Fair and Balanced

Controllers don’t trust the inherently messy process of trial-and-error competition. They are motivated by two abiding faiths:

The first is in man’s abilities to figure things out through abstract reason.

The second is in the general trustworthiness of smart people to apply the findings of abstract reason dispassionately for the general welfare.

Whenever the controllers see evidence that the world isn’t perfect, they assume that the imperfection can be corrected by government applying genius to the problem.

This “controllers” approach is dangerous.

First, not all imperfections should be corrected. Many are the unavoidable byproducts of productive trial-and-error competition. “Correcting” these imperfections too often means shutting down trial-and-error competition.

Second, because controllers can exercise economy-wide control only through “Big Plans,” these plans are necessarily formulated in aggregate lumps. They are plans for “workers,” for “banks,” for “mortgagees” and so on.

All nuance and individuality are lost, for these Big Plans cannot possibly be customized to account for the different tastes, talents and hunches of each of hundreds of millions of people. The differences among workers, among banks, among consumers are ignored.

Third, because Big Plans are premised on the notion that the planners have figured out just how the different sectors of the economy should operate, these plans crowd out the individual, decentralized experiments that are the hallmark of a market economy.

A plan isn’t really much of a plan if individuals are permitted to ignore it.

Fourth, unlike in decentralized markets, if the Big Plans are flawed — either in design or in execution — there’s no offsetting, competitive alternative. Everyone is along for the dangerous ride. All eggs are in the same big basket.

via Here comes the G-20 – Pittsburgh Tribune-Review.

I’m always happy to see a smart economist write a piece for public consumption that explains key economic issues for the layperson. The last few days have been especially nice in that regard.

The quoted piece if by the often quoted Don Boudreaux. It explains the virtues and pitfalls of free market approaches and the pitfalls of centralized “big government” approaches. I wish he had written a little about the advantage of centralized approaches. The big advantage is immediacy of execution. Think about our system of roads and highways. While something better might have emerged from free market approaches, it certainly would have taken a lot longer. We may chafe at government’s ability to impound property to build roads, but at least the roads materialize in our lifetimes!

Life and economics are about trade-offs. While I agree that free-market solutions are usually best, I also want to fairly consider the alternatives. Too much political argument states only the advantages of one approach and the disadvantages of the alternative. I guess that’s why they call it argument. Maybe we need less argument and more balanced considerations.


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