Economist Friedrich Hayek said that, “If socialists understood economics, they wouldnt be socialists.” This idea captures a truth worth serious consideration. Too many people have lost sight of basic economic principles and, as a result, are increasingly attracted to the easy answers offered by socialism. They want government to provide more, regulate more, control more and redistribute more, without fully understanding the dire consequences of exactly where those policies lead.
Hayek understood those consequences. The Austrian economists classic 1944 book, “The Road to Serfdom,” remains one of the most important warnings ever written about the dangers of central planning and collectivism. It is hardly an easy or entertaining read, but its central argument is clear. When government assumes control over economic decision-making, inevitably individual freedom suffers, and this is the path to serfdom.
A government that attempts to centrally plan an economy must ultimately decide what is produced, how much is produced, who receives it and at what price. Dissent becomes an obstacle. Individual choices become a threat to the plan. Eventually, the state must force people to conform. That is the serfdom he predicts. This can and is slowly happening even with well-intentioned democracies, like ours in the United States. Each new intervention is justified as necessary to solve the problem of the moment.
LEADING ECONOMIST WARNS OF RISE OF ‘GEN Z AFFORDABILITY SOCIALISM’
Any good economic system begins with individual freedom. Within the rule of law, people are free to pursue their own interests for their own sake to improve their own circumstances. These conditions unleash the most powerful force in the world: incentives!
When people can own property, keep the rewards of their labor and pursue their own goals, they have a reason to work, save, invest, innovate and take risks. Someone may offer his skills to an employer in exchange for wages. Someone else may start a business, accept the risk of failure and earn a profit if successful. Another may save and invest for the future.
Each is free to pursue his own objectives, in his own way, for his own benefit. People only improve their condition by providing goods or services that other people want and that is how society benefits. While not intentional, their interests are aligned.
Economist Adam Smith said it best in “The Wealth of Nations,” writing, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest…”
HERE’S WHY UNIVERSAL BASIC INCOME WOULD BE A DISASTER FOR AMERICAS FUTURE
That is the remarkable power of markets. Millions of people, pursuing their own interests and responding to prices and incentives, can coordinate economic activity more effectively than a handful of government officials attempting to design the economy from the top down.
Government must protect individual rights, enforce contracts, defend private property and prevent force and fraud. Hayek believed in reasonable social support programs within a free society. However, this support should be provided without interfering in the marketplace. Once government begins manipulating prices, subsidizing favored industries, protecting pol
