A government that's too protective stifles innovation and productivity, when mostly it should just get out of the way.
There is often an instinct after a big economic shock to retreat from risk. Usually that means government adopting policies that accept risk on behalf of individuals. The Great Depression was followed by the New Deal; the Great Recession yielded the Affordable Care Act. It's no surprise that the pandemic brought Build Back Better, which aimed to expand the welfare state even further.
The future of the bill is uncertain, but no matter what replaces it, the move to siphon more risk from Americans’ lives at this point is a mistake. Some risk reduction has been valuable in the past, but today we are at a critical moment where more will cause harm. Rather than take risk out of the economy we need to add more in, especially for low-income people and the middle class.
Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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