Will the COVID Pandemic Cause a Big Government ‘Ratchet Effect’?

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In his classic book, Crisis and Leviathan, economic historian Robert Higgs introduced a key concept that he called “the ratchet effect.” Higgs noted that the power of government grows during times of crisis, such as war or national depression, but that once the crisis passes, the newly acquired power of the State doesn’t recede back to its original level.

Higgs explained:

“After the ideological transformation that took place during the Progressive Era, each genuine crisis has been the occasion for another ratchet toward Bigger Government. The Progressive ideological imperative that government must ‘do something,’ must take responsibility for resolving any perceived crisis, insures new actions. …Once undertaken, governmental programs are hard to terminate. Interests become vested, bureaucracies entrenched, constituencies solidified.”

The COVID pandemic appears to supply yet another pretext for the move towards bigger and more authoritarian government. The toll on personal and economic liberty has been great and the deleterious effects may linger far longer than the virus.

Very early in the pandemic, economist Brian Wesbury expressed concern about the ratchet effect on the economy. While he recognized that temporary government relief was necessary, given the mandated lockdowns, he worried that the increased expenditures would not be unwound once the crisis passed. In March 2020, Wesbury wrote:

“It’s important that the expansion of government is not made permanent. The New Deal took annual federal spending from about 3% of GDP to about 10% of GDP (before World War II) and we never went back, or even close. Policymakers need to avoid making COVID19 an excuse for another permanent leap upward in the size of government, which would erode future living standards versus where they would otherwise go.”

Since then, federal spending has skyrocketed, accompanied by unprecedented quantitative easing by the Federal Reserve.

Total federal spending in the pre-pandemic year of 2019 was $4.4 trillion. Federal outlays in 2021 reached $6.8 trillion, an increase of more than 50% in two years. During the past two years, the U.S. has spent 27% of its GDP on COVID-related stimulus, the most of any large industrialized economy. For the Left, this is still not enough. President Biden’s grotesque Build Back Better program would have added several trillion more in spending. This program is now stalled, thanks to Sen. Manchin, although efforts will be made to revive it in a smaller form this year.

According to economist Frank Shostak, “the currently observed shortages of workers and materials coupled with the large price increases of goods and services is because of aggressive monetary pumping of the Fed and massive government outlays.” In other words, the shortages and inflation we see are not because of COVID, but because of government and central bank responses to COVID.

But we are promised more of the same. What is needed is precisely the opposite: tighter monetary policy and reduction in spending.

The ratchet effect on personal liberty looks even more ominous.

Early on, in March 2020, mayors and governors invoked their emergency powers to enforce lockdowns. Nearly two years later, this emergency power survives in the blue states, many of which still retain indoor mask mandates and the shuttering of in-class education. (Even in Missouri, a reliably red state, the governor only relinquished his emergency powers on December 31). Most of the Democrat-dominated big cities (e.g., Chicago, Boston, L.A., New York, San Francisco) have adopted mandatory vaccination as a price for entering public accommodations such as restaurants and health clubs.

The blue mindset also prevails in areas controlled by the federal government, which is why there are still mask mandates for air or train travel. Worst of all, in September 2021, the Biden Administration directed the Occupational Safety and Health Administration (OSHA) to order employers to implement a vaccine mandate regimen for every business with 100 or more employees. The U.S. Supreme Court is currently reviewing the constitutionality of this sweeping and unprecedented mandate.

Major universities, utterly dominated by the Left, have imposed draconian COVID lockdowns on a population cohort the least at risk from the virus. These edicts, which amount to COVID hazing, have been chronicled by independent journalist Michael Tracey. Here’s the most recent example: Yale University, which requires its students to be double vaxxed and boosted, has instituted a campus-wide quarantine until February 4, during which time students may not eat at local restaurants, even outdoors.

Left-wing journalist Glenn Greenwald noted the ominous implications. “None of this COVID bureaucracy will disappear even if a full cure is found tomorrow,” he wrote, “it will just morph into some vague coercive public health apparatus.”

Dr. Anthony Fauci fully supports such a pivot. In September 2020, Fauci and colleague David M. Morena wrote:

“COVID-19 is among the most vivid wake-up calls in over a century. It should force us to begin to think in earnest and collectively about living in more thoughtful and creative harmony with nature, even as we plan for nature’s inevitable, and always unexpected, surprises.”

“Living in greater harmony with nature will require changes in human behavior as well as other radical changes that may take decades to achieve,” Fauci opined. “[W]e will need to prioritize changes in those human behaviors that constitute risks for the emergence of infectious diseases.”

Fauci and company, in other words, are trying to leverage the pandemic to radically change the way we live.

It is impossible to predict how COVID authoritarianism may evolve, but there are hints of how it may play out.

Recently, unelected New York governor Kathy Hochul signed legislation declaring racism a “public health crisis” in the state of New York. She is likely following the lead of the highly politicized Centers for Disease Control and Prevention (CDC). In April, CDC Director Rochelle Walensky declared racism a “serious public health threat.” Municipalities across the country, including Chicago, Boston, and Louisville, began to declare racism a public health crisis in the aftermath of George Floyd’s death and the Black Lives Matter protests. Using “public health” as a pretext to promote the Left’s “diversity and inclusion agenda” is just one way for the Left to politicize public health.

Climate change is another way to leverage the pandemic.

In his book, COVID-19: The Great Reset, World Economic Forum (WEF) founder and executive chairman Klaus Schwab wrote that the COVID crisis should be regarded as an “opportunity [that can be] seized to make the kind of institutional changes and policy choices that will put economies on the path toward a fairer, greener future.”

Michael Rectenwald, who has authored a series of articles on the Great Reset at Mises Wire, noted that, “Although Schwab has been promoting the Great Reset for years, the covid crisis has provided a pretext for finally enacting it.” According to Schwab, we should not expect the post-COVID world system to return to its previous modes of operation. Rather, Schwab suggests that changes will be, or should be, enacted across interlocking, interdependent domains to produce a “new normal.”

Rectenwald writes:

“The Great Reset means the issuance of medical passports, soon to be digitized, as well as the transparency of medical records inclusive of medical history, genetic makeup, and disease states. But it could include the implanting of microchips that would read and report on genetic makeup and brain states such that ‘[e]ven crossing a national border might one day involve a detailed brain scan to assess an individual’s security risk.’”

If this sounds fantastic, consider the depredations of freedom that have already occurred in Australia and New Zealand, once thought to be bastions of liberal democracy.

Ross Mittiga, a professor of political science, writing in the prestigious American Political Science Review, provides the theoretical justification for authoritarianism in dealing with climate change, explicitly citing the COVID pandemic as precedent:

“While, under normal conditions, maintaining democracy and rights is typically compatible with guaranteeing safety, in emergency situations, conflicts between these two aspects of legitimacy can and often do arise. A salient example of this is the COVID-19 pandemic, during which severe limitations on free movement and association have become legitimate techniques of government. Climate change poses an even graver threat to public safety. Consequently… legitimacy may require a similarly authoritarian approach. While unsettling, this suggests the political importance of climate action. For if we wish to avoid legitimating authoritarian power, we must act to prevent crises from arising that can only be resolved by such means.”

While a post-COVID ratchet effect is not inevitable, history tells us that it is the paramount challenge we face in the coming years. Fighting to restore liberty is a task that can hopefully unite conservatives of all stripes — and hopefully some old-style liberals too.