Central planning by socialist countries failed in the past. But that was a different era.
Today, central planning is likely to succeed. Why?
We are in the age of the Internet. We have large volumes of data that can be used for planning.
It is easy to measure the results and to communicate them quickly to all the relevant parts of the organization. This will help to achieve the goal of efficiency and accountability.
Large organizations have central planning. They describe it as "corporate planning". The need to plan their corporate goals and have them achieved through decentralized execution. They measure the results and performance of the different parts of the organization and act on the results.
The key difference between the central planning of a private enterprise and of a government is in the goal that is being pursued.
A private enterprise is driven to achieve the maximum profit, usually by suppressing wages, overcharging and delivering inferior quality at lower cost.
The aim of the government should be to deliver the public goods in a cost efficient manner by using the cost plus method.
If the government provides a subsidy, they will have means to ensure that the subsidy is distributed equitably and that nobody abuses the subsidy for personal gain. Examples of subsidized public goods are basic education and health care.
There is still room for the private sector to cater for wealthy people who can pay for better quality.
But ordinary people would prefer to have their basic needs met at low cost. They want low cost of living.
Do not be fooled by people who imply that central planning by government is bad. It did not work in the past for various reasons. But it can work well today. And it is a better way to deliver public goods and lower the cost of living for ordinary people.
Tan Kin Lian
Today, central planning is likely to succeed. Why?
We are in the age of the Internet. We have large volumes of data that can be used for planning.
It is easy to measure the results and to communicate them quickly to all the relevant parts of the organization. This will help to achieve the goal of efficiency and accountability.
Large organizations have central planning. They describe it as "corporate planning". The need to plan their corporate goals and have them achieved through decentralized execution. They measure the results and performance of the different parts of the organization and act on the results.
The key difference between the central planning of a private enterprise and of a government is in the goal that is being pursued.
A private enterprise is driven to achieve the maximum profit, usually by suppressing wages, overcharging and delivering inferior quality at lower cost.
The aim of the government should be to deliver the public goods in a cost efficient manner by using the cost plus method.
If the government provides a subsidy, they will have means to ensure that the subsidy is distributed equitably and that nobody abuses the subsidy for personal gain. Examples of subsidized public goods are basic education and health care.
There is still room for the private sector to cater for wealthy people who can pay for better quality.
But ordinary people would prefer to have their basic needs met at low cost. They want low cost of living.
Do not be fooled by people who imply that central planning by government is bad. It did not work in the past for various reasons. But it can work well today. And it is a better way to deliver public goods and lower the cost of living for ordinary people.
Tan Kin Lian
1 comment:
The problem is the government is not run by the unpaid volunteers with a true heart for the people but can only be run by the rich and wealthy!!above $500,000. The rest is mediocre.
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