The Economists Who Got It Right |
Politicians say they can "make the economy work better."
I once believed they could.
But years of reporting taught me that politicians' attempts to "fix" the economy usually make things worse.
Twenty years ago, Republicans and Democrats helped create the Great Recession by telling government-backed Fannie Mae and Freddie Mac to buy more peoples' mortgages because, as President George W. Bush put it, "Owning a home is a part of (the American) dream."
But that guarantee inspired lenders to approve dubious mortgages, given to riskier borrowers.
Housing prices shot up in a government-created bubble. When many people stopped making mortgage payments and the housing bubble burst, we got the Great Recession.
It's just one example of what Austrian economists Friedrich Hayek and Ludwig von Mises wrote about years ago.
In "The Fatal Conceit," Hayek writes, "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."
Mises' "Human Action" points out that all economics start with individuals making purposeful choices. That "human action" determines prices, and markets........