Javier Milei’s Gift for Pope Leo
‘Man is not born wise, rational and good, but has to be taught to become so.’—Hayek
ET
On June 7, Pope Leo XIV met with Argentine President Javier Milei at the Vatican. Mr. Milei reportedly gave the new pope a historical document from 1642, a handwoven vicuña poncho, and Austrian economist Friedrich Hayek’s 1988 book, “The Fatal Conceit: The Errors of Socialism.” Even though the book costs only $18.83 on Amazon, it was the most valuable gift.
Hayek’s fatal conceit is that “man is able to shape the world around him according to his wishes.” It’s a hearty defense of free markets—of classical liberalism. My colleague Matthew Hennessey got taken to task by the vice president for defending free markets on these pages. In 2025!
Hayek pounds home the point that markets are about price discovery. Wealth creation “is determined not by objective physical facts known to any one mind but by the separate, differing, information of millions, which is precipitated in prices that serve to guide further decisions.”
Catch that? By buying and selling in free markets to determine prices, you and I, and “millions who are connected only by signals resulting from long and infinitely ramified chains of trade,” drive the economy. We do it better than the self-selecting know-it-all-but-really-know-nothing blowhard intelligentsia.
Hayek writes, “One’s initial surprise at finding that intelligent people tend to be socialists diminishes when one realizes that, of course, intelligent people will tend to overvalue intelligence.” Hayek rips these government meddlers: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”
Planners are ill-informed. “To the naive mind that can conceive of order only as the product of deliberate arrangement, it might seem absurd” that order and economic growth “can be achieved more effectively by decentralizing decisions.” Hayek notes the fallacy because “decentralization actually leads to more information being taken into account.”
Still, liberals and conservatives alike insist on bending the economy to their whims. These buttinskis can control markets no more than King Canute can control tides. But they all want to be economic kings. Central planners gotta central plan. Waste years of grad school for a Ph.D. in economics just to let markets do all the work? No way. So they meddle, and never for the better. This was Hayek’s warning. Among the recent bipartisan meddlers Hall of Shame: Peter Navarro, Jake Sullivan, Robert Lighthizer, Austan Goolsbee, Joseph Stiglitz.
It isn’t that markets are anti-intelligence, it’s that they are best when run on their own, without interference, collecting all our price decisions. Natural collectivism, you might say, without anyone in charge. Markets know more. Did central planners tell engineers to invent microprocessors? No. Internet browsers? Netflix? GLP-1 drugs? Large language models? A thousand times no. Yet we have industrial policy mimicking Soviet five-year plans.
Anything that interferes with markets and price discovery is dangerous. Unions distort prices. Student loans—and the policy of forgiving them—distort prices. So do quotas, subsidies, green policies and ethanol requirements. Even lockdowns and stimulus checks. Taxes, especially capital-gains taxes, distort the cost of capital. Redistribution is the ultimate market manipulation. And tariffs, which are taxes, distort prices, jobs and currencies.
Other conceits? Progressives wanted to control the climate by micromanaging the economy. Fail. The new right—and the old left for that matter—wants to break up Big Tech and media. But markets already do that dirty work.
Apple is behind on artificial intelligence, and its stock is underperforming. Warner Bros. Discovery stock is down more than 50% since the 2022 merger, and now the company is breaking up, proving that even government-sanctioned franchises (cable) don’t last forever. Remember the America Online and Time Warner merger? AOL isn’t worth much these days, and the old Time Warner is heading in that direction. Markets did that, not central planners.
At first, I wondered why Mr. Milei would give “The Fatal Conceit” to the pope, until I found this passage: “Man is not born wise, rational and good, but has to be taught to become so. It is not our intellect that created our morals; rather, human interactions governed by our morals make possible the growth of reason.” Righteous.
Mr. Milei is often characterized as “staunchly libertarian,” as if that were a crime. Under his reforms, including cutting the size of government and eliminating price controls, Argentina has seen both its inflation and poverty rates plummet—though there’s more to go.
Argentina is proof that, as badly as they are treated, free markets are resilient. Remove the boot from their neck, and they’ll sing. My advice for those in charge: Set and enforce rules of the sandbox, let markets flourish, and then get out of the way. Maybe with an American pope’s blessing, we can try that here.
Write to kessler@wsj.com.
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