F.A. Hayek and the Coronomics Crisis

F.A. Hayek’s The Road to Serfdom influenced Ronald Reagan and in 1991 President George H.W. Bush awarded Hayek the Presidential Medal of Freedom. The author, Bush proclaimed, “has done more than any thinker of our age to explore the promise and contours of liberty.” Since then presidents have paid little if any attention to Hayek, and few politicians seem eager to apply his thought to the current pandemic. 

The problem with socialism, according to the Nobel laureate, is that economic knowledge is highly fragmented, so no person or group of persons can possibly command an economy in a productive and efficient way. This reality, confirmed by socialist governments in Eastern Europe, Cuba, and Venezuela, also finds fulfillment in the current global pandemic, particularly in the United States. 

As the coronavirus spread, public health bureaucrats urged politicians to shut down the economy, which many politicians proved eager to do. Politicians decided which businesses were “essential,” which businesses and institutions were to shut down, and which were to remain open. The results were disastrous, with unemployment rising to 16.3 percent in California by June. As the people try to make sense of it all, they might consider another observation by Hayek.

Those who set out to plan economic life are confronted with the alternative of assuming dictatorial powers or abandoning the plans. The planner, Hayek wrote, must choose between “disregard of ordinary morals and failure” and for this reason, “the unscrupulous and uninhibited are likely to be more successful in a society tending towards totalitarianism.” As it is often explained, the worst get on top, and the people may find some evidence for that during the pandemic. 

Abortion clinics and liquor stores are allowed to remain open, but health clubs and even parks shut down. Church gatherings are prohibited and parishioners forbidden to sing or chant. A solitary surfer is arrested at Malibu Beach, but mobs of looters and arsonists are essentially left alone to destroy businesses. At this writing, parts of downtown Sacramento remain boarded up, and many businesses will not be coming back, even after the crisis abates. 

As KTLA reports, Los Angeles mayor Eric Garcetti is “authorizing the city to shut off L.A. Department of Water and Power services at houses, businesses and other venues hosting large gatherings during the pandemic.” If the people in many cities thought the unscrupulous and uninhibited are already on top it would be hard to blame them.