719. What If Birthday Parties Were Centrally Planned?

Hello everybody, welcome back to another episode of The Way the World Works. You know, we talk a lot about central planning is bad, we shouldn't central plan, and that's why it's so bad when you central plan and, you know, there's great books like Tidal Tunes of the Road to Surfdown, which does a fantastic job explaining this. But I want to break it down into even smaller terms, you know, instead of giving examples of,

of, you know, this is why this policy is bad. I want to talk about like, what is central planning in a way that all the kids, all the listeners can really understand it? And I thought, what a better way to do that than talking about birthday parties. And you're probably thinking, okay, what?

So let me explain. So just a part like, just to give you a little bit of info about myself, I never let anyone else plan birthday parties for me. And this is probably my own issues. But the reason is because I've come to realize that if I want my birthdays to be absolutely perfect, and kind of a perfectionist in a lot of ways,

then I plan them myself, because that means I get the food I want. I get the cake flavor I want. In fact, I actually end up always making my birthday cake, because I don't even trust other stores to make it how I want it. Again, I'm not saying this is great. I probably have some control issues, but I like that I know what kind of music I want to play

at the party. I know the perfect guest list. And why is that? It's because nobody knows me better than me. I know the decisions I want to make as far as what my favorite things are, what I want to incorporate that, what would make me really happy after my party.

I know that better than everybody, right? And you could say the same thing about yourself, right? We know ourselves well enough where it's very easy for us to pick out the best presents for ourselves. Now, I'm not saying again, there's not a great feeling when you have like friends give you a surprise party.

And even if the cake is chocolate and you want a vanilla, there's still something so great about having friends and having community. So I'm just giving an example of central planning and my neuroticism for having to control everything. So it's funny. But now let's say I wanted to throw a birthday party for my sister, okay? Now, I know my sister pretty well.

We shared a room together the first, you know, 12 years of our lives. So I know my sister pretty well. So I could probably pick out a lot of, I could probably come pretty close to picking out what she wanted, right? I could probably get pretty close to choosing the music for her. You know, maybe I don't really know what her favorite cake flavor is right now,

because it changes because she likes the try new things. You know, I'm not really sure what friend she's hanging out with lately because we live so far apart. But you know, I know some friends that she's used to talk to, so I'll invite them. And you know, music again, I'm not really sure either. But I can get pretty close because I know my sister pretty well.

But it's not going to be perfect, right? Because I don't have all the knowledge of my sister because only she has that knowledge. Only she knows her favorite things. So if I were to plan a party for her, she would probably be so thrilled and so happy that I went through all this effort. But would it be everything that she would have picked?

Would it be the perfect party? No, it wouldn't be because I'm going into it with imperfect knowledge. I don't know all these things, but I'm going to try my best. Now, again, with a family, it's a little different in friends because it's the thought that counts in a lot of ways, right? Like you're doing something super kind.

So it's not like I'm doing something bad, but just if we're looking at it from an objective perspective, yeah, I'm not going to get everything right if I'm throwing a party for someone else. Okay, now let's zoom out a little bit more. So we did ourselves, we did our sister. What if we planned a party for someone our age on the other side of the world? What if you were planning a party for someone your age in China?

And you don't really know anything about them. You just know maybe it's a boy who's 10 in China. You could guess, right? You could say I'm 10. So I know that 10-year-olds like to play, but what does that mean? What do they like to play?

Do they like to play with, you know, video games? Do they like to play with, you know, play make-believe? Do they like to play sports? You don't know. So you're going to guess, you're going to go into this just trying to guess. What kind of music do they like?

Well, you have to think like, well, I actually don't know what kind of music is popular in China. So I guess I'll just take a guess and assume they like, well, we like. Okay, well, what kind of food do they like? Do you think they like pizza? Like we had at that birthday party. I went to last week.

I don't know. I guess let's give them pizza. You know, cake? I don't know. What kind of cake do they like? So you're making all these guesses.

If you think you're going to get everything right, if you are trying to plan a birthday party for somebody you've never met, somebody who likes an interest, you don't know. All you know is they're a boy, they're 10. That's it. They live in China.

That's it. That's all you have to go off of. Absolutely not. You're not going to know. And that party is probably going to be way further off than it was when you were trying to throw a party for your sister.

Because you don't know and you can't know. Even if you knew that person like you knew your sister, you just can't know. And what this is, this is something that F.A. Hayek, who, and if you remember, and if you haven't read, tell twins in the road to serfdom, please pick that up.

But that was based off another book called The Road to Serfdom that was written by a brilliant economist named F.A. Hayek. Now F.A. Hayek, he had this other idea. He called it the knowledge problem. He talked about how central planners, these big government planners that want to make plans for all of us,

it's so silly for them to do that because there's a knowledge problem. They don't have all the knowledge they need. For somebody to be a perfect central planner, they would have to have knowledge into it. They'd have to be a mind reader. They'd have to know what every person wants.

But even if they had that, they couldn't do it because they would have to centrally plan for millions of people's different wants and needs. You can't do that with one plan. You just can't. But so the knowledge problem touches on the same thing that you would have

if you were trying to plan a birthday party for that 10-year-old boy in China, you couldn't do it because you don't know. And so that party, he'd probably end up being pretty disappointed. Again, maybe he would be very grateful, a stranger through a party for him. But would it be everything he liked? No, I don't know how much pizza is in China,

but I don't know that that would be his favorite feeling. Maybe he'd try and love it. Who knows? But the point is you don't have the knowledge suitable to plan a really great party for this boy because you just, there's no way you don't have that knowledge. And so this is central planning.

This is that idea of central planning. It's that I don't know enough about you. You don't know enough about me to plan something. So that's the whole problem with central planning, right? Like I don't know enough about you. You don't know enough about me.

And we certainly don't know enough about people that live in completely different countries with different communal preferences, different personal preferences. We don't know these things. And so we can't make plans for those people. So that is when we talk about why central planning is so bad. It's not even just that we don't think big government should be

existing to plan things for us. It's that they literally cannot do it. They can't do it. And so now let's put this on a different plane. We talked about birthday parties because I think that's something we can all relate to. Who doesn't love a good party?

But what if it's policy? Okay. Let's talk about public policy, health care. This is a big one. When you have politicians out in Washington, DC, out near where I live, trying to make health care decisions for somebody who lives in Nebraska,

it's not going to go well for them. They're not going to understand what a person in Nebraska needs. And just to give you an example of this. So before the pandemic, telehealth was very regulated. Now, telehealth is when I can actually have a doctor's appointment. And I do this all the time with my doctor's over video or over the phone.

That's telehealth, right? I think like telephone. So that's telehealth. Now, before the pandemic, telehealth rules were very, very restrictive. And quite honestly, in most places they were outright banned. You couldn't do a telehealth appointment.

Now, this also meant that you didn't have a robust choice of doctors because you now have to go to a doctor that you're able to get to, right? You have to be able to get to that doctor. But telehealth, because the pandemic people were not supposed to be leaving their house, so we were social distancing, all that stuff,

telehealth had to become the norm because it was a necessity. And luckily because of that, the laws, it's forced the laws to change. But I haven't changed anywhere and they've still made it hard. And part of this is, let's say, again, somebody in Washington, DC is making a decision for somebody in Nebraska. Nebraska is a more rural area, okay?

And the problem when you get into these rural areas is people don't have access to doctors. I can walk out my door and walk to my doctor in 10 minutes. It's wonderful, right? In fact, I can walk to most of my doctors and my dentist, all these people. Dentists, you probably couldn't do a telehealth if you needed a cleaning, but you get what I'm saying.

So a lot of these people in rural areas, they don't have access to this. And so have you ever gone to the doctor and you think something's really wrong with you? And as it turns out, it's nothing serious. It's just a typical cold. They give you medicine. Now, imagine if something is wrong and you live in a rural area and you have to get in your car

and you have to drive two hours or maybe you have to go to an emergency room nearby, which is going to cost you more money only to find out that it's not a big deal. It's just a cold. Here's some medicine. That's a lot of money you're spending because if you have to go to a local emergency room, emergency rooms are so expensive.

If you have to drive two hours to a doctor, that's also a lot of time and gas, like it's expensive. Just to be told, oh, actually you're fine, which is what we hope. We hope when we go to the doctor that we hear that we're fine. And if they give you a prescription, you can call it to your local pharmacy. Now, they can do all that over telehealth.

If it's something like that, you could call a doctor, describe your symptoms, and they can say, you know what, I don't think this is serious. I'm looking at you right now and you don't look pale or you look like you're okay. I think I'm just going to call on this prescription and then call me in five days and we'll see how you feel and if not, we'll bring it into the office. So this is hugely beneficial for people that live in rural areas.

It's not only beneficial, it can be lifesaving if there is something that requires them to go in. Because when you live in a place that's so far, you probably get into the mentality of, okay, I don't feel great, but I don't want to have to drive two hours. I don't want to go to the emergency room. And so you are more likely to stay home and maybe you need it to go in. So these are things that people who don't live in rural areas just don't understand.

It's not a huge priority for them. So that goes back to the knowledge problem. As somebody who lives in a big city or who lives in a walkable area like I live in, if they don't know that, if they don't know what a person in Nebraska needs, what a person in rural North Carolina needs, if they don't know what that person needs, they cannot possibly make a federal policy

for these people. When they don't know them, they don't know their needs. This goes back to the knowledge problem. This goes back to this central planning. You can't make plans for groups of people when you don't know what they need because they're too far removed from you and you can't meet all their needs.

You can't say, let's make one law because one size doesn't fit all, right? You can't make one law that only benefits people in this state or maybe only benefits like a handful of people in one state, leaving out all sorts of other people. And so this is where we get into real trouble with central planning. And so when we talk about why it's so bad, it's not just because big government is shouldn't have that much power because it's very dangerous when they get a little bit of power.

They don't like to let it go, but it's also that it just doesn't work. And when they make these policies, who funds them, we do. And so they're making policies that we're paying for that have nothing to do with what we really need. So when we hear about how bad central planning is, I want you to think about it in terms of the birthday party. I want you to think about central planning like you trying to plan that party for that

10-year-old boy in China, it just doesn't make sense. We can talk about all the reasons why, you know, funding it through taxes is bad. We can talk about why government shouldn't have that much power to begin with. But I want us, when we were talking about central power and why it is bad for my practical standpoint, I want us to think of the birthday party, of the knowledge problem of F.A. Hayek, pick up title twins in the road to surfdom.

It's a really great story-driven example of this. So yeah, we will leave it there as always. Do not forget to like and subscribe to the podcast. And until next time, I'll talk to you later.