Wednesday, April 23, 2014

Paul Krugman Responds To Income Inequality Value Signal

Check out this title...

Paul Krugman – Who Assails Income Inequality – Will Take Quarter-Million-Dollar Job With Income Inequality Institute

Hey Robert Gehl, how awesome is your title?  It's super awesome.  Way more awesome than my title.

The concept is...

In which our hero Krugman responds to the brightest value signal...





More about our hero... (Is This Forum A Market?)...


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Is it strange to think of pragmatarianism as a sort of economic incarnation of direct democracy? I've been thinking about that lately, and to an extent it seems to hold up. It's effectively a party list, proportional, direct democracy with an election threshold, and where each individual's voting power is determined by the proportion of tax receipts drawn from that individual. - Orham

It's not strange to think of pragmatarianism (PG) as a direct democracy. Just like it's not strange to think of a market as a direct democracy. Neither is it strange to think of participatory budgeting (PB) as a direct democracy.

However, PB and PG are very different. PB is shallow flowcilitation while PG is deep flowcilitation. And we should all understand that actions (deep input) speak louder than words (shallow input).

If a society is to put an economic democracy in place, this doesn't seem the way to have one. I mean, voting power being determined by one's individual proportion of tax receipts? - Orham

Let's do a bit of substitution...

Voting power = influence over how society's limited resources are used
proportion of tax receipts = proportion of productivity

Making the substitutions in your original sentence...

influence over how society's limited resources are used being determined by one's individual proportion of productivity

Well...yeah. Right?

Productivity can't just stand on its own though. Just because you're extremely efficient at producing poison oak doesn't mean that we should give you all the farm land.

A mind, just like farm land, truly is a terrible thing to waste...but a productive mind only has as much value as society assigns to the product.

Markets give everybody the freedom to go around determining how much other people's thoughts/products are worth.

As a result, if I want Paul Krugman's thoughts on pragmatarianism...then it's going to cost me a lot more than just a penny.

As a result, space in the New York Times is not divided equally. Should it be? Or should Super Krugman have a huge chunk of it? Is it fair for Krugman to have infinitely more space in the NY Times than I have? Why should Krugman have infinitely more influence than I have? Why should Elizabeth Warren have infinitely more influence than I have? Why should Obama have infinitely more influence than I have? What's going on here? Why is my megaphone, by comparison, microscopic?

It seems to me that this would be a serious problem. If we're all voting for pizza toppings, and everyone but me gets a single vote while I receive fifty votes, whose preferred pizza toppings are going to be served? Hope you like anchovies, because I do.- Orham

I do like anchovies.

Let's tweak your scenario. There's 50 of us at a party. We each have a vote. If you end up with 50 votes...would I call shenanigans? Maybe if you cheated.

Would it be cheating if you went around buying votes? I like anchovies too so I probably wouldn't charge you anything for my vote. So, all things being equal, the less somebody likes anchovies...the more you'll have to pay them. But if somebody voluntarily accepts your money in exchange for their vote...it stands to reason that the exchange was mutually beneficial.

What if you went around exchanging your epic homemade brownies for votes? What if you went around exchanging skillfully drawn portraits for votes? What if you went around exchanging sexual favors for votes?

If somebody voluntarily gives up one thing (x) for another (y)...then we can conclude that, from their perspective, y > x. This means that in a market, if you ended up with everybody's vote...then it was because everybody else ended up with things that they value more than their vote. So why would we complain about vote trading if the outcome is better as a result?

Whether we are talking about ballot votes or dollar votes, giving people the freedom to exchange votes certainly doesn't subvert the will of the people. On the contrary, it clarifies the will of the people. Deep flowcilitation is the realm of sacrifice...it shows us what's beneath the surface.

Allowing Krugman to have infinitely more space in the NY Times than I have doesn't subvert the will of the people. It reflects the will of the people. The question is...how accurately does it reflect the will of the people? More accuracy is certainly better...which is why deep input should always trump shallow input.

If we created a market in the public sector...then Krugman's megaphone would be infinitely larger than my own. This is because nobody is paying me a quarter of a million dollars a year to study income inequality or pragmatarianism or anything else. Neither is anybody giving me a huge chunk of space in the NY Times. Therefore, in a pragmatarian system, Krugman would have infinitely more influence/power/control than I would over how tax dollars were allocated.

The moral of the story is that preventing Krugman from using his large megaphone in the public sector doesn't just block his deep input...it blocks the deep input of the millions of people who have willingly sponsored Krugman's megaphone. The masses have magnified Krugman's influence. The multitude has multiplied Krugman's power. The crowd has clearly deified Krugman. This means that preventing Krugman from shopping in the public sector blatantly subverts the will of the people.


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The topic of this blog entry plucked the phrase..."in which our hero..." from my memory.  But I wasn't even vaguely close to remembering the source.  I thought it might have been from a poem.  Then I wondered whether it was from a song.  Surprisingly, I somehow managed to remember that it was from a song by Dntel... "In Which Our Hero is Decapitated by the Evil King"...






Here's the story from the album Something Always Goes Wrong...

"In Which Our Hero Begins His Long and Arduous Quest"
"In Which Our Hero Finds a Faithful Sidekick"
"In Which Our Hero Is Put Under a Spell"
"In Which Our Hero Dodges Bullets and Swords"
"In Which Our Hero Frees the Damsel in Distress"
"In Which Our Hero Is Decapitated by the Evil King"


In a better world...when anybody hears the word "decapitated" they will automatically think "obamerated"...

"In Which Our Hero Is Obamerated by the Evil King"

Would it help if I sent a letter to the Evil King?

Dear Evil King, 
Please don't obamerate Krugman.  We will be worse off if you block his deep input.  
Sincerely, 
Xero

Who is the Evil King?  He's anybody who wants to prevent Krugman from shopping in the public sector.  Except, doesn't Krugman want to prevent himself from shopping in the public sector?  Probably...right?  So Krugman is the hero and the Evil King.

It's self obameration.

Clearly Krugman doesn't completely obamerate himself though...he partially obamerates himself.  It's partial self-obameration.

Like a man who wants to be chained when it's a full moon?  Krugman is our hero...except when the moon is full...then he turns into a blood thirsty werewolf.  In the absence of strong chains...he would devour all the people that he had previously rescued.

Krugman tells us something like...
In the private sector...I use my powers to help people....but in the public sector...I would have no choice but to use my powers to hurt people.  I can't be trusted in the public sector!  Whatever you do...please prevent me from shopping in the public sector!  It's imperative that you never allow me to allocate my tax dollars.  The results would certainly be catastrophic.  In the private sector I endeavor to fight income inequality...but in the public sector I would fight for income inequality.  
When Krugman is in the private sector he's Dr. Jekyll...a very informed, intelligent and capable person who endeavors to efficiently allocates his resources.  But in the public sector Krugman is Mr. Hyde....a very uniformed, unintelligent and incapable person who intentionally misallocates his resources.

We live in interesting times.  And by that I mean that we live in the Dark Ages.

Thursday, April 17, 2014

Markets: 3V Network - Vet, Validate, Vouch

This recent tax choice study...Are Taxes Beautiful? A Survey Experiment on Information, Tax Choice and Perceived Adequacy of the Tax Burden...received a lot more reddit love than I could have hoped for.  That's...encouraging.

Same thing with my previous blog entry...Value Deviation From The Crowd

Here's a reply to a reply...

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Thanks for your thought out response.  I'm terrible with analogies so bear with me.

Based on my fairly considerable research I strongly perceive that congress is blindfolded behind the wheel of a bus that we're all passengers in.  If you want to give the passengers 1% control over the steering wheel...then I would feel 1% safer.  I certainly wouldn't argue against even the tiniest step in the right direction.  But neither would I stop arguing for more steps in the right direction.

Taxpayers really don't need training wheels in the public sector.  This is because they are successfully riding bikes without training wheels in the private sector.  Physics works exactly the same in  both sectors...as does economics.

In the private sector...if you misallocate your resources...then what happens?  You'll have less resources to allocate.  If you have less resources to allocate...then it's because you misallocated your resources.  Squandering limited resources decreases your influence over how society's limited resources are used.

Shopping is the process by which we all go around and give our positive feedback (money) to the people who are good at riding bikes.  It's a triple "V" mechanism... vouch/vet/validate.  This 3V mechanism is a powerful fail safe device.  Resources are shifted from those who crash to those who don't.

For example, when it comes to our food supply...we really want the most productive farmers to have far more resources than the least productive farmers...and that's exactly what happens.  Farmers who do their homework have far better yields than farmers who don't do their homework.  Without 3V...there's nothing to prevent far too many seeds of grain from ending up in the really wrong hands.

So taxpayers have the 3V stamp of approval.  According to all our spending decisions...they are good at doing their homework.  They diligently researched the private factors that they need to produce the products that we value...and we gave them our positive feedback for doing so.

As it stands...we're shooting ourselves in the feet by preventing taxpayers from shopping in the public sector.  It's like telling a talented painter to only use half the colors.  Or telling a writer to only use words from the first half of the dictionary.  Or telling your gardener to only plant annuals.  Or telling your handy man to only shop in one half of home depot.  Or telling a carpenter not to use a hammer.  Or telling your masseuse not to use her hands.  Errrr.

Why would we prevent a bakery owner from shopping in home depot?  Is he going to buy nails when he should have bought flour?  Is he going to buy a lawnmower when he should have bought an oven?  If we allowed him to shop in the public sector...would he spend his taxes on more drug war when he should have spent his taxes on better roads?

When congress builds a bridge to nowhere...do they really suffer?  Not at all.  They just call it "stimulus".  If a bakery owner spent his taxes on a bridge to nowhere...would he suffer?  Certainly.  So who should be in charge of deciding when and where bridges are built?  The people who have nothing to lose or the people who have everything to lose?  

In summary, if people are good at allocating resources...then we really want them to be able to shop in the public sector.  If people are bad at allocating resources...then there's absolutely no reason to prevent them from shopping in the public sector.  Therefore, everybody should be allowed to shop in the public sector.

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A relevant passage...
When high roads, bridges, canals, &c. are in this manner made and supported by the commerce which is carried on by means of them, they can be made only where that commerce requires them, and consequently where it is proper to make them. Their expences too, their grandeur and magnificence, must be suited to what that commerce can afford to pay. They must be made consequently as it is proper to make them. A magnificent high road cannot be made through a desert country where there is little or no commerce, or merely because it happens to lead to the country villa of the intendant of the province, or to that of some great lord to whom the intendant finds it convenient to make his court. A great bridge cannot be thrown over a river at a place where nobody passes, or merely to embellish the view from the windows of a neighbouring palace: things which sometimes happen in countries where works of this kind are carried on by any other revenue than that which they themselves are capable of affording. - Adam Smith, Wealth of Nations
 If we don't want to majorly misallocate roads, bridges, canals, &c....then we have to create a market in the public sector.  Somebody please send the memo to Rachel Maddow, &c 

Wednesday, April 16, 2014

Value Deviation From The Crowd

Reply to: Is This Forum A Market?

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We can keep trying.

1. Does the crowd value football more than I do?  Yes, very yes.  I don't value it at all.  Therefore, I will never ever have to worry about funding football.

2. Does the crowd value public healthcare more than I do?  I have no idea.

3. Does the crowd value the environment more than I do?  No way.  For example, I'm the only person in my neighborhood who has a tropical dry forest instead of a lawn.  So, in a pragmatarian system, I would most likely have to worry about funding the environment.

4. Does the crowd value national defense more than I do?  I have no idea.

5. Does the crowd value education more than I do?  I have no idea.

If we created a market in the public sector...then we would have an infinitely better idea what the crowd values.  Here's how I've illustrated this...





If the top of the bar is green, then it means that the crowd values the public good more than you do.  If the top of the bar is tan, then it means the opposite.

From your perspective, there is a...

...surplus of healthcare (a)
...shortage of welfare (b)
...shortage of environment (c)
...surplus of defense (d)
...shortage of NASA (e)
...surplus of education (f)

Clearly you're not going to derive any utility from spending your taxes on public goods that there's a surplus of. This means that you wouldn't spend any taxes on healthcare, defense or education.  This narrows your spending options down to welfare, environment and NASA.  Welfare has the largest shortage so perhaps you'll spend all your taxes on welfare.

As an outside observer...I can't see your utility function.  All I can observe is that you spent all your taxes on welfare.  This means that I can't conclude that you don't value any of the other public goods.  In other words, I can't say that the other public goods don't match your preferences.  The only logical conclusion that I can come to is that welfare is, by far, your biggest priority.    

In reality though...you're probably not going to sit around observing funding graphs.  You're going to live your life and respond to public shortages in much the same way that you respond to private shortages.  If a shortage of milk sufficiently concerns you...then you'll allocate your private dollars accordingly.  If a shortage of defense sufficiently concerns you...then you'll allocate your public dollars accordingly.

Unlike in the private sector though...in the public sector you'll always have the option to give your taxes to your impersonal shoppers (congress).

What's important to consider is that the further people's values deviate from the norm/crowd...the greater they will perceive the shortages to be.  Personally, I'm pretty sure that I'll perceive a huge shortage of environmental protection.  But most people will not.  Most people in a pragmatarian system will perceive that most things are mostly well funded.

The closer somebody is to the norm...the more closely the funding levels will match their preferences...and the less anxiety they'll have regarding the funding of public goods.  The further somebody is from the norm...the less closely the funding levels will match their preferences...and the more they'll toss and turn at night worrying about the adverse consequences of large shortages.

Of course, the mission of every deviant will be to make themselves the norm.  That's exactly what I'm doing right now.  As a pragmatarian (a deviant)...I have reason to believe that there's a huge shortage of pragmatarianism.  My anxiety is that people can't allocate their assets to alleviate or address their anxiety.  But most people, having normal values, think the current supply of pragmatarianism is perfectly fine.  So here I am trying to convince them otherwise.  The more people that I convince...the smaller the shortage...and the more normal pragmatarianism becomes.

Orham's anxiety is, at least superficially, caused by her perception that there would be a large shortage of national defense in a pragmatarian system.  This means that she believes herself to be a deviant.  Or maybe she would prefer to think of herself as exceptional?  When it comes to defense funding...is she really the exception rather than the rule?

Hey Orham, global warming is a far more clear and present danger than any foreign threat.  What shall it profit us to win a war but lose the Earth?

See...we could certainly duke it out...and attack each other with pages and pages of facts and figures...but it's not like the loser can allocate their taxes accordingly.  Doesn't that make you nervous?  It really makes me nervous.  Because people can't shop for themselves in the public sector...there's far less incentive to widely disseminate essential information.  Widespread ignorance, rational or otherwise, should make everybody nervous.

What's interesting is that most people reject pragmatarianism on the basis of perceived shortages.  But for most people...the shortages will actually be far smaller than they currently are.  They just don't realize it because they have no idea what the crowd truly values.

Eliminating demand opacity would ensure that shallow input never trumps deep input...
The people feeling, during the continuance of the war, the complete burden of it, would soon grow weary of it, and government, in order to humour them, would not be under the necessity of carrying it on longer than it was necessary to do so. The foresight of the heavy and unavoidable burdens of war would hinder the people from wantonly calling for it when there was no real or solid interest to fight for. The seasons during which the ability of private people to accumulate was somewhat impaired would occur more rarely, and be of shorter continuance. Those, on the contrary, during which the ability was in the highest vigour would be of much longer duration than they can well be under the system of funding. - Adam Smith, Wealth of Nations   
People wantonly calling for wars...that should sound familiar...
As was noted in Chapter 3, expressions of malice and/or envy no less than expressions of altruism are cheaper in the voting booth than in the market.  A German voter who in 1933 cast a ballot for Hitler was able to indulge his antisemitic sentiments at much less cost than she would have borne by organizing a pogrom. - Geoffrey Brennan, Loren Lomasky, Democracy and Decision
People should be free to wantonly call for wars (shallow input)...but if they want their wishes to come true...then they should have no choice but to reach deep into their own pockets (deep input).  This fail safe device will prevent any unnecessary wars.  And since no war is really necessary...pragmatarianism would result in world peace.    

Crowd Flowcilitation

What's the difference between a forum post and a blog post?

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Anybody a fan of Edward Sharpe and the Magnetic Zeros (ESMZ)? I sure am...my favorite song is Desert Song but the crowd favorite is Home.

The band's frontman, Alex Ebert, is passionate about helping to encourage and facilitate civic participation. To this end he's launched The New IRS and is in the process of developing SecondGov.

In this video, Ebert discusses both projects. You can read about them here...Change agent: Edward Sharpe frontman prepares to launch SecondGov, a virtual political system with real-world aspirations.

What do you think? Are you going to sign up to be notified when SecondGov goes live? Do you predict whether or not it will have a greater impact than Americans Elect?

I'm definitely planning on becoming a member of SecondGov. It sounds like a really fascinating experiment in facilitating input.

It should be a self-evident truth that allocation systems work better when input/feedback is facilitated rather than blocked. Being able to vote for a representative is certainly better than not being able to vote for a representative. Being able to write your congressperson is certainly better than not being able to write your congressperson. Being able to e-mail your congressperson is certainly better than not being to e-mail your congressperson.

If it makes sense for it to be easy to give a representative your vote...doesn't it also make sense for it to be easy to take your vote away from a representative?

Can you imagine walking up to Elizabeth Warren and taking your vote away from her? Should people be able to do that...at any time? Why would we want to prevent people from doing so?

The trend is clearly to make it easier and easier for people to share their input. This forum is one of many examples. It seems inevitable that this trend will spill over more and more into the public sector.

Civic crowdfunding already facilitates deep input...and SecondGov will facilitate shallow input...along with perhaps BitGov (Correcting Democracy) and/or BitVote.

What's the best analogy to describe why facilitating feedback is better than blocking it? This one is pretty good...
The management of a socialist community would be in a position like that of a ship captain who had to cross the ocean with the stars shrouded by a fog and without the aid of a compass or other equipment of nautical orientation. - Ludwig von Mises, Omnipotent Government
So is this one...
Neither do men light a candle and put it under a bushel, but on a candlestick, and it giveth light unto all that are in the house. - Matthew 5:15
Blocking input is like turning off the lights. If the lights aren't on then we'll be stumbling around in the dark...
Where no counsel is, the people fall: but in the multitude of counsellors there is safety. - Proverbs 11:14
If you're not a big fan of the bible...then you can just think of it as Linus's Law...
given enough eyeballs, all bugs are shallow
And even more towards evolution...
It is sufficient if all firms are slightly different so that in the new environmental situation those who have their fixed internal conditions closer to the new, but unknown, optimum position now have a greater probability of survival and growth. They will grow relative to other firms and become the prevailing type, since survival conditions may push the observed characteristics of the set of survivors toward the unknowable optimum by either (1) repeated trials or (2) survival of more of those who happened to be near the optimum - determined ex post. If these new conditions last "very long," the dominant firms will be different ones from those which prevailed or would have prevailed under other conditions. - Armen Alchian, Uncertainty, Evolution, and Economic Theory
Life is such that we don't know what the future will hold. We don't know what future conditions will be like. Facilitating input allows us to hedge our bets against uncertainty. If an allocation system blocks input...then it's because the architects believe that they have a crystal ball. Or perhaps a perfect compass. Or night vision goggles. Or maybe omniscience.

I certainly don't have a crystal ball...which is why I greatly encourage your input!

Monday, April 14, 2014

Alex Ebert - The New IRS and SecondGov

Every once in a while I search google for "choose where your taxes go" or "decide where your taxes go".  Yesterday, when I did so...I found this article...  Alex Ebert Wants YOU to Decide Where Your Tax Money Should Go.

Turns out that Alex Ebert is the frontman for one of my favorite bands...Edward Sharpe and the Magnetic Zeros (ESMZ).  Clearly I don't usually take the time to learn the names of band members.  I love listening to music but spend my time studying other topics.

My favorite song from ESMZ is Desert Song...but the crowd favorite is by far Home.

It was certainly a wonderful surprise to learn that such a great artist supports such an important cause.  It's far more than a celebrity endorsement though.  What Ebert has done is create a website that allows you to share how you would prefer your tax dollars to be allocated...

The New IRS

This ties into a larger project called SecondGov..."an open online platform where ANYONE can propose, discuss, and vote on virtual policies to solicit change."

To learn more...check out this article by Michael Carney...Change agent: Edward Sharpe frontman prepares to launch SecondGov, a virtual political system with real-world aspirations

I've already signed up to be notified when it launches.  I wonder how many people will participate?  Will SecondGov manage to succeed where Americans Elect failed?

Here's a video where Ebert discusses The New IRS and SecondGov...






And here's a recent video of Townsquare discussing tax choice...


Friday, April 11, 2014

Flowcilitation

"Flow Facilitation" - 8,210 results
"Flowcilitation" - 2 results
"Flowcilation" - 0 results

If a concept is important then you really don't want to force people to wade through a swamp of irrelevant search results (ie tax choice vs pragmatarianism).  If you want somebody to find the needle, then don't put it in a haystack.  If the needle is already in a haystack, then endeavor to remove it by giving it a unique ID.

Is flowcilitation an important concept?  Yes, very yes.  Facilitating the flow of input improves the answer to the fundamental question... how should society's limited resources be used?

But not all input is equally valuable though.  I have to warn you that the following example might blow your mind.  On Reddit (a flowcilitator), in the econ subreddit, I saw this link that ellak12 shared...




The Huffington Post interview with the economist Ha-Joon Chang had received 897 upvotes and 219 downvotes.

Here's what I found when I read the interview...
So there is no economic theory that actually says that you shouldn’t have slavery or child labour because all these are political, ethical judgments. - Ha-Joon Chang
Was your mind blown?  It really should have been.

There were 897 people who freely gave their positive input to an economist who said that there's isn't an economic theory that defends people's freedom to give input.  Yeah...this is exactly why shallow input should never trump deep input.

Just because shallow input should never trump deep input doesn't mean that we should eliminate shallow input.  Shallow input is extremely useful.  In this case it highlights a huge problem: 80% of people who are interested in economics...and even some professional economists...don't know that there are very strong economic arguments against slavery.  This problem should really scare you because the moral arguments against slavery, by comparison, are extremely weak.  If we want to avoid slavery...then it would really behoove us to ensure that each and every member of each and every society knows the strongest arguments against slavery.

First, incentives matter.  Slaves lack the incentive to maximize their productivity...
Land occupied by such tenants is properly cultivated at the expence of the proprietor as much as that occupied by slaves. There is, however, one very essential difference between them. Such tenants, being freemen, are capable of acquiring property, and having a certain proportion of the produce of the land, they have a plain interest that the whole produce should be as great as possible, in order that their own proportion may be so. A slave, on the contrary, who can acquire nothing but his maintenance, consults his own ease by making the land produce as little as possible over and above that maintenance. - Adam Smith, Wealth of Nations
But if great improvements are seldom to be expected from great proprietors, they are least of all to be expected when they employ slaves for their workmen. The experience of all ages and nations, I believe, demonstrates that the work done by slaves, though it appears to cost only their maintenance, is in the end the dearest of any. A person who can acquire no property, can have no other interest but to eat as much, and to labour as little as possible. Whatever work he does beyond what is sufficient to purchase his own maintenance can be squeezed out of him by violence only, and not by any interest of his own. In ancient Italy, how much the cultivation of corn degenerated, how unprofitable it became to the master when it fell under the management of slaves, is remarked by both Pliny and Columella. In the time of Aristotle it had not been much better in ancient Greece. Speaking of the ideal republic described in the laws of Plato, to maintain five thousand idle men (the number of warriors supposed necessary for its defence) together with their women and servants, would require, he says, a territory of boundless extent and fertility, like the plains of Babylon. - Adam Smith, Wealth of Nations
...and it follows that they lack the incentive to innovate...
Slaves, however, are very seldom inventive; and all the most important improvements, either in machinery, or in the arrangement and distribution of work which facilitate and abridge labour, have been the discoveries of freemen. - Adam Smith, Wealth of Nations
More marionettes means less progress.

Second, input matters.  Slaves, by definition, are blocked from sharing their input on the question of how society's limited resources should be used.  The more input that's blocked, the less correct/valuable the answer will be.

Understanding the importance of incentives and input will help you understand why there's such a significant outcome disparity between command economies and market economies.

Here are a couple relevant comments on flowcilitation.  The first is one that I shared on Daniel M. Rothschild's article...How Uber and Airbnb Resurrect ‘Dead Capital’

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It's so much easier to comment on articles than it used to be. Just like it's so much easier to have articles published than it used to be. It's easier for input to flow. Flow is facilitated.

Command economies fail because input is blocked. Markets succeed because input is not blocked. But clearly, when it comes to facilitating flow, there's always room for improvement.

Crowdfunding isn't a recent phenomenon...but crowdfunding websites are. They make it extremely easy to share your deep input on commercial and civic endeavors. Therefore, they are flow facilitators.

What about creating a market in the public sector (pragmatarianism)? How much flow would be facilitated? It would be a flood of input. Yet, it only has 60 likes on facebook. Where's the bottleneck?

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Next comment was on this article...The Market: The Only Trustworthy Pollster by Donald Boudreaux...

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Excellent article! It's fundamentally important to help people understand this concept. But I'm thinking that it's only one half of the story...

First half: Votes don't accurately reveal what people actually want.
Second half: Voting for what you don't actually want can shift resources away from the things that you truly want. The genie might grant your wishes...but you'll be worse off if he does. The logical result of granting voters' wishes is that we end up with more of the things that we don't actually want and less of the things that we truly want.

If shallow input (voting) doesn't adversely impact the allocation of resources...then there's absolutely nothing wrong with it.

The first half of the story is essential...but the second half is far more compelling. It's the punch line. Unfortunately, perhaps it's not the easiest thing to illustrate.

We all voted for a Lexus and the result is a shortage of food? The resources required to provide everybody with a "free" Lexus had to come from somewhere. And it stands to reason that they were taken from the things that we value more than a fancy ride. So we're definitely worse off when our ballot votes (shallow input) are allowed to trump our dollar votes (deep input).

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Ballot voting, Reddit votes, Facebook likes and Youtube thumbs up/down are all examples of shallow flowcilitation.  These flowcilitators give us insight into people's opinions, feelings and sentiments.  This insight is extremely superficial.  It's the tip of the iceberg.  It's the cover of a book.  Dollar voting, on the other hand, is an example of deep flowcilitation.  It gives us insight into people's values.  This insight is extremely deep.  Therefore, when it comes to answering the fundamental question of how society's limited resources should be used...shallow input should never trump deep input.

The fact that people do not have the freedom to choose where their taxes go reflects the fact that the vast majority of people are not aware of the strong economic arguments against blocking input.

Thursday, April 10, 2014

Shallow vs Deep Input

But when your leaders are chosen by popularity, whether through vote or product buying or social buzz, you then have a Cathedral that is of the bazaar. The great secret — this is what the Dark Enlightenment types are morally afraid to face — is not that our elites are bad, but that our elites are bad because they were chosen by our undifferentiated majority. The herd isn't brilliant; it's stupid. Worse than stupid, it's deceptive and dishonest. The bazaar is the enemy, not the cavalry come to save us! - Brett Stevens, The Redundancy of the Dark Enlightenment 

The other day I went to a bazaar. I saw a small rug that I really liked...




...so I asked the vendor whether he accepted votes.  For some strange reason he didn't.

Isn't that weird? The guy only accepted money. He wouldn't let me buy his rug with my words (opinion/sentiment/feeling).  I even tried offering him a thumbs up...both real life and youtube...but he said no deal.  Same thing with facebook likes. He did pause at a reddit upvote though.

See guy, your mistake is lumping markets and democracy together.

In a market...in order to get the rug, I have to sacrifice something that I personally own and value...like my money (blood/sweat/tears).  Spending is deep input.

With voting, on the other hand, I'm simply talking. Talk is cheap. Voting is shallow input.

Our system fails because shallow input trumps deep input.  Words are given more weight than actions.  It wouldn't be so bad if our political leaders were omniscient....but they really aren't.  This means that resources are diverted to less valuable uses.

NRxc (anorexic...no economics on their bones) people guess that the solution is to eliminate shallow input (voice).  No, the solution is to facilitate deep input on public goods. How? By creating a market in the public sector.  Giving people the freedom to exit within the public sector would clarify the demand for public goods.

Let me tweak Stephen Crane a bit...
Democracy, thou art for suckling children,
Thou art the enlivening milk for babes;
But no meat for men is in thee.
Then-
But, alas, we all are babes.
When you're ready to grow up, pragmatarianism has the meat you'll need.