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  • Robert MacCulloch

Central Planning boosts Productivity?

The Head of the Productivity Commission has given an interview today with the National Business Review. Here's a quote from the article, "Even as NZ's productivity rates lag behind those of other small, advanced economies, Commission Chair Ganesh Nana hopes the push to cut the country’s greenhouse gas emissions might help narrow the gap. Nana told NBR NZ had to adopt a different approach if the country was to lift its productivity & produce more value, for less effort. It would require government, businesses, workers, communities, and Māori to work together with a common purpose. He said the best example of that “mission-led” perspective was the American decision last century to put a man on the moon within a decade". See https://www.nbr.co.nz/story/how-crack-productivity-nut-after-decades-poor-performance


What is Nana on about? The space race between the Soviets and the Americans is a dubious example of how to boost productivity. The Soviets were first to put a person in space (though not land on the moon) and the cost practically bankrupted them. It was more about national pride than productivity and was a State-led, centrally planned project. It was not an example of (decentralized) private sector innovation, which is the engine of growth. And Nasa subsequently fell apart with loads of administrators and over sized budgets. It has only been private entrepreneurs like Elon Musk who revitalized innovation in this sector. His launch costs are a tiny fraction of Nasa's.


Furthermore, the US was already the world's leading industrial superpower prior to the moon mission and its status as a leader in innovation and entrepreneurship had practically nothing to do with a centrally planned "purpose", other than that coming from documents like the Declaration of Independence, which stated "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness".


The "working together for a common purpose" line from the Commission Chair suggests he supports everyone getting into line. But history has taught us there can be danger lurking in such an approach - what happens if the "common purpose" that is pushed upon us turns out to be wrong, even sinister? Aren't we meant to be living in a society promoting individual liberty whereby we each have freedom to pursue our own purpose?