A Free-Market Solution For Resolving The Coronavirus Pandemic

by | Mar 24, 2020

Leave people free to make their own choices and allow the free market to work its miracle of fulfilling the urgent demands of the moment to save lives, supply very needed goods and services, and find profitable ways of keeping those goods flowing and jobs existing to maintain as best as possible our standards of living.

The world has rapidly moved into a seemingly aggressive paternalistic planning mode in the face of the Coronavirus crisis. Many voices are heard to say that personal and economic liberties must be restricted or even temporarily banned. At the same time, many of those same voices are saying that at a moment like this government spending, for all intents and purposes, has no limit. Welcome to the world of a really lot bigger government.

Over the last two weeks, municipal and state governments in places like California, New York, New Jersey, Connecticut, Pennsylvania, and Illinois, to name just a few that the media has particularly publicized, have ordered the virtual shutting down of huge parts of the economy under their respective jurisdictions. They have commanded entire populations of tens of millions of people to not leave their homes other than for a small handful of reasons such as getting medical treatment or food shopping under penalty of a fine or worse.

Millions of people in manufacturing and especially the service sectors of the market have been or are in the process of being thrown out of work because the enterprises in which they are employed have been ordered to close their doors or narrowly reduce the type of business they do until further notice, again subject to legal penalty.

War Powers, Budget Busting, and Monetary Ease

At the federal level, the president of the United States has declared a “national emergency in the fight against the Coronavirus. He has activated a Korean War-era piece of legislation called the Defense Production Act that enables the chief executive to commandeer enterprises and, indeed, entire industries, and compel and direct what those businesses will produce and how and in what quantities to meet the needs of combating the “enemy” threatening the American people. Indeed, at a press conference, President Donald Trump even called himself a “war president.”

Reports have appeared warning that the Department of Justice has approached members of Congress to have authority, with a senior judge’s approval, to detain individuals indefinitely in declared national emergencies such as the current Coronavirus crisis, along with a number of other serious exemptions from respecting a detained person’s Constitutional rights and civil liberties.

On the budgetary side, all accounts suggest that the next spending bill coming out of Congress and heading for the president’s desk will be in an amount of over $2 trillion, or approximately 10 percent of the U.S. Gross Domestic Product. It contains a grab bag of spending, including sending every American a check from Uncle Sam for up to $1,500 and followed by another check in the same amount later in the spring. Multibillion-dollar bailouts would go to the major airlines and the travel industry to tide them over until large numbers of people start flying and vacationing again.

Loans and guarantees will be extended in, as yet, undefined ways and amounts to small and retail businesses forced to close their establishments due to governmental decrees preventing customers from entering and using their facilities. The Secretary of the Treasury has referred to the federal government having a possible $4 trillion line of credit to extend to businesses adversely affected by the supply-restricting commands imposed by Washington, D.C. or the state governments.

At the same time, America’s central bank, the Federal Reserve, has promised easy and available lines of credit for financial institutions and others to help them stay in business and supply the means for borrowers and investors to pay their bills and meet their payrolls in the face of falling or stalled production and sales resulting from those government edicts to stop what they are doing and sending their workers home for self-quarantining and social distancing.

The New Command and Control Economy

“Social distancing” is the new official language for government telling people not to interact with others at work, or in the common areas of everyday life, or even at home. What it amounts to is the government telling people where, with whom, and when they may associate in close proximity with others for mutually beneficial trades or for various forms of family activities and social comradery and entertainment.

Suppose that the federal government in close collaboration with state governments were to introduce such draconian coercive controls and commands on the American people at any time other than like the present one, when many in the country have become wrapped up in fear and near hysteria over the threat of the Coronavirus. I think it is likely that many would wonder if some type of political coup d’état was not in the process of transforming the American Republic into a near totalitarian state and planned economy.

What other conclusions could be drawn when personal freedom and civil liberties were being trampled upon, when the freedom of association both inside and outside the marketplace was being straightjacketed, and private property rights and free enterprise were, respectively, abridged and placed under government direction and dictate?

Because of the concerns surrounding the life and death impact of the Coronavirus, the vast majority of the population in the United States (and in all other countries affected by the virus, as well, such as in Europe), acquiesce and support the government telling them what to do in their everyday life, including how to do it.

In addition, the imposition of this system of social authoritarianism is happily pursued as a bipartisan exercise by politicians in expanding the powers and reach of the government at all its levels. At the same time, members of both major political parties never lose sight that in a presidential election year they are playing to the voters in both vigorously seeming to be doing “something” and vastly enlarging the dollars to be eaten up at the government trough by the various groups they normally pander to and which are now suffering due to those new command and control policies they are jointly imposing on the country.

Any New Normalcy Will Not be the Old Normal

At some point, as yet not fully determined or predictable, the Coronavirus crisis will come to its end. Many will have been infected by the virus and will have suffered anything from non-existent symptoms to serious illness that has required hospitalization. And, tragically, a certain number who have come down with the virus will succumb to its effects and pass away, especially those in the later years of life who have a variety of pre-conditions that weaken their immune systems to better ward off the viral invader.

The world, including the United States, will attempt to return to some kind of “normal,” though what normal means at that time will not be independent of all that has occurred in the interim between the first appearance of the virus and its disappearance, either from “natural” causes or by medical advances in the form of a successful inoculation.

But what most likely will be one of the lingering legacies of the Coronavirus crisis will be the presumption that governments not only must take the lead, with all the accompanying power and controls to face and fight a future pandemic, but that it is the duty of every citizen in such situations to do what the political authorities in elected office or appointed in the appropriate bureaucratic offices tell them to do.

Future Recriminations Will Likely Call for More Government

No doubt, if there are any criticisms and recriminations about who and how things were handled – and they are already in play, given that it is an election year – the corridors of debate most likely will be confined to discussions of the personalities who had been in charge, and the failure on their part to be as farsighted and forthright in implementing various policies as then seem “obvious” after the fact. In other words, discussions will revolve around how better to do the command and control system the next time, especially since the residues of the command and control system introduced during the Coronavirus crisis will still be on the books or will still be in effect as a “readiness” for that next time.

Already in the pages of The Nation (March 20, 2020), it is decried that too many, including Democrats like Joe Biden were penny-pinchers in wanting to restrict spending and contain government deficits. The author insists, “When faced with the genuine prospect of annihilation, the only adequate response is to do whatever it takes to prevent it. For the United States government, that means not asking, ‘How will we find the money’? but instead, ‘How will we find (and mobilize) the necessary real resources’?”

Oh, and just as urgent and categorical is finding the money and mobilizing the needed real resources, the author says, to do away with fossil fuels, institute the Green New Deal, assuring everyone “the right to a well-paying job” and “creating the public goods that are available for free to everyone.” If we could gather the needed money and organize the required resources to defeat the Coronavirus, then surely we can do the same to solve problems x, y, and z, as well as . . . If only we do so, we will be well on the road to collectivist Utopia.

And others, especially on “the left,” also, condescendingly smirk that there are no libertarians in a pandemic, as it is pointed out that a Republican administration has turned to government “activism” to fight the virus, thus confirming that the days of market fundamentalism and laissez-faire have reached their end (under the ignorant assumption, of course, that America has had a real free market at any time over the last hundred years).

The Republicans have been doing all in their power to confirm this view of “progressives” by working day and night to bring to the desk of the president that $2 trillion giveaway in the name of overcoming the economic tailspin the government’s own policies have produced at the federal and state levels.

So, What Should Government Do? Very Little

Now, at this point, it would not be unreasonable for a reader to wonder: So, if the turn toward a system of command and control is to be bemoaned in the face of the coronavirus crisis, what should government have done and be doing, given the health risk? Surely the answer could not and cannot be, “Nothing,” can it?

My answer, for whatever it may be worth, is that is exactly right: Government should be doing little or next to nothing. The problem is a social and medical one, and not a political one. The best methods and avenues for people as individuals and as members of groups and participants in society as a whole, to discover and apply that which would be best to deal with a pandemic of this sort is to leave it to the institutions of voluntary civil society and the competitive, profit-directed forces of supply and demand.

The classical liberal conception of the purpose and function of government is to protect the individual lives, liberty and honestly acquired property of the citizens under its jurisdiction. This includes an impartial and equal rule of law. Anything that goes beyond these duties and responsibilities must by necessity involve an encroachment of political power over the actions and decision-making of the free individual.

Free Men Make Their Own Choices, for Good or Ill

It is one person claiming the authority over another about how they should live, what they may do, with whom they may interact and for what purpose and under what terms. Whether it is a tyrant who has established his political authority through violent means or whether those claiming that power to tell others how to live their lives are holding their political authority based on a democratic election, it remains, nonetheless, some people commanding the actions and interactions of others who may not voluntarily agree with or consent to what they are being told to do.

But it’s “science,” or “sound medical findings,” to which the individual is being made to conform! It’s for his own good, in the face of either that person’s ignorance or lack of will and willingness to do what is “really right” for them in a particular instance.

References to “science” and “sound medical findings” as an unchallengeable benchmark of justifiable coercion often sounds amusingly innocent and naïve when looked at from the perspective years or decades later, when science and medicine have advanced much further and we can smilingly look back on what people thought was the “right thing to do,” in that earlier and less informed time.

No doubt that is how some of our “science” and medical knowledge will be viewed at some later time in the future. It is the way we look at someone in the 1800s, for instance, who declared with dogmatic certainty on some scientific or social matter, “But, my dear fellow, this is the 19th century!” implying that the state of knowledge was so advanced that how could anyone question or challenge it? Our amusement comes from thinking how uninformed and “primitive” their thinking seems to be compared to our far more advanced knowledge and understanding in the 21st century.

The Morality of Liberty Requires Non-Interference

Even if someone is absolutely right on the danger from another’s actions concerning himself, it would still be wrong to stop his conduct from the perspective of recognizing and respecting his right to live his life as he chooses. If you see your neighbor sprinkling a bit of arsenic on his food, and he continues to do so after you have forthrightly and clearly expressed to him the potential health dangers, either because he does not believe you, or he’s willing to run the risk because he likes the taste, or because he wants to commit suicide, you do not have the right to interfere with his actions.

You may reason, argue, plead, and admonish, but a free man may not be interfered with, no matter how frustrating, ignorant, or contrary to reason and science you may consider his conduct to be. Once we open that door, the way is opened for any number of seemingly reasonable and unreasonable demands to dictate and determine how others may live. That some get imposed while others do not, once the premise is accepted, is merely a matter of the prejudices and presumptions of public opinion at a moment in time. Today’s “absurd” regulation becomes tomorrow’s essential political intervention for the good of others, with no logical end to which that premise may be applied.

This may be all well and good, but individuals interact with others, and their actions, especially when it concerns a deadly and contagious virus like the Corona one, can and will infringe and impinge on the lives and well-being of others. People interact in two types of “social spaces;” those that are in the domain of private property and market exchange, and those that are in common areas, with the latter potentially creating problems known as “the tragedy of the commons.”

The Arena of Property, Prices, and Markets

In the realm of private property, owners can set and the transactors may agree upon the terms and conditions under which they voluntarily interact and associate. For instance, in the workplace those on the shop floor have to wear protective goggles, or fire-resistant types of clothing, or must have special training in the use of various tools and instruments used in the production processes of the enterprise.

People negotiate and agree to the type of work to be done, the wages to be earned, the hours of normal employment, the demeanor and deportment expected of each toward other members in the workforce and customers of the business. Special or unusual or irregular circumstances and situations that may arise may be agreed to ahead of time or dealt with as they arise within the enterprise.

Everything mentioned in the preceding paragraph may differ in specific forms and details among firms and enterprises to suit the particulars of the workplace in question. Patterns of conduct in the private marketplace of work and sales reflect the difference in time and place and purpose. There are as many nuanced rules, procedures and practices as the circumstances that market supply and demand warrant at a moment in time and over time in similar and changing conditions.

What is produced how it is produced, where it is produced, and for whom it is produced is guided and determined by the structure of market prices for both final, finished consumer goods and for the factors of production (land, labor, capital) that are used in various complementary and substitutable ways, under the directing vision of entrepreneurs, enterprisers, and businessmen concerning the shape of consumer demands to come.

Supplies are adapted, coordinated and brought into a balance with the demands of those who wish and are able to buy the goods and services potentially brought to market. Changes in the pattern of consumer demands and shifts in availabilities   and discovered uses of the means of production constantly and continuously result in processes and periods of adjustment to the new circumstances. Everything, it needs to be remembered, takes time to fully and correctly adapt, even with the best intentions and thoughtful expectations, in trying to correctly anticipate the unexpected and the not completely knowable.

What is brought to bear in all of this is the knowledge, experience, informed judgements, and insightful hunches of all the individual participants of the entire global system of division of labor in the worldwide marketplace of goods and ideas. If, as the saying goes, two heads are better than one, then surely 7.7 billion heads are better than all of the best minds of the relative handful of those in government who would presume to know how to “get things done” in better and more balanced ways than when all those billions of minds are set to work through the motive of profit and the avoidance of loss in attempting to improve one’s own circumstances.

Personal Choices and the Tragedy of the Commons

The tragedy of the commons refers to those areas of social life that have not come under the full orbit of private property and market-based decision-making. These are areas that, as they say, belong to everyone and therefore to no one. It is pointed out, for instance, that a common pasture openly accessible to all will likely be over-grazed as each herdsman tries to get as much out of its use as he can; or a common river to which all have access may be polluted by some (or all) due to no restraint on how and for what the common waterway may be used in the pursuit of private purposes. Most of us have experienced irritation and inconvenience from the trash left by others on “public beaches” to which all in the community have entrance with no personal cost or penalty for not policing the garbage they felt behind.

The common areas lack the constraints and incentives that influence people’s behavior in using and managing what is privately theirs, with the benefits and the costs of the actions mostly falling upon those private owners from either wise or thoughtless decision-making. Many, if not most, of the environmental problems often experienced in society can be traced back to areas of social interactive life in which private property rights have not been carefully delineated, recognized and secured by custom and law. In other words, they are generally found in those areas in any society in which there is equal access and use under “social communism.” It creates those instances usually called “negative externalities.”

What does all this have to do with the Coronavirus crisis and the role of government in society? The common problem arising from a communicable disease like the Coronavirus is that it inescapably spreads from interpersonal actions that occur in relatively close proximity. But this is life; we cannot completely get away from participating in the constant and numerous forms of human association, from which come all the benefits that we share in our modern society.

Someone sneezes or coughs near us; we touch something where another hand has recently been; we “rub shoulders” in crowded spaces; and we naturally and unintentionally touch others, whether the latter is a handshake, or a pat on the back, or a kiss on the cheek.

A by-product of our natural “touchy-feely-ness” is transmission of such things as the flu, which in various strains reappears each year. During the 2017-2018 flu season there were 45 million cases in the United States, 810,000 of which required hospitalization; while 61,000 people died that season from the flu. So far in the 2019-2020 season, which runs from October to May, there have been 38 million cases of flu in the U.S., with 400,000 hospitalizations, and 25,000 deaths, with still two and a half months to go in the current flu season.

People could be more “socially distancing” themselves, going shopping less frequently, avoiding more social and business activities and events during that flu time of the year, and stop touching and kissing others as much as we do. But most of us choose not to be as cautious and careful as we, hypothetically, could be.

We all know in the back of our minds the risk and uncertainty of whether we will be one of the numbers in that statistic. But as the saying goes “You buys your ticket, and you takes your chances,” in the public and common arena of social interaction. And we do not expect or decry a failure of government to get in our individual ways in making these decisions.

Government’s One-Size-Fits-All

Are there particular uncertainties with this new Coronavirus? Yes, according to all the scientific and medical experts. Does this call for heightened care and concern in what we do and how we do it? Most certainly. But, the experts have also been able to tell us, so far, that the young seem to be more asymptomatic, the middle age ranges seem to get it, with many of the usual or other flu-like symptoms, but for the large majority in this group it will pass after a period of discomfort and inconvenience, as with the strains of many other flus. The “at risk” are those 60 and especially 70 or older, and particularly if they have any number of preconditions that have or may weaken their immune system.

So how shall we manage the inescapable “commons areas” of everyday life of just being in proximity with others in many if not most of the things we usually do? One method is the one our command and control government central planners have been imposing. In a typical “one-size-fits-all” approach, local and state governments have shut down entire sectors of the economy, especially the service and entertainment and related business enterprises.

They have been ordered under legal penalty to stay home, to not go out except for those things government says you may go out for, and to stay away from workplaces unless they are “essential” employments as the government defines them. Because everyone could be a potential carrier and recipient of the virus, all will be confined within the one corridor of permitted activities as determined by those in political authority.

This societal straitjacket of economic stoppage and slowdown singularly due to the compulsory command of politicians and bureaucrats is starting to wreak havoc on the livelihoods and investments of tens of millions of people. It may have been the case that the history of monetary and fiscal policy over the last ten years strongly suggested that a new economic downturn was going to happen sometime in the future.

But it is clear that this slowdown and likely recession is not due to the usual pattern of the business cycle. This has been induced by government basically telling large numbers of businesses and workers in society to stop working, stop selling, shut down or more narrowly confine how you do your business.

Letting Individual Choice Their Actions in the Commons Area

What, in my view, should have been, and can still be done in terms of an “answer” to the health tragedy of the human commons? Those in the medical and biological fields especially knowledgeable about and doing research in virology should share and explain to their fellow citizens the nature, properties and particular dangers from this Coronavirus, as is best understood in an evolving situation. And they should, as they have been, recommend the wisest courses of personal and social actions to avoid or at least minimize the likelihood of catching the virus and passing it on to others.

At this point, everything else should be left up to the decisions and judgments of the individual members of the society. Will everyone act “rationally” or “reasonably” as “experts” and normal common sense suggests they should? No. We have seen this with news videos of college students and others congregating in large numbers on beaches in America and Australia, and when asked why, some sound like infantile knuckleheads who say they are bored and “Just want to get drunk and party, man.” Is there any meaning to a negative IQ?

But rather than blanketly shutting down these common areas, like the public beaches, or walkways and thoroughfares, just let them alone. As with any tragedy of the commons situation, others will and should have the liberty to adapt and adjust to the actions of these others as best they find it prudent or necessary, given their own situations and circumstances, and personal health concerns.

Let people decide these things for themselves based on their own risk averseness and concerns for not coming down ill and for not infecting others if they come into contact with a carrier. Those in the most susceptible categories of likely danger would and should adapt as they find and think best.

Not everyone over 60 or 70 has a precondition or will die from the virus if they catch it. Those in this age group should be the ones most careful in planning and designing their interactions with others, particularly staying away from the grandchild or great-grandchild who fits into that knucklehead group.

I might mention that some Americans still have, in this context, a healthy Thoreauvian spirit of civil disobedience. Not far from where I live in Mount Pleasant, South Carolina there is a delightful and heavily wooded county park with numerous winding paths perfect for going for a stroll, walking the dog, or for a bicycle ride or a jog.

The county government may have categorically declared all such parks closed until the end of the Coronavirus crisis, but a good number of people went over or around the locked gates and enjoyed a warm and blue-skied weekend in this common area, in spite of what the local government dictated. People were in a good mood, highly friendly and bantering back and forth over the situation, and keeping their six feet apart. The voluntary associations of civil society peacefully and intelligently at work in the midst of an infectious virus crisis.

Leaving Private Enterprise Free to Meet People’s Demands

What about the private sector of business and industry in the common social space? This, too, government should leave free and unimpeded. In the face of all the publicized short supplies of a variety of goods, including toilet paper and hand sanitizers, new shipments arrive in many places within a day or two – or at least this will continue to do so for as long as state and local governments do not stop these manufacturers from continuing to produce and gear up a greater supply to meet the increased panic demand.

In spite of all the typical attacks on business and profit-making and the “evil” of higher prices for especially scarce goods at this time of fear and concern, it is the private enterprise system that has the institutions and possesses the incentives to make it advantageous and profitably worthwhile to not only “deliver the goods” on the regular and daily basis that we all so very much take for granted, but to meet unusual and extraordinary circumstances such as the present. The value of the competitive market is that it sets those multitudes of minds to work to devise ways to rapidly and effectively get the goods that people now need and want more of than in the usual patterns of events. Changing relative prices reflecting greater and lesser demand and supply changes sets in motion adaptations and adjustments to the new circumstances with greater speed and flexibility than any top-down command and control system of government can possibly oversee and manage.

Prices are a signaling system, a vast and interconnected system of human communication that gives the necessary information to those who need to know, so they may utilize their special knowledge and skills and abilities in their localized times and places to rebalance and re-coordinate how and what they do to meet the changed demands of others as quickly as can be done.

It has been the monopoly decision-making and permission process of the Pure Food and Drug Administration (FDA) and the Centers for Disease Control (CDC) that has delayed developing new and improved testing techniques to deal with the Coronavirus, as well as revving up the manufacture of testing equipment and related materials and products.

After weeks of delays in not wanting to loosen or give up their command and control over these things, the FDA and the CDC relented and the private sector was partly given greater freedom to produce, develop and supply what has been most urgently needed. As a result, more of these goods soon will be on their way to where they are wanted.

Allowing People to Weigh the Trade-offs

But what about workplace health and safety in the face of the Coronavirus? The people and not a host of politicians and bureaucrats should determine how and what to do to maintain the efforts and energies of production. Employers and employees should be allowed to decide among themselves the best courses of action, in conjunction with the customers’ preferences.

In spite of what the writer for The Nation magazine may have said, the world and everyone in it is not facing “annihilation.” Humanity will not perish, human life will recover and go on, and as with all other similar natural tragedies, efforts will be made to minimize the human loss, but some will succumb, just as is the case with the usual flu every year.

There are always trade-offs, and personal costs and benefits. If there are some commodities in intensely greater demand in such a crisis as the Coronavirus, but with health concerns on the shop floors of the manufacturing processes, with profits to be made employers can offer time and a half or double even triple pay to compensate for the riskier work environment. Some workers will prefer to stay at home, while others weigh the new offered options and decide it’s worth the greater risk of catching the virus in exchange for what that extra pay will enable him and his family to provide for. Part of the cost would be to be more vigilant in managing one’s life away from work to minimize passing on the virus to others around them at home.

This way, each person can weigh things for himself, given his own circumstances as income earner, parent, husband, son or daughter and make the choice that seems best for them, while not standing in the way or dictating what is right for anyone else. This seems far more reasonable and rational than the sledgehammer technique of the government’s command and control system.

By its very nature, the government planners and their top-down planning method cannot know, appreciate, or incorporate all the nuanced details and bits of knowledge and information that makes each person’s choice not only “right” for them, but that ends up freeing people up to go about doing what are the “right” things as reflected in the market demands and prices of what is needed most urgently by others in society, as well as where and when.

The anecdotal story about the origin of the term “laissez-faire,” is that in 1681, the French minister of finance, Jean-Baptiste Colbert, asked a group of businessmen what the government could to assist them, and one of them replied, “Leave it to us,” that is, leave the marketplace alone to the free, peaceful and honest productions and trades of the participants on the supply and demand sides of a free market.

That is what the government should have done from the start in the face of the Coronavirus crisis, and should introduce as quickly and thoroughly as possible right now, because its own central plans over the people and production of society are dragging the entire economy and society into a terrible economic downturn that will create very serious dislocations, shortages, lost jobs, and bring economic ruin to multitudes of Americans.

All that is needed to be done and should be done, even in this Coronavirus crisis, is to leave people free to make their own choices and allow the free market to work its miracle of fulfilling the urgent demands of the moment to save lives, supply very needed goods and services, and find profitable ways of keeping those goods flowing and jobs existing to maintain as best as possible our standards of living.

Made available by the American Institute for Economic Research.

Dr. Richard M. Ebeling is the recently appointed BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel. He was formerly professor of Economics at Northwood University, president of The Foundation for Economic Education (2003–2008), was the Ludwig von Mises Professor of Economics at Hillsdale College (1988–2003) in Hillsdale, Michigan, and served as vice president of academic affairs for The Future of Freedom Foundation (1989–2003).

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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