Friday, October 14, 2011

Reply to Paul Krugman

Here's a comment I posted in reply to Paul Krugman over at the New York Times...

The primary failure of the market is that, because of the free-rider problem, there is little financial incentive to produce public goods.  The primary failure of the government is that planners only have access to a microscopic percentage of the information available to society as a whole.
So you and your opponents can go round and round perusing the horizon like that fellow in the Stephen Crane poem...or you can both make some basic concessions.
Conservatives will concede that taxes are necessary and you'll concede that donations to government organizations should be 100% tax deductible.  This idea is known as pragmatarianism.  Kind of like how Deng Xiaoping said that he didn't care whether the cat was black or white...what mattered was whether it caught mice.
Forcing taxpayers to consider the opportunity costs of their individual taxes is the only way to ensure that limited public resources are allocated as efficiently as possible.  It's also the only way to ensure that government organizations will operate as efficiently as possible.  Plus, it's the only way that taxpayers will ever be happy about paying taxes.
What's so strange is that both liberals and conservatives believe that congress is somehow uniquely qualified to allocate public resources.  They seem to forget that congress only has this job because nearly 1000 years ago they fired the king and quickly filled the vacancy.
It was admittedly a very liberal move for them to have done so.  Likewise, it will be a very liberal move when control of taxes is passed from congress to taxpayers themselves. Not sure if any event in the past 100 years could be considered more "progressive".
Next time you talk to your buddy Obama...please offer pragmatarianism as an example of something that qualifies as legitimate and genuine "change". We're tired of all this hyperpartisan obstructionism and would like to have a real opportunity to directly support the government organizations that we value.


  1. ... planners only have access to a microscopic percentage of the information available to society as a whole.

    Another consideration is the inverse-square law: the further you are from something, the less you know about it, by the square of the distance.

    (BTW I appreciate your nod to Herbert Spencer.)

  2. Inverse-square law...yeah, that makes sense. I really struggle trying to effectively convey the coverage disparity between the invisible hand (millions of taxpayers) and congress.

    Here are two analogies. In the military they would often make us do "police calls". Basically we would line up in a row and walk forward to pick up any trash we encountered. One person walking in a straight line would miss a lot of litter but the more people you added the less likely it would be that any litter would be missed.

    The second analogy involves puzzle pieces. Each and every of our individual and unique opportunity cost decisions represents a piece of the puzzle. Planners do not have access to these puzzle pieces given that we are not forced to make opportunity cost decisions with our individual taxes. Therefore planners are plenty of puzzle pieces short of a perfect picture. The best possible use of our limited public resources can only be determined by allowing the invisible hand to assemble all our puzzle pieces together.

    People don't have to understand how the invisible hand works for it to work. But perhaps they need to understand how the invisible hand works if they are to understand the value of pragmatarianism. Hopefully others will be able to come up with some better analogies to convey the concept.