Recovering from economic lockdowns: Expanding the welfare state—or freedom?

Recovering from economic lockdowns: Expanding the welfare state—or freedom?

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As we now know, the months-long economic lockdowns that many governments imposed when the current coronavirus pandemic first hit this year failed to stop the virus from spreading. Instead, the lockdowns caused economic and social devastation: soaring unemployment rates and business failures, ballooning government debt, failing mental health of adults and children, suicides, substance abuse, domestic violence.

With vaccines and effective treatments for COVID-19 now in sight, governments are starting to plan economic recovery. They have a choice between two opposite solutions: continue riding on their pandemic-boosted powers and expand the welfare state—or let people free to find their own solutions for recovering from the devastation caused by the government lockdowns.

The first solution is favored by many governments because it increases their power to achieve their ideological ends.

Canadian federal government’s pandemic recovery plan, drawing from the Build Back Better global movement to reinvent capitalism (started by the World Economic Forum), is an example. As Finance Minister Chrystia Freeland put it, this is an opportunity to create “a more equitable and greener Canada.” In other words, let’s expand the welfare state to reduce inequality and fight climate change as well.

In the welfare state model, the government guarantees everyone’s economic security by “redistributing” wealth from those who produce it to those who don’t, thereby reducing economic inequality and sacrificing the more productive to the less productive. With the ascent of the environmentalist ideology, governments have expanded their welfare protection role to fighting “catastrophic, man-made” climate change (despite lack of evidence for a significant human contribution to changing climate or for climate-caused catastrophes).

There are good explanations as to why expanding the welfare state through wealth “redistribution” and banning fossil fuels does not work to help the economy recover. For example, Matthew Lau explains in a Financial Post column why “redistribution” schemes such as taxing “excess” corporate profits and personal wealth are impractical.

But the welfare state solution is not merely impractical; it is also immoral.

Expanding the welfare state is immoral because it is inconsistent with what human survival requires. To survive as humans, we require freedom, not forced sacrifice through wealth “redistribution.”

If we are to find solutions for recovering from the devastation of the government lockdowns—or to overcome the current pandemic and fend off future ones—we need to be free to think and act on our thinking. As Matt Ridley shows with compelling evidence in his book, How Innovation Works and Why It Flourishes in Freedom, solutions to problems don’t come from governments. They come from human ingenuity—which flourishes only in freedom and is stifled under government coercion.

The second solution to the pandemic recovery, restoring people’s freedom, is the moral and practical alternative, although it is rarely proposed. It is moral because it removes legislated sacrifice and allows people to create and trade freely, thereby improving their lives, along with all of those with whom they trade.

This solution is rarely proposed because the welfare state is the only social system that most people know and therefore, it feels “safe,” even after the massive devastation during the pandemic. With the majority of the media spreading the message of the Build Back Better movement about ending capitalism and banning fossil fuels, the idea of peeling back the welfare state and increasing individual freedom seems inconceivable and even scary.

However, if we want to recover from the pandemic and the devastation of the government lockdowns, we must embrace the freedom-restoring solution: capitalism.  Capitalism is the only social system that allows us to live without sacrificing to others or sacrificing others to ourselves through forced wealth “redistribution.”  It is the only solution that protects us against the initiation of force and permits only voluntary trade with others.

Capitalism, as Ayn Rand defined it, is “the social system based on the recognition of individual rights, including property rights, in which all property is privately owned” and where the government’s only role is the protection of individual rights.

Capitalism is not the present reality. But if we want to improve our chances of living flourishing lives without sacrifice, we must start by questioning the idea that the welfare state is the given. We must protest the government’s attempts to expand it—and demand its eventual dismantling. 

Economic recovery, fielding off future pandemics—and our lives—depend on it.

Photo credit: Max Pixel

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Jaana Woiceshyn teaches business ethics and competitive strategy at the Haskayne School of Business, University of Calgary, Canada.

She has lectured and conducted seminars on business ethics to undergraduate, MBA and Executive MBA students, and to various corporate audiences for over 20 years both in Canada and abroad. Before earning her Ph.D. from the Wharton School of Business, University of Pennsylvania, she helped turn around a small business in Finland and worked for a consulting firm in Canada.

Jaana’s research on technological change and innovation, value creation by business, executive decision-making, and business ethics has been published in various academic and professional journals and books. “How to Be Profitable and Moral” is her first solo-authored book.