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A reformed central planner speaks…

June 7, 2011

Remember my Tolstoy story about the German generals who were ‘consulting’ with the Russian army the first time they fought Napoleon (and lost, badly)?

For a refresher: Book Nine: 1812, chapter 10

Pfuel was one of those hopelessly and immutably self-confident men, self-confident to the point of martyrdom as only Germans are, because only Germans are self-confident on the basis of an abstract notion of science, that is, the supposed knowledge of absolute truth….

In 1806 Pfuel had been one of those responsible, for the plan of campaign that ended in Jena and Auerstadt, but he did not see the least proof of the fallibility of his theory in the disasters of that war. On the contrary, the deviations made from his theory were, in his opinion, the sole cause of the whole disaster, and with characteristically gleeful sarcasm he would remark, “There, I said the whole affair would go to the devil!” Pfuel was one of those theoreticians who so love their theory that they lose sight of the theory`s object – its practical application. …

He was even pleased by failures, for failures resulting from deviations in practice from the theory only proved to him the accuracy of his theory.

Now being an ex-central planner, I know the type. I worked with many who believed that their strategies were perfect, the execution of their strategies were idiotic. You could actually replace “German” with “Modern Progressive Theorist” and “Pfuel” with “Teknocrat A” (pick your favorite big-fan-of-central-planning-wonk) – you’d be pretty close to the mark.  And when the model doesn’t work as planned? Well, here’s an example:

President Obama has finally ventured an opinion on the horrible jobs report from last Friday… “President Obama said we don’t know yet what happened in terms of this particular blip,’

Yup. The theories we used to develop our model to know how to act said this shouldn’t have happened. Don’t question the model, puzzle over what went wrong in the practical application. TRY HARDER!!!!

The author asks: How does it make sense to keep giving more money and power to the man who says every single ramification of his policies is “unexpected?”  The whole concept of a centrally-planned economy becomes absurd after two years of “unexpected” news and developments “we don’t understand,” coupled with “blips” that last forever.  It is painfully obvious that the central planners don’t know what they’re doing, and don’t understand why their plans are failing.

It wasn’t supposed to work like this. The favorite theories of strong central planning said that we should be growing by now, and yet:

Contrary to the popular view among economists that currency devaluation is necessary during periods of economic hardship, debasement works against the very investment that drives company formation and job creation given the tautological reality that any returns on investment will come back in cheapened money…An economy is not a living, breathing blob, rather it’s a collection of individuals acting in their individual self interest.

Those best at doing strategy work have a strong background and preference for the execution & learning from practical application. After all, a strategy is only successful if the result is what you intended – and the actual outcome aligns to the intended outcome.

3 Comments leave one →
  1. June 8, 2011 3:09 pm

    Personally? I think he’s surprised. It’s guys like Krugman who are playing the Pfuel – Obama strikes me as the student who managed to get good grades by parroting whatever his favorite professors asserted. I don’t get the impression he’s more than a megaphone for the ideas and thinking of others. If given a choice between diobolically cynical in the use of other people’s credulity, or being one of the credulous who wasn’t bright enough to be diabolical or cynical – I’d pick the latter. It’s either deliberate (and brilliant) or it’s accidental and being put to use by someone who’s deliberate and brilliant, making a heck of a lotta $ in the process

  2. June 8, 2011 12:25 am

    You might be amused by the video debate between central planning and individual market actors — by rappers Keynes and Hayak. It’s better than I expected it to be.

    In the meantime, Keynes will continue to be one of the gods at the altar of progressivism. And the economy will be sacrificed at that altar, again and again.

    You have to decide: Is President Obama truly surprised, or is he just playing the Pfuel?

    ===|==============/ Level Head

    • June 8, 2011 9:26 am

      Or perhaps, a Pfuel and his strategy are soon parted… by reality.

      Wasn’t it Eisenhower who said that all strategies were perfect until you hit the beach?

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