The Dream of Planning

September 24, 1962

The immense appeal to so many intellectuals and politicians today of the idea of government economic Planning rests on a simple but glaring oversight. The apostles of Planning forget that each of us, in his private capacity, is constantly planning ahead, regarding his job, his business, his leisure, his spending, his saving for a home or a car or the education of his children. And these millions of individual plans are coordinated through the marvelous mechanism of competition and the free market.

The question then is never whether there should be planning or not, but who should plan for whom? To put it another way, the question is whether each of us should be free to make his own plans, or whether all of us should be forced to work or consume according to some Master Plan drawn up for us by some supposed group of supermen. Most Plans being proposed today are plans for accelerating economic growth. But almost equally popular, under the influence of J.K. Galbraith, are Plans to control our spending and socialize consumption.

According to the Galbraith thesis, most consumers do not know how to spend the incomes they have earned. They buy whatever advertisers tell them to buy. They have atrocious taste, and crave cerise automobiles with ridiculous tailfins. They are, in brief, boobs and suckers, wasting their money on trivialities and junk.

THE TWO ‘SECTORS’

The natural conclusion from all this is that consumers ought to be deprived of freedom of choice, and that government bureaucrats, full of wisdom—of course, of a very unconventional wisdom—should make their consumptive choices for them. The consumers should be supplied not with what they themselves want, but with what bureaucrats of exquisite taste and culture think is good for them. And the way to do this is to tax away from people all the income they have been foolish enough to earn over that required to meet their bare necessities, and turn it over to the bureaucrats to be spent in ways in which the latter think would really do people the most good.

The goods and services for which people voluntarily spend their own money make up, in the Galbraithian vocabulary, the “private sector” of the economy, while the goods and services supplied to them by the government, out of the income seized from them in taxes, make up the “public sector.” This is a neat semantic triumph. For the word “private” is meant to suggest the selfish and exclusive, and the word “public” to suggest the democratic, the shared, and the public-spirited.

VOLUNTARY VS. COERCED

But a truly descriptive vocabulary would throw a different light on the matter. For what Galbraith calls the “private sector” of the economy is, in fact, the voluntary sector; and what he calls the “public sector” is, in fact, the coercive sector. And as this sector grows at the expense of the voluntary sector we come to the essence of the welfare state. In this state nobody pays for the education of his own children, but everybody pays for the education of everybody else’s children. Nobody pays his own medical bills, but everybody pays everybody else’s medical bills. Nobody helps his own old parents, but everybody helps everybody else’s old parents. Nobody provides for the contingency of his own unemployment, his own sickness, his own old age, but everybody provides for the contingency of the unemployment, sickness, or old age of everybody else. The welfare state, as Bastiat put it with uncanny clairvoyance more than a century ago, is the great fiction by which everybody tries to live at the expense of everybody else.

This is not only a fiction; it is bound to be a failure. This is sure to be the outcome whenever effort is separated from reward. When people who earn more than the average have the “surplus,” or the greater part of it, seized from them in taxes, and when people who earn less than the average have the deficiency, or the greater part of it, turned over to them in handouts, the production of everybody must decline; for the energetic and able lose their incentive to produce more than the average, and the slothful and unskilled lose their incentive to improve their condition.