Reasons Why Top-down Government Doesn't Work
underlings need to take responsibility
Down the ages, most rulers have imagined themselves as a vital spark in the endeavor of human existence and flourishing. But in fact, rulers are good for only one thing: leading the people against an enemy. How could this be? Let me count the ways.
First of all, economics. What are prices? Are they merely a device by which the rich exploits the poor, and which require periodic abolition in government price controls to restore justice?
Maybe, but economists in the 20th century determined that prices were an essential part of the human economy. They communicate scarcity, value, need, from buyers to sellers and from sellers to buyers. And everyone who buys or sells anything is giving prices a little nudge, and sending a message to the rest of the market.
It was Austrian economist Ludwig von Mises that really made the point in his critique of socialism, first in a 1920 article “Economic Calculation in the Socialist Commonwealth.” La Wik:
Mises argued that a socialist system based upon a planned economy would not be able to allocate resources effectively due to the lack of price signals… Mises projected that without a market economy there would be no functional price system… According to Mises, socialism would fail as demand cannot be known without prices.
Friedrich Hayek, a student of Mises, made a similar argument in The Road to Serfdom. He attacks the very idea that “the complexity of modern civilization [is] an argument for central planning” and that without coordination by a central agency, “social life… [would] dissolve in chaos.” Hayek argues that the opposite is true.
[I]t is the very complexity of the division of labor… that makes competition the only method by which such coordination can be adequately brought about. There would be no difficulty about efficient control or planning were conditions so simple that a single person or board could effectively survey all the relevant facts. It is only as the factors… become so numerous that is is impossible to gain a synoptic view of them that decentralization becomes imperative.
This is precisely what the price system does under competition[.]
In “The Use of Knowledge in Society” Hayek looks at the metal tin.
Assume that somewhere in the world a new opportunity for the use of some raw material, say, tin, has arisen, or that one of the sources of supply of tin has been eliminated. [No matter why.] All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere and that, in consequence, they must economize tin.
Because the price is higher. And nobody needs to know the why or the wherefore. When you stop to think of it, all this is amazing: that something as simple as prices could send signals to everyone: buyers, sellers, traders, investors, everyone.
Of course, we now know that social scientists Stalin and Mao decided to conduct two double-blind tests of the theories of Mises and Hayek. The result of Stalin’s Five Year Plans and Mao’s Great Leap Forward was unequivocal. Stalin’s plan lead to famine, with 6 to 9 million deaths. Mao’s plan lead to the Great Chinese Famine with 15 to 55 million deaths. Socialism leads to starvation, experts agree.
Then there is politics. Politics, as I now understand it, is the fight against the enemy, and the gifting of friends. Thus:
The political is the friend / enemy distinction — Carl Schmitt
Who are our enemies? Who are our friends? — Mao Zedong
There is no politics without an enemy — Curtis Yarvin
Markets make friends where politics creates enemies.
For my friends, everything; for my enemies, the law — Óscar R. Benavides, president of Peru.
But this means that politics is always draining resources from the economy to gift political friends and supporters. The most notable science on this question is the analysis of “regulatory capture” by George Stigler, that all economic regulators end up being captured by the economic interest that they have been charged to regulate.
Meanwhile, scientists agree, the shortest measurable time interval in the universe is the interval between getting a check from the government and deciding you deserve it.
Another impact of politics on people is Chantrill’s Law, that government programs never work because you can never reform them. This refers to the fact that government programs are primarily a means of funneling resources at voters. Any “reform” means that some beneficiaries of the government program are going to find their benefits reduced.
Then there is the military. That seems to be the obvious case where top-down organization works. But in World War I the Germans discovered that on the lethal battlefields of Flanders there was a limit to the amount of top-down supervision that could work. So in their post-war evaluation of the lessons learned they determined to
devolve creative freedom and authority upon their juniors… And those juniors… required relentless schooling, training, and encouragement to use that freedom wisely. The goal, according to Hans von Seeckt, was to make “of each individual member of the army, a soldier who, in character, capability, and knowledge, is self-reliant, self-confident, dedicated, and joyful in taking responsibility [verantwortungsfreudig] as a man and as a military leader.”
I understand that after the Vietnam war, the US armed services implemented a similar philosophy.
This really is not that hard. Humans are social animals that flourish through cooperative interaction, not through diktats from on high.