Central planning doesn’t work. It just doesn’t. I hope that soon people will finally take their heads out of the sand and face the truth. And it needs to be ended. Soon. Here are some rather important examples.
This morning I linked to Sheldon Richman’s article, Central Planning at the Federal Reserve. Richman notes that, in addition to the central planning nature of the Fed chairman dictating interest rates which everyone must obediently follow, the Fed is now the central planner in allocating credit.
It is standard operating procedure (though of course illegitimate by free-market standards) for a Fed chairman to inflate the money supply supposedly to provide increased liquidity during an economic crisis. It is then left to the market (distorted, to be sure) to “allocate” the money. What’s new is that under the Bernanke Fed’s self-expanded powers, the central bank is allocating credit to chosen financial institutions, including insolvent rather than merely illiquid ones. That is apparently unprecedented in the United States.
Given that central planners lack the necessary information throughout various markets within an entire given territory — and the U.S. is a huge territory with a population of over 300 million inhabitants — there’s no way they could efficiently allocate, or reallocate (or, perhaps more accurately, “redistribute”) credit to where it actually is needed. And, with this monopoly power that the Fed has, the system inherently enables this monetary central planning institution’s bureaucrats to play favorites, regardless of actual needs. That is because “men are not angels.”
I agree with Sheldon Richman in opposing government control in money, investment, banking and credit, when he notes that “in a society that calls itself free, no one should have such power at his disposal. A free economy leaves savings and investment to the uncoerced choices of individual persons, just as it leaves money and banking to the market.”
Not only is central planning impractical and inefficient, but it is immoral. That is, compulsory central planning, in which an entire population is compelled by law to have to follow the dictates of these (imbecilic, corrupt and criminal) central planners. There are a lot of conservatives who say they oppose central planning, but they nevertheless support the Federal Reserve, because they don’t particularly understand the kind of destruction that such an agency has caused in these nearly 100 years since its inception. And they don’t see that the Fed is an institution of central planning, no different, in my opinion, from Soviet-style central planning.
But where is the moral authority of the federal government to forbid banks from competing in a free market of banking? Or to compel 300 million people in the territory via legal tender laws, to have to use the one government-issued currency, the so-called “dollar,” while outlawing any other competing forms of currency that people might otherwise prefer to use. It is the combination of central planning and centralized dictates from bureaucrats who are far removed from the real world — but who like to have a lot of power over others, that’s for sure — that create the moral hazard. This scheme of government-managed money and banking really is immoral, as well as impractical.
For more information on the illegitimacy and impracticality of central planning in money and banking, please see these articles: Monetary Central Planning and the State by Richard Ebeling, The Case Against the Fed by Murray Rothbard, Taking Money Back by Rothbard, Why the State Demands Control of Money by Hans-Hermann Hoppe.
I don’t know why it is so difficult for so many people to see the terrible destruction of central planning. There are many further examples. One is the national health care and insurance problem, that the Left use to seize control over everybody’s private, personal medical and insurance matters, via ObamaCare. What the Left really wants, its ultimate goal, is for a Soviet-like total State control over our medical issues, as well as all other aspects of our personal, private lives.
But for some reason even the Republicans, who want to replace ObamaCare with RepublicanCare, don’t understand that the problems with insurance and the costs of medical care are caused primarily by government interventions in the medical system, with taxation and regulations, licensure, fees, mandates and restrictions. What needs to be done is getting rid of all those interventions, those intrusions, which really are intrusions because they are thefts and trespasses committed by legislators and government bureaucrats who, quite frankly, just like to have a lot of control over a lot of people.
Morally, ethically and economically, everyone has a right to medical freedom. Doctors and patients have a right to establish voluntary associations and contracts that are nobody else’s business but that of those specific individuals. And, like it or not, insurers have a right to voluntary associations and contracts with willing and able consumers, all without compulsion or intrusion by State bureaucrats, and private charities, hospitals, churches and other organizations have a right to provide assistance for those in need (and there should be no HHS, IRS, or other government bureaucrats getting in their way).
For more information and insight on those issues, here are some helpful articles: My own article on Government Medicine vs. Contract and Property Rights, also Subsidizing Sickness by Lew Rockwell, A Four-Step Healthcare Solution by Hans-Hermann Hoppe, Medical Control, Medical Corruption by Rockwell, Uncertainty and Its Exigencies: The Critical Role of Insurance in the Free Market by Hoppe, and Rothbard’s critique of Hillary Clinton’s 1993 proposals for government medicine.
The last example of central planning here that I have addressed several times (and will continue to do so) is central planning in national security. Many people don’t realize that the “Defense” bureaucrats in Washington, who are in charge of the security and safety of 300 million Americans, are central planners. The powers that they have, whether instructed by the U.S. Constitution or not, are those of a government monopoly. They have the unchallenged monopoly in territorial protection that is free from any competition, and, as monopolists in security, they are allowed to be above the rule of law (Like the local police, “They are the law,” etc.). And the entire population of 300 million people are compelled by law to have to use their security “services,” without any alternatives allowed; therefore, it is a compulsory monopoly. Has anyone out there ever even thought about that? And as with any other monopolists, especially those whose activities are legally protected from competitive forces, these monopolists are not accountable. That is why they have caused so much trouble.
There are two main problems with this scheme of compulsory monopoly in territorial protection, in my view. One is that this is an institution of central planning. But have these central planners really done any good for us? Look at Vietnam. First, Vietnam was a case of Lyndon Johnson lying his way into war during an election year. (Gulf of Tonkin.) Hmmm. That’s a new one. And then the central planners dug themselves (and us) deeper and deeper into the hole of quagmire, putting America into turmoil.
In 1990, George H.W. Bush started the war against Iraq, a country that had not attacked us. During that war that Bush started, the U.S. military bombed and destroyed Iraqi civilian water and sewage treatment centers, forcing Iraqi civilians to have to use untreated water. And then our central planners’ sanctions and no-fly zones throughout the 1990s prevented materials from being brought to Iraq to repair the damage to Iraq’s civilian infrastructure, and prevented food and medical supplies from being brought in there. All this led to the deaths of hundreds of thousands of innocent civilians in Iraq by the mid 1990s, and another few hundred thousand by the year 2000. It also was a major cause for widespread anti-Americanism throughout the Middle East, and many Americans have no idea about all this, thanks to government schools (another failure of central planning), and they couldn’t understand that this was a main reason the 9/11 terrorists had for their actions on that day. Unfortunately, many people interpreted such conclusions as “blaming America,” when in fact it is our incompetent, corrupt, buffoonish national security central planners who are to blame.
The other main problem with this central planning scheme of compulsory monopoly in territorial protection is human nature (and see Ludwig von Mises’s Human Action on that). When you give professional bureaucrats and politicians that kind of monopolistic control over the lives of 300 million people — we must depend on these clowns to protect us from foreign aggressors with no other choices allowed — it is like giving free toys to kids. The power will go to their heads, and they will want more power. And they will do what they can to expand their powers during their temporary moments in the government playpen. Instead of engaging in peaceful activities and overseeing America while minding their own business, these central planner bureaucrats have been provoking foreigners as a means of justifying these bureaucrats’ further expanded powers, and as a means of justifying ever more powers that they manipulate the citizenry into supporting. What do you think starting wars is going to do? Not provoke foreigners?
So, instead of keeping us safe, the DC bureaucrats’ provocations have been making us less safe, as well as plundering the treasury, making use of the Fed’s monopolistic money-printing powers, and bankrupting the country in the process. And the gullible sheeple continue to believe the lies and propaganda as they support even more war, even more provocations of foreigners, less freedom and more police state at home.
For more information on the destruction of central planning and monopoly in territorial protection, here are some helpful articles: The Production of Security by Gustave de Molinari, Foreign Aggression by Morris and Linda Tannehill, The Private Production of Defense [.pdf] by Hans-Hermann Hoppe, No More Military Socialism and Wall Street, Banks, and American Foreign Policy by Rothbard, and my articles on central planning in national security and how the current corporatist scheme is a racket. (And also Gen. Smedley Butler: War Is a Racket.)