2020 Saw the Return of the State Leviathan. We Must Be Wary
Covid-19 prompted states around the world to seize more power. This will have long-term consequences for economies.
Calling order.
Photographer: Aris Oikonomou/AFP
Like wars, pandemics drive changes that are bound to outlast them. The Black Death in the mid-14th century helped raise wages across Europe, since labor had become scarce and workers could command a premium from landowners. Similarly, the Covid-19 crisis looks set to have long-term consequences on the economy — in no small part because of how much power the state has seized across much of the rich world. Unless managed carefully, this return of the Leviathan could hamper economic growth and productivity for many years to come.
The pandemic prompted governments to intervene in two primary ways: Politicians issued unprecedented restrictions, such as lockdowns, on companies and individuals to slow contagion and reduce pressure on health-care systems. At the same time, they provided large-scale economic support, including loan guarantees and equity injections, to struggling businesses. In Europe, the bloc temporarily loosened its state-aid rules so it could deploy this all-important safety net.