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Saturday, April 30, 2011

How Could Anyone Know Less About Hayek...

and even know how to spell his name?

George Soros writes:

"Friedrich Hayek is generally regarded as the apostle of a brand of economics which holds that the market will assure the optimal allocation of resources — as long as the government doesn’t interfere. It is a formalized and mathematical theory, whose two main pillars are the efficient market hypothesis and the theory of rational expectations.

"This is usually called the Chicago School, and it dominates the teaching of economics in the United States."

It's really hard to imagine how anyone could do worse than Soros and still know how to spell 'Hayek', since:
1) Hayek did not think the market will "assure the optimal allocation of resources."
2) Hayek's theories were not "formalized and mathematical."
3) Hayek rejected anything like "the efficient market hypothesis."
4) Hayek was most definitively not a member of the Chicago School.

Soros's piece is stunning in its display of ignorance. It is as though his impression of Hayek post-1950 is formed entirely by hearsay and completely disconnected from Hayek's actual writings.

6 comments:

  1. People at the Mises forums were saying that since Soros is a friend of Popper, who was a friend of Hayek, he should have known a little better.

    I disagreed, saying that a friend of a friend is not exactly a friend. But yes, Soros has had enough and has lived long enough to have all the chance to meet and engage with Hayek.

    He is one of the most confirmation bias ridden public figures today. Although he is a "self-hating" businessman, his self-villainization is self-praise in disguise.

    He thinks he was responsible for damaing British currency, even though he is still merely a billionaire fish in a trillion dollar market pond.

    He is like Manuel Ayau who gladly wrote "right wing fascist" or something on his card after somebody insulted him that manner.

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  2. Regarding mathematics, it really depends on what theory we're talking about. While "The Pure Theory of Capital" may not have been as formal as other more-mathematical works were, it is fairly well formalized. Certainly, Hayek quasi-abandoned his earlier approach of "understanding over accuracy", right?

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  3. That's a good point Jon. But I don't think Soros was talking about The Pure Theory. He was addressing Hayek's case for laissez faire.

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  4. Soros may not know much about Hayek, Prateek, but calling him a fascist is absurd.

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  5. Mr. Callahan, I never called him a fascist.

    I am afraid you misunderstood.

    Manuel Ayau was unfairly insulted by somebody who called him a fascist.

    However, Ayau gladly wore that as a badge of honour, because it showed his critics to be weak and ineffectual.

    On the other hand, Soros gladly pins on himself the tag of an evil businessman. He is not. But he would love to think so, because it makes him look more powerful than he is.

    I would never call him a fascist, because I have a sense of proportion, unlike many bloggers on economics blogosphere. :)

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  6. Got it, Prateek. Sorry to have misunderstood you.

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