Paul Ryan’s Intellectual Muse

by Richard Epstein

Hoover Institution
Defining Ideas
August 28, 2012

The wisdom of Hayek is exactly what this country needs right now.

My last column for Defining Ideas, “Franklin Delano Obama,” stressed the dangers of Franklin Roosevelt’s “Second Bill of Rights,” which was long on rights but short on any articulation of their correlative duties. Roosevelt’s program works well everywhere except in a world of scarce resources, which, alas, is the only world we will ever know.

Fortunately, Roosevelt quickly met with some determined intellectual resistance. In 1944, when Roosevelt unveiled his “Second Bill of Rights,” Friedrich von Hayek, an Austrian economist, political theorist, and future Nobel Prize winner, wrote The Road To Serfdom. That book rightly became a sensation both in England and in the United States, especially after the publication of its condensed version in The Reader’s Digest in April 1945. Hayek’s basic message was the exact opposite of Roosevelt’s. He was deeply suspicious of government intervention into markets, thinking that it could lead to economic stagnation on the one hand and to political tyranny on the other.

Hayek has never been out of the news. But, right now, his name has been batted around in political circles because Paul Ryan, the Republican Vice-Presidential nominee, has acknowledged that he regards Hayek as one of his intellectual muses. That observation brought forward in the New York Times an ungracious critique (called “Made in Austria” in the print edition) of both Hayek and Ryan by Adam Davidson, a co-founder of NPR’s Planet Money. Davidson’s essay reveals a profound misunderstanding of Hayek’s contribution to twentieth-century thought in political economy.

Davidson leads with a snarky and inaccurate comment that, “A few years ago, it was probably possible to fit every living Hayekian into a conference room.” But it is utterly inexcusable to overlook, as Davidson does, Hayek’s enduring influence. A year after the Road to Serfdom came out, Hayek published his 1945 masterpiece in the American Economics Review, “The Use of Knowledge in Society,” which has been cited over 8,600 times. In this short essay, Hayek explained how the price system allows widely dispersed individuals with different agendas and preferences to coordinate their behaviors in ways that move various goods and services to higher value uses.

More

Prime Time for Paul Ryan’s Guru (the One Who’s Not Ayn Rand)

Friedrich von Hayek

by Adam Davidson

New York Times
August 21, 2012

As Paul Ryan and Mitt Romney take the stage in Tampa next week, the ghost of an Austrian economist will be hovering above them with an uneasy smile on his face. Ryan has repeatedly suggested that many of his economic ideas were inspired by the work of Friedrich von Hayek, an awkwardly shy (and largely ignored) economist and philosopher who died in 1992. A few years ago, it was probably possible to fit every living Hayekian in a conference room. Regardless of what happens in November, that will no longer be the case.

Hayek’s ideas aren’t completely new to American politics. Some mainstream Republicans, including Ronald Reagan, have name-checked him since at least the 1980s as a shorthand way of signaling their unfettered faith in the free market and objection to big government. But few actually engaged with Hayek’s many contentious (and outré) views, particularly his suspicion of all politicians, including Republicans, who claim to know something about how to make an economy function better. For these reasons, and others, Hayek has become fashionable of late among antigovernment protesters, and if Ryan brings even a watered-down version of his ideas into the Republican mainstream, the country’s biggest battles about the economy won’t be between right and left, but within the Republican Party itself — between Tea Party radicals who may feel legitimized and the establishment politicians they believe stand in their way.

For the past century, nearly every economic theory in the world has emerged from a broad tradition known as neoclassical economics. (Even communism can be seen as a neoclassical critique.) Neoclassicists can be left-wing or right-wing, but they share a set of crucial core beliefs, namely that it is useful to look for government policies that can improve the economy. Hayek and the rest of his ilk — known as the Austrian School — reject this. To an Austrian, the economy is incomprehensibly complex and constantly changing; and technocrats and politicians who claim to have figured out how to use government are deluded or self-interested or worse. According to Hayek, government intervention in the free market, like targeted tax cuts, can only make things worse.

More

A Russian farce over a punk rock band

Washington Post 
Editorial
August 18, 2012

In late 1933, a young writer in Moscow composed a 16-line poem that depicted a cruel and ghastly dictator, Joseph Stalin, with polished boots and thin-necked henchmen. “His thick fingers are bulky and fat like live-baits,” wrote Osip Mandelshtam. “He is forging his rules and decrees like horseshoes — into groins, into foreheads, in eyes, and eyebrows. Every killing for him is a delight. …” The poem led to Mandelshtam’s persecution, and he died in a Soviet prison camp five years later.

His poem, a satirical polemic, is worth recalling in the wake of a decision Friday by a Moscow judge to sentence three women who make up Pussy Riot, a punk rock band, to jail for two years as a punishment for their disrespectful performance art.

In February, the women, dressed in tights, colorful ski masks and short skirts, mounted a platform in front of the altar of the Cathedral of Christ the Savior in Moscow and, with some wild dancing, mimed a short “punk prayer” critical of President Vladimir Putin and his close ties to the Russian Orthodox Church. Others recorded a video of their antics. The performance took less than a minute. Later, the group added music and lyrics to a video that went viral, and they were arrested for “hooliganism” and inciting religious hatred.

More

Iran and the Human Rights Opening

by Mehdi Khalaji

Wall Street Journal
August 7, 2012

With tensions mounting over Iran's nuclear program, the West has dealt the Tehran regime crippling blows on several fronts, including through sanctions, the targeted killing of scientists, and cyber operations such as the Stuxnet virus. Tehran is no doubt reeling but regime leaders have spotted a silver lining: The West's single-minded focus on the nuclear dossier has permitted them to widen their violations of human rights.

Indeed, since the protests that followed the 2009 election, Iran's human-rights abuses have worsened substantially—a development that has gone largely unnoticed in the U.S. and Europe. This is a tragedy with profound strategic implications for the West.

The Iranian legal system allows numerous human-rights violations, including discrimination against women and ethno-sectarian minorities, and the imposition of brutal penal sentences, such as stoning. Tehran's ruling theocrats view human rights as a Western invention used to undermine Islamic culture and sovereignty as part of what Supreme Leader Ali Khamenei considers a soft war against Iran. They therefore do not believe themselves duty-bound to uphold their basic human-rights obligations, including those under international agreements to which they are party.

Consider this example: A man, under house arrest for the past two years, learned of the death at different points of his two sisters. The state refused him the right to attend either funeral. This outrageous case did not involve an average Iranian citizen but rather Mehdi Karroubi, a presidential candidate in 2009 and the former speaker of parliament. Mr. Karroubi has remained under arbitrary house arrest since the post-election uprising along with two other dissidents, Mir Hossein Mousavi—the opposition's leading presidential candidate—and his wife, Zahra Rahnavard, who was heavily involved in her husband's campaign.

More

David Gothard

International Religious Freedom Report for 2011: Greece

U.S. Department of State
August 2012

The constitution and other laws and policies protect religious freedom and, in practice, the government generally respected religious freedom and took measures designed to address concerns. The primary issue remained the degree to which religious groups are afforded the same privileges and legal prerogatives granted the Orthodox Church. The government demonstrated a moderate trend toward improvement in respect for protection of the right to religious freedom.

There were some reports of societal abuses or discrimination based on religious affiliation, belief, or practice. The Greek Orthodox Church exercised significant social, political, and economic influence. Some non-Orthodox citizens complained of being treated with suspicion or being told they were not truly Greek when they revealed their religious affiliations to other Greek citizens. Other religious groups reported discrimination by members of society. Members of the Muslim minority in Thrace were underrepresented in public sector employment and no Muslim military personnel advanced to officer ranks.

The U.S. government discussed religious freedom with the government as part of its overall policy to promote human rights. The ambassador and consul general in Thessaloniki met with government and religious leaders on a regular basis. They also hosted iftars (evening meals during Ramadan) attended by a broad range of government, community, diplomatic, nongovernmental organization (NGO), media, academic, and religious leaders, and attended Holocaust memorial events.

Read the Report

China's Growth: Planning or Private Enterprise?

by Paul Gregory

Library of Economics & Liberty
August 6, 2012

Introduction

China appears to have come through the world economic crisis better than many other countries. China's admirers claim that, under China's "state capitalism," planners have guided large state companies rationally and wisely through the rough seas of the world economy. The Chinese Communist Party (CPC) plans, oversees, and administers the interwoven network of state banks, airlines, railroads, utilities, oil companies, and large manufacturers, all of which make up the economy's "commanding heights" (to use Lenin's term). As Europe and the United States slump, the CPC can speedily launch infrastructure projects or shift millions of migrant workers from one locality to another. There is no messy democracy to gum up the works. New York Times columnist Thomas Friedman extols: "A one party system can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century."

But Ludwig von Mises in the 1920s and F. A. Hayek in the 1930s discredited the idea that planners can manage an entire economy. Hayek pointed out that central planners lack "the knowledge of the particular circumstances of time and place." Because the planners do not have the information that rests with hundreds of thousands of companies and millions of consumers, planning fails, as it did spectacularly in the Soviet Union. Interestingly, even socialist economist Robert Heilbroner admitted as much. China is not an exception. Its economic growth has occurred despite the government's economic planning and because of its large, dynamic private sector.

China's Economic Growth

As Figure 1 shows, China's Gross Domestic Product grew from 1979 to the present at an average of slightly over 8.5 percent per annum. Although Japan and the Four Tigers (Hong Kong, Singapore, South Korea, and Taiwan) matched that growth rate at various points in the past, more than thirty years of such high growth is unique. The CPC would like us to believe its growth is due to its peculiar brand of socialism with a Chinese face. In fact, what deserves credit is the entrepreneurship of the Chinese people.

Figure 1. China's Growth Rate of GDP, 1983-2011

More

The Shame of Putin’s Courts

by Masha Gessen

New York Times
August 6, 2012

Of all the bad feelings one can have about one’s own country, shame is the most painful. Righteous outrage motivates one to act; sadness breeds solidarity; even fear can bring people together. But shame not only makes you want to jump out of your skin, it also means you have already effectively jumped out of the skin that is your country.

I distinctly recall the first time I recognized the feeling of shame in myself. It was a bit over a year ago, when I watched a video of an American gay activist, Lt. Dan Choi, being grabbed and dragged off by the Moscow police just outside Red Square for attempting to take part in an illegal gay pride parade. I remember, too, thinking about what was causing me to feel ashamed: I was imagining many of my friends in other countries watching the video and thinking of me as living in a backward country.

This summer, that feeling is growing familiar. The ongoing trial of three members of Pussy Riot, the girl band that staged an anti-Putin “punk prayer service” in Moscow’s main cathedral, has been compared to the Spanish Inquisition, a witch hunt, and Stalinist show trials (I am guilty of that comparison, too). All of these comparisons give the Moscow court too much credit. The Inquisition, the witch hunters, and even Stalin’s executioners believed in their causes and fought passionately for them. What is going on in the Moscow courtroom today is a dispassionate, cynical travesty of justice.

More

We're In Milton Friedman's World

by Timothy B. Lee

Forbes
July 31, 2012

The web is awash in well-deserved tributes to Milton Friedman on what would have been his one hundredth birthday. Friedman’s Free to Choose was one of the first books on public policy I read in high school, and it has had an immense effect on how I view the world.

Some of Friedman’s policy proposals, such as school vouchers and drug legalization, are still hotly debated today. But I think the most important measure of a thinker’s influence are his once-controversial ideas that are now considered so obvious that no one seriously disputes them. I’ve recently been reading a collection of Friedman’s Newsweek columns from the late 1960s and early 1970s, a time when he was at the peak of his fame and influence. Among the proposals he wrote about most frequently were: severing the link to gold and letting the dollar float, fighting inflation by reducing the growth of the money supply, ending the draft, abolishing wage and price controls, and cutting taxes.

Most of these proposals were adopted by the end of the 1970s. All are still practiced today. But more remarkably, they’re all now considered so obviously correct that few people seriously advocate returning to the policies of the 1970s.

More