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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Thursday, November 12, 2009

More common sense from America's national treasure, John Stossel....

Competition is a "discovery procedure," Nobel-prize-winning economist F. A. Hayek taught. Through the competitive market process, we producers and consumers constantly learn things that force us to adjust our behavior if we are to succeed. Central planners fail for two reasons:

First, knowledge about supply, demand, individual preferences and resource availability is scattered -- much of it never articulated -- throughout society. It is not concentrated in a database where a group of planners can access it.

Second, this "data" is dynamic: It changes without notice.

No matter how honorable the central planners' intentions, they will fail because they cannot know the needs and wishes of 300 million different people. And if they somehow did know their needs, they wouldn't know them tomorrow.
From here. And what about innovation? Well, innovation for a centrally planned economy heads towards servicing what the government central planners can contemplate and fit into their limited models. Since market information is not found in any accessible place and information actually becomes less accessible under that static model since there is no information available from prices since prices are set by the planners themselves, changes to meet shifting needs or demand are not adjusted since this information is impossible to recognized. In this model, real innovation suffers and loses its ability to create outsized returns whereas servicing government and their process becomes the focus for investment. So investment, since government is now the decision maker will not need to service actual shifts in demand or needs but to service the central planners need to be relevent.

Good luck America. Central planning didn't work in the USSR, 1960's China, North Korea, Africa and it won't work there.


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