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Dweebs at the NY Times were shocked, shocked, to learn of the respect Paul Ryan pays to Friedrich Hayek. Richard Epstein writes of Hayek’s enduring value.
The wisdom of Hayek is exactly what this country needs right now.
My last column for Defining Ideas, “Franklin Delano Obama,” stressed the dangers of Franklin Roosevelt’s “Second Bill of Rights,” which was long on rights but short on any articulation of their correlative duties. Roosevelt’s program works well everywhere except in a world of scarce resources, which, alas, is the only world we will ever know.
Fortunately, Roosevelt quickly met with some determined intellectual resistance. In 1944, when Roosevelt unveiled his “Second Bill of Rights,” Friedrich von Hayek, an Austrian economist, political theorist, and future Nobel Prize winner, wrote The Road To Serfdom. That book rightly became a sensation both in England and in the United States, especially after the publication of its condensed version in The Reader’s Digest in April 1945. Hayek’s basic message was the exact opposite of Roosevelt’s. He was deeply suspicious of government intervention into markets, thinking that it could lead to economic stagnation on the one hand and to political tyranny on the other.
Hayek has never been out of the news. But, right now, his name has been batted around in political circles because Paul Ryan, the Republican Vice-Presidential nominee, has acknowledged that he regards Hayek as one of his intellectual muses. That observation brought forward in the New York Times an ungracious critique (called “Made in Austria” in the print edition) of both Hayek and Ryan by Adam Davidson, a co-founder of NPR’s Planet Money. Davidson’s essay reveals a profound misunderstanding of Hayek’s contribution to twentieth-century thought in political economy.
Davidson leads with a snarky and inaccurate comment that, “A few years ago, it was probably possible to fit every living Hayekian into a conference room.” But it is utterly inexcusable to overlook, as Davidson does, Hayek’s enduring influence. A year after the Road to Serfdom came out, Hayek published his 1945 masterpiece in the American Economics Review, “The Use of Knowledge in Society,” which has been cited over 8,600 times. In this short essay, Hayek explained how the price system allows widely dispersed individuals with different agendas and preferences to coordinate their behaviors in ways that move various goods and services to higher value uses.
Alas, Davidson’s dismissive account of Hayek does not mention even one of Hayek’s major contributions to weaning the United States and Great Britain from the vices of centralized planning. Thus Hayek’s 1940 contribution to the “Socialist Calculation” debate debunked the then-fashionable notion that master planners could achieve the economic nirvana of running a centralized economy in which they obtain whatever distribution of income they choose while simultaneously making sound allocations of both labor and capital, just like in Soviet Russia.
Hayek exposed this fool’s mission by stressing how no given individual or group could obtain and organize the needed information about supply and demand conditions throughout the economy. The virtue of the price system was its use of a common unit of measurement—money—to allow various actors to compete for a given resource without having to lay bare why they need any particular good or service. The seller need only accept the highest bid, without nosing around in other people’s business. The interaction between buyers and sellers allows for constant incremental adjustments of both price and quantity. Old information gets updated in a quick and reliable way, thereby eluding the administrative gauntlet of the socialist state.
Jennifer Rubin posts on the VP also rans.
In selecting Rep. Paul Ryan (R-Wis.) as his running mate, Mitt Romney may have significantly changed the trajectory of the race and also the GOP. As to the latter, Ryan’s elevation to the ticket has set back the careers of several rising GOP stars and firmly put the party on the reform track.
New Jersey Gov. Chris Christie and Sen. Marco Rubio (R-Fla.) made the decision not to run for president in 2012. It wasn’t the “right time.” Maybe President Obama was inevitably going to be reelected. Maybe they needed more experience. For whatever reason, they took themselves out of the presidential race. Then Romney left them off the ticket. Now where do they stand? …
A couple of weeks ago, Niall Ferguson angered the left with his call for Obama to hit the road. Now he is going after higher ed.
School is in the air. It is the time of year when millions of apprehensive young people are crammed into their parents’ cars along with all their worldly gadgets and driven off to college.
The rest of the world looks on with envy. American universities are the best in the world—22 out of the world’s top 30, according to the Graduate School of Education at ShanghaiJiaoTongUniversity. Once it was Oxford or Cambridge that bright young Indians dreamed of attending; now it is Harvard or Stanford. Admission to a top U.S. college is the ultimate fast track to the top.
Little do the foreigners know that all is far from well in the groves of American academe.
Let’s start with the cost. According to the College Board, average tuition and fees for in-state residents at a sample of public colleges have soared by 25 percent since 2008–09. A key driver has been the reduction in funding as states have been forced to adopt austerity measures. In the same time frame, tuition and fees at private universities rose by less (13 percent), but still by a lot more than inflation.
According to the Consumer Financial Protection Bureau, total student debt (which includes private loans and federal loans) climbed to more than $1 trillion. It is the only form of consumer debt that has continued to grow even as households pay off mortgages, credit cards, and auto loans. In real terms, students are borrowing twice what they did a decade ago.
It’s not only Facebook stock that Silicon Valley superstar Peter Thiel is selling. He’s shorting higher education, too, arguing that college is the new asset bubble—the natural successor to subprime. …
And Open Market Blog says the higher education bubble is causing a demographic decline among college grads.
… As college costs and student loan debt soar (partly due to opulent university spending) and unemployment rises, young college graduates, crushed by student loan debt, are deciding not to have kids, resulting in demographic decline among the educated in America. In recent years, student loan debt has skyrocketed from $100 billion to nearly $1 trillion, creating a potential debt bomb for the American economy.
France and England now have higher birth rates than America. College-educated people in their 20s are definitely more likely to have kids there. “American fertility is now lower than that of France” and the United Kingdom, notes The Economist, even though American fertility was higher than France or England in 2007.
Why the recent change? Could it be because college graduates in England and France have less student loan debt? Tuition is lower there. Per capita expenditures are lower at their elite schools. France and England spend much less on physical plant for colleges and universities. Faculty salaries don’t get as high there.
The buildings at my French-born wife’s alma mater don’t look very impressive, although she studied and learned a lot there. If a French university outwardly looks more like a high school than a Harvard, that’s OK with them. What matters to them is the learning that takes place within, not whether it looks like a college marketer’s movie-set image of what a university should look like. French students also study a lot more than American students, so they may be more accustomed to not having spare time (something that may help prepare them to have kids after they graduate, since parents of young children have little free time). …
Donald Boudreaux, the proprietor of the Cafe Hayek blog posted on the tiring memes we hear after each hurricane. One is the complaints about price gouging and the other will suggest the economy will be stimulated by all the construction that will bring our wealth back to even. He provides links to essays that debunk those memes and you can go there if you wish.
As tropical storm Isaac takes direct aim at my hometown of New Orleans, I predict two inevitable occurrences.
First, depending on the severity of the damage done by Isaac, prices of staple goods such as gasoline, bottled water, and plywood will spike in south Louisiana and Mississippi – price increases that will (here’s the prediction) spark a litany of economically uninformed laments about greed and “price gouging.” So this New Orleans native offers here his thoughts, from April 2005, on price gouging. No need to thank me.
Second, again depending on the severity of the destruction caused by Isaac, faux-wise commenters – some of whom are on economics faculties – will advise us all to understand the upside of Isaac’s destruction: a ‘stimulated’ economy. My vanity nudges me here, as above, to share with you some earlier thoughts on this matter.
The “scientist” who came up the with the fraudulent hockey stick graph of global warming is talking about suing Mark Steyn. James Delingpole wants to raise money to support the suit so it will go to discovery.
Today I’m launching a fund and I wonder whether anyone would like to contribute. Please, I implore you all, PLEASE chip in to help finance Professor Michael Mann’s suit for defamation against sinister, right-wing Canadian climate-change denier Mark Steyn and the fascist-denialist organ for which Steyn writes, National Review Online!
I don’t think Mann is going to win his case, not for one fraction of a millisecond. That’s why I think it’s so important that we give him all the financial encouragement we can at this sensitive early stage. There’s a danger that Mann may yet take advice from his lawyers, realise that there’s about as much chance of his defending the integrity of his ludicrous, comedy “Hockey Stick” curve as there is of George Galloway winning the Random Stranger I’d Feel Most Safe Sharing A Bed With While Completely Fast Asleep award (as annually voted by the readers of Mumsnet) – and pull out.
This must not be allowed to happen.
From obscure beginnings and with little discernible talent, Michael Mann has risen to become arguably the best loved comedy figure in the entire field of climate science, like Fatty Arbuckle, Pee Wee Herman and Coco the Clown rolled into one.
He singlehandedly invented Mann-made global warming using his amazing Hockey Stick curve – the one programmed using the ingenious algorithm whereby, whatever information you fed into it – fudged paleoclimatological reconstructions, the latest football scores, tofu futures – it always came out in the same, scary-looking This Is The End Of The World And We’ve Got To Act Now By Pumping Gazillions More Money Into Climate Research shape.
He gave us the phrase “Hide The Decline” – and starred in the hilarious song and video written in homage by a fan club called Minnesotans For Global Warming.
He described the battle between (apparently) well-funded “sceptics” like myself and “scientists” – ahem – like Michael Mann as “literally like a marine in battle against a cub scout.”
But of all the comedic pleasure this veritable Mickey Mouse among “climatologists” has given us so far, none comes even close to matching the joy and entertainment he will surely give us if he goes ahead with his court action against NRO and Steyn. …
ONE OF YOUR BETTER ONES