The Failure of Central Planning

Time for a thought experiment

As we suffer through the effects of moving more and more of our economy through the central planners, it’s important to understand why these so-called ‘experts’ continue to fail — before they drive us all off the cliff we can all see in the distance.

A modern free market economy, at its core, is simply people making their own decisions using the knowledge available to them. I value a soda more than I value a dollar, and the grocer values the dollar more than the soda. When we trade, BOTH of us are better off. This is generally how an economy works. You decide what type of shampoo you use, what you eat, what you wear, and a million other things — every single day. Colloquially, we call that ‘voting with your wallet.’

When the central planners insert themselves into the economy, the decisions once made by customers are instead made by politicians. Generally, these people have never run a business and don’t have the first clue about how to do it. Because of this, their decisions are made based on political calculations.

This is why people like Bernie Sanders say “You don't necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country.” Sure, one person probably doesn’t need 23 different deodorants, but more than 330 million people live in America. Reducing choices by fiat is, by definition, ignoring the preferences of some of the people.

Imagine you’re responsible for a birthday party for someone you don’t know. Who would you invite? What kind of music would you play? How do you decorate? What kind of cake would you serve? Where would you hold it, and at what time? What types of gifts would you ask the attendees to bring?

It quickly becomes apparent you lack the necessary information to throw this party, and the odds you can successfully pull it off are miniscule.

Now imagine that instead of planning a party for this one person, you had to plan a party that EVERYBODY IN THE COUNTRY was to throw. One cake. One music. One decorating theme. The very idea of it is depressing.

Yet this is how government works when it inserts itself into the economy. Your preferences are overridden with the preferences of the politicians. Has vaping helped you quit smoking? Too bad. Want to live in a tiny home (and reduce your carbon footprint)? So sorry. As the government makes more and more decisions, these inefficiencies pile up. Today they decide who can be open and at what capacity, what medical information you must require from your customers, and on and on. When cracks inevitably appear in the economy, the politicians double down on their terrible policies, exacerbating the situation further.

With this in mind, don’t be surprised when the real world ignores Biden’s fantasy-laden edicts just like the tides ignored King Canute. At least Canute knew his edicts would do nothing and was trying to educate his advisors. Our political class should also heed this lesson.