 Well good morning everyone. It's a great pleasure to be back at Jekyll Island. Some of you know that my wife and I met at a Mises Institute conference here at Jekyll Island almost 30 years ago. So thank you. So you singles out there look around. You might you might you might find someone. My my children have have begged us to come up with a better story, a more exciting story for how we met you know on a ski vacation at the Alps or something like that. But really what could be more exciting than thinking about the Leviathan state and how we might if not completely stop it at least to slow it down. So so I want to talk about Leviathan and how it relates to the corona virus situation that we find ourselves in. You know when all of this when things began to hit in in Europe in the US in March and we began to see travel restrictions and shelter in place orders and mask requirements and so forth. You know there was a lot of talk at the time that well don't worry about these things. These are these are temporary emergency measures that are required for this extraordinary set of circumstances in which we find ourselves. But don't worry it won't last you know pretty soon things will go back to normal. But even at the time I remember thinking you know if we look at how government has grown in the past it's almost always in these temporary emergency situations so called that we get new government policies, new measures, new restrictions on our liberties that quickly become part of the permanent a permanent part of the landscape. I was thinking in particular of the great book by Robert Higgs called Crisis and Leviathan about more about what I'll say in just a moment and decided to write about this. I noticed that this published a piece on Mises dot org back in on March 13th. So I was pretty much ahead of the curve in figuring this out. I have to confess that the title for this article Corona Crisis and Leviathan came from Ryan MacMacon and not for me. I wish I'd thought of that. But but I did have the idea to apply Higgs theory to the to the current health situation. Let's think more generally about how government grows. So Ludwig von Mises made a very important contribution, a number of important contributions to the study of government growth. One of his most important works in the 1920s was a collection of essays on government intervention published as in English as interventionism. Joseph Lerner has pointed out that while this book came out in 1929, Mises theory of intervention didn't really take full form until it was described in human action in 1949, at least in the German language predecessor to human action. But Mises offered a very specific theory of how government expands. And it has to do with the challenges of operating what Mises would call a mixed economy. So Mises, of course, provided one of the best descriptions or an analysis of how a market economy works. Mises also also produced his devastating analysis and critique of why a socialist economy cannot allocate resources to their highest valued uses. But Mises also explained how sort of a middle system, a so called third way system that was partly capitalist and partly socialist was also not feasible. Mises pointed out the logical contradictions of this so called intermediate state or interventionist economy, in particular showing how government interventions are not able to achieve their stated ends, their stated goals. Moreover, these interventions create secondary effects, secondary problems, which call for yet further rounds of government intervention to alleviate those problems, which then create additional problems calling for more government intervention and so forth. So you can't have a stable kind of mixed economy. Logically, such an economy is inevitably drawn in one direction or another. Either the restrictions will be repealed and you go to a market economy, or we're led down a path towards ever increasing government intervention. Higgs' book is offers a slightly different version of this thesis. Higgs points out that if you look at how governments have grown over time, what we don't see, we don't see a steady consistent increase in the size or scope or extent of intervention of government. Rather, we see these kind of discontinuous jumps. Higgs uses the metaphor of the ratchet. He calls it the ratchet effect. Government grows through the ratchet effect, right? You know what a ratchet is, that's a tool. You know, it only goes one way. You turn it this way and the screw turns when you release the ratchet, the screw stays in place. So you can only tighten the screw or only loosen the screw depending on which way your ratchet is set. And Higgs said what happens, the way government grows, is there some kind of crisis real or imagined, right? Which calls forth a new set of government policies, interventions, which are designed to alleviate the crisis real or imagined. Once the crisis is over, are those new policies and new interventions relaxed? No, they stay in place. Just sort of sitting around either becoming a permanent part of the landscape or sort of lurking in the background waiting for the next crisis to emerge. Higgs illustrates his thesis with a number of historical examples. In particular, he looks at how Franklin Roosevelt's New Deal interventions, New Deal agencies, were all sort of thinly disguised versions of World War One era predecessors. Right? Outside of, you know, this room outside of our circles, World War One doesn't, does not get as much attention as it deserves as an explanation for the growth of the Leviathan state. Most people who consider themselves pro-market or conservative or whatever will lash out at FDR and the New Deal for causing this huge growth in the state without recognizing that the New Deal is kind of a logical extension of World War One, according to Higgs, in this sense that, you know, to deal with various supposedly temporary wartime emergencies like, you know, food, we need to make sure that the right kind of food is being produced so that our, you know, soldiers in the field have adequate food supplies and so people working in factories producing munitions can have the right kind of food. So we set up this brand new federal bureaucracy, the food administration to control agriculture in the United States for the war. Well, we need to make sure that industrial production is being channeled into making bullets and aviation and tanks and so forth. So the government creates the War Industries Board. The War Finance Corporation is set up to nationalize the financial sector. The War Labor Board is created to mobilize labor and make sure that labor is allocated to the most important uses according to wartime aims and so on. You get the point. As Higgs demonstrates, once the war was over, the officials, the bureaucrats who were running these organizations, they didn't just all go back to their previous lives. They hung around in D.C. They stuck around sort of waiting for the next crisis to emerge, to which they could direct their talents. In a very illuminating section of the book, Higgs goes through the documents, the charters that created the various New Deal agencies, like the Agricultural Adjustment Administration, the National Recovery Administration and so on, and shows that these charters were literally copied and pasted from the documents that had created the World War One predecessors, right? The NRA did not just spring forth, you know, from the brow of Zeus. The NRA was just a rewritten version of the War Industries Board in terms of structure and mission and purpose and so forth, right? So once the crisis is over, we don't go back to the old, we don't go back to what we had before. The temporary measures, allegedly temporary measures designed to alleviate the crisis typically become permanent. You know, why else does government only grow but never shrink? Well, I mean, you know, sometimes you have a phenomenon where the government government officials have already achieved some objective, at least by their own elite, or maybe by their own standards, they've achieved the objective. Do they pack up their bags and go home? No, they just stick around and goof off, right? They consume, as Bill Nascannon famously put it, they consume bureaucratic slack. They just sit around and goof off during the day on the taxpayer dime, because there isn't anything for them to do. Or even worse, they find new things to do, right? So called mission creep. I've written a little bit about this myself, like, you know, these private military companies, right? So private military companies were tasked with various objectives, you know, during the Afghanistan and Iraqi adventures, right? So once those particular, the initial military objectives have been met, you know, do all these paramilitary, do the private military companies shut down and go home? No, they not only stick, they stick around, but not just to goof off, they want to find new activities, you know, for which they can use their talents. So they lobby policymakers, in this case, to intervene in other places around the world. Hey, we've got this capability, we have this now latent capability to go in and perform assassinations and extraordinary renditions and drone killings and so forth. We're not just going to let it sit idle, let's find a way to use it, right? So government policy becomes endogenous to these capabilities that were developed to address some other concern. And that can be even worse than consuming bureaucratic slack. But these are reasons why government only grows and never shrinks. Easy to find historical examples, examples from recent history. Right? Think about 9 11. Think about all of the policy measures that were put in place, you know, to protect us from the next 9 11 style attack. Well, of course, we got the Patriot Act, and we have, you know, warrantless wiretapping and indefinite detention without trial and extraordinary rendition and all kinds of other violations of our liberties that Judge Napolitano and others have written about very eloquently. Were those measures repealed? Were those measures scaled back? You know, once Osama bin Laden was captured? Of course not. Right? The NSA has continued to grow in its capabilities. And certainly in its budget, we still have, you know, the TSA, right? The TSA is here to stay. Those of you thinking that one day you will once again be allowed to bring your larger than three ounce bottles of shampoo on the plane through the X main machine. I'm sorry, but that is never gonna happen. Right? All of the changes that were supposedly to alleviate this emergency to deal with the emergency, they quickly became part of the landscape. And now, of course, we have a whole generation of people around the world who have grown up in this environment and don't know anything different than that. You know, what you don't have to take off your shoes to get on a plane. Or remember the old days, old timers like me, when you can actually go to the gate to greet an incoming traveler without a ticket. Right? I don't see us ever going back to that kind of a world. Think about the financial crisis. Right? Remember the dark days of 2007, 2008, when markets collapsed, large financial institutions were teetering on the brink of insolvency. And we were told, well, the financial system is so fragile, you know, we're going to bail out AIG, you know, some other companies, big companies like Bear Stearns, we're not so sure about. Right? Yes, we recognize that using taxpayer funds to bail out a giant for-profit financial institution seems to go against, you know, our standard model of how a free market should work. But we have no choice because if we let one or two of these big banks fail, the entire global financial system will collapse. Okay. Yeah, some of us might be wishing for that day. Okay. But so what did we get as a result? Well, we got a whole bunch of things. You know, we had a lot of implicit too big to fail guarantees. Now we have explicit ones. We had, you know, different kinds of bailout programs. And now, of course, the Fed buys all kinds of assets, as well as treasury bills and so forth. We've got, you know, QE and other so-called extraordinary financial interventions. Well, they're not extraordinary anymore. Now they're ordinary, right? You know, zero interest rates or negative nominal interest rates. You know, not only are these things now considered, you know, part of the Fed's toolkit. I hate that term, right? But now these are just standard elements of the toolkit to be deployed whenever they're needed. People have become desensitized to them, right? We just sort of expect that, yes, well, of course, the Treasury, the Federal Reserve System, Congress, the President should do whatever is necessary to maintain the stability of the financial system, forgetting that when some of these measures were introduced during the financial crisis, they were wildly controversial. And many people, not just people in this room, but many people said, well, no, that's not consistent with the charter of, that's not consistent with the Fed's charter and mission. Nobody says that anymore because the charter and mission have gone out the window. The restraints have been forgotten because once the Fed is doing these extraordinary things long enough, the extraordinary becomes the ordinary. Well, how does this apply to COVID? I mean, we could go through this list of various policy interventions that are supposedly alleviating the spread of the virus. Restrictions on movement, restrictions on assembly, so called NPIs, non-pharmaceutical interventions, social distancing rules, restaurant and bar, capacity restrictions, school closures, masks, et cetera, right? Locking down the entire economy or shutting down particular businesses or, as you see in some states, right, the governor or the legislature or the some top public health official, you know, choosing which companies and which industries can remain open, which ones have to be shut, you know, location tracking, right, for contact tracing. It wouldn't surprise me if we all have mandatory, you know, there's an app on your phone that will tell the health officials where you've been and who you've talked to. We already have that to some extent. Controls on information, you know, flagging unpopular opinions on COVID-19, as fake news, et cetera. You know, all of these things, even just in 9, 10 months, have become a little bit more like the new normal, if not quite, right? I think Thoe Bishop had an article on Mises.org the other day about so-called medical tyranny, right, the idea that the, you know, academic epidemiologists should have the power to make the decisions about our lives and how the economy is running so forth. You know, today people are, you know, people think these are weird, but how many years of having these kinds of measures, if not in place right away, but sort of on the back burner, waiting to be deployed before they become just part of the landscape? And, you know, I'm sure you would agree that even in states like Florida and Georgia that have fewer restrictions on movement and masks and so forth, right, even in those states, you know, if next week the governor or other officials were to announce, oh, well, gosh, we're looking at the dashboard here. We see a spike of, you know, so called positive cases. We're gonna, we're gonna revert back to capacity restrictions and partial lockdowns and this and that. We're gonna close the schools. You know, people will grumble, but most people are already sort of acclimated. They've already come to think as normal the idea that government officials can turn these things on and off. Oh, thank goodness. What a great, you know, in Florida, for example, which I think has done a pretty good job. You know, thank goodness that we have someone like Governor DeSantis who allows us to live our lives, you know, closer to normal. The idea that it's up to the governor and other officials to tell you what you can and cannot do for health reasons, that is now kind of the new normal is becoming the new normal. If you go back to Mises analysis of the sort of secondary effects of intervention, I think we can we can quickly identify things that we've seen even just in the last few months as they relate to COVID. So think about lockdowns, whether complete lockdowns, partial lockdown, school closures, business closures, etc. Right right away, these had a number of effects on the economy and society. Economic effects are most obvious, right? Business failure, surge in unemployment, crippling effects on economic growth and economic performance. What do we get out of that? Oh, well, we need a new round of government interventions to solve the problems created by this initial round. So we need more bailouts. We need we need to write a check to every American. We need to give checks to small business. We need to write checks to the airlines. We need to bail out the banks. We need to do more bailouts. We know we'll punt the costs into the future. So, you know, all this new round of subsidies is designed to alleviate the problems caused by the initial lockdown orders. And of course, from that we get a loss of economic freedom. We get reductions in productivity and loss of economic growth and, you know, reductions in overall well being. Okay, then what about, you know, school school closures? Right, you close the schools. Well, for public schools, that maybe makes education better. But in some cases, right for private schools, we have harm to our education sector. And you know, who knows what the long term effects of that will be less educated workforce, people more stressed out workforce, probably have a loss in economic performance. We have all the health problems associated with shutdowns. People can't get their cancer treatments, increased rates of depression, anxiety and so forth. You know, what kind of effects will that have? Well, oh, gosh, well, now we need more government intervention to alleviate all these health problems. We need socialized medicine, whatever. All of these things inevitably lead to a bad place. Okay. Oh, the pundits, of course, have already started their ideological campaign of explaining how COVID demonstrates government failure and the era of small government is over. I don't know what era that was, except maybe Jacksonian democracy as described by Patrick. Yeah, we need to do capitalism differently. And of course, the root cause of the pandemic has got to be climate change, right? We've got to work climate change in there somehow. So what do we do? What do we do about all this? Well, I mean, one thing I think is very important, we need to remind people that, you know, sort of wartime propaganda is wartime propaganda. Okay, we need to push back against the idea that all of these new sort of policies and procedures are okay and are necessary to combat this horrible crisis. We need to identify it as propaganda and resist it as propaganda. You know, don't let the new normal become normal. Resist the idea that the way things are now is the way things always have to be. And of course, we need to keep thinking about it and speaking about it and writing about it and supporting organizations like the Mises Institute that are working hard to make the world a better place. Thank you very much.