There’s a frequent excuse for all sorts of government interventions in the market: While they may be costly, risky, and counter to standard economic theory, they are nevertheless essential to counter a foreign authoritarian threat—one that, so the theory goes, suffers none of the failings of our decadent liberal democracy. Dictators and central planners, we’re told, can “play the long game” (or “plan for the long view”), ignore (or crush) domestic opposition, quickly implement decisive economic or military action, and willingly absorb any resulting side effects or casualties. Thus, it’s imperative that the United States urgently pass and implement policy X, even though it might not make much economic sense.
Having grown up during the Cold War, lived through the Japan hysteria of the 1980s and 1990s, and long been a fan of free markets and liberal democracy (for all their warts), I’ve long been baffled by this theory, which has nevertheless proven popular with the last two presidential administrations and scores of wonks and pundits. Yet recent events show why we still should be skeptical of supposedly omniscient authoritarian regimes and of those once again claiming we must abandon Western capitalism to save it.
Other problems, beyond the long-term demographic issues and others we’ve already discussed, have also emerged. For example, after spending about $1 trillion on loans to numerous developing countries, China’s once-vaunted Belt and Road initiative (which many U.S. wonks wanted to copy) is now hemorrhaging cash, laden with bad debts, and getting rebranded as “Belt and Road 2.0.” Zero COVID and Xi’s crackdown on tech and other private companies, meanwhile, have caused entrepreneurs to flee the country. And they’re fleeing Hong Kong, too. Now come the inevitable purges of various party apparatchiks for their totally-not-sketchy “crimes” of “disloyalty” and “graft.”
As my Cato colleague Marian Tupy and co-author Gale Pooley summarized in their book Superabundance (which I reviewed here), institutional makeup affects much more than just GDP:
Inclusive economic institutions rely on the existence of political institutions characterized by power-sharing and wide distribution of decision making among the elites, businesses, civil society, and, ultimately, individuals. The elite are, in a word, constrained. Unconstrained decision making, in contrast, centralizes power in the hands of a small elite or, in extreme cases, in one individual. The former fosters competition, coalition building, and accountability. The latter fosters elite predation.
Today, Smith scholars agree on some important things. They generally agree that The Wealth of Nations (WN) should be seen as an extension of, or annex to, TMS. They also generally agree that, although the two great works differ greatly in certain aspects, such as the language used and the distance or warmth of the author’s voice, there is no underlying tension between the two works. The two works emphasize different things, and to some extent treat different things, but there is no inconsistency between them. Indeed, most of the Smithian contrarieties—that is, seemingcontradictions—that have engaged scholars are either intra-TMS or intra-WN.
Certain work requirements for food stamps are also on hold. Yet businesses need help. Unemployment is 1.9% in Minnesota, 2% in New Hampshire, and 2.5% in Missouri. Maybe Mr. Biden hopes to keep the emergency going until the end of the next recession.
Now that most schools are reopen with most kids unvaccinated, no masks in sight, and no $100000 hepa ventilation -maybe we can admit that these were all unnecessary for schools to open safely, a lesson we could have taken from Sweden circa April 2020