COVID-19 and the Political Economy of Mass Hysteria


If such thing as mass hysteria exists with this contagious fear and irrational reactions, then it is very dangerous to have such an institution as the state.

Mass hysteria is a phenomenon that is widely studied in psychological literature. It is when a group of people develops a strong fear towards a threat, be it existing or non-existing. It happens in factories, for example, when someone sees a bug and starts scratching himself, and upon seeing him others develop the same symptoms. In the end, it is found out that there has never been a bug. It has been just psychological. And yet, it can increase symptoms and be contributing factor in an epidemic. There is a famous case of a Portuguese TV show where some of the main actors get a strange virus and when the kids saw the TV show they developed the same symptoms, real symptoms, and even three schools had to be closed in Portugal. There was an investigation that followed and it was found out it was just psychological. The virus never existed.

In the same way that they are placebo effects (you think you will get better, and because you think you will get better, you actually get better), there also exist nocebo effects, which is the opposite (you think you will get ill and therefore you get ill, or you get worse than otherwise, you would have gotten). There is a famous case of a guy who wanted to commit suicide. He was participating in a clinical trial, swallowing 28 pills to commit suicide, and developing symptoms. His heart starts to beat very fast and he gets to the hospital. They manage to stabilize him somehow and then the doctor of the medical trial arrives and tells the guy that he was in the control group, trying to kill himself by just taking placebos. When the guy is told that he gets immediately better and can be released from the hospital because it was just psychological.

This mass hysteria, can also happen in free societies. Because of the negativity bias of the human brain, due to evolution, we concentrate on negative news because they can be threats. If our ancestors would have ignored the threats they would have died. That is why we concentrate on them. If we get negative news all day long, seven days a week, 24 hours a day, then we can develop so much anxiety and stress that we fall into this hysteria. Fear and anxiety are also contagious and can spread to other people. The group that falls prey, that succumbs to this mass hysteria gets bigger and bigger.

This phenomenon exists and can lead to irrational behavior, to overreactions to threats that are not as threatening as people think. However, there are also ways in a free society to reduce the amount of mass hysteria (e.g. through stress and anxiety reducing strategies), because stress and anxiety are perfect grounds to breed mass hysteria. So how can stress and anxiety be reduced? Well, physical exercise, sports, socializing, distraction (by interacting with others)… It is exactly the activities that the state prohibited during the COVID-19 crisis, and of course, the stress and the anxiety level went sky-high.

In a free society, even if there is mass hysteria there are at least some limits to the harm that it can produce because private property rights are defended. Even though people react irrationally they cannot harm others so easily. Not so with the state that violates private property rights, lockdowns, shutdowns… Imagine that the government falls into mass hysteria. The politicians, the group of people who gets control of the government are in mass hysteria. The harm that these people can do is practically unlimited because they don’t care for private property rights.

In a free society, the spread of mass hysteria can be limited through experimentation. You look for alternative solutions to the threat. As a business owner, you don’t know (no one knows) if this threat is existing or how big it is so you may try things. You may close your business or limit the number of people who can get into it, take the temperature of the people or introduce masks, or just do business as usual. Then you can compare how the different experimentations, the confrontation of the spread, if something is an overreaction or not and how it works. And if people behave normally and don’t die like flies it probably it is not as dangerous as other people thought. People who have not fallen prey to this mass hysteria, let’s say the borderline cases, can observe and acknowledge that these people act more or less normally so it is not such a big threat. However, when we live in a state with a senate that always has a centralized approach and it mandates to do the same for everyone then it is a fertile ground for groupthink to develop. You cannot compare, you cannot watch others. You think that since everyone is doing this it must be correct. Since it is the state imposing this there are no other options. In a free society, you can see other options (the Hayekian discovery process). You can discover information on how threatening the threat is, how real the threat is. You cannot discover this if you just have a centralized one-size-fits-all approach.

Politicized mass media is another thing that can amplify mass hysteria. If the media plays the role to support the government in its measures, in its overreacting, and gives the population negative news 24 hours a day, 7 days a week, then mass hysteria is very likely to develop. This is especially the case with the social media that we are connected to today. We get constantly negative news, making it very difficult to stay positive and not to develop a stress and anxiety level where you get hysteric.

How and why is the media politicized today? We have state TV channels, state radio stations, licenses, journalists who go through university education or state education… and the media tends to support the government in the mass hysteria. Gettin negative news from an authoritative source is another factor that can amplify mass hysteria because you think this an authoritative source must be correct. If he says it is a big threat it must be a big threat, so you get excited. Take Anthony Fauci for example. He goes to the congress of the United States, a sacred, mystic building, that you cannot touch or go inside unless you are a politician, and says that COVID-19 is ten times deadlier than the seasonal flu. Then, how do you think like a normal citizen? The state is responsible for our public health, and this guy, who in a free society would probably be no one, but through political connections he has risen to this authority, you believe it is a really dangerous threat.

You have to take into account that fear is used as a political factor as well. Government rests on fear, on the narrative that it is here to protect you from threats. And this has been played over and over throughout history. From foreign threats and terrorism (f.e. Saddam Hussein has weapons of mass destruction), all these threats are used to expand the power of the state. Governments have an incentive to use or to increase threats and use them to increase their power. With COVID-19 governments have increased very much their power.

When it comes to mass hysteria politicians have very bad incentives because they face asymmetric payoffs. When they underestimate the threat, that is very bad. Let’s imagine that they underestimate the threat of an epindemic and there are dead people. They would be ousted or out of the office and will be blamed for the dead. They do not want this. What happens If they overestimate the threat? There may be also death but they are not as directly connected to the threat. It may be death by suicide, people who fall into alcoholism and die a few years later, maybe people who don’t get cancer treatment or cancer is not detected in time due to a lockdown, people get depressed because they lose their jobs and die earlier… but these deaths will not be directly connected through the political decisions of lockdowns. And, in any case, the politicians have the media to protect them. The media will say it was necessary, it was very harmful. On top of that, politicians can always say that if we would not have done it, millions would have died. So, what is the incentive for the politician? Of course, to overreact, to do a lockdown, to shut down everything. In the end, the costs of these decisions the politician do not assume in total. He will get his salary, unlike the people who lose their jobs, lose all their investments and savings because the business that they have built goes bankrupt. People who get depression lose. The politicians do not bear the psychological and health costs because they can externalize these costs to others and it is therefore very likely that politicians will overestimate a threat and overreact to it. This contributes to the mass hysteria because people think that if the state does a lockdown it must be a horrible thing. If the state creates a warlike atmosphere of soldiers walking around the streets to see if the lockdown is enforced then people get anxious, and this is a perfect fertile ground for hysteria.

If such thing as mass hysteria exists with this contagious fear and irrational reactions, then it is very dangerous to have such an institution as the state because the harm that can be produced if the state amplifies the mass hysteria is tremendous, it is biblical, and you can see it with COVID-19.

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  • Philipp Bagus

    Philipp Bagus is professor at Universidad Rey Juan Carlos. He is a Fellow of the Mises Institute, an IREF scholar, and the author of numerous books including In Defense of Deflation and The Tragedy of the Euro, and is co-author of Blind Robbery!, Small States. Big Possibilities.: Small States Are Simply Better!, and Deep Freeze: Iceland’s Economic Collapse.

The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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