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Does the Pandemic Really Require an Expansion of the State?

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In most Latin American countries, COVID-19 has hit countries with precarious health systems hardest while inflicting deep wounds that will become scars that will be us for a long time to come.

There is, however, one issue that is particularly striking because of its lack of causality and the frequency with which it has been repeated in different parts of our region: the idea that the pandemic has shed light on all the flaws of the free market and that this should now become a watershed that allows states to regain lost ground: to regain ownership of the means of production and to replace the market economy with a larger state.

It is vital for this narrative to be challenged. How has the pandemic discovered the flaws of the open economy model? How could a government better face an extreme situation like this? I want to stop at this point because the questions I am asking seem to me to be unavoidable any longer while they have been cunningly avoided by the left and other forms of populism, in order to do what any state does -as it emulates a certain type of art: horror vacui (terror of the void). It happens that, loosely paraphrasing the great Peruvian poet César Vallejo, the nature of the state is to need more power, and it will therefore always seek expansion.

What changed in the past 100 years? Communism rose and fell. And today knowledge is used efficiently for the benefit of society. We need much more from Hayek and less from Marx. (Flickr)

We should take a step back to question these assumptions. Has the market failed here or has the state failed? Citizens lose most of their income in order to avoid possible health risks. With state coffers full of money, not from fiscal responsibility, but out of their refusal to invest, many Latin American governments have reacted too late and failed to contain the pandemic. They have done so by copying mechanisms deployed in Europe or the United States, without understanding the differences.

The consequences of lockdowns are immense. In this part of the world, millions of families live without access to drinking water and electricity. How do you ask a family to stay for an indefinite period of time in a 20 square meter house without a bathroom and without electricity? How do you ask someone who lives under an economy built on survival to do the shopping at the market once a week when they can barely, with enormous effort, put food on the table day by day? The lack of common sense led several of the countries in the region to take these irresponsible measures such as ruling that children can only venture out a maximum of 200 meters from their house, to the nearest park.

In case you haven’t already noticed, there are not parks every 200 metres in Latin America. What has failed is the state itself and its inability to distribute its huge budget efficiently. Moving away from the best sources of information, which are nearly always in the market and the private sector, while centrally planning the containment of a problem as dynamic as the market itself.

Inevitably, it has been the market that has produced the vaccines and the oxygen, while the highest survival rates against the virus are in private clinics. Now it is time to find mechanisms for those who are excluded from the market because of the barriers imposed by the state and allow them to participate in the benefits of prosperity and growth. We can never allow the enemies of freedom to get the idea that the pandemic marks the end of capitalism and that the market is to blame. Just compare the mortality rates during the Spanish flu with those caused by COVID-19.

What has changed, paradoxically, in these 100 years? And today knowledge is used efficiently for the benefit of society. We need much more from Hayek and less from Marx.

Mijael Garrido Lecca Palacios

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