To commemorate the 40th anniversary of the award of the Nobel Prize in Economic Science to F.A. Hayek, my GMU colleague (from over in the law school) Todd Zywicki and I wrote this essay for the October 13th edition of the Wall Street Journal. A slice:
In addition, many of Dodd-Frank’s costs are passed on to consumers in the form of higher bank fees and reduced bank services. Expensive bank fees then drive many consumers out of the mainstream financial system and into the arms of payday lenders. The Federal Deposit Insurance Corp. estimates that the number of “unbanked” consumers in America rose by one million from 2009 to 2011, while payday lending has boomed during the same period. That was not the plan.
Such hubris and its inevitable results would not have surprised Hayek. In the 1970s, he saw government policies create the inflation they were designed to avoid. Government has shown again and again the folly of efforts to centrally direct complex systems.
What does Hayek recommend? A little humility. “We shall not grow wiser before we learn that much that we have done was very foolish,” he wrote in his 1944 masterpiece, “The Road to Serfdom.” It was the book’s central lesson that hubris makes us not only poorer but also less free. Today’s leaders would be wise to become better students of the late Nobel laureate.