The coronavirus recession is almost certainly here, and there’s nothing anyone can do to prevent it.
Our leading economic indicator, the purchasing managers’ index, has just fallen off a cliff. This is worse than 2008. The saving grace is that, as with a similar fall in GDP in 1957 with the Asian Flu, the economic fall is likely to be extremely sharp but also short, with a swift recovery. The relief package from Congress might well aid with this and reduce suffering in the meantime.
The jargon for the kind of problem posed by the coronavirus is “exogenous,” that is, a problem that comes from outside our economy. The problem will be the same whatever our economic structure and policy, meaning that a socialist state, if any still existed with an actual economy, would be having the same problems as a free market economy. Our capitalist system will aid in the swiftness of the recovery, but it will not, as any other system would not, stop the problem occurring in the first place.
Except, this coronavirus crisis shows us that we have endogenous problems posed by our own government and its bureaucracy. The Centers for Disease Control and Prevention and Food and Drug Administration are two prime examples. We would like, for example, to be able to scale up society’s coronavirus testing abilities. However, the FDA has banned anyone from offering home testing kits, a massive bureaucratic barrier to the nation’s capabilities in this time of crisis.
This is not the only such problem. The two government agencies have delayed the development and roll out of hospital-based coronavirus tests as well. As reported by Reuters:
That’s right: In the middle of a global crisis, the government screwed up — and then waited five weeks to fix it.
Imagine fighting World War II that way. Instead, we had the Cadillac plant moved from building cars to manufacturing tanks in only 55 days.
It is not just here that we’ve got a problem, either. Modern society is so festooned with restrictions upon who may do what that we’ve even got the New York Times now asking which regulations we might do away with to aid our coronavirus response. You know, such as allowing trained medical personnel to work in states other than the one where they’ve got their license, and all that apparent radicalism.
That is, a big part of our problem here is not just the virus, nor even the macroeconomic tribulations stemming from it. It’s the constraints of the ruling bureaucracy and “red tape” making the coronavirus’s impact much worse than it needs to be.
We need to kill off some of our overweening government bureaucracy to get through this with the least possible pain. Having done so, we may well end up realizing that we didn’t need quite so much governance in the first place.
This country was founded on the idea of the right to life, liberty, and happiness. By the third sentence of the Declaration of Independence it says that when the instituted government no longer does those things, then “it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”
If to solve a crisis we must roll back the government, clearly we shouldn’t have that expansive a government in the first place.
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute. You can read all his pieces at The Continental Telegraph.
