Today is Friedrich Hayek’s birthday and it is an important year to celebrate his birth. Although the twentieth century was the century of Hayek, this year seems also to be the year of Hayek. As a country, we are belatedly remembering his warnings, and seeing the consequences of ignoring them for so long.
Hayek explained many years ago the problems with centralized monetary policy, over-regulation and interference with prices. He understood the danger of subsidizing risk and loss and feeding a boom with easy money.
He also understood that markets are a process, and the process is one of learning and discovery—for this reason, financial models that are uniformly imposed and expect perfect information are doomed to fail.
To celebrate, we suggest buying a copy of the Road to Serfdom, if you do not have one, and perhaps in the evening, drink a toast of burgundy wine in his name.
It is too bad that we are all made to revere Keynes for his defunct theory of massive government spending. It does not matter how many times that theory had been proven failure. It is like spring. It springs to life regardless dismal failures of the past. It is now alive in the US.
Fred Hayek and Milton Friedman are extremely accurate in their economic behavioral theories but are shunned by the socialists.