Republicans, including conservatives, have been largely supportive of the $2.2 trillion coronavirus relief package, and they seem ready to do still more. This has led some liberals to herald the death of small-government ideas or at least to decry what they claim is an inconsistency.
After all, they argue, during the Obama administration, Republicans roundly denounced a smaller piece of legislation designed to stimulate the economy amid the Great Recession. How many sanctimonious tea party lectures were we given about the importance of reining in government spending and stopping bailouts?
Through Republican and Democratic administrations, we have pleaded with lawmakers to show more concern about the nation’s unsustainable federal debt. But in terms of the philosophical argument, there is simply no comparison between the standard debates about bailouts and economic stimulus, on the one hand, and the unprecedented situation of enforced idleness that policymakers are dealing with now.
This current crisis is not economic in nature — it is more akin to a defensive war or humanitarian disaster. Ordinary people have been asked to do their part by making large personal sacrifices. To ease their resulting pain is in no way morally comparable to what the government did in 2009, bailing out corporations whose irresponsible management and lending decisions created a national crisis.
During the previous crisis, taxpayers who had behaved responsibly were tapped to rescue businesses that had behaved recklessly. Ironically, this was done on the theory that wealth would somehow trickle down from General Motors or the big banks to their and other companies’ workers. Not only did this fail, but these government interventions created a terrible precedent, giving rise to moral hazard that will encourage riskier behavior in the future.
Milton Friedman, arguing against automotive bailouts, once said: “The private enterprise economic system is often described as a profit system. That is a misnomer. It is a profit and loss system. If anything, the loss part is even more vital than the profit part. ... A private enterprise that fails to use its resources effectively loses money and is forced to change its ways.”
The case of the coronavirus is nothing like this. The economic hardship right now is not the result of poor decisions or a failure of businesses to meet consumer demand effectively. Nor is it even quite like a hurricane or other natural disaster. Rather, the economy is cratering right now because governments at all levels have forced businesses to shut down and forced their customers to stay home, all in the interest of public health.
The Fifth Amendment to the U.S. Constitution forbids that “private property be taken for public use, without just compensation.” This clause typically applies to eminent domain cases, such as when the government must seize property to build a highway. Libertarian law professor Ilya Somin argues that in the case of the coronavirus, “the principle underlying the Takings Clause points the way towards a moral rationale for compensation, even if such compensation is not legally required.”
Had the virus merely chased consumers away from businesses that attract large crowds, then we could compare it to a natural disaster. But it is actually much more directly caused by good government decisions. It is thus fitting, fair, and just that government should cushion the blow it inflicts in the name of the public good.
Unlike in 2009, hardly anyone questions whether the decisions creating this economic crisis serve the common good. All taxpayers benefit directly from a slower spread of the virus. It is not offensive in this instance to ask taxpayers to help shoulder the costs of those being forced out of their living in the name of public health.
It must be added that those who believe in limiting the size and scope of government have never believed in “no government” — a ridiculous straw man position routinely trotted out by dishonest interlocutors on the Left. But conservatives and libertarians have a much more urgent motivation than politics to distinguish between the current situation and that of 2009. If they fail to appreciate and articulate the difference, then the coronavirus precedent will be used to justify future government expansions that are not remotely comparable.