Tuesday, September 27, 2011

The Revolution Was Postponed Because...

of rain?  No, the revolution was postponed because it was outside of everybody's area of expertise.

None of the academics I've asked have ever thought about allowing taxpayers to directly allocate their taxes to the various government organizations.  But some respond that it's outside their area of expertise.

It's not like I'm asking literature professors.  Perhaps the economics professors feel it has more to do with politics and the political science professors feel it has more to do with economics.

Or maybe they don't feel like engaging a random person but are they are just too polite not to respond.

In any case, it would be one thing if they had considered the idea and dismissed it...but it's interesting that they had never thought of it before.

The idea occurred to me while studying International Development at UCLA.  IDS is a broad subject so I was able to take quite a few political science classes as well as economics classes.  Not sure if the idea would have occurred to me if I had been an economics or political science major.

The value of the idea didn't hit me right away.  But I'm a huge fan of hypothetical situations so it was fun to pose the question to my friends.  After asking a few people I realized that their concerns canceled each other out.  Nothing would be underfunded because the supply for public goods would meet demand.

So here's the problem.  On one hand, the average person has trouble appreciating pragmatarianism because they have no idea how the invisible hand works.  On the other hand, above average people, aka academics, have rather narrow areas of expertise.

If the average person can't grasp it, and the above average person won't consider it...then the idea seems kind of stuck between a rock and a hard place.  Therefore, the revolution was postponed because it was outside of everybody's area of expertise.

Sunday, September 25, 2011

Does Congress Have More Information Than Taxpayers?

There are quite a few people who believe that the average congressperson is better informed than the average taxpayer.  While this may or may not be true pragmatarianism doesn't deal with averages...it deals with sums.

When trying to figure out how to convey this idea I remembered a photograph that I took while stationed in Afghanistan.  It's of an American solider on one side of a make-shift seesaw with some Afghan kids on the other side.  Even though the average American solider outweighs the average Afghan kid...the cumulative weight of 5 kids equals that of the one solider.  

So the question is...how many taxpayers would it take to equal the public goods information of one congressperson?  If we say that there are around 150,000,000 taxpayers and 535 congresspeople then there are nearly 300,000 taxpayers for every congressperson.  How in the world could 1 congressperson effectively and efficiently evaluate as much information as 300,000 taxpayers could?

Even if 300,000 taxpayers only encountered 3 seconds worth of public goods information in their daily lives they would still consider 10 times more information than one congressperson working 24 hours a day could.  

Obviously we need congresspeople to write laws but there's just no way that they can allocate public resources as effectively or as efficiently as the invisible hand could.  Taxpayers should be able to choose to directly allocate their individual taxes to the various government organizations at any time throughout the year.  

What's very important to understand is that this system already works for the private sector...
As I've mentioned before, there are some major problems with gov't spending on programs. And these revolve around measurability and self-correction. When private businesses are running their businesses poorly and not delivering value, the free market drives revenues down and the business either corrects itself or it goes out of business. The gov't doesn't have such mechanisms. They often put in bogus measurements on how effective the program is, and when it doesn't work the first year, they double down and put more money into the program. No self-correction mechanism. - James L, Greta Wire Blog
The government can easily have the same self-correcting mechanism by allowing taxpayers to decide which government organizations receive their taxes.
For this is the salient point: private organizations, whether for-profit or non-profit, perform or lose their customers or their donors. When a private entity fails to deliver on its promise, or actually causes harm, it is held liable for the failure and pays the damages. When government fails, it gets a bigger budget and even more power. - Mary L. G. Theroux, Public and Private Responses to Katrina
Given the choice, would you allocate any of your taxes to a government organization that continually fails to perform?
Because of the existence of consumer and donor choice, private services are rarely offered by only one provider -- there is competition for funding which encourages both quality and affordability as service providers seek to outdo one another. Government services, however, tend to be monopolies because they do not have to fight for funding from countless individual sources. - Bryan, The Government Vs Private Charity
Giving taxpayers a choice is fundamental.  Forcing government organizations to fight for funding from countless individual taxpayers is the only way to ensure that government operates efficiently.
Charitable organizations are better than government as a source of aid. First, it is easier for donors to hold charitable organizations accountable than it is for taxpayers to hold government accountable. A failed government program can go on forever. An ineffective charity has a more difficult time obtaining funding. - Arnold Kling, Libertarianism and Poverty
It's not difficult to make it easy for taxpayers to hold government accountable.
Although the term 'NPM' suffers from a degree of concept stretch, Hood (1991) sets out some broad reformist priniciples in which the public choice heritage can be clearly observed. The first is that the focus of public sector reform should be on structural reorganization rather than policy. It is the structure of the public sector that fails to provide adequate incentives for the public sector organizations to respond to citizens' preferences for government goods and services. The provision of public services should be made more competitive, both between publilc sector providers and between the public and private sectors. Contracting out, quasi markets and seperation of the questions of who pays (public finance) from who provides (public provision), are all hallmarks of NPM. They follow from the government failure logic and the objective of greater efficiency in particular. As discussed above, individual contracts in the public sector will generally fail to provide efficiency-enhancing incentives, but the public choice view is that increased competition in the provision of public services will. - Patricia Kennett, Governance, globalization and public policy
The concepts of New Public Management (NPM) seem to be the closest to pragmatarianism.  

We have to pay taxes but there's no reason why the act of paying taxes can't simultaneously force government to be accountable to the people who fund its existence.   

Thursday, September 22, 2011

The Joy of Writing Checks to the Government

Conservatives argue that if Warren Buffett thinks that the rich should pay more taxes then he should just donate his money to the government.  So far Warren Buffett has not put his money where his mouth is.  Instead, he donates his money to non-profit organizations rather than to government organizations.  Clearly his actions speak louder than his words.

Here's the liberal counterargument...
The animating motivation behind paying taxes is not the unalloyed joy of writing checks to the government but rather the knowledge that you are part of a collective system that is funding a government and its policies. - Derek Thompson, Rich People: Raise Our Taxes
Why do people feel a warm glow when they donate to charities but feel a cold prickle when they pay taxes?  What’s the difference? Both contribute to the common good.

The difference is choice.

If we allow taxpayers to choose which government organizations receive their individual taxes...then liberals, conservatives and libertarians will all joyfully write checks to the government.  Will they still be a part of the collective system that funds government and its policies?  Yes, of course!

Liberals will be joyful because they won’t have to pay for self-fulfilling wars, conservatives will be joyful because they won't have to pay for ineffective welfare and libertarians will be joyful because they’ll only have to pay for defense and the courts.

To be clear...everybody would still have the same exact tax rate.

Not sure how joyful anarcho-capitalists will be.  Their theory is that the private sector can do everything better than the public sector can.  So they'll be forced to pay for the single least redundant government organization.  If their theory is correct though…then the most redundant and inefficient government organizations will lose funding and go extinct…the scope of government will narrow…and the tax rate will decrease proportionally.

Will socialists be overjoyed?  Their theory is that the public sector can do everything better than the private sector.  So they'll be writing more than their fair share of checks.  If their theory is correct though…then the most redundant and inefficient private organizations will lose revenue and go extinct…the scope of government will broaden…and the tax rate will increase proportionally.

In essence, allowing for a division of labor between taxpayers will reveal the perfect division of labor between the public and private sector.  At long last the age old debate regarding the responsibilities and duties of government will be conclusively and definitely resolved.

Wednesday, September 21, 2011

Universal Suffrage, Pragmatarianism and the War On Drugs

Let's evaluate the two steps of the democratic process using the war on drugs as our example. Drugs are bad mmm'kay?

Step one involves the process of deciding whether or not drugs should be legal. Should kids be allowed to participate in this process? Here are some of the factors which are completely immaterial to whether they should be allowed to vote...
  1. whether they would vote for or against legalization
  2. whether they had enough information to make an "informed" decision
  3. whether they had enough life experience
  4. whether they pay taxes
Every argument against kids voting is an argument that we can make against adults voting. Voting is just the right to try and protect one's interests. Everybody should have the right to try and protect their interests...irrespective of all other factors. The only limitations should be that a voter must be a resident and that they cannot be accompanied in the voting booth.

So here we have the tug of war contest between two sides. It makes sense that we would want the side that cares the most to win. Therefore, it would be counterproductive to limit campaign contributions or to limit how many people volunteer for campaigns or to limit how many hours they can volunteer for. The amount of time/money that people contribute reflects how much they care about the issue.

In order to decide which side "wins" or "loses" the democratic contest we take a vote.

Step two of the democratic process involves funding the outcome…in this case…the war against drugs. Currently, both sides of the debate have to pay for the war against drugs. It's completely bizarre that people who believe that drugs should be legal have to help fund the war against drugs. It adds insult to injury and results in taxes being put in the same category as death.

So how do we decide how much money should be allocated to the war against drugs? Currently we have representatives making those decisions. The problem is that there's no way they can know the optimal level of funding for the war on drugs. It's impossible. They have no idea how many other public goods people would be willing to forgo in order to support the war on drugs.  In economic terms this is known as opportunity cost.

If any taxpayers feel that congress is not accurately representing their values then they should be able to individually decide what percentage of their taxes the war on drugs should receive. If anybody felt that the way on drugs wasn't receiving enough money…then they would be more than welcome to "donate" additional money to the war on drugs. They could also "donate" additional time by trying to convince others why it's important for them to "donate" more of their taxes to the war against drugs.

The beauty of pragmatarianism is that taxpayers would…
  1. …be transformed into donors supporting public goods.
  2. …have the opportunity to directly support the causes that they care about
  3. …only pay for results
The focus would switch from cutting to contributing.

The point is that everybody should be allowed to vote and everybody should be allowed to directly fund the public goods that they value. The bottom line for step one is that arguing against kids voting is the same thing as arguing against adults voting. The bottom line for step two is that arguing against pragmatarianism is the same thing as arguing against results.

Saturday, September 17, 2011

The Real World - Pragmatarian Rules

A "very liberal", a conservative and a libertarian all responded to a forum thread that I started on pragmatarianism.  After some brainstorming I came up with an analogy that was kind of like a pragmatarian twist on MTV's the Real World.

Here's my post...written in response to Pinkie...the "very liberal"...

Pinkie, let's say that you, me, Chuckberry and Neomalthusian agree to purchase a house together...and we all agree to split the mortgage.

The trickiness comes into play in deciding what the house needs. As a "very liberal" you believe the house needs a pool, a jacuzzi, a pool guy, a home gym, a vegetable garden, a greenhouse, a gardener, a state of the art washer/drier/fridge/dishwasher, a maid/cook, post-modern furniture, modern art, an interior designer, a feng shui consultant, a ridiculous home entertainment system, earthquake insurance, flood insurance, tornado insurance...etc.

Chuckberry, the conservative, believes that the house needs two dobermans, a security guard, a steal-reinforced 10ft brick wall topped with razor wire...and new copper pipes.

Neo, the libertarian, believes that the house needs very little. He just wants a home security system and super high-speed internet.

As the centrist, I believe that the house needs a reasonable amount of common goods.

In order to pay for all your common goods we'd each have to pay a lot of money. On the other hand, we wouldn't have to pay much money to cover Neo's common goods. So we all agree to each pay the average amount between your high cost and Neo's low cost.

We decide to allocate our "common money" via the representative method. So we take a vote and everybody votes for themselves...except for me. I vote for you...so you win. You immediately increase our common money rate in order to try and pay for all the common goods. But you decide it's not enough money so you take a second mortgage on the house.

Us guys start to grumble and even you kind of realize that we can't afford all the common goods you want. So we take another vote and elect Chuck. Chuck lowers our common money rate but doesn't pay off the second mortgage. Then he directs nearly all of our money to building his super wall, hiring a second guard and buying a third doberman.

You point out all the weeds in the garden, the alligator in the pool, the dishes in the sink...and you promise not to raise our common money if I vote for you again. Neo objects of course...he wants me to vote for him. Heh, like anybody would ever vote for a libertarian. Obviously our house needs more than two common goods.

So I vote for you but you do exactly the same thing as the first time. So then I vote for Chuck but he does exactly the same thing as well. The bank is breathing down our necks and the animosity in the house is palpable. There's got to be a better way.

I call a house meeting and suggest a new method. Everything would be exactly the same...except, if we're not happy with our representative we can choose for ourselves which common goods receive our individual common money. We decide to give it a try.

Neo pulls me aside and tells me that we've been seriously overpaying for pretty much all of our common goods. He takes me to ikea to see some reasonably priced furniture.....then to a local gym which has an olympic sized pool and low fees. Afterwards we go to a local mom and pop restaurant with healthy but very affordable dishes. Lastly he takes me to a very nice local botanical garden where he tells me about how we can significantly reduce our insurance rates by bundling.

What do I do? I present you with all these alternatives. Perhaps you'll agree with some and disagree with others. Maybe you'll provide some different alternatives.

What ends up happening is that we start focusing on results. If you can find us a super skilled/affordable chef to come cook for us then none of us guys are going to bother going out and paying more money for mediocre food. If you can find us a crazy motivated/knowledgeable personal trainer that can give us a great group rate then we wouldn't bother paying for a gym that we never go to. If you can find a gardener that turns our garden into the Garden of Eden for less money than the cost of membership at our local botanical garden then we wouldn't complain.

We all want the best results for the least amount of money. We all want the most bang for our buck. It's within our reach. We just have to concentrate. Pragmatarianism...it's completely non-partisan...and within our reach. We just have to concentrate.

Monday, September 12, 2011