Saturday, March 28, 2015

Germanwings vs Linus's Law

Context

It's Saturday morning.  My gf, who's a therapist, is sitting on the toilet while I'm sitting on the couch.  To get an idea of the distance between our locations... if she says something like, "The cat's in the tub... why are you in the tub?"... then I can just barely hear what she's saying.  Sometimes, rather than shout back and forth, she'll call me and we'll talk on the phone.  For some reason it seems nicely absurd to talk on the phone with somebody in the same house.

So this morning I pick up my phone and learn that my gf wants to talk about the Germanwings co-pilot seeing a therapist for depression.  What's my response?  To push my gf's buttons of course.  What can I say?  I'm only human.  I blame the pilot's therapist.  We end up have a loud debate/discussion about who's to blame.

My arguments are thrown off by the fact that she's got me on speaker phone with the volume turned all the way up.  So I can clearly hear what I'm saying being broadcast in the bathroom... with a slight delay.

/Context

What do you think?  Too much context?

Linus's Law:  given enough eyeballs, all bugs are shallow

Here's the Wikipedia entry... Linus's Law... and here's my recent blog entry... Linus's Law: Narrowly vs Broadly Defined.

If we narrowly define Linus's Law... then it's only relevant to computer programming.  You write a program and it doesn't work like it's supposed to.  Why?  Because there's a "bug" in your code.

If we broadly define Linus's Law... then it's relevant to anything that doesn't work like it's supposed to.  A pilot intentionally crashes a plane full of people into a mountain.  Why?  Because there was a "bug" in his thinking.

For too many people... the "solution" to pretty much every problem is more government regulation.  But for anybody who understands Linus's Law... the solution to pretty much every problem is more eyeballs.

To be clear... there's a fundamental difference between the general solution (more eyeballs) and the specific solution.  To expect me to come up with the best specific solution for every situation where the general solution is applicable... is to really miss the point of Linus's Law!  There are a gazillion different ways to add more eyeballs... and no two ways are equally effective for every situation.

So I really don't know the best way to add more eyeballs to flying.  It just seems like a given that it's a generally good idea.

If we're going to put a lot of lives in somebody's hands... then it stands to reason that we want more, rather than less, eyeballs scrutinizing the hands in question.  We want more, rather than less, eyeballs poking and prodding hands to determine their capability.

If the passengers of the Germanwings flight had known that the pilot had just broken up with his girlfriend... and had been seeing a therapist for depression... then perhaps some of them would have thought twice about putting their lives in his hands.  And what if it was ridiculously easy for them to bring these details to the attention of other potential passengers?

Would pilots welcome all this additional scrutiny?  Would they really want to have their lives under a microscope?  The fact of the matter is that they wouldn't all mind the scrutiny equally.

Imagine you're interviewing a potential babysitter.  You ask, "would you mind if I ran a background check on you?"  If the babysitter replies that she would mind... then chances are pretty good that you'd cross her from the list.

When you're watching a crime show and the suspect isn't willing to submit a DNA sample... what do you think?

My gf argued that it's the company's responsibility to effectively screen its pilots.  Yes...but a truly effective screening process should have absolutely no problem with independent verification.

If a pilot is mentally and physically sound... then generally speaking there shouldn't be a problem with putting him under the public's microscope.

If a plane is physically sound... then generally speaking there shouldn't be a problem with putting it under the public's microscope.  

If a plan is sound... then generally speaking there shouldn't be a problem with putting it under the public's microscope.

If a program is sound... then generally speaking there shouldn't be a problem with putting it under the public's microscope.

Right now if you search google for Germanwings "Linus's Law" you'll only find four results... none of which are relevant.  This is a "bug" in our society.  And this is me pointing it out.  Given enough eyeballs, all bugs are shallow.

A couple relevant passages...
The technology for reducing the number of plane crashes in this country is available.  All we have to do is to treat every plane as though it were Air Force One.  But, if we did, how many would be willing to pay the prices to fly from their hometown to Chicago? - Richard B. McKenzie, Bound to Be Free
If anyone insisted on deliberating with maximum scrupulousness every one of the economic acts he undertakes every day, if he insisted on rendering a judgment of value throughout to the last detail concerning the most trifling good that he has to deal with by way of receipt or expenditure , by utilization or consumption, such a person would be too much occupied with reckoning and deliberating to call his life his own. The correct maxim and the one which would be observed in economic life is "Be no more accurate than it pays to be." In really important things, be really exact; in moderately important things be moderately exact; in the myriad trifles of everyday economic life, just make the roughest sort of valuation. - Eugen Böhm-Bawerk, Capital and Interest 

Friday, March 27, 2015

Linus's Law: Narrowly vs Broadly Defined

Posted this in TheScienceForum.com... Linus's Law... Yay or Nay?

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This started off as a reply to this thread... Should Dywyddyr be banned from the Forum?  But in my reply I brought up the topic of Linus's Law.  So I'm posting my reply as a new thread so I don't get banned again for "derailing" a thread.  And since I'm posting a thread... I figured that I might as well add some additional and relevant content.

People like you are the reason why a forum needs moderators like that. Apparently they aren't quite tough enough. - Strange

People like me?  You mean... people with unconventional views/thoughts?  If my thoughts are correct... then these moderators aren't doing the members of this forum any favors by locking/trashing my threads and banning me.  If my thoughts are incorrect, which is entirely possible... then these moderators aren't doing the members of this forum any favors by locking/trashing my threads and banning me.

Let's break this down programming style...

Case correct

Trashing/locking my thread robs forum members of the opportunity to hear myself, and possibly others, provide some arguments/evidence in support of a correct thought.

Case incorrect

Locking my thread robs forum members of the opportunity to hear different perspectives/arguments/evidence on why my thought is incorrect.

The longer a thread stays open, the greater the chances that a new forum member will be able to find and point out the error or truth of my thought.  Could the new member simply start a new thread that does so?  Well... if he wants to point out the truth of my thought... then he might not be inclined to do so given that my thread was locked/trashed and/or I was banned for a week for starting it.

And if he wants to point out the error of my thought?  Sure, he can start a thread... but will any of the participants in my locked/trashed thread see it?

There's a reason that we subscribe to threads.  It's so that we can be notified when a thread/topic that we're interested in receives new replies.  Subscribing to threads is beneficial because it helps prevent us from missing any new replies to topics/discussions that we're interested in following.  If we lose interest in the thread/topic... then it's easy enough to unsubscribe.

Allowing a thread to stay open facilitates...

1. debugging (finding the errors in a thought).
2. subscribing to any future debugging.

In this thread...  Are HUMAN SWARMS more accuate tools than POLLS or SURVEYS? I shared a link to Linus's Law and this relevant passage....

The history of Unix should have prepared us for what we're learning from Linux (and what I've verified experimentally on a smaller scale by deliberately copying Linus's methods [EGCS]). That is, while coding remains an essentially solitary activity, the really great hacks come from harnessing the attention and brainpower of entire communities. The developer who uses only his or her own brain in a closed project is going to fall behind the developer who knows how to create an open, evolutionary context in which feedback exploring the design space, code contributions, bug-spotting, and other improvements come from from hundreds (perhaps thousands) of people. - Eric Steven Raymond, The Cathedral and the Bazaar

Is this passage relevant to closed vs open threads?  I sure think it is.  When a moderator closes a thread... he prevents the "swarm" from tackling the topic of the thread.  Why does the moderator close the thread?  In too many cases it's because he, one person, is certain enough that his answer is better than any answer that the community could possibly come up with.  In economic terms this is known as the "fatal conceit".  It can also be described as "hubris".

Is Raymond's passage relevant to banned members?  I sure think it is.  Banning members decreases the number of eyeballs that this community has.  Less eyeballs means less chances that "bugs" (errors) will be found.  And the people who are most likely to be banned... ie "deviants"... are the people who are most likely to look in really different places.  Having more eyeballs isn't beneficial when everybody's looking in pretty much the same direction.   Uniformity in thinking really doesn't increase the chances that bugs will be found.  This is why it's always better to have more, rather than less, (bio)diversity.   Progress depends on difference.

Here's what you had to say about Linus's Law in that swarm thread...

You ignore the fact that the Wikipedia entry points out that this is a fallacy, as anyone with experience of professional software development would know. Quality is more important than quantity in code reviews, as in so many areas. - Strange

I would have pointed out the "bug" in your thinking shortly after you posted it... but I was banned for a week because I posted this thread.

When it comes to finding bugs in the programming code itself... then obviously you have to be able to read the code.  But the more people you have who can actually read the code... the greater the chances that somebody is going to spot the error.  Even when a program only consists of a few lines of code... I've found myself sitting there staring and staring trying to find the bug.  Sometimes it's not easy to spot things that are right under our nose.  Which is exactly why two heads are better than one.

And as anyone with experience of professional software development knows... most software isn't developed for developers... it's developed for people who aren't developers.  And the more people who are using your software... the greater the chances that somebody is going to enter some different input that "breaks" the software.  What did the user find?  A bug in the code.  Software is made for users... so it's a problem with the software when a user inadvertently "breaks" it.

It's a bug in your thinking to believe that Linus's Law is only relevant to finding errors in programming code.  Linus's Law is relevant to anything that can have bugs (errors/problems/mistakes).  This post of mine can certainly have plenty of bugs.  They can be minor errors such as misspellings and/or grammatical errors... or they can be major errors such as logical fallacies.  The more eyeballs that see this "code" (post)... the greater the chances that all the bugs will be found.   More eyeballs means more scrutiny.

In essence, a forum is decentralized (mostly) debugging process.  A member posts a thread (code) and other members are given the opportunity to try and find any errors.  If they find a large enough bug... then they have the opportunity to bring the bug to the attention of other members.

It's also a bug in your thinking to believe that Linus's Law is only relevant to finding bugs/errors/problems/mistakes.  Linus's Law is just as true for Easter Eggs as it for bugs.  Given enough eyeballs, all Easter Eggs are exposed.  The more kids that are looking for Easter Eggs (EEs)... the more EEs that will be found.

So not only is this forum a decentralized (mostly) debugging process... it's also a decentralized (mostly) treasure hunt.  We have the opportunity to point out what we perceive to be landmines/bugs/problems/errors... and we also have the opportunity to point out what we perceive to be EEs/truth/solutions/treasure.

When moderators lock/trash threads and ban members... is it because they have legitimate reasons for doing so... or is it because they fail to understand Linus's Law?  Most of my threads have been trashed/locked and I've already been banned twice.  So clearly I'm a little bit biased against Lynx_Fox and Dywyddyr.  But I'm entirely willing and able to admit that maybe I'm the one with the big bug in his code.  Maybe these two moderators understand Linus's Law a lot better than I do?

Perhaps Lynx_Fox and Dywyddyr can effectively explain the difference between Linus's Law and Proverbs 11:14?

Where no counsel is, the people fall: but in the multitude of counsellors there is safety.

A broader definition/understanding of Linus's Law has all types of relevance to our government.  If software can have bugs... and this forum post can have bugs... then it stand to reason that any plan can have bugs.  Government plans can be just as buggy as private plans.  There's a pretty big difference though.  In the private sector... if you want a lot of people to invest in your plan...  then you're going to have to subject your plan to a lot of scrutiny/eyeballs.   In the public sector however... congress doesn't have to persuade a multitude of taxpayers that a plan for a bridge will not violate Quiggin's Implied Rule of Economics.  Which is exactly why we end up with bridges to nowhere and unnecessary wars.  The solution is simply to create a market in the public sector (pragmatarianism).  If government plans are truly bug free... then they should have no problem holding up to all the additional scrutiny.  Because when it comes to government plans... ignorance of bugs truly isn't bliss.

Thursday, March 26, 2015

Fee.org - Thumbs Up vs Quarters Up

I noticed that Jeffrey Tucker commented on this Fee.org article by Robert Murphy... The Silk Road Back to Leviathan?  So I shared a link to my recent blog entry...  In Which Our Anarchist Hero Jeffrey Tucker Proves The Point Of Taxation.  Tucker hasn't replied... yet... but a couple of other people replied.  Here's my reply to their reply...

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tehol and Bob_Robert... it's probably my fault but both you guys are missing the point by a million miles. Let me try again.

Imagine if Fee.org charged members $1 per/month... but members could choose which articles they spend their money on. For the sake of simplicity... let's imagine that this month there are only two articles....

1. The Silk Road Back to Leviathan? by Robert Murphy
2. How Markets Tell the Truth and Politics Tells Lies by Gary Galles

Let's also imagine that Fee.org has 50,000 members (the same number of facebook fans it has).

How would this month's $50,000 be divided between the two articles? You don't know the answer. I don't know the answer... nobody knows the answer.

If you've read Hayek, then you would know that information is dispersed. Each of us only has a piece of the puzzle. My piece of the puzzle is that I'd spend my $1 on Galles' article rather than on Murphy's article. This is because, from my perspective, Galles' article does a better job of revealing the Unseen.

The bug in Jeffrey Tucker's economics is that he believes that, just because these products (articles) aren't rivalrous, none of our pieces of the puzzle are necessary/important. Tucker believes that producers of liberty articles... such as Galles and Murphy... do not need our individual valuations in order to put society's limited resources to their most valuable uses.

But the fact of the matter is that Galles' article and Murphy's article aren't equally valuable. And it behooves consumers and producers alike to learn which article is more valuable.

The solution to this knowledge problem is really simple. Fee.org would charge its members a very reasonable monthly fee. Liberty.me already charges $5/month so there's no reason that Fee.org couldn't charge its members a buck or two a month.

This does not mean that Fee.org would have to exclude non-members from reading its articles... it just means that members would be given some special status/recognition/perks/props for their valuations/contributions. Liberty.me already does the same thing. The only difference is that Liberty.me doesn't give its members the freedom to allocate their monthly fees to the most valuable blog entries.

Can't Fee.org just rely on donations? Let's say that I only value Galles' article at $0.25 cents. In this case it's really not going to be worth it for me to take the time to track down Galles' paypal address and then log into my paypal account in order to send him $0.25 cents. There are too many steps in the process. The opportunity cost of the process exceeds my $0.25 cents worth of valuation.

But if, at the beginning of the year... I use paypal to deposit $12 into my Fee.org "bank account"... then... if Fee.org sets it up right... spending $0.25 cents on Galles' article would be as easy as giving a Youtube video a thumbs up. Kind of like how it's too easy to buy something on Amazon.

In essence, Fee.org would be creating a market within its website. They would be facilitating trades. They would be making it stupid easy for me and every other member to trade with Galles, Murphy, Tucker and anybody else who writes articles for this website. Fee.org would take its cut and pass the rest on to the intended recipients.

As far as I know, Fee.org would be the first website to try this (MMC + CC). If it worked (and why wouldn't it?)... then other websites, like Youtube and Netflix, would quickly follow suit. As a result, more and more people would wonder why we don't do the same thing with the government. If it's important to share our puzzle pieces on Fee.org articles and Youtube videos... then why isn't it important that we share our puzzle pieces on everything that the government does?

Tuesday, March 24, 2015

Debugging Education Economics - Robert Reich, Robert Murphy and Donald Boudreaux

Robert Reich recently posted the following to Facebook...

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A wealthy businessman told me recently that American teachers were paid too much. I said the truth was the opposite. They’re paid far too little. I asked him: “Which is more important, the nation’s financial capital or our human capital?” He said it was our human capital. Then I asked him: “what’s the average pay for those who guide and develop our financial capital, investment bankers and portfolio managers?” He guessed $1,200,000 a year, which isn’t far off. I then asked: “What’s the average pay of those who guide and develop our human capital, America’s teachers?” He guessed $120,000 per year. I told him that, in fact, high school teachers earn an average of $56,260; elementary school teachers, $56,320; and middle school teachers, $56,630.

In other words, investment bankers and portfolio managers are earning about 20 times what teachers are earning. Yet if the nation’s human capital is more important than its financial capital, that ratio is absurd. The law of supply and demand isn’t repealed at the classroom door. If we want talented men and women to become teachers rather than bankers, we need to pay them far more. He nodded, caught in the net of his own logic.

What do you think?

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Robert Murphy's response... Robert Reich Literally Doesn’t Understand the First Thing About Price of Labor

Donald Boudreaux's response... An Open Letter to Robert Reich

Murphy and Boudreaux are both excellent economists... but evidently they never saw the movie Stand and Deliver.  While there might be a surplus of teachers... there's always going to be a shortage of exceptional teachers.  If we had a truly free-market in education... then we'd expect to see roughly the same income inequality that we see in other fields.

Right now there around 3.7 million full-time elementary and secondary school teachers in the US.  There's a bell curve with a small percentage of below average teachers, a large percentage of average teachers, and a small percentage of above average teachers.  With 3.7 million teachers... it's a given that there's going to be significant disparity in talent.
Individuals differ, one from another, in important and meaningful respects.  They differ in physical strength, in courage, in imagination, in artistic skills and appreciation, in basic intelligence, in preferences, in attitudes toward others, in personal life-styles, in ability to deal socially with others, in Weltanschauung, in power to control others, and in command over nonhuman resources.  No one can deny the elementary validity of this statement, which is of course amply supported by empirical evidence.  We live in a society of individuals, not a society of equals.  We can make little or no progress in analyzing the former as if it were the latter. - James M. Buchanan, The Limits of Liberty
The fact that all teachers are paid roughly the same really doesn't mean that there aren't any exceptional teachers.

As I explained here... Raymond Fisman - Education vs Markets... the problem with schools is that, even with a voucher system, parents are paying for a bundle of teachers.  If all the teachers in a bundle were equally talented then there wouldn't be a problem.  But we've all endured more than a few lousy teachers.

The solution to our educational problems is to unbundle teachers.  This can easily be accomplished by allowing parents to choose which teachers, rather than schools, they give their money to.  The below average teachers will receive below average pay.  The average teachers will receive average pay.  The above average teachers will receive above average pay.  And the small handful of one in a million teachers will receive one in a million pay.

Unfortunately for all of us, the law of supply and demand truly is repealed at the classroom door.  Just like it's repealed in the entire public sector.  But it really shouldn't be.

See also...

Superstar Theory: J.K. Rowling vs Elizabeth Warren
Deirdre McCloskey - Revealing The Unseen

Scott Sumner vs The Fed

Not sure if you've noticed, but I haven't dedicated many, errr... any... blog entries to monetary policy.  This is because when it comes to monetary policy... I'm an expert.  Hah.  Nope.  It's the other way around.  I'm most definitely not a monetary policy expert.  Just like I'm not an expert on the government's environmental policy.  Or the government's foreign policy.  Or the government's military policy.  There are many things that fall under the current scope of government.  Monetary policy is just one of them.

When I was a libertarian... I was interested in defending my perspective on the proper scope of government.  But now that I'm a pragmatarian... I'm more interested in defending my perspective on how we should use the invisible hand to determine the proper scope of government.

So because I'm more of a big picture guy... I tend to skim... more than a bit... when it comes to Scott Sumner's posts over at EconLog.  Sumner is most definitely a monetary expert.  It's pretty easy to tell given that nearly all of his posts are on the topic of monetary policy.

Here's Sumner's most recent blog entry... Is Stanley Fischer too complacent?  While skimming over it I imagined Sumner encouraging readers to boycott the Fed.  I really enjoyed the image so here I am sharing it with you!




With the current system, I don't think that Sumner would ever say this.  Right?  How can we possibly boycott the Fed?  At best we can write a strongly worded letter to the Fed...

Dear Stanley Fischer, 
It has come to my attention that it is entirely possible that you are too complacent.  This concerns me a great deal.  Please be more... diligent.  If you fail to do so then I will be forced to... use stronger words.   
Sincerely,
A Concerned Citizen

Would Fischer really be inclined to take heed?  Not according to Tabarrok...

It’s the threat of exit that makes people listen. - Alex Tabarrok, The Tragedy of Jonathan Kozol

I can't exit from the Fed, so why should Fischer listen?  Maybe he'd listen to congress instead?  So I should write my congressperson a strongly worded letter?  If this was the only system that I'd ever been exposed to... then it might seem like a pretty decent system.  But when I compared our political system to a market system... well... now I'm a pragmatarian.

With the current system... it would never make sense for Sumner, a monetary expert, to encourage a boycott of the Fed.  No matter how complacent Fischer was... no matter how tight or loose money was... no matter how many wheelbarrows of cash it took to pay for one loaf of bread... with the current system it would never be logical for Sumner to encourage his readers to boycott the Fed.

It's got to be a huge problem that with our current system it will always be illogical for Sumner to encourage readers to boycott the Fed.  Pragmatarianism would solve this problem.

In a pragmatarian system it would certainly be logical if Sumner ever encouraged people to boycott the Fed.  This is because in a pragmatarian system people could choose where their taxes go.  Anybody who had been cultivating the Fed with their cash... would easily be able to stop doing so (exit).

How bad would the government's monetary policy have to be before Sumner encouraged his readers to boycott the Fed?  Kinda bad?  Really bad?  Super bad?  And if Sumner did encourage his readers to boycott the Fed... how much money would the Fed lose?  A little?  A lot?  If it was only a little... how many other monetary experts would have to support the boycott in order for the Fed to get the message?

Here's another good question... how many more people would pay closer attention to Sumner's expertise if we could actually choose where our taxes go?  I often find myself explaining to people that pragmatarianism would eliminate rational ignorance.

I really want to live in a world where Sumner, a monetary expert, has the option to encourage his readers to boycott the Fed.  I really want to live in a world where I can clearly see exactly what the demand is for the government's monetary policy.  I really want to live in a world that has demand clarity rather than demand opacity.  I really want to live in a world that's enlightened.

Sumner, a monetary expert, is wondering whether Stanley Fischer is too complacent.  And I'm wondering whether Sumner would give any of his taxes to the Fed if he had the freedom to do so.  Sumner's actions would speak a lot louder than his words do.  His demand for the Fed is one piece that is missing from the puzzle.  Unfortunately, it's not the only piece that's missing.  Most pieces are missing from the puzzle.  And then there's a big mystery when we experience economic problems.

In this video you can see puzzle pieces coming together...






Why are so many economists complacent about the fact that we don't know what the demand is for government policies?  Just how great is "demand" anyways when we don't need it for monetary policy, environmental policy, military policy or any other government policy?  If we don't need demand to determine the supply of money... then why do we need demand to determine the supply of milk, shoes and cars?  Eventually economists are going to have to confront this question... let's just hope that they do so sooner rather than later.


See also...

Hyperinflation in the Weimar Republic
Holocaust - The Extremely Inefficient Allocation Of Jews

Monday, March 23, 2015

In Which Our Anarchist Hero Jeffrey Tucker Proves The Point Of Taxation

The argument has often been made that helping the poor is a public good. There's something to that. But if the government sets up programs that ostensibly help the poor, we simply shift the public good problem. Now the public good is monitoring the government. Just as we had an incentive to free-ride on the charitable activities of others, creating too little charity, so also when the government runs programs, we have an incentive to free-ride on the monitoring activities of others, creating too little monitoring. - David Henderson, A Partial Defense of David Friedman
Henderson posted that a day after another EconLog blogger, Alberto Mingardi, posted his thoughts on a  "libertarian strategies" discussion over at Liberty Matters.  I read through the discussion and found this...
In economics, the first condition of the need for economization is scarcity. For this reason, the difference between scarce and nonscarce goods is fundamental and absolute. A good is either rivalrous in ownership and control or it is not. It either has to be reproduced following consumption or not. It either depreciates in its physical integrity or it does not. If I am wearing my shoes now, no one else can wear them at the same time. But if I hold an idea and decide to share it with the world, I can retain my ownership while permitting the creation of infinite numbers of copies. In this sense, ideas evade all the limitations of the physical world. - Jeffrey Tucker, Does the Structure of Production Apply to Ideas? 
Let's put 2 + 2 together.

2 = The free-rider problem would lead to a shortage of charity (a public good)

2 = Ideas that support freedom are a public good

2 + 2 = The free-rider problem is largely to blame for our shortage of freedom

Who do you think would be more inclined to agree with my logical conclusion... Henderson or Tucker?  Probably Henderson... given that Tucker is an anarcho-capitalist.

Tucker's perspective on the public goodness of ideas inspired me to do a bit of digging into his work (ideas).  It was pretty easy to find the "bug" in his economics.  

Back to Basics on Property and Competition

That's an article that Tucker wrote in 2009.  The first part is actually quite great and relevant...
Zeroing in on a topic like “intellectual property” offers a chance to clarify fundamental notions in economics generally. You think you understand something like property rights or the nature of competition — you have studied the ideas for years! — and then a challenge comes along that blows everything up. It’s an opportunity. Time to think and think again. 
This is true!  Let's seize the opportunity to clarify our economics!  Tucker goes on to say...
Ideas, then, are what Mises calls “free goods”: copies are potentially limitless. They “do not need to be economized.”
Hmmm. This sounded curious. So I looked it up...
They called free goods those things which, being available in superfluous abundance, do not need to be economized. Such goods are, however, not the object of any action. They are general conditions of human welfare; they are parts of the natural environment in which man lives and acts. Only the economic goods are the substratum of action. They alone are dealt with in economics. - Ludwig von Mises, A First Analysis of the Category of Action
If you search that page for the word "idea"... you'll learn that Mises did not once refer to ideas as "free goods".  Maybe he did elsewhere?  If he did, then point me in the right direction!  If he didn't, then it's Tucker, rather than Mises, who is calling ideas free goods.  I'm sure Tucker wasn't intentionally trying to mislead readers into believing that Mises argued that ideas are free goods... but hopefully you'll agree that Tucker's phrasing is easily open to misinterpretation.

Here's what Mises does say in the same source...
It is customary to say that acting man has a scale of wants or values in his mind when he arranges his actions. On the basis of such a scale he satisfies what is of higher value, i.e., his more urgent wants, and leaves unsatisfied what is of lower value, i.e., what is a less urgent want. There is no objection to such a presentation of the state of affairs. However, one must not forget that the scale of values or wants manifests itself only in the reality of action.  These scales have no independent existence apart from the actual behavior of individuals. The only source from which our knowledge concerning these scales is derived is the observation of a man's actions. Every action is always in perfect agreement with the scale of values or wants because these scales are nothing but an instrument for the interpretation of a man's acting.
Tucker's actions, for example, are the only way that we can know his values.  And to be clear, just in case you missed the previous million times that I've explained the concept of louder... here it is from the same source...
Neither is value in words and doctrines. It is reflected in human conduct. It is not what a man or groups of men say about value that counts, but how they act. The oratory of moralists and the pompousness of party programs are significant as such. But they influence the course of human events only as far as they really determine the actions of men. - Ludwig von Mises
Actions (spending) speak louder than words (voting).  What people are personally willing to sacrifice provides a far more accurate insight into their values.

But why in the world should we even care about Tucker's values?  Does it truly matter which products/services he values more?  Why is this information at all important or necessary?
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
Socialism fails because production isn't guided by the valuations of consumers.  Tucker doesn't truly grasp this.
Let’s say I write a book and publish 1000 copies. They are all mine. When I sell one, I now have 999 remaining and the new owner of the one book, in a free society, is free to do with his copy what he wants: use it as a placemat, throw it away, deface it, photocopy, and even republish it. You can even re-republish it under your own name, though that would amount to the socially repudiated vice of plagiarism (vice, not crime). The new copies, which always involve some cost, compete with old copies.
Not sure if you noticed, but you can download Mises' book Omnipotent Government for free.  You don't even have to pay a penny!  It's a really great deal!  Right?
What are the advantages of living under intellectual freedom as described above? The authors list three main ones. 1) The number of copies is more plentiful and that price is thereby lower, which helps consumers. I like this point because it underscorces that IP is really what the old classical liberals denounced as a “producers’ policy” like protectionism or industrial subsidies. It beefs up the bottom line of specific firms at consumers’ expense. 2) The initial innovator still earns money as in the perfume or fashion or recipe industry, 3) “The market functions whether there is one innovator or many — and socially beneficial simultaneous innovation is possible.”
Does the $0 price tag on Omnipotent Government truly help consumers?  Yes... if you only focus on the Seen.  But as Bastiat pointed out, the good economist focuses on the Unseen.

The Unseen is that we don't have access to consumers' valuations of Omnipotent Government.  This essential information is hidden away in each and every consumer's heart of hearts.  Latent information doesn't factor into the decisions of producers.  This means that the compass that guides the economy is marginally less effective.

If we only look at one single product... Omnipotent Government... then the compass appears to be only slightly defective.  But what if we consider all the other free books, essays, articles, papers, Youtube videos and blog entries that promote freedom?  If you can picture all the valuation information that's missing... then it should be painfully clear that the compass isn't marginally defective... it's substantially deceptive.  It communicates the really wrong thing.  The message it sends to producers is incorrect.  The compass erroneously indicates that society doesn't highly value ideas for freedom.  And why should producers allocate significant amounts of society's limited resources to the production of something that society doesn't highly value?  They really shouldn't... so they don't.  As a result, there's a shortage of ideas that effectively promote freedom.  As they say in computing... garbage in, garbage out.

Perhaps a picture will help.  Here's one from my entry on the topic of value signals...




Imagine that the next generation's Mises or Hayek or Friedman or Buchanan is in high school right now.  His name is Roberto.  It stands to reason that we probably don't want Roberto to become a brain surgeon or a judge or an engineer.  Right?  We'd really prefer it if he would apply his considerable genius to vanquishing the obstacles that stand in the way of more freedom.  Therefore... what?  We should take our valuations of liberty "ideas" and hide them under a bushel?  We should diminish the value signal that points to liberty?  We should make a career in freedom a lot less lucrative than the alternatives?  We should decrease Roberto's incentive to forego his other options?  We should increase the opportunity cost of fighting for freedom?  We might as well shoot ourselves in the feet while we're at it.

Maybe another illustration would help...




Low prices are only beneficial when they send the right message to producers.  If the price of corn, for example, is very low... then the message that's sent to farmers is... "use your land to grow higher-priced crops".  This is the right message if there's a surplus of corn.  If, on the other hand, there's a shortage of corn... then this message is really wrong.

It's the same thing when it comes to higher prices.  Higher prices are only beneficial when they send the right message to producers.  Take the minimum wage for example...




A minimum wage communicates to (potential) producers of unskilled labor that they should drop out of school and/or move to the US.  This is the right message if the US is suffering from a shortage of unskilled labor.  If, on the other hand, the US is suffering from a surplus of unskilled labor... then a minimum wage sends the really wrong message to (potential) producers of unskilled labor.

All economic problems stem from communication failures.  And all communication failures stem from economists failing to see and/or explain the Unseen.

The solution is super simple.  Tucker would create a website just like LessWrong... but dedicated to the promotion of liberty.  Members would pay $5 per month... but they could allocate their monthly fee among the other members.  Whichever members produced the best arguments for freedom would receive the most money.  The more money that they received... the brighter the value signal.  The brighter the value signal... the more people that would join the website.  This virtuous cycle would produce freedom superstars.

The thing is... Tucker already created this website!  Liberty.me costs $5 per month and you can blog all about freedom and liberty.  The minor detail is that you can't choose which members you allocate your monthly fee to.

Tucker thinks markets are so great... but he didn't create a market within his website.  Why didn't he?  It's because there's a "bug" in his economics.  Tucker mistakenly believes that non-rivalry negates the necessity of valuations.  In no way, shape, or form does non-rivalry negate the necessity of valuation.  What non-rivalry indicates is the necessity for a mandatory minimum contribution (MMC) combined with consumer choice (CC).  Combining MMC and CC allows for economic action (spending) to more accurately communicate individual valuation of non-rivalrous goods.

Right now I'm really not going to pay $5/month to blog.  It's one thing to blog for free... but it's another thing to pay to blog.  However, I'd certainly join Liberty.me if each and every member could allocate their $5 dollars among the other members.

Consider this list...


If every single person on this list was a member of Liberty.me... who would receive the most money?   There's a "bug" in your economics if you don't want to find out.

To be clear, this list is the Seen.  Nearly all these people spend a considerable amount of their limited time promoting liberty for free.  A bad or buggy economist will look at this list and argue that the considerable supply of pro-liberty material proves that we really don't need to accurately valuate non-rivalrous goods.  So what's the Unseen?  Obviously it's not easy to see!

In order to see the Unseen... you have to imagine what would happen if we did figure out how to accurately valuate the demand for non-rivalrous goods.  It stands to reason that as the value signal grew brighter... that more people would be added to this list.  So what's the Unseen?  It's all the people who aren't on this list... but should be.

If it sounds like I'm harshly criticizing Tucker for failing to see the Unseen... then let me direct you to this blog entry that I posted a year ago... Don't Hide Marx Under A Bushel.  What inspired that blog entry was a blog entry over at the Crooked Timber liberal website... Karlo Marx and Fredrich Engels / Came to the checkout at the 7-11.  In that entry, Scott McLemee lamented the fact that a publisher (Lawrence & Wishart) forced marxists.org to stop freely sharing copyrighted material.  Here's a snippet from McLemee's blog entry...
Somehow it has not occurred to Lawrence & Wishart that, by enlarging the pool of people aware of and reading the Collected Works, the archive is actually expanding the audience (and potential market) for L & W’s books, including the somewhat pricey MECW volumes themselves, available only in hardback at $25-50 per volume. I’m stressing the bottom line here, given that the press’s decision is rational only on the narrowest conception of it. But a piece of synchronicity involving another CTer underscores just how much the left can learn from, of all things, the sectarian right: 
About the time the Marxist Internet Archive announced that it would be taking down all the MECW material, Corey and I both, by coincidence, were availing ourselves of radically under-priced materials from the enemy’s publishing apparatus. He’d received an order containing dirt-cheap copies of Bastiat from the Liberty Fund, while a day earlier I had downloaded free digital editions of the major Austrian School books on theory of value and the socialist-calculation debate from the Mises Institute website. There’s more to neoliberal hegemony than loss-leader pricing, but as ideological combatants those people know what they’re doing. - Scott McLemee
If you read my blog entry on McLemee's lament then you'd know that I found it immensely funny.  But now I find it immensely "funny" for reasons that I've endeavored to explain in this blog entry.

What I'm trying to say is that if I'm harshly criticizing Tucker for missing this "bug" in his economics... then all this harsh criticism is equally applicable to myself as well.  Well... not me now... but me a year ago.  In other words, I only just recently removed this "beam" from my own eye.

This concludes my debugging of Jeffrey Tucker's economics!  Well... I've pointed out the bug... but only Tucker himself can remove it from his economics.

Some other relevant material from Tucker...


And some other relevant material from myself...





















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Saturday, March 21, 2015

Scott Alexander vs Adam Smith, J.S. Mill, Alex Tabarrok, Don Boudreaux, David Friedman, Murray Rothbard, Jason Brennan, Elizabeth Warren, Geoffrey Brennan, Loren Lomasky

This seems to me overly optimistic. After all, back when only a tiny percent of the country was tolerant of homosexuality, it might be that church groups could raise a lot of money to enforce anti-gay laws, and gay people were mostly poor and couldn't raise very much money to defend themselves. I think I know what Friedman’s response would be, which is “Yes, and during that time in your real-world statist society, homosexuality was also illegal. Yes, you would have to wait for cultural norms to change before homosexuality would be legalized, but it would very likely be easier to do my way than yours.” I think he’s possibly right. - Scott Alexander, Book Review: The Machinery of Freedom
In 1973, when The Machinery of Freedom was published... what was the demand for anti-gay laws?  We don't know.  After 911, what was the demand for war?  We don't know.
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
Was there a real or solid interest for Christians to fight for the enforcement of anti-gay laws?  This is the question that each and every Christian would have asked themselves if they had been given the opportunity to endure the complete burden of their morality.
They will not indeed submit to more labours and privations than other people, for the relief of distressed fellow creatures: but they make amends by whining over them more.  It is not difficult to trace this sort of affectation to its cause. It originates in the common practice of bestowing upon feelings that praise which actions alone can deserve. - J.S. Mill
Christians had feelings against gays... but would they have been willing to work longer hours to pay for their feelings?  Would they have been willing to put their money where their feelings were?
Overall, I am for betting because I am against bullshit. Bullshit is polluting our discourse and drowning the facts. A bet costs the bullshitter more than the non-bullshitter so the willingness to bet signals honest belief. A bet is a tax on bullshit; and it is a just tax, tribute paid by the bullshitters to those with genuine knowledge. - Alex Tabarrok, A Bet is a Tax on Bullshit
What's the total amount of money that Christians would have bet on anti-gay laws?  How much would they have been willing to gamble?
With respect, I respect any preference that reflects a genuine willingness of those with the preference to bear personally all necessary costs to indulge the preference.  But I do not respect ‘cheap’ preferences — preferences that are merely expressions backed-up with no personal stake in indulging the preferences. - Don Boudreaux, To Want or Not to Want
How many Christians would have been willing to personally bear the cost of indulging their anti-gay preference?
But market demands are in dollars, not votes. The legality of heroin will be determined, not by how many are for or against but by how high a cost each side is willing to bear in order to get its way. People who want to control other people's lives are rarely eager to pay for the privilege; they usually expect to be paid for the 'services' they provide for their victims. And those on the receiving end— whether of laws against drugs, laws against pornography, or laws against sex—get a lot more pain out of the oppression than their oppressors get pleasure. They are willing to pay a much higher price to be left alone than anyone is willing to pay to push them around. - David Friedman, The Machinery of Freedom
How much money would gays have been willing to pay to be left alone?
Only the free market, then, can determine different qualities or degrees of a service. Second, and even more important, there is no indication that for a particular taxpayer, the government is supplying a "service" at all. Since the tax is compulsory, it may well be that the  "service" has zero or even negative value for individual taxpayers.  Thus, a pacifist, philosophically opposed to any use of violence, would not consider a tax levied for his and others' police protection to be a positive service; instead, he finds that he is being compelled, against his will, to pay for the provision of a "service" that he detests. In short, equal pricing on the market reflects demands by consumers who are voluntarily paying the price, who, in short, believe that they are gaining more from the good or service than they are giving up in exchange. But taxation is imposed on all people, regardless of whether they would be willing to pay such a price (the equal tax) voluntarily, or indeed whether they would voluntarily purchase any of this service at all. - Murray Rothbard, The Myth of Neutral Taxation
How much money did gays have to pay for the enforcement of anti-gay laws?  How could anything over $0.00 be acceptable?
Democrats are not united in their moral and political outlooks. High information Democrats have systematically different policy preferences from low information Democrats. Rich and poor Democrats have systematically different policy preferences. Compulsory voting gets more poor Democrats to the polls. But poor Democrats tend to be low information, while affluent Democrats tend to be high information voters. The poor more approved more strongly of invading Iraq in 2003. They more strongly favor the Patriot Act, of invasions of civil liberty, and torture, of protectionism, and of restricting abortion rights and access to birth control. They are less tolerant of homosexuals and more opposed to gay rights. In general, compared to the rich, the poor—including poor Democrats—are intolerant, economically innumerate, hawkish bigots. If compulsory voting were to help Democrats at all, it would probably help the bad Democrats. The Democrats would end up running and electing more intolerant, innumerate, hawkish candidates. - Jason Brennan, The Demographic Argument for Compulsory Voting, with a Guest Appearance by the Real Reason the Left Advocates Compulsory Voting
The poor would have been willing to pay for anti-gay laws?  What would the rich have been willing to pay for?
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. - Elizabeth Warren
The rich wouldn't have spent their money on anti-gay laws because, according to Warren, they'd have spent their money on all the public goods that their profitable businesses depend on.  Markets work because the opportunity cost of tilting at windmills is always too high.
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
Everybody wants a free lunch.  If they didn't, then taxes wouldn't be necessary.

What would have happened if, in 1973, every taxpayer in the world had been free to shop in their country's public sector?

Gays wouldn't have spent their taxes on anti-gay laws.  Uh, what government agency was responsible for enforcing anti-gay laws?  The police?  So gays would have boycotted the police?  Police weren't just responsible for enforcing anti-gay laws though.  I'm pretty sure that they are responsible for enforcing all the laws.  We refer to police as "law enforcement".  Not, "partial law enforcement" or "selective law enforcement".

Maybe some gays really hated anti-gay law enforcement... but they also really loved anti-liter law enforcement.  Then what?  Soul-searching?  Perhaps not much of a dilemma in this case.

Gays definitely wouldn't have been the only people who detested certain laws.  I'm sure recreational drug users weren't fans of the anti-drug laws.  And jaywalkers weren't fans of anti-jaywalking laws.

Maybe a significant shortage in law enforcement funding would have encouraged the police to suspect that they could earn more money apart rather than together.  So the police would have been unbundled.  This law enforcement division of labor would have allowed the gays to only boycott the enforcement of anti-gay laws.  Gays wouldn't have been forced to throw the baby out with the bath water.

With law enforcement unbundled... gays would have been able to easily learn which country in the world had the least amount of demand for the enforcement of anti-gay laws.  Which country was it?  Maybe Denmark?  And then all the gay people in the world would have foot-voted for Denmark?  Probably not.  But chances are good that they wouldn't have foot-voted for whichever country had the greatest amount of demand for the enforcement of anti-gay laws.




In a pragmatarian system, as soon as some Christian saw the light (realized the opportunity cost)... they would have been free to immediately stop spending their own taxes on the enforcement of anti-gay laws.  Their enlightenment would have instantly made the public sector a little less dark.  Markets facilitate marginal improvements.  With the current system in the public sector... it's binary.  We either do... or do not... allocate society's limited resources to the enforcement of anti-gay laws.

What a primitive time I was born into.  Here I am scratching my head trying to figure out how to better explain the importance of knowing what the demand is for public goods.  Like having to explain the importance of fire... or a wheel.

Knowing what the demand is for public goods is important because then we can know what the fuck is wrong with the people in our world.  If it turns out that there isn't enough demand for conservation... then we'll know that people don't have information regarding the importance of conservation.   If people aren't free to put their taxes where their hearts are, then we really can't accuse them of having their hearts in the wrong place.

We can't make informed decisions without information.  And the demand for public goods is fucking important information.  In the absence of this information... we're all puppets tilting at windmills.

In a previous entry, or two, I argued that payments have two functions... compensate and communicate.  I pointed out that these two functions are inseparable.  But what in the world is compensation?  Isn't it just the opportunity to speak louder?

A market is basically people passing modular megaphones around.   The more money you earn... the larger your megaphone.

Boudreaux recently shared this passage...
When Richie [Rich] and his dad build a mansion, they use bricks, mortar, and cement that might have otherwise become part of a hospital, a community center or a housing development.  They hire masons, carpenters, and electricians who might otherwise have been employed building roads, shopping centers, or – with a little retraining – automobiles.  The food served at the Rich’s extravagant feasts is food that nobody but the Riches and their guests can eat; the fuel burned by their private jets is made from oil that will never heat their neighbors’ houses. 
But when Scrooge bathes in his dollar bills, the only thing he keeps from his neighbors is a lot of cheap paper.  As long as he hoards his money instead of spending it, there are more bricks and mortar, more ready workmen, more food, and more fuel for Scrooge’s neighbors to enjoy. 
There are some who get this exactly backward: They believe that lavish spending spreads prosperity, while a miser is a burden to the community. - Steven Landsburg, Fair Play
At first this seemed really right... but then it seemed kinda wrong.  The part about scarcity and opportunity cost is right... but then it seems to be making the argument that abundance is a function of saving.  It's commendable that Landsburg was trying to highlight the absurdity of liberal economics... but the way he puts it is somewhat misleading.

When Afghanistan Richie spends his money on bricks... then the owner of the brick factory is given a larger megaphone... some of which he passes on to this guy...




The guy in this picture is making bricks.  And the guy in the next picture is not using bricks... he's using stone instead...




Incidentally, the mortar in this wall was partly made from shit gathered by the girl in this photo that I shared in Subsistence Agriculture vs Sweatshops...




Having an abundance of shit is only desirable if there's an abundant demand for stone walls.   Because... we really don't want an abundance of irrelevant things.  This means that we only transfer our dollars/volume over to the people who are responsible for supplying relevant things.
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
Getting the balance right is what abundance is all about.  And we really can't get the balance right if we don't know what the demand is for public goods.

Afghanistan felt as if I had been transported back to more primitive times.  More primitive times?   What's primitive is having to try and explain to Scott Alexander why it's so important to clarify the demand for public goods.