With Bailouts, Governments Are the Big Winners

by Thorsten Polleit

The growing concerns about the consequences of the COVID-19 coronavirus have led to a global demand and supply shock: the demand for goods and services has collapsed, and because international production and value chains are now also disrupted, output slows down, and its former level can no longer be maintained.

The demand and supply shock brings the division of labor in the individual countries and thus internationally to a standstill. The damage is colossal and threatening. The fine division of labor is the engine that drives the economic prosperity of the world’s population. It cannot be switched off with impunity. If the shutdown continues, supply shortages of vital goods will be inevitable for people around the world.

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