Volcker Disses Hayek (and The Road to Sefdom)

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During an interview with SmartMoney at WSJ, former Fed chairman Paul Volcker swatted away the warnings of Friedrich Hayek about the dangers of expanding regulation, like the warnings were just an annoying fly. Here’s the exchange:

SM: And right now government agencies are expanding. The economist Friedrich Hayek warns of tyranny when the government controls economic decision making.

PV: Obviously, government should get more involved in the regulatory side than we have been in the last two decades. The government has a role in health care — we just had a big political fight about it. I don’t think people are ready to give up Social Security, Medicare or defense.

SM: Weigh in on the debate.

PV: I’m not in favor of big government by and large. I picked up Hayek’s The Road to Serfdom the other day, and it seemed less relevant than in 1945 [when it was published]. He wrote at a time when communism was a prime threat and socialism an existential ideal. We still have too much government interference, but we don’t have the communist bear looming down on us.

Like Alan Greenspan, Volcker seems to be one of those who is "theoretically" anti-big government, but when the marching orders come from his controls (Hint: His office is in the very high rent Rockefeller Center in NYC), he stays in hop-skip with the rest of them.

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