The Road from Serfdom - an interview with F.A. Hayek

Wow look at how clearly he answers the questions. Half his answers begin with a "Yes" or a "No." Can you imagine someone thinking and speaking this clearly these days?

"... socialism was bound to fail as an economic system because only free markets--powered by individuals wheeling and dealing in their own interest--could generate the information necessary to intelligently coordinate social behavior. In other words, freedom is a necessary input into a prosperous economy."

<i>The rules of the game that the gold standard requires [say] that if you have an unfavorable balance of trade, you contract your currency. That's what no government can do--they'd rather go off the gold standard. In fact, I'm convinced that if we restored the gold standard now, within six months the first country would be off it and, within three years. it would completely disappear.</i><p>I wonder to what degree we can use this to explain the PIIGS problems in Europe. Of course, they don't have a gold standard. But for a given nation in the Euro, the value of the currency is fixed: they have no means of manipulating it to take pressure off their fiscal problems.

This quote,<p>"<i>Reason:</i> Is Britain irrevocably on the road to serfdom?<p><i>Hayek:</i> No, not irrevocably. That's one of the misunderstandings. The Road to Selfdom was meant to be a warning: "Unless you mend your ways, you ll go to the devil." And you can always mend your ways.<p><i>Reason:</i> What policy measures are currently possible to reverse the trend in Britain?<p><i>Hayek:</i> So long as you give one body of organized interests, namely the trade unions, specific powers to use force to get a larger share of the market, then the market will not function. And this is supported by the public because of the historic belief that in past the trade unions have done so much to raise the standard of living of the poor that you must be kind to them. So long as this view is prevalent, I don't believe there is any hope. But you can induce change. We must now put our hope in a change of attitude.<p>I'm afraid many of my British friends still believe, as Keynes believed, that the existing moral convictions of the English would protect them against such a fate. This is non- sense. The character of a people is as much made by the institutions as the institutions are made by the character of the people. The present British institutions contribute everything to change the British character. You cannot rely on an inherent "British character" saving the British people from their fate. But you must create institutions in which the old kinds of attitudes will be revived which are rapidly disappearing under the present system.",<p>on the (historically) current effect of unions is priceless.

Sorry for the long quote, but I have tried to reduce its length as much as possible while retaining meaning:<p>"" [...] the idea that things ought to be designed in a 'just' manner means, in effect, that we must abandon the market and turn to a planned economy in which somebody decides how much each ought to have, and that means, of course, that we can only have it at the price of the complete abolition of personal liberty. ""<p>This seems to me to be a false dichotomy. If the state sets artificial prices on some goods, say basic foodstuffs, this does not automatically lead to the complete destruction of market forces, it simply produces an artificial input in the market, leading to an equilibrium that likely to be different from the natural equilibrium.<p>As an aside, I was really thrilled by his description of meeting Alexander Solzhenitsyn.

Ironic how he singles out Spain as a country that was in a position to make itself into a shining beacon of fiscal responsibility, to be emulated by the rest of the world.