Decentralized markets are much better off because they allow for experimentation. Government planning doesn't allow for any experimentation, which explains why many government programs fail or are otherwise ineffective. The only way to survive in a complex world is to decentralize decisions. Competition makes us richer because it's unproductive to to tell people to meet goals without any financial incentives.
Four possible problems with centralized planning:
- It's impossible to determine who is the right or wrong seller without the price system to tell us.
- Suppose a central planner manages to get the seller right, the allocation problems are immense. How do you determine who values a good the most without prices?
- It's impossible to determine how much should be supplied without prices.
- If the quantity supplied is too high, it effectively makes us all poorer.
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