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The ‘New’ Confusion About Planning: T. Boone Pickens and Energy Public Policy

“[A]s my father liked to tell me, ‘Son, a fool with a plan can beat a genius with no plan any day.’ Right now, when it comes to America and our effort to achieve greater energy security, we’re a foolish nation without a plan.

If it were up to me, America’s energy plan would have ….”

- T. Boone Pickens, Leadership Absent on Energy Plan,” Omaha World-Herald, May 1, 2013.

“The curious task of economics is to demonstrate to men how little they really know about what they imagine the can design.”

- F. A. Hayek, The Fatal Conceit: The Errors of Socialism (1988), p. 76.

T. Boone Pickens, the author and marketer of three national energy plans (see yesterday’s post), is a “man of system,” to use Adam Smith’s phrase from the mid-18th century.

Pickens’s grandiose scheme to use the powers of government to implement wind-for-natural-gas in  electrical generation and natural-gas-for-oil in transportation (Pickens I) inspired Carl Pope, then head of the Sierra Club, to state back in 2008: “To put it plainly, T. Boone Pickens is out to save America.” [1] Plans II and III dropped wind (when business Boone did) to just push natural gas in the transportation market.

To plan or not plan–that is the wrong question in the realm of human action. Purposeful human action is planning. A central plan enforced by government (which by definition has a legal monopoly on the initiation of force) precludes planning on the individual and group level done by voluntary means.

Thus T. Boone Pickens has fundamentally misconstrued the question of planning which is who will plan: the market through private property, voluntary exchange, and the rule of law or government through its “experts” and legal monopoly on coercion.

Early Warming: Adam Smith

One of the oldest fallacies of economics is that the only plan is the central plan, devised by experts and implemented by common-good government.

Adam Smith warned against the “man of system” in The Theory of Moral Sentiments (1759) presciently recognizing that the quest to correct alleged market failure was prone to two other types of error: analytic failure (expert error) and government failure. In his words:

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamored with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it.

He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it.

If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder. [2]

Hayek on Planning

Perhaps more than any other 20th century intellectual, F. A. Hayek differentiated between coercive planning and market planning by individuals and groups of individuals–and why the latter was preferential.

Some salient Hayek quotations follow:

“The argument for liberty is not an argument against organization, which is one of the most powerful tools human reason can employ, but an argument against all exclusive, privileged, monopolistic organization, against the use of coercion to prevent others from doing better.” [3]

“The more the state ‘plans’ the more difficult planning becomes for the individual.” [4]

“It is because every individual knows little and, in particular, because we rarely know which of us knows best best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it.” [5]

“All political theories assume, of course, that most individuals are very ignorant. Those who plead for liberty differ from the rest in that they include among the ignorant themselves as well as the wisest. Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that the most ignorant individual can deliberately employ is comparatively insignificant.” [6]

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account.” [7]

“Our faith in freedom does not rest on the foreseeable results in particular circumstances but on the belief that it will, on balance, release more forces for the good than for the bad.” [8]

Conclusion

On one level, the Pickens plans can be criticized in specific energy terms (such as fighting the ghosts past of Arab OPEC oil in his “energy security” case for government-sponsored natural gas transportation).

But on a another level, the idea that the market is “planless” compared to government planning is both wrong and dangerous. The danger is that “planning” is the open sesame for big government and a slippery slope to serfdom. “From the saintly and single-minded idealist to the fanatic is often but a step,” warned Hayek. [9]

——————————————–

[1] Carl Pope, Sierra Club. Quoted in Dean Calbreath, “Pickens Pitches Plans to Shift U.S. Away From Oil,” San Diego Union Tribune, June 25, 2008.

[2] Adam Smith, The Theory of Moral Sentiments (1759), VI. II. 42.

[3] Hayek, The Constitution of Liberty (1960), pp. 88–89.

[4] Hayek, The Road to Serfdom (1944), p. 114.

[5] Hayek, The Constitution of Liberty (1960), p. 82.

[6] Ibid.

[7] Hayek, The Fatal Conceit: The Errors of Socialism (1988), p. 76.

[8] Hayek, The Constitution of Liberty (1960), p. 83.

[9] Hayek, The Road to Serfdom (1944), p. 62.

3 comments

1 Kent Hawkins { 05.15.13 at 7:26 am }

This is a very thoughtful overview of an extremely important matter. To produce optimum planning results, the focus of human effort should be on improving education in all aspects and stages of a person’s development. This should not turn into a centrally planned, institutionalized approach like we now largely have in developed countries, reinforced by teachers unions. I have seen the oath that one such union requires of its members and it includes a considerable section, outweighing all others in size, on adhering to the rules and regulations of the union, on pain of fine and censure. I note this has recently been removed from its website.

At a recent family reunion I met a man from Finland who is married to a distant family member and now living in Canada. He told me he is sending his pre-school child to Finland, to live with his family for schooling, which at first surprised me. I quickly concluded that Finland must have a sufficiently superior education system to warrant this. Apparently this is the case.

According to an OECD initiative, the Program for International Student Assessment, Finland is a world leader in children’s education, second only to Shanghai-China and narrowly by Korea. In Finland, one of the principles is that teachers are not constricted by centrally planned approaches and content.

Four of my grandchildren in two families have been home schooled from an early age. Three have now entered the school system, two in high school and one at university. All are surprising the teachers and fellow students by their positive attitude towards learning and their very high level of knowledge at the level that the system insists they be put into. Home schooling is not for every family for many reasons, and this experience is a small sample, but it does illustrate the shortcomings of centrally planned, institutionalized education.

Surely proper education is the optimum approach to better planning, and ultimately freedom.

2 Kenneth Haapala { 05.17.13 at 4:19 pm }

Excellent combination of commentary and selection of quotes to give cogent meaning.

3 rbradley { 05.21.13 at 2:24 pm }

Economist Don Boudreaux at Cafe Hayek challenged T. Boone on planning several years ago! http://cafehayek.com/2008/09/no-planning.html

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