Saturday 18 Aug 2018 | 15:48 | SYDNEY
Saturday 18 Aug 2018 | 15:48 | SYDNEY

Hayek and the euro crisis


Mark Thirlwell

27 May 2010 16:36

Simon Johnson and Peter Boone have recently had a quick go at reworking Hayek's The Road to Serfdom in light of the euro crisis. In their formulation, instead of the welfare state, it is unregulated finance and state capture by corporate interests pushing European democracies into 'some form of state-run serfdom'. According to their grim prognosis:

Hayek's predicted demise of western society will prove correct, but welfare systems will prove the victim, rather than the mechanism, erased by a political and financial elite gone awry.

At bottom, their forecast is driven by the consequences of a massive debt overhang – what they call 'debt peonage'. As I've noted before, I do think that the debt dynamics facing a large part of the developed world look very problematic. Even so, I'm not ready to forecast the 'demise of western society' just yet. 

Finally, to provide a marked contrast to the Boone and Johnson ?ber-pessimism, this piece offers a much more upbeat view on the debt question facing rich world policymakers.