An Economy That Flies Blind Crashes Blind

by Gary North
by Gary North

Imagine a national highway system. On any stretch of highway, the speed may be different. The national speed limit is changed on a regular basis by a national committee. The committee is made up of government appointees and representatives of the auto industry.

The committee decides to change the speed limit by reviewing traffic flows that are reported and analyzed weeks later.

The formula used by the committee does not affect every speed sign by the same percentage. Every speed sign along the roads is digital, allowing moment-by-moment revisions.

The signs' posted limits can and do change randomly every time the committee changes the national speed limit. They can also change randomly in between meetings, depending on traffic flow and speed, which is fed into local computers that can adjust the posted speed.

The committee assigns to a subcommittee the task of adjusting the national speed limit on a day-by-day basis within a narrow range. This speed limit affects only those stretches of highway that connect the two coasts. It does not predictably affect the side roads and intrastate highways.

The subcommittee assesses what needs to be done by means of data fed back to it from dozens of regions. The subcommittee cannot determine what individual speed signs will say. It aggregates the data by means of a proprietary formula known only to the subcommittee.

The national committee tells drivers to plan all of their trips in terms of the national speed limit.

Every trucking firm must write contracts stretching out for an unspecified number of months, based on the target national speed limit announced by the main committee every two months, which reserves the right to raise or lower the target rate.

Would you invest heavily in trucking firms on this basis?

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May 6, 2009

Gary North [send him mail] is the author of Mises on Money. Visit http://www.garynorth.com. He is also the author of a free 20-volume series, An Economic Commentary on the Bible.

Copyright © 2009 Gary North

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