In honor of the 40th Anniversary of the awarding of the Nobel Prize to F.A. Hayek, Don Boudreaux and I have a column today in the Wall Street Journal, “A Nobel Economist’s Caution About Government: Friedrich Hayek warned that intervening can make things worse. ObamaCare and Dodd-Frank, anyone?”
Here’s the opening lines:
Forty years ago the Nobel Prize in Economic Science was awarded to a scholar who believed the prize perhaps should not exist. As he graciously accepted the distinction in 1974, Austrian-British economist Friedrich A. Hayek worried aloud that thinking of economics as a science might fuel what he called “the pretense of knowledge”—the idea that anyone could know enough to engineer society successfully. He was right to fret.
Hayek’s greatest contribution to economics was to show that society is far more complex than we realize, with little pieces of knowledge dispersed among millions of individuals. “The curious task of economics,” he famously wrote in “The Fatal Conceit,” which he published in 1988, “is to demonstrate to men how little they really know about what they imagine they can design.”
Recent government interventions suggest that politicians and bureaucrats today think they can design just about anything. This ignorance has backfired, as it always does, bringing with it what economists call “unintended consequences.”