The Shocking Way Central Planning Destroys Your Wealth

by Bill Bonner

The economists who set out do to central planning, if they were in a small village, they could organize traffic by central planning. They could say, “Mr. Jones takes his car on this road at 4:00 in the afternoon, and then he’ll be over, finished, by 4:30. So then Mrs. Smith can go this way on this road, and she won’t hit him. And then the bus can pass here at 5:30,” and so on. They can organize traffic by central planning. That’ll work in a small community.

You get in a big community where you don’t know who’s going where or where or when or why. It doesn’t work. They’d all collide. So civilization has solved this problem wit the advent of general rules.

Thou shalt not kill. But in traffic, we say, “Thou shalt drive on the right hand side.” And “Thou shalt give priority to the car appearing on the right hand side.” “Thou shalt stop at stop signs and not run over kids in crosswalks,” and so on.

Those rules, which are very simple, they’re so simple that a person of very low IQ apparently, can get a driver’s license. And then they drive perfectly well. So far as I know, the correlation between having an accident and IQ is inverse, so that people with high IQs are more likely to have accidents. At least I read that somewhere. I don’t know if it’s true. But it kind of makes sense because the guy with the high IQ is riding down the road thinking about something else and does something stupid.

And the truck drivers typically have low IQs. I’ve read that. I don’t know how true this is but I read it. And I kind of imagine it, being focusing on the driving is probably a good thing.

But that’s the way the real world works. And the real world works on rules that allow people, that you don’t know who they are, where they’re going, or why they’re going, to get where they’re going, just by following a few simple rules: “Thou shalt not kill.” “Thou shalt not steal.” “Thou shalt stay on the right hand side of the road.”

But the central planners come along, as if they could know what everybody’s doing, why they’re doing it, when they should do it, and they start to set up their own rules. The most flagrant example of this can be found in central banking.

The reason is that the elites have an advantage in controlling things. When you control things, you can direct resources your direction. In the case of modern central banking, where who’s made any money in the last ten years? Or who’s made any money in the last five years?

Those figures are rather shocking when you see that the class of rich people has made something like $5 trillion in the last five years and the average person hasn’t made a penny. Not had made a penny, in fact, lost money. The average household has less real income today than it had in 1999.

And you have to wonder, how in the world did that happen? Well, the answer to how did it happen: well, it was centrally planned.That’s the way they wanted it to happen.

Source: Daily Reckoning