The Fallacy of Centralized Planning

untitledIt’s Christmas eve.  Perhaps this is a good time to remind ourselves why God is the only central planner in whom we should place our faith. “In God We Trust” remains our national motto for now, but it appears that more and more Americans trust a powerful welfare state at least as much. It didn’t happen overnight. Certain segments of our citizenry and political leadership have been moving us in this direction for decades.

This fact didn’t dawn sufficiently upon me until the summer of 2008. I was visiting Atlanta at the time, teaching a spirituality course for the college where I’m employed as a theologian. One evening we found ourselves dining in the home of a mutual friend who lives in the area. This friend and his wife had invited others from their neighborhood as well. One of them was an attorney who was also a leader in the Atlanta-area Democrat party.

As you can imagine, being only a few months before the presidential election of 2008, much of the evening was spent in the discussion of politics. I quickly realized that the Democrat attorney and I had opposing views of what made America great. Rather than debate him, I set about trying to understand him. I asked lots of questions. At some point he confessed that, if truth be told, he was honestly a socialist. He was thrilled with the candidacy of Barack Obama.

As I listened for the remainder of the evening I was seized with concern for the future. The emotional wave that came upon me that night was something new for me in terms of its focus. As he spoke throughout the evening, the attorney opened my eyes to the fact that the socialist Utopian hopes that I thought belonged only to a small minority of Americans were actually deeper and more determined than I had ever imagined. I have thought of that socialist Democrat often since that night.

Led by the “mainstream” media and the self-serving rhetoric of Barack Obama, much of America has a romantic crush on socialism.  We’re talking, writing, and even smiling about it. This is the dream promised to us by candidate Obama when he was in Ohio in 2008. He told Joe the plumber and all of us then that “when you spread the wealth around, it’s good for everybody.”

Obama is right.  Spreading the wealth around is good for everybody.  Of course it is. Spreading wealth by seizure and centralized authority, however, is not good for anybody. It’s what we in American today call taxation and entitlements.

Giving people money to spend is different from paying them for producing wealth through production of consumables or provision of necessary services. The great socialist fallacy is that money is the same as wealth. Money is nothing but a tool of exchange. Without genuine wealth produced through labor, there is nothing to give value to money. Nations work themselves into poverty when they fail to see this, as we are doing now.

Socialism appears to be a refined lady, but she is a cruel witch in disguise.

Like a teenager succumbing to “love at first sight” while knowing nothing about the beloved, some Americans are fooled by the supposed beauty of socialist central planning. “We’re all socialists now,” proclaimed Newsweek just a month after Obama was inaugurated. The love affair has continued ever since. Back in September, the high-school band in New Oxford, Pennsylvania honored the Russian Revolution of 1917 in a football halftime show. Unconcerned for the millions slaughtered under Soviet rule, the students proudly wore costumes resembling Russian military from the era of the Cold War and dutifully carried the hammer and sickle.

The superintendent of schools for the region defended it by reminding angry parents that the band was justified in their subject since it had celebrated freedom back in 2008. How symbolic.

Centralized economic planning does nothing but make the elites more wealthy and powerful while making most citizens destitute and powerless.  Do you see any people of average economic means in Congress, or in the Oval Office, or directing the Federal Reserve? Enough said.

If you believe in the average American and his or her ability to make the country strong, then you should be a proponent of the free-market economy. Centralized planning has never worked. It can’t.  Small groups of powerful people at the top cannot monitor and control an economy to any adequate degree. The attempt to do so is known as Keynesianism, an approach advocated by economist John Maynard Keynes. As Ron Hera of the Ludwig von Mises Institute reminds us, Keynes “advocated that the government should play a large, active role in the economy.” The result is clear: “Western economies today are characterized by large, central governments, central banks, and massive debts.”

I wonder if the young people in the New Oxford High School Band have ever been told about the police state that was necessary to keep the people of Soviet nations in line, or the walls and barbed wire that kept them from fleeing their misery. Socialism is a Utopian vision that doesn’t work because that which is given away free is abused. Money provided without production becomes worthless. Incentives are destroyed but government promises remain. The result is poverty and totalitarianism.

Traveling behind the Iron Curtain in the late 1970s and early 1980s, friends and I saw firsthand that Soviet centralized planning was a disaster. People bartered for what little they could get. They begged tourists to trade clothes for the military memorabilia they were able to steal or buy cheap from their soldier friends (it seemed the only things in abundance in the Soviet-controlled lands were items related to military dominance; that fact alone should awaken us to the suffering of the people of the time and place). Even in nice hotels the bathrooms were stocked with newspaper instead of toilet tissue.

All the while there were the prying and ever-present eyes of the police state. Brave Soviet citizens spoke of it occasionally, but only in a hushed whisper, only inside their homes, and only after locking the doors and closing their curtains.

Yes, indeed. Christmas is a good time to think about what you believe.


4 thoughts on “The Fallacy of Centralized Planning

  1. Excellent article Professor Switzer. I would only add that this is nothing new. Alexander Hamilton and Henry Clay were also central planning authoritarians. Both of them sought a large centrally planned Government with a command and control economic system. This idea has ent through several name changes over the years, but the concept is as old as life itself. Alot of people have been fighting this idea, but it appears the proponents of this idea are winning. It saddens me.

  2. John, Jim Gallahue here. Just want to thank you for including me on your distribution and say Merry Christmas to you and yours.

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