Todd Zywicki on why the rule of law should not be shrugged during times of crisis:
There are four reasons why this is so. First, adherence to the rule of law is necessary for economic prosperity in general, but even moreso during economic crisis. Second, adherence to the rule of law is necessary to restrain the opportunism of politicians and special interests that use the opportunity presented by the crisis to piggyback their own narrow interests, often with no relationship to the real problems. Third, once discretion is unleashed during the crisis history tells us that the dissipation of the crisis does not promote a return to the rule of law—in fact, there is a “ratchet effect” of government discretion as the post-crisis period brings about a consolidation of governmental discretion rather than new limits on it. And finally, the mere potential for discretionary action promotes moral hazard, thereby creating the conditions for still further rounds of intervention. Thus, while little is lost in the short run by tying the government’s hands from discretion, more importantly the only way to promote long-term economic growth and preserve freedom in the long run, and to avoid precisely the circumstances that then justify future arbitrary government intervention is to constrain government discretion in the short-run.
Todd distinguishes national security and economic crises, with a focus on the forgotten man and that which is unseen:
I suspect that this justification rests on an intellectual error that confuses the appropriate responses to a national security crisis with that of an economic crisis. In a national security crisis government discretion may be necessary in order to anticipate and respond to threats and to seize tactical opportunities. But that is not what is needed following an economic crisis. What is necessary is reestablish coordination among billions of people. The problem is one of reestablishing decentralized coordination rather than centralized prevention of threats. Political uncertainty about the integrity of contracts and regulatory policy undermines investor confidence and raises interest rates. Thus, for every job supposedly saved through arbitrary intervention there may be many others that are never created as a result of the uncertainty created by government intervention in the economy.