Posted by: Michael Mandel on September 22
With another killer hurricane about to hit the U.S., I want to note that Arnold Kling has two very relevant essays on how to deal with disasters, wars, and other high-uncertainty events. The two essays are The Impossibility of ‘Planned Improvisation’ and The Planning Illusion. Kling writes:
I think that people have a tendency to put too much faith in centralized planning, and they do not have sufficient regard for decentralized improvisation. The more ambiguity that exists in a situation—because of its novelty, uncertainty, and the absence of critical information—the more that it favors improvisation over planning.
He goes on to say:
When something goes wrong, there is a natural desire to blame a lack of planning. In fact, with hindsight, it is always possible to come up with a plan that would have worked better. I would refer to this as the planning illusion. This illusion causes a number of problems.
First, the planning illusion leads to the syndrome known as “planning for the last war.” Organizations develop a set of operating strategies that are based on theories that are outdated, or just completely misguided.
Second, faith in planning causes organizations to become overly centralized. Information from peripheral sources is ignored. Flexibility for field-level decisionmaking is denied.
Finally, faith in planning leads people to believe that government has a solution for every problem. In many cases, better approaches emerge from decentralized improvisations.
And concludes by saying:
My sense is that we live in an age where ambiguity is on the rise, because technology is changing rapidly and globalization has increased the speed at which opportunities and threats materialize. This suggests a relatively greater need for improvisation and adaptation, with somewhat less value in bureaucratic planning. Unfortunately, the planning illusion seems to cause many people to long for a government approach that is more centralized rather than less.
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.