Future

What 9/11 and the Financial Crisis Teach Us About COVID-19

Sometime in 2021, the American people will be presented with a reorganized and newly empowered federal public health bureaucracy. As time passes, it will grow in size and scope.

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After September 11, 2001, huge swaths of the federal government reorganized around the idea of fighting terrorism. The Transportation Security Administration (TSA) became a maximally intrusive and minimally effective part of every traveler's life. The FBI, which had failed to connect the dots on the 9/11 plot, received billions more in funding. The Department of Homeland Security, a shiny new Cabinet-level bureaucracy with an Orwellian name, grew at a rate that would make Clifford the Big Red Dog turn green with envy. The PATRIOT Act whisked away Americans' privacy, and the Authorization for Use of Military Force plunged the nation into a new type of endless war. The security state that had been unable to prevent a terror attack on American soil was showered with gross sums of money and far-reaching new powers as a result.

But at least, the hawks thought, we'd be ready for the next crisis.

The next crisis was the financial meltdown of 2008. As many of the country's major financial institutions spiraled downward, the concept of "too big to fail" took on new meaning. The outgoing Republican president, George W. Bush, declared that he'd "abandoned free market principles to save the free market system." In the wake of the crash came complex new regulations on banks and financial markets, including Dodd-Frank at home and Basel III abroad. These constrained the global banking institutions while granting financial regulators the authority to inspect balance sheets and to demand changes in corporate strategy. All the while, governments seemed to signal that if trouble came knocking again, the feds would likely once again socialize the banks' risk.

But at least, the regulators thought, we'd be ready for the next crisis.

Enter the coronavirus. Once again, the existing government players have not covered themselves in glory. As Jacob Sullum documents in "When Should Force Be Used To Protect Public Health?" (page 18), the Food and Drug Administration (FDA), the Centers for Disease Control and Prevention (CDC), and the surgeon general issued confusing and misleading guidance and imposed unhelpful constraints on the manufacture and dissemination of masks and tests, overstepping their boundaries and making things worse in the process. The White House contradicted itself constantly in the crucial early days—and in the crucial later ones as well. State governors and their health agencies swayed in the winds of public and expert opinion.

We do not yet know whether the measures taken by public officials were effective in controlling the spread of the virus. Unfortunately, we can be fairly confident about what the next steps in this dance will be. Sometime in 2021, the American people will be presented with a reorganized and newly empowered federal public health bureaucracy. It will strike many, initially at least, as a sensible response to the pandemic. As time passes, it will grow in size and scope. Though theoretically focused on disease control, it will wield enormous power over the economy, with the capacity to shutter entire regions or industries in the name of saving lives. It will constantly be looking for ways to justify itself, reaching toward everything from climate change to gun violence to the food system.

It won't be the only bureaucracy growing. As Veronique de Rugy explains in "Disaster Relief for Small Businesses Is a Disaster All Its Own" (page 43), the federal government has already responded to the coronavirus pandemic by heaping cash and responsibility on one of its more strikingly inept agencies, the Small Business Administration.

Public schools, which have struggled mightily with the rapid switch to online learning, will almost certainly be the recipients of large grants. They will spend the money fighting the last war, preparing for rapid-onset distance learning in ways that may never be directly relevant again. A new army of online learning specialists will spring up and be stationed at every school. They will mostly fail to squeeze new methods into old models, they will join the teachers union, and they will never go away.

A new surveillance apparatus will be established, perhaps under the auspices of the public health behemoth, perhaps in cooperation with existing law enforcement. It will take our temperatures in public spaces and require private institutions to do the same in their own domains. Our phones will become little pocket narcs, telling government snoops whom we have bumped into lately. This, too, will require more funding, more authority, and more powerful tools.

In each of the previous crises, the government acted both too quickly and too slowly. The PATRIOT Act was signed into law a little over a month after 9/11, and the TSA was created shortly after that. But actual airport security procedures took years to implement, and only after subsequent attack attempts did additional rules accumulate like sediment. In 2008, bailouts hit banks' coffers with lightning speed but the rules and compliance costs rolled in slowly and unpredictably, especially since Congress left so much of the actual rulemaking to unaccountable regulators. In both cases, tens of thousands of new employees were hired as agents of an ever-more-intrusive state, creating a massive new class of people who are beholden to and perhaps co-opted by the federal government. Expect the same to happen again.

Lurking in the background of each of these new buildups is the question of who will pay. Between each crisis, the United States experienced long periods of prosperity and growth. Our political leaders have chosen not to save for a rainy day and—except in very rare cases—not to roll back interventions that turned out to be unnecessary, expensive, or counterproductive. So we walked into the coronavirus crisis with fewer options, more limited resources, and more distractions.

And we're not ready for the next crisis.

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  1. To sum it up, we’re screwed.

    1. If by screwed you mean that almost all of us will work for some government agency and that the managed economy, like all the other managed components of our society, will oscillate between stumbling dysfunction and total grid lock, and that we will all pretty much distrust and passively hate each other (and ourselves), then yes, we’re screwed.

      Resistance may indeed be futile.

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  2. I expect Suderman will write in Reason on how the Public Health Stasi would be so much smoother and more efficient if only the right people and policies were involved. Bailey too, as he cheer-leads for a more science-based jack-boot.

    1. Based on modeling.

      1. For the children.

      2. Based on modeling.testing everyone, every day.

    2. To be fair, we are wholly unequipped for anything like a pandemic (a meaningful one) or biological terrorism/warfare.

      In my mad scientist fantasies, a small group can effectively obliterate the population with biological agents. Wait 100 years, claim the new beach front property. I got time.

      So the question becomes how do you protect against biological warfare without a Public Health Stasi?

      Free markets and organic co-operation are grand, but of limited military appeal.

      1. The strong will survive

        1. The strong in this case being those who can coordinate data to track disease progression and implement disaster management policies.

          Notice how the eradication of diseases has come at the behest of government action and not from rugged individualist forming Voltron.

  3. “grew at a rate that would make Clifford the Big Red Dog turn green with envy.”

    Womp womp.

  4. As long as it’s the Health Security Administration’s armed agents razing my business to the ground and lobbing flashbang grenades into my baby’s crib at 4:00 AM, then at last I’ll know it’s for my well being.

    What people fail to realize from the initial response to the pandemic (don’t buy masks, don’t go to the hospital until your lips are blue, etc) was advice from the medical community not for your personal health but to maintain the health of the system. That’s what we have to look forward to.

    1. Was it though? I’m 50/50 on that I thought that at first but now I almost think it’s because they know it’s a magical dumbo feather that will get people back out into the world again. Although that theory assumes a level of understanding of human nature that they probably don’t have. Maybe it’s a combination of both.

      1. No, it’s just plain growth for the sake of growth, and flailing around doing something, because that is what governments do.

    2. Ultimately the health of system is needed to preserve your personal health. It was an effort to avoid a tragedy of the commons

      1. It was an effort to substitute one tragedy of the commons for another; to make sure enough deck chairs would be available until the stern submerged.

      2. Your personal health is your personal responsibility.

      3. “It was an effort to avoid a tragedy of the commons”

        Sarc or stupidity?

      4. That’s what they told people in the holodomor. You must starve so that the whole may eat.

    3. The system is always about promoting the system.

      Has there ever been an organization with a primary goal of eliminating itself? (Besides the Libertarian party)

      1. Nah, the libertarian party is just as focused on sustaining itself as any other system.
        By being impotent, the LP preserves itself as a vehicle for grifting and bitching (in no particular order)

  5. A business so grossly unprepared and incompetent would suffer a somewhat different fate.

  6. I thought grandma was expendable now?

  7. We can fix all this in November; just get together with all your friends (at least the 6 feet apart kind of together) and be sure to vote for the politicians at local, state, and federal levels that will not allow this to happen again, and will roll back the past disasters.
    I think they mostly register with the unicorn party.

    1. Problem with voting the bastards out is… get this… politicians lie.

      Term limits will not help. Ranked-choice voting will not help. Public elections will not help. Obliterating political parties will not help.

      Any system of elections tends towards oligarchy. It is structural, baked in, as old as Aristotle’s observations on the nature of democracy.

      What you want is oversight before any damage is done, so you don’t have to spend the next 50 years trying to find the best combination legislators to figure a means through the Gordian knot without mass upheaval and with enough sustain to survive crisis and triumph alike.

      It is time to come to terms with the fact our system of government is fundamentally broken, and quit with this charade that if the public just elected better bastards this time.

      This time will be different. Honest.

      1. Populist violence is the only thing that has ever kept electoral government in check.
        Read Machiavelli’s Discourses on Livy.
        The Roman republic, upon which the US is modeled, was a constant dynamic of senate/patricians pushing their will to the point where the people/plebs said “enough” and pushed back by force.
        But as the republic expanded and grew more prosperous, the senate patrician class removed and protected themselves further from the mob’s reach. The more insulated they grew, the less responsive they needed to be.
        Lack of fear makes room for abuse

        1. “Populist violence is the only thing that has ever kept electoral government in check.”

          If this is the case then the libertarians can call it quits now. The is no case to be made for the NAP, attempting to reason with people, or even advocating for more freedom for people to bludgeon each other.

          Can’t have it both ways.

  8. I’m not too pessimistic about the next crisis because I’m fairly confident our next crisis is going to be our last crisis. One good thing about burning down a house of cards is that it’s easy and it doesn’t take long. Civil War 2.0 isn’t going to be nearly as long and costly and bloody as the first one, less like major surgery and more like a flea bath.

    1. Civil War 2.0 isn’t going to be nearly as long and costly and bloody as the first one, less like major surgery and more like a flea bath.

      Great analogy, assuming you’re the dog of course.

  9. Did the staff at Reason die of COVID? Get arrested while rioting protesting?

    We have a bona fide article that attests to the growth of the leviathan as a foregone conclusion that, AFAICT, doesn’t even *attempt* to blame Trump.

    They must’ve read my comments about how it was becoming obvious the writers were just proofing cheap, Chinese-generated content and thought, “Oh Shit! They’re on to us!”

  10. “Sometime in 2021, the American people will be presented with a reorganized and newly empowered federal public health bureaucracy. As time passes, it will grow in size and scope.”

    Take it out behind the barn and kill it with a pitchfork.

  11. Lurking in the background of each of these new buildups is the question of who will pay.

    If you don’t know the answer to that one…

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