World War II was the era of John Maynard Keynes, who taught that a few great minds can improve an economy. The 1990s were the era of Milton Friedman, when markets proved they had the capacity to slip past government and regulatory obstacles.
The next few years? They belong to Hayek, and for that we can thank the effort to pass the health-care bill.
Friedrich von Hayek literally was an Austrian, born in Vienna in 1899. But Hayek also was a member of the Austrian school of economics, that group of scholars who built models that tried to explain the business cycle.
Having served as an artillery officer during World War I, Hayek learned that when the worst could happen, it often did. In the early 1930s he decamped to the U.K., where he taught at the London School of Economics. During the blitz, Hayek was an air warden and walked the rooftops with Keynes, the man who would become his great opponent.
As the war came to end, Hayek penned an apocalyptic tract, “The Road to Serfdom.” His thesis was that war gets people used to national planning. So the planners continue to plan, even in peacetime. These incremental expansions of the social- welfare state aren’t benign. They foster the creation of ever- more-powerful interest groups. The economy becomes less productive. Political corruption in turn gives rise to dictators. Foreign-policy tension or economic crisis accelerates the trend.
“‘Emergencies,’” Hayek wrote, “have always been the pretext on which the safeguards of individual liberty have eroded.” ...
And speaking of expansions of the social-welfare state and ever-more-powerful interest groups, the collection for the Catholic Campaign for Human Development begins this weekend.
