A letter in Monday’s Wall Street Journal:
Mr. Reich mischaracterizes the agendas of Ronald Reagan and Barack Obama. Mr. Reich also demonstrates what Friedrich Hayek once called the “fatal conceit.”
Mr. Reich argues that the primary philosophical difference between Messrs. Reagan and Obama is that Reagan tried to advance economic growth with “top-down” policies, while Mr. Obama is working through the more egalitarian “bottom-up” approach.
However, Reagan understood, as Hayek pointed out, that it is impossible for central planners to possess the necessary knowledge to efficiently allocate economic resources (high IQs and doctoral degrees notwithstanding).
Reagan knew that with less government the market would send unbiased price signals to every consumer. Individuals would take those signals and use their own specialized knowledge — information about what their needs are, what investments make sense — to make economic decisions. Collectively, these decisions reflect extremely diverse knowledge and allocate resources for the whole economy in the best way possible. What could be more “bottom-up” than that?
In fact, it is Messrs. Obama and Reich who are attempting to manipulate from the top down by taking resources from every American and allocating it as they, the central planners, see fit. It is Messrs. Obama and Reich who are disregarding what we the people want. What could be more conceited than that?