Dear Doug, We are looking at the same data and coming to opposite conclusions. I must say that my criteria for judgment is purely Hayekian, because I believe that every idea deserves to be judged, in the first instance at least, on its own criteria. And on purely Hayekian grounds, I don't see any of the "success" that you see. Certainly, it is odd to find the communist gov't of China cited as a libertarian success story. You might be right, of course, but the conclusion must be that the libertarian ideal is broad enough to include socialism and communism. I don't know much about Sweden's economy in the period you cite, but is it not fair to ask, "If this supposedly Hayekian economy was so successful, why did the Swedes abandon it so completely?" >I know that Reagan cut marginal income tax >rates. Reagan also raised social security taxes >and ran huge deficits, so that is a mixed bag. We would seem to agree, then, that Reagan did try to implement Hayek's ideas, and that the best he could achieve was a "mixed bag" (your description) or a complete failure (my description.) As far as Reagan "cutting taxes" goes, it simply isn't true, because borrowing is taxing too. This can't be said often enough. To lower the rate and borrow the difference is not tax-cutting, it is tax-shifting, from the current generation to the next. Further, if we are working with deficit financing, is that not more Keynesian than Hayekian? Should we attribute any "success," such as it is, to Keynes or to Hayek? And was it really a success? It is very easy to produce the illusion of wealth by borrowing a lot of money. But it seems to me that our current economic conditions of enormous debt and diminishing economic power have their roots in Reagan. And we need to dispel the myth that Reagan raised revenues by cutting rates. The Treasury's own office of Tax Analysis shows that this is untrue (http://www.ustreas.gov/offices/tax-policy/library/ota81.pdf). Reagan did raise revenues--by raising taxes, and still managed to run record deficits. >Dawson, John W. (2007) "Regulation and the >Macroeconomy." Kyklos, Blackwell Publishing, vol. 60(1), pages 15?36, 02. >Dawson, John W. & John J. Seater (2005) "The >Macroeconomic Effects of Federal Regulation." >Working Papers 05?02, Department of Economics, Appalachian State University >Dawson and Seater find a negative correlation >between regulation and growth. there was a drop >in the level of regulation in 1985- that one >year of the Reagan administration. Yes, and I seem to remember that the most immediate effect was the Savings and Loan crises. Was this success? >There was also a drop in regulation for three >years following the 1994 congressional election. >Otherwise regulation has risen for every year in >living memory. That is what the data shows. >Depite this, the US remains less regulated than >most nations in the world. Consequently the US >can be seen as more Hayekian than other nations, Exactly! And what are the results? Unmanageable debts, a zero-savings rate, a bloated bureaucracy, a diminishing industrial base (the only real way to repay debts), a crumbling infrastructure, a financial melt-down, diminished labor force participation rates (giving the illusion of low unemployment rates), a health-care system in disarray, an increasingly stratified educational system, a growing gap between rich and poor, median wages static for 30 years, etc. If this is success, I would hate to see what failure looks like. > but there has hardly been a Hayekian takeover. > There is a large literature on the correlation > between economic freedom and economic growth. Does any of this literature define "economic freedom"? I often see the term used, and never see it defined. >Once more, the relative degree of free commerce >correlates with actual results, real results, >actual improved performance, not in theory, but >in empirical observable measureable data. But it is unclear if the data you cite supports Keynes or Hayek. All we can say with certainty is that the more one tries to be Hayekian, the more the deficits and the government grows. > The fact that Reagan was unable to translate > his rhetoric into large and lasting results > does not change the general > correlation between economic freedom and > economic performance. The US has less ecomomic > freedom than libertatrians and economic > conservatives would like, but more economic > freedom that most other nations. The US also > happens to be quite prosperous. I have not seen > any credible evidence to the contrary. This leads me to ask, "What would you accept as evidence?" >People like Klein use examples of crony >capitalism to condemn free market capitalism. >The absurdity of this practice should be obvious. But Doug, you miss the point. There is only crony capitalism. That has always been the case. It was the case in Adam Smith's day, when 3/4's of The Wealth of Nations was devoted to documenting the cronyism, and it is true in our day. Do you have some day in mind when this wasn't true? Some exception to the rule? Oh, one more thing. You mentioned somewhere "privatization" as some sort of free-market success. Privatization does not make a gov't function "free market," and certainly not competitive. You can turn the building of roads and the collection of tolls over to a private company, but that does not make it free market, because you can't have competitive roads on the same route. The best you can do is trade a gov't monopoly for a private monopoly. Maybe that's good and maybe that's bad, but it isn't free market, unless your definition of the free market includes monopolies, in which case, "freedom" is a strange term here. By the way, what is your definition of a free market; this is another term that I often see used and never see defined. John C. M?daille