Wednesday, August 10, 2011

Links on central banking and central planning

Gene Callahan agrees that many at the Mises Institute have a penchant for throwing around words like "evil" and - upon further inspection - actually meaning it. There's another phrase many of them like to attach to 98.5% of the people outside the city limits of Auburn, Alabama: "central planner". Stephen Kinsella raises this non-sequitor in my earlier post on Jeff Tucker. Confirming my suspicion that many affiliated with the Mises Institute think Krugman and Keynesians are genuine threat to Western civilization itself, he wrote: "Well, central state planning, bad economics, etc., yeah, it's not crazy to think they pose a threat to civilization and life."

After thanking Stephen for agreeing with me on the ill-advisedness of central planning and reassuring him that Krugman and Keynesians don't pose this particular threat, skylien wrote: "the first problem seems to be what is central planning? As Daniel obviously does not see central banking as central planning. But I think this is stuff for a new blog post."

Indeed. Although I'm going to outsource this one because just a couple days ago David Glasner had a great post reminding us that central banking is not central planning. This morning he also has another interesting post on Hayek and the question of central banking as central planning.

It's all a very good discussion. There was something that I think Hayek got wrong in his discussion of public works in the second link - see what you think of it (although granted Hayek is vague about who he is refering to - perhaps he is correctly criticizing whoever he has in mind).

16 comments:

  1. Der MenschenfreundAugust 10, 2011 at 8:03 AM

    Glasner post doesn't address the issue.

    IF you believe in ABCT and a "natural rate of interest" THEN you have to conclude that a central bank does not use all the available information because it sets its rates arbitrary. One agency sets the rate. It's not the aggregated result of market decisions ...

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  2. Der,

    I think if you ask most Keynesians unless the government actually seizes control over a company or an industry then central planning doesn't exist; even the most highly regulated, etc. would be centrally planned, etc. To me post-Civil War railroads are a decent example of centrally planned railroads, even though they nominally remained in private hands - and they (and consumers) suffered mightily as a result of that effort.

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  3. Der MenschenfreundAugust 10, 2011 at 8:15 AM

    *arbitrarily

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  4. Please Daniel, read the ONE comment on Glasner's post on Hayek.
    Please?

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  5. Anonymous -
    Sure. I think people on this blog are aware at least on a general level of the evolution of Hayek's thought. I think Glasner's point isn't to present an intellectual history of Hayek so much as citing a good argument along the same lines of his earlier post. I am guessing Glasner would not endorse the later Hayek, although I'm not deeply familiar with his thinking at this point.

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  6. Call for Geithner no confidence vote: http://dailycaller.com/2011/08/10/rand-paul-pushing-for-vote-of-no-confidence-in-tim-geithner/

    In the 1950s the Congress had a no confidence vote re: Dean Acheson.

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  7. Gary, you are using your own, personal definition of central planning. Here is what the rest of us use:

    "In such economies, central economic planning by the state or government controls all major sectors of the economy and formulates all decisions about the use of resources and the distribution of output.[5] Planners decide what should be produced and direct lower-level enterprises to produce those goods in accordance with national and social objectives."

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  8. Gene,

    From the link that you are using:

    Beginning in the 1980s and 1990s, many governments presiding over planned economies began deregulating (or as in the Soviet Union, the system collapsed) and moving toward market-based economies by allowing the private sector to make the pricing, production, and distribution decisions. Although most economies today are market economies or mixed economies (which are partially planned), planned economies exist in very few countries such as Cuba, Libya, North Korea, Saudi Arabia, Belarus, and Myanmar.[11]

    The part that is bolded is my doing. That's what we call a self-fisking.

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  9. The reason I know what link you used (wikipedia of all things) is because I plugged the words you quoted in Google and it spit out a wikipedia article. I then scanned it and found the remarks that I quoted.

    Now Keyesians favor mixed economies (there is no denying that); meaning that according to the very source that you use to define what central planning is, they also support partially planned economies.

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  10. And of course we centrally plan immigration here in the U.S.:

    http://news.cincinnati.com/article/20110809/NEWS01/108100318/

    http://www.fff.org/comment/com1005c.asp

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  11. I am quite comfortable calling the NHS in Britain central planning in the market for healthcare. By Glasner's logic, this would be wrong. It's not really central planning because the government doesn't control all markets, and there are private healthcare providers too.

    Basically, Glasner is denying that it is possible to have central planning in a particular market.

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  12. There wasn't even central planning is Soviet Russian, because there was a thriving black market which the government planners did not control.

    In this view, central planning is just a limiting concept which has never, and probably can never, actually exist in the real world. A theoretical plaything we may use to illustrate a point, like the probabilities 1 and 0, but without any practical application.

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  13. Lee Kelly,

    One point of interest in Glasner's post is this:

    "And there is something disreputable about using a term like 'central planning,' with its overtones of totalitarian domination and suppression of individual rights..."

    One of the things that libertarians complain about of course are the deleterious effects of planning by the state on individual liberty in the West.

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  14. then would you disagree if we just called a keynesian an 'economic planner?'

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  16. Yo, anonymous, say something useful.

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