Barack Obama and some on his economic team claim to be students of Hayek. But as Université du Québec economist Pierre Lemieux points out, Obama’s new plan to “regulate” the macroeconomy is premised on purely magical thinking where government bureaucrats have an impossible God-like knowledge of market relations, and where bureaucrats and politicians have a complete personality transplant making them into not-of-this-world angels who no longer care about themselves, their friends and the sources of power, and who care only about the overall performance of the economy. In other words, Obama and his economic team get an “F” in Hayekian Econ 101:
Why is government intervention so expectedly inefficient in promoting economic growth and stability? The short answer is two-pronged. First, politicians and bureaucrats don’t have the incentives to fix, or not to break, the economy. Second, there is an insuperable information problem, which Nobel laureate Friedrich Hayek’s work put in clear focus: the state (the whole apparatus of government) simply does not have the information necessary to intervene efficiently. The business cycle is a complex phenomenon on which generations of brilliant economists still don’t agree. How could we expect that campaigning politicians and bureaucrats in committees will resolve the problem? How could they, as the 89-page Financial Regulatory Reform document states, get “a focus on identifying whether new trends might be creating risks that would otherwise go unseen”?