Planning for Disaster

Over at MinnPost, there is a longish piece bemoaning the demise nearly a decade ago of the Minnesota State Planning Agency.  A rare example of a government agency going out of business, then Governor Tim Pawlenty dissolved the agency in 2003, distributing a few remaining bits to other agencies.

Now comes Steven Dornfeld to pine for the former agency, under the premise that "long-range, strategic planning would be an essential function of state government — especially in these troubled economic times."

Perhaps for the first time ever, I am in agreement with State Representative Phyllis Kahn (DFL-Minneapolis), who is quoted saying,

"I don't think it ever produced anything of any intellectual depth.  We were better off looking to the university, the departments and special commissions for planning and policy proposals."

But many of her colleagues believe otherwise.  Over the past few years I have come across several proposals to revive the agency and give it broad powers to plan large swaths of our economy.  Mostly, these calls come from those unhappy with the results produced by markets or just happenstance, preferring a "top down" approach.

Now I am familiar with a few examples where long-term, strategic planning is valuable.  The electric transmission grid is the subject of a series of long-term plans running 10 years and decades further into the future.  But the Grid itself is a great example of why planning as a concept is not helpful.  Sitting today, who can imagine what technological breakthroughs will occur in materials, the "smart grid", shifts in demand, new supply technologies, etc.  Just imagine grid planners thirty years ago trying to plan for the electrical requirements of plug-in hybrid cars or the iPhone, inventions that were years into the future, but both important future drivers of electrical demand.

Multiply that by 5 million times and you get a sense of the problems with state-level planning, even for a mid-sized state like Minnesota.  Economists refer to the "Economic Calculation Problem".  Simply stated, not even the smartest planners, armed with the largest, fastest computers, can collect and manipulate enough data to mimic the workings of a free market with millions of independent actors.  There are just too many variables, and too many interactions between those variables, to get it right.

Instead, in any large-scale planning exercise, you are usually left with the warmed-over conventional wisdom of the present, projected into the future, with any real controversy left out.  Imagine a group of state bureaucrats coming up with something like the Moynihan Report today.  It simply would not happen.
But Planners keep trying.

Our own Minnesota Department of Transportation is accepting comments for the next few weeks on its 50-Year Transportation Plan.  All I know is that by 2061 I'd better have my Jetson's flying car.