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Panic Is Imprudent

Here’s a letter to a Café Hayek commenter:

Ms. Fernandes:

Regarding your comment on this blog-post of mine: You write as though covid kills all, or nearly everyone, who it infects. But it does not come remotely close to being so lethal 

I don’t deny that covid is unusually harmful. What I do deny is that the response of nearly every government worldwide has been proportional to the harm posed by covid. Governments’ responses have been, and continue to be, colossally excessive. Such excess is the result of panic all out of proportion to the underlying danger. To steal a point made yesterday by my colleague Bryan Caplan, if covid is ten times more dangerous than a ‘normal’ flu, then a response ten times stronger might be appropriate; what we’ve gotten instead is a response that is closer to 1,000 times stronger – one totally disconnected from reality. 

And this response, I’m convinced, poses a far greater danger to humanity than does covid. 

Orders for an indefinite suspension of economic activity are issued by government officials. Even in calm times, these officials routinely display obliviousness to economic realities. They treat material prosperity as if it grows automatically, with the only question being how it is distributed. They operate under the delusion that the economy will remain strong if government floods it with enough money, writes enough checks, and orders that prices not rise and that wages not fall. Most of these officials believe that they increase their fellow-citizens’ access to goods and services by using tariffs to decrease their fellow-citizens’ access to goods and services. 

Politicians seem unaware of the unavoidable necessity of making economic trade-offs – and so they incessantly attempt the impossible task of avoidance. But politicians are keenly aware of the boosts to their power that occur whenever people are gripped by what the late Hans Rosling calls “the fear instinct.” 

Reasonable people disagree over what is the optimal response to covid. But no reasonable person trusts that the same government officials who in calm times act in utter ignorance of economic reality are, in these panicked times, acting intelligently and prudently. And so every reasonable person stands on solid ground when condemning today’s draconian responses. 

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030