Wednesday, January 17, 2018

Obama Presidential Center VS Public Park

The proposed plan is for 20 acres of Chicago’s Jackson Park to be destroyed and replaced with the Obama Presidential Center. Here’s the comment that I posted on the Dezeen story…


Imagine a survey…

Should the presidential center be built in the park?


But instead of participants simply voting for their preferred option, they would spend any amount of money on it. This system has two benefits…

1. Everybody would see and know the actual demand for/against the proposal.
2. The city would raise money to help reduce its ridiculously huge debt.

From my perspective, the world needs a lot more trees than buildings. So I’d definitely spend my money on the “No” option.


It is impossible for anyone, even if he be a statesman of genius, to weigh the whole community’s utility and sacrifice against each other. — Knut Wicksell, A New Principle of Just Taxation

The Suburbanist gets credit for bringing this issue to my attention…

Friday, January 5, 2018

The Efficient Allocation Of Babies

In my thread... Game Theory For Baby Names... Bombadil sarcastically suggested that babies be allocated according to spending.  It reminded me of the first episode of the Australian show "Offspring"...

And we land in whichever family we scored. Do babies end up with the families that suit them best?  Would we be better off swapping around?  

Do the best with what you're given, kids, like the rest of us.  For better or worse, you can't choose your family. 

Sunday, December 24, 2017

The cost of communicating the usefulness of things


Imagine if people had to perform 100 push-ups before they purchased anything. What impact would this have? It would greatly increase the cost of trade. In other words, it would greatly increase the cost of communicating the usefulness of things. People would far less frequently communicate the usefulness of things, so everybody would be far less informed about the usefulness of things, and everybody would make far less useful decisions. The result would be far less progress.

Walking upright is kinda like doing less pushups before trading.

Using horses is kinda like doing even less pushups before trading. The earliest native Americans didn’t have horses. Therefore… ?

Taxpayers are prevented from using their own tax dollars to signal the usefulness of goods supplied by the government. Therefore… ?

Life is synonymous with colonization. Colonization is nature’s mandate. Because, species that aren’t adequately diversified generally don’t stick around very long. The sooner people recognize the correlation between trade and progress, the faster we’ll colonize the stars.


This is relevant...

Alipay turned out to be so convenient that Liu began using it multiple times a day, starting first thing in the morning, when he ordered breakfast through a food delivery app. He realized that he could pay for parking through Alipay’s My Car feature, so he added his driver’s license and license plate numbers, as well as the engine number of his Audi. He started making his car insurance payments with the app. He booked doctors’ appointments there, skipping the chaotic lines for which Chinese hospitals are famous. He added friends in Alipay’s built-in social network. When Liu went on vacation with his fiancée (now his wife) to Thailand, they paid at restaurants and bought trinkets with Alipay. He stored whatever money was left over, which wasn’t much once the vacation and car were paid for, in an Alipay money market account. He could have paid his electricity, gas, and internet bills in Alipay’s City Service section. Like many young Chinese who had become enamored of the mobile payment services offered by Alipay and WeChat, Liu stopped bringing his wallet when he left the house. - Mara Hvistendah, Inside China's Vast New Experiment in Social Ranking 

Saturday, December 16, 2017

Spotlight On Max Sawicky

Most people love attention, me no less than anyone... - Max Sawicky

I just finished reading Henry Farrell's response to Sawicky's review of Brink Lindsey's and Steven M. Teles' new book The Captured Economy.  Since Sawicky loves attention, I figured that I'd give him some of mine.  Will he love it?


Dear Sawicky,

If you look above this blog entry you'll see a tab that says "Resources".  That page has a list of over 50 links to some of the most important articles, blog entries, scholarly papers and books about economics.  So far there is only one link to the website... Can We Criticize Foucault?

Have you read that article?  It's pretty great.  To be honest, I value it more than your own article...

Foucault article > your article

Which article do you value more?  Which jacobinmag article do you value most?  Does it matter? 

Personally, I think that people's valuations really matter.  So it's very troubling to me how many places there are where people aren't given the opportunity to share their valuations.  In other words, I'm troubled by all the places that aren't markets. 

Netflix, for example, is not a market.  Each month Netflix decides how to divide my $10 dollars among all its products.  This wouldn't be so problematic if Netflix was a mind-reader.  Or my best friend forever.  Or my lover.  Or my brother.  Or my mother.  But Netflix is none of these things.  It's just some company. 

Vons is also just some company.  But, unlike Netflix, Vons does give me the opportunity to decide for myself how I divide my money among all its products. 

What difference would it make if Netflix subscribers could decide for themselves how to divide their dollars?  I've already asked a few economists but they really didn't know.  How could they not know what difference the Invisible Hand would make? 

Do you know what difference the Invisible Hand would make?

The stage, and spotlight, they are all yours.  Please make good use of them. 


Friday, December 15, 2017


Dug through my Twitter page and found some tweets that I wanted to have more convenient access to. I tried to organize them a bit...

Tuesday, December 12, 2017

Public Finance In A Nutshell

Here's a reply I just posted on Medium...


“This sounds like you’ve read a lot of…”

Evidently you haven’t read or James Buchanan. Which means that you haven’t studied austrian economics or public finance.

The Nobel economist Paul Samuelson was not an austrian economist. He was a very orthodox economist who studied public finance and other subjects. Here’s what he wrote in a paper that was published in 1954…

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

The premise here is that the optimal supply of public goods depends on people’s true signals. The supply of defense won’t be optimal if you pretend that it is less important to you than it truly is. However, the only reason that you’d have an incentive to be dishonest is if you had the option to spend your money on private goods rather than on public goods. If this option was eliminated, then your incentive to be dishonest would also be eliminated…

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

Imagine if Netflix gave you the opportunity to divide your subscription dollars however you wanted among all your favorite content. Would you have any incentive to be dishonest? Nope. This is simply because you wouldn’t have the option to spend your subscription dollars on things like food or clothes. Therefore, how you divided your limited dollars would accurately reflect your true preferences.

Paul Samuelson and James Buchanan were both Nobel economists. Samuelson was a liberal economist while Buchanan was a libertarian economist. Despite their ideological differences, they both agreed that the optimal supply of public goods depends on people’s true preferences for them.

Just like it would suboptimal for the private sector to supply meat if everybody was a vegetarian… it would be suboptimal for the public sector to supply war if everybody was a pacifist.

There you go, public finance in a nutshell. Any questions?

Monday, November 27, 2017

The Demand For David Friedman

My comment on Keynes on Newton--and some ideas for fantasy by David Friedman


Have you read Adam Smith's book of essays? I was surprised that he wrote a 100 page essay on the history of astronomy. Especially since he is largely responsible for the idea of the division of labor. I think it's possible for labor to be overly divided. Take the handicap principle for example. Nowhere in the Wikipedia entry does it mention the fact that spending money is a costly signal. Smith also shared some enjoyable thoughts on music. Basically the main theme is on how things are ordered.

In the book's intro is this interesting bit...

The change in his habits which his removal to Edinburgh produced, was not equally favourable to his literary pursuits. The duties of his office, though they required but little exertion of thought, were yet sufficient to waste his spirits and to dissipate his attention; and now that his career is closed, it is impossible to reflect on the time they consumed, without lamenting, that it had not been employed in labours more profitable to the world, and more equal to his mind. - Dugald Stewart, An Account of the Life and Writings of Adam Smith

Imagine seeing Smith or Newton waiting in a line. You'd think, "Yikes! The opportunity cost is too high!" Or, "Something is really preventing the Invisible Hand from doing its job!"

While I'm here, I hope you don't mind if I share some ideas that I'd appreciate your thoughts on.

1. What if everybody had to do 100 push-ups before they purchased anything? The cost of trade would increase, so the quantity of trade would decrease, and so would the rate of progress. The reverse is true if the earliest native Americans had used horses. Horses would have reduced the cost of allocating resources, trading would have been less costly, the quantity of trade would have increased, and more progress would have been made.

2. Becoming bipedal reduced our ancestors' allocation costs. This increased the frequency of allocation, but it also meant having to more frequently solve allocation problems, which meant greater selection pressure on intelligence. The invention of bags and using other animals to carry things made the allocation problems even harder. Nowadays the allocation problems are even harder still, but good or bad allocation decisions rarely impact our reproduction. Therefore, we've reached peak intelligence.

3. Markets with prices work much better than socialism because prices transmit at least some information about people’s perception of importance. This would mean that the efficiency of allocation depends on the quantity of information about importance. Prices can never be optimal because they almost always fail to transmit all the information about importance. The economic term for the hidden information is of course “consumer surplus”. In theory, pragma-socialism would be the optimal economic system because it would entirely eliminate consumer surplus.