Professor Philipp Bagus has published a remarkable article making the case for developing a political economy to help us understand the 2020 coronavirus and similar events prone to mass hysteria.

The article, titled “COVID-19 and the Political Economy of Mass Hysteria,”1 appears in the International Journal of Environmental Research and Public Health. Happily, it is available online in full from the Swiss outfit MDPI (which is committed to open access scholarly publishing in the face of lingering and absurd twentieth-century paywalls for most academic journals). Bagus, along with coauthors José Antonio Peña-Ramos and Antonio Sánchez-Bayón, argue that digital media effectively boosts and weaponizes information provided by authoritative state sources in times of crisis.

The invocation of “public health” tends to suspend the public’s capacity for disbelief; after all, who wants to be sickened by an illness which respects no borders or strata of society? And why would politicians or media figures lie about a strange new virus emanating from China? It also tends to suspend the public’s objections to plainly illegal or dubious extra-legal measures, such as business closures and school shutdowns. It makes us forget about trade offs and alternatives, at least temporarily, because life, or at least our health, is at stake. This is especially true in the early months of a crisis, what we might call the “fog of war.”

But as Bagus and company make clear, political and economic realities do not magically vanish during a pandemic. In fact, the enduring tensions between economics and politics loom ever larger when states take aggressive steps to keep citizens at home and substitute fiscal or monetary stimulus for economic activity. Public health and the broader welfare state—especially public healthcare systems—cannot be neatly separated. And the bigger the government, the more profound the magnitude of policy errors. Politicians, per Hans-Hermann Hoppe, have an everlasting tendency to think short term by their very nature. And they are at their worst when emergency powers are seized from a willing public uninterested in legislative processes.

Bagus’s framework for the political economy of covid emerges when we begin to understand the politics and the economics realistically and in tandem. Mass hysteria imposes tremendous costs across society, both in human and economic terms. Tradeoffs cannot be avoided, even if they are not much discussed in popular media. Alcoholism, suicides, untreated illness, and vast psychological harms all must be considered in addition to the staggering and almost unknowable financial costs of lockdowns. Hysteria makes it all worse. The paper identifies political institutions, politicians themselves, and media actors as having colluded to intensify the degree of hysteria in society over covid during the past year:

  • States banned or limited activities like dining, sports, and socializing;
  • States approached the perceived threat from the virus in a centralized way;
  • Heavily politicized and state-licensed media tended to promote viewpoints provided by government officials;
  • Negative news stories were bolstered when provided by seemingly authoritative public health officials;
  • Politicians may well haved benefited by instilling fear in the population; and
  • Politicians had every incentive to overstate the threat of the virus, as they don’t bear the costs

The close nexus between political actors and dominant media platforms creates a ripe environment for covid hysteria simply because the incentives and tools are so suited to it. As the authors put it:

Self-interested politicians face an asymmetric pay-off. Underestimating a threat and failing to act has great political cost, as politicians will be held responsible for the disaster caused by the threat they underestimated. By contrast, an exaggeration or even invention of a threat and 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 enacted bold measures. If the costs of these measures ultimately turn out to be excessive compared to the actual danger, then the politicians do not have to bear the cost of the wrong decision but can pass it on to the rest of the population. Politicians enjoying a guaranteed income therefore have an incentive to exaggerate a danger and to impose exaggerated measures, also called policy overreaction, which is conducive to the emergence and growth of mass hysteria.

In sum, property rights tend not to be effective limits in curbing mass hysteria in a welfare state. Moreover, the state may inhibit the natural mechanisms that reduce stress and hysteria. The centralized nature of the state increases group and conformity pressures. Politicized mass media and negative messages from official state agencies can further increase psychological pressure. Finally, the state may intentionally want to increase anxiety, and politicians have the incentive to make bold decisions and exaggerate the threat.

Big government and big media go hand in hand, hence the public overreaction to covid. After all, collectives by their very nature do not allow for a variety of viewpoints or approaches to problems. Bagus and his coauthors have given us a wonderful and original exposition, a new way of looking at Edward Bernay’s old concept of “manufacturing consent.” They have also given us the solution: market incentives, property rights, and decentralized mechanisms for discovery. Top-down statecraft cannot produce competition for solutions, but instead acts as a blunt and inefficient instrument of bad policy.

Or as the authors state, “there exist important limits for a mass hysteria to harm life and liberty in a minimal state.”

  1. Philipp Bagus, José Antonio Peña-Ramos, and Antonio Sánchez-Bayón, “COVID-19 and the Political Economy of Mass Hysteria,” International Journal of Environmental Research and Public Health 18, no. 4 (2021): 1376,


  • Jeff Deist is president of the Mises Institute, where he serves as a writer, public speaker, and advocate for property, markets, and civil society. He previously worked as a longtime advisor and chief of staff to Congressman Ron Paul, for whom he wrote hundreds of articles and speeches. In his years with Dr. Paul he worked with countless grassroots activists and organizations dedicated to reducing the size and scope of government.