The folly of central planning that the left forgets
The market got in this position because the government forced lenders to loan to borrowers who could not pay.
The top story of 2008 is undoubtedly the revival of the left. After nearly two decades on the defensive following the collapse of the Soviet empire--the definitive example of the failure of socialism--advocates of a government-controlled economy are trying to make a comeback.
How brazen has this leftist revival become? It has gotten so far out of hand that some on the left are openly defending central planning. Yes, comrades, you read that right.
I occasionally poke around the Internet to see the response to my articles, and I recently came across a reply to my December 11 article warning about the return of the Old Left, complete with central planning for the financial and auto industries. Over at MyDD, a prominent clearing house for "netroots" Democratic Party activists, Charles Lemos responded by complaining that "Central planning is the latest conservative epithet in the wake of president-elect Obama's bold and sweeping proposals for revitalizing the increasingly moribund American economy." He then goes on to declare that, "As liberals, as progressives it is imperative that we fight for planning. It's time we rehabilitate the concept of long-term planning."
Can anyone really be saying this in the 21st century? If so, it is because they have failed 20th-Century History 101. For those in need of a quick refresher, the satirical website The People's Cube has posted a helpful overview of the product line once offered by the East Bloc's centrally planned auto industry. My favorite line is an old joke about the Yugo: "Every car came with a rear defroster to keep your hands warm as you pushed it."
But central planning has not just been discredited by a mass of empirical evidence. It has been thoroughly refuted in theory, too. Legions of pro-free-market economists, particularly the Austrian school's Ludwig von Mises, have thoroughly demonstrated that the government's so-called planning is actually an attack on planning.
Planning is what is already done in a free economy by millions of private individuals. Every economic decision they make is a plan about how to allocate the only money and effort they have a right to dispose of: their own. And these plans are made with full access to the only kind of information that is really relevant: the context of their own lives and values.
Government planning, by contrast, consists of smashing all of these private plans and replacing them with inferior plans made by inferior men.
Planning for its future solvency, for example, Bank of America decided not to lend money to a defunct window and door manufacturer--but then along comes Illinois Governor Rod Blagojevich, right before his arrest, to demand that the bank extend such a loan anyway. Other banks decided, reasonably enough, that the best way to survive an economic downturn is to make only conservative investments--but along comes their uninvited new business partner, Treasury Secretary Hank Paulson, who declares that he expects them to open a floodgate of new lending.
As for central planning, I will refer readers to a question I have asked often. How many eggs and slices of bacon are needed in New York City everyday. The fact is the number probably fluctuates daily depending on demand which is effected by price and through the magic of the marketplace just about the right number make it into the city everyday and if one guy tried to predict it he would almost always be wrong.
Control freak government just does not work efficiently. The command economy is one of the biggest follies of mankind. The people who have not figured that out generally are liberals who don't care about what individuals want.