Question

What’s good about allowing society to follow Adam Smith’s Invisible Hand? In that spirit, people can judge for themselves how much they risk from being exposed to COVID-19, so why should the government get involved with shutting down businesses? Why not let individuals make their own choices?

Answer 1

Adam Smith and other classical economists had claimed that economy would always be better off without any sort of intervention. Thus, the policy of laissez faire was promoted by Smith and his followers for a very long time. In 1930s US and UK in particular and the world in general saw the worst recession. Almost 1/4th of the population lost employment. Government initially followed the policy of non intervention which led to even more deterioration of the economy.

John Maynard Keyenes, a British economist, in his General theory, postulated a theory that allowed for governments' increased role during recession and other such difficult times to increase business confidence and bring back the economy to the earlier level as soon as possible.

Roosevelt administration adopted his measures that saw the country's economy recover quickly.

Similarly in the above mentioned question, we can see that if government doesn't impose lockdown, virus will inevitably spread at an even faster rate which will only worsen the current situtation with massive rise in infected persons and related deaths. During such difficult times, government should use rationality of saving lives over short term economic pain that could be recovered after the virus subsides.