I’ve received a few questions about a line I wrote in a note on indicative planning:
“I can almost hear the objection — how could any government be wiser than the market? The answer is simple: at the level of a national economy, even the dullest officials are smarter than the market itself.”
Was that an exaggeration? It wasn’t.
Let’s start with an analogy. Imagine a pile of bricks, cement bags, roof tiles, and other materials — and the task is to build a house. The job is handed to someone corrupt and incompetent. The result is predictable: a leaky roof, crooked doors, broken heating. People are rightly unhappy.
Now imagine another case. This time the job goes to a brilliant and honest man — but with one instruction: sell all the materials and wire the money to your uncle. There’s no roof, no house, no shelter. Just empty ground and an empty conscience. Is that really an improvement?
Every metaphor has its limits, of course. Most entrepreneurs don’t behave like that. Yes, they seek profit — but they also take pride in good work, in building something solid, in hearing customers’ praise. They care about their reputation. In the real world, motives are mixed; only in rare cases does a businessman behave like the man who sold the bricks and left everyone out in the rain.
But there is one sphere where the metaphor fits perfectly — the world of global finance.
Picture a fund manager deciding whether to invest in the Czech Republic or Bangladesh, in aircraft or pharmaceuticals. He doesn’t care about airplanes or medicine. He’s never been to either country. His mission isn’t to help people or enrich local economies. His mission is to maximize returns for his fund. If selling the bricks brings more profit than building the house, he won’t hesitate for a second.
And that, perhaps, should be one of our guides: to know when to let the market decide — and when the state must step in.