Extreme concentration of wealth in US economy has led to central planning

First, you get people who don't know about a profession trying to dictate to people who do know about it. EX: Hitler and Stalin managing farm production, even though they didn't know anything about farming - agricultural production goes down leading to famines.

Second, you lose the price signal which says what people really want enough to act on, given scarce resources. This leads to a feedback loop where goods priced below the equilibrium have demand far in excess of supply. EX: Everyone would love to buy a subsidized steak instead of a hamburger, so if steak is subsidized to hamburger prices, there'll be shortages and you'll need to impose rationing and coupons and things (which becomes a dual currency system where the coupon/ration becomes the real constraint currency, and then those become blackmarketed until an equilbrium is reached - but only with a lot of hassle).

Third, central planners generally have incentives that diverge widely from the people they're supposed to be planning for - ex, making sure those new centrally planned jobs go to your political supporters. This has happened in the majority of centrally planned economies.

You wouldn't expect a high concentration of wealth to have these same problems. Steve Jobs having central planning ability over Apple, and by extension, over a lot of the high quality glass and semiconductor industries isn't the same as Brezhnev having that power. Jobs, of course, is much more competent at building high end consumer technology than Brezhnev and not prone to make some of the common errors.

I would say that the checks and balances that kept our country strong have been steadily eroded, with the result that he describes.

http://en.wikipedia.org/wiki/The_New_Industrial_State

The bigger they get, the more central planning we have... And they're gettin' pretty big.

Before clicking, take your guess. What percent of total American wealth does the top quintile control?

Summary: http://danariely.com/2010/09/30/wealth-inequality/

Paper: http://www.people.hbs.edu/mnorton/norton%20ariely%20in%20pre...

The finding that extreme concentration of wealth within the United States in the hands of a few thousand people amounts to central planning is empirical evidence in favor of the application to the US economy of a theorem in the Theory of Games and Economic Behavior.

In Chapter 11 of The Theory of Games and Economic Behavior (TGEB), Morgenstern and Von Neumann attempt to reduce the general theory of n-person games to the theory of (n+1)-person zero-sum games through the introduction of a fictitious (n+1)-st player. The payoff to the fictitious (n+1)-st player in the new game equals the negative of the sum of of the payoffs to the n players in the original n-player game. This defines the (n+1)-player zero-sum extension of a general n-player game. In the discussion, Morgenstern and Von Neumann observe that the introduction of the fictitious (n+1)-st player requires some analysis to ensure that the zero-sum extension of an n-player game does not create additional possibilities for interaction among the original n players–that the ‘”fictitious” player does not influence the game in any way. They rule out the absurd possibility of receiving payments from a fictitious player, but have to consider the possibility of self-denial among the n real players in the zero-sum extension.

In the reduction of a general n-player game to an (n+1)-player game in which a fictitious (n+1)-st player is introduced with no ability to form coalitions with the n real players, and whose losses pay for the winnings of the real players, Morgenstern and Von Neumann captured the plight of the lower 99.5% of the population (the "taxpayer"), which collectively serves as the fictitious (n+1)-st player in modern capitalism. The taxpayer is unable to influence the outcome of the games of the real players–the upper one half of one percent of the population (the "central planners"). The taxpayer's role is to passively fork over whatever funds are needed to ensure the maximum winnings for the real players, and the least for himself.

This outcome is established in a proposition on page 513 of TGEB, in which the possibility that the n players may choose self-denial to exploit some coalitional advantage is ruled out. The real players will never deny themselves in any imputation to the advantage of the fictitious (n+1)-st player, who always receives the minimum.

We might call that proposition the Taxpayer Theorem. Its application to contemporary capitalism, in which the taxpayer insures the central planners against losses, seems not to have been noticed.* In the case of the taxpayer, unlike the fictitious player of the (n+1)-st zero-sum extension of a n-player game, there is some slight possibility of influencing the n real players, but in practice this effect is negligible, and in the strict terms of cooperative game theory, irrational. In the case of the lower 99.5%, side-payments to the upper 0.5% are ruled out because taxpayers are effectively unable to form coalitions, since the concentration of wealth in the upper 0.5% is too extreme. To almost any approximation, the taxpayer is the fictitious player in the zero-sum extension of whatever game the important players in the upper one half of one percent happen to be playing.

*It is inconceivable that Von Neumann would not have foreseen this application, but it is conceivable that he would chose to leave its rediscovery to posterity.

This entire premise would go out the window if he only knew how to graph money correctly.

There is no central planning in the US. There is nothing even close to central planning. Our politicians cannot agree on anything - the political parties are almost as divided as they've ever been - and we are only beginning to see the effects of that. How is this central planning? The examples the author gives at the very end of the article (the main article on globalgorillas), is the result of the free market at work. The political situation we were in in 2008 and we are in today, is the response to that. That's democracy and, as gut wrenching as it seems right now, it will eventually work itself out.

http://en.wikipedia.org/wiki/Cybersyn

The Chilean attempt at realtime computer controlled planned economy.

He wrote it in the 30s as a response to the push for more central planning.

There are simpler models if you want to explain the current economic malaise. Just look at the fundamentals: we've run out of cheap energy!