November 26, 2020 Reading Time: 6 minutes

There has been much discussion over the immediate effects of public health interventions such as business closures and restrictions on social activity in response to Covid-19. It is clear that lockdowns have led to a number of adverse consequences such as unprecedented economic retraction, psychological stress, suicides, and disruptions to all sorts of important social institutions. These factors alone, combined with the questionable efficacy of lockdown policies in preventing Covid-19 deaths, should encourage consideration for the contrary. However, what has seen sparse attention is the long-term consequences that come with drastic lockdown policies.

Lockdowns do not happen in a vacuum, history keeps moving even after Covid-19 is gone and the actions we take today will set the foundation for tomorrow. For example, if we forcefully redistributed all the wealth in society we could easily eradicate poverty and inequality. However, in the long term that would likely lead to severe economic retraction and require that the United States government become a dictatorship. That society is not worth living in and we would be better off if we hadn’t done so. Setting aside the general debate around the short-term efficacy of lockdowns, it seems that the long-term consequences of lockdowns only promise more hardship. Planning not just for next year, but for the generations decades ahead that will inherit this country once our time here is done is one of the true indicators of responsible leadership. 

Accelerated Economic Calamity

It is abundantly clear that lockdown policies such as nonessential business closures and movement restrictions have ravaged the economy in the short term. It is also clear that in the near future the security of small businesses remains uncertain as Yelp reports that 60% of restaurants will never reopen. Such developments are certainly painful but perhaps one of the most important and least discussed issues is the potential economic crisis that may result years into the future. A crisis that will not just affect small businesses and vulnerable families but the entire country. 

Closing down the country has forced the US government to implement trillions of dollars worth of quantitative easing to prop up Wall Street and stimulus checks to prop up Main Street. If lockdowns continue such policies will need to continue. The result is an unprecedented level of government debt. Forbes writes,

“For the first time U.S. debt is now about equal to GDP (Gross Domestic Product), like the sound barrier we once thought if we hit it we might explode.”

Although the US government can afford to go further into debt it would now be crossing into a fiscal and monetary unknown. How much longer can the government print money to finance its programs and will this lead to a point where future Americans will need to take painful if not devastating austerity measures? 

The Federal Reserve has indicated that it intends to keep interest rates low until 2023, which may not only encourage rash investing decisions on Wall Street but for the average American Market Insider writes

“The Fed’s somewhat vague language is of little comfort to Americans working to build up their savings. In the months since the Fed slashed rates, the yields on checking accounts and savings vehicles have cratered. And for the foreseeable future, Americans will need to make some tough calls to ensure their money is working for them.”

Even after the Covid-19 vaccines roll out, herd immunity is reached, and the virus is long gone, the drastic policies of today will last long into the future. The worst-case scenario is that the current policies hasten the timeline for a financial crisis or worse. 

Forbes poses a potential consequence of our current economic policies when it writes

“But we are on a collision course with another force, as we see further increasing Main Street insolvencies, unemployment and the weakening of the finances of ordinary households and businesses. If the Fed were to ease up “printing money,” we might see significant deflation, like Japan in the 1990s. Worst still, we might see rapidly increasing inflation. This would produce the secular stagflation former Treasury Secretary Larry Summers has spoken of—remember President Jimmy Carter?”

Although nobody is sure to what extent the government can continue printing money without severe consequence, and it is entirely possible that it could go for much longer, we are testing the boundaries of monetary policy. 

The stock market, particularly the S&P 500, has essentially been propped up by quantitative easing since the Obama administration. This is even more true now as the market continues to reach all-time highs despite economic devastation throughout the real economy. The market is due for a serious correction in the form of a recession which is being prevented but also further exacerbated by money injections from the government. We are pretty much generating a stock market bubble.

The worst-case scenario is that all these terrible things happen at once. If so, then we have set up the next generation and very likely ourselves for a devastating financial crisis with little tools left to mitigate it as we have exhausted them today. 

Preserving Our Structure of Government

The economic policies of lockdowns will push the country into a new frontier where economists are still debating over how the monetary physics work. However, there is little debate when it comes to the damage lockdowns have done to our system of constitutional government.

The authority to enact a lockdown policy doesn’t just come out of thin air. All government power is derived from explicitly granted authority or precedent. By breaking unwritten molds and sometimes outright violating the law, politicians at the state and federal level are eroding the guard rails that prevent domestic tyranny.

For example, the police power gives the government the authority to establish its own laws that protect the general welfare of the public. That is a rather vague rule and the crafters most likely felt that the power would be used in a narrowly tailored fashion, not with arbitrary lockdown policies. California’s new 10PM-5AM curfew and Michigan’s ban on selling seeds are two rules that come to mind that if left unchallenged will erode the meaning of narrowly tailored. This would further expand the arbitrary powers of government to act without democratic consent.

In 1905, a mandatory vaccination policy led to a Supreme Court case known as Jacobson v Massachusetts, which cemented the government’s power to curb individual rights in the name of public health. That court case has now been used to justify but also sometimes fight current lockdown policies. The court case itself mandates that such policies must be narrowly tailored as vaccination is more widely viewed as directly related to stopping pandemics. However, lockdowns will likely create a precedent for the government to waive individual rights with almost little justification if left unchallenged. 

Perhaps the most concerning behavior of politicians during lockdowns is the blurring of institutional checks and balances. The law in question is the separation of powers doctrine, which most notably applies to the relationship between the legislative and the executive branch. Before the governor of a state can declare a lockdown, that power must be granted by the state legislature. 

Many governors have decided to circumvent that rule and exercise power that the people never granted them, which is textbook tyranny. The governor of Michigan attempted to extend her emergency powers in order to continue the state’s lockdown against the wishes of the legislature. In Wisconsin, the governor and his unelected state health department acted without any authorization from the legislature to implement lockdown policies. These are just two examples that were fortunately declared unconstitutional but it is clear that across the country governors are getting away with such power grabs. 

Such power grabs do not happen and just go away when the virus is gone. These powers and precedents oftentimes become ingrained into the law, leaving us all less free and less prosperous. One doesn’t need to look any further than the PATRIOT Act which was enacted after the terrorist attacks on 9/11. That bill introduced an entire slew of controversial and borderline unconstitutional rules that are still in place today, even after the threat of terrorism has subsided from public attention. Much like lockdowns, it is questionable whether the extra powers granted to the government actually aided in the prevention of terrorism but we still live with the consequences.

Key Takeaways

The long-term consequences of a policy are what makes it sustainable. There is a reason why many are hesitant to enthusiastically hop on radical ideas that drastically alter the structure of government or go against established economics. The reason is that we do not simply exist in the moment and long-term stability is preferable to short-term passions. In terms of economic policy, it is important that we actually allow the next generation a shot at prosperity, not spoil it with our actions today. 

Our system of constitutional checks and balances may make governing slow and cumbersome but they are there for a reason. That reason is to maximize the longevity and stability of a free society. The Founders could have crowned George Washington king as he was extremely popular, but this country was built to last through the ages, not one personality. Problems will come and go but our responsibility to future generations to pass on a country that is as free if not freer is something that must be tended to every day. 

While there is certainly a vigorous debate over the short-term efficacy of lockdown policies, there can be little question about the long-term sustainability of what we are doing to ourselves. Alongside the immediate consequences of lockdowns, our leaders should consider the long-term problems as well to ensure we do not pass along a degraded shell of our society to our posterity in exchange for a short-term goal. Years into the future, we should be able to be proud of who we are, not who we used to be. 

Ethan Yang

Ethan Yang

Ethan Yang is an Adjunct Research Fellow at AIER as well as the host of the AIER Authors Corner Podcast.

He holds a BA in Political Science with a concentration in International Relations with minors in legal studies and formal organizations from Trinity College in Hartford Connecticut. He is currently pursuing a JD from the Antonin Scalia Law School at George Mason University.

Ethan also serves as the director of the Mark Twain Center for the Study of Human Freedom at Trinity College and is also involved with Students for Liberty. He has also held research positions at the Cato Institute, the Connecticut State Senate, Cause of Action Institute and other organizations.

Ethan is currently based in Washington D.C and is a recipient of the 13th Annual International Vernon Smith Prize from the European Center of Austrian Economics Foundation. His work has been featured and cited in a variety of outlets from online media to radio broadcast.

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