Command economies are unable to efficiently allocate goods because of the knowledge problem - the central planner's inability to discern how much of a good should be produced.
Shortages and surpluses are a common consequence of command economies. A free-market price system, on the other hand, signals to producers what they should be creating and in what quantities, resulting in a much more efficient allocation of goods.
The Central Plan of the command economy is incompatible with dissent, disagreement, individual preferences, and your own plan, whatever it may be. If the Central Plan is to prevent foreclosures on homeowners who can’t pay, then the plans of individuals whose resources will be used to prevent those foreclosures must give way. If your individual plan and the Central Plan are in conflict, you will have to give up your plan.
In America today, for every problem, a national 'solution' is proposed, regardless of how individual or local the issues are. Whether we consider housing, education, energy, transportation, finance, labor, automobiles, health care or insurance, we are overwhelmed with ever more 'federal government knows best' policies and programs centralized in Washington. And what it does not mandate, the federal government manipulates with its ability to massively redistribute income.
The idea that multiplying rules and statutes can protect consumers and investors is surely one of the great intellectual failures of the 20th century. Any static rule will be circumvented or manipulated to evade its application. Better than multiplying rules, financial accounting should be governed by the traditional principle that one has an affirmative duty to present the true condition fairly and accurately—not withstanding what any rule might otherwise allow. And financial institutions should have a duty of care to their customers. Lawyers tell me that would get us closer to the common law approach to fraud and bad dealing.
Economic centralization and consolidated power are thriving in the wake of the financial crisis, as both tend to increase when the public is panicked and willing to cede more power and control to the very institutions that have already egregiously abused what power they previously possessed.
Over the last few months, we have become all too familiar with the phrase 'too big to fail,' which acknowledges that economic centralization on such a large scale, whose efficiency and virtues we have heard praised for decades, represents a grave threat to the health of the national economy during a normal correction.
