Paul Krugman and Joseph Stiglitz must be prancing around like excited schoolgirls about Ebola, say Chris Campbell & Daniel Oliver in this Guest Post.
We’ve given Ebola a lot of thought this weekend. And how different this crisis would be without the government getting in the way.
Despite the insanely underwhelming (yet typical) response from the government, most people can’t imagine that we could deal with any type of crisis without government intervention.
Most are inundated with the idea that we need government in our lives for crises like these. We know this simply isn’t true. It’s when the government gets out of the way that the magic happens.
How effectively would the private sector act if the state got out of the way?
While pondering this, we came across the same question on the inquiry website Quora. (Quora, if you haven’t been, is a place where people can ask questions and let others vote on the answers. It’s a great research tool. Highly recommended.)
The question was, how would a non-interventionist state respond to the Ebola crisis?
The answer, of course, is they wouldn’t have to.
Here’s a screenshot of the original question…
And here’s the highest-voted answer from one user, Rob Weir:
I’m puzzled about what part of the state’s lacklustre response you would hold up as a shining example of what only an interventionist state could do?
In any case, a libertarian response would include things like:
- “No FDA regulations of drugs. So if someone comes up with an Ebola cure or treatment it can be tried immediately and not wait for 10 years for state approval. The reduction in costs to the drug companies would spur more investment in this area. The lack of state subsidies of health care would result in lower prices for consumers.“We would get information about the disease, its risk, its mode of spreading, etc., from our doctors or other trusted sources that we chose, rather than from an Administration trying to appear confident and in-control right before an election.
- “Private airports could, immediately and without red tape, refuse flights from hot zones without worrying whether or not it was “politically correct”.
- “Voluntary cooperation among hospitals would enforce quarantines. The fear of ostracism or rejection from mutual aid networks would replace state coercion.
- “Employers could pay those who are suspected of catching Ebola a bonus to remain under quarantine, a cost of doing business to prevent the rest of their workers from getting infected.
- “If libertarian views were more widespread around the world there would be less need for traveling to the United States. People would have more opportunities in their own country. Instead of socialist policies depressing industry and forcing migrant workers to spread disease, the encouragement of private enterprise might lead to more local factories, reducing the spread of diseases.”
But efficiency, ya’ know [or individual rights and freedom – Ed.], isn’t the name of the game.
Instead, crazy Keynesians who have governments’ ear argue that if it increases government spending, it enables economic growth. That’s the current tangled thought process.
By that logic, we should be celebrating Ebola to fix the economy as much as Paul Krugman wanted to celebrate a space alien attack to fix the economy (true story). Even encouraging it to come over here and spread ‘wealth across our land too. After all, we’re in a slump. And Ebola could be all the stimulus we need.
Hashing out the absurdity, Daniel Oliver, founder of Myrmikan Capital, wrote the following article earlier this month.
He calls it ‘Oh! What a Lovely Pestilence!’
Ebola has come to America: Paul Krugman and Joseph Stiglitz must be delighted.
The core story of Keynesian economists is that government demand, as ideally embodied in war spending, enables economic growth.
To illustrate, in a column called ‘Oh! What A Lovely War!’ Krugman asserted:
World War II is the great natural experiment in the effects of large increases in government
spending, and as such has always served as an important positive example for those of us
who favour an activist approach to a depressed economy.
“It is never quite explained how wealth is created by removing millions of young men from the work force — many of whom never returned — to sink ships, destroy factories and level cities; nor how shortages and price controls on the home front could be good for the economy.
But fellow Nobel laureate Joseph Stiglitz agrees with Dr. Krugman’s prescription:
What we need to do instead is embark on a massive investment program — as we did, virtually by accident, 80 years ago… Can we actually bring ourselves to do this, in the absence of mobilisation for global war? Maybe not.
Or maybe so.
Last month, Lakeland Industries announced the U.S. government had placed an order for 160,000 of its hazmat suits. The stock jumped 30% after the first confirmed case of Ebola on American soil. No Federal Reserve stimulus programs were necessary to create this wealth effect.
If the often-fatal disease spreads, demand for hazmat suits will surge, not to mention hospital clinics, workers to build barricades, security guards to man quarantine checkpoints, probate officers, orphanages, and a host of other government services.
It’s a good bet ammunition sales would also rise, along with canned food, firewood, and funeral services, stimulating the private economy. A lovely pestilence could create just as many jobs as a global war.
As Krugman wrote recently about China: ‘to put it crudely, it’s running out of surplus peasants. That should be a good thing. Wages are rising.’
History supports his analysis. The plague in medieval Europe killed between 30- 60% of the population, which resulted in a sustained increase in wage rates that taught the capitalists a lesson by retarding economic growth for centuries. Ebola similarly offers a chance to solve America’s “surplus labour problem” and stick it to the capitalists harder than any of Thomas Piketty’s proposals.
As an added bonus, Ebola would save the government trillions. Obamacare architect Ezekiel Emanuel wrote last month that it is pointless to live past the age of 75. The mind slows, senses weakness, productivity crashes, creatively vanishes: I have liv’d long enough: my way of life / Is fall’n into the sear, the yellow leaf.
And it’s expensive. Most healthcare spending is at the end of life, not surprisingly, when people are the least healthy. If people die young, Obamacare and Medicare will be saved…
The trillions saved could be spent on more stimulus. In fact, the more people die, the more savings there would be, and the more stimulus would be available to boost the economy for whoever is left. Imagine how rich the survivors would be!
Sadly, Ebola-stricken Liberia is unfamiliar with progressive economics. News outlets report that people are abandoning the fields and factories, leading to shortages, especially of food and fuel. Activity in the services sector has fallen by over 50%. Inflation has doubled. Civil war threatens.
Perhaps what West Africa needs is not more doctors, but a few Keynesian economists.
Let us hope Krugman and Stiglitz volunteer.
Chris Campbell (left) is the Managing editor of Laissez Faire Today. Before joining Agora Financial, he was a researcher and contributor to SilverDoctors.com.
Daniel Oliver (right) is the founder of Myrmikan Capital, LLC, and is President of the Committee for Monetary Research and Education.
This post first appeared at Laissez Faire Today