Covid-19 and the political economy of mass hysteria

Deputy Director of the Master's Degree in Economics and Political Science at ESEADE. – Professors Philipp Bagus (Rey Juan Carlos, Madrid), José Antonio Peña Ramos (UG, Granada), and Antono Sánchez Bayón (URJC, Madrid) published a paper on how the government response to the pandemic has generated major damage.

They argue that what happened with COVID-19 can be associated with a case of mass hysteria, strengthened by the connection between the media and the size of the state.

Some paragraphs to highlight (the bold are mine):

“It could be argued that infection by a virus would constitute a negative technological external effect [72]. However, the only task of a minimal state is to protect private property rights. It is not the job of the minimal state to protect its citizens against all life risks, such as catching a cold or seasonal flu [73]. In a minimal state, citizens are free to decide what risks they want to take, be it driving a car, bungee-jumping, or participating in social interaction. Indeed, the state’s attempt to reduce infection rates in the form of mandatory face masks, business closings, or refuge-in-place orders violates the private property rights that the minimal state is supposed to defend and can produce externalities. negative in the form of depression, alcoholism or suicide. “

About the media:

“As discussed in detail below, the problem with mass hysteria is that there are reasons why both the media and the state can actively contribute to the spread of fear and spread biased information.

(…) Negative news sells. The media have the incentive to portray the danger. The history of the government as a hero providing resolution to threats is very commercial [85]. “

And on the incentives of politicians in a more interventionist environment:

“It is in the interest of a government to emphasize the vulnerability of citizens to external and internal threats, because the legitimacy and power of the state rest on the narrative that it protects its citizens against such dangers. (…)

Interested politicians [119,120] face an asymmetric reward. Underestimating a threat and not acting comes at great political cost, as politicians will be held accountable for the disaster caused by the threat they underestimated. On the contrary, an exaggeration or even an invention of a threat and a bold state intervention are politically more attractive. If the existential threat claimed by politicians really turns out to be such a great danger, they can be celebrated as heroes if they enact bold measures. If the costs of these measures are ultimately excessive compared to the real danger, then politicians do not have to bear the cost of the wrong decision, but can pass it on to the rest of the population. “

This was indeed the case in Argentina. When the quarantine worked “wonderfully” and we compared ourselves to Sweden and Brazil and Chile, success was all for “Professor Fernández”. When the numbers of infections and deaths began to equal and later exceed those of any country in the region (and by far those of Sweden), the keynote conferences were over and the blame fell on “people who do not take care of themselves ”.