The shortcomings of central planning and national security

Thanks to David Henderson for raising an issue that gets far too little attention: the problem isn't so much WHICH government (Democratic or Republican) can protect us but how well equiped government is to protect us in the first place. As we know from economics, and as David Henderson reminds us in this column entitled "Maybe Clarke and Rice Are Both Right," there are limits to central planning. I'm not suggesting that we scrap centrally planned national security, but we should be aware of its limitations and act accordingly. Here's an excerpt in which Henderson refers to Nobel economist Friedrich Hayek:

Central economic planning can't work, explained Hayek, because no small number of people at the top, however brilliant or informed, can aggregate all the trillions of pieces of data needed to plan an economy well. The main information that matters in real time is what Hayek called "knowledge of particular circumstances of time and place" and this information is necessarily decentralized: it exists only fleetingly in the minds of millions of people. Forbid people from acting on their information, argued Hayek, and the information won't be used. That, plus lack of incentives, is why crops rotted while waiting for railway cars and why the wrong sizes and types of steel were produced regularly in the Soviet economy. In a free-market economy, by contrast, people have both the incentive and the ability to use their information. For instance, the shipper who earns his living by using otherwise empty or half-filled journeys of tramp steamers is performing a useful function based on special fleeting knowledge not known to others.

Hayek's argument applies whether the good being produced is food, steel, or internal security.