The United States and the broader world are experiencing a shock not felt since World War II, if not before. U.S. gross domestic product may plunge 34%. A roll of toilet paper is now more valuable than a barrel of oil, and tens of millions of workers who were employed just a month ago now find themselves out of work. Whole industries from restaurants to airlines are decimated, and department stores may be a thing of the past. It has become tempting in a number of quarters to blame capitalism.
Capitalism has been under siege for some time. Last October, Pope Francis wrote, “The battle against hunger and malnutrition will not end as long as the logic of the market prevails.” A commentary in Barron’s concluded, “Once the immediate public-health crisis has passed, there will be tremendous temptation to go back to the old ways. This must be rejected categorically,” suggesting that the pandemic recession should end shareholder capitalism. “Coronavirus stimulus and disaster plans reveal cruelty of capitalist and political ‘reality,’” a headline at NBC News read. Naomi Klein, chair of media, culture, and feminist studies at Rutgers University, wrote at the Intercept about “Coronavirus capitalism — and how to beat it.” Climate activist Eric Holthaus tweeted, “We need a Green New Deal with a robust public safety net. … Capitalism is failing in front of us.” Famed primatologist Jane Goodall said that the pandemic arose because of man’s disrespect for nature.
The list of such pronouncements is long.
But capitalism is really the solution, rather than the cause, of the human and economic catastrophe now underway. Economist Arthur Brooks, the former president of the American Enterprise Institute (where I work), noted, “Grinding material poverty was the norm for the vast majority of people through the vast majority of human history. … In just the last few hundred years, that all changed for a few billion people. So the right question today is: ‘Why did whole parts of the world cease to be poor for the first time in history?’”
The answer is free market capitalism. President Barack Obama himself acknowledged as much when he stated, “We don’t dispute that the free market is the greatest producer of wealth in history — it has lifted billions of people out of poverty.”
Those who are condemning capitalism are mistaken in a number of ways. Freedom and capitalism go hand in hand, whereas socialism often subordinates individual liberty not to the interests of the state but rather of those in the state’s leadership class. There is no better case in point for this than COVID-19’s initial outbreak: It was the Chinese Communist Party that chose to obfuscate and hide the roots and reality of the Wuhan coronavirus.
Autocracies crave opacity. The World Health Organization is rightly under the microscope for its deference to Beijing amid Chinese lies. Capitalist Taiwan is free China, and the juxtaposition between its success and Communist China’s failure is huge.
It is easy to castigate President Trump for downplaying or distracting from the coronavirus threat. Leadership matters. So does consistency: Trump was not alone, nor were errors limited to one side of the aisle. Rather, what has most hampered the U.S. response has been a clunky and bloated bureaucracy.
While a Hillary Clinton presidency may have made marginal adjustments here and there, it would have been even more reluctant to curtail travel from China (racism!), and the same institutional interests would have paralyzed the interagency process. If partisans believe the U.S. government’s response would have been more efficient under Clinton, then that suggests politics rather than capitalism are the problem. Regardless, this is why federalism is so important. States took the lead while Washington fiddled — and within states, counties and municipalities have been at the forefront in responding to their own assessments of local conditions.
Environmentalists have sought to hijack the current crisis for various agendas, but by doing so, they diminish and disrespect science. Goodall, for example, should note that humans have confronted waves of pandemics throughout their history. There is also a border between “nature” and “civilization,” and transmissions occur. New diseases emerge not only because of human expansion but rather because of medical ingenuity. Many diseases from which people suffer now were unheard of decades or centuries ago — not because people now abuse the environment but rather because we live longer.
The pandemic in many ways shows what the Green New Deal would do to the economy and should be a warning rather than a reason. Across the globe, wealthier societies (China excepted) prioritize the environment more than impoverished ones do. Nor is it possible to separate ease of transportation from the past century’s global economic boom. To try to do so — for example, vis-a-vis air travel — would be like advising foot surgery after removing the spine. Nor would any scientist true to the scientific method advise policy based on historical models without predictive value.
The World Health Organization’s chief role is not as scientific enabler but rather as public cheerleader and disseminator of information. In this latter role, it failed. The real scientific advances will come not from WHO bureaucrats or state-dominated societies such as China, Russia, or Iran but rather from the private companies and scientists unencumbered by state direction in countries such as the U.S., Germany, South Korea, and Israel. That these capitalist engines can pursue multiple solutions to the coronavirus problem set simultaneously is something capitalism enables — and is anathema to socialism.
Capitalism-bashing may be the rage in certain segments of society, but capitalism alone provides the path forward — whereas bigger government not only will fail to prevent the next pandemic but will strangle recovery. It is right to pay essential workers in logistics and retail more as their labor becomes more critical at this time, but that is capitalism: The market adjusts more than ossified political interests. While there is a role for a social safety net, an economic boom follows every recession except when derailed by governments seeking to overregulate or micromanage that recovery. Inequality may be a problem, but then the solution is to create more wealth rather than redistribute or ration it.
The COVID-19 pandemic is causing immense suffering, and so it is important not to compound it. The current suffering does not change the truism that free markets create wealth while government suffocates it. Certainly, inequality can be a problem, but it is also critical to recognize that today’s poor remain wealthy by standards of decades past. Let us hope that free markets will craft a cure or containment of the coronavirus — because state bureaucrats most certainly will not.
Michael Rubin (@Mrubin1971) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a resident scholar at the American Enterprise Institute and a former Pentagon official.
