John Tamny of RealClearMarkets
In his 1940s classic, The Road to Serfdom, Friedrich Hayek described classical liberalism as essentially a non-system whereby “there are no hard-and-fast rules fixed once and for all.” Major media presently attach the adjective “conservative” to the writings of Hayek, but in truth, he was seeking something quite the opposite. Conservatism presumes rigid structures and rules, whereas Hayek felt that no central authority could ever successfully regulate the infinite individual decisions that ultimately constitute a market.
Hayek’s thinking takes on greater importance today, given the desire of many strategists across the policy spectrum to “fix” the derivatives markets. Sadly for them, logic tells us their efforts will bear very little fruit. Indeed, to Hayek, those who presumed to manage commerce suffered from a “fatal conceit” in suggesting they could somehow oversee human action to our benefit. Offering up an easy comparison, Hong Kong has thrived economically with very little governmental oversight, while India has historically been economically stagnant with gut-wrenching levels of poverty under governments that have seen fit to regulate seemingly anything and everything.
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