Nuclear energy can electrify the world or destroy it: The technologies for doing so are virtually interchangeable. This dilemma was recognized by J. Robert Oppenheimer shortly after he led the Manhattan Project to its conclusion with the destruction of Hiroshima and Nagasaki. It also motivated President Eisenhower to propose the "Atoms for Peace" program in 1953, and with it was born the first scientific nuclear dialogue between the United States and the Soviet Union at the International Conferences on Peaceful Uses of Atomic Energy in 1955 and 1958.
During this time, scientists in both nations also began to pressure their governments to control the nuclear dangers resulting from atmospheric nuclear testing and the nuclear arms race. The Soviet scientists were led by Andrei Sakharov and later by Evgeny Velikhov. The American scientists worked mostly under the umbrella of the National Academy of Sciences and were led by W.K.H. Panofsky and Sidney Drell of Stanford University and Hans Bethe, Herbert York, and Richard Garwin. The scientific dialogue was instrumental in bringing some measure of arms control to the nuclear arms race during the last two decades of the Cold War.
My personal involvement with scientific diplomacy began with the collapse of the Soviet Union. I was director of the Los Alamos National Laboratory in 1986, during the Reagan defense buildup to counter what he called the "evil empire." By October 1986, however, President Reagan met with Soviet General Secretary Gorbachev in Reykjavik and together they nearly agreed to eliminate nuclear weapons. Although they did not succeed, they asked nuclear scientists from each country to conduct their own nuclear test and allow the other side to make on-site measurements of its explosive yield. These tests developed technical confidence for verification of the Nuclear Threshold Test Ban Treaty that allowed the two presidents to sign the treaty.
Once an innovative source of time-tested economic concepts like marginal utility, the Austrian school of economics has gradually fallen out of favor since the middle of the last century and has been increasingly marginalized by academia into the category of "heterodox economics." However, the recent financial crisis and current recession have changed all that. Failure by most economists to predict the economic collapse, and the inadequacy of current economic models to fully explain its causes (not to speak of providing meaningful solutions), have once again raised interest in the theories of Friedrich Hayek, Ludwig von Mises, and other economists associated with the Austrian school. Especially in the public discourse - notably in the blogosphere - commentators are presenting ideas that draw from Austrian school principles particularly apt for our current situation.
The Austrian school, in short, advocates the functioning of a free and unconstrained market. It argues that individuals have the specific knowledge of local market conditions needed to make correct economic decisions. Central government interventions, even well-meaning ones, are necessarily destructive, since they cannot incorporate essential local knowledge. Once enacted, these interventions create inefficiencies or disincentives of their own. Government then feels compelled to intervene even more - and so a vicious circle is created.
Importance of Local Information
Like politics, all economic activity is ultimately local. And yet, in all the spirited discussions about the financial crisis, the perspectives of individual decision makers - consumers and business owners - have notably gone missing. Erudite debates about misguided federal government intervention are plentiful: Were the GSEs Fannie and Freddie to blame? Will bailouts be repaid? Must Glass-Steagall be reinstated? Inadequate government intervention also gets plenty of airtime - we hear about whistle-blowers unheeded, regulations under-enforced. Most of all, we hear about the uniqueness of this particular crisis and its grand scope (the Great Recession). Yet all of these debates seem to ignore the different ways the crisis has played out across the country: Some devastated states like Florida may take decades to recover fully, while in places like Texas, the real estate downturn seems almost not to have happened at all.
