How Lockdowns Broke Human Capital

It’s too easily forgotten that human beings are the most crucial capital of all. Which means how they deploy their talents is of utmost importance.

This is something to keep in mind as scholars like Nicholas Eberstadt wonder about “the bizarre imbalance between the demand for work and the supply of it.” His analysis was disappointing. It’s as though he witnessed the cruelty of the lockdowns related to the coronavirus without catching on to what the suffocation of freedom meant for human capital.

For those eager to perhaps understand it better, human beings are making a crucial investment when they accept a job. In life there are no dress rehearsals, so the choice of work can’t be taken lightly. Please think about this with the lockdowns top-of-mind.

Politicians, policymakers, and experts who would never miss a paycheck or a meal suddenly decided that workers not like them were no longer essential. In making this choice for others, they robbed human beings of years of investment of self in certain industries while also bluntly telling these others that their livelihood could be taken from them near overnight.

It’s all worth thinking about with Eberstadt’s musings about “a bizarre imbalance” post lockdowns top of mind. In reality, the latter is a statement of the obvious and it’s not remotely bizarre. Real people saw up close what government can do to jobs and what we call “the economy” in short order. That so many would be rather reluctant to re-commit their own capital to certain fields really isn’t at all surprising. It was disappointing that Eberstadt didn’t acknowledge this.

Instead, he pivoted to policy. In particular, he wrote about how in 2020-21 “Washington pulled out all the monetary and fiscal stops to avoid an economic collapse.” This was very disappointing. Eberstadt essentially decided to write about what Washington did in response to an economic collapse, while ignoring Washington’s definitive role in the collapse.  

Absent panicky politicians on the local, state and national levels taking away individual freedom to assemble, go to work, and operate one’s business, there’s no “economic collapse” to avoid. That the entity behind the economic collapse was empowered to fight it didn’t seem to trouble Eberstadt.

At which point Eberstadt glossed over the folly of Washington “doing something.” Lest readers forget, command-and-control was foisted on the American people beginning in March of 2020. That the economy collapsed in response was and is a blinding glimpse of the obvious. For Eberstadt to then assert that trillions of federal spending somehow staved off “economic collapse” is Eberstadt’s very disappointing way of saying that command-and-control in response to command-and-control is the source of economic advance. Not at all.

The trillions in federal spending that Eberstadt concludes was necessary (the stuff about alleged monetary “stimulus” is hard to take seriously, but would require another column) to “avoid” economic misery ignores that absent federal subsidization of lockdowns, there wouldn’t have been lockdowns. Think about it. And in thinking about it, ask yourself if elites generally sanguine about lockdowns would have felt that way if their own jobs had been threatened. The question answers itself, at which point it’s safe to say that if a panicky President Trump had properly not panicked and not signed a $2.9 trillion spending bill, the jobs and business destroying lockdowns would have ended around the country very quickly out of necessity. Talk about “stimulus.”

Indeed, imagine if the political class hadn’t extracted nearly $3 trillion from the private sector, thus rendering lockdowns dead in the water? If so, the people who populate the economy would have been free to go back to work much sooner, and they would have been free to do so sans the politicized allocation of nearly $3 trillion. In short, an economy that was already booming would have continued to boom. Such is the norm absent command-and-control married with trillions of government waste.

From there, Eberstadt observes that “Americans actually had more money in their pockets during pandemic emergency years.” What he leaves out is that government can only give out what it’s first taken, and the rich are generally those taken from. To the Keynesian-leaning, this is a good thing. More consumption! Alas, it’s investment that truly powers advance only for government to dampen economic spirits with the forced movement of wealth from individuals most prone to invest their excess into the hands of those most prone to consume. Eberstadt’s essay routinely omits that government didn’t help us avoid collapse as much as its interventions were the collapse.

The view here is that Eberstadt disappointingly missed, only to miss again and again. From the forced wealth transfers he finds reasons for workforce exit without happening on the original sin of government decreeing the work of millions non-essential. Having missed this truth, Eberstadt then pivots to wealth transfers that he thinks helped us “avoid” collapse, only for him to conclude now that it’s harming the same “economy” through reduced workforce participation. You think?

The challenge now for the macro-focused Eberstadt is the crucial unseen. In particular, it’s perhaps lost on him that the most important capital (human) was suffocated to the tune of millions by government force. A failure to see this renders his other analyses about “Men Without Work” not as useful as it could be. Investment of human and financial capital powers all growth, but in 2020 government crushed the investment in numerous ways. That men are withholding their capital in the aftermath of immense federal blundering is very much a statement of the obvious.

Republished from RealClearMarkets