I started the draft for this post before reading Steven Landsburg’s The Big Questions. Only now, as I get back to completing it do I realize that he provided the perfect words to back up this point, and I’ve already posted those words.
The fact that “we (I certainly didn’t have anything to do with it) sent a man to the moon” has been used in many debates over what the government is capable of achieving. Maybe you’ve heard it. It usually goes something like this:
“If we can send a man to the moon, then we can…
…make sure everyone has health care
…ensure everyone has a good standard of living
…give everyone a vacation?” (This one surfaced recently in the UK. While they didn’t send a man to the moon, this shows where this logic can lead.)
Sending men to the moon was hard, no doubt.
But, the fallacy is generalizing what it takes to send a man to the moon is similar to what it takes to end poverty or give everyone health care.
Sending a man to the moon isn’t the same type of problem for several reasons.
First, the goal and end result of sending a man to the moon is unmistakable. You get a man to the moon or you don’t. There’s little room for quibbling on whether the goal was achieved or not (though some people aren’t so sure we achieved the goal).
With something like poverty, the goal and result are not unmistakable. Everybody has their own idea of what poverty is and what the world looks like when it has ended and there will always be quibbling that we haven’t yet achieved the goal. Same goes for health care for all or ensuring a good standard of living.
Second, like Landsburg describes, the economy is too big and complex. It is unfathomably so.
…if you find it difficult to imagine that a decentralized economy can allocate resources better than any central planner, it’s probably because you’ve been led astray by irrelevant visions. You imagine organizing a birthday party or a small business [or sending a man to the moon] and conclude that someone’s got to be in charge. But the economy is complex in ways that a party or a business [or sending a man to the moon] is not.
When I organize a party, I tell people how they can be most helpful. If you asked me to organize the economy, I’d be paralyzed. The economy is too big and too complex — and your talents are too varied and too unobservable — for me to have any idea how you can be most helpful. I need you to figure that out for yourself. For that, you’ve got to know which goods are in high demand. And for that, you need prices.
Amazingly, that’s all you need.
Assuming that a few people at the helm can direct resources to solve a problem like poverty, assumes too much. Thomas Sowell develops that point in his book Intellectuals and Society (p. 15):
Many intellectuals and their followers have been unduly impressed by the fact that highly educated elites like themselves have far more knowledge per capita– in the sense of special knowledge– than does the population at large. From this it is a short step to considering the educated elites to be superior guides to what should and should not be done in society. They have often overlooked the crucial fact that the population at large may have vastly more total knowledge–in the mundane sense–than elites, even if that knowledge is scattered in individually unimpressive fragments among vast numbers of people.
If no one has even one percent of the knowledge currently available, not counting the vast amounts of knowledge not yet discovered, the imposition from the top down of the notions in favor among elites, convinced of their own superior knowledge and virtue, is a formula for disaster.
Just a few short years ago, a lot of very smart people in politics and financial institutions who had relatively little knowledge about lending money thought it was a good idea to relax lending standards to spread the dream of home ownership. Some were convinced that math modeling could hide the risk. Others thought that home ownership would lead to more responsible behavior. Many people blindly trusted these smart folks.