Does a crisis caused by bad government lead to even more bad government, which is the pessimistic hypothesis in Robert Higgs’ classic, 'Crisis and Leviathan'? Or does an economic crisis force politicians to actually scale back the size and scope of government, which is the hypothesis in Naomi Klein’s 'The Rise of Disaster Capitalism'.
I’ve generally sided with Higgs, though there obviously are cases—such as Chile—where bad statist policies were followed by sweeping economic liberalization.
But, based on new research from the International Monetary Fund, it may be that Klein has a stronger argument.
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