What Went Wrong?
By Arnold Kling
In the first year of the Obama administration, the Democrats, either wittingly or unwittingly, decided to put the big government-versus-small government debate at the center of American life.
I would put this somewhat differently. The left decided that the debate was settled. They took the view that the financial crisis proved once and for all that markets do not work, and that wherever markets produce imperfect outcomes, government is the answer.
In the widely-unread Unchecked and Unbalanced, I argue that the narrative of the financial crisis needs to be more nuanced. There was government failure as well as Wall Street failure.
I think that one can make a case that recent decades have vindicated Hayek more than Keynes, Galbraith, or any other icon of the left. The World Wide Web is a vivid illustration of spontaneous order, in which central planning plays hardly any role. Apple controls the “apps” on the iPad through a centralized mechanism. The Internet remains wide open. If history is any guide, the centralized mechanism will lose in the end.
The problem with those who have decided to aim for a more statist society is not just that they have stirred up some reactionary sentiments among the peasant classes. They are attempting to centralize power at a time when the decentralization of knowledge is making centralized power inappropriate and ineffective.
I happen to be reading The Franco-Prussian War, by Geoffrey Wawro. Toward the end of the war, some Parisian radicals proclaimed a new republic, with many hoping to create a communist society. In many respects, they were out of touch with reality. They over-estimated their support in the countryside and their control over the military situation. Perhaps one can see parallels with the Obama Administration.