Does Washington Know Best?

ap_capitol_nt_110928_wblogAccording to some estimates, there are more than 100 million traffic signals in the U.S., but whatever the number, how many of us would like Washington, in the name of public health and safety, to be in sole charge of their operation? Congress or a committee it authorizes would determine the position of traffic signals at intersections, the length of time the lights stay red, yellow and green, and what hours of the day they can be flashing red.

While you ponder that, how many Americans would like Washington to be in charge of managing the delivery of food and other items to the nation’s supermarkets? Today’s average well-stocked U.S. supermarket stocks 60,000 to 65,000 different items from all over the U.S. and the world. Congress or some congressionally created committee could organize the choice of products and their prices. Maybe there’d be some cost savings. After all, what says that we should have so many items from which to choose? Why wouldn’t 10,000 do?

You say, “Williams, those are ludicrous ideas whose implementation would spell disaster!” You’re right. Nobel laureate Friedrich Hayek, one of the greatest economists of the 20th century, said it is a fatal conceit for anyone to think that a single mind or group of minds, no matter how intelligent and well-meaning, could manage to do things better than the spontaneous, unstructured, complex and creative forces of the market. The biggest challenges in any system, whether it’s an economic, biological or ecological system, are information, communication and control. Congressmen’s taking over control of the nation’s traffic signals would require a massive amount of information that they are incapable of possessing, such as traffic flows at intersections, accident experiences, terrain patterns and peak and off-peak traffic flows.

The same information problem exists at supermarkets. Consider the challenge in organizing inputs in order to get 65,000 different items to a supermarket. Also, consider how uncompromising supermarket customers are.

We don’t tell the supermarket manager in advance when we’re going to shop or what we’re going to buy and in what quantity, but if the store doesn’t have what we want when we want it, we’ll fire the manager by taking our business elsewhere. The supermarket manager does a fairly good job doing what’s necessary to meet that challenge.

You say, “C’mon, Williams, nobody’s proposing that Congress take over the nation’s traffic signals and supermarkets!” You’re right, at least for now, but Congress and the president are taking over an area of our lives infinitely more challenging and complex than the management of traffic signals and supermarkets, namely our health care system. Oblivious to the huge information problem in the allocation of resources, the people in Washington have great confidence that they can run our health care system better than we, our physicians and hospitals. Charles Darwin wisely noted more than a century and a half ago that “ignorance more frequently begets confidence than does knowledge.” Congress exudes confidence.

Suggesting that Congress and the president are ignorant of the fact that knowledge is highly dispersed and decisions made locally produce the best outcomes might be overly generous. It could be that they know they really don’t know what they’re doing but just don’t give a hoot because it’s in their political interest to centralize health care decision-making. Just as one example, how can Congress know whether buying a $4,000 annual health insurance policy would be the best use of healthy 25-year-old Joe Sanders’ earnings? Would he be better off purchasing a cheaper catastrophic health insurance policy and saving the rest of the money to put toward a business investment? Politicians really don’t care about what Joe thinks is best, because they arrogantly think they know what’s best and have the power to coerce.

Hayek said, “The curious task of economics is to illustrate to men how little they really know about what they imagine they can design.” We economists have failed miserably in that task.

Freedom Center pamphlets now available on Kindle: Click here.

  • tagalog

    Once it was widely accepted that the nature of Marxism, scientific as it was claimed to be, is that certain events are historically inevitable. This translated, after the Bolshevik Revolution, into the idea that anything the government does is historically correct no matter how wrong it appears contemporaneously. “We never make mistakes” was the mantra for Moscow as Solzhenitsyn articulated it.

    Now we know that “Washington never makes mistakes.” Rely on it. The Obama State is a historical inevitability. Nothing they do is wrong over the long haul, no matter how wrong it appears now.

    • Chris Shugart

      For all you eggheads out there, the term is “dialectical materialism.” It’s a typical progressive pseudo-scientific theory, the kind that gets invented to prove the premise of some political agenda. Not unlike global warming in its application.

  • Michael Shaw

    I live in the Province of British Columbia, Canada and much amused that the government B.C. Health Care plan would not qualify under Obamacare because it does not include pharmaceuticals, dental or optical care. It covers consultations with physicians and hospital care if required but everything else must be paid through private insurance or out of pocket. Having only one tenth the population of the U.S. the administration of government health care in Canada is divided among the ten provinces. Providing health care for Americans should have been left to the Several States and the people as the U.S. Constitution implied. Such a Herculean task is beyond the capabilities of Congress no matter how well intentioned.

  • Jason

    Totalitarianism will come through small steps. First traffic lights, then healthcare, then a controlled economy and bang, you are now living in Oceania. Every single thing we give up to the state makes it easier for the state to take the next thing from us.

  • antioli

    I believe the Congress men can look out for their own best interests better than any one else in the world.