Saturday, February 15, 2014

Hayek destroys E.J. Dionne from the grave

I realize that it is folly to take E.J. Dionne as a serious thinker, but his recent column blaming Austrian economics and, more specifically, F.A. Hayek for the nation's ills needs to be corrected.  Unfortunately, Dionne's silliness is what passes for seriousness among progressives these days.  Blogging at the Volokh Conspiracy, which is now part of the Washington Post's family of blogs, Todd Zywicki does an efficient take-down of Dionne, while also providing a very nice summary of Hayek's contributions to economics.
Start with Hayek. Dionne’s attack on Hayek is summarized in this paragraph:
Hayek and Mises perceived little difference between democratic governments that used their power to plan against recessions and dictatorships that did the same thing. In this view, the policies of Franklin Roosevelt led down what Hayek called the “Road to Serfdom” and were thus objectively comparable to those of Hitler or Stalin.
Later on, Dionne conflates this statement with what he represents to be the takeaway from Hayek’s critique of the New Deal and related policies:
Hayek believed, Judt said, that “if you begin with welfare policies of any sort — directing individuals, taxing for social ends, engineering the outcomes of market relationships — you will end up with Hitler.”
This is not an accurate summary of Hayek’s thesis in the book (I observe in passing, it isn’t evident from the column that Dionne has actually read The Road to Serfdom itself, as opposed to just reading commentators on the book who have also fundamentally misunderstood the book). Hayek did not believe that “if you begin with welfare policies of any sort” that you were necessarily on the road to serfdom. In fact, the entire last part of his famed The Constitution of Liberty is dedicated to explaining how many modern welfare-state policies could be implemented in a manner that would not unduly threaten liberty and the rule of law.
Hayek never said that the basics of the welfare state were incompatible with individual liberty. Hayek’s concern was that comprehensive economic planning of the economy by the state was incompatible with individual liberty and the rule of law over the long run. His attack on the New Deal was not about Social Security, but rather the National Recovery Act and other interventions designed to cartelize industries, erect barriers to entry, raise prices for producers at the expense of consumers, fix wages, and divide markets among incumbent producers. Central planning, not the welfare state, is what was incompatible with individual liberty.
Perhaps Dionne didn't realize that there was a cartoon version of the Road to Serfdom. It might be more his speed.