Friday, May 23, 2008

The Importance of Decentralization

From today's Downsize DC dispatch:
Everyone is feeling the pinch of increased gasoline prices. But that's nothing compared to the rate at which the cost of first class postage has risen. The average price of gasoline has increased 1,400% in the last 89 years, but the price of a first class stamp has risen 2,100%.

There are many reasons for this. Here's a big one: Government is a monopoly. It has no incentives to economize. Another problem is that spending decisions are made for political reasons, not because the social benefits outweigh the costs. Here's another example, that relates to the first one . . .

The U.S. Postal Service has purchased more than 30,000 ethanol-capable trucks. This has caused their gasoline consumption to rise by more than 1.5 million gallons. A Postal Service study found that the new vehicles get as much as 29% fewer miles to the gallon.

Aren't you glad we have the government to solve our energy and environmental problems?

The American people are partly to blame because when they look to the politicians to solve problems they are appealing to the most wasteful, incompetent, and often harmful institution in the world -- Big Government.

The solutions to our problems can't come from the top-down. They can't be dictated by monopoly government. They must and they will come from the bottom-up. Solutions are found when creative individuals can profit by responding to the demands of consumers. Today's higher prices are the inventor's and the entrepreneur's signal to get to work.

The knowledge and ideas we need to solve our problems can't possibly be concentrated in Washington, DC. Knowledge and creativity are decentralized resources, dispersed across the entire world population. This is why the worst errors are centralized in the halls of government, while most of the truly viable solutions are decentralized.

This is true even of our environmental and energy problems. While the politicians are floundering in error, with their top-down mandates for mass-produced ethanol and farm subsidies that drive-up the cost of food, the decentralized sector of our economy is busy creating real solutions.

We recently reported on a breakthrough in solar power technology by Sunrgi. Their new solar cell technology concentrates the energy of sunlight by a factor of 1,600. But within days IBM announced a similar technology that concentrates sunlight by an even larger factor -- 2,300.

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