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Source link: http://archive.mises.org/9016/von-hayek-in-1975-you-must-hear-this/

Von Hayek in 1975 (you must hear this)

November 25, 2008 by

This is F.A. Hayek in 1975 on Meet the Press. If you have never listened to a Mises.org podcast before, you must listen to this. I heard this Friday and I’ve been haunted by it ever since. A number of points stand out to me.

1) Hayek is amazing here. He holds the line. He is patient and explains very well. He refuses to relent. The core of his message is rooted in the Austrian view of cycles, and this interview demonstrates that he never stepped away from it, despite some far-flung claims.

2) The line of questioning he endures is hilariously naive and idiotic. We think we have a Keynesian problem now; it’s clear that these people really believe that policy makers can manipulate the economy like a machine, trading off unemployment for inflation and back again, with no trouble. So they hit Hayek for his supposed personal opinion that unemployment is better than inflation, as if the trade off is direct and easy to manipulate. How far we’ve come!

3. In light of the present crises, and the appalling ignorance of the present generation of policy makers of any historical understanding, it is so helpful to remember that we’ve been down this road before, and done all the wrong things before. Forget learning from history. The present generation does even know enough history to learn anything from it. So this interview really makes it clear what has come before.

Finally, all hail Professor Hayek. He really did a wonderful service back then. He has much to teach us 35 years later!

{ 26 comments }

Dennis November 25, 2008 at 11:14 am

“Forget learning from history. The present generation does even know enough history to learn anything from it.”

This statement is absolutely true and emphasizes an important issue.

I would add that when large additional control over the economy and individuals’ finances and lives is involved, the incentive to study and learn from history (or for that matter reasonable theory) is greatly diminished. Power and all the benefits that accrue to those that wield it is also an important factor.

Stanley Pinchak November 25, 2008 at 11:31 am

Dennis,
I would go so far as to say that the application of power and the increase of intervention increases the time preferences of individuals in such a regime as compared ex ante. Those with a high time preference will be less interested in pursuits like learning than those with lower time preferences. Thus the situation of an un-learned electorate voting for more interference in their lives is a self reinforcing phenomenon. The worst part of having such a high time preference is that this will reduce the willingness of these individuals to participate in a reasoned dialog with those who see the problems in their life and could provide methods to alleviate their distress.

Cory Brickner November 25, 2008 at 12:24 pm

Jeff,

Even more astounding is Hayek’s prediction that should the United States continue on its present course of inflationary policies that we shall see economic crisis 20 years from then. The only reason things are not worse here in the US as compared to England is the government is not trying to nationalize various industries.

Oops. Come 30+ years later, not only has the economic inflationary housing bubble burst, but to pour salt on the wounds, we have government essentially nationalizing its pet industries.

C. Evans November 25, 2008 at 1:47 pm

I like his response to the question Why do so many intellectuals and economists skeptical of, and even hostile to, free-market capitalism? He replies that these people like the idea of a system in which they are in control. Thus, they abhor the free market and desire a planned economy. This hubris appears to be the sine non qua of all collectivist thinking.

Keith November 25, 2008 at 2:20 pm

He’s trying to explain color to blind men.

J Cortez November 25, 2008 at 2:37 pm

Very interesting.

I was struck how even though the commentators/questioners knew practically nothing, they still knew more and had better manners than the current bunch of people posing as the press today.

Meet the Press needs to have somebody like him on immediately.

Glen November 25, 2008 at 2:58 pm

C. Evans,

In short, a type of cognitive dissonance. Most people I know that go into those endeavors want also to be a savior so they must believe that someone like them can provide the ‘plan’ that will save the world. They refuse to believe that millions and millions of apparently random actions of individuals can produce better results than they can through their plan. They long for the world to be ordered along the lines they envision so they are captured by something that can provide at least sophistic support for what they want to believe. Also, they firmly believe themselves immune to the corrupting influence of power or don’t even think it is an issue.

Mark Hubbard November 25, 2008 at 3:15 pm

A very interesting clip: thank you for posting this.

JOHNNY GALT November 25, 2008 at 6:48 pm
Inquisitor November 25, 2008 at 11:17 pm

Interesting he and Nozick entertained very similar explanations as to why many intellectuals are left-leaning.

Greg Ransom November 26, 2008 at 1:20 am

Thanks for posting this. I’ve wanted to see this broadcast for decades now, after reading the transcript long, long ago.

Thanks.

Greg Ransom November 26, 2008 at 1:29 am

Hayek also made an appearance on Buckley’s “Firing Line” sometime in the 1970s. Is there any chance of getting audio of that one?

KY Leong November 26, 2008 at 2:52 am

Listening to Hayek is so much easier than reading his work, despite his thick accent.

I am also totally amazed by his patience with these Keynesian political morons. He reminds me of a Chinese Buddha with infinite wisdom and tolerance for human stupidity.

Thanks for the post, Jeff.

mark m November 26, 2008 at 9:27 am

“… they hit Hayek for his supposed personal opinion that unemployment is better than inflation, as if the trade off is direct and easy to manipulate. How far we’ve come!”

Jeff,

I really don’t think we have come all that far and with this recession we will end up going backwards.

Listen to the British Labour govt in its defence of its bailout and stimulus measures. It lambasts its Tory opposition for “not caring” when it (the Tories) hesitates to support the govts highly interventionist measures, as if the only thing stopping Cameron and his shadow ministers was their personal feelings on the matter rather than what can actually be done to affect the situation. Another Tory backbencher was roundly condemned ‘cos he said that Britain had to go thru the recession in order to remove the unproductive and innefficent investments that had sprung up during the boom years. Again, all because of the belief that the govt can simply tweak a few taxes and print a bit more money and solve all our problems for us.

And its not just a bankrupt govt savings face: by and large commentators (esp. the BBC) display implicit support for the Labour govts policy strategy. The idea of nationalising banks is hardly scrutinised at all.

Capitalism will get it full in the kneck for this recession as govts react with increasing levels of state intervention – forcing banks to loan, nationalisation of banks, lending direct to private companies maybe even nationalisation again, public works programs, and, when the inflation kicks in, price and wage controls. I even wonder if emigration controls will be stepped to stop any likely brain drains on the part of those industriuous people who get fed up with this turn of events.

Richard Ebeling November 26, 2008 at 10:46 am

The summer that Hayek gave this interview in 1975 he was a senior fellow at the Institute for Humane Studies, when they were still headquartered in Menlo Park, CA.

Before he went to do the interview, some of us who were on IHS fellowships that summer as well — Gerry O’Driscoll, Sudha Shenoy, Don Lavoie, Gary Short, Larry White, Roger Garrison and myself, among others — told him we would be watching very carefully to make sure that he did not “leak.”

So if he was consistent, principled, and uncompromising during that interview on Meet the Press, I’d like to think it was (at least partly) because we had warned him he’d be answerable to this group of other Austrians for any, well, “errors” or “omissions”!

Richard Ebeling

David Spellman November 26, 2008 at 11:24 am

I think Stanley Pinchak made a very insightful comment about why the rabble support the tyranny.

James Matlock November 26, 2008 at 1:44 pm

Very, very good commentary. It is hard to believe that the nationalization of the American banks was undertaken with little scrutiny or thought about the logical implications regarding loans to private entities. I can assure you that the government will seek to regulate even moreso to whom these banks are able to lend in the coming months. The government then has control of capital and which businesses are capable of receiving capital. Is this even America anymore? The government then controls which banks will fail and which businesses will fail.

Marxist thoughts have been criticized and villified in this country for 40+ years, and because it was believed that anyone that entertained these ideas was a Communist, very little was studied or covered on these topics, lest the author be accused of being a Communist sympathizer, so that by the time we finally arrive in a fully Socialist state, nobody is able to differentiate or understand the situation. Player Piano anyone? Animal Farm?

Hassan Bamdad November 26, 2008 at 4:11 pm

Hayek is gaining a following in Iran. Today a review of his work was on the front page of this free market oriented Iranian web-site:

http://rastak.com

Chronos November 27, 2008 at 12:07 am

@Stanley Pinchak:

I’ve recently been having thoughts along those lines myself. Recently, on one of the science-related blogs I keep up on (can’t recall which), I posted a comment to the effect that the bureaucratic bloat of NASA and other national space agencies means that projects get approved or denied based on how “sexy” they are, instead of their actual scientific contribution.

(For instance, we’re learning practically nothing by launching shuttles, building the ISS, or otherwise putting human beings into space. We’ve learned far, far more from robotic probes, like the Spirit and Opportunity rovers on Mars, which cost a tiny fraction of ISS: $800 million for two Mars rovers, versus $100 billion for 80% of a space station. And the ISS is at a steep orbital incline — steep meaning both “away from the equator” and “expensive to reach from the ground” — just so it can fly directly over Moscow for publicity purposes.)

Of course, the craving for “sexy” over “informative” is itself a direct symptom of skewed time preferences. However, I also opined that, in the absence of NASA but continued presence of the Fed and other time-preference manipulations, much of what NASA does would simply not exist in the private industry, whether useful science or not. The current market, so immersed in interest rate manipulation and “me me me now now now” culture, is incapable of taking the long view on innovation and discovery, including space exploration and other non-applied basic science.

In that sense, NASA represents an attempt to redress the wrongs of one hand by committing opposite wrongs with the other hand (a bit like idealized Monetarism). And, of course, the balance is tenuous and ephemeral because it doesn’t arise naturally from the system — instead requiring master manipulators who declare how much space research we ought to have.

Edward November 28, 2008 at 1:59 pm

Please post a link to the transcript if anyone has it.

LibertyVini November 28, 2008 at 11:38 pm

Don’t forget, this was during the reign of Gerald Ford, whose sub-mental “Whip Inflation Now” campaign was undoubtedly an intentional misdirection of public (and press) attention away from the central role the Fed played.

Invariably, these disinformation campaigns include a broad and sustained campaign to program the press to amplify such purposeful inanities, completely swamping the real information.

Mario Rizzo December 3, 2008 at 4:24 am

I remember watching this on tv. It is interesting to keep in mind that Thatcher came to power just a few years later and changed the British trajectory. Question: Does a video exist — after all it was a tv program?

Tony December 3, 2008 at 4:19 pm

What I find most upsetting as a college student is the fact that not a single econ professor will even mention Hayeks name for more than a few seconds. His theories of the business cycle are completely excluded by my professors. The only mention of Hayek in my class on money and banking has been that he was brilliant but that his theories do not use mathematical models and therefor are apparently void. It is a travesty that college students do not learn his theories especially in a time like this.

Frank Rizzo December 3, 2008 at 5:51 pm

Tony, I find your post very interesting. I am currently a sophmore enrolled in the school of business at Rutgers University. Hayek’s name is mentioned rather often in my econ courses and my professors have at times also discussed the Austrian’s Theory of the Business Cycle. In fact, his book, “The Road to Serfdom” is actually required reading in a course I will be enrolled in for next semester. What many people fail to realize is how valuable it is to be able to acknowledge other economic ideologies. I would find it very interesting to know where you are attending classes? Please respond.

BillOGoods February 22, 2009 at 1:23 pm

Having listened to FAH and read these comments, I’m finding it difficult to understand the role of Paul Volker in the Obama Administration. FAH seems to say in this interview that easy money, inflationary policies are wrong for the long term health of an economy. It was Volker In the late 70s and early 80s that managed a Fed tight money policy that caused unemployment to rise over 10%, but that eventually stopped inflation—laying the ground work for a long economic recovery.

Hayek says in this interview that the slower the “recovery,” that is, the longer it takes to reverse inflation the right way (tightening the money supply), the longer the recovery.

Now, what’s a guy like Volker doing supporting an administration that wants to inflate the money supply beyond anything we have ever known outside of a South American basket case.

Адриан August 22, 2009 at 5:01 am

Приятно конечно понимать, что остались действительно блоги в этой мусорке рейтинга Яши. Ваш – один из таких. Спасибо!

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