Michael Gerson, a columnist at The Washington Post, add his two-cents’ worth to the discussion of the Obamacare signup debacle. Toward the end of his piece, which is vastly inferior to the analyses of Megan McArdle and Arnold Kling, comes this:
[T]he failed rollout has … raised ideological issues of broader significance. It has reinforced a widely held, preexisting belief that government-run health systems are bureaucratic nightmares. And it has added credence to the libertarian argument that some human systems are too complex to be effectively managed….
I am not a libertarian who argues against the need for programs such as Medicare and Medicaid. But Friedrich Hayek has this much going for him: He understood that the challenge of technocratic planning is always limited information: “The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.”
Which is why planning tends to fail, particularly in highly complex systems. “This is not a dispute about whether planning is to be done or not,” Hayek said. “It is a dispute as to whether planning is to be done centrally, by one authority for the whole economic system, or is to be divided among many individuals.”
It’s gratifying that Gerson acknowledges Hayek’s insight about the limitations of central planning. However, Hayek wasn’t writing about systems like the Obamacare signup software, which can be fixed — eventually (though the fix may be to start over). Rather, Hayek was writing about the impossibility of substituting central planning for markets to attain efficient resource allocations. Central planners — even if armed with the most sophisticated computer programs and massive data bases — can never possess all of the local, transient information that is embedded in market processes.
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