December 17, 2013

Planning for economic success

By Christina M. Martin Attorney

In 1945, Friedrich Hayek wrote an essay explaining why central planners were doomed to fail at economic planning. I saw this essay come to life recently during a county commission hearing in Florida.  The commission is in the midst of making its long term land-use plans for the county, so it hired a company to research how to aid economic growth with its plan.  The expert testified that in her interviews with businesses, she was hearing over and over that the businesses were interested in building, but the zoning laws made it impossible.

Some of the commissioners were indignant. They said that could not be possible since they had many acres of empty commercially zoned land.  The expert explained that the land available was not economically feasible or useful for the various businesses’ needs. Several commissioners looked confused. Some said they needed more information so that they could decide how other people’s land – land located in the county –  should be used.

Hayek taught the answer to this problem decades ago:

[U]ltimate decisions must be left to the people who are familiar with these circumstances, who know directly of the relevant changes and of the resources immediately available to meet them. We cannot expect that this problem will be solved by first communicating all this knowledge to a central board which, after integrating all knowledge, issues its orders. We must solve it by some form of decentralization.

Unfortunately, planners rarely want to decentralize. As Jonathan Wood wrote about yesterday, some California cities are taking the opposite approach, increasing restrictions and decreasing individuals’ options of how they can use their own land. The same restrictive approach is being peddled in Florida.  Draconian land-use laws stifle individual freedom, the entrepreneurial spirit, and property rights.

The good and bad news is that the most ambitious central planning is doomed to fail, as Hayek explained, because planners can never know everything necessary or adjust quickly enough to make better economic decisions than individuals make for themselves.

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