Dr. Helen

The Nation is Not Your Extended Family

I thought about this as I read a new book from the Fraser Institute called The Essential Hayek. The book shares the ideas of Friedrich A. Hayek in a simple to read short book:

Nobel laureate economist F.A.Hayek first revolutionized economists’ understanding of markets, and then profoundly challenged the public’s understanding of government. Hayek is one of only a few social scientists over the past 200 years who thoroughly rethought the relationship between individual people and both the market and the state. While countless works have discussed the importance of Hayek and his ideas, none have focused on making his core ideas accessible to average people. This volume highlights and explains Hayek’s basic insights in plain language to ensure that his critical ideas about the nature of society are both accessible and enduring.

In Chapter 9 on “The challenge of living successfully in modern society,” the author, Donald J.Boudreaux shares Hayek’s wisdom on the problems with treating the greater society like our extended family:

Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within the different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e. of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilisation), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once.

The book points out that for those that we know, love and care for, it makes sense to make economic decisions not commercially, but by mutual agreement or with mom or dad making decisions. However, this works because the people involved know each other and can figure out what approach works best (unless dysfunctional which is also common these days). But the same cannot be said of strangers; we do not know what is best for other people we don’t know. In this case, it is best to follow impersonal rules with “arms length” exchanges and contracts.

“These exchanges and contracts give rise to market prices. These prices, in turn, guide each of us to act productively–both as consumers and as producers–with the increasingly large numbers of strangers who make our modern lives possible.”

As the media and government focus on making strangers personal friends and focus on “doing something” to relieve the suffering, it can often be a mistake. These practices can be counterproductive and lead to negative outcomes such as people and thus, the country becoming less productive over time.

Nowadays, over 50 percent of the population wants stuff for free as they relax on their parent’s couch and eat potato chips. But “a government big enough to give you everything you want, is a government big enough to take away everything that you have.” It’s just a matter of time. Hayek knew this and he will be forever relevant.