First, the infections increased exponentially, then the state’s faith grew absurdly. More and more billion-dollar aid, more and more political promises. It is time to reflect on your responsibility.
In the crisis, the state takes command. He closes the borders, he banishes people to his home office and he rains money. The executive uses the fullness of its power. This increases the concern that we will get used to how easily we can delegate the management of life risks to the state. That we expect to be able to postpone our problems – even if the plague is long gone.
Whether self-employed, medium-sized or large companies: They all hope that short-time work and loans will alleviate the impact of the recession. It is legitimate for companies to seek help. At the same time, they have to make provisions for emergencies. An entrepreneur told me that he had an iron reserve with which he could pay salaries for a few months. This man believes that the purpose of being an entrepreneur is also to prepare yourself for the vicissitudes of life. So it’s not just about the economy, it’s also about values. It is about the principle of personal responsibility, which applies to companies as well as individuals. Our free society is based on it.
The pandemic mercilessly uncovers vulnerabilities
We can only overcome the corona crisis with personal responsibility, not with epidemic socialism. With the banal details of prophylaxis, washing hands and social distancing. But also with fewer dividends and bonuses for the 2020 financial year or the insight that we will spend our holidays at home this year. We will forego some things, and as long as the renunciation means nothing more than some inconvenience, we have been lucky.
Politicians are trying to convince us that there is enough money available. “There is no upper limit,” claims the German finance minister. The Swiss parliament is outbidding itself with suggestions as to which professions and sectors need further assistance. The message is always the same: nobody has to be afraid, the state cares for everyone. Perhaps this suggestion can be explained psychologically. We can only reasonably get through the crisis with collective self-deception. Of course, everyone knows that the appeasement is wrong. The epidemic is already leading to layoffs. Despite all the aid payments, there will be many bankruptcies – through no fault of your own, but also one of your faults. The pandemic mercilessly uncovered weaknesses in companies and politics.
Central banks have been flooding the world with cheap money since 2008. The US Federal Reserve is currently pumping $ 63 billion into the markets every day. US companies have tripled their debt since the financial crisis, and many companies are now facing liquidity constraints. They raised funds in the expectation that the economy fueled by the central banks would buzz forever. Now, this calculation does not work because of the corona crisis. That is an entrepreneurial risk.
Old ideas repackaged
In the crisis, all expectations are directed towards the collective, and emergencies can only be dealt with if individuals make the right decisions. In Bergamo, the European epicenter of the epidemic, doctors, nurses, and nurses did not give up despite the risk of infection and exhaustion. You shouldn’t have done that. You could have despaired and overwhelmed by the challenge. Instead, they fought for every life.
The collective preparation for the crisis, on the other hand, only deserves a grade of “poor”. Governments ignored the warning that virus infections in China could spread to Europe at any time. There was no mask supply, worse: it was taking too long for the authorities to respond appropriately to COVID-19.
Politics is no smarter than any of us. The parties are now demanding what they have always asked for. Socialists pull the dusty idea of additional taxes for the “rich” out of the drawer. It is not imaginative. They want to turn us shopkeepers – nicely packaged as corona measures. The left has always demanded that the state intervenes in the economy. In the crisis, it turns out that the state has to bring back the drug production that has been relocated to Asia. The same country that failed to store enough masks should now know how best to design globalized supply chains. The individual makes himself small, the state suffers from hubris. Nothing ever changes in continental Europe, not even in the crisis.
Healthcare is the best example of how much the government doesn’t help much. Italy has a high government quota of almost 50 percent. The public sector, therefore, manages half of the gross domestic product. Nevertheless, the hospitals are already in worse condition in normal operation than in Germany with a state quota of 44 percent so far or in Switzerland with 33 percent. In 2015, 10,000 patients died in Italy due to resistant hospital germs, but only 2,300 in Germany. The same diagnosis in the case of the corona pandemic: health care in Ticino did not collapse like the hospitals in neighboring Lombardy. State money is one thing. Efficiency is something else entirely.
We are always preparing for the wrong crisis
Food was scarce in Switzerland during the Second World War. So the country spared from battles fought the “cultivation battle”. Wherever there was a meadow in the cities, potatoes were planted at the behest of the government. The state also decided to stockpile staple foods in huge stores.
But the pandemic lacks masks, not food. The full Swiss compulsory stocks remain unaffected. The state, and large institutions in general, are always preparing for the last crisis. This is not an accusation, it cannot be otherwise. If the state gears up, if it does everything it can, it can only do so for a purpose that is plausible for people because they have already experienced similar situations. Societies are conservative, viruses are not.
Individuals and companies, not the state, have new ideas and the creativity they need to deal with crises. Years ago, software billionaire Bill Gates warned that a global pandemic was the greatest risk to humanity. He fights infectious diseases worldwide with the Bill and Melinda Gates Foundation.
Once the restrictions are lifted, we will need creativity to deal with the turning point. The loudest will be those who call for investment programs. We should resist this as well as the demand to significantly increase health care funds. There are still too many acute hospitals in Germany and Switzerland, the corona crisis does not change the need for reform.
How private initiative thrives
Government over-provision has its price. The state deprives companies and citizens of the power they dispose of. According to forecasts by Deutsche Bank, the German government ratio will climb to well over 50 percent this year. So there is currently a redistribution from private to state. The debt that a finance minister now bears is paid off by his successors by increasing taxes or reducing them later than planned. Greetings from the “Soli”. It was temporarily introduced to finance reunification. “Temporarily” can take an eternity.
Wherever subsidized companies spread, private resourcefulness has a difficult time. Capital is not used in a targeted manner, but where the state’s watering can is sufficient. Productivity drops. As the exit from the shutdown is emerging, we should be aware that the crisis requires two answers. Medically, she could only be managed with collective discipline. Economically, it takes the creativity and motivation of every individual.
We will only unlock this potential if we put the state back in its place after the pandemic. The scope for tax cuts has decreased due to new debt, but it has not yet been exhausted. Besides, unnecessary regulations should be removed to stimulate the economy through deregulation. The state must make itself small for the private initiative to thrive.