The Feedback Problem That Destroys Central Planning

Описание: A system without feedback cannot correct its mistakes.
And a system that cannot admit it is wrong can never improve.

Healthy systems rely on constant signals. Errors are exposed early. Bad ideas fail fast. Resources move away from what does not work and toward what does. That feedback loop is not optional. It is how learning happens.

Government directed systems break this process.

When policies fail, the failure is not punished. It is hidden, redefined, or subsidized. Losses are explained away. Targets are changed. Funding is increased. Accountability disappears.

East Germany is a textbook example.

It had an educated population and significant industrial capacity. What it lacked was real feedback. Central planners insulated factories from competition and market signals. Outdated goods kept being produced because no one was allowed to fail. Instead of adapting, industries were protected.

The result was stagnation that lasted decades.

When reunification finally removed those protections, reality hit fast. Nearly 60% of East German factories shut down within a few years. Economists found productivity levels at roughly 1/3 of comparable decentralized economies. Not because people were lazy or incapable, but because bad ideas were never allowed to die.

In voluntary systems, failure teaches. Inefficient practices disappear. Better ideas grow. It is messy, but it is self correcting.

When feedback is silenced, errors compound. When failure is subsidized, stagnation becomes permanent.

This is why planners never know they are wrong.
And why systems without feedback collapse slowly, then all at once.

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