20 min watch 2 Jun 21
Summary: Terrible as it’s been for humankind, the pandemic has given scientists a unique period in history in which to examine orthodox theories, and create new ones.
For economists, this has been a year observing how most workers were, at the least, forced to change how they interact with the workplace - for many millions more it’s meant furlough or unemployment. The pandemic also closed supply chains, but never resulted in significant food shortages. It did, however, show the value of self-sufficiency with vaccine production. And perhaps most significantly the pandemic showed the power of the state at a time of international calamity - government spending has filled the gaps that Covid made in the economy, albeit at immense fiscal cost. So economists now have more evidence to show what works, and what doesn’t, when an economy unexpectedly closes down.
In his book “Economics in One Virus”, Ryan Bourne looks at some of the economic questions that Covid threw at us, and analyses society’s responses. Ryan works at the Cato Institute in Washington DC - this think-tank is libertarian in its outlook, and his conclusions lean towards the idea that the private sector will usually allocate resources in the best possible way, and that government intervention is much less effective. Personally I’d say that it’s precisely at times like this that big government gets to prove its value, but there are good arguments that the free market showed it worth here - you could point to the UK supermarket chains as a good example. Despite a couple of days of empty shelves following March 2020’s panic buying, their contingency planning worked pretty flawlessly, without government intervention. It’s hard to imagine what the UK would look like without the significant state support that those out of work received over the last year though.
You can see my interview with Ryan here:
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