Friday, December 19, 2014

Introducing Rodrigo Davies To Peter Boettke

Imagine we're at a holiday party sipping on some eggnog.  Across the room we spot Rodrigo Davies and Peter Boettke.  They are standing back to back and talking to some other people.  Do you think we should introduce them to each other?  Yes?  Me too!

Except, we're not at a holiday party with Rodrigo Davies and Peter Boettke.  We're on the internet...which is way better than real life.  In real life I'd stand there for a long time deliberating trying to figure out the best time to introduce them to each other.  Most likely I'd interrupt them both at the worst possible time...right before the punchlines of their favorite jokes.  This would make me even more nervous and flustered and my mind would go completely blank and I'd be tongue tied and lucky to even remember their names.  They'd end up having no idea why I thought it was so important that they should meet each other.  This scenario would flash through my mind before I even took one step in their direction.  So in order to build up the courage to introduce them to each other I'd have to drink some super stiff eggnog.  But by the time I built up enough courage, it's entirely possible that I'd end up vomiting eggnog all over their shoes.

Thank goodness for the internet!  Here on my blog I can take all the time in the world to put together something that's at least semi-coherent.

Let's start with a brief overview.  As most of you probably already know, libertarians want less government.  The challenge for them is to figure out how, exactly, to go about shrinking the government.  There's been quite a few different ideas on the topic...


One idea that's strangely absent from the libertarian blogosphere is civic crowdfunding...


Out of curiosity I also checked a couple liberal blogs...


All six results are actually for one blog entry...Snark versus Trains...which consists entirely of snippets from this blog entry by Ethan Zuckerman... Google cars versus public transit: the US’s problem with public goods.  Here's a snippet from that entry that will help me attach a few epiphytes to the same branch...
My student Rodrigo Davies has been writing about civic crowdfunding, looking at cases where people join together online and raise money for projects we’d expect a government to otherwise provide. On the one hand, this is an exciting development, allowing neighbors to raise money and turn a vacant lot into a community garden quickly and efficiently. But we’re also starting to see cases where civic crowdfunding challenges services we expect governments to provide, like security. Three comparatively wealthy neighborhoods in Oakland have used crowdfunding to raise money for private security patrols to respond to concerns about crime in their communities. Oakland undoubtably has problems with crime, in part due to significant budget cuts in the past decade that have shrunk the police force.
Not only do you now know who Rodrigo Davies is...you also know what civic crowdfunding is and its relevance to libertarianism.  I certainly wouldn't have been able to recite that entire passage from memory at the holiday party!  Well, I suppose I could have just used my cellphone to access that blog entry.  Then I could have read it out loud.  That wouldn't have been at all awkward...nope.

For those of you who don't know who Peter Boettke is... he's an economist over at George Mason University.  Here's his Wikipedia page...Peter Boettke.    

What happens when we search his blog (Coordination Problem) for "civic crowdfunding"?

"civic crowdfunding" site:coordinationproblem.org - 2 results

1. Richard Ebeling on the Future of the Free society
2. Sumner, Murphy, Richman, and Cantillon Effects

You have to scroll a bit to find the term "civic crowdfunding" because it's not mentioned in the blog entries themselves...it's mentioned in the comment section.  Hmm...I wonder whose comments they are?

It's entirely possible that Boettke read my comments and learned about civic crowdfunding and as such, already knows knows who Davies is.  Except, Boettke's recent blog entry...'Tis the Season for Giving...leads me to a different conclusion...
While the standard political discourse is focused on a battle over the public purse --- either the state demanding more resources to finance its activities, or opponents arguing that the state should be starved of resources --- the real debate that is too rarely discussed is the appropriate scope of governmental activities.  The public discourse for those who advocate a free society must move from starving the state of resources to starving the state of responsibility.
Doesn't this sound like the perfect set up for a discussion on the merits of civic crowdfunding?  Perhaps it might help if I share another snippet from Zuckerman...
If crowdfunding parks succeeds, it supports the case that governments don’t need to build parks because they’ll get built anyway through the magic of civic crowdfunding. That, in turn, supports the Norquistian argument for a government small enough to drown in a bathtub, with services provided by the free market and by crowdfunding a thousand points of light. - How do we make civic crowdfunding awesome?
Zuckerman's fear is that civic crowdfunding has the potential to shift responsibility from the state to individuals...but you sure wouldn't know this from Boettke's blog entry or the blog entries of any of the other prominent libertarian bloggers that I listed above.

Don't get me wrong...I love all the work that they are all doing.  The economics information that they help explain and disseminate goes a really long way to slowing the steady expansion of government.  It just seems like they are missing a valuable opportunity to take an even bigger whack at the root of command economies.

Going back to Boettke's blog entry...he asks...
What is the functional equivalent in the non-profit space of property, prices and profit/loss?  There is no clear answer.
Let's consider this answer from Davies' recent blog entry...A New Way to Invest in Communities...
However, there are other methods of financing community development that can give a much stronger 'yes' to that second question, the question of scale. One of those is a very old form of crowd-based finance: municipal bonds. For just over two centuries, U.S. cities have been using them to finance critical improvements, from transport infrastructure, to schools, to the Golden Gate Bridge. Municipal bonds give individuals the opportunity to invest in improvements to their city, while receiving predictable, tax-free returns every year, and, at the end of the bond (often 5-10 years), the individual gets his or her money back. They don't offer the theoretically sky-high returns of stocks, but they do offer tax-efficient returns at very low risk (the default rate on municipal bonds is close to 1 in 1,000).
What would Boettke have to say about the clarity of this answer?   The answer that he does actually discuss in his blog entry is the idea of focusing more on individuals rather than projects.  If we can crowdfund civic projects...then why can't we also crowdfund civic individuals?  I don't see why we can't.  But sponsoring individuals doesn't only have to be financial...it could also be intellectual as well.  It would be great if Boettke wanted to share some money with Davies...but it would also be pretty wonderful if he wanted to share some constructive blog entries with him as well.

Davies announced in his blog entry that he's recently accepted a position with Neighbor.ly...a civic crowdfunding company.  That's pretty cool!  Hopefully their endeavor will go a long way in helping to clarify the demand for public goods.

Ok, there you go.  Rodrigo Davies and Peter Boettke have now been formally introduced.  And nobody had any eggnog vomited on their shoes.  Or, maybe, this blog entry is the virtual equivalent of eggnog being vomited on everybody's shoes.  hah.  The internet's pretty great.

Sunday, December 14, 2014

Economics, Evolution and Epiphytes

My recent post on my other blog contains quite a bit of explicit economic content... Herclivation (a theory that considers the possibility of facilitating the adaptive radiation of epiphytic orchids via translocation and/or hybridization).  And by "explicit" I mean that I debunk John Nash's theory that we all prefer blondes equally.

Is it possible for somebody to be fascinated by economics but bored by evolution or vice versa?  Do economists have a better grasp of evolution than biologists have of economics?  That would be a fun study.  Consider these two examples...
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
Economists employ tools that can also be used to analyze the growth and body form of organisms in terms of evolution and ecology.  According to this approach, plants resemble factories because they also acquire raw materials, in this case CO2, water, light and essential ions, to fabricate value-added 'products', specifically progeny.  Like any enterprise using the same materials that other factories require to manufacture the same products, co-occurring plants compete.  Just how severely they interfere with one another depends in large part on the distinctness of the strategies used to obtain mutually required resources. - David Benzing,  Bromeliaceae: Profile of an Adaptive Radiation
These examples are kind of like different varieties of economic imperialism.  For an example of economic imperialism check out this blog entry...Can Economics Explain Human Sacrifice?

Is there a biological equivalent of economic imperialism?  Or maybe there aren't any biologists that have used the tools of biology to analyze topics in different fields?  I guess I wouldn't be surprised if biology and related fields weren't lucky enough to have their own version of Gary Becker.   Well...what about this...biological imperialism?  Does that count as an example of the biological equivalent of economic imperialism?

The stupid Wikipedia entry for economic imperialism doesn't even mention "opportunity cost"...
A corollary of maximization is that on the margin, there are always tradeoffs.  The notion that there is no free lunch is central to economics.  The simple, but crucial concept of opportunity cost lies behind much of the ability of economics to extend into other areas.  Sometimes the tradeoffs are subtle.  Prices and costs are not necessarily parameters that are observed in market data, but they affect behavior nonetheless.  Other social sciences do not place the same weight on explicit recognition of the tension between costs and benefits, which reduces the ability of these fields to grapple systematically with social phenomena.  Thinking about tradeoffs gives rise to related thoughts on substitutability.  Economists place emphasis on choice.  Things are not technologically determined.  This is true for consumers and producers alike.  There is no fixed number of jobs.  Firms can trade off between employing labor and capital and workers can choose between labor and leisure. - Edward Lazear, Economic Imperialism  
As I've mentioned before elsewhere, the opportunity cost of the minute size of the wind-disseminated orchid seeds is that they lack the nutrients that they need to germinate on their own.  They depend on certain types of fungus to supply them with adequate nutrients.  On one hand, there's no guarantee that the fungus is going to be present wherever the orchid seeds land.  But on the other hand, the seeds are so light that they can really "extend into other areas".  Evidently sacrificing the weight of nutrients for greater dispersal distance is not a bad trade-off for orchids...given that they are the most successful plant family.

I think, perhaps, generally speaking...the problem solvers (scientists, economists, etc.) who are able to borrow and effectively use tools from other fields will make a lot more progress than problem solvers who only use their own tools.

Sunday, November 30, 2014

President Bartlet's Critique Of Pragmatarianism

For those of you that haven't watched The West Wing, Bartlet is a fictional president of the United States.  He doesn't critique pragmatarianism specifically...but this is relevant enough for me to share (context: The Lame Duck Congress)...

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Bartlet: Can I tell you something, honestly? This is one of those situations where I couldn't give a damn what the people think. The complexities of a global arms treaty, the technological, the military, the diplomatic nuances, it's staggering, Toby. 82% of the people cannot possibly be expected to reach an informed decision.  You want to call a session anyway?

Toby: No. No. If we lose, and we will, we're out of.

Bartlet: Yeah. Anything else?

Toby: No, sir. Thank you, Mr. President.

Bartlet: You know we forget sometimes, in all the talk about democracy we forget it's not a democracy, it's a republic. People don't make the decisions, they choose the people who make the decisions. Could they do a better job choosing? Yeah. But when you consider the alternatives, anyway, Abbey's in New Hampshire, you want to come up for a cigar?

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In a pragmatarian system, people would still choose the people who make the decisions. The only difference is that they would also choose how much of their own tax dollars they gave to them.

Let's consider five different boats that people could be in...

Boat 1 - "You can have my vote and all of my tax dollars"

Boat 2 - "You can have my vote and some of my tax dollars"

Boat 3 - "You can have my vote but none of my tax dollars"

Boat 4 - "You can't have my vote, but you can have my tax dollars"

Boat 5 - "You can't have my vote or my tax dollars"


So which boat would you be in?


Boat 1

- If somebody's in this boat then they truly trust their representatives.

Boat 2

- If somebody's in this boat then they kind of trust their representatives.

Boat 3

- If somebody's in this boat then they don't truly trust their representatives.

Boat 4

- If somebody's in this boat then they are probably crazy.

Boat 5

- If somebody's in this boat then they really don't trust their representatives.


The number one critique of pragmatarianism is that people are uninformed.  But if people are uninformed, and they give all their tax dollars to their impersonal shoppers (congress), then does it matter?  Not as a critique of pragmatarianism.  Being uninformed only matters if people would choose to allocate their taxes themselves.

The weight of the number one critique of pragmatarianism depends on the number of people who would choose to allocate their taxes themselves.  The more people that would choose to allocate their taxes themselves, the more weight that this critique has.  Except, the more people that would choose to allocate their taxes themselves, the less people that truly trust congress.

Basically, when somebody says, "people are too uninformed to allocate their taxes themselves" they are really saying, "people don't truly trust their representatives".

We have a system where we give a huge chunk of our hard earned money to people who we don't truly trust to spend it?  Does that make sense?  Wouldn't it make much more sense to have a system where we give our money to people we truly trust?  Maybe such a system doesn't exist?  Oh wait, it does...it's called a market.

Markets work because people have to earn our trust.  Does congress have to earn our trust?  Nope.  What about the EPA?  Nope.  What about the DoD?  Nope.  What about the IRS?  Nope.  Does any governmental organization have to earn our trust?  Nope.

If we want the government to really work then we have to create a market in the public sector.  It will be a beautiful day when public servants actually have to earn our trust.  

Saturday, August 2, 2014

No Choice But To Do The Right Thing

Context: Progress Depends on Freedom

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Are we really arguing that government institutions that retain their monopoly of power and which use any funding they receive to enact coercion on those who refuse to fund them as "Pareto optimal"? It isn't "more valuable" because the coerced are suffering a loss of value. - Jon Irenicus

It's optimal if the value gained by the consenting coerced is greater than the value lost by the unconsenting coerced.

Imagine if everybody but one person derives value from being coerced into contributing to the common good. In other words, everybody but one person voluntary gives their tax dollars to congress and the IRS. We can imagine that we'd suffer a major net loss of value if we eliminated congress and the IRS. One person would gain but 299,999,999 people would lose. Unless of course his gain would be greater than the total of their loss.

Pareto isn't about the morality of an endeavor...it's simply about maximizing value created. You didn't explain why pragmatarianism wouldn't result in the Pareto optimum.

Now, ordinarily someone who is robbed etc. has the option to seek restitution and defend themselves against the perpetrator. I guess if you're willing to acknowledge that this could well happen with a pragmatarian government, we're on the same page, but anarcho-capitalism certainly isn't depriving anyone of a "valuable" option who isn't themselves doing the same to others; it is depriving those individuals, the coercers, of that option... or at least removing the pretence that they are anything but criminals, who are to be dealt with in the usual manner. - Jon Irenicus

If I rob you, then I get to choose how I spend your money. If I don't get to choose how I spend your money...then why would I bother robbing you?

In a pragmatarian system...am I robbing you if I reach into my own pocket to pay for a 25% tax rate? Well...maybe? But wouldn't I also be robbing myself? I'm not paying coercers so that you have to contribute to the common good...I'm paying them so that WE have to contribute to the common good. What kind of robber has one gun pointed at you and one gun pointed at himself? "Let's give up 25% of our money...or else!!!"

Imagine that you really don't want to eat an entire bag of chips. But you lack the self control to stop eating the chips. So you tell your friend to take the bag of chips away from you after you've eaten 15 chips. Is he robbing you if he takes the bag away from you?

If I pay congress and the IRS...am I trying to rob you or am I trying to ensure that we both contribute?

You have to get inside the mentality of somebody who would willingly pay coercers...

"Given the choice, I'd choose to eat the entire bag of chips even though I really shouldn't. Maybe this is true of other people as well. Maybe they also lack the self control to give up momentary pleasure for future benefit. I think it's entirely possible so I will pay somebody to take the bag of chips away from US".

"Given the choice, I wouldn't contribute to the common good. Maybe this is true of other people as well. Maybe they also lack the self control to give up monetary pleasure for future benefit. I think it's entirely possible so I will pay somebody to force US to contribute to the common good."

In essence, the mentality is, "Let's have no choice but to do the right thing".

You might disagree with the mentality...but it's not unreasonable to want to avoid situations in which you might make the wrong choice. If you think that you might drink and drive...you give your keys to the host. That way if you do drink, then you won't have the choice to drive.

How many people are willing to pay congress and the IRS in order to avoid a situation in which they might not choose to contribute to collective goods? I don't know. But I'd really like to find out. Wouldn't you?

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It kinda feels like there's a linvoid here...

Linvoid = choosing to avoid a situation in which you might make the wrong choice

Friday, August 1, 2014

Is Anarcho-capitalism The Promised Land?

Context: Progress Depends on Freedom

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No, markets are considered efficient where there are voluntary transactions considered mutually beneficial ex ante. This does not concern coerced transactions, where a majority (or even a better capitalised minority) can afford to coerce others into doing its bidding, which is precisely why arbitration and security exist: to prevent and, where applicable, rectify coerced losses of welfare. More demand means you can potentially charge a higher price for your good or service, and not that a demand for coercing others into doing your bidding somehow magically leads to positive sum, Pareto-efficient outcomes. You're correct that departments for which there is greater demand will attract more resources under pragmatarianism, which I am not disputing, but if we're discussing the relative efficiency of this system versus full blown voluntaryism, the demand to initiate coercion against others is detrimental to the achievement of positive sum economic exchanges, as by definition the coerced will be forced to engage in (trans)actions which they would rather have not. - Jon Irenicus

As I've said over and over...I have absolutely no problem with the assumption that anarcho-capitalism is Pareto optimal and pragmatarianism is not.  But in order for this to have any sort of relevance...you have to explain why pragmatarianism wouldn't lead us to anarcho-capitalism.

Imagine we're at a train station.  You want to go to the promised land and so do I.  A train pulls into the station.  The conductor is the invisible hand.  I go to board the train and you tell me that it's not going to the promised land.  Ok, so where is it going?  Why wouldn't the invisible hand take us to the promised land?  Would it take us half way and then run out of steam?

Pragmatarianism would create a market in the public sector.  Just like in the private sector...consumers would exchange less valuable options for more valuable options.  Is congress a more or less valuable option?  Is the IRS a more or less valuable option?

What are your options?

1. You can say that these options are more valuable...but then this would mean that anarcho-capitalism is NOT Pareto optimal.  Why not?  Because it would be missing more valuable options.

2. You can say that these options are less valuable...but that consumers would choose them anyways.  If consumers consistently fail to choose more valuable options...then markets really wouldn't work.  People would choose to starve rather than buy food.

Do you have another option?  I don't see one.  If people are willing to spend their money on watermelons... then an outcome without watermelons really wouldn't be Pareto optimal.  If people are willing to spend their money on congress and the IRS...then an outcome without these options really wouldn't be Pareto optimal.

So in order for your point about pragmatarianism being a suboptimal outcome to have any relevance...you need to explain why this would continue to be the case.

I agree that the first day of pragmatarianism the outcome would be extremely suboptimal.  The options would still largely reflect the preferences of government planners rather than consumers.    But the second day...the outcome would be marginally more optimal.  Same thing with the third day...and the fourth day...and so on.  Why do you perceive that this trend wouldn't continue?  If each day the outcome becomes more optimal (because consumers choose more valuable options)...then why wouldn't the outcome eventually become optimal?

Going back to the train analogy.  Imagine we board the train conducted by the invisible hand.  Just as soon as we sit down you say...

Irenicus: Our location is extremely suboptimal
Xero: Well...yeah...we're still at the station

A second after we leave the station you say...

Irenicus: Our location is still very suboptimal
Xero: Well...yeah...we just left the station

An hour later you say...

Irenicus: We're going the wrong way.  The promised land is in the opposite direction.
Xero: How can we be going the wrong way when the conductor is the invisible hand?

You reply...

Thursday, July 17, 2014

Why does consumer choice ensure a consistent supply of better options?

Why does consumer choice ensure a consistent supply of better options?

  1. Consumers are willing to pay for better options
  2. Producers want money

If we want to ensure a consistent supply of better public goods...then we have to allow consumer choice in the public sector.

Context: Dear Rothbard, The Government Isn't Beyond Repair

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Do I look like Alex Ebert from Edward Sharpe and the Magnetic Zeros? It's his site not mine. I link to it because I support the general idea. Clearly Ebert's specific idea is different from my own.

When I first thought of people choosing where their taxes go...I figured they'd simply fill out a form when they paid their taxes. But when I spent more time thinking about it...I realized that if it makes sense for the public sector...then why doesn't it also make sense for the private sector? Except, it really doesn't make any sense for the private sector...which means that it really doesn't make any sense for the public sector.

If you perceive that there's a problem with the environment...then waiting until the end of the year to support the EPA makes as little sense as waiting until the end of the year to go to the grocery store. Markets work because people can address shortages whenever they valuate it worth it to do so. Would it make any sense for Home Depot to be open only one day of the month? Nope.

So, my specific idea is that people could shop in the public sector whenever they wanted to. You would simply go directly to the government organization's website and make a contribution. They'd give you a receipt and you'd submit all your receipts to the IRS by April 15.

And if you weren't happy with the tax rate...then you wouldn't go directly to congress's website and you wouldn't make a contribution to congress. If enough other people also boycotted congress...then congress would either change the tax rate or go out of business. Same thing if you weren't happy with the IRS. Same thing if you weren't happy with the DoD. Same thing if you weren't happy with the DMV. Same thing if you weren't happy with NASA. Shall I continue or do you get the idea?

Markets mean that producers cater to the preferences of consumers. Why? Because producers want our money. So creating a market in the public sector would mean that congress would want our tax dollars. So would the IRS. So would every other government organization. Therefore, it would behoove them to discern our preferences. If they fail to discern our preferences...then we will let them know by not given them our tax dollars. This would effectively communicate to them that they need to improve how they are using society's limited resources.

Would you be happy with the selection of items on the shelves in the public store? Of course not. It's a given that you would want better options. We always want better options. It's a fact that you would be willing to pay for better options. And it's a fact that producers want more money. What happens when we put these two facts together? We learn why consumer choice ensures a consistent supply of better options.

If you know this...if you understand this...then you should love the idea of creating a market in the public sector as much as I do. You would start a blog to help spread the idea. Doing so would help create a larger net...and with a larger net we would catch more fish. So are you going to start a blog? If not, then you don't love pragmatarianism as much as I do. If this is the case then let me know which part of consumer choice in the public sector you don't know/understand/appreciate.

Wednesday, July 16, 2014

Razotarianism - Supplementing Public Revenue By Incentivizing Voluntary Contributions

A few years ago Warren Buffet made headlines by arguing that rich people weren't paying enough taxes.  In response, Rep. John Campbell proposed the Put Your Money Where Your Mouth Is Act...
This simple bill would add a line near the bottom of Page 2 of all Form 1040 tax returns, allowing any taxpayer to voluntarily and very easily pay more tax than the law requires. What a great idea, huh? - John Campbell, The Liberal Tax
Unfortunately, not enough other congresspeople agreed that Campbell's idea was that great.  But I certainly did...so I sent him an e-mail about another great idea...The Taxpayer is King.

Off the top of your head...do you know if it's even possible to make donations to specific federal agencies?  I sure didn't.  After a bit of searching I found this article by Brian Palmer...Uncle Sam Wants You ... or at Least Your Spare Change.  It turns out that it is possible...at least for some agencies...

Department of Treasury
General fund
Debt reduction

Department of Health & Human Services
National Cancer Institute
National Institute of Health
National Institute of Mental Health
National Institute of Environmental Sciences

Department of the Interior
National Park Service

Department of Agriculture
The United States National Arboretum

Department of Defense
Veteran Affairs

NASA
National Science Foundation
National Endowment For the Arts

What if you want to donate to the EPA or USAID?  I'm not so sure.  This 1963 document is the most official and comprehensive source that I could find on the topic.  Who knows if any of those laws have changed since then.  But why would any government agency be prohibited from accepting donations?  Because...they already have more than enough money?  From my perspective, every government organization should facilitate donations.  Maybe they shouldn't go as far as unleashing hordes of bike riding, suit wearing and door knocking minions...but it should be really easy to find the "Donate" button on their website.

For some reason relatively little has been written on the topic of donating to the government.  Here's what I managed to find...


There is, however, one guy out there who really loves the idea of people donating to the government.  His name is Razo.  A few months ago he commented on this blog entry of mine...What About Voluntary Taxation? Also, Knockers vs Builders...Which One Are You?  Shortly afterwards...I tried, and failed, to adequately address his concern about the wealthy having too much influence in a pragmatarian system.. .Visualizing And Evaluating The Public Goodness Threshold.

We've been e-mailing back and forth intermittently since then and I've managed to get a somewhat better handle on his solution to the problems of government.  What really helped me better understand his model was a paper he recently wrote.  But before I share the link with you...let me make sure that the title of his paper doesn't jump you to the wrong conclusion.

With Razo's model...taxation would still be compulsory...but perhaps not indefinitely so.  The more donations the government receives...the less taxes people will be required to pay.  In other words, more voluntary contributions means less coerced contributions.

If you have strong feelings one way or another about compulsory taxation...I really think it will be worth it if you try and keep an open mind.  

Here's his paper... Voluntary Taxation and the Future of Democracy.

Let's get some semantics out of the way.  Razo calls his model "Voluntary Taxation".  This label is... misleading.  I fear, as you might have noticed, that both liberals and anarcho-capitalists will jump to the wrong conclusion right off the bat.  Maybe they will incorrectly assume that Razo has been sponsored by the Tea Party.  But that's really not the case.  In theory, Razo's model should be equally desirable to both sides of the debate.  So I've taken the liberty of calling his model of government "razotarianism".  With this label it will be highly unlikely for anybody to be immediately and incorrectly biased for or against his model.  Plus, right now there isn't a single search result for the word "razotarianism".  This means that it meets the google alert standard.  You don't have to worry about being swamped by irrelevant results should you sign up to receive an e-mail from google whenever there's a new search result for "razotarianism".

Before we dive in, let me confess that I'm really not going to be able to do razotarianism justice. Heck, I can't even do pragmatarianism justice. But I'd be doing Razo's model even less justice if I didn't at least try to give it the recognition that it certainly deserves.

Are you wondering why in the world more people would voluntarily donate more money to the government? The answer is...incentives!  In a razotarian system, people would be incentivized to contribute more than they were required to do so.  What's the incentive?  Votes.  Anybody who paid more than their fair share to the government would receive more votes.  If you're concerned that this would give too much influence to the wealthy...then let me put your concerns to rest by clarifying that the weight of your contribution would depend on your total wealth.  So if both you and Bill Gates donated 1% of your wealth to the government...then even though his contribution was absolutely larger...you'd still receive the same amount of votes because his contribution was relatively the same size.

How powerful is this incentive?  Let's try and visualize the possibilities with this illustration...




"A" represents the current system with the current incentive.  The amount of donations that the government receives is a green drop in a red ocean.  It's vanishingly small.  If we switched over to a razotarian system...would people be sufficiently incentivized to voluntarily shoulder half of the tax burden..."B"?  Do you think it's possible that people would be so incentivized that they would be willing to voluntarily shoulder the entire tax burden..."C"?  

How much are people willing to pay for more say?  Beats me...but I'd certainly love to find out.  I really appreciate the idea of incentivizing people to pay more than their fair share of taxes.

Bryan Caplan touched on this...
I do wonder, though: Could the U.S. government attract a lot more donations with better marketing?  What if the President spent less time raising money for his campaign and more time raising money for the Treasury?  What if Congress publicly acknowledge the ten biggest donors in an annual ceremony?  I can easily believe that donations to the U.S. government would rise a hundred-fold.  But even then, Uncle Sam's share of national charity would be a mere .1%. - Bryan Caplan, Why Are Donations to Government So Small?
In my blog entry...Civic Crowdfunding - Encouraging Participation...I linked to these two posts by Miles Kimball...


In my entry I also argued that civic crowdfunding websites shouldn't just list the donors and the size of their donations...they should also include a link of the donor's choosing.  No reason that this couldn't work for making donations to government organizations.  If I make a donation to the EPA...and I opt for my donation to be made public...then my row on the EPA's "Thank you!!!" page would display three things...my name, my donation amount and a link to my blog.  The more I donated...the higher the link to my blog would be on their "Thank you!!!" page...and the more traffic my blog would receive.  Like any good trade...it would be mutually beneficial.

That's just one of many different possible ways that people could be incentivized to donate to government organizations (GOs).  It's hard for me to imagine why, as taxpayers, we wouldn't we want GOs to enthusiastically explore additional sources of revenue.

So how do we get from here to there?  Let's break the big challenge down into three smaller challenges...

  • Awareness - people have to know that it's possible to donate to GOs
  • Facilitate - people have to be able to easily find the donate button
  • Incentive - people have to be rewarded for donating to GOs

Challenge #1 - Awareness

If every GO website has a noticeable donate button (challenge #2) then anybody who visits a government website will realize that it is possible to donate to GOs.  Plus, there should be an up-to-date list of GOs that you can donate to.  If you take a look at this donation page on the the USA.gov website...you'll see that their list of GOs that you can donate to is far shorter than my list.  That's easy enough to remedy.

Ideally, the USA.gov website should link people to the complete list maintained on the Government Accountability Office (GAO) website.  It's right up the GAO's alley given that their responsibility is to make the government more "efficient, effective, ethical, equitable and responsive".  Clearly the GAO is dropping the ball if they allow GOs to turn their noses up at additional sources of revenue.

Challenge #2 - Facilitate

This should be the easiest challenge.  Thousands of non-profit organizations make it ridiculously easy for people to donate to their organizations.  If a GO can't accomplish this simple task...then they really shouldn't be spending anybody's tax dollars.

Challenge #3 - Incentive

This would seem to be the biggest challenge.  What perks/rewards/benefits can people receive for donating to GOs?  I already mentioned more traffic for your website.  What about a T-shirt?  Would you shell out $35 for a T-shirt?  It would say something like, "I donated to the EPA...because the environment's worth it!"  It's for a good cause...right?  Would you shell out $250 for a limited edition silver coin featuring Dendrophylax lindenii?  Would you shell out $10,000 for additional votes?

If you did spend $10,000 for additional votes...are you being more altruistic than somebody who donated $10,000 to the government for nothing but the warm glow of doing so?  This question is important because, I believe that the logical basis of razotarianism is the idea that, in the political realm, selfless people should have far more influence than selfish people.  Razo's model intends to effectively filter out the greedy bastards from politics.  Except, I'm not too sure if anybody who needs to be bribed with votes in order to donate to the government is necessarily that selfless.

Before we dig deeper into the rationale...let's try and figure out how Razo believes that this filter process would work...
Based on the rate of return on capital, wealthy individuals will have to decide whether they want to retain their capital or increase their political power. They can’t have both because the model mathematically excludes the possibility of increasing wealth and also increasing political power. If the rate of return on capital is 10%, for example, and an individual’s voluntary tax contribution is 20%, it will not take long for that person to lose his or her wealth. It’s also important to understand the competitive nature of the model.  At the upper extreme, people will inevitably compete at annual (wealth and income) tax rates of nearly 100%. One does not have to be a financial expert to understand that 100% tax on wealth and income will necessarily drive economically ambitious people (of all social classes) away from politics and into business, where they belong. Again, one of the most important strengths of the voluntary tax model is its unprecedented ability to remove self-interest from the top tier of politics.
Does this make sense?  The more money you donate to the government...the less money you'll have to invest in profitable ventures.  So do you want more votes...or more money?  Because you can't have both.

Here's another passage...
It is worth clarifying that the voluntary tax principle does not condemn self-interest. It simply excludes it from politics.  This ability to divorce business and self-interest from politics is precisely where the power of the voluntary tax model is found.
And another...
In his zeal for the common good, our imaginary taxpayer has voluntarily given away 100% of his wealth and his entire life’s work and has opted for a life of productive simplicity.
And another...
The segment of the population with the most political power would be comprised of the individuals who have demonstrated the least amount of self-interest. 
This strikes me as fundamentally wrong.  Perhaps the best way to show the wrongness is to whip out Elizabeth Warren...
There is nobody in this country who got rich on his own. Nobody.  You built a factory out there—good for you! But I want to be clear.  You moved your goods to market on the roads the rest of us paid for.  You hired workers the rest of us paid to educate.  You were safe in your factory because of police forces and fire forces that the rest of us paid for.  You didn’t have to worry that maurauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. 
If Warren is correct that the successful operation of business depends on government...then wouldn't it be a huge disaster to try and divorce business from politics?

In this sense...razotarianism and pragmatarianism are polar opposites.  As a pragmatarian I want the rich guy, who I dollar voted for, to have far more political influence than Warren, who I didn't even ballot vote for.  As a razotarian, Razo wants the rich guy to have far less political influence than Warren.

So who's right?  Razo or myself?

Let's consider the simple act of buying an apple pie.  Buying an apple pie means dollar voting for whoever produced that pie.  Let's say his name is Bob.  In order to produce the pie and earn our money...Bob had to dollar vote for whoever produced the apples that he put into the pie.  Bob, who really wants our money, has a strong incentive to purchase the optimal quantity and type of apples.  If he purchases the wrong quantity or type of apples... then he will lose dollar votes.  And given that Bob is self-interested...he really doesn't want to maximize loss, he wants to maximize gain.  So he diligently does his homework, and we benefit.

But are apples the only input in apple pies?  No, there are numerous other inputs...which can be divided into two types...private and public.  Private inputs, such as apples, are private because they are supplied by the private sector.  Public inputs, such as roads, are public because they are supplied by the government.

Apples and roads both go into our apple pies.  Of course roads don't literally go into our apple pies.  It would really suck to find chunks of asphalt in an apple pie.  But the apple pies that we buy depend on roads just as much as they depend on apples.  Apple pies can't go from Bob's bakery to your home without them.  This is why I want Bob to be free to shop for himself in the public sector.  Nobody has more incentive or knowledge than he does to dollar vote for the optimal balance of apple pie inputs.  If he needs more apples...then that's what he'll spend his private dollars on.  If he needs better roads...then that's what he'll spend his public dollars on.  If Bob misallocates either his private dollars or his public dollars, then consumers would shift their dollar votes to producers who haven't misallocated their money.

Razo wants to diminish Bob's influence in the public sector.  Why?  Because Bob is self-interested.  I want to increase Bob's influence in the public sector.  Why?  Because Bob is self-interested.

Let me clarify, I don't want to arbitrarily increase Bob's influence in the public sector.  I merely want his influence to accurately reflect the will of all the people who have dollar voted for him.  Because right now it really doesn't.  Bob's influence has been limited as the result of primitive traditions and bad economics.  These shackles have to be removed.  The fact of the matter is...the more people Bob serves...the more influence he should have.  Nonsensically limiting his influence in either sector fundamentally subverts the will of the people that Bob has effectively served.  Prohibiting Bob from shopping in the public sector doesn't help consumers...it hurts them.  It's as counterproductive as literally shooting Bob, their good and faithful servant, in the foot.

Are you convinced that I'm right?  If not, then read this passage by Adam Smith...
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 commerce, in our case Bob, isn't free to dollar vote for the optimal allocation of roads, bridges and canals... then how could these public inputs possibly be constructed where they create the most value for consumers?  Does it really serve the common good if the government builds billions of bridges to nowhere?

Here's another wonderful passage by Adam Smith...
It does not seem necessary that the expence of those public works should be defrayed from that public revenue, as it is commonly called, of which the collection and application are in most countries assigned to the executive power. The greater part of such public works may easily be so managed as to afford a particular revenue sufficient for defraying their own expence, without bringing any burden upon the general revenue of the society. - Adam Smith, Wealth of Nations
This argument is perfectly relevant as to whether or not government organizations should have donate buttons on their websites.  Facilitating donations is the bare minimum that government organizations can do to help minimize their "burden upon the general revenue of society".  

What about razotarianism?  How much would it help decrease society's compulsory tax burden?  I don't know.  But it's a really good question.  It's kinda hard to imagine truly selfless donors really shouldering very much of the total tax burden.   Just how much money do truly selfless people have?  If they earned a lot of money...then perhaps they weren't so selfless.  And if they have to be bribed with votes in order to donate a lot of money to the government...then perhaps their Scrooge like transformation didn't really occur.

From my perspective...the compulsory tax burden would be far more likely to significantly decrease if votes weren't sold on a proportional basis.  Plus, arbitrarily limiting Bob's influence in the public sector substantially subverts the will of the people.  So I still prefer pragmatarianism...but razotarianism is definitely on to something with the idea of incentivizing donations to the government.  Hopefully many more people will discuss the merits of this approach.  Especially John Holbo.