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Quotation of the Day…

… is from page 130 of the 2007 Definitive Edition (Bruce Caldwell, ed.) of F.A. Hayek’s classic 1944 volume, The Road to Serfdom:

That in a competitive society most things can be had at a price – though it is often a cruelly high price we have to pay – is a fact the importance of which can hardly be overrated.  The alternative is not, however, complete freedom of choice, but orders and prohibitions which must be obeyed and, in the last resort, the favor of the mighty.

This insight springs from basic price theory.  It’s an insight that my freshman students learn well by mid-semester of their first course in economics.  It’s also an insight that a prominent economist who was in the process of assessing the price-control-ridden, and already autocratically hammered, Venezuelan economy in 2007 ought to have put front and center of his analysis.  Yet, as Roger Koppl points out in a comment on this post, Joseph Stiglitz instead chose to warn Venezuelans to beware of excessive dependence upon oil and of the ‘Washington Consensus.’  That ‘consensus’ features much that deserves to be warned against, but even its worst parts are nothing as compared to the destructive interventions that Chavez was inflicting on the Venezuelan people – interventions the predictable destructiveness of which is today in full and awful bloom in that county.


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