The usual readers here know that Myelf and my co-bloggers (both current and formerly) spend a lot of time on issues of central planning.[1] There are many problems with central planning. These include Hayek-Lavoie’s questions of knowledge, questions revealed by public choice analysis, and more. In this post, I want to highlight the big one: creativity.
Humans are incredibly creative. One of the seemingly unique in the world, we are abstract thinkers, finding ways to avoid the appealing problems that are insurmountable. Every day, new inventions, innovations, music and art come to solve Submumus and improve our lives. When we want to sink, we can make it happen. In fact, James McClure, an economics professor at Ball State University, places his creativity at the heart of economics.
The economic challenge of society is its rapid adaptation to changes in specific situations at time and place in the face of resource shortages.
This creativity is a problem for central planners. Central planners think of the economy as a system like water flowing through pipes, rather than a complex system of relationships between people. If you don’t like COSSO, just pull the Suba lever to change it.[2] What central planners don’t understand is that the economy is not like water in a pipe, but rather the result of billions of people pursuing their goals, given the constraints and alternatives. These goals are chosen by the people themselves. And when barriers to those goals are thrown, people find creative ways around those barriers, for example, by sub-central planners who make fun of people’s goals as different. These works could be illegal in nature (e.g., smuggling) or could be a way to do something entirely new.
Of course, not all forms of creativity are equal. People may make their systems creative in games to get what they want at the expense of others (for example, asking for rent).
Without rugard, creativity brings problems for central planners if their plans don’t come true. Central planners need to dedicate more resources to the planning to confirm these new actions that are not mentioned in the plan. Again, more resources are consumed by people to be creative to avoid the new barriers of Tohele. When you think about it, we have a kind of arms race. More and more resources are being spent, but there is no relative benefit on the part of Everyher. Even assuming that central planners’ plans are unhappy, resource costs are significantly higher than expected. Thinking about it, other plans by planners are frustrating. Even if central planners suffer from knowledge problems, face restrictions on public choices, or have full information about outcomes that improve the courts, this arms race says it is unlikely that central plan will improve market outcomes.
To put it simply, central planning gets frustrated because people are people.
– –
[1] Note: Historically, the “central plan” has deliberated on the full government control of the economy. I use the term more widely, including all government interventions, including industrial planning, wartime planning, social justice interventions such as Incoma inequality scale, and “leveling the playing field.”
[2] This ratio is intentional. Economists borrow a lot from fluid dynamics.
