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.
| October 7, 2010; 11:49 AM ET
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