Balancing central planning and "dispersed planning" (sort of what the USA and Europe do today)

Hayek’s criticism of central planning that “vital information about an economy is inherently local” and that central planners are too distant to be able to access that information in any nearly useful way can be flip-flopped on “dispersed planners” which is what we may fairly call the Hayeks and Milton Friedmans of the world.

Unfettered local economic actors (those countless hidden hands) are too far distant from the sight of the urgent central needs of society to leave the accomplishment of such goals to their shortsighted hands. Trusting the unfettered free market automatically to bring about the best overall (central?) social outcomes amounts magical thinking [*].

Neither local actors nor central planners know enough about each other’s milieu to act efficiently on each other’s behalf, so, we must choose a practical balance to get the best of both worlds – in a word “compromise” between giving all power to one or the other. [This is a very general first thought on the subject – perhaps much more general than I suspect – it may take a couple of weeks to a couple of years to flesh it all out – still sounds to me like a classic answer to “dispersed planners” enthusiasts.]

From recent reading [Skousen] on how Keynes pointed out what classical economists missed (fiscal expansion is better than contraction in a recession) and how Friedman figured out what Keynes missed (monetary expansion works even better) I have come to see, what seems to the amateur, as the too tentative nature of big economic theorizing. Leading to the notion that where to come down should always and only be decided by what experience discovers works in the everyday world – theory corrected by experiment just like any other science – the need for correction doesn’t seem to worry generations of economists enough for my money. Another way to say the same thing might be to see these elaborate models which economists work up as mere education with which they should attempt to identify what is going on when they visit the real world.

The motto of policy makers should be the same as doctors' (another group that has to come up with answers in real time; not in a hundred years when the perfect answer finally arrives): First, do no harm. IOW, if you haven’t enough (experimental?) practical success with some procedure, limit yourself to recommendations at most. For example, the IMF has no business forcing the Philippines into becoming a net importer of rice. There is no reason to believe that the IMF – unlike the rest of humanity and history – is just chock full of folks who are able enough to run countries; can just hire them off the street and drop them off anywhere needed – that’s the level of presumption that forcing their ideology down others’ throats amounts to.

[* ...and is a pretty reliable tip off that such goals do not press anxiously upon the temples of said unfettered free marketeers. More precisely such social needs anxieties are not originating from within their midbrains, A.K.A., limbic systems, A.K.A., the literally pea sized seat of human emotions -- for their forebrains to deal with.

[Just as carbon monoxide makes you too dumb to realize how dumb carbon monoxide is making you – why you do not go back into a fire to rescue your HDTV – our midbrains can make the smartest of us high-IQ wise too dumb to realize how dumb our (lacking?) motivations are.]