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Rereading Hayek

Tyler Cowen rereads Friedrich Hayek's "The Road to Serfdom." The most important phrase in the book, he says, is "this book, written in my spare time from 1940 to 1943." "In those years, how many decent democracies were in the world?" asks Cowen. "How clear was it that the Western powers, even if they won the war, would dismantle wartime economic planning? How many other peoples' predictions from those years have panned out? At that time, Hayek's worries were perfectly justified."

All that's perfectly correct. And yet, I see "The Road to Serfdom" when I go to the offices of Republican members of Congress. This isn't Hayek's fault, of course. But political movements have a difficult time adapting to victory. Last night, I listened to the candidates for Delaware's congressional seat debate each other. The Republican, a rather extreme individual named Glen Urquhart, explained that our way out of the recession was to help the private sector get back on its feet. The Democrat, John Carney, agreed.

Yesterday morning, I went to the Eisenhower Executive Office Building to talk with Austan Goolsbee, head of President Obama's Council of Economic Advisers. "The business cycle in the 2000s was driven by consumer spending faster than income growth and residential housing investment, and that was unsustainable," he told me. "And so we’re trying to point to an older-style of recovery that’s business-investment driven."

There isn't any serious player in American politics who supports a centrally planned economy. There are people who support social insurance, and people who support national defense, but no one wants Apple or General Mills to take production orders from a bureaucrat. But it's very hard for political movements to adjust to a world in which they only have to be 10 percent as worried. In some ways, there seems to be an opposite incentive, as lower stakes require groups to use more extreme rhetoric if they're to keep their followers engaged. If Obama had really pushed for a socialized health-care system, the right could've argued against that. As it was, his plan was quite moderate, and so death panels entered the discussion.

At this point, the liberals I know are excited by the prospect of a few things. Extending health insurance -- probably private -- to all Americans. Reducing health-care costs for all Americans, as that will leave them with more of their income to spend on what they wish. Doing something about carbon emissions, preferably through market signals like a carbon tax or cap-and-trade. And, in my case, some sort of early-childhood education system. Marx would be very disappointed, but Hayek, I think, would be quite comforted.

By Ezra Klein  | October 7, 2010; 11:49 AM ET
Categories:  Books  
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No Hayek would hate it. Hayek never mellowed even after he was proven wrong.

Posted by: endaround | October 7, 2010 12:48 PM | Report abuse

In Road To Serfdom, Hayek wrote "Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance—where, in short, we deal with genuinely insurable risks—the case for the state’s helping to organise a comprehensive system of social insurance is very strong…. Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make provision for the consequences, such communal action should undoubtedly be taken."

which is kind of funny now.

See also John Quiggin's related post at

Posted by: bdballard | October 7, 2010 1:12 PM | Report abuse

Why don't you go and read Hayek yourself??? And early childhood education? Oh brother. My sense, both anecdotally and in studies, is that children who remain at home with a mom or dad until kindergarten turn out to be better students than the ones put in daycare.

Posted by: truck1 | October 7, 2010 2:08 PM | Report abuse

"There isn't any serious player in American politics who supports a centrally planned economy... no one wants Apple or General Mills to take production orders from a bureaucrat"

GM, Chrysler, AIG, done.

All the health insurance companies; a list of what you can sell will be provided by the government... as well as the prices you can charge.

G.E. and light bulb manufacturers? the list is in the works, close down any non-CFL plants now in preparation. Oh, the last one closed this year? If it wasn't "central planning" and "production orders" why did that happen?

Any oil/natural gas driller or coal mining company? Sorry, we're going to have to control and limit your companies more than ever before.

But not "General Mills"; so the goal really isn't fully central planing for the economy? Pull the other one, it's got bells on it (for you youngsters that's a polite way of saying "bullsh*t").

Everyone knows what the game is now; D.C. has accelerated the takeovers and control too much for anyone to miss it; unless they're being deliberately obtuse.

Congratulations for your obtuseness; I'm sure it's a useful job skill given the topics you write about.

Posted by: gekkobear | October 7, 2010 4:41 PM | Report abuse

"There isn't any serious player in American politics who supports a centrally planned economy. . . . no one wants Apple or General Mills to take production orders from a bureaucrat."

. . . other, more eloquent writers than I have already pointed out the startling number of companies that have been virtually nationalized by this administration's policies, but even if you try to duck out of that by saying "yes, well - GM, AIG, G.E. - fine, but not Apple or General Mills" . . . guess what, you're still wrong. As two minutes with Google will reveal, there are plenty of bureaucrats who want to control production at both:

Now I know you're just a blogger, without all the layers of fact-checkers that your counterparts who write for the print edition of the Post have at their disposal, but still . . . either you're a lousy researcher, or you're intellectually lazy, or you WERE aware that you were peddling a bunch of c**p, and were just being dishonest. Your pick!

Posted by: mjdaniels | October 7, 2010 5:19 PM | Report abuse

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