Hayek and Corona
April 17, 2020
Corona is unprecedented and I am willing to give government's plenty of latitude. Mistakes will be made. But some are worse than others, and the dumbest economic mistake I have seen comes out of France this week. Friedrich Hayek saw it coming in 1944.
Bloomberg reports couple of days ago about a French court preventing Amazon from selling nonessential goods. Amazon responded by suspending operations, saying “The court gave categories that are very general and create ambiguity that would be too hard to implement. This is a complex business to run.”
So, in the midst of a crisis when the public sector struggles with the delivery of essential services, and most private sector companies have been brought to their knees, Amazon is the one that is actually working.
And, the very state that can't deliver services, is telling that company how to do its business.
Friedrich Hayek wrote one of the most important papers in economics in 1944, titled The use of knowledge in Society where he made the point that central planning doesn't work because it is impossible to aggregate essential information up to the highest levels of government. The commissars at the top simply do not have the information required to make good decisions, why central planning fails.
The French court is making the same mistake. Sad really.
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