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June
30
2020

Surrounded by Government Failure, Why Do People Still Believe?
Veronique de Rugy

I am always amazed by the faith that people have in government. Scour the newspaper any day of the week and you will read stories detailing the many failures of the federal, state, and local governments or agencies, and of their stupendous ability to commit the same mistakes over and over again. Yet these agencies are the one that people turn to in times of troubles or needs.

Astonishing.

Take the June 26th edition of the Wall Street Journal. There you’ll find a piece on how the Small Business Aid program has a significant fraud risk, according to the Government Accountability Office. That’s unfortunate for a program riddled with implementation problems that leave many small businesses unable to apply, while many large ones had no problems getting one of the available small-business loans.

And then there’s the report about how the IRS paid $1.4 billion in stimulus payments to dead people. That’s correct: dead people. According to the report, “The IRS, which was trying to get the money out quickly, didn’t use death records from the Social Security Administration as a computerized filter in the first three rounds of payments, according to GAO.”

One common reaction to these two stories is that Congress was rushing, everyone was panicking, and pundits were clamoring that we must go big or even bigger than big. But if that’s the problem, how to explain the $137 billion in improper payments made in 2018? For the record, this staggering level of improper payments happens every year. And then there’s the fact that we can’t even measure how many improper payments take place in the Department of Defense because that agency fails its audits on a regular basis—hence no one really knows where all the money goes. Yet here we are, always trusting the same government to somehow do better this time around.

On that same page in the Journal you can also read how “Battered U.S Wine Importers Brace for Higher Tariffs.” As the Journal reports, “The U.S. Trade Representative’s office, which imposed 25% tariffs on wine, cheeses, olives and other products from the European Union in October, is now considering raising levies to 100%, citing a lack of progress in negotiating a settlement and eliminating subsidies for Airbus SE.” Never mind that the president has finally hinted that he knows full well that Americans—the same Americans who have nothing to do with the Boeing-Airbus dispute—are paying the tariffs.

Yet, President Trump, and pretty much everyone in the Democratic Party, happily contributes to this new protectionist wave. Sadly but predictably, barely anyone in the Republican party is pushing back against the president and his protectionism sidekicks, Peter Navarro, Robert Lighthizer, and Wilbur Ross.

Scanning further down the page of the Wall Street Journal report you learn that thanks to government-imposed lockdowns, “140,000 Businesses Listed on Yelp are still Closed Because of Covid-19 Pandemic.” Depressingly, you read, “A large minority of that set, 41%, has shut for good, according to Yelp.” 

It is not surprising: businesses cannot be kept closed for months and then survive having done nothing. Yet many states haven’t reopened fully in order to allow businesses to survive by reorganizing their activities to keep consumers and employees safe. 

That’s in spite of the academic evidence that lockdowns were a mistake. In fact, upon hearing that the number of cases—which as Don Boudreaux points out is quite different from the number of deaths— is increasing, some states are now announcing that they’ll pause reopening. 

Yet, the fact that the number of cases will go up as the economy reopens was fully expected since as a share of the population few people have actually been exposed to the virus. If a rising number of cases is reason enough to stop everything – reason enough to again coerce the economy and life into deepfreeze – while we await a vaccine quickly that might, or might not, arrive, what do we think is going to happen?

Governors around the country should end the lockdown and give businesses a shot at saving their businesses by reinventing some of the ways they serve their customers. Full reopening is no guarantee at all that consumers will come back quickly, of course. 

New data confirm what we already knew; namely, that many people did not wait for the governments to lock down the economy to stay home and shelter in place. Such fear-based behavior contributed much to the economic collapse. That means that most consumers will be careful and watch out for their health and that of others without government decrees telling them to do so this time around too. But at least give consumers and businesses a chance to find what works for them once the economy is reopened.

I conclude with a report from the Washington Post. One is about Trump’s refusal to encourage people to wear masks. This, of course, comes on the tail of Dr. Fauci’s admission that he had intentionally misled the public about the usefulness of wearing masks so that they could be directed to health-care professionals.

And here is Fauci explaining how and why he lied: “He also acknowledged that masks were initially not recommended to the general public so that first responders wouldn’t feel the strain of a shortage of PPE. He explained that public health experts “were concerned the public health community, and many people were saying this, were concerned that it was at a time when personal protective equipment, including the N95 masks and the surgical masks, were in very short supply.” 

It’s interesting that Americans started wearing self-made masks long before this Fauci admission showing that maybe they were buying it. However, for the most part, Americans continue to trust Fauci. David Henderson, though, does not.

Seriously, reading the newspaper on a daily basis should make everyone question government’s intervention in our lives. But based on the support for both a populist protectionist Republican like Trump and his Democratic opponent for the presidency, Joe Biden, it doesn’t. So what are we to do?

I believe we should continue fighting the battle of ideas because when we are deep into the mess that both parties, and their underlying ideologies, are creating, some people will look for answers and for solutions outside the state. As Milton Friedman once said, “That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.” 

I take that task seriously.

Finally, I certainly feel obligated to intellectuals of the past who have fought for our freedoms in what were arguably even more depressing times. For that reason, I dedicated my professional life to answering Friedrich Hayek’s call to action that 

“We must make the building of a free society once more an intellectual adventure, a deed of courage…. Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in the power of ideas which was the mark of liberalism at its best, the battle is not lost.” 

This, I believe, is why we continue fighting.

 

 

AIER Senior Fellow Veronique de Rugy is also a Senior Research Fellow at the Mercatus Center at George Mason University and a nationally syndicated columnist. Her primary research interests include the US economy, the federal budget, homeland security, taxation, tax competition, and financial privacy. She received her MA in economics from the Paris Dauphine University and her PhD in economics from the Pantheon-Sorbonne University.

 

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