What Would Hayek Do?

In Britland they are worrying about the consequence of cranking up the government share of the economy from 38 percent in 1997 when Tony Blair became prime minister to an expected 44 percent this year or next. Well, we all know the answer to that. Nothing good.

In the annual Hayek Lecture given at the Institute of Economic Affairs,
Andrew Neil thinks about the bigger picture. With China and India poised to become economic giants in the next 50 years should Britain stay a part of a Europe in inevitable decline or should it become the 51st state of the USA?

What would Hayek say?

Based on the ideas he formulated over a lifetime of scholarship and advocacy he would argue against a Britain founded on The Fatal Conceit of building society using “constructivist rationalism,” the idea that
“all social institutions are, or ought to be, the
product of deliberate design”. Instead he would argue that Britain should be built using “evolutionary rationalism,” that is
orderly
“structures which are the product of the actions
of many men [and women] but are not the
result of human design.” He would say (and his words would apply just as much to us here in the good old U.S. of A.) that

Government policy should not respond to
China as such, he would say, but strive to
become a low-tax, high-skill, well-educated,
high-productivity vibrant nation-state just
offshore the highest-taxed, increasingly low-skilled, sclerotic set of rich nations in the
world. The ability to compete with China would
follow naturally.

It really isn’t that hard, is it. Just do it.

But we can see where the hard part is. It’s dealing with all those who have squirreled into the vast welfare state (that princely 44 percent of GDP) and built themselves a nice little hoard over the years. Maybe their hoard is a tenured professorship. Maybe it’s a 30-and-out union job. Maybe it’s a 30-and-out government job. Maybe it’s a job in some tax-favored industry.
All those folks are going to squeal like banshees over any move to a low-tax, high-skill vibrant nation-state. Because, after years getting paid pretty nicely for not doing too much, they are going to object to all that vibrancy. To them, it will feel like Hurricane Katrina.

It’s just human nature.