Strengthening Constitutional Self-Government

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Economy

An Italian on the Austrian Economist

Alberto Mingardi directs the Italian free-market think tank [yes, there are a few] Istituto Bruno Leoni. In the WSJ, he channels Friedrich Hayek to critique of the European Union.

Centralized welfare systems are necessarily run by a bureaucratic leadership that cannot master the knowledge needed to manage a complex society.

As Mingardi notes, "Hayek is often associated with his critique of socialist systems."

There is, in society, a "knowledge problem": Economic life requires the coordination of individual planning. The relevant knowledge for economic planning is dispersed rather than concentrated in society. If this makes coordination challenging enough in a market system, it also makes coordination a virtual impossibility under central planning: The planner can never secure and process all the necessary information to provide detailed guidance to any given development in society.

Mingardi applies Hayek's critique to "hard-core socialism" and "the soft-core version widely adopted by European democracies," arguing that the bureaucratic leadership of centralized welfare systems simply cannot micro-manage a complex society. The result is inevitably inefficiency and waster - but the temptation to be the party of welfare is clear:

These inefficiencies and this waste, of course, become rents for those that live off them and return the favor with their political support.

Mingardi effectively compares market and social models of democracy in light of the realities of European bankruptcies. The entire article is worth a read.

Categories > Economy

Discussions - 1 Comment

Hayek is right. Here in the US we have "The Most Intelligent President Ever" with a Harvard Law degree along with tons of Ivy League elitists that he has appointed as advisors and cabinet members to help him run the country and the country is now in the crapper.

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