The Economists Who Got It Right

John Stossel
Tue, 24 Mar 2026 14:58:09 -0700
Opinion

Politicians say they can "make the economy work better."

I once believed they could.
Updated: Wed Mar 25, 2026

Politicians say they can "make the economy work better."

I once believed they could.

But years of reporting taught me that politicians' attempts to "fix" the economy usually make things worse.

Twenty years ago, Republicans and Democrats helped create the Great Recession by telling government-backed Fannie Mae and Freddie Mac to buy more peoples' mortgages because, as President George W. Bush put it, "Owning a home is a part of (the American) dream."

But that guarantee inspired lenders to approve dubious mortgages, given to riskier borrowers.

Housing prices shot up in a government-created bubble. When many people stopped making mortgage payments and the housing bubble burst, we got the Great Recession.

It's just one example of what Austrian economists Friedrich Hayek and Ludwig von Mises wrote about years ago.

In "The Fatal Conceit," Hayek writes, "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."

Mises' "Human Action" points out that all economics start with individuals making purposeful choices. That "human action" determines prices, and markets coordinate the most efficient use of resources.

But the media believed the socialists. The New Republic wrote: "the major task of our civilization is ... to organize our great economic organs."

On the contrary, wrote Hayek: "To follow socialist morality would destroy much of present humankind and impoverish much of the rest."

He was right. Every socialist government, everywhere, has failed. They fail because no political leader can ever know as much as millions of individuals doing our own thing.

"That's the idea that Mises' introduced to the world," says Ryan McMaken of the Mises Institute. "Central planning doesn't work because everybody has different ideas for themselves, wants to do different things with their property. If you take away their ability to do what they want, it eventually causes great impoverishment."

I assumed belief in socialism would die when the Soviet Union did — but bizarrely, it hasn't. Recently, young people helped elect socialist mayors in Seattle and New York City.

They promise rent control and government-run grocery stores.

"We don't have to look any further than Mises to find an excellent explanation of why that doesn't work," says McMaken in my new video.

Unfortunately, Mises and Hayek were never as popular as economists pushing central planning and government spending.

"There's a big advantage that the people who are in favor of inflation and more government regulation have. Everyone in government wants that same thing," says McMaken. "'Like to spend? Like to regulate the economy? Boy, have we got an economic theory for you.' (That) of course became instantly popular with people in government."

And popular with the public.

"Because the public wants government to spend on them as well!" says McMaken. "Here was an economic theory telling them the government can give you boatloads of welfare nonstop forever and there's no downside. ... The reality is that there is a downside: recessions, unemployment, inflation and falling real wages."

We got that in the 1970s, after years of spending on President Lyndon B. Johnson's "Great Society" programs. In total, American taxpayers have spent $30 trillion in the name of reducing poverty. Politicians said government agencies would spend the money efficiently.

They rarely did, and the deficit spending contributed to 15% inflation.

"People then saw, 'Everything we've been told for the last 30 years about managing the economy isn't really true,'" says McMaken. "When you start to inflate the money supply, it sows the seeds for a future economic collapse. That is the cause of everything we've seen over the last century. It is Mises' work that explains why the Great Depression happened ... We have to study the economic side of things because if we don't ... we can't see the ways that the state is ripping us off."

Hayek and Mises were right. The socialist planners are wrong.

Books like "The Fatal Conceit," "The Road to Serfdom" and "Human Action," although I couldn't get through all of it, are well worth reading today.