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Why Decentralized Economic Planning Is So Important

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Tags Bureaucracy and RegulationCalculation and Knowledge

07/30/2017

The Svalbard Global Seed Vault is a fascinating project. Built by the Norwegian government on the island of Spitsbergen at a cost of approximately $9 million and opened in 2008, its mission is to preserve the seeds of the world’s food crops in case other seed banks lose samples due to mismanagement or large-scale regional or global crises. With a futuristic-minimalist entrance and a rather unostentatious interior, it has all the makings of a plot point in a dystopian novel.1

In order to fulfil its mission, the vault was designed to be “failsafe” — able to preserve the seeds even if human maintenance were to be disrupted. As such, it has been built in a tectonically stable region, high above the sea level, and deep inside a mountain encased by permafrost, so that the seeds would remain dry and frozen even if the polar caps were to melt or the cooling system stopped operating. In late June, however, doubts were cast on how failsafe the vault actually is, when melting snow and heavy rain led to water flooding the access tunnel, freezing on the way down.2 While the water did not threaten the seeds per se, future survivors of the apocalypse, after trekking all the way to Spitsbergen, might find their access to the vault blocked by a tunnel full of ice.

What went wrong? Given was built to even withstand the melting of the polar caps, one can rule out that the recent flooding is a portent of a changing climate that defied even the wildest expectations of the expert planners. In fact, the possibility of water entering the access tunnels of Spitsbergen’s coal mines seems to have been well-understood by mining companies, which builds most of the tunnels leading to mines with an upward slope, allowing water to flow out of the tunnels instead of into the mines. For some reason, however, the access tunnel to the Global Seed Vault was constructed with a downward slope. As one coal miner put it: “For me it is obvious to build an entrance tunnel upwards, so the water can run out. I am really surprised they made such a stupid construction.”

Now, the Norwegian government is looking into fixing the problem and re-establishing the failsafe nature of the vault, investing a further $4.4 million (some 50% of the initial cost of the vault) for improvements, including $1.6 million to find a suitable access solution. One suggestion they already got for free from the coal miner quoted above: “Make a new access tunnel going upward so the water can run out, not into the seed bank.”

What are the lessons from this mishap? Evidently, it is not a major disaster, and in the current day and age, the few million dollars that will be spent on fixing the problem appear rather minuscule compared to other public expenditures, such as the $16 million-a-piece Moab bomb the US government dropped on Afghani militants in April. Yet, it does serve to illustrate some general problems of planning.

Planners cannot take every eventuality into account and sometimes, the experts might overlook seemingly minor details which are common knowledge to common people. Had the developers of the seed vault just consulted the right miners with field experience building access tunnels in Spitzbergen, the Norwegian government could have saved itself millions of dollars. While in this case, the consequences of planning failures are not dire, this can change once large-scale plans affect actual people and their livelihoods. If one looks, for example, at unsuccessful urban planning projects, costs can spiral and what was intended as urban renewal or social housing can deteriorate into crime-ridden ghettoes. Moreover, the case perfectly illustrates the gap between “expert” and “local” knowledge, which, especially in global development policy, has led to countless failures of large and small projects over decades.

Of course, such challenges of planning affect the public and private sector equally. Yet, in the free market, the impact of planning failures tends to be limited in scope and enterprises have to pay for them out of their own pockets. In contrast, when the government gets involved, ambitions tend to soar, and the tax payers have to foot the bill, sometimes even the same taxpayers who have to suffer the consequences of misplanned projects in the first place.

Sascha Klocke is a PhD candidate in Economic History at Lund University in Sweden and is a member of the Austrian Economics Meeting Europe. Sascha hold a MA in African Studies from Copenhagen University and a BS in economics from Goethe University in Frankfurt, and was is a 2016 Mises Institute Fellow.

Sascha Klocke is a PhD candidate in Economic History at Lund University in Sweden and is a member of the Austrian Economics Meeting Europe. Sascha hold a MA in African Studies from Copenhagen University and a BS in economics from Goethe University in Frankfurt, and he was a 2016 Mises Institute Fellow.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
Image source: https://en.wikipedia.org/wiki/Spitsbergen#/media/File:Mountains_(js)_11.jpg
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