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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2 Responses

  1. Excellent, thankyou.

    Those pushing hard socialism seem to want to make everyone poor, which fits the fixed-pie economics and drive-to-the-bottom ethics theorized by Karl Marx, because he denied the effectiveness of our human means of survival for life – our individual minds.

    (Those promoting soft socialism are starting a slope to slide down.)

    The human way to thrive is individual rights supported by defense and justice systems, of which Ayn Rand’s particular definition of ‘capitalism’ is a part. (In contrast to the definition popularized by True Believers in Marxism, the violent ideology.)

    https://wattsupwiththat.com/2020/11/21/what-is-the-great-reset/
    https://wattsupwiththat.com/2020/11/22/state-security-your-papers-please-uk-to-introduce-freedom-passes-for-coronavirus/.

  2. An example of creativity and enterprise, is that startup Microsoft won IBM’s business for an ‘operating system’ on its new PC in competition with an established company that was complacent. (Helped by existence of an operating system that a Seattle company had developed for a customer who no longer needed it, and happily sold it to Bill Gates and partners to get needed cash. Microsoft then fleshed it out.)

    Could central planners predict that?

    And coincidentally a bit later, the very good WordPerfect software began as a simple addition to a municipal accounting program then blossomed into the pre-eminent word processor, supplanting the most popular one of the day. But the company made the strategic error of not embracing Windows earlier, thus Microsoft Word became pre-eminent.

    (WordPerfect supplanted Wordstar, which was written to be relatively easy to port to other O/S, but that made it difficult to add features to.

    WordPerfect added a light version of its programs but I stopped recommending it because products were not in stores often enough, corporate bloat and inward focus not performance for real potential customers.)

    Central planners and business investment and media pundits also overlook what I call ‘Competition at the margin’, for example WalMart began selling dry and canned foods, then frozen foods, then meat and produce – it’s now almost a full line grocery store. That took many years to propagate, starting in one region then expanding.

    And I ask if central planners could predict that a small grocery store is surviving in the shadow of a large new branch of a chain with big money behind it. One reason is that it is easy to get in and out of, a factor that helps larger but still modest size chains in my area. And near me a fabric and sewing store thrived next to a WalMart with its customers walking past the store so seeing it, WalMart employees were telling customers about the independent store because WalMart’s selection of products was limited, being a department store.

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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.

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