Would Friedrich Hayek have supported Obamacare?

[The spartan]

For those of you who are not familiar with Hayek, he was an economist who was the big rival to Keynes during the development of macroeconomics. Hayek is the "big hitter" of Austrian Economics, and speaks out a lot against government spending and involvement, especially in his most famous work: The Road to Serfdom.

http://en.wikipedia.org/wiki/Friedrich_Hayek

Now, I have not read Road to Serfdom, though I am aware of a lot of the key points, but you can imagine my surprise when I came across this paragraph:

Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance, where, in short, we deal with genuinely insurable risks, the case for the state's helping to organize a comprehensive system of social insurance is very strong.... there is no incompatibility in principle between the state providing greater security in this way and the preservation of individual freedom. (Friedrich von Hayek, The Road to Serfdom, page 125.)

Is Hayek, lord of Austrians, expressing his support of socialized medicine? Austrians are some of the biggest opponents of Obamacare. What the heck is going on here?

[Nutsack]

I like how one of your dragons name is usher.

But really though I agree with Hayek and I am ready to try something new. I will vote for anyone who supports Austrian economics like for example that guy who got beaten in the primary by a robot.

[Dr. Croccer]

Ideological inconsistency.

Not that it should matter what some 2nd rate economist thought about the matter 60 years ago, but whether or not it's practical and moral now.

[The spartan]

Ideological inconsistency.

Not that it should matter what some 2nd rate economist thought about the matter 60 years ago, but whether or not it's practical and moral now.

Many consider him to be one of THE economists, though.

[Enemy of the State]

Hayek became more and more "purely" Austrian and libertarian as he got older. He actually began his intellectual career as a Fabian socialist. Austrian economics is value free though. It's perfectly possible to be a socialist and still accept the validity of Austrian economics. That statement by Hayek is certainly not libertarian, but it doesn't conflict with any Austrian theory.

[The spartan]

Hayek became more and more "purely" Austrian and libertarian as he got older. He actually began his intellectual career as a Fabian socialist. Austrian economics is value free though. It's perfectly possible to be a socialist and still accept the validity of Austrian economics. That statement by Hayek is certainly not libertarian, but it doesn't conflict with any Austrian theory.

Road to Serfdom is his big critique, though, and he is overtly supporting socialized medicine. I do not know if his position changed later in life or what, but I haven't been presented with evidence that it did.

[numerosdecimus]

Road to Serfdom is his big critique, though, and he is overtly supporting socialized medicine. I do not know if his position changed later in life or what, but I haven't been presented with evidence that it did.

The Road to Serfdom is his "softest" work. It's a good first read for beginners who want to get in "tune" with a libertarian perspective.

Hayek isn't consistent with some of his views, that's why he's sometimes called a "quasi-austrian". His stance on state medicine and other issues come from a personal perspective. Much like some economists who focus on state control and intervention but differ on some speciffic issues on wether or not the state should intervine. The opposite is also true for free market economists, but nevertheless remains an inconsistency.

And yes, he would have objected to Obamacare as well as Rommeycare and "anyone'scare", the interference it will provoke (greater than the already existing) on the health sector will result in a severe depression in this specific sector.

For a more consistent argument, I would recomend reading von Mises or Rothbard.

PS: Edited

[Col. Tartleton]

The argument against socialized medicine is not primarily an economic issue. It's a matter of whether or not taxation for socialized medicine is justifiable.

Socialized medicine could be quite reasonable within the sphere of national defense. That usually isn't how it's argued for and there would be a fair argument against it still.

You can justify a lot of illiberal but altruistic behavior for the sake of defense. The issue is whether or not you should.

For defense the welfare of individuals becomes secondary to the welfare of the group. Some may be forced to die so that others may live. The draft is the drawing of lots. In the most vulgar terms of who lives and who dies.

So in such a situation it might be reasonable to guarantee that everyone under and through military age gets healthcare provided to ensure a strong national defense, and those over the military age, having served may be entitled to veteran benefits or the like.

[Squiggle]

Pretty sure most Libertarians would more look more to Von Mises than they would Hayek in any case.

[Denny Crane!]

For those of you who are not familiar with Hayek, he was an economist who was the big rival to Keynes during the development of macroeconomics. Hayek is the "big hitter" of Austrian Economics, and speaks out a lot against government spending and involvement, especially in his most famous work: The Road to Serfdom.

http://en.wikipedia.org/wiki/Friedrich_Hayek

Now, I have not read Road to Serfdom, though I am aware of a lot of the key points, but you can imagine my surprise when I came across this paragraph:



Is Hayek, lord of Austrians, expressing his support of socialized medicine? Austrians are some of the biggest opponents of Obamacare. What the heck is going on here?

Hayek was never a crazy anarchist libertarian, he was simply an economist promoting the idea that the economy was complex and organic and emphasising the problems of to much intervention in the economy but still made significant provision for investment and limited forms of welfare. I suspect most people that criticise Hayek and promote Hayek (I'm thinking American politicians here) haven't read his work. Maggie Thatcher promoted his work and said she supported his ideas, and she never attacked the NHS, in fact some say that Thatcher centralised more and concentrated power in Whitehall rather than localisation. Something I'd say was a mistake but thats besides the point.

I don't really read much these days so just scanning Wikipedia I found this quote of his quite interesting:

"probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rules of thumb, above all the principle of laissez-faire."

I've never read the denationalisation of money but I'm incredibly interested and intend to.

[Justice and Mercy]

Sounds like he's talking from moral (or political) grounds here, not economic grounds.

Thereby, this paragraph has nothing to do with the theory of Austrian economics.

[The spartan]

Sounds like he's talking from moral (or political) grounds here, not economic grounds.

Thereby, this paragraph has nothing to do with the theory of Austrian economics.

It sounds like you are ok with Hayek contradicting his own position. You can't have a socialized medicine system "separate" from the economy, so if he is for it, he is for it economically as well.

From what I am understanding from discussing this topic with people who know more about Hayek than myself, it seems as if Hayek wasn't flat out against the concept of government involvement in the economy, he was against the idea that the government had any idea with what it was doing in the matter. So, given that the insurance market deals with such concrete numbers compared to other markets, Hayek had confidence the government could at least manage that market and provide the service themselves. That is what I was told, anyways.

[DimeBagHo]

It sounds like you are ok with Hayek contradicting his own position. You can't have a socialized medicine system "separate" from the economy, so if he is for it, he is for it economically as well.

I'm not sure what you mean here. There is a big difference between the state handing out vouchers so that certain people can buy insurance and the state making up rules about what insurance policies have to cover and setting prices. Vouchers just make the state another customer, or not even that because voucher holders decide where to spend the state's money.

From what I am understanding from discussing this topic with people who know more about Hayek than myself, it seems as if Hayek wasn't flat out against the concept of government involvement in the economy, he was against the idea that the government had any idea with what it was doing in the matter.

Yes, he thought that rational economic planning was impossible, so state planning of the economy could never be justified. However he drew a distinction between two very different types of regulation; he was fine with regulation that merely set the rules for economic transactions, but opposed regulation that attempted to control the outcomes of economic transactions.

A law that requires all contracts to be witnessed would be OK. That doesn't tell you what sort of contract you can make it just tells you one of the procedures you need to follow to make any contract. A law that says you can't buy insurance unless it covers some specific condition, or worse, sets a predetermined price, is a whole different story.

So, given that the insurance market deals with such concrete numbers compared to other markets, Hayek had confidence the government could at least manage that market and provide the service themselves. That is what I was told, anyways.

No. He thought would be fine if the government bought health care for some people, but I don't think he ever suggested that it would be a good idea for the state to manage healthcare.

[Justice and Mercy]

It sounds like you are ok with Hayek contradicting his own position.

Even if he WERE contradicting his own position (he's not), why exactly would I care?

You can't have a socialized medicine system "separate" from the economy, so if he is for it, he is for it economically as well.

No, but you can support a policy that you believe is bad for the economy.

I support many policies that I believe are bad for the economy. For one, I support a government run post office (NOT a monopoly).

He's not supporting this kind of insurance system because he believes it efficiently allocates resources, he supports it because we're capable of supporting it and he believes it should be had.

So, given that the insurance market deals with such concrete numbers compared to other markets, Hayek had confidence the government could at least manage that market and provide the service themselves. That is what I was told, anyways.

No, he supported it (and said this in that quote) because we could afford to do it.



One thing that I need to make clear over and over is that proving that a policy is bad from an economic standpoint doesn't prove through and through that it's a bad policy. Alot of the harm of leftist do-gooders would be erased if they weren't under the illusion that their policies are good for the economy. Things would improve if their welfare came from the following point of view: It may be economically destructive, but we view it as a moral duty.

[Squiggle]

: It may be economically destructive, but we view it as a moral duty.

How the hell can something be a moral duty if its destructive? Hurting the general economy obviously hurts specific demographics, being the poor, anyway. Welfare programs necessarily create a moral hazard, they necessarily create a situation that will lead to 50% [and up] dependence. Thats human nature. As to Hayek, I recall an interview by him a few years before his death where he said he wrote the Road to Serfdom to be a populist book [derp] and therefore moderated many of his views. To what extent were his actual positions and to what extent he was trying to offer palpable alternatives I dont know-- nor do I care.

Theres a substrain of "classical" liberals who advocate plenty of intrusive economic policies: why are we distinguishing them from regular liberals, then? Most liberals "classical" or not live under the delusion that they can grow the state in a variety of ways, to euthanize danger in life, and yet it wont remain intrusive and grow beyond their control. The liberals in the past who advocated that are no less fools, no less ideological enemies, than those who do it currently.

[Justice and Mercy]

How the hell can something be a moral duty if its destructive?

I can't answer the question because I don't believe that it is a moral duty. Many disagree.

[DimeBagHo]

Most classical liberals, all the way back to proto-liberals like Locke, have held the view that there is no problem with the state supporting those who are genuinely incapable of supporting themselves, especially in times of crisis like famine or war.

However, Hayek would have objected to Obamacare and the current US welfare system on two grounds: (1) It interferes too much with the operations of the market. (2) It extends to far too many people.

Regarding (1) Hayek would have been fine with a system that simply bought basic health insurance for poor people. The problem with Obamacare is that it attempts to micromanage the coverage provided by insurance policies and, much much worse, it is designed to distort market prices, leading to pervasive collective irrationality.

Regarding (2) Hayek was more concerned about independence than most classical liberals, and held the view that liberty simply would not survive if most people were dependent on the state, so he would have had a big problem with the current situation where 50% of the US population live in households that receive payments from the state.

[Engie]

Most classical liberals, all the way back to proto-liberals like Locke, have held the view that there is no problem with the state supporting those who are genuinely incapable of supporting themselves, especially in times of crisis like famine or war.

However, Hayek would have objected to Obamacare and the current US welfare system on two grounds: (1) It interferes too much with the operations of the market. (2) It extends to far too many people.

Regarding (1) Hayek would have been fine with a system that simply bought basic health insurance for poor people. The problem with Obamacare is that it attempts to micromanage the coverage provided by insurance policies and, much much worse, it is designed to distort market prices, leading to pervasive collective irrationality.

Regarding (2) Hayek was more concerned about independence than most classical liberals, and held the view that liberty simply would not survive if most people were dependent on the state, so he would have had a big problem with the current situation where 50% of the US population live in households that receive payments from the state.

This.

[King Gambrinus]

Hayek was a very good man who deserves to be respected. He never criticized socialism in its ideal form, he only criticized the fact that some people use socialism to abuse power and create big government. He certainly would not let people die because they can't afford healthcare.


Ayn Rand was the dangerous one. She's just a borderline Nietzsche-loving fascist who believes in superior beings. Of course, the VP candidate for the Republicans used to support her views...how things change. Whoever supports her views thinking they are the champion of liberal economics needs to be kept well away from any major institution.

[Claudius Gothicus]

The question is... should we care about what austrians say?