Hayek, politics, and the economy

In regard to the events of January sixth, I can only say that conditions are evidently much worse than I thought.

In regard to solving this problem, I repeat what I always say: Most of our problems are economic in nature. Not political. 

I don't forget what Hayek said:

Most planners who have seriously considered the practical aspects of their task have little doubt that a directed economy must be run on more or less dictatorial lines... The consolation our planners offer us is that this authoritarian direction will apply "only" to economic matters... Such assurances are usually accompanied by the suggestion that, by giving up freedom in what are, or ought to be, the less important aspects of our lives, we shall obtain greater freedom in the pursuit of higher values...

Unfortunately, the assurance people derive from this belief that the power which is exercised over economic life is a power over matters of secondary importance only, and which makes them take lightly the threat to the freedom of our economic pursuits, is altogether unwarranted. It is largely a consequence of the erroneous belief that there are purely economic ends separate from the other ends of life...

That's from The Road to Serfdom, Chapter 7: "Economic Control and Totalitarianism". 

I quote those words from Hayek for his view of the economy, his view that people sometimes think, or are sometimes led to believe, that economic matters are "matters of secondary importance only". Hayek strongly disagrees with that. So do I.

As I have noted before, Hayek's chapter is about totalitarianism, but his argument is about the often-overlooked importance of economic matters. From Hayek I learned the great importance of the economy: Other people say the world is driven by politics. I say politics is driven by economic forces and economic conditions.

By the morning of the presidential election of 2016, half the world was politicized. Both halves were politicized by the next morning. All of those people think the world is driven by politics.

They're running down a blind alley, all of em. Economic problems require economic solutions, not political solutions. Because we persist in applying political solutions, conditions never improve. Because conditions never improve, each side blames the other for things getting worse. Because each side blames the other, politics becomes ever more polarized. Because politics becomes ever more polarized, the chances of actually solving the problem become ever more remote.

Economic problems require economic solutions.

 
The above started as the opening to a long and still unfinished post. It came back to life suddenly while I was reading Interview with Benjamin Friedman on Religion, Economic Growth, and Much Else at Conversable Economist. Here, Ben Friedman is exactly right:

... no matter how rich our society is, if we get into a situation in which large numbers of people feel that they no longer have a sense of forward progress in their material lives, and they don’t see that turning around anytime soon, and they don’t have optimism either that their children will face a better economic future, that’s the circumstance under which people turn away from these small-l liberal, small-d democratic values, like tolerance and respect for diversity, generosity, openness of opportunity, even respect for democratic political institutions.

No. He's right, but I don't know about "exactly". I don't know about "small-l liberal, small-d democratic values, like tolerance and respect for diversity, generosity" and all that crap. That's a political view.

Here's what I know: Hayek says failing to notice the significance of economic matters will lead to bad political decisions. Benjamin Friedman says a bad economy makes the political situation worse. I agree with both of them.

Set politics aside. Use your free time to study the economy. 

The problem is cost. That's most of what you need to know, right there. And you already knew it.

I don't have a good ending for this post, so I'll just quote the historian Rostovtzeff again, on the Fall of Rome:

What happened was a slow and gradual change, a shifting of values in the consciousness of men. What seemed to be all-important to a Greek of the classical or Hellenistic period, or to an educated Roman of the time of the Republic and of the Early Empire, was no longer regarded as vital by the majority of men who lived in the late Roman Empire and the Early Middle Ages.

We can have another Fall, or we can fix the economy. It's our choice. 

But remember what Toynbee said: civilizations die by suicide.