Sarah Paine: observation

Transcript context

…My favorite example of this is that there were top-down commands that you had to produce a certain amount of steel. A steel factory would then be incentivized to make thicker bars of steel rather than thinner bars because that would count as greater production, except a lot of inputs actually do require the thinner sheets. So then the other factories have to thin down the steel, but that also counts towards GDP. So producing the inefficient steel and then cutting it down to size is both being double-counted towards GDP. Oh, and just the whole waste of it. Like the heavy TVs, they probably have four times the inputs that they need to make them that would be good for other things. It’s this notion that you can actually plan an economy. Prices are a miracle. Good old Adam Smith, the invisible hand. Prices are the way to go and markets, it’s more efficient. I wonder if one thing that’s going on is that in the early and mid-20th century, you have economies which are much simpler, at least compared to today. So even then, obviously, command and control is less workable than capitalism. But if you just have heavy industry, you need a certain amount of cement, steel, concrete, fabrics, coal. That’s much more workable than, “We’ve got to centrally command what SaaS tools your enterprise is allowed to use.”…

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