Monday, June 18, 2018

Voting With Donations

My comment on Bob Murphy's blog entry... For the Purposes of the Current Debate, I Don’t Think Hayek Supported a “Basic Income Guarantee”

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Three years ago on Medium the liberal economist James Kwak also made the case that Friedrich Hayek supported basic incomeI responded to his story with more or less your same point... that he was neglecting the context.

Now, three years later, for me the real issue is that Kwak doesn't understand what markets are good for.  Markets are incredibly useful because correctly guessing demand is incredibly difficult.  The crazy thing is that this critique of Kwak's understanding is also applicable to even the staunchest market defenders such as yourself.  This is easy enough to prove. 

Here you supplied a story about basic income.  But what would you guess is truly the demand for this topic?  Again, if correctly guessing demand was so easy, then markets wouldn't be so useful.  Your blog is not a market... therefore it's clear that you don't truly understand what markets are good for. 

Turning your blog into a market would be really easy.  Readers could simply "donation vote" (DV) for their favorite stories.  DV is most commonly associated with people using donations to decide who will kiss a pig, or get a pie in the face, or get dunked into a water tank.  Sometimes zoos use it to name a baby animal.  But DV is also used to rank/sort/order/prioritize all the non-profits in the world.  The Red Cross, for example, receives very many donation votes which is why it can use a very large portion of the world's limited resources. 

Right now FEE is searching for a new president.  How are the candidates going to be ranked?  They definitely aren't going to be ranked by DV.  Therefore, FEE doesn't truly understand what markets are good for.

Last year, much to my very pleasant surprise, the libertarian party (LP) used DV to choose its convention theme.  Unfortunately, the LP didn't also use DV to choose the convention location, date and speakers.  So just because an organization uses DV doesn't guarantee that it knows why the market is so useful.

The market is an incredibly useful tool.  On a daily basis we use this tool to help each other prioritize.  Yet, the LP has only once used this tool to improve its own priorities.  FEE has never used this tool to improve its priorities.  As a pro-market blogger you're in the same boat.  Strange as it might seem, right now I'm the only person preaching the benefits of DV.  Does this mean that I'm the only person in the world who truly understands what markets are good for?  I guess.  I'm the only person in this boat.  Either I'm in the wrong boat, or everybody else is.  I'd really hate to be in the wrong boat so please, if you think that I am, then I'm all ears.  Make the case that some producers, such as pro-market bloggers, should be exempt from receiving specific and substantial feedback from consumers.  Or make the case that cheap signals are just as credible as costly signals.

Monday, June 11, 2018

Questions For Vitalik Buterin

Here's the comment that I just posted on Tyler Cowen's blog entry... What should I ask Vitalik Buterin?

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Yes! This! What does Buterin think about Cowen's critique of quadratic voting (QV)? I perceive QV to be a hybrid between voting and spending. How will Buterin determine whether QV is better than its parents at ranking things?

Is Buterin familiar with the idea of donation voting (DV)? DV is most commonly associated with using donations to decide who will kiss a pig, or get a pie in the face, or get dunked into a tank of water. Sometimes zoos use DV to decide what to name a baby animal.

The thing is, whenever anybody makes a donation, each dollar they donate is essentially a vote. This means that DV is used to rank/sort/order/prioritize all the non-profits. The Red Cross, for example, receives very many donation votes, which allows it to use a huge amount of society's limited resources.

Personally, I would be very surprised if QV is more effective than DV at ranking things. I can't imagine why it would be beneficial to arbitrarily diminish the Red Cross's control over society's limited resources. Perhaps though I'd be singing a very different tune if the Red Cross and the KKK were switched in the rankings.

My best guess is that it would be maximally beneficial if we used DV to rank potential people for Cowen to interview. DV should also be used to rank potential questions for Cowen to ask people that he plans to interview. All the money raised could be given to me. Alternatively, it could be given to Marginal Revolution University, which would allow it to compete more resources away from other uses.

It can be said that DV gives too much influence to the wealthy.  But it can also be said that it gives the smallest amount of influence to the biggest free-riders.

Tuesday, May 29, 2018

Dear Jag Bhalla

If you search ScientificAmerican.com for "invisible hand" you could learn that there's some guy named Jag Bhalla who is critical of the Invisible Hand.  I found his website and sent him an e-mail, which was when gmail immediately notified me that his e-mail address was broken.  So here we are.

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Karl Popper was so cool...

If I am standing quietly, without making any movement, then (according to the physiologists) my muscles are constantly at work, contracting and relaxing in an almost random fashion, but controlled, without my being aware of it, by error-elimination so that every little deviation from my posture is almost at once corrected. So I am kept standing, quietly, by more or less the same method by which an automatic pilot keeps an aircraft steadily on its course. — Karl Popper, Of Clouds and Clocks

But he wasn't nearly as cool as Adam Smith...

It is thus that the private interests and passions of individuals naturally dispose them to turn their stocks towards the employments which in ordinary cases are most advantageous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and passions of men naturally lead them to divide and distribute the stock of every society among all the different employments carried on in it as nearly as possible in the proportion which is most agreeable to the interest of the whole society.  — Adam Smith, Wealth of Nations

Contrary to popular belief, the Invisible Hand is not about self-interest, it's about people using their money to communicate what their interests are.  The supply is regulated by the spending signals of countless consumers.

In Friedrich Hayek's 1945 Nobel essay he reinforced the idea that markets are all about communication...

We must look at the price system as such a mechanism for communicating information if we want to understand its real function — a function which, of course, it fulfils less perfectly as prices grow more rigid. (Even when quoted prices have become quite rigid, however, the forces which would operate through changes in price still operate to a considerable extent through changes in the other terms of the contract.) The most significant fact about this system is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action. In abbreviated form, by a kind of symbol, only the most essential information is passed on and passed on only to those concerned. It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement. — Friedrich Hayek, The Use of Knowledge in Society

Command economies fail because, in the absence of prices, they are unable to utilize all the relevant and necessary knowledge that is dispersed among all the consumers and producers.

In 1954 the Nobel economist Paul Samuelson critiqued Hayek's essay by pointing out that, because of the free-rider problem, prices don't work so well for public goods...

But, and this is the point sensed by Wicksell but perhaps not fully appreciated by Lindahl, now it is in the selfish interest of each person to give false signals, to pretend to have less interest in a given collective consumption activity than he really has, etc. —  Paul Samuelson, The Pure Theory of Public Expenditure

Samuelson's basic assumption was that the optimal supply of all goods is entirely dependent on honest signals.  Again, it's about using money to communicate your interests.  The problem with a good like Linux is that you can benefit from it without having to pay for it.  Let's say that your true valuation of Linux is $40 bucks.  If you only donate $20 dollars to it, you still can fully benefit from it, but you can take the $20 bucks that you saved and use it to buy a nice steak.  The amount that you spent on Linux would be a false signal because it would be less than your true valuation of it.  On its own, your false signal isn't so much of a problem... after all... you only cheated Linux out of $20 bucks.  The issue is when everybody else does the same thing.  When everybody's contribution to Linux is a lot less than their true valuation of it, then naturally it's going to be a lot lower quality than everybody truly wants it to be.  Also, there's going to be far fewer freely available alternatives to Linux than everybody truly wants.

To be clear, the only reason that consumers have the incentive to be dishonest about their true valuation of Linux (a public good) is because they have the option to spend their money on steak (a private good) instead.  If this option was eliminated, then so too would be the incentive to be dishonest.  This was the point that the Nobel economist James Buchanan made in 1963...

Under most real-world taxing institutions, the tax price per unit at which collective goods are made available to the individual will depend, at least to some degree, on his own behavior. This element is not, however, important under the major tax institutions such as the personal income tax, the general sales tax, or the real property tax. With such structures, the individual may, by changing his private behavior, modify the tax base (and thus the tax price per unit of collective goods he utilizes), but he need not have any incentive to conceal his "true" preferences for public goods. - James M. Buchanan, The Economics of Earmarked Taxes

I'll hedge my bets by sharing how other people have explained the idea of individual earmarking...

One strand of this approach-initiated in Buchanan’s (1963) seminal paper-argues that the voter who might have approved a tax increase if it were earmarked for, say, environmental protection would oppose it under general fund financing because he or she may expect the increment to be allocated to an unfavored expenditure such as defense. Earmarked taxation then permits a more satisfactory expression of individual preferences. — Ranjit S. Teja, The Case for Earmarked Taxes

Individuals who have particularly negative feelings concerning a publicly provided good (e.g. Quakers on military expenditures, Prolifers on publicly funded abortions) have also at times suggested that they should be allowed to dissent by earmarking their taxes toward other public uses. — Marc Bilodeau, Tax-earmarking and separate school financing

Imagine if Netflix gave subscribers the opportunity to use their monthly fees to help rank the content.  Would subscribers have any incentive to be dishonest? Nope. This is simply because they would not have the option to spend their fees on things like food or clothes. Subscribers would not have the option to spend their fees outside of Netflix. Therefore, how subscribers earmarked their fees would honestly communicate their true valuations of the content.  The result would be the optimal supply of content.

The most relevant economic discussion looks basically like this...

Smith: Consumers should have the freedom to spend their money to help rank goods.
Hayek: It's true, the market is the only way to utilize all the dispersed knowledge.
Samuelson: While the market does work for private goods, it fails for public goods.
Buchanan: Actually, earmarking would allow the market to also work for public goods.

So what do you think?  Have I successfully changed your mind about the Invisible Hand?  Have I efficiently eliminated one of the biggest errors that you live by?  Have I fulfilled my moral obligation to economically educate and enlighten you?

To be clear, my own beliefs in the Invisible Hand can potentially be falsified.  If Netflix gives the Invisible Hand the opportunity to regulate the content, and it didn't noticeably improve, then this would falsify my belief in the Invisible Hand.

Science is, or should be, the most fertile common ground.

Unfortunately I doubt Netflix will conduct this experiment any time soon.  Here's a potential experiment that's much more accessible.  Imagine if a bunch of people rank the following books...

The Origin Of Species
Harry Potter and the Sorcerer’s Stone
The Handmaid’s Tale
A Tale of Two Cities
50 Shades of Grey
Principia
The Bible
War and Peace
12 Rules For Life
A Theory of Justice
The Cat in the Hat
The Wealth of Nations
The Hunger Games

First the participants would vote for all the books that match their preferences.  Then they would spend their own money to quantify just how closely these books match their preferences.

To be clear, the participants would not be buying the books.  They would simply have the opportunity to spend any amount of their own money in order to reveal the size of their love for each book.  All the money they spent would help crowdfund this experiment.

How differently would voting and spending rank the books?  My hypothesis is that voting would elevate the trash while spending would elevate the treasure.  If, however, voting ranked the Wealth of Nations higher than spending did, then this would falsify my hypothesis.

The relative effectiveness of the Invisible Hand can easily, relatively speaking, be compared to the alternative ranking systems.  The fact that these tests have not been conducted is the biggest error ever.  Let's combine our forces and eliminate this error.  Together we can demolish the massively detrimental disparity between where the world is, and where it should be.

Friday, May 25, 2018

James Buchanan Deserves More Attention

Here's my comment on Sam Staley's review of Nancy MacLean's book...

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Personally, I'm a huge fan of James Buchanan so I'm acutely aware of the amount of attention he typically receives. Naturally I feel like he never receives nearly enough attention. Thanks to MacLean's book, however, there was a noticeable spike in articles about Buchanan. So in this sense, which is pretty important, I do appreciate her book. I think her bad critique of Buchanan is a lot better than no critique. Of course I would have preferred a much better critique of him... but beggars can't be choosers.

Also, in MacLean's defense, she was 100% correct that Buchanan's work is an attack on democracy. Unfortunately, as a historian she didn't really appreciate or address his economic arguments.

Even Michael Munger didn't get it. On Twitter he vehemently denied that Buchanan's work is an attack on democracy. I replied...



Munger did not respond. If he does happen to believe that voting is better than spending at revealing preferences then what, if anything, would falsify his belief?

Let's say that the Independent Institute used voting and donating to rank economists. If voting ranked Buchanan higher than donating did, then this would falsify my belief that spending is better than voting.

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A few months ago in this forum discussion I shared this passage by Buchanan...

Individuals do not act so as to maximize utilities described in independently existing functions. They confront genuine choices, and the sequence of decisions taken may be conceptualized, ex post (after the choices), in terms of "as if" functions that are maximized. But these "as if" functions are, themselves, generated in the choosing process, not separately from such process. If viewed in this perspective, there is no means by which even the most idealized omniscient designer could duplicate the results of voluntary interchange. The potential participants do not know until they enter the process what their own choices will be. From this it follows that it is logically impossible for an omniscient designer to know, unless, of course, we are to preclude individual freedom of will. - James M. Buchanan, Order Defined in the Process of its Emergence

Here's part of the response that I received...

You're using as a defense a quote from the single worst President in American history to justify as generalizable the very quote that I picked from you as a representation of your system's generalizable failure. It is fitting that someone whose legacy is synonymous with the rabid defense of arbitrary social structures based on the conflation of holding socioeconomic power with the capacity to exercise socioeconomic power is your preferred tipple.

What would James Buchanan, the economist, have been named if his parents had used the market to rank potential names? 

Wednesday, May 23, 2018

Which Economic Nutshell Is Better?

It seems like I'm forever endeavoring to stuff economics into a better nutshell.  Here are two recent nutshells... the first is bigger and more technical while the second is smaller and more accessible.  Which one is better?

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Nutshell #1 (shared here)

Here's Adam Smith's Invisible Hand...

It is thus that the private interests and passions of individuals naturally dispose them to turn their stocks towards the employments which in ordinary cases are most advantageous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and passions of men naturally lead them to divide and distribute the stock of every society among all the different employments carried on in it as nearly as possible in the proportion which is most agreeable to the interest of the whole society.  — Adam Smith, Wealth of Nations

Contrary to popular belief, it's not about self-interest, it's about people using their money to communicate what their interests are.  The supply is regulated by the spending signals of countless consumers. 

In Friedrich Hayek's 1945 Nobel essay he reinforced the idea that markets are all about communication...

We must look at the price system as such a mechanism for communicating information if we want to understand its real function — a function which, of course, it fulfils less perfectly as prices grow more rigid. (Even when quoted prices have become quite rigid, however, the forces which would operate through changes in price still operate to a considerable extent through changes in the other terms of the contract.) The most significant fact about this system is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action. In abbreviated form, by a kind of symbol, only the most essential information is passed on and passed on only to those concerned. It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement. — Friedrich Hayek, The Use of Knowledge in Society

Hayek argued that command economies fail because, in the absence of prices, they are unable to utilize all the relevant and necessary knowledge that is dispersed among all the consumers and producers.

In 1954 the Nobel economist Paul Samuelson, who was a liberal, critiqued Hayek's essay by pointing out that, because of the free-rider problem, prices don't work so well for public goods...

But, and this is the point sensed by Wicksell but perhaps not fully appreciated by Lindahl, now it is in the selfish interest of each person to give false signals, to pretend to have less interest in a given collective consumption activity than he really has, etc. —  Paul Samuelson, The Pure Theory of Public Expenditure

Samuelson's basic assumption was that the optimal supply of all goods is entirely dependent on honest signals.  The problem with a good like Linux is that you can benefit from it without having to pay for it.  Let's say that your true valuation of Linux is $40 bucks.  If you only donate $20 dollars to it, you still can fully benefit from it, but you can take the $20 bucks that you saved and use it to buy a nice steak.  The amount you spent on Linux would be a false signal because it would be less than your true valuation of it.  Your false signal on its own isn't so much of a problem... after all... you only cheated Linux out of $20 bucks.  The issue is when everybody else does the same thing.  When everybody's contribution to Linux is a lot less than their true valuation of it, then naturally it's going to be a lot lower quality than everybody truly wants it to be.  Also, there's going to be far fewer freely available alternatives to Linux than everybody truly wants. 

To be clear, the only reason that consumers have the incentive to be dishonest about their true valuation of Linux (a public good) is because they have the option to spend their money on steak (a private good) instead.  If this option was eliminated, then so too would be the incentive to be dishonest.  This was the point that the Nobel economist James Buchanan made in 1963...

Under most real-world taxing institutions, the tax price per unit at which collective goods are made available to the individual will depend, at least to some degree, on his own behavior. This element is not, however, important under the major tax institutions such as the personal income tax, the general sales tax, or the real property tax. With such structures, the individual may, by changing his private behavior, modify the tax base (and thus the tax price per unit of collective goods he utilizes), but he need not have any incentive to conceal his "true" preferences for public goods. - James M. Buchanan, The Economics of Earmarked Taxes

Let me hedge my bets by sharing how other people have explained the idea of individual earmarking...

One strand of this approach-initiated in Buchanan’s (1963) seminal paper-argues that the voter who might have approved a tax increase if it were earmarked for, say, environmental protection would oppose it under general fund financing because he or she may expect the increment to be allocated to an unfavored expenditure such as defense. Earmarked taxation then permits a more satisfactory expression of individual preferences. — Ranjit S. Teja, The Case for Earmarked Taxes

Individuals who have particularly negative feelings concerning a publicly provided good (e.g. Quakers on military expenditures, Prolifers on publicly funded abortions) have also at times suggested that they should be allowed to dissent by earmarking their taxes toward other public uses. — Marc Bilodeau, Tax-earmarking and separate school financing

Imagine if Netflix gave subscribers the opportunity to use their monthly fees to help rank the content.  Would subscribers have any incentive to be dishonest? Nope. This is simply because they would not have the option to spend their fees on things like food or clothes. Subscribers would not have the option to spend their fees outside of Netflix. Therefore, how subscribers earmarked their fees would honestly communicate their true valuations of the content.  The result would be the optimal supply of content. 

The expert economic discussion looks basically like this...

Adam Smith (1776): Consumers should have the freedom to spend their money to help rank goods.
Friedrich Hayek (1945): It's true, the market is the only way to utilize all the dispersed knowledge.
Paul Samuelson (1954): While the market does work for private goods, it fails for public goods.
James Buchanan (1963): Actually, earmarking would allow the market to also work for public goods.

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Nutshell #2 (shared here)


Right now, because of democracy, you assume that congress makes decisions that take my well-being into consideration. My well-being? In the private sector I have to spend so much time and energy going around using my money to inform producers what works for my well-being. I shop and shop and shop. For example, I go to the supermarket and buy some artichokes. In doing so I essentially tell Frank the farmer, "Hey buddy! Good job guy! You correctly guessed that my well-being depends on artichokes! Thanks! Good lookin' out! Here's some money! Keep up the good work!" His behavior benefits my well-being, so I have to use my cash to positively reinforce his beneficial behavior.

Now here you are with the assumption that congress somehow knows what works for my well-being despite the fact that I've never once in my life shopped in the public sector. I've never once decided to give any of my tax dollars to the EPA, NASA, the DMV or any other organization in the public sector. I've never once used my tax dollars to positively reinforce behavior that benefits my well-being. Yet, despite the fact that I've never once shopped in the public sector, congress knows what works for my well-being? Woah. This boggles my mind. It blows my mind. It puts my mind into a blender. Your assumption bears repeating with emphasis... congress knows what works for my well-being despite the fact that I've never once in my life shopped in the public sector. Your assumption is really that shopping is entirely unnecessary. If you truly believe that shopping is entirely unnecessary... then please... don't hide your insight under a bushel. Start a thread here, there and everywhere and say "Hey folks! Shopping is entirely unnecessary! It's a massive waste of everybody's limited time and energy to use our money to communicate what works for our well-being! All we need to do is infrequently vote! And occasionally write our representatives!"

Every democracy has been bundled together with a market. The market, not the democracy, is why these societies have been relatively successful. Societies always work better when we better understand each other's needs... and markets are far better at revealing our needs than democracies are. Our needs aren't simple things... they are incredible complex and dynamic. The idea that infrequently voting and occasionally writing our representatives can adequately reveal our needs is the most harmful idea that has ever existed. But it's not like I can show you all the additional prosperity we would currently be enjoying if it weren't for democracy.

However I can show you the difference between voting and spending. All we need to do is use voting and donating to rank prominent skeptics. Then you'll see the difference between voting and spending and decide for yourself which ranking better reflects your own need for skeptics.

Sunday, May 13, 2018

Scott Sumner VS Utopia

We also need to understand the different roles played by different people in society. The democratic system helps to prevent policy from getting too far out ahead of the public. The immediate implementation of Bryan's open borders proposal might lead to a backlash against immigration, whereas this sort of backlash is less likely from a more cautious proposal that advances through both houses and is signed by the President. The role of intellectuals is (and should be) very different from the role of policymakers. Broad policy goals (not details) should reflect the wisdom of voters, even if the average voter is not very smart. Intellectuals should try to shape public opinion (although they will always be less influential than filmmakers.) - Scott Sumner, How much idealism is ideal? 

The wisdom of voters?  Is there such a thing?  Here's a list of books...

The Origin Of Species
Harry Potter and the Sorcerer’s Stone
The Handmaid’s Tale
A Tale of Two Cities
50 Shades of Grey
Principia
The Bible
War and Peace
A Theory of Justice
The Cat in the Hat
The Wealth of Nations
The Hunger Games

Imagine if this list was sorted by a bunch of college students. One group of students would use voting to rank the books while another group would use spending.  To be clear, the spenders wouldn’t be buying the books, they would simply be using their money to express and quantify their love for each book. All the money they spent would be used to crowdfund this experiment.

How differently would the voters and the spenders sort the books?  In theory, the voters would elevate the trash while the spenders would elevate the treasure. This would perfectly explain the exact problem with Google, Youtube, Netflix, Twitter, Reddit, Facebook, Medium and all the other sites where content is ranked by voting. Democracy is a major obstacle to the maximally beneficial evolution of society and its creations. Of course I might be wrong.

Am I wrong?

Thursday, May 10, 2018

The Smoking Gun Of Human Intelligence

My comment on: Genetics, IQ, and ‘race’ – are genetic differences in intelligence between populations likely? by Kevin Mitchell

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You're overlooking the smoking gun. Why, exactly, are humans exceptionally intelligent? It has to do with our bodies. Unlike wolves, our bodies aren't optimized for running. Unlike dolphins, our bodies aren't optimized for swimming. Unlike hawks, our bodies aren't optimized for flying. Our bodies are optimized for carrying. We're physically the best, by far, at simultaneously allocating a wide variety of resources over greater distances. This is the smoking gun.

When other animals decide to migrate they aren't confronted with a very complicated carrying problem. It was a very different story with our ancestors. Successful migration was a function of solving hard allocation problems. Figuring out the optimal combination of resources... getting the balance right... correctly calculating the (opportunity) costs and benefits... all this depended on processing a lot of information. Smarter allocators were more reproductively successful. Exceptionally intelligent individuals exerted exceptional influence on the gene pool.

The invention of bags greatly increased the difficulty of the allocation problem, which put even greater selection pressure on intelligence. Same thing with the discovery that animals could be used for transportation. The invention of carts put even more selection pressure on intelligence.

These innovations were very unequally distributed across continents. Therefore it's a given that the same is true of intelligence. However, to be clear, the type of intelligence that survival depends on, or used to depend on, really isn't measured by IQ tests. Well yeah, of course... IQ tests weren't created by economists.

Nowadays we can use trucks, trains, planes and ships to simultaneously allocate huge amounts of resources. But it's no longer the case that the goodness of allocation decisions will determine reproductive success. We've reached peak intelligence. This could potentially change once we start seriously colonizing the stars. I love that video.

Imagine you decide to join the first group of colonists to Mars. What would you take with you? What if you knew, for a fact, that the Earth was about to be destroyed by an asteroid? Would you take more seeds? If you took one coconut, you'd forgo the opportunity to take millions and millions of different orchid seeds. Just how useful are orchids anyways? It's not like you can eat them.

The point of trade is to correctly discern the social usefulness of things. There's a difference between how useful orchids are to you, and how useful they are to us. Gold isn't at all useful to me personally, I can't eat it and I have absolutely no interest in wearing it, but if I randomly happened to find a huge nugget while hiking, then I'd definitely decide to carry it because, thanks to the market, I know that it is very useful to us.

The social usefulness of academic papers is currently determined by voting. Each citation counts as a vote. But where's the paper that proves that voting is more useful than spending at determining the social usefulness of things? It doesn't exist. If it isn't the case that voting is more useful than spending, then it is the case that academics are currently far less useful to humanity than they could, and should, be.

To be clear, spending doesn't have to mean buying. Academic papers could be ranked by using donations. Alternatively, there could be a Netflix for academic papers where subscribers could earmark their subscription dollars to the most useful papers. Each subscriber would essentially use their money to say, "This paper is worth carrying, and I'll prove it by spending my money on it." Costly signals are credible signals.