I write this on March 18, now having watched a 180-degree reversal of how we think about contagious disease. Formerly, we would put sick people in quarantine and respect the right of healthy people to go about their lives. Today (March 18, 2020), we are now on the brink of martial law. In our zeal to fight the corona virus, we are shutting down travel, public gatherings, restaurants, etc.
This is what a mass panic looks like.
Not to mention it is already wreaking massive economic damage. The economy was already faltering. The false boom stimulated by a decade of monetary meth was likely turning to bust, even before the virus. And then the government began to shut down whole industries: air travel, hotels, sports, bars, restaurants, etc. And likely more to come.
I write extensively at Monetary Metals about the risk of debt defaults cascading like Dominoes, so I will not further address that here. I will only say that whole industries are laying off (with much more to come) whole workforces in one giant dump. That is a lot of people who will suddenly experience hardship, not to mention stop spending on everything from clothes to computers, phones to tunes (never mind restaurants and bars, they wouldn’t be allowed even if they still had their paychecks). As always in a downturn, mainstream financial and economic analysis is useless. I think right now, they are predicting “slower growth.” Yeah, and if you slam the brakes in your car, it is “slower acceleration,” too.
Any why this draconian response? There is now a new technical expression, among the newly-minted tens of millions of experts who inhabit social media platforms. They seek to “flatten the curve.” That is, they say, it is inevitable that this virus will sweep the population. But if we can just slow its progress, then our health care system will be able to respond, there will be enough beds, ventilators, and health care professionals to care for the case load. If we allow it to progress at full speed, then the hospitals will be overwhelmed, and America will look like Cuba.
If you think that the govt must outlaw public gatherings, close the restaurants, and shut down half the economy … to “flatten the curve” … then you–yes YOU–are attempting to be a central planner.
In capitalism, people and industries are resilient. The reason is simple. They are free to act on their reason, and to seek a profit.
In socialism and central planning, there is no resiliency. The people starve if the crop yield is below quota, they drown if the tide rises, they suffer in darkness if an oil shipment is delayed. The reason is simple. They are not allowed to act, but must wait for orders from a central planner. And Mises proved that socialist planning is impossible, even if the planner is a wise, honest, caring genius.
If it is indeed true that American hospitals are soon to be overwhelmed by virus patients then this is not a recommendation for more central planning, enforced by redirecting scant law enforcement resources to enforcing martial law.
It is a damning indictment of just how socialist–and hence sclerotic, rigid, and brittle–our health care industry has been forced to become under the degree of socialized medicine we already have. We are not fully socialist yet. Hence we are not Cuba yet.
I fear the kind of government that can shut down public gatherings and centrally plan healthcare and everything else. I fear it much more than a virus.
Totally agree, Keith. We may be at a tipping point with all of the govt, interference in the market and dumping of money into the economy, bailouts, free money to the population, that the the federal debt and ever accruing interest come home to roost.
I notice that the price of gold seems to be going down when the market goes down and up when the market comes back up. Does this mean that people are treating gold like stocks rather than a store of value?
I figure when things get bad enough, Gold will start going higher as the market tanks.
On Wed, Mar 18, 2020 at 8:55 AM Keith Weiner Economics wrote:
> Keith Weiner posted: “I write this on March 18, now having watched a > 180-degree reversal of how we think about contagious disease. Formerly, we > would put sick people in quarantine and respect the right of healthy people > to go about their lives. Today (March 18, 2020), we are n” >
Agreed Keith. However, I strongly believe analysing economy must be as broad as analysing society, watertight. That’s the only way to reduce the harm of the former to the latter. Unfortunately, that is rarely the case. Hence, we better focus on the society.
I don’t want to say things that cannot proved by facts.At least for the meantime. That means also no one should if we all objective. The differences between capitalism and socialism might be seen expanded at the time we are going to establish where or how the virus originated. But for now lets talk about 3D printing in Italy. It is an innovation of capitalism, most likely. The puzzle is why the capitalist socialising; providing at low cost.
I think, protecting and fighting for your fellow beings from being swept from the face of earth is the true understanding of capitalism its ideals and what gives it momentum. Therefore, unhesitatingly, I think observing the ideals and ideas of socialism is understanding the logic of colours. White, black and light colours are emblems of socialism. They allows all other colours to be visible and detectable; even to bear meaning.
Reducing rate of spread of the virus using law, even martial law, is no selfish to anyone, socialist or capitalist. Lets survive the virus first and find out afterwards who thinks the capitalist doctors and professionals would have provided better response to the virus if the governments were not there, whilst doing it according to their reason and for profit. Engels Friedrich would have not said that what he meant about the world standing on its head? Lets hope Chinese in Wuhan have not already scored a huge points for the socialist.
Any Capitalists Company of Battlefield Soldiers Ltd yet? How is that if profit is meaningless unless you are spared to enjoy it.
Society transcend economics Sir Keith, on standards of COVID-19 at least.
Thoughtful post. Thank you.
I agree 100%, sir. This is all just one more media circus.
Yes, I agree there is a virus. No, I DO NOT agree with the media fanning the flames of panic and fearmongering. They all ought to be crucified – maybe even literally!