Telegraph: Financial crisis shows why we should admire Freidrich Hayek

Professor Philip Booth, from the London-based Institute of Economic Affairs (IEA), had a great post on yesterday’s Daily Telegraph blog (UK), discussing why the latest economic crash strongly supports the arguments made by Freidrich Hayek and other Austrian economists regarding the regulation of markets. From the article:

The crash gives many more indications that Freidrich Hayek was right. Hayek argues that unregulated markets develop institutions that ensure that trust and reputation become valuable commodities. But who cares about trust and reputation when we believe that everything will be looked after by the regulators or by deposit insurance? As far as a company is concerned, compliance with regulation has become more important than trust. The market has been allowed to generate crude economic efficiency, but trust has been crowded out by regulation.

Now a random Hayek quote for closing:

‘Emergencies’ have always been the pretext on which the safeguards of individual liberty have been eroded.

~ F.A. Hayek, Law, Legislation and Liberty, vol. 3, p 124