Guardians of economic freedom: Friedrich Hayek and Milton Friedman

Economists, being, human. are subject to fluctuations In ‘opinions and Ideology. Because government policies seemed so successful In mobilizing the Us. and U.K. war economies for military victory CM!I” <*many and Japan during & World War II, and because macroeconomic policies seemed to succeed In con- queering the Great Depression, conservative fairness came to represent only minority opinion among , most free word professional economists.

In weighing the relative merits of state and market, public debate often oversimplifies the complex choices that societies face. Markets have worked miracles in some countries. But without the right kind of legal and political structure, and without the Scial overhead capital that promotes trade and private investment, markets have also produced corrupt capitalism with great inequality, pervasive poverty, and declining living standards.

In economic affairs, success has many parents, while failure is an orphan. The success of market economies may lead us to overlook the many successes of collective action over the last century, as the case of the lighthouse reminds us. Collective action has helped reduce malnutrition and conquered many terrible diseases like smallpox. Government programs have .increased literacy and life expectancy. Macroeconomic successes have reduced the sting of inflation and unemployment, while government transfer programs have brought health’ care to the poor and improved the quality of life for the aged. State-sup- ported science has penetrated the atom, discovered the DNA molecule, and explored outer space.

Of course, these successes do not belong to governments alone. Governments harnessed private ingenuity through the market mechanism to help achieve these social aims. And, in some cases, governments were like’ orators who didn’t know when enough was enough.

The debate about government’s successes and failures demonstrates again that drawing the boundary between market and government is an enduring problem. The tools ot economics are indispensable to help societies find the golden mean between lais- sez-faire market mechanisms and democratic rules of the road. The good mixed economy is, perforce, . the limited mixed economy. But those who would reduce government to the constable plus a few light- houses are living in a dream world. An efficient and humane society requires both halves of the mixed system-market and government. Operating a mod- ern economy without both is like trying to clap with one hand.

 

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