Friday, October 21, 2011

Reply to Jeffrey Sachs

Here was my comment on Jeffrey Sachs's article A New Direction for American Economic Policy ...

Take money from Bill Gates and give it to politician­s to spend!? Let's skip the middlemen! Gates and the other 1% should directly allocate their individual taxes among the various government organizati­ons at anytime throughout the year

While we're at it...why not let Sachs put his taxes where his mouth is? If what he's saying has­en wouldn't Gates and company follow Sachs's advice if they were given the choice? Heck, why not let all taxpayers directly allocate their taxes?

Forcing taxpayers to consider the opportunit­y costs of their individual tax allocation decisions is the only way to ensure the best possible use of limited resources. In other words, the invisible hand is always more effective than planners at efficientl­y allocating resources.

We solved the free-rider problem long ago by forcing people to pay­w we just need to solve the inefficien­cy problem by allowing taxpayers to choose how to spend their taxes.

Imagine how inefficien­t the outcome would be if we all had to purchase the same private goods? Yet, everybody thinks it's perfectly natural that we're all forced to purchase the same public goods. The result? Hyperparti­san obstructio­nism.

Besides, why should people feel a cold prickle when they pay taxes? If we allow them to choose how to spend their taxes then they'll feel a warm glow. It should feel good to contribute to the common good!

Yup, pragmatari­anism is the best long term solution to these problems.


  1. I can do you one better, screw the middleman of the government, have Gates, Buffet, (insert random billionare) concerned about poverty and welfare donate to charities that don't rely on forced coercion for funds. Who is better at allocating resources, those who achieve donations by demonstrating their ability to use them for a good cause or those with guns and badges?

    While I really like the idea of the public allocating their tax dollars, the least amount of money should be given to the government as possible without inviting legal trouble.

  2. James...hah. Yeah, taxes are the only difference between pragmatarianism and anarcho-capitalism. Here are a couple articles that touch on the idea... If you could choose to whom you paid your tax and Charitable Donations to the Government.

    The question is...would pragmatarianism lead to anarcho-capitalism? Pragmatarianism basically subjects government organizations to survival of the fittest. The most inefficient/redundant GOs will lose funding and go extinct...the scope of government will narrow...and the tax rate will decrease proportionately.

    Unless...of course...inefficient GOs adapted and become efficient. Then the result might be socialism...or anywhere else in between

    Rothbard really hated the state. If he had a button that would have destroyed the state in one fell swoop he would have pushed that button until his thumb blistered. But what if he was wrong? Would we all have to join gangs for protection?

    Rather than one person dictating their vision...what if each and every taxpayer had their very own button that when pushed would deprive redundant/inefficient GOs of their individual taxes?

    That way the invisible hand would determine the ideal scope of government. We don't have to worry or debate whether Rothbard was right or wrong...we'll just let each and every taxpayer use their taxes to indicate who the winners and losers are.

  3. As long as forced taxation exists, it wouldn't be true anarcho capitalism. While pragmatarianism would bring a better market approach to the government and would likely result in more effective service, it wouldn't be as efficient as voluntary payments. I am not so sure about the tax rate going down however, though that would be nice.

    In lieu of no government protection, many would employ defensive agencies/insurance for protection. I guess you could call these companies gangs if you want.

    In the end, pragmatarianism would be infinitely better than what we have now but I don't know if it would be superior to pure anarcho capitalism. Just like how slavery was inefficient and not as productive as voluntary labor, the same concept can be applied to taxation.

  4. The tax rate is directly tied to the scope of government. If you broadened the scope of government then the tax rate would go up. If you narrowed the scope of government then the tax rate would go down.

    In a pragmatarian system how would you narrow the scope of government?'d simply create private sector alternatives to government organizations.

    For example, if you created a non-profit organization that was incredibly effective at providing free-education...then more and more people would donate to your organization and less and less people would allocate any of their taxes to government subsidized public education.

    You could also start up your defensive agencies and as more and more people purchased protection from these agencies then less and less people would allocate their taxes to the police...assuming your agencies provided better protection for less money than the police.

    It's a no risk approach to seeing just how anarcho-capitalist our society could go. And everybody would benefit from anarcho-capitalists' efforts to put government organizations "out of business". The more competition the better.

  5. I agree with your assessment, it would be a very interesting experiment see how things went down. I forget where I heard it, but I believe there are mor private security personel in the world than public police officers. As long as the government doesn't illegalize such activity, it could be successful. But don't expect public unions and other special interests to go down without a fight.