The danger of central planning

All readers out there will agree that the value of "freedom" is of the highest order. But then, many people don't appreciate how freedom gives us our high standards of living, and gives the greatest number of people happiness. The free market is a dynamic concept, of millions of individuals making many complex decisions every day. People look at every decision they are faced, and decide based on the information available. People have to deal with the limited amount of resources that they have - i.e time, energy, money. A rational person takes these things into account when making a decision.

And as thousands of people make their decisions, they encounter each other. Under the free market, they trade and barter voluntarily. These voluntary transactions are mutually beneficial. Both parties profit when no coercion or violence is used. Profit is a word often demonised by anti-capitalists and progressives. But it doesn't always involve money. If I am allergic to peanut butter, and I swap my peanut butter sandwich for a tuna sandwich with a willing partner, then we have both profited from the exchange.

This is not to say that people make mistakes. People often decide to go gambling with their savings, expecting a return but losing it all.

Anyhow, stop for a minute and think about how many billions if not trillions of decisions there are each day. Imagine all the people deciding what to eat, what to wear, where to go shopping, which route to drive, when to get petrol. You are starting to see the complexity of the economy. But the full measure is incomprehensible.

Here is a concept:
I could not, for a minute, make all the decisions for another person that would give them the same level of happiness as they would acheive making it for themselves. And similarly, nobody else can decide whats best for me and make decision of my behalf that would give me the same level of happiness.

Do any politicians realise this ? Most of them seek to regulate my life. They change the law due to popular public sentiment, so that certain actions I would take are penalised or outlawed. This is known as central planning. A central authority sets in place rigid laws and regulations that cannot be violated by the market. They make a decision for all others. In China alone, central planning of the farming industry killed over 50 million people through famine.

The free market has evolved and now most economies have money as a medium of exchange. Prices, denominated in the local currency, are used to indicate information. A seller sets a price at which he is willing to sell his goods. And a buyer can only accept or reject that. Prices indicate all kinds of input factors, like scarcity and cost. A toothbrush made of solid gold would cost hundreds because gold is rare. Consumers only want a simple device to clean their teeth and are not willing to give up so many resources for such an item, hence you don't see many gold toothbrushes on the market. The important point in all of this is that prices are an important indicator and signal to help the market function. The Austrian economist Ludwig von Mises realised this and correctly foresaw the failure of communism in the early 20th century, because of its removal of prices and its centrally planned economy.

At the moment, Victoria is hardly a free economy.

I cannot exercise my free speech in Victoria if it is even slightly critical of religion, race or sexuality, or else I risk prosecution. I cannot ride a bicycle without a helmet or else I risk a hefty fine. I cannot park in certain areas, or for certain durations or else I risk another hefty fine. I must drive my vehicle below a certain limit or else I risk losing my license - even though I have excellent reflexes and may wish to travel slightly above the limit when I judge it is safe, I am persecuted if I do so. My dog must be on a lead, even if it is a friendly and well trained pet.

But theres more. Besides regulating individuals, the Bracks government has done more than any other to regulate commerce and industry. Australia is already a rigidly bureaucratic workplace, with set work hours, minimum wages, work conditions, mandatory 9% superannuation, sick leave, public holidays, workplace safety laws etc. But Steve Bracks plans to regulate the energy and water industries in the near future. Energy retailers will have to purchase 10 percent of their energy from renewable sources, which are much more costly, less reliable and efficient. And there will be a ban on any new construction of dams, which would help boost our supply of water. Large retailers will no longer be allowed to offer free plastic bags to customers.

All 3 measures will hurt consumers. The cost of electricity and water will rise, and the cost of groceries and shopping will rise as businesses are forced to charge a fee for plastic bags. And how does the economically illiterate Bracks government describe these measures ?

The Government predicts the move will result in $2 billion in investment in clean energy production and create hundreds of new jobs.

Nonsense ! Talk about trying to put a positive spin. This is dishonesty at its peak.
Imagine trying to describe a ban on, lets say the sale of all breads and toast, as the following:

The Government predicts the move will result in $2 billion in investment in cereal and create hundreds of new jobs.

Well thats what we are faced with. Millions of people will be worse off because their will be less choice and less freedom. Of course, every single person will be faced with a new set of (smaller) opportunities after the regulation comes in. They will have to make decisions based on whats available, and if you ban the consumption of bread, more of the alternative foods will be consumed. But thousands of jobs would be destroyed, bakeries closed, consumers and families worse off with no breads at all, restaurants would lose patronage. etc etc.

Victoria - we are moving backwards.