The central planner and associated politico ilk, the plans thereof, suffer from a knowledge problem in that: How does the central planner know all the plans of all the individuals that make up all others outside the central plan? How does the central planner know that all the individual particular time and circumstance based plans (the plans of the many) somehow and in someway come into equilibrium with the central planner’s particular central plan (the plans of the few)? Stated alternatively, the central planner proceeds as if his/her plan will succeed based on a wild guess aka “economic” impact study that in essence assumes away the particular time and circumstance of all others outside the central plan as not being plans divergent in nature from the central plan -and- implicitly assumes perfect knowledge of the particular time and circumstance plans of all others outside the central plan. Through magical thinking (the assumption of perfect knowledge) the central planner assumes those zillion plans and interaction between those zillion plans merge into equilibrium with the central planner’s plan. (2)
If perfect knowledge does indeed exist, then failure should rarely or never occur. Yes, you figured it out, the central planner doesn’t know and hence a major knowledge problem exists. Yes, failure is an option. The implicit assumption of perfect knowledge by the central planner ends in failure more times than not. As William Easterly explains [paraphrasing]: Despots and their central plans occasionally succeed, but more times than not they fail, with the only winners being those special interests and/or cronies enjoying the spoils of the now failed plan. (3)
Moreover, in US political economy the history of central plan failure, with the only winners being those special interests and/or cronies enjoying the spoils, is a broken record that is ongoing and extends into history over 225 years. (4)
Notes:
(1) Economics and knowledge, F.A. Hayek, presidential address to the London Economic Club, February 1937
http://www.econlib.org/library/NPDBooks/Thirlby/bcthLS3.html
(2) Ibid
(3) The Tyranny of Experts, William Easterly, 03/2014
http://www.amazon.com/Tyranny-Experts-Economists-Dictators-Forgotten/dp/0465031250/ref=sr_1_1?s=books&ie=UTF8&qid=1424082583&sr=1-1&keywords=the+tyranny+of+experts
(4) A Republic No More: Big Government and the Rise of American Political Corruption, Jay Cost, 02/2015
http://www.amazon.com/Republic-More-Government-Political-Corruption/dp/1594037272/ref=sr_1_1?s=books&ie=UTF8&qid=1424082678&sr=1-1&keywords=a+republic+no+more+big+government+and+the+rise+of+american+political+corruption
