Abu Dhabi, UAESunday 5 July 2020

Coronavirus shows why Ronald Reagan was wrong about 'big government'

Once the pandemic is behind us, free-marketeers should stop treating government intervention so derisively

Big government is back – and how. Recent days and weeks have seen not just state-ordered lockdowns in various degrees, from total in Italy and France to partial in Malaysia, a 14-hour curfew in India, and increasing restrictions in different parts of the US. We have also witnessed unprecedented economic stimulus and support measures being unveiled by administrations around the world.

On Sunday, the UAE increased its stimulus package to Dh126 billion. In Europe, Germany has promised €550bn, the UK €383bn, France €345bn and Spain €200bn. Politicians in Washington have been discussing a huge package worth nearly $2 trillion – including help to individuals amounting to around $3000 for a family of four, according to US Treasury Secretary Steve Mnuchin. Many countries are offering to cover a large percentage of the salaries of employees whose companies have had to shutter or are facing a drastic loss of revenue – 90 per cent in the case of the Netherlands, 75 per cent in Denmark, 80 per cent in the UK.

And all this massive action by the state – that might at other times be described as “meddling” in the marketplace by rabid free marketeers – is uncontroversial because it is widely recognised that we are not just fighting a pandemic. It is equally necessary for us to ensure that businesses do not simply collapse, that the self-employed are not left to fend entirely for themselves, and that when we are once again able to resume whatever normal life will look like post-coronavirus, we will have preserved as much of our economic structures as possible.

Administrations of the left and the right are united on this – because it turns out that when it comes to the crunch, we really need big government.

At some point after the crisis has passed, perhaps when most of the global population has been vaccinated and the virus will have become a disease that we can manage, if not eradicate, this should lead to a substantial re-think on the part of conservatives the world over. For a great many of them have spent the past four decades insisting that “big government” is the problem, not the solution.

Former US president Ronald Reagan and former British prime minister Margaret Thatcher were famously small government conservatives. AP Photo
Former US president Ronald Reagan and former British prime minister Margaret Thatcher were famously small government conservatives. AP Photo

The former US president Ronald Reagan expressed that view most famously in 1980, with his line that: “The nine most terrifying words in the English language are, ‘I’m from the government, and I’m here to help'."

The rhetoric was echoed across the Atlantic by British Conservative MPs who decried the malign effects of what they called the “nanny state” (this despite the fact that one of their number, the current cabinet minister Jacob Rees-Mogg, was well-known for campaigning with his family’s nanny).

“Government” as an abstract came to be talked about as something that was inherently malign. If the private sector could take an industry over, it became conventional wisdom on the right that it would naturally do better than the state. Even though there were many who thought that natural monopolies, such as water and rail services, might be better run in the interests of public service rather than the profits of shareholders, this was dismissed as old, “statist” thinking by the stormtroopers of the Thatcher-Reagan revolution.

This was not only a very unfair assessment, which completely ignored the role of government in promoting human rights and societal progress, from the American “Great Society” of the 1960s onwards. It also ridiculed the idea of “government”, either as being wedded to inertia by stick-in-the-mud civil servants – the “Sir Humphreys” familiar to viewers of the TV series Yes, Prime Minister – or as actively working against the people they were supposed to be serving.

It is an attitude that may well have contributed to the decline in trust in institutions that has led to the rise of irresponsible populists and their dangerously truth-free narratives.

Of course governments get it wrong, and often. But the last time they were really tested, during the financial crisis of 2008 and 2009, they failed not by doing too much, but by giving in to the big corporations and banks whose owners peddle the myth that all government is bad. Genuinely conservative governments should have been more concerned with the SMEs they let go to the wall, and by the damage to societal cohesion inflicted by a decade of austerity policies that many economists believe were counter-productive.

Today, if we act as individuals, as “islands entire of ourselves" – to paraphrase the English poet John Donne – we know we will fail. Only by acting as something greater can we survive this pandemic, and support businesses and all whose work has suddenly disappeared. The “market” has no solution. Indeed, the “market” enables panic-buying and price-gouging – the latter of which is, although appalling, an entirely rational response to scarcity in purely economic terms.

The only thing that can save us is big government. That means properly funded socialised health care, education and all the other services that make up a “welfare state” – a term whose noble associations should be reclaimed.

It means a society in which liberty and enterprise are encouraged, but so is a new respect for national institutions whose legitimacy flows from the country’s people. The government should reflect the people; it should in some sense actually "be" the people. And if they need it to be “big”, as they do now, that is no more than an expression of the national will.

It is “big government” that will get us through these stormy times. Conservatives should remember that, and not treat it so derisively once again when we are eventually in safe harbour.

Sholto Byrnes is a commentator and consultant in Kuala Lumpur and a corresponding fellow of the Erasmus Forum

Updated: March 23, 2020 05:04 PM

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