[ This is whole article a must read for all conservatives. It’s long in the original but I’ve never read anything better on Hayek. – JS ]
From Heritage.org
Abstract: The economist Friedrich Hayek attempted in his writings to spotlight the interlocking set of ideas—constructivist rationalism, scientism, socialism, “the engineering mentality”—that was leading the West down what he famously called the road to serfdom and to propose in its place a return to a revitalized form of classical liberalism. In this essay, Professor Bruce Caldwell draws upon the writings of Hayek, other Austrian economists, and public choice theorists to distill 10 fundamental insights that not only apply to the current crisis, but also can help us to think more clearly about the nature and limits of economics more generally. His conclusion: We usually do not have the necessary knowledge to intervene effectively in the economy, and the political process is such that, even if we did, we still likely would get bad policy, coupled with an ever-growing government sector. Hence the preference for smaller government among Austrian economists and public choice theorists.
- Theme #1: The Business Cycle Is a Necessary and Unavoidable Concomitant of a Free-Market Money-Using Economy.
- Theme #2: The 1970s and Why Keynesian Economics Was Rejected
- Theme #3: Some Regulation Is Necessary…
- Theme #4: …But a Lot of Regulation Is Fraught with Problems and Will Make Matters Worse.
- Theme #5: The Economy Is an Essentially Complex Phenomenon for Which Precise Forecasting—on Which the Construction of Rational Policy Depends—Is Ruled Out.
- Theme #6: In Any Complex Social Order, Any Action May Have Both Good and Bad Unintended Consequences.
- Theme #7: Basic Economic Reasoning Captures What We Can Know and Say About the Essentially Complex Phenomenon That We Call the Economy.
- Theme #8: The Cry for Social Justice Is Both Misguided and Dangerous.
- Theme #9: The Basic Hayekian Insight—Freely Adjusting Market Prices Help Solve the Knowledge Problem and Allow Social Coordination.
- Theme #10: The Basic Public Choice Insight—More Often Than Not, Government Cures Are Not Only Worse Than the Disease, but Lead to Further Disease.
In conclusion, if we combine the last two insights, we see that the Austrian economists and the public choice theorists deliver a one-two punch: We usually do not have the necessary knowledge to intervene effectively in the economy, and the political process is such that, even if we did, we still likely would get bad policy together with an ever-growing government sector.
That is why the Austrian economists and the public choice theorists favor smaller government. Especially in today’s environment, their insights bear repetition.
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