The coronavirus pandemic, and resulting government response, has created one of the greatest disruptions to daily life in modern American history. With much of the country now focused on “reopening,” pundits and policymakers have focused their attention on what the “new normal” of a post-COVID America looks like. Although much of the attention has been focused on the future of massive public gatherings and changes to American work environments, the most significant change to American societies may be faith in our governing structures.
The policy response to the coronavirus has already led to dramatic changes to policy. In the positive, both federal agencies and state governments have waived or altered many traditional regulatory requirements to bypass disastrous delays in medical testing and to better facilitate delivery of services. In the negative, the Federal Reserve has massively escalated its interventionist policies, highlighting how radical these institutions have truly become.
Beyond specific policies, however, the most significant change may be the degree to which the COVID response changes the public view of centralized political power. In particular, there are three relatively unique aspects of this pandemic that may be the precursor to significant realignments going forward.
State Governments Have Taken the Lead in Public Policy
In spite of rhetoric from President Trump about the White House having “full authority” over state governments, the current administration has been largely content with allowing governors to lead the way in responding to the pandemic. This has led to significant differences in the severity of economic lockdowns, testing behavior, and even authorized treatments between states.
Given the hypertribalism of modern politics, it’s easy to simplify this into a typical “red state-blue state” division, but this overlooks significant differences in approach from governors and state legislatures within the same party. For example, although Michigan, New York, and California are high-profile examples of blue states with strong lockdown policies, Colorado is an example of a state with a Democratic governor who has largely followed the reopening guidance promoted by the Trump administration.
The significant differences in policy between states (such as New York and Florida) has meant greater attention, from both the press and the voters subjected to unprecedented restrictions, toward their state capitals and away from the usual circus of Washington. Many governors have seemed to relish this move, such as Governor Gavin Newsom of California, who proudly declared himself leader of a “nation-state.” The power of state governments has even led to some governors engaging in the sort of executive overreach that has become the norm in the national level, such as Colorado governor Jared Polis taking control of federal aid money against the wishes of the state legislature.
The stark contrast between state responses, coupled with differences in outcomes—both in terms of economic and public health measures—is an important lesson in the power of federalism that has been eroded in American politics. The precedents being set today may further embolden the growing trend of state rejection of federal authority that we’ve seen with such issues as drug laws and immigration enforcement. When we factor in the hyperpartisan environment, and a predictably polarizing presidential election later this year, the future of American politics may increasingly be defined by a battle of federal and state authority.
The State Battle over a Federal Bailout
As Ryan McMaken has noted, state budgets are going to face major shortages as the devastating impact of lockdowns limits tax revenue. Although no state will be spared from the economic fallout, this revenue shock will be particularly devastating for those already on particularly unsound economic footing.
Already we’ve seen this begin to play out in Washington, with Republicans pushing back strongly against Democrat calls for a $195 billion bailout of state and local governments. The Wall Street Journal this week summarized this growing conflict with the question, “Why Should Florida Bail Out New York?,” highlighting the differences in governing philosophy and economic health between the two similarly sized states.
Although it’s obvious that Congress has no stomach for any sort of fiscal restraint when it comes to national economic aid or stimulus programs, the more the debate focuses on state—and partisan—differences, the more we are likely to see the federal representatives of fiscally prudent states hunker down against bailouts in their own interest. Already we’ve seen blue state leaders like Governor Newsom threaten their own version of Washington Monument syndrome, stating that police and first responders will be the first victims if Washington doesn’t bend to his bailout demands.
This could easily erupt into the sort of state-on-state legislative battle we haven’t seen play out in Washington in a long time.
Shared Experience and National Unity
Lastly, one of the aspects of the coronavirus that has driven a lot of the radical differences in narrative and policy between states has been the difference in its severity around the country. In past national tragedies, there has usually been a trend toward national unity, as the event created a common experience among all Americans. Although New Yorkers dealing with the aftermath of 9/11 or Gulf Coast residents during Hurricane Katrina experienced these events in a more personal and intimate way, everyone witnessed them on television and with a similar appreciation for their significance.
This is clearly not the same with the coronavirus.
I recently had a good friend who is a nurse in northern Louisiana visit, and he was shocked at how laxly residents of north Florida were taking the virus. Although the city he currently lives in is very red and culturally Southern, it was an early hot spot for COVID-19, and the scars from that had majorly impacted much of the community. In Panama City Beach, Florida, the greatest fears in the last few months came from the impact that lockdowns were having on a local economy so dependent on tourism and the service industry.
Considering that common experiences can shape national unity far more powerfully than government institutions can, it’s possible that the cultural consequences of the coronavirus will fuel divisions between states in a way that disagreements on marijuana laws never could. It is both reasonable and natural for a resident of New York City, which has suffered nearly twenty thousand coronavirus-related deaths, to be far more traumatized by the virus than residents of Houston, which has suffered fewer than two hundred.
Considering that a major question for political fallout going forward will be the degree to which the economic damage inflicted on this country was “justified” by the threat of the virus, the differences in experience make it unlikely that the coronavirus will build anything resembling a national consensus.
The lasting impact of the coronavirus going forward—alongside the devastating economic consequences that we have yet to truly face—could be deepening a regional, cultural, and political polarization that has been building in recent years. These are also precisely the sort of differences that are only escalated by centralized political power, and that will only be fueled by the upcoming theater of the 2020 presidential election.
Although national tragedies tend to bring a country together, it seems clear that the coronavirus will leave America as divided as it has been in modern history.
Tho Bishop is an assistant editor for the Mises Wire, and can assist with questions from the press. Prior to working for the Mises Institute, he served as Deputy Communications Director for the House Financial Services Committee. His articles have been featured in The Federalist, the Daily Caller, and Business Insider. This article was originally featured at the Mises Institute and is republished with permission.
Recent protests in Hong Kong, along with the resulting fall out from international corporations questioned for their relationships with mainland China, has placed a renewed focus on the authoritarianism of the Chinese Communist Party. This has led to several articles identifying ways in which Western countries have learned from the CCP, including Europe’s growing embrace of web censorship and growing interest in the social credit system rolled out in 2018. Given that it wasn’t that long ago that it was common to see Western leaders and neoliberal commentators openly envy aspects of the Chinese political system, these concerns are certainly worth exploring. What should be of equal interest, however, is the ways China may be learning from the West.
The next arm weapon the CCP may plan to wield against its citizens is a War on Cash.
As Joseph Salerno, among others, has noted for years now, a successful War on Cash would represent a new escalation in government’s long history of weaponizing currency against the population. Moving far beyond the clipping of coins as a means of stealth tax collection, the purpose of a War on Cash is not simply to strengthen a government’s grasp on the wealth of its citizens — but the move becomes a highly effective means of tracking any who find themselves in the crosshairs of the state.
These features make a cashless society attractive for any government — which explains why it has become an increasingly popular goal for politicians, bureaucrats, and central bankers in the West. This is precisely why we’ve seen the cause promoted from such influential economists as Kenneth Rogoff, former chief economist of the IMF, Marvin Goodfriend, an economics professor at Carnegie Mellon who was once nominated to the Fed by Donald Trump, as well as various economic ministers. The governments of Australia and Sweden have made a cashless society an explicit policy goal within their countries, while some central banks — such as the ECB — have begun phasing out higher denomination bills as an opening move in their own cashless campaigns.
Of course, the international perspective of the Swedish government is quite different than that of China’s — and understandably so. For all of Sweden’s issues, there are no comparisons to the CCP’s brutal child policies or its treatment of religious minorities. What should be understood, however, is that a successful move to a cashless society would give the Swedish government similar tools over its population as those the Communist Party seeks over its dominion. While the former may ground their policy aims in “combating drug trafficking” and “convenience,” the end result in both cases is a new terrifying weapon in the hands of the state.
Luckily, it’s easier for the government to desire a cashless society than it is to create it, and we’ve seen countries like Sweden rethink their approach. There is reason to think that China may be less apprehensive. Not only is the government more powerful, but it is also more desperate.
Given the surveillance power of a cashless society, the potential of joining a social credit system with a digital yuan makes sense. What’s just as important for China is to help further tighten the CCP’s grip on its struggling economy.
As I’ve noted before, lost in the attention paid to Trump’s trade war with China, China’s financial system is showing signs of a growing strain. Not only have we seen escalating bank failures and the creation of new bailout devices for failing firms, but some companies have resorted to paying their workers with IOUs as they run short on cash. Meanwhile, Chinese local governments are now defaulting on debts to contractors. Given the importance of economic growth to the CCP’s control of the country, its understandable why we’ve seen President Xi forge new high-tech weapons to be used against the population.
Interestingly, China’s desperation is being confused by some as a sign of strength. For example, some have misunderstood the underlying motives for the CCP’s renewed interest in cryptocurrency.
While much has been made of Chinese media giving Bitcoin a front-page treatment, the tight control the CCP has over its financial system makes actual use of private crypto extremely difficult. Instead, the stage is being set for moving the yuan to the blockchain. While some have sold this as some novel challenge against the dollar — even suggesting that the Bank of China could try to peg it to gold — this is, as Daniel Lacalle explained, a delusion.
This is not a trump card to be used against Uncle Sam, but a new tool of CCP oppression against is own people. As noted by Jason Burack, a market analyst that has been closely following Chinese economic news, “throughout history, governments have always hijacked technology and used it for nefarious purposes.”
At this point, the CCP successfully waging a War on Cash is mere speculation — though a recent move to allow tourists access to digital payment systems such as AliPay might help pave the way for that transition. It would be a policy change very much in character with the authoritarian regime in Beijing — and one that has long been sold as “benign” by the more “liberal” globalist elite.
When crafting Obamacare, the top priority for policy writers was not identifying the best ways for patients to receive the medical care they needed, but instead to identify ways to reduce the costs of care. Rather than working to undo the labyrinth of regulation and government programs that directly contribute to the high costs of American healthcare, the policy wonks within the Obama Administration worked to identify ways government could save money by reforming existing programs and changing the operations of hospitals.
One such initiative was the Hospital Readmissions Reduction Program, designed by the government agency in charge of Medicare and Medicaid. The purpose of the plan was simple, studies showed that 20% of Medicare patients discharged from hospitals ended up returning within 30 days – often for preventable causes. The aim of this new program was to incentivize hospitals to take proactive measures to treat such patients by penalizing them for high readmission rates.
While the program did manage to save the government money, new studies now show that the savings may have contributed to thousands of preventable deaths.
In the New York Times, cardiologists Rishi K. Wadhera, Robert W. Yeh and Karen E. Joynt Maddox, explained the findings of a new study looking at the program.
In their words:
[A] deeper look at the Hospital Readmissions Reduction Program reveals a few troubling trends. First, since the policy has been in place, patients returning to a hospital are more likely to be cared for in emergency rooms and observation units. This has raised concern that some hospitals may be avoiding readmissions, even for patients who would benefit most from inpatient care.
Second, safety-net hospitals with limited resources have been disproportionately penalized by the program because they tend to care for more low-income patients who are at much higher risk of readmission. Financially penalizing these resource-poor hospitals may impede their ability to deliver good care.
Finally, and most concerning, there is growing evidence that while readmission rates are falling, death rates may be rising…. If we assume that the program was directly responsible for these increases in mortality and that prior trends would have continued unabated, the program may have resulted in 10,000 more deaths among patients with heart failure and pneumonia.
The authors of the article conclude by asking the question “Why are policies that profoundly influence patient care not rigorously studied before widespread rollout?”
The better one is, “why should government policy makers be influencing the general practices of hospitals in the first place?”
Unfortunately this is simply the latest example of the dangers of government managed healthcare in America. From government insurance plans with payment schedules, to medical coding, to top-down government programs waged in the name of “costs control,” Washington politicians have continued to place government bureaucrats and insurance companies between a patient and their medical professional.
Of all economic sectors, health care should clearly rank among those most dependent on local knowledge. After all, how to best treat a patient is decidedly circumscribed in the here and now. Yet, lured by the idea that medicine is a scientific enterprise, we persevere in our attempt to manage health care with the same methods that would fail to optimize the construction and distribution of even a simple pencil.
While this new study should give pause to all federal policymakers striving for even greater government control over healthcare, we know that it won’t. Already the drumbeats are growing for the Democratic-controlled House to force a vote on the misnamed Medicare for All bill championed by Bernie Sanders and his fellow democratic socialists.
[When her attacker was] inside, the man tackled her and began trying to cover her mouth with his hand, which she thought smelled of chemicals, the report states. He then started hitting her in the face with his fist.
After she was able to break free, Noble grabbed a pistol off the coffee table and shot the man three times before running to her neighbor’s apartment and telling her to call 911, according to the report.
Noble told police that “she feared not only for her safety but for the safety of her baby, and felt that she had no other option in this situation, according to the report.
Authorities have ruled that Noble’s use of force was justified, however she now faces 24 years in jail for her actions. Why? She previously pled guilty to a felony marijuana charge.
“Right now I’m looking at the max, 24 years, that’s my baby’s life. I mean, I’m going to miss 24 years of my child… I won’t even, I won’t even know my child, I’ll miss out on everything.”
The tragedy of Nobles’s story has several layers.
The first is that a marijuana possession is a felony charge in the state of Arkansas. It’s worth noting that there is nothing particularly unusual about Noble’s case: her and several friends were found with an ounce of marijuana and drug paraphernalia during a routine traffic stop. Since no one claimed ownership, all faced criminal charges. Facing jail time, Noble accepted a plea deal that gave her a suspended sentence and barred her from possessing a fire arm.
The second is how over criminalization leads to a dangerous loss of basic individual rights. In the case of Noble, the gun used to defend herself was owned by her husband, who serves is the Arkansas National Guard. In the eyes of the Arkansas “Justice” system, Noble being caught with marijuana last December meant she had no right to use her husband’s firearm to defend herself from a brutal attacker. The law would leave her a defenseless victim.
Luckily there does seem to be momentum towards restoring gun ownership rights to non-violent offenders that have been caught up in America’s justice system. Legislators at both the state and federal level have relevant pushed bills in recent years, while federal courts have also found some that blanket bans for all felons are unconstitutional.
Unfortunately for Noble, this precedent won’t apply to her case as she was still under her five year suspended sentence.
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