(by Per Bylund via The Mises Institute | Zero Hedge) – The state strives for power, and what grants power is fear and dependence. The state is making people dependent on it, both as means for control and as an outcome of many policies intended to provide relief.
We have seen a lot of fear and dependence in this pandemic. Fear has been the message that has propelled types of repressive policies that were not possible before. Had anyone suggested only over a year ago that whole countries, democratic European countries, would close down and quarantine people in their homes most of us would have thought him crazy. But it happened. Because fear was drummed up, many populations went along with it. Even though they later protested and resisted, it was too late. Much of the damage was already done. And of course, many feared not only the virus but also the police, which sometimes with enormous brutality cracked down on those seeking a breath of fresh air after weeks stuck in their homes.
It is possible to roll back these policies. However, many of them will need to be rolled back for society to function again. To be clear, it is not possible for the state to keep everybody locked in their homes for long. This is an overreach and points to the limit of the state’s power. When the people rise in opposition, as we’ve seen in this pandemic, the state has no power.
Much more troublesome is the other side of the lockdown and the damage caused to the economic system. Not only were people locked down, but society and therefore practically the whole economy was forcefully paused. The problem here is that there is no “Pause button” for the economy. It may sound easy for politicians, who have no conception of how the real world works. But you cannot simply pause a business. You also cannot pause the supply chain. If you have ever run a business you know that being an entrepreneur is not a steady state but a changing process. It is a constant struggle to get money to come in so that you can cover costs that you’ve assumed long ago. That’s what entrepreneurs and businesses do. They assume costs and imagine they will be paid for their efforts later, and paid more than the cost they already assumed.
In other words, if you “pause,” a business, the costs remain but you get no revenue. How are you going to pay those bills when everything is on pause? You cannot. This is perhaps easy to understand … so easy that even some politicians grasp the concept. So many countries like the United States have offered relief in the form of loans to businesses. Of course, such schemes come with the usual cronyism and favoritism. The loans often do not end up in the hands of those intended. They also shift power and influence away from the market to the bureaucrats in government. Or to put it differently, businesses survive or go under as decided by bureaucrats, not by consumers.
There is more than simply money. Imagine food processing and the beef farmer when the politicians press Pause, which stops businesses from dealing with slaughtering, cutting, processing, and shipping meat. But it doesn’t stop the farming. The farmer’s animals will not stop growing and will not stop eating because the economy is paused. The farmer will go bankrupt because he needs to cover their food, water, and care without being able to sell any beef. Even if he has savings to cover the expense, the meat will lose quality and value as the cows grow older than their prime. At the same time, no meat is reaching the shelves in the stores. So while the farmer is stuck with costs he cannot cover because he cannot sell the meat he produces, consumers cannot find meat in stores. Consequently, we experience a shortage of food, while at the same time farmers and other producers have surpluses that they cannot afford to keep and are unable to sell. What a ludicrous situation. Read Full Article >