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Seven Reasons Why Government Planning Cannot Work

Jan 11

2007

“Planning is not radical doctrine,” some planners wrote soon after the fall of the centrally planned Soviet empire. “It is rational decision making.”

In fact, comprehensive, long-range planning cannot be rational decision making for the following reasons. I have discussed some of these reasons in detail in previous posts, and I will discuss the rest in future posts. But I thought it would be worthwhile listing them here.

• The Data Problem: The amount of data needed to write a truly comprehensive plan is more than any planning agency can afford to collect. Even if collected, it is more than anyone, even with the help of computers, can comprehend.
• The Future Problem: Writing a long-range plan requires information about the future that is unknowable, such as future technologies, costs, and personal preferences.
• The Modeling Problem: All planning requires models, but before a model becomes complicated enough to be useful for comprehensive planning, it becomes too complicated for anyone to understand.
• The Pace of Change Problem: By the time planners collect all available data and go through the public process of writing a comprehensive plan, conditions have changed so much that the plan is obsolete.
• The Incentive Problem: Government planners who deal with other people’s resources, whether their land or their tax dollars, have no incentive to find the right answers because the costs of their mistakes will be imposed mostly on others.
• The Political Problem: Ultimately, the final decision in any government plan will be made through the political process, a process which is hardly rational.
• The Special Interest Problem: Any time you give a government agency the power to write plans for other people’s money and resources, you create incentives for special-interest groups to lobby in favor of plans that primarily benefit them. Such interest groups will not provide a balanced view; in particular, taxpayers will be underrepresented.

Any one of these reasons would be sufficient to make government planning unworkable. None of them can be solved by any technological or institutional improvement. Those who worry about externalities and other problems that planners purport to address need to find alternative solutions to their problems.

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Reprinted from The Antiplanner