14 ms·

Hayek deserves so much more recognition. Now more than ever - we need people to understand the fundamental inadequacy of central planning.

wavefunction 6y ago
The problem I have with your particular statement is that you seem to be using a conspicuous lack of central planning as evidence that it's completely ineffective while past episodes involving central planning applied to deal with somewhat similar circumstances have shown it to be effective in tackling issues like ebola outbreaks, swine flu or other pandemics that do not respect federalism, "local control" or pure ideology divorced from rational thought.
- SllX 6y ago
  Missions would be inefficient if they weren’t centrally planned. Markets would be inefficient if they were centrally planned.
- jesuschroist 6y ago
  But this is just what Hayek's work is all about: to show _why_ central planning is ineffective. It works with theoretical arguments and there is no need to use real-life examples.
  - deleted 6y ago
    [deleted]
- rayiner 6y ago
  Federalism reflects a principle that works even in a pandemic response, which is that local units of government are better equipped to evaluate the local situation and respond accordingly. The federal government was too big and ponderous to quickly react to the situation in NYC (which after all comprises a mere 2.5% of the US population). Meanwhile, other states locked down too quickly and for hard because that’s what was required in NYC. Note that when the pandemic hit, the EU room a back seat to the National governments, even though the EU has a CDC itself. And in Japan success was largely due to local effort: https://fee.org/articles/did-japan-beat-covid-19-with-a-decentralized-response/ https://fee.org/articles/did-japan-beat-covid-19-with-a-dece... See also: https://www.hoover.org/research/decentralize-covid-19-response https://www.hoover.org/research/decentralize-covid-19-respon...
  - tptacek 6y ago
    That might make sense with respect to things like lockdown plans, but the PPE and ventilator shortage seems like a clear counterexample.
    - Fellshard 6y ago
      What need is there to centralize those resources?
      - tptacek 6y ago
        The inability of any one state to marshal those resources as effectively as the central government can, not to mention the supply chain debacle of the central government interfering with the acquisition of those resources.
        SllX 6y ago
        That’s an artificial limitation, not helped by the National government’s penchant for seizing State orders and stockpiles under the current administration. Without crap like that, there’s no reason California or New York couldn’t create their own medical stockpiles. They could run their own testing regime at least as effectively as the Federal government, but the FDA actually hindered testing both by the States and private companies early on due to an old regulation based in an old law that they could not shed fast enough. States were also quick to shed regulatory barriers of their own making, which should probably remain shed after this is all over.
        tptacek 6y ago
        I guess the idea that all 50 states can replicate this effort effectively is something you can believe.
        SllX 6y ago
        You don’t need all 50 to do it. Wyoming’s largest metro area isn’t that far from Colorado’s, and two of Missouri’s largest cities are on its East and West borders. States stockpiling or relying on Federal stockpiles or making agreements to share stockpiles is as much a choice as any other. Seeing as how the Federal stockpile was not properly maintained and refilled by either the Obama administration or the Trump administration (who could have at least checked on it) after H1N1, maybe at least one of them would manage to do a competent job of it.
buzzkillington 6y ago
His critique was that you would need astronomical amount of data, like a gigabyte, to model the US economy. Computer systems have gotten fast enough that a 00s Pentium 4 can handle all of the US economy, with the rest being a problem of gathering inputs.
- WillPostForFood 6y ago
  His critique goes well beyond just the quantity of data. This is, perhaps, also the point where I should briefly mention the fact that the sort of knowledge with which I have been concerned is knowledge of the kind which by its nature cannot enter into statistics and therefore cannot be conveyed to any central authority in statistical form. His bigger argument though, is even if it were effective, it is inherently undemocratic. It will often be necessary that the will of a small minority be imposed upon the people
  - CWuestefeld 6y ago
    Exactly. This was a big part of the thesis of The Road to Serfdom. He makes the point that so long as everyone is on the same page, working to the same goal, central-planning can be very effective. We can see this historically when a nation unites in defense, as America (and much of the world) did during WWII. But when every person has their own goals and values, the central planning is no longer able to work effectively. It's not simply that it's hard to optimize that many functions at once, but that much more fundamentally, it's impossible for the central planner to know what those individual functions even are. So the titular road to serfdom is when we agree to unite toward a central goal and thus subject ourselves to the central planning, that central authority can't easily be removed later when the shared goal has been achieved. Thus we find the central authority acting as an obstacle toward the individual goals that we've returned to.
- logicchains 6y ago
  The issue is that it's impossible for a computer to know what everybody values. When people participate in a market, this allows their values to be expressed: at a particular time, if they spend their money on A over B, then they valued A over B. Talk is cheap (people can say anything they want; it conveys extremely little information if they're not putting their money where their mouth is, so to speak).
littlestymaar 6y ago
For sure, central planning is so inadequate. And China's economic failure compared to liberal countries like India is a great illustration of that. Oh wait… (Also relevant, in the 20s and 30s, USSR came from a shithole agricultural country with no industry, to the second biggest industrial economy of the world). I'm not saying that central planning is desirable, but it's for sure more than adequate of your goal is development.
- nickik 6y ago
  If you even the slighest bit of understanding of Indian history and Indian economics calling it 'liberal' is complete nonsense. After WW2 India adopted a diliberatly socialst agenda, often called Indian Socialism the was all about top down managment of all markets with heavy government guidence and intervention. This concept was popular in pre-WW2 British Socialism and India served as a huge experiment. While some of this has been removed you can still see it all over Indias economic policies today. India is still a far, far away from any sort of free market economy or liberal political order. > (Also relevant, in the 20s and 30s, USSR came from a shithole agricultural country with no industry, to the second biggest industrial economy of the world). Its is another bunch of nonsense socialist myth making. The trope of Imperial Russia being a backwards shithole then as soon as Soviets take over its some paradise is nothing but Communist propaganda. In fact before WW1 Russia was one of the fasted growing nations, that itself was one of the reasons for WW1 as the Germans realized that within a generation Russia would probebly match or be more powerful then them. If you look at Russia WW1 economy, you will see that in terms of manufacturing it actually performed incredibly well. They had a problem with food distriubtion and political authority, more then with production. The Imperial Russian economy was already one of the biggest industrial countries by a lot of different measures. This is clearly confirmed when you look at the weapons output during WW1. In the 20s Soviet economy first of all starved millions of people and only by the end of the 20s did they reach pre-war levels of output. From 1928 they started collectivisation and even more agressive industrialisation, but it should be noted that it required millions of people dead, many more millions put into forced labor and massive starvation of the whole population to export grain and thus import pretty much everything from the West. To make a point of this, the Soviets literally copied US and German factories and payed tons of money for them and then used lots of forced labor to build them. Putting that as some great success of centralised planning is dubious to me. And this great plan also didn't lead to much improvment for the actual people, it was primarly about the production of military equipment.
cma 6y ago
Hayek said epidemics were an obvious exception to most of his ideology and called for government planning: https://twitter.com/nntaleb/status/1274130684337172481 https://twitter.com/nntaleb/status/1274130684337172481
- centimeter 6y ago
  David Friedman and others have come up with decentral ways to deal with complex externalities like disease transmission risk. You can read "Machinery of Freedom" for a taste of how this works. It would probably involve health insurance standards for the negotiation of transit rights, just like we have car insurance standards for the negotiation of vehicle transit rights.
voldacar 6y ago
Most of his ideas came from Mises, so I would say it is Mises who deserves the recognition
kiliantics 6y ago
If central planning is so inadequate, why are all the most successful capitalist corporations using it? I don't know any highly profitable company that operates in a decentralised way. They are very hierarchical, with organisational power concentrated at the top.
- xtian 6y ago
  The most famous example is when Sears was internally organized around free market ideology by an Ayn Rand adherent. It did not go well. Declining profits drove a viscous cycle of back-stabbing and secrecy among competing units inside the company. My impression is that the people who argue against central planning always rationalize backwards from a pre-established conclusion. The fact is that the experiment has never been allowed to proceed on a national scale without violent undermining from the forces of private capital, both internal and external.
  - gnusty_gnurc 6y ago
    > My impression is that the people who argue against central planning always rationalize backwards from a pre-established conclusion. If you study the origins of central planning and the birth of the progressive movement in the early 20th century, you'll see that private capital loved central planning. Notions of ultimate efficiency through experts directing organizations through central planning went hand-in-hand with a lot of evil stuff. The obsession with perfection through "science" and tending to the "societal organism" was really contra the idea of free markets, individual rights, etc. They drew on evolution in precisely the worst way(narcissism and hubris). Whereas Hayek draws on evolution to say that culture and society develops through independent actors discovering traditions, organizations, etc. Through the observation of many people/organizations attempting things and either failing or succeeding, society picks up things to copy and reproduce - the lesson being that we can't direct evolution, it emerges!
    - xtian 6y ago
      I agree, it’s well documented that private capital loves fascism and totalitarianism. I’m speaking of socialist central planning though. The idea that free-marketism provides the ideal environment for human freedom and societal development is just demonstrably false in so many ways.

wavefunction 6y ago

The problem I have with your particular statement is that you seem to be using a conspicuous lack of central planning as evidence that it's completely ineffective while past episodes involving central planning applied to deal with somewhat similar circumstances have shown it to be effective in tackling issues like ebola outbreaks, swine flu or other pandemics that do not respect federalism, "local control" or pure ideology divorced from rational thought.

SllX 6y ago
Missions would be inefficient if they weren’t centrally planned. Markets would be inefficient if they were centrally planned.
jesuschroist 6y ago
But this is just what Hayek's work is all about: to show _why_ central planning is ineffective. It works with theoretical arguments and there is no need to use real-life examples.
- deleted 6y ago
  [deleted]
rayiner 6y ago
Federalism reflects a principle that works even in a pandemic response, which is that local units of government are better equipped to evaluate the local situation and respond accordingly. The federal government was too big and ponderous to quickly react to the situation in NYC (which after all comprises a mere 2.5% of the US population). Meanwhile, other states locked down too quickly and for hard because that’s what was required in NYC. Note that when the pandemic hit, the EU room a back seat to the National governments, even though the EU has a CDC itself. And in Japan success was largely due to local effort: https://fee.org/articles/did-japan-beat-covid-19-with-a-decentralized-response/ https://fee.org/articles/did-japan-beat-covid-19-with-a-dece... See also: https://www.hoover.org/research/decentralize-covid-19-response https://www.hoover.org/research/decentralize-covid-19-respon...
- tptacek 6y ago
  That might make sense with respect to things like lockdown plans, but the PPE and ventilator shortage seems like a clear counterexample.
  - Fellshard 6y ago
    What need is there to centralize those resources?
    - tptacek 6y ago
      The inability of any one state to marshal those resources as effectively as the central government can, not to mention the supply chain debacle of the central government interfering with the acquisition of those resources.
      - SllX 6y ago
        That’s an artificial limitation, not helped by the National government’s penchant for seizing State orders and stockpiles under the current administration. Without crap like that, there’s no reason California or New York couldn’t create their own medical stockpiles. They could run their own testing regime at least as effectively as the Federal government, but the FDA actually hindered testing both by the States and private companies early on due to an old regulation based in an old law that they could not shed fast enough. States were also quick to shed regulatory barriers of their own making, which should probably remain shed after this is all over.
        tptacek 6y ago
        I guess the idea that all 50 states can replicate this effort effectively is something you can believe.
        SllX 6y ago
        You don’t need all 50 to do it. Wyoming’s largest metro area isn’t that far from Colorado’s, and two of Missouri’s largest cities are on its East and West borders. States stockpiling or relying on Federal stockpiles or making agreements to share stockpiles is as much a choice as any other. Seeing as how the Federal stockpile was not properly maintained and refilled by either the Obama administration or the Trump administration (who could have at least checked on it) after H1N1, maybe at least one of them would manage to do a competent job of it.

buzzkillington 6y ago

His critique was that you would need astronomical amount of data, like a gigabyte, to model the US economy. Computer systems have gotten fast enough that a 00s Pentium 4 can handle all of the US economy, with the rest being a problem of gathering inputs.

WillPostForFood 6y ago
His critique goes well beyond just the quantity of data. This is, perhaps, also the point where I should briefly mention the fact that the sort of knowledge with which I have been concerned is knowledge of the kind which by its nature cannot enter into statistics and therefore cannot be conveyed to any central authority in statistical form. His bigger argument though, is even if it were effective, it is inherently undemocratic. It will often be necessary that the will of a small minority be imposed upon the people
- CWuestefeld 6y ago
  Exactly. This was a big part of the thesis of The Road to Serfdom. He makes the point that so long as everyone is on the same page, working to the same goal, central-planning can be very effective. We can see this historically when a nation unites in defense, as America (and much of the world) did during WWII. But when every person has their own goals and values, the central planning is no longer able to work effectively. It's not simply that it's hard to optimize that many functions at once, but that much more fundamentally, it's impossible for the central planner to know what those individual functions even are. So the titular road to serfdom is when we agree to unite toward a central goal and thus subject ourselves to the central planning, that central authority can't easily be removed later when the shared goal has been achieved. Thus we find the central authority acting as an obstacle toward the individual goals that we've returned to.
logicchains 6y ago
The issue is that it's impossible for a computer to know what everybody values. When people participate in a market, this allows their values to be expressed: at a particular time, if they spend their money on A over B, then they valued A over B. Talk is cheap (people can say anything they want; it conveys extremely little information if they're not putting their money where their mouth is, so to speak).

littlestymaar 6y ago

For sure, central planning is so inadequate. And China's economic failure compared to liberal countries like India is a great illustration of that. Oh wait… (Also relevant, in the 20s and 30s, USSR came from a shithole agricultural country with no industry, to the second biggest industrial economy of the world). I'm not saying that central planning is desirable, but it's for sure more than adequate of your goal is development.

nickik 6y ago
If you even the slighest bit of understanding of Indian history and Indian economics calling it 'liberal' is complete nonsense. After WW2 India adopted a diliberatly socialst agenda, often called Indian Socialism the was all about top down managment of all markets with heavy government guidence and intervention. This concept was popular in pre-WW2 British Socialism and India served as a huge experiment. While some of this has been removed you can still see it all over Indias economic policies today. India is still a far, far away from any sort of free market economy or liberal political order. > (Also relevant, in the 20s and 30s, USSR came from a shithole agricultural country with no industry, to the second biggest industrial economy of the world). Its is another bunch of nonsense socialist myth making. The trope of Imperial Russia being a backwards shithole then as soon as Soviets take over its some paradise is nothing but Communist propaganda. In fact before WW1 Russia was one of the fasted growing nations, that itself was one of the reasons for WW1 as the Germans realized that within a generation Russia would probebly match or be more powerful then them. If you look at Russia WW1 economy, you will see that in terms of manufacturing it actually performed incredibly well. They had a problem with food distriubtion and political authority, more then with production. The Imperial Russian economy was already one of the biggest industrial countries by a lot of different measures. This is clearly confirmed when you look at the weapons output during WW1. In the 20s Soviet economy first of all starved millions of people and only by the end of the 20s did they reach pre-war levels of output. From 1928 they started collectivisation and even more agressive industrialisation, but it should be noted that it required millions of people dead, many more millions put into forced labor and massive starvation of the whole population to export grain and thus import pretty much everything from the West. To make a point of this, the Soviets literally copied US and German factories and payed tons of money for them and then used lots of forced labor to build them. Putting that as some great success of centralised planning is dubious to me. And this great plan also didn't lead to much improvment for the actual people, it was primarly about the production of military equipment.

cma 6y ago

Hayek said epidemics were an obvious exception to most of his ideology and called for government planning: https://twitter.com/nntaleb/status/1274130684337172481 https://twitter.com/nntaleb/status/1274130684337172481

centimeter 6y ago
David Friedman and others have come up with decentral ways to deal with complex externalities like disease transmission risk. You can read "Machinery of Freedom" for a taste of how this works. It would probably involve health insurance standards for the negotiation of transit rights, just like we have car insurance standards for the negotiation of vehicle transit rights.

voldacar 6y ago

Most of his ideas came from Mises, so I would say it is Mises who deserves the recognition

kiliantics 6y ago

If central planning is so inadequate, why are all the most successful capitalist corporations using it? I don't know any highly profitable company that operates in a decentralised way. They are very hierarchical, with organisational power concentrated at the top.

xtian 6y ago
The most famous example is when Sears was internally organized around free market ideology by an Ayn Rand adherent. It did not go well. Declining profits drove a viscous cycle of back-stabbing and secrecy among competing units inside the company. My impression is that the people who argue against central planning always rationalize backwards from a pre-established conclusion. The fact is that the experiment has never been allowed to proceed on a national scale without violent undermining from the forces of private capital, both internal and external.
- gnusty_gnurc 6y ago
  > My impression is that the people who argue against central planning always rationalize backwards from a pre-established conclusion. If you study the origins of central planning and the birth of the progressive movement in the early 20th century, you'll see that private capital loved central planning. Notions of ultimate efficiency through experts directing organizations through central planning went hand-in-hand with a lot of evil stuff. The obsession with perfection through "science" and tending to the "societal organism" was really contra the idea of free markets, individual rights, etc. They drew on evolution in precisely the worst way(narcissism and hubris). Whereas Hayek draws on evolution to say that culture and society develops through independent actors discovering traditions, organizations, etc. Through the observation of many people/organizations attempting things and either failing or succeeding, society picks up things to copy and reproduce - the lesson being that we can't direct evolution, it emerges!
  - xtian 6y ago
    I agree, it’s well documented that private capital loves fascism and totalitarianism. I’m speaking of socialist central planning though. The idea that free-marketism provides the ideal environment for human freedom and societal development is just demonstrably false in so many ways.