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445 of 505 people found the following review helpful
5.0 out of 5 stars Too bad we aren't taking this advice, August 9, 2008
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This review is from: The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) (Paperback)
Friedrich Hayek, the Nobel prize winning economist, wrote this brilliant classic as a critique of government intervention and manipulation in markets. I am neither an economist nor a political scientist, but I was led to this book after watching with horror the recent outrages that are consciously being inflicted on us by our elected officials, most recently the bailout and socialization of the two giant mortgage lenders, Freddie and Fannie. I couldn't remember that I ever received any share of the loot when those companies were making huge profits and their CEOs were earning tens of millions per year, but now I find that our elected officials have written a blank check in my name, the taxpayer, to bail out these companies' losses and stupidity, and then handed the check to a group of unelected officials (and, surprise, surprise, those two companies spend hundreds of millions on congressional lobbying). Privatize the gains, socialize the losses: sounds like a win-win situation for somebody.

This kind of disastrous socialism is exactly what Hayek critiques in devastating form in this book, specifically government control of the economy. Apparently, they say, this book has been very influential, but a layman could certainly never tell by looking around. Hayek was writing from the perspective of a central European who had recently witnessed first-hand the unfolding development of National Socialism (Nazism) in Germany, and he is warning that the exact same attitudes and policies that had been followed in Germany were uncritically being followed by the Allies, merely at a few years distance.

He begins by recollecting the ideals of old, classic liberalism, "the forgotten road". Of course, in Hayek's context, "liberal" means the true, historic liberalism of limited government, free markets, and private property, not "liberal" in the bastardized sense somehow hijacked by Leftists to mean unlimited government, socialized markets and massive forced wealth redistribution. He looks at the rise of collectivist thinking versus individual (it's all for the greater good); the problems of central planning in a democracy (someone in power makes the economic decisions for everybody else); the downfall of the Rule of Law (government is no longer bound by fixed rules announced beforehand but instead possesses arbitrary power limited only by its own discretion); the inextricable link between centralized economic planning and totalitarian regimes (if we're going to follow a plan, someone's got to force everyone to follow it); the problem of deciding how the society's production will be distributed; a chapter showing that "nothing is more fatal than the present fashion among intellectual leaders of extolling security at the expense of freedom" (Republicans apparently didn't get the memo); how in a socialized economy the worst individuals inevitably rise to the top (Really? Can it be? Obama and McCain?); the necessity of manipulating truth in a socialized society; and the fact that Nazism was a direct outgrowth of socialism and socialist ideology.

The relevance of the points enumerated above does not require comment. We are running madly down the road to serfdom, which is the road of socialism. Unfortunately for those of us who are being dragged along against our will, history is not neutral, and we will suffer the consequences of other peoples' decisions, just as the Jews in Germany did and the Russians in the Soviet Union did. Socialism has always led to poverty and oppression, and freedom, on the rare occasions it has been tried, has produced unparalleled prosperity. Hayek shows in detail why. We've decided to give socialism another try. God help us.
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Tracked by 3 customers

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Showing 1-10 of 15 posts in this discussion
Initial post: Apr 7, 2009 9:08:30 AM PDT
Last edited by the author on Apr 7, 2009 9:09:03 AM PDT
Reminds me of the old lady who asked Benjamin Franklin, after the Constitutional Convention, what sort of country he had created for the American people. Old Ben replied, "A Republic, madam, if you can keep it."

Whoops.

Posted on Apr 12, 2009 8:26:13 AM PDT
Good review. Thank you. Something most reviewers leave out, and a factor which I struggle to understand, but I think is relevant:
the appeal of central planning. The appeal of noble ideals. The appeal of socialism, however people seek to disguise it. The mantle of righteousness, in which so many "progressives" (socialists? dreamers? "REgressives"?) wrap themselves. How come so many good and sincere people sheepishly follow propaganda that leads to... what Hayek describes?
Is it a testament to the subtle dangers? Or is it naivety? A lack of reading?
And of course, THEY think the same of us... That should be the stuff of stimulating debate, but the relative lack of reviews of the RTS and the lack of comments and 'fire', makes me think this book is way underappreciated. The "Forgotten Man" (Amity Schlaes) is a good book, but no less than 230 reviews sofar (April 2009) versus the small handful on the RTS? RTS is a way more fundamental, timeless classic, surely.
The only thing that seems certain, is death, taxes, and the fact that we don't learn from History. Heck, we don't even READ History...

Posted on Jun 15, 2010 3:23:17 AM PDT
Eric Reid says:
Yes, Hayek is correct when he says that "the exact same [economic] attitudes and [economic] policies that had been followed in Germany were uncritically being followed by the Allies, merely at a few years distance." But that started happening all the way back in the 1940s. Today we are in 2010. Where is your serfdom, Mr. Hayek?

The fact that the Allies followed the same economic policies as Germany and DIDN'T end up the same as the Nazis is the reason why Hayek was wrong.

Posted on Jun 20, 2010 4:41:57 AM PDT
Cesar Soto says:
Beautiful review. Thanks!

In reply to an earlier post on Jun 26, 2010 10:46:00 PM PDT
To put things in perspective, maybe people should read a more current book that deals with the economy by another Nobel prize winning economists, "FREE FALL" by Joseph E. Stiglitz. Even the great free market guru, Alan Greenspan, had to admit, in testimony before Congress, that he was mistaken. What's ammazing is that the people who believe in free market economy point to things like Fannie Mae and Freddie Mac as examples of government overregulation. They are, in fact, examples of government deregulation. Without deregulation, they could not have made the toxic loans they dealt in. Without deregulation, AIG, among others, could have not sold credit default swaps. Without deregulation, Goldman Sachs and Lehman Brothers could not have sold synthetic collateralized debt obligations. Without deregulation there would have been no Savings and Loan collapse. There would have been no Enron among many others. I don't agree with Obama's agenda either, but come on people, do a little reading outside those who espouse your own limited rhetoric. Get a clue. Free markets aint free.

In reply to an earlier post on Jul 3, 2010 7:36:37 AM PDT
Last edited by the author on Jul 3, 2010 7:45:20 AM PDT
Joe R. Mayo says:
Mr. Reid, with all due respect - The U.S. made a major shift in political leaders when FDR died and Truman took the helm, followed by Eisenhower. The other point is that Hayek is strong to point out that socialism takes many minor steps in evolving. Today, if one can look back several decades, one can see that there is much "central" planning going on by the federal government and is even filtering down to the states (look at medicaid for example). We have lost individual freedoms in so many ways from where we started that people now look to the government to take care of them - health insurance, medicare, medicaid, social security, unemployment insurance, the list goes on and on. The individual freedoms that our Creator gave us and was made law by the Constitution includes freedom to be, to succeed (whatever individually that means), to fail, to become what one wants to become without hindrance from a "government", or at least with as little hindrance as possible. It is the socialists that have come to real power in the country that are taking us to serfdom as fast as the Senate and House of Representatives can accumulate the votes - prior to November let us hope. What we have today are real power hungry people that believe they know better than the rest of us how to manage "cattle" and will jam it down our throats. Hence the proof made clear in Hayek's book that real socialists believe that the only way to truly achieve their aims is with a authoritarian form of government. My hope is that more people will read Hayek and more eyes will be opened.

In reply to an earlier post on Jul 3, 2010 7:58:24 AM PDT
Joe R. Mayo says:
Mr. Rankin - Very true, there is no such thing as a free market. I agree also that there must be regulation to some degree. What I don't agree with is interference into business from the government in the form of arm twisting. If Congressmen would keep their noses out of the business of Fannie Mae and Freddie Mac as well as others, then the markets would work to provide honest business. Yes, I know that there are always crooks in every endeavor and that is why there should be regulation to some degree, laws are passed to keep people honest. But, when government officials press business to do what should not be done, then we see the fallout. Also, the AIG, Goldman Sachs, Lehman Bros. types should be allowed to fail and go out of business. That is how capatalism should work and lessons are learned to others on what not to do. The federal government should not interfere in failure of businesses. That goes for home owners also. If one gets a loan that one cannot pay and goes into bankruptcy, so be it. Another lesson learned - maybe.

In reply to an earlier post on Jul 28, 2010 7:27:54 PM PDT
Last edited by the author on Jul 28, 2010 7:29:10 PM PDT
[What's ammazing is that the people who believe in free market economy point to things like Fannie Mae and Freddie Mac as examples of government overregulation. They are, in fact, examples of government deregulation.]

Mr. Rankin, you are quite mistaken. Fannie and Freddie are examples of extreme regulation of the most evil kind. Not only were these two financial giants ORDERED to give loans, but they were ordered to give loans to individuals who were not credit-worthy by then-current standards. This resulted in the present-day chaos where millions of homes are being foreclosed on in the last two years, and millions more are expected to follow.

To be sure, there are dangers in allowing capitalistic markets to operate without checks and balances to protect the public, but this is not "centralized planning."

In reply to an earlier post on Jul 29, 2010 9:48:41 PM PDT
Mr. Pepin;
In 2000 rules were put in place to disallow high risk mortgage loans to be counted as affordable housing loans. In 2004 these rules were rescinded and GSE's were allowed to participate in the subprime market and purchase risky loans. They did this because they wanted to make money for themselves (upper management) and their stockholders. They were pressured by the government to keep a percentage of their loan portfolio in subprime red lined neighborhoods as designated by the CRA of 1977, but the loans in these areas were supposed to be conforming. In 2004 they were allowed to purchase nonconforming loans, which they did in order to make more profit. All the gurus of the time, like Greenspan, said that an event was unlikely and they were on safe ground. They said that regulation was counterproductive and economists like Adam Smith and Milton Freidman were correct (free market economy).
Apparently, someone erred.

In reply to an earlier post on Jul 30, 2010 4:42:24 AM PDT
RvR, everything you have stated is true. My only point was that as we view the whole scenario, we tend to view the "nonconforming loans" as the allowance of free-market capitalism to operate freely without any regulation. But it was actually the opposite that occurred. For example, the whole mortgage loan crisis was precipitated by the US Government imposing the rule that GSE's like Fannie and Freddie must incorporate a percentage of non-conforming loans into their portfolio, in order to meet with the Progressives desire to allow every person an opportunity to purchase a home.

When everything began to unravel in 2007, the US Government further exacerbated the problem by allowing Fannie and Freddie access to Federal Reserve low-interest loans (at similar rates as commercial banks) and even going so far as to remove the prohibition on the Treasury Department to purchase their stocks.

In other words, this housing crisis was NOT perpetrated by laissez-faire policies, but by governmental attempts at micro-managing the crisis by lame attempts at centralized planning.

And, of course, this is the whole thrust of Hayek's book, that when governments try centralized planning, they can't keep up with market forces, and the only thing that that can do is either allow things to run their course, or further embroil themselves into MORE planning techniques. This is exactly what occurred when Bush passed on the TARP legislation to Obama.

Since that time, the Obama administration has only furthered the quagmire by marching down the Road to Serfdom by their centralized planning of Health Care, Cap and Trade, and other similar legislative efforts.
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