Arnold Kling  

Hayek Interviewed

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A quarter century ago, by a pre-white-haired John O'Sullivan, for The Foundation for Economic Education. Very rewarding to listen. For example, a bit over an hour into it, he makes the point that unions that force up wages in one industry will divert capital into that industry, taking it away from workers in other industries. Earlier, his thoughts on the three sources of social norms--instinct, tradition, and intellectual theory--are well articulated, also.

Thanks to Don Boudreaux for the pointer.


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COMMENTS (5 to date)
Pedro P Romero writes:

In his initial comments Hayek points out how the (first world) war changed what would have been a career in Biology to a career in Economics. As he says due to the excitement that he and his generation felt after the war in more social issues. It is not bad to be interested in the most important issues confronting your society.
I think that that is an important lesson from old economists, that probably due to specialization has produced a situation in which (some) economists actually want to stay mute about the important issues.

John Booke writes:

I'm reading (not easy) Joseph Schumpeter's "Capitalism, Socialism and Democracy" written in 1941 (revised version 1949). I am surprised that the book is mostly about the eventual fall of capitalism and the rise of socialism (only one chaper on "creative destruction"). One disturbing warning was that an over-educated population will flood the labor market with white-collar workers and the value of their services will collapse along with profits. Are we seeing that now?

BlackSheep writes:

Booke, at the time, liberals were seen as reactionary neanderthals, every progressive thinking person knew the planned economy was at the future's corner. Would you like to elaborate on that labor market prediction though?

spencer writes:

If capital flows from non-union industries to union industries it would be because the returns to capital are higher in the union industry.

So having capital flow from a low productivity nonunion industry to a high productivity union industry is a desirable results.

Why would you think it was undesirable except for the virtually universal libertarian belief that the solution to everything is cheap labor?

BlackSheep writes:

spencer, I have only watched part of the interview so far, and the player doesn't allow seeking, so I have yet to watch that piece. I didn't understand Kling's point at first either, but I think what's meant is that by increasing the price of labor, not only are you going to see a shift for more skilled labor, but capital will be cheaper relatively to labor as well. The returns from investing are now higher not because of any productivity change, but because the more capital intensive production structure will now represent a lower cost solution. I think the uncertainty created by the union further reinforces this point as well.

ps: give me a break on the English. :P

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