Tuesday, July 28, 2009

Hayek's Relevance


From The American Spectator:
In his book The Fatal Conceit, Nobel laureate Friedrich A. Hayek provided some insight into this lethal combination of arrogance and stupidity.

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design," advised Hayek.

Before the "obvious economic failure of Eastern European socialism, it was widely thought that a centrally planned economy would deliver not only 'social justice' but also a more efficient use of economic resources," wrote Hayek. "This notion appears eminently sensible at first glance. But it proves to overlook the fact that the totality of resources that one could employ in such a plan is simply not knowable to anybody, and therefore can hardly be centrally controlled."

In other words, Nancy Pelosi and Barack Obama just don't know enough -- can't know enough -- to design or run a complex economy. It's not just that neither of them has even run a successful hot dog stand. The problem is that there are too many millions of transactions in an economy, too many interactions and unintended consequences, for any one person or any single committee to understand -- even if they all went to Harvard.

Emphasis added

No comments:

Post a Comment