A Note from Hayek

It's hard to be a lib

Yesterday I made the gruesome mistake of imitating Matt Darling and telling my generation that we’re better off than our elders were at a similar age.

What naturally followed was an onslaught of individuals asking (1) is this adjusted for inflation? (it is, it says so on the graph) (2) is this accounting for social security benefits (it is, it says so on the graph) (3) is this accounting for different tax rates? (it is, it says so on the graph) (4) is this considering the rise in housing prices? (it is, shelter is 1/3 of the price index). (5) isn’t the data skewed by billionaires? (it’s not, it uses median data, and says so on the graph).

I’m still responding to the repeating flow of questions, but wanted to connect this to a general point about the political climate in the country.

Liberalism has succeeded. By all metrics, the world is a much safer, richer, healthier, and more prosperous place than it was a hundred years ago. Nevertheless, people continue to pretend that the world is terrible and that their parents had it much better.

Part of this is because old people tend to trip us up. They do actually believe things were better 50 years ago *because they were young 50 years ago*. And, in general, people tend to forget the unfortunate perils of youth in favor of the nostalgic bits.

But a more important factor than pensioner nostalgia-mongering is that humans take progress for granted. A clear example of this is the post-pandemic inflationary surge. Real incomes still rose! But that’s not how people perceive the world. People perceive wage increases as something they earned, while price increases are caused by “a broken system”. Of course, if one takes a look at Argentina, the picture changes quite quickly. People there have a better understanding of how inflation relates to wages, mostly because they have lived through many bouts of double-digit price increases.

In other words, our monetary system (and liberalism) is suffering from its own success. Americans forgot what inflation was like, and ended up with a framework of understanding that boiled down to “blame Biden”. Now, naturally, the heat is on Trump (who is, to be fair, somewhat responsible given his tariff policy).

It is also no coincidence that liberalism’s success has led to the rise of the far-left and far-right. Bernie Sanders, Curtis Yarvin, AOC, and Nick Fuentes are all products of a system where constant economic growth and political freedoms are considered to be the norm. This is why Bernie can promise wealth taxes higher than any developed country has had. It is also why Trump can play around with disobeying supreme court orders. The bulk of society simply does not believe that things can go wrong. Economic collapse from bad policy? The worst people can imagine is Covid or 2008. Dismantling of political freedoms? As far as the median voter is concerned, the worst case scenario is that some immigrants get wrongfully deported.

This is the world we live in, one where people assume that security and prosperity are guaranteed and unrelated to our liberal democratic system. As a result, a bulk of the country is convinced that the ills associated with liberalism can be solved by a radical upheaval. A switch to socialism, deporting immigrants, or crowning Trump king could solve our problems. And since “nothing ever happens”, our political freedoms and economic prosperity are under no threat.

In fact, none of this is new. Most of what I’ve said above is just paraphrasing Hayek from 80 years ago. Unfortunately for us, the last time the world witnessed these trends it resulted in the creation of the USSR and Nazi Germany. Let’s hope we stop taking liberalism for granted before we get to that stage.

But while the progress towards what is commonly called “positive” action was necessarily slow, and while for the immediate improvement liberalism had to rely largely on the gradual increase of wealth which freedom brought about, it had constantly to fight proposals which threatened this progress. It came to be regarded as a “negative” creed because it could offer to particular individuals little more than a share in the common progress - a progress which came to be taken more and more for granted and was no longer recognised as the result of the policy of freedom. It might even be said that the very success of liberalism became the cause of its decline. Because of the success already achieved man became increasingly unwilling to tolerate the evils still with him which now appeared both unbearable and unnecessary.

Because of the growing impatience with the slow advance of liberal policy, the just irritation with those who used liberal phraseology in defence of anti-social privileges, and the boundless ambition seemingly justified by the material improvements already achieved, it came to pass that toward the turn of the century the belief in the basic tenets of liberalism was more and more relinquished. What had been achieved came to be regarded as a secure and imperishable possession, acquired once and for all. The eyes of the people became fixed on the new demands, the rapid satisfaction of which seemed to be barred by the adherence to the old principles. It became more and more widely accepted that further advance could not be expected along the old lines within the general framework which had made past progress possible, but only by a complete remodelling of society. It was no longer a question of adding to or improving the existing machinery, but of completely scrapping and replacing it. And as the hope of the new generation came to be centered on something completely new, interest in, and understanding of, the functioning of the existing society rapidly declined; and with the decline of the understanding of the way in which the free system worked our awareness of what depended on its existence also decreased.

• Hayek - The Road to Serfdom