It’s been nearly six years since the SARS-CoV-2 virus spread into the United States, ushering in the pandemic that would come to define the first quarter of this decade.
Considering how recently it occurred and how much it affected every facet of American life, it is somewhat remarkable how absent the pandemic and the government’s response are from today’s news cycle, the daily political fights online and in the media, or in popular culture and fiction.
Even when the pandemic is brought up and re-examined, the focus is usually on the necessity and nature of the government measures put in place to control the spread of the virus or the public’s level of compliance.
That is, to be sure, a worthwhile debate. But the government’s economic response is often left out, which can give the impression that—as controversial as the lockdowns or vaccine mandates might have been—the quick and extensive mobilization of the government’s considerable fiscal and monetary powers was one uncontroversial success story of the covid years.
It wasn’t, and the lack of controversy surrounding it is disturbing.
For most of American history, there had been a fairly consistent understanding that it’s wrong for the government to step in and help a company when it was suffering economic losses or facing bankruptcy.
Beyond that being an avenue for cronyism and corruption, economic theory has also made it very clear for hundreds of years that economic losses are a necessary element for economic growth.
The economy is, after all, a process. And specifically, it’s a process for producing goods and services that people want to consume. In a market unhampered by government, every part of every line of production is geared towards eventually making something that people value enough to pay for. That’s the whole point.
For an economy to grow and everyone to become wealthier, some people need to take on the role of an entrepreneur. Entrepreneurs reallocate resources to new lines of production or refine existing lines to account for factors that are constantly changing—things like technology, capital availability, and consumer preferences.
In our role as consumers in a truly free market, we can opt out of any exchange for any reason. So entrepreneurs can only make profits if they offer a good or service consumers’ value enough to pay more for than the business had to pay to produce it. When they don’t, they are stuck with the losses. Economic losses are a very motivating signal that the resources used in a line of production would be better used elsewhere. They are crucial for reorganizing the economy to better meet the needs and wants of the end consumer—which, remember, is the entire purpose of the economy in the first place.
To be clear, the federal government has been intervening in the economy since it was founded. And especially since the beginning of the twentieth century, government officials have been using state power to warp the economy in ways that benefit themselves and their well-connected friends in various industries.
Hellbound and Down 