Dick Armey weighed in on behalf of the Hayekians against the stimulus bill with a WSJ editorial last week. Beside his proud reference to the Laffer Curve thesis (meh), he also rests most of his thesis on this idea:
“The problem with government attempts to manipulate the economy through fiscal policy — spending that takes resources away from those who are productive and redistributes it to politically favored interests — is that it is audacious. It assumes that government knows better how to spend and invest than individuals acting in their families’ best interest.”
Now I get the argument…and I am generally in agreement: more money in the consumer’s pocket is just and smart policy. But Dr. Armey certainly wouldn’t argue that “individuals acting in their families’ best interest” would ever create public works, public education, NASA, Yellowstone Park, the Armed Forces, or the Pell Grant program? Or would he? Does he have a political theory of how self-interest can create public goods? I’d love to hear it.
Furthermore, Hayek and Armey assume ‘normal times’ in the economy. Do Hayekian tax cuts solve the problems facing a massively indebted, credit-frozen, psychologically-unstable economy? Are they cure-alls for recessions generally? If there are empirical examples of this, I’d love to see them.
Ideology over pragmatism is a dangerous choice for all points on the spectrum. It is unfortuntate that Dr. Armey has chosen this path at a terrible time in our economy.
