There are two very distinct approaches to crisis resolution. One is the socialist approach, adopted by most governments of the world in the latest coronavirus crisis. The other is the individualistic approach, used by few if any of the world’s major nations.
The Socialist Approach
Here are some of the main elements of the socialist approach:
The number of COVID-19 cases in Japan had been showing a very low daily uptick until this past week. Suddenly, there were more than forty new cases a day, and the news is reporting that for most of those people the route of infection cannot be determined. The governor of Tokyo Koike Yuriko has been teleconferencing with the governors of surrounding prefectures (such as Kanagawa (Kawasaki and Yokohama), Chiba, and Saitama) to hammer out a plan for social distancing in the metropolis.
In response to the coronavirus, central banks worldwide are currently pumping massive amounts of money. This pumping, it is held, is going to arrest the negative economic side effects that the virus-related panic inflicts on economies. As appealing as it sounds we suggest that this view is erroneous.
Not hesitating to exploit a health pandemic to advance their ideological agenda, Jacobin magazine on March 26 published an article attempting to proactively blame “millions” of coronavirus deaths on “capitalism.”
Titled “How Capitalism Kills during a Pandemic,” the article advances tired slogans about free markets placing “profits above people,” buttressed by faulty and at times self-contradictory arguments that prove unpersuasive.
Let me make one thing clear—I’m not downplaying the importance of a strong response to this virus. I believe there is a good reason to be overcautious in the short term before we understand the disease better and are able to apply a more surgical approach to its management and eradication.
Social distancing, working from home, avoiding travel, all of those things help us to avoid the overwhelming and potential collapse of the healthcare systems such as we are witnessing in Italy and Spain.
Listen to the Audio Mises Wire version of this article.
In the midst of the emerging economic chaos triggered by the COVID-19 coronavirus, individuals are seeking answers from governments as to how to prevent the emerging economic disaster.
Mainstream economists have turned Japan’s adverse demographics into a scapegoat for its economic debacle. Be it the Financial Times or the IMF, the general narrative is that Japan’s shrinking and rapidly aging population has stifled both economic growth and productivity.
One day over the next few weeks, I will find my bank account $4,400 higher than the day before. I’ll have more bread, so to speak. However, the circuses—the movies, concerts, sporting games, etc.—will remain nowhere to be found. Where is a Roman emperor when you need one?
Modern central banks have already moved far beyond what was once considered the proper role for a central bank as a “lender of last resort.” Now Keynesians and MMTers (modern monetary theorists) want to take things even further.
