David R. Henderson  

Me on the Economics of Imperialism

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Adolf Hitler's Economics... Two Observations on Milk

In this radio interview, Scott Horton interviews me about various current economic issues including: the Obama budget, the Bush-Paulson-Bernanke bailout, why most of the Republicans in Congress have zero credibility in pushing for small government, the economics of imperialism, Adam Smith's early use of public choice to explain British imperialism, why we don't need to go to war for oil, why I think we are nowhere close to another Great Depression, why I think Ron Paul is wrong in predicting a world fiat currency, and Robert Byrd's objections to Obama's continuation of Bush's aggrandizement of Presidential power.

One of the things I highlight in the interview is a marvelous line from Friedrich Hayek that fits Bryan Caplan's view of "rational irrationality." A friend of mine, Michael Walker, the former head of the Fraser Institute in Canada, once asked Hayek why it was so hard to convince people of the value of economic freedom. Hayek smiled and said:

One of the forms of private property that people cherish most is their ideas. If you convince them that their ideas are wrong, you have caused them to suffer a capital loss.

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COMMENTS (8 to date)
dearieme writes:

Hats off to Hayek! Especially since a "capital loss" could also mean "a loss in their head" - that being where ideas reside - or an "important loss" or even a "loss to be celebrated".

Jacob Miller writes:

Interesting. "I'd rather have you take my belongings than prove me wrong." Of course no one will actually say that, but actions say otherwise.

I guess it is true that if I never think I can never change my mind.

Eric writes:

Oh wow, read the "Druthers" comment posted on the antiwar website.

Georg Thomas writes:

I would be highly interested in the authentic reference of Hayek's remark. Is the quote from Walker's memory? I am asking, because the most immediate implication of the quote is contrary to the gist of Hayek's thinking:

The ability to make free use of one's knowledge ("ideas") is what Hayek stresses, not the fun of being right. In fact, the former teaches people to understand the grave dangers of the latter.

A free society/person does not succeed by conceit, but by the intrinsic compulsion to learn from mistakes. In an environment that encourages, yeah forces, a person to learn from errors [rather than command and (extraneous) fiat,] the incentive to be neurotic about being wrong is systematically dismantled and turned into a "thirst" to learn and improve.

Like the much cited "greed" (of a person supposedly not properly directed by wise government,) which is in truth mostly a healthy concern for what properly matters to a person, "conceit," an obtuse insistence of being right, tends to be the hallmark of the constantly deprived, not the free.

Greg Ransom writes:

Does Walker have a reference for this quote, i.e. did Walker publish it somewhere?

David R. Henderson writes:

Greg Ransom,
I don't know. I remember Mike Walker telling me the story, but I don't know if he ever wrote it up.
Best,
David

Scott Wentland writes:

Is it a "capital loss" if the new idea is actually more correct than the old one?

I suppose if the correct idea goes against the grain of one's ideology, then it'd be more of an "ideological loss."

Kurbla writes:

Hayek didn't answered why it is hard to convince people that specific issue. Instead, he rehashed common sense why it is hard to convince people anything - using economic metaphors. Not a big deal - but why not. But, why it is hard to convince people to extend private property rights specifically? Because their emotions prevent it. In some situations it is almost impossible to advocate property rights. Imagine the following:

Mark and Don live with families on an island divided in three parts. Mark's water source dry up and Don's source is very rich. Mark asks Don to give, sell, borrow some water, but Don doesn't want. Mark decides to break Don's property right and take some water by force. You're the third man who observes these two fighting. You're physically stronger and your sense of justice will prevail.

So, what it will be? Property rights respected and Mark's family dying or communist sense of social justice and Mark and his family surviving? Or you'll be neutral? Do you feel your emotions are fighting against libertarians ideas?

Sure, it is extreme case, if reality is that extreme all the time, we'd live in communist world already.

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