Revisiting Hayek

Friedrich Hayek was an Austrian economist, philosopher and intellectual considered to be one of the most important economists and political philosophers of the twentieth century. He shared the 1974 Nobel Prize in Economics for his pioneering work in the theory of money and economic fluctuations.2 Hayek's work has influenced world leaders for decades however, at this present time in our history, it is more important than ever to remind the public about the lessons and logic he had to offer.

To many who have watched the transition from socialism to fascism at close quarters the connection between the two systems has become increasingly obvious, but in the (Western) democracies the majority of people still believe that socialism and freedom can be combined. They do not realize that democratic socialism, the great utopia of the last few generations, is not only unachievable, but that to strive for it produces something utterly different - the very destruction of freedom itself. As has been aptly said: ‘What has always made the state a hell on earth has been precisely that man has tried to make it his heaven.' - F.A. Hayek, The Road to Serfdom1

Revisiting Hayek's work informs us of how the dramatic actions being taken by the current administration will lead us down a road that ultimately ends in the destruction of this democracy along with the freedoms and liberties we take for granted... [snip]

President Obama laid out his historic budget proposal in a manuscript entitled A New Era of Responsibility -- Renewing America's Promise. Unfortunately, his budget proposal is anything but responsible and broadly expands on plans by his predecessors which have already set us down "the road to serfdom." The growth rate of government spending for entitlement programs has increased 110% faster than that of the economy over the last two decades (figure 1).4,5 Entitlement programs or transfer payments to individuals currently account for 70% of total government spending.6

Figure 1. Growth in total government transfers to individuals vs. GDP growth

Still the President and his team try to sell the American people on the argument that the government hasn't done enough - it hasn't done enough to protect and expand the power of labor unions, to provide ALL Americans with healthcare, a college education, a comfortable retirement, security for individuals against unsustainable mortgage and credit card debt, security from risky investments, security for banks and businesses against irresponsible spending and lending, and finally security against climate change. According to the logic of the administration, more government spending is required to return America to prosperity... [snip]

Hayek recognized the threat from the inevitable expansion of government spending and entitlement programs and wrote in his famous work, The Constitution of Liberty,

"It has been well said that, while we used to suffer from social evils, we now suffer from the remedies for them. The difference is that, while in former times the social evils were gradually disappearing with the growth of wealth, the remedies we have introduced are beginning to threaten the continuance of that growth of wealth on which all future improvement depends."13

How can a government continue to promise more while its actions are simultaneously decreasing economic output?

The answer in the short-term is obvious; it will raise taxes and borrow money...

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image toon 1st reps msm mny sclm bbro = Oby's words v his actions