July 19, 2016 at 7:26 am, by Carl

Why don’t we try Hayek when, after 70+ years, it is clear that Keynes ideas don’t fulfill the promise?

 

This was a question from one of my students after the class had investigated the economic systems of the two great 20th Century economists: John Maynard Keynes and Friedrich von Hayek.  The class had spent the previous six or seven class days deep in our national history since World War II, and for this student (and a few others) the clarity was startling.  Our country, and most Western nations, adopted Keynes economic principles as the best fit for a Progressive Mindset nation, and yet as we look around today, it sure seems as if none of the promises of Keynes’ philosophy had come to pass.

 

So, why don’t we simply shift to Hayek?

 

The answer, as I told the class, was mostly because leaders, and the nation in general, are afraid to accept the brutal truth of Hayek’s position, that there will be winners and losers, successful businesses and bankruptcies.  We don’t like to hear that it won’t be fair.

 

Why?  Because since the onset of socialism in the 20th century, certainly American socialism (i.e. Progressivism), has sold this myth that things in life are supposed to be fair.  So, we keep telling the lie of fairness when, of course, all around us is the evidence that life is not fair.  Everyone doesn’t have the athletic prowess of Serena or Lebron.  Everyone can’t play like Yo-yo Ma or sing like Bono.

 

Thus, because people accept the lie, they foolishly keep voting for politicians who claim they will fulfill the promise of Keynes.  Meanwhile, the people live their entire lives in various poor economic situations and INSTEAD OF GETTING MAD AND MAKING A CHANGE…they just keep voting for the same type of politician, assuming foolishly that some new politicians will do something.  I don’t know if this is simply an example of the classic saw of insanity (continuing to do the same thing and yet expecting a different result) or a refusal on the person’s part to admit that if THEY were the winner, the multi-millionarie person, that they TOO would not want the government to take their money in higher taxes.

 

But even in the complaint, the truth emerges.  It’s not that there is something that could be done to bring about fairness…it is that inequity is inherent in the natural order around us.  Somehow we have now arrived at a time in our culture where it is assumed that one can literally change anything.  We see advances in DNA, and I honestly think some people believe that if they wished, they could actually engineer having the sports prowess of the superstars.  There are already some who do believe that they can stop the unfairness of death.

 

You can’t.  The natural world demonstrates again and again that there is an inherent unfairness in life.  One place has the tornado hit while another escapes the wrath.  One couple finds their baby born with a medical issue that will impact the full life of the child; next door a healthy baby is born.

 

The Keynes model does not work as it cannot ever fully overcome the reality that there is an inherent unfairness in life.  But people like the lie because it means they personally don’t have to make a change.

 

Once in my class, as we were discussing the challenges of economics, one student protested saying that their family could not escape the poverty of their life.  The student explained that life in West Virginia was just hard and unfair.  “My family can’t leave.”  I looked at her in mock horror and said “are your relatives slaves?”  She looked at my perplexed.  I reiterated, “I thought slavery had been abolished; are you saying your family are held as slaves on the land.”  With a quiet no, she acknowledged that her family were as free as the next person (and yes, as I have written about previously, I do know there is slavery alive and well in our country and globally…we’ll leave them aside for right now).

 

As I then explained to the class, if her family members wished, they could pack up and leave their poor surroundings immediately.  They CHOOSE NOT to.  And, if her complaint for them was really the statement of victimhood.  You must avoid victimhood at all possible.  You are NOT a victim; if were you live has you trapped in some poverty, take action.  Move immediately.   Even if it means leaving most of your meager possessions…there is no reason to stay trapped in some situation that is harmful for you!

 

I live in Florida.  I choose to.  If a hurricane comes through and harms me or my family, it is no one’s fault.  And, it is not necessarily “unfair.”  It is rather the way of the world; hurricanes come and can cause massive destruction.  If I really don’t like it, then I should move from Florida today.

 

Hayek’s model of economics approaches macro economics on this level.  Economy is like the weather.  You cannot control it.  You are in peril if you try.  Your best bet is to watch the signs and react appropriately.

 

Look, I know there is more to say about macro-economics.  And yes, I know in our current country, capitalism has gotten so far out of whack (mostly due to the loss of influence of the historical counter-balance, Christianity, with its accompanying values of self-sacrifice, moderation, giving away, taking care of the less fortunate).  All of that is a post for another day.  Just realize we have continue to try to use Keynes misguided ideas, much like a scientist who believes she can alter the weather and protect people from the difficulties.

 

Rather can perpetuating the lie, we would do much better as a country if we simply admitted life is hard.  You may go through college, and still not find that magical job that makes your life financially rich.  How we define life success steps into the mix here, which bears much import to the discussion.  Wealth should not be the focus of your life journey.

 

Nationally, we need a change.  And it isn’t one that goes into MORE Keynes-thoughts by adopting full-blown Socialism. Like Keynes, it is a dead end of frustration as, once established, people realize they still don’t have equity, and life remains challenging.

 

Rather, we need a change to return to where every human has majority control over the output of their life, with government playing a very small role.  It is the right move.  It will be hard for us, much like finally deciding to quit smoking or to get healthy and lose that extra 100 pounds.  There is no quick fix; no easy answers.  The first step, though, is to admit the current path is not the right one.