Just out is the Spring 2011 issue of The Insider, in which we features two articles showing how Friedrich Hayek’s ideas about the limits of economic planning apply to three of today’s most salient policy issues. Here is the editor’s note with the complete rundown:
Not so long ago it was widely understood—mostly by economists, but by non-specialists, too—that free markets served an essential function: providing signals, in the form of prices, that individuals needed in order to make economic plans. According to this view, prices reflect knowledge that can never be discovered by bureaucracies or by any means other than markets, and without the knowledge embedded in these prices, it would be impossible to calculate what economic activities were worth undertaking in a world of limited resources.
But economic truths are forgotten during a crisis. Thus, we focus in this issue on the ideas of Friedrich Hayek, who, more than any other, developed the intellectual case against attempts by governments to engineer society as if it were a clock whose parts could be made to fit just so.
The evil that Hayek targeted was the comprehensive planning of society by a central authority. Nobody advocates that today, but new government interventions raise some of the same concerns that animated Hayek. As Peter Wallison explains, new regulations in both health care and financial services can only undermine the price mechanism in those areas, which will undermine competition; and a lack of economic competition can only make citizens vulnerable to encroachments on their liberty.
Hayek’s insights about the role of prices also yield a theory of the business cycle that runs counter to the Keynesian views that inform policy today. Again, what we learned in the 1970s, we have seemingly unlearned today. David Azerrad, drawing on the work of
Bruce Caldwell, distills 10 Hayekian insights on dealing with tough economic times.
In other articles, Roger Stark warns about the Medicaid disaster ahead, Matthew Spalding explains why a constitutional convention isn’t the best idea, we talk with Bob Chitester and Candy Mead about how izzit.org is introducing students to the economic way of thinking, and Rory Cooper identifies the essentials of a social media strategy.