Wednesday 7 December 2022

"As if it were sufficient for a government to 'fully finance' something on a stack of paper called 'budget' for the stuff in question to be produced in the required volume"


Those who still believe that government ownership of things like water and supermarkets would help produce more goods and services "might learn something from a report in today’s Wall Street Journal," says Pierre Lemieux at Econ Lib. "It explains the Russian government’s problems in boosting production of military supplies for the war in Ukraine," even when (not to say especially when) the Russian government owns and controls everything in the supply chain.

"A 2021 report from the Swedish Defence Research Agency describes the industry as 'top-down controlled and primarily government funded'.” In other words, the wet dream of every nationalising politician and plunderer around and about our Parliament.

And yet, in this central planner's paradise, the chairman of the defense committee in Russia’s Duma has just had to send "a request to the country’s prosecutor general to investigate why the Defense Department couldn’t properly outfit the mobilised troops given it was fully financed to do so, according to state media."

It's similar to something the Ardern Government has been gradually discovering, in everything from building houses to centralising health and water to fixing mental health to remedying child poverty: that spending alone isn't enough. That including something in a budget doesn't just make it happen. That even in a full centralised production system, it takes more than issuing orders and throwing cash around to make something happen.
As if it were sufficient for a government to 'fully finance' something on a stack of paper called 'budget' for the stuff in question to be produced in the required volume and at an acceptable quality! The difficulty of a government to milk its subjects is of course as true in civilian as in military matters.

And it's not just the corruption problem. This is not unique to Russia. Nor is it due to war. Without the price signals and incentives of private ownership in a relatively unhampered market, those productions decisions just can't be properly planned -- and so the 'production possibility frontier' (what an economic system can ultimately produce) necessarily shrinks.


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