Sunday, September 30, 2007

Is Hayek being misread?

Road to Serfdom was my introduction to Austrian Economics and Hayek. Since then I have been an ardent admirer of Hayek, both his style of writing and what he says. I do agree that he is not the most consistent author I have read, but I love reading Hayek and Mises. For my Constitutional class we are reading Buchanan now, and in his Reason of Rules with Brennan, he portrays Hayek in a way that bothers me (its just one sentence, but it still bothers me) Within the first 15 pages of the book, he says that Hayek and his followers have placed a lot of faith in the 'evolutionary' process and that there is no reason to believe that this would lead to an efficient outcome. It is true that Hayek places a lot of faith in the evolutionary system for rules; however, I am not sure that Hayek says this will be an efficient system. If I read Hayek correctly, my understanding is that he says such rules will be adopted that make it easier for individuals to engage in catallaxy. The evolutionary process is such that rules and traditions that are not functional will go out of use and only those that are resilient and apply to the requirements of the community will be followed. I have to emphasize here that my aim is not to make this sound like the argument of a legal positivist which is the exact opposite of Hayek's conception of rules. I am not sure Hayek talks about efficiency. Also when you talk in terms of evolution and spontaneous order, I am not sure we can even have a conception of efficiency. Evolution is the strive towards a better arrangement of events, right!! I do not know enough about the followers Buchanan and Brennan mention, but I am fairly confident that Hayek does not have notions of efficiency with the evolutionary process. Am I the one misreading Hayek?

Thursday, September 27, 2007

A very unstable State

One of the research projects I started working on this summer was a study of the nature of Kerala and its economy. What got me started was an article in EPW about how peacefully Communism has lead to the economic success of Kerala. I entirely disagreed with the author. Woven within his praise for the communist government were a lot of examples as to how pro market policies were helping the state, and how anti-market policies were having unintended consequences. A typical ECON 101 story. Since then I have been working on a serious paper and doing a lot of background research on Kerala. Turns out, the State has a very unstable past. For the first 10 years of independence it was under President's rule. In 1957, the first State Government, was formed. However, this and subsequent governments have been pretty unstable until the eighties. Maybe there's a reason here to the State's success. The politicians were too busy fighting for power that they let the economy be relatively free. Nice theory, can't say it will stand up empirically, but I am excited about it.

Thursday, September 06, 2007

Fellow GMU on Fox News

Mike Makowsky is in the news both on FOX and in the New York Times. His recent paper with Prof.Stratman on speeding tickets seems to be very popular with the news. Watch him on Fox here, and read the NYT article here.

Hattip Anthony Evans