Donald J. Boudreaux And Todd J. Zywicki | Wall Street Journal | Oct. 12, 2014 5:51 p.m. ET
Forty years ago the Nobel Prize in Economic Science was awarded to a scholar who believed the prize perhaps should not exist. As he graciously accepted the distinction in 1974, Austrian-British economist Friedrich A. Hayek worried aloud that thinking of economics as a science might fuel what he called “the pretense of knowledge”—the idea that anyone could know enough to engineer society successfully. He was right to fret.
Hayek’s greatest contribution to economics was to show that society is far more complex than we realize, with little pieces of knowledge dispersed among millions of individuals. “The curious task of economics,” he famously wrote in “The Fatal Conceit,” which he published in 1988, “is to demonstrate to men how little they really know about what they imagine they can design.”
Recent government interventions suggest that politicians and bureaucrats today think they can design just about anything. This ignorance has backfired, as it always does, bringing with it what economists call “unintended consequences.”
Consider the Affordable Care Act. The law’s mandates, restrictions, prohibitions, taxes and subsidies are meant to make health insurance universally available. Yet since its passage in 2010, the proportion of Americans lacking health insurance has fallen only to 13% from 16%, according to a recent study by the Centers for Disease Control and Prevention. Millions of Americans have faced higher premiums, often losing their preferred doctors, contrary to what President Obama predicted and promised.
Thanks to the hastily written law’s incentives, ObamaCare also has been a drag on employment. About 18% of employers surveyed by the Federal Reserve Bank of Philadelphia in August said that the ACA caused them to reduce the number of workers they employ. Only 3% of employers credit the ACA with enabling them to hire more workers. Those who are being hired often find their workweek capped at 29 hours, not coincidentally just one hour less than the definition of “full time” under the ACA.