Contributing to the rise of unlimited government as a result of the pandemic were the above bailouts. For the first time, the government gave vast amounts of money directly to its citizens, extending the social safety net not just to the disadvantaged but to everyone. Again, maybe this was necessary and a good policy, a compensation to businesses for being shut down and to the public for not being allowed to go to work. I’m just saying that this largesse, justified or not, greatly expanded the role of government, as well as the willingness of citizens to accept that expanded role.
Yesterday we discussed how the Black Plague of the 14th century contributed to the rise of economic and political freedom. Today I want to discuss how the COVID pandemic is contributing to the loss of economic and political freedom.
COVID, which is far less fatal, has also led to a labor shortage and to the consequent rise of wages. But notice the difference. The labor shortage this time is caused not by the death of millions but by people leaving the workforce, either voluntarily or because of government-imposed lockdowns. We now face the additional prospect of the labor shortage getting even worse because of vaccine mandates, either from governments or from private companies, as large numbers of workers in key sectors are vowing to quit their jobs rather than get vaccinated.
But the wage gains from the labor shortage are being cancelled by the surge of inflation. According to the Econ 101 textbook explanation, inflation comes from too much money chasing too few goods. Productivity is down because of the world-wide lockdowns, as well as the labor shortage. But the government has been pouring money into the economy, beginning with $4 trillion-dollar bailouts and continuing with the recently-passed trillion dollar infrastructure bill, with an additional $2 + trillion social infrastructure bill waiting in the wings.