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How will coronavirus change the world? Show more Show less
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COVID-19 has torn through the fabric of our lives all over the world - with over 20M cases and nearly 1M deaths, and a global collapse in GDP that is historically unprecedented. Will it have long term impact, and what will that look like - economically, politically, and socially?

Coronavirus will impact global politics Show more Show less

As coronavirus spreads, political institutions and actors will inevitably react.
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Coronavirus will normalize state involvement in all economies

As the global economy takes a nosedive, government will play an ever more important role in our economies. Deep state involvement in the 'free market' will become the new norm even in liberal economies.

The Argument

As the pandemic spread from nation to nation and waged a global war on health, economies were also severely damaged. During that period, 22 million Americans alone filed for unemployment benefits.[1] Worldwide, as stock markets underwent a tremendous shock, questions were raised by many. Some compared this situation to the Recession of 2008 while others thought this could be worse than the Great Depression of 1932. All of these events, though varied, have one thing in common: They allowed the state to become involved in their economies. Coronavirus will normalize such state involvement in all economies because many businesses will fail if the government does not intervene. When it comes to state involvement, two important approaches need to be addressed. The first one is laissez-faire which is the concept that all capitalistic societies must let economies run uninterrupted and that in the long run, any market failure will fix itself. However, this policy was challenged by John Keynes who explained that in some extraordinary circumstances this will not hold true and that the government needs to become involved in order to rescue the economy. The pandemic has ushered such a time where government intervention is crucial. From dictating when businesses can open, what sectors of the economy need to be prioritized over others to how much aid each division will get, the government now has the power to determine all of these things. Furthermore, this pandemic will not only have temporary effects on the economy, which has led the government to spend almost 2 trillion in stimulus money, but it will also have shockwave long-term effects. For a prolonged period of time, economies will depend on the government and this co-management will normalize state involvement.

Counter arguments

Due to COVID-19, the government has definitely become more involved in businesses. But, this involvement is very much short-lived and it will not continue in the future. The reason is that state involvement for prolonged periods of time actually has more adverse effects than positive ones. In a capitalistic society, production and supply are driven by demand for such products. When the government gets too involved in terms of dictating what items are "essentials" and what items are "non-essentials", eventually there will be a significant gap in demand and supply. During the pandemic itself, such measures are key in making sure that hospitals and other essential businesses are supplied and cared for. However, if this were to continue, then ultimately businesses will see a continuous loss in revenue and governmental involvement will need to cease.

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Premises

Rejecting the premises


References

  1. https://hub.jhu.edu/2020/04/16/coronavirus-impact-on-european-american-economies/source.html

This page was last edited on Thursday, 3 Sep 2020 at 16:02 UTC

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