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Perfect Liberty Is the Proper Response to Covid-19
or
The Socialist Calculation Problem and Covid-19
by Patrick
Barron
One hundred years ago Ludwig von Mises wrote
the definitive exposure of the impossibility of socialism: Economic Calculation
in the Socialist Commonwealth. In a recent Mises Wire
essay--Socialist Robert Heilbroner's Confession in 1990:
"Mises Was Right."--Gary North sums up the socialist problem succinctly
(his emphasis).
"But Heilbronner failed to present the central argument that
Mises had offered. Mises was not talking about the technical difficulty of
setting prices. He was making a far more fundamental point. He argued that no
central planning bureau could know the economic value of any scarce resource.
Why not? Because there is no price system under socialism that is based on the private
ownership of the means of production. There is therefore no way for central
planners to know which goods and services are most important for the state to
produce. There is no hierarchical scale of value that is based on supply and
demand—a world in which property-owning individuals place their monetary bids
to buy and sell. The problem of socialism is not the technical problem of
allocation facing a planning board. It is also not that planners lack
sufficient technical data. Rather, the central problem is this: assessing
economic value through prices. The
planners do not know what anything is worth."
Notice North's point. Socialism is impossible,
not just technically difficult. Knowing what to produce requires a price
system. A price system requires private ownership of the means of production.
Why? Because the price system rests on individually held hierarchical scales of
values. And the hierarchical scale of values require private ownership of the
means of production. In other words, if you don't own something, you cannot
know its worth. This doesn't mean that everyone has the same hierarchical scale
of values. But all these individual scales of value do meet in the market place
to determine marginal prices at given points of time. Your beanie baby
collection may be worth a thousand dollars in
today's market and possibly zilch tomorrow. Now, your beanie baby
collection may be priceless to you and you don't really care about its value to
others. But if you decided to make a business of selling beanie babies or even
simply sell your collection, you would be forced to confront the reality of the
marketplace.
Covid-19 and the Socialist Calculation Problem
You may well ask what this has to do with Covid-19.
Covid-19 isn't a marketable good. It isn't owned by anyone. No one wants it.
Quite the opposite in fact. True. Nevertheless, government's response to Covid-19
assumes that it knows everyone's personal risk hierarchy and can tailor an
appropriate public response. This is as impossible as knowing values in a
socialist commonwealth. In the place of a hierarchy of wants, we have a hierarchy
of risk. And just as everyone's hierarchy of wants is different, everyone's
hierarchy of risk is different. No one can deny this. We see it played out
everywhere. Young people in college assess their personal health risk from
Covid-19 as very low. The aged and those suffering from other illnesses assess
their personal health risk as very high. Furthermore, one's response is
determined by what one gives up. The elderly living on pensions may be giving
up very little in a lockdown or quarantine other than their social life.
Certainly they are not giving up their life sustaining income by staying in
semi-isolation. But those still of working age have a very different tradeoff. Business
owners who are forced to shut down may lose their entire wealth. Salaried and
hourly workers may see a slower drain on their wealth, but the longer the
lockdowns continue the more accumulated wealth they will see drain away.
I have used stereotypical broad categories here
for illustrative comparisons only. Of course, those of the same age, health
profile, wealth accumulation, etc. may have entirely different personal risk
assessments. The old adage applies that no two people are alike. These facts of
human existence make universally acceptable public policy responses to Covid-19
not just difficult but impossible. The only acceptable public response is one
of perfect liberty; i.e., each individual decides his own response to Covid-19
as long as he does no harm to others.
What about Externalities?
This brings up a common retort that perfect
liberty DOES harm others. A typical government justification for coerced
lockdowns and quarantines was that there was a need to conserve hospital beds
for the expected onslaught of Covid-19 patients. Sounds reasonable at first,
but not upon further examination. This so-called line of reasoning rests upon
faulty externality theory; i.e., that everything you do affects others in some
degree. By this logic government has a right to regulate everything you do. Forgetting
for a moment that government's access to information is no greater than that of
thousands of others, there is the ethical problem of government's right to
determine to whom a private entity may offer services. For example, a private
hospital may refuse patients who wish to have elective surgery in order to
preserve beds for what the hospital considers more important patients, but
government may not insert its power of coercion into this decision. Like the
socialist allocation problem, government has no "skin in the game"
and, therefore, it has nothing upon which to make a universally applicable
policy except the temporary prejudice of those currently elected to office
and/or those currently working for government. Perhaps an even more damning
criticism of the externality rationale is that there is no attempt and probably
no definitive calculation of the many adverse consequences to lockdowns and
quarantines, from delayed medical treatment that leads to worsening health
(both physical and mental) or even death to permanent loss of one's ability to
feed, house, and clothe one's family adequately.
"Perfect Liberty" IS the choice of our
political leaders. Why not the rest of us?
So, we are left with these conclusions: Since all
risk is personal, no one knows the risk tolerance of others. Therefore,
one's response to Covid-19 is a personal decision based upon one’s personal
risk assessment. In other words, perfect liberty must be respected because it
is the only rational option. Impractical? This is the very policy actually
followed by many of the authors of the current restrictions. Governor Newsom of
California attended a lavish dinner party after issuing new and more onerous
restrictions on public and private gatherings. Illinois Governor Pritzker has
been unapologetic about visiting his many out-of-state residences after telling
his constituents not to do the same. Other politicians have been similarly
embarrassed. Are they taking unnecessary risks, both to themselves and others?
There is no definitive answer. By the very fact that they violated their own
restrictions, we can conclude that they valued their freedom to do so above
their personally perceived risk. Why should not that same right be available to
all of us?
