We’re all technocrats now

“The Constitution is very clear that the president is commander in chief of the military, but the president is not the commander in chief of the economy or of the people… The president is not supposed to manage and run the economy. The people are supposed to do this. The government is supposed to give them sound money, low taxes, less regulation. The people are supposed to run it.” – Ron Paul, January 30, 2008

No matter how obviously discredited by real world examples, the lure of centralized economic planning persists. That fatal conceit, the idea that if only the right people are put in charge, they can finally organize society in a perfectly equitable manner, refuses to fade into history. Somehow, the tragic failure of the Soviet Union’s centrally organized five-year plans isn’t used to mock those who espouse an economic worldview with the same failed premise. Case in point, a recent entry from Yahoo’s Power Players

“…whatever you think you know about the stimulus, think again. A new book, ‘The New New Deal: The Story of Change in the Obama Era’, challenges to take a closer look. Grunwald’s started digging into the stimulus whilst he was reporting on energy for Time.

“I heard that there was $90 billion in this thing for clean energy, and we had been spending maybe a few billion dollars a year,” said Grunwald. “Wind, energy efficiency, the smart grid, cleaner coals, electric vehicles, advanced bio fuels, the factories to make all of that green stuff in the United States — I mean this was a complete game changer for the renewable energy industry. So I said, ‘That’s weird,’ and I knew this thing was $800 billion, so what else is in it?”

The bottom line and the theme of Grunwald’s book is that this wasn’t just $787 billion dollars of stimulus to get the economy going through tax cuts and investments and infrastructure — President Barack Obama was trying to reinvent the economy with this stimulus.”

And he failed, as anyone who attempts such an impossible task will necessarily do. Thomas Edison famously tried over 10,000 different filaments before successfully inventing the light bulb, which while difficult was a very specific objective. With that in mind, the entire country should break out into simultaneous horrified laughter when a few men in Washington, DC suggest that they should be put in charge of inventing an entire economy in one shot, replete with detailed predictions about what the end result will be.

Those precise predictions, such as the Obama administration’s expected unemployment numbers, were laughably incorrect not only because they used flawed Keynesian assumptions; they were wrong because they were precise. Likewise, Republicans and conservatives undermine their own philosophy when they accept the premise that citing the results of complicated macro-economic models adds credibility to their policy prescriptions. When Mitt Romney proclaims that his economic agenda will create “12 million new jobs in 4 years”, I hear fingernails scratching a chalkboard. It’s especially rich considering Republicans just needlessly cancelled the first day of their convention because experts in that field were unable to accurately predict the weather three days out.

For better or worse, the last decade will be defined from a technology standpoint by Apple and Facebook. Yet who 10 years ago could have predicted those breakthroughs, and the endless ripples through the economy that they caused? You cannot plan such breakthroughs, nor buy them.

America was founded by people professing their intent to “Live free or die”, and rallying behind simple concepts like the right to pursue happiness.  A century and a half later that philosophical foundation enabled us to become an economic powerhouse capable of toppling fascism and communism in succession. We defeated authoritarian ideologies, yet inherited their presumptions nonetheless. We’re all technocrats now, expecting our political leader to “manage” a $13 trillion economy.

That in itself is kookier than anything Ron Paul has ever said.

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