Monday, October 31, 2011

Deontological Ethics vs Pragmatic Ethics

Whether it's political or religious in nature...there's not much you can do with dogma.  Generally I try and steer clear of it but recently I got a bit tricked...twice no less!  The back to back instances involved a revolutionary communist and a natural rights libertarian.  What tricked me was that the communist in several of his blog entries referred to himself as "pragmatic" while the libertarian acknowledged some type of "fairness" principle.

Even though the communist and the libertarian are at nearly opposite ends of the political spectrum...their conclusions on pragmatarianism were strikingly similar.  The communist concluded that I was full of BS and the libertarian concluded that I was incoherent.

When two relatively intelligent people with widely different political views come to the same conclusion...then it's reasonable cause for doubt.  Doubt is nothing new for me though as it's been a fairly constant companion ever since I transitioned to advocating, rather than just considering, pragmatarianism.  That's ok though because, according to Oliver Wendell Holmes, Jr..."to have doubted one's own first principles is the mark of a civilized man."

The concept of "doubt" is quite interesting.  As I mentioned in my post on the divine disparity...Adam and Eve were kicked from the Garden of Eden because the serpent introduced Eve to her very first doubt...which she then passed on to Adam.  In my post I also mentioned the story of Abraham...who didn't seem to express any doubt when he was about to sacrifice his son Issac.  Then of course there was doubting Thomas.

Jesus himself had this to say about doubt...
Jesus answered and said unto them, Verily I say unto you, If ye have faith, and doubt not, ye shall not only do this which is done to the fig tree, but also if ye shall say unto this mountain, Be thou removed, and be thou cast into the sea; it shall be done.  Mathew 21:21
Buddha, on the other hand, said this...
O how they cling and wrangle, some who claim
For preacher and monk the honored name!
For, quarreling, each to his view they cling.
Such folk see only one side of a thing.
Tightly clinging to absolute morals or universal rules is the realm of deontological ethics.  Conversely,  pragmatic ethics takes a larger perspective on morals, rules and laws.  It requires trying to stand outside of your own perspective.

Many of the concepts that we consider "absurd" today were considered "absolute" 500 years ago...isn't it possible that many of the concepts that we consider "absolute" today will be considered "absurd" in 500 years?

In my post on absurdity spotting I shared Herbert Spencer's awesome broad sweeping perspective where he offers numerous examples of the absurd functions that have been fulfilled by various governments at different times.  In a later post on awesomeness spotting I shared a few examples of awesome innovations to public healthcare and education.

Pragmatarianism does not require that you doubt your first principles or see an issue from multiple perspectives...it just requires that you respect and tolerate people's freedom to allocate their individual taxes to the government functions that they deem to be ethical/awesome/necessary.  In other words...pragmatarianism is an expression of political tolerance.

To misquote Voltaire..."I disapprove of what you say, but I will defend to the death your right to say it."  The pragmatarian would say..."I disapprove of how you allocate your taxes, but I will defend to the death your right to do so."  Well...whether a pragmatarian would actually become militant would depend on their first principles.

Personally, I was a minimal state libertarian my entire life until I genuinely considered the free-rider problem.  If I acknowledged that the free-rider problem would result in insufficient funding for national defense...then why wouldn't the free-rider problem apply to all the other public goods that I wanted to kick over to the private sector?

When confronted with this same dilemma most libertarians beat a hasty retreat back to the safety of their universal and absolute ethical principles.  My ethical principles were based on J.S. Mill's Harm Principle...which basically conveys the idea that the freedom to swing my first ends where your nose begins.  It's considerably more flexible than stricter libertarian axioms...so I was left on shaky ground with no sources to refer to in order to help stabilize my ideological foundations.

The shaky ground proved to be quite fertile though...it allowed a hypothetical scenario that I'd considered long ago to germinate and grow into pragmatarianism.  Perhaps doubting takes us a step closer to enlightenment.

Incidentally, a member of the Libertarian Party on Facebook recently shared a link to Jeffrey Miron's blog entry on Poverty and Libertarianism.  Much to my surprise Miron acknowledged that the free-rider problem wouldn't only apply to national defense.  That was the very first instance that I had ever run across of a libertarian making that acknowledgment.

Most of us are familiar with the story of the blind men and the elephant.  Right now we are all like blind men arguing over the scope of government.  In order to accurately discern what the scope of government should actually be...each and every taxpayer should be allowed to add their unique perspective to the puzzle.  This would simply involve giving taxpayers the freedom to spend their individual taxes on the government functions that they believe to be truly necessary.

So what do you think?  Am I incoherent and full of BS?  Perhaps...but Socrates and Hayek would have certainly agreed that it's wiser to err on the side of underestimating how much any of us truly knows.
The problem is thus in no way solved if we can show that all the facts, if they were known to a single mind (as we hypothetically assume them to be given to the observing economist), would uniquely determine the solution; instead we must show how a solution is produced by the interactions of people each of whom possesses only partial knowledge. To assume all the knowledge to be given to a single mind in the same manner in which we assume it to be given to us as the explaining economists is to assume the problem away and to disregard everything that is important and significant in the real world. - Friedrich August Hayek, The Use of Knowledge in Society
[Update Dec 2012] Here are a few relevant passages that I've since run across...
The psychologist was not only an authority to whom one owes obedience, but a representative of Science and of one of the most prestigious institutions of higher education in the United States.  Considering that science is widely regarded as the highest value in contemporary industrial society, it is very difficult for the average person to believe that what science commands could be wrong or immoral.  If the Lord had not told Abraham not to kill his son, Abraham would have done it, like millions of parents who practiced child sacrifice in history.  For the believer neither God nor his modern equivalent, Science, can command anything that is wrong. - Erich Fromm, The Anatomy of Human Destructiveness
Yet the history of thought should warn us against concluding that because the scientific theory of the world is the best that has yet been formulated, it is necessarily complete and final. We must remember that at bottom the generalisations of science or, in common parlance, the laws of nature are merely hypotheses devised to explain that ever-shifting phantasmagoria of thought which we dignify with the high-sounding names of the world and the universe. In the last analysis magic, religion, and science are nothing but theories of thought; and as science has supplanted its predecessors, so it may hereafter be itself superseded by some more perfect hypothesis, perhaps by some totally different way of looking at the phenomena—of registering the shadows on the screen—of which we in this generation can form no idea. The advance of knowledge is an infinite progression towards a goal that for ever recedes. - James George Frazer, The Golden Bough
It is easy to believe; doubting is more difficult. Experience and knowledge and thinking are necessary before we can doubt and question intelligently.  Tell a child that Santa Claus comes down the chimney or a savage that thunder is the anger of the gods and the child and the savage will accept your statements until they acquire sufficient knowledge to cause them to demur.  Millions in India passionately believe that the waters of the Ganges are holy, that snakes are deities in disguise, that it is as wrong to kill a cow as it is to kill a person - and, as for eating roast beef…that is no more to be thought of than cannibalism.  They accept these absurdities, not because they have been proved, but because the suggestion has been deeply embedded in their minds, and they have not the intelligence, the knowledge, the experience, necessary to question them.
We smile…the poor benighted creatures!  Yet you and I, if we examine the facts closely, will discover that the majority of our opinions, our most cherished beliefs, our creeds, the principles of conduct on which many of us base our very lives, are the result of suggestion, not reasoning…
Prejudiced, biased, and reiterated assertions, not logic, have formulated our beliefs. - Dale Carnegie, Public Speaking for Success
Our creed is that the science of government is an experimental science, and that, like all other experimental sciences, it is generally in a state of progression. No man is so obstinate an admirer of the old times as to deny that medicine, surgery, botany, chemistry, engineering, navigation, are better understood now than in any former age. We conceive that it is the same with political science. Like those physical sciences which we have mentioned, it has always been working itself clearer and clearer, and depositing impurity after impurity. There was a time when the most powerful of human intellects were deluded by the gibberish of the astrologer and the alchemist; and just so there was a time when the most enlightened and virtuous statesman thought it the first duty of a government to persecute heretics, to found monasteries, to make war on Saracens. But time advances; facts accumulate; doubts arise. Faint glimpses of truth begin to appear, and shine more and more unto the perfect day. The highest intellects, like the tops of mountains, are the first to catch and reflect the dawn. They are bright, while the level below is still in darkness. But soon the light, which at first illuminated only the loftiest eminences, descends on the plain and penetrates to the deepest valley. First come hints, then fragments of systems, then defective systems, then complete and harmonious systems. The sound opinion, held for a time by one bold speculator, becomes the opinion of a small minority, of a strong minority, of a majority of mankind. Thus the great progress goes on, till schoolboys laugh at the jargon which imposed on Bacon, till country rectors condemn the illiberality and intolerance of Sir Thomas More. - Thomas Macaulay

Wednesday, October 26, 2011

A "Hard Times" Pragmatarian Milestone

BBQs are pretty much the best.  Eggplant, zucchini, Portobello mushrooms, hot dogs, steak and ribs are the items that my friends and I typically BBQ.  But every once in a while we get lazy and just BBQ steak...or just hot dogs.  We've come to refer to these sparse BBQs as "hard times" BBQs.  The "hard times" meme quickly dispersed and we use it in a broad variety of situations.

For example...here's a "hard times" milestone for pragmatarianism.  It's the first blog entry that somebody besides me has dedicated to the concept.  What makes it a "hard times" milestone is that the blog entry is a criticism of pragmatarianism.  heh.

Opportunity Cost - The Barefoot Bum

As criticisms go it's not bad.  It's definitely worth taking a look at if you're vaguely interested in the possibility of applying market principles to government organizations.

[Update]  Hmmm...guess I should have realized that The Great Leap Forward is a touchy subject for revolutionary communists.

Sunday, October 23, 2011

Is the Tax Allocation Disparity Divine or Delusional?

Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority. - Frédéric Bastiat, The Law  (1850)
Too much fun.  It's kind of really dawning on me just how many people implicitly trust the allocation decisions of congress.  Their trust is completely irrational...and nearly universal in scope.  It's nearly universal in scope because it's fundamentally primitive stuff that's been etched into our collective psyche.

Primitive cultures would sacrifice animals to deities and pray for favorable outcomes.  Sacrifice is basically the act of giving up something that you would rather keep.  By giving to a deity people entered into a type of supernatural quid pro quo arrangement.  It shouldn't take much of a stretch to understand that taxes are nothing more than the modern day expression of ritualistic sacrifice.

Since the beginning of recorded history the line between rulers and gods has been blurred...but as rulers became more "rational" they recognized that they could accomplish more with gold rather than with blood tributes.

Around 2000 years ago Jesus said to "Render unto Caesar the things which are Caesar’s, and unto God the things that are God’s".  Trust Caesar with your taxes just like you trust God with your tithe.  Caesar will spend your taxes as wisely as god will spend your tithe.  Don't even try and second guess  the outcomes...Caesar and god both move in mysterious ways.  Trusting in god or Caesar requires faith.  Faith is of course the "... substance of things hoped for, the evidence of things not seen."  (Hebrews 11:1)

It wasn't until around the 1200s that the Magna Carta was signed.  The Magna Carta directly limited the power of kings.  Then 600 years passed before Herbert Spencer wrote...
"When that "divinity" which "doth hedge a king," and which in our day has left a glamour around the body inheriting his power, has quite died away - when it begins to be seen clearly that, in a popularly-governed nation, the government is simply a committee of management; it will also be seen that this committee of management has no intrinsic authority. The inevitable conclusion will be that its authority is given by those appointing it; and has just such bounds as they choose to impose. Along with this will go the further conclusion that the laws it passes are not in themselves sacred; but that whatever sacredness they have, is entirely due to the ethical sanction - an ethical sanction which, as we find, is derivable from the laws of human life as carried on under social conditions. And there will come the corollary that when they have not this ethical sanction they have no sacredness, and may be rightly challenged.
The function of Liberalism in the past was that of putting a limit to the powers of kings. The function of true Liberalism in the future will be that of putting a limit to the powers of Parliaments"  - Contemporary review, Volume 46...(1884)
People have obviously projected their expectations of divinity onto congress.  We can see this because people implicitly trust that congress's tax allocation decisions will be "divinely superior" to their own collective tax allocation decisions.  Taxpayers have more faith in congress than they do in the invisible hand...despite the existence of overwhelming evidence that planners fail at efficiently allocating resources.

On one hand we could follow a market approach where the funding for a government organization (GO) would be directly determined by taxpayers.  This would result in a perfectly efficient allocation of public goods.  On the other hand we could follow a planned approach where funding for a GO would be directly determined by congress.  This would result in a perfectly "moral" or "divinely inspired" allocation of public goods.

The market approach to public goods, aka pragmatarianism, would result in the best possible use of limited resources...while the planned approach relies on "divine intervention" and statistics to determine a "better than the best" possible use of limited resources.  We're supposed to have a separation of church and state but maybe each congressperson offers a silent prayer before they decide how to allocate taxes.

With the market approach...perhaps society would only allocate $5 billion dollars to the war on drugs...which would accurately reflect exactly how much society valued the war on drugs...relative to other public goods.  The current planned approach allocates $15 billion to the war on drugs.  We can think of this disparity between the two allocations as a "divine disparity".  It certainly requires copious amounts of faith to trust that this "divine disparity" will produce outcomes that are more favorable than any we could ever hope to imagine...or ever hope to explain.

Personally I grew up in a fairly religious family.  We regularly read the bible...we attended church once a week and we always prayed before meals.  We would even pray before we cut open a watermelon.  My grandfather and I were huge fans of watermelon (as in Ode to the Watermelon by Pablo Neruda) so it kind of made some sense that we prayed before cutting open the watermelon.  Our prayers always started with expressing gratitude and ended with humble requests for some divine intervention that we might be particularly blessed from partaking in the watermelon.

My grandfather was quite eloquent at indirectly asking that the watermelon be a good one but I always felt awkward and self-conscious at asking that god divinely intervene to ensure that our watermelon was a good one.  It seemed so trivial...plus it would be impossible to even discern whether a minor miracle had actually taken place.  My faith was never that strong.

When I was very young I never doubted the authenticity of any of the fantastic stories in the bible...but as far back as I can remember I was always more interested in reading the Zoobook magazines that my mother ordered for me as well as the National Geographic magazines that she ordered for the both of us.

There were so many neat and unusual animals and insects that I'd never even heard of...it was extremely fascinating and enjoyable to learn about new ones.  Not exactly sure when I first ran across the theory of evolution...but I vaguely remember seeing the extinct prehistoric ancestors of present day animals in the Zoobooks magazines.  Perhaps when I was 10 or 11 I started to realize that the evidence for evolution easily surpassed the evidence for religion.

By the time I hit my teens I was pretty much an atheist but still read the bible with my family and attended church when I had to.  And when it was my turn to pray over the watermelon...I self-consciously prayed that the watermelon would be a good one...all the while appreciating the absurdity of doing so.

It's been years now since I read the bible with my family but I still remember quite a few of the stories.  Recently I've been revisiting some of these bible stories with renewed interest in order to try and better understand how ritualistic sacrifice has evolved into taxes.

When Adam and Eve were in the Garden of Eden they were not required to offer up any sacrifices to god.  But then Eve ate from the Tree of the Knowledge of Good and Evil and they were expelled from the garden.

Perhaps somewhat incidentally...Erich Fromm offered a really interesting perspective on this story.  His thoughts were that when Eve ate from the tree of the knowledge of good and evil it represented when humanity first developed conscious self-awareness.  Adam and Eve became aware that they were naked and were then expelled from the garden...which represented being alienated from a harmonious coexistence with nature.

Maybe...perhaps Eve's sin (and the first sin in the world) was for her to think for herself...which meant to question the rules of god.  After Adam and Eve were expelled from the garden it then became necessary for them to offer regular sacrifices to god.  It was the only way that they could understand and attempt to change the harsh realities of the natural world.

Not quite sure if Cain and Abel's sacrifice was the first to be mentioned in the bible...but Cain offered fruits and vegetables while Abel offered a lamb.  For some reason god favored Abel's offering over Cain's offering.  Perhaps this was because Abel had some of that "divinity which doth hedge a king".  If so, then it was divine inspiration... facilitated by a strong connection with god... which led him to allocate a lamb to god rather than selecting fruits and vegetables as his brother had done.  The more you know somebody the more likely it will be that you'll pick an appropriate gift for them.

Google'd a bit to try and find other possible explanations for god rejecting Cain's sacrifice and found this passage somewhat useful in understanding the dynamic between god and his subjects...
We must come to grips with one thing: God, as Creator, is sovereign over His creation. While there are proximate reasons for God’s decrees, what ultimately makes “right” right and “wrong” wrong? God’s sovereign choice. This does not mean God is capricious or arbitrary; God is always reasonable because He is the creator of reason. If God’s actions seem to conflict with or transcend man’s sense of “reason,” that doesn’t mean God is wrong; it means His thoughts are not our thoughts, and His ways are not our ways (Isaiah 55:8). He respects one offering and rejects another, ultimately, for His own reasons and pleasure—and isn’t that the Creator’s prerogative? Again, this isn’t to say He is arbitrary; His Word gives us all the knowledge of Him and the reasoning we need to understand and obey.  - Why Didn’t God Respect Cain’s Offering?
Does this remind you of anything?  Hopefully a few of you were reminded of Adam Smith's "duties of the sovereign".

The next biblical story of sacrifice which comes to mind is that of Abraham.  His willingness to sacrifice his son Issac demonstrated that he implicitly trusted that the outcome would be favorable in ways that he couldn't even begin to fathom.  Abraham had incredible faith.  His story foretold how god would send his son Jesus down to earth to be sacrificed for all of our sins.

The story of Elijah versus the prophets of Baal, like the story of Cain and Abel, also concerned a sacrificial competition of sorts.  Unlike with Cain and Abel though, the sacrifices of Elijah and the prophets of Baal were exactly alike but were offered to completely different gods.   What's also different in this story is that there was a desired  outcome which was established early in the story...an end to a severe famine.  The prophets of Baal were unable to solicit any response from their gods even after they cut themselves and mixed their blood on their alter.  When it was Elijah's turn his god clearly accepted his offering...rain immediately followed...the Israelites' trust in god was reestablished....and all the prophets of Baal were quickly killed.

That cycle of faith being lost and then reestablished can be seen today in how voters alternatively lose and then reestablish faith in the Democratic and Republican Parties.  Primitive societies switched deities in order to try and identify which deity offered the best possible return on their sacrifices just like voters elect different parties in order to try and discover which party offers the best possible return on their taxes.  This return on investment (sacrifice/taxes) can also be thought of as a "blessing".

The problem is that congress adds absolutely no value to the tax allocation process.  In fact, they subtract considerable value from the process by misdirecting the flow of taxes.   Anything other than the best possible use of limited public resources will produce distortions with numerous unintended negative consequences...both of an economic and social nature.

At what point in history will a tipping point be reached where there are enough voters that realize that the current "divine disparity" is actually delusional and damaging?  When will they realize that there is nothing better than the best possible use of limited public resources?   When will they accept that the only objective way of discovering the best possible use of limited public resources is to allow taxpayers to directly allocate their taxes themselves?

And Stephen Crane replies...
Tradition, thou art for suckling children,
Thou art the enlivening milk for babes;
But no meat for men is in thee.
Then --
But, alas, we all are babes.

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 has merit...th­en 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 pay taxes...no­w 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.

Monday, October 17, 2011

The Dialectic of Unintended Consequences

Here's an article that the author over at the EconoSpeak blog wrote on how the discussion of power is missing from economic discourse....The Power of Economics vs. The Economics of Power.  It's for sure that power and control is a fascinating topic...so fascinating that my comment on his entry transformed into this blog entry...

Eh, it would have been more interesting if you had considered both sides of the equation.  So here's the other side...

Unions also use their power to engage in rent-seeking behavior.  They strong-arm companies into paying wages and benefits that are above what the market says their labor is worth.

It's the same concept with the minimum wage.  One unintended consequence of these efforts is that high school kids end up making poor career choices on the basis of this inaccurate information.  Unions and liberals manipulate traffic signals and change the signal color from red to green.  Kids see the green light and drive directly into oncoming traffic.  This results in a vicious cycle of inefficient labor allocation that negatively impacts our economy to a great degree.

This concept is certainly not a new one.  In 1848 the economist Frédéric Bastiat wrote an excellent essay on the opportunity cost concept.  Here's an excerpt...
Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.
Then in 1946 Milton Friedman and George J. Sigler wrote on how ceilings on rent were actually counter-productive...Roofs or Ceilings? The Current Housing Problem

Unintended consequences can be very rough sometimes.  But in the case of unions, there was one very righteous unintended consequence.  At the height of their power in the 50s and 60s, unions demanded wages that were so high that it became economically sound for industries to move their production overseas.

Well...that might not sound awesome to most...but it's very awesome to me for a couple reasons.  First, I studied development theories at UCLA and learned about all the numerous and extremely costly attempts by our government to help third world countries develop.  Nearly all the attempts were complete failures that had severe negative unintended consequences.  Talk about a depressing field.

Second, having lived and worked in several developing countries I quickly learned to value the well being of people in those countries as much as I value the well being of Americans.

So from my perspective, it's awesome and not a little ironic that unions have unintentionally done more to help people in developing countries than all of the intentional USAID and IMF efforts combined.

People in unions unintentionally donated their jobs to people in developing countries.  People in unions lost choices while people in developing countries gained choices.  But it's important to keep in mind that the marginal utility loss of going from 50 to 49 choices isn't as large as the marginal utility gain of going from 1 to 2 choices.  The people in developing countries gladly chose these "donated" jobs over subsistence living.  As more and more people learned the skills necessary to do these jobs there were more and more people who were able to take these skills and start companies of their own.  The demand for labor increased while the supply of labor stayed constant...so wages of course increased.  Now these newly developed countries are moving their industries to developing countries where wages are considerably lower.

Interestingly enough, Paul Krugman (of all people) touched on this idea in his paper...In Praise of Cheap Labor - Bad jobs at bad wages are better than no jobs at all.

A race to the bottom?  Yeah, no...it's a race to the top.  The profit motive within the proper framework unintentionally leaves a trail of developed countries in its wake.  Developing countries continue to converge in order to put themselves in the path of this unintentionally virtuous cycle.

So from the narrow American perspective the outcome was negative while from the broader global perspective the overall outcome was extremely positive.  America took a small step backward so that the Asian Tigers could take a giant leap forward and catch up to us.

China however, was not one of the Asian Tigers.  At the same time that the Asian Tigers were leaping forward with an open market approach...China was attempting to leap forward with a closed planned approach.  Rather than open China up to foreign investment Mao Zedong and his fellow planners decided it would be a good idea to collectivize agriculture in order to direct more resources towards industrialization.

While the market approach gave people more choices the planned approach took choices away from people.  The disparity between the results was incredible.  The market approach resulted in the Asian Tigers actually leaping forward while the planned approach resulted in 20-30 million Chinese people starving to death as a direct result of state induced famine*.

Mao Zedong's unintentionally disastrous efforts unintentionally resulted in the pragmatic recommendations of Deng Xiaoping finally being given genuine credence.  That guy was seriously righteous...he had been going around saying that he didn't care whether a cat was black or white...what mattered was whether it caught mice.  He opened China up to foreign investment...people were given more choices...and as a direct result China has now truly leapt forward.

It would seem straightforward that it's safer to err on the side of giving people more, rather than less, choices.  This idea is more eloquently expressed by Thomas Jefferson..."I would rather be exposed to the inconveniences attending too much liberty than those attending too small a degree of it."  Libertarians love that quote...but it needs a really good dash of Deng Xiaoping's pragmatism...
Pure libertarianism needs something to curb its extremity.  That something is pragmatism.  
Philosophical pragmatism is an essential American development.  Its animating principle is that truth is social and constructed rather than transcendent and objective.  It holds that ideas prove their worth in action, and that the results of an idea are the best criteria by which to judge its merit.  And since what works for me might not work for you, pragmatism advocates a strenuous openness to all perspectives. - James Walsh, Liberty in troubled times
Deng Xiaoping plus Thomas Jefferson equals pragmatarianism.  Pragmatarianism advocates that people be allowed to choose where their taxes go.  Taxpayers wouldn't have a choice whether they paid taxes but they would have a choice which government organizations received their individual taxes.

Taxes are not too dissimilar from charity.  The ancient Jewish charity law..."Tzedakah"...has 10 levels of giving that are ranked from least righteous to most righteous.  The least righteous way to give is to give begrudgingly.  The most righteous way to give is to give in a way that enables the recipient to become self-reliant.  Right there we can see the basis between the disparity between the liberal and conservative approaches to welfare.

For the large majority of people we can say that taxes in their current form can be considered the least righteous way to give.  People have a vanishingly small say in how their own taxes are spent, so it's understandable why they would begrudge paying their taxes.  A pragmatarian system would give taxpayers a choice to allocate their taxes to the most righteous government organizations.  A truly righteous government organization is one that produces results.

From my perspective...when I consider all of our government's failed attempts at helping other countries develop...I'm incredibly incredulous regarding our government's ability to help us continue to develop**.    What helped those other countries become self-reliant was when people in unions unintentionally sacrificed their own jobs.  The corporations that then set up factories in developing countries were not motivated by altruism...their sole motivation was to increase profits...but the unintended consequences of their actions were more altruistic than any intentionally altruistic efforts by government.
By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it. - Adam Smith, The Wealth of Nations
When it comes to the welfare of people in the US...should we trust government intervention or trust market forces?

Whatever your answer is...I'll respect it and only ask that in return you respect my own.  It is fundamental to truly appreciate that the most righteous level of political altruism is to allow people to directly support the government organizations that they value.  Hyperpartisan obstructionism isn't just counter productive on the party level...it's also counter-productive on the individual level as well.  We are all just blind men feeling different parts of an elephant and coming to our own conclusions.  To come to the correct conclusion we have to piece our perspectives together.

Pragmatarianism would allow us to piece all our perspectives together.  The invisible hand would take all our individual, valuable and essential puzzle pieces and assemble them together to display the perfect picture.  The cumulative choices of millions of taxpayers will reveal exactly what the ideal scope of government should be.


* I highly recommend reading Dogshit Food by Liu Heng.  The story is included in the Columbia Anthology of Modern Chinese Literature.

** For the life of me I can't find or remember the source of the ironic idea that people in the middle ages were too stupid to realize that they were in the middle ages.  Anybody know the actual source?

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.

Thursday, October 13, 2011

Can You Spot the Awesomeness?

Last year I wrote an entry on absurdity spotting.  Absurdity spotting in a pragmatarian system would mean that taxpayers could choose not to allocate any of their taxes to any "absurd" government organizations.  This post will look at the flip side...awesomeness spotting.

Earlier in the year the New Yorker magazine published an article called The Hot Spotters.  The article covered an innovative effort to reduce healthcare costs by ensuring that the costliest patients received proper care.  One of the main people engaged in this effort, Jeffrey Brenner, calculated that the top 1% of patients in the New Jersey community of Camden accounted for 30% of the healthcare costs.  By providing these costly patients with proper care Brenner was able to demonstrate significant results.  Part of his challenge though was finding funding...
Outsiders tend to be the first to recognize the inadequacies of our social institutions. But, precisely because they are outsiders, they are usually in a poor position to fix them.
Pragmatarianism would place taxpayers in a perfect position to help fix any inadequacies that they spotted.  If Brenner's awesome efforts can help save taxpayers money...then why not empower taxpayers to directly allocate some of their taxes to support his efforts?  This would extend taxpayers' locus of control and increase their self-efficacy.

With the current system...as healthcare costs continue to rise...congress will either borrow more money or cut funding for public schools.  Brenner's response to this "opportunity cost" was that if we effectively cut healthcare costs then we do not have to sacrifice education or health.

Speaking of awesomeness spotting and schools...here's a transcript excerpt from CNBC's executive vision program...
Simon Hobbs (Host): Andy, your website is very interesting because it allows people to very specifically target who gets what.  Does that change the motivation?
Andy Kaplan (DonorsChoose.org Chief Financial Officer): Yeah, that’s right Simon.  At DonorsChoose.org we connect people like you with class room needs across America.  So at our site, any teacher at a public school can post a project that he or she wants to do with their classroom.  They describe it, they describe the school and people like you and I visit DonorsChoose, we select a project that speaks to us, and we fund it.  When the project is funded, DonorsChoose takes the money, we buy the materials, we ship them to the classroom, the teacher does the project, takes pictures, the kids right thank you notes, and we send all that back to the donor.  So the beauty is, the donor knows the investment they made in the classroom, and they get to see the feedback.
Simon Hobbs (Host): Mathew, how powerful is this connectivity?  It’s a game changer in terms of bringing in corporations in that you partner with…it’s huge isn’t it?
Matthew Bishop (‘Philanthrocapitalism’ Co-Author):  Yeah, I think technology is the great story about philanthrocapitalism because it solves two problems.  One, it allows us to have much greater idea where our money is going and what use it’s being put to.  And the second is it’s giving the people we’re trying to help a real voice to actually say whether we’re providing the help we say we’re providing.  So DonorsChoose is fantastic, you know you get these letters back from these school kids and you really think, well I’ve done something tangible.  But they actually have a really clever search process as well…a bit like Amazon recommending you books to read.  You like this, well you’ll like this.  So they actually very quickly figure out what kind of classroom projects you like and keep hitting you with more of them.  And it’s very effective as a donor you really feel well, I like this organization.
Wouldn't taxpayers like to know the investment they made in America?  Wouldn't taxpayers like to have a real voice?  Pragmatarianism would empower taxpayers to directly connect with the government organizations that they value.  Adding that essential element of "choice" will help taxpayers feel the tangible positive impact of their taxes.

Without that element of choice, taxpayers will continue to be nothing more than donors completely alienated from their altruism.

Here's a passage from the end of the New Yorker's article...
Critics say that it’s a pipe dream—more money down the health-care sinkhole. They could turn out to be right, Brenner told me; a well-organized opposition could scuttle efforts like his. “In the next few years, we’re going to have absolutely irrefutable evidence that there are ways to reduce health-care costs, and they are ‘high touch’ and they are at the level of care,” he said. “We are going to know that, hands down, this is possible.” From that point onward, he said, “it’s a political problem.” The struggle will be to survive the obstruction of lobbies, and the partisan tendency to view success as victory for the other side.
How absurd would it be if donors to PETA and donors to the NRA had to pool their donations and elect representatives to decide how to split the money between the two organizations?  The obvious result of such a system would be hyperpartisan obstructionism.  To fix the public sector we should take note of what works in the private sector...choice!

With a pragmatarian system the public healthcare debate would be a moot point.  Taxpayers would be able to choose to directly allocate as much or as little of their taxes as they wanted to Medicare or Medicaid.  The demand for public healthcare would determine the supply of public healthcare and the supply of public healthcare would determine the percentage of the population that qualified for coverage.  Merit, rather than political muscle, would determine which government organizations received funding.

If we empower taxpayers to support the government organizations that they know are awesome and we don't force them to support the government organizations that they know are absurd...then the resulting division of labor will produce awesomeness all around.

The yin and yang of life is the absurdity and awesomeness of public goods.

Wednesday, October 12, 2011

Aikido, Dune and Taxes


On some forum an anarcho-capitalist asked me how to get rid of taxes. This was my reply...

People say the only two certainties in life are death and taxes. Taxes have probably been around for a lot longer than 2000 years. By trying to fight taxes you're pretty much going up against an immortal. You are not going to defeat this opponent by tackling it head on.

Aikido is a pretty good martial art if you want to go up against an opponent that is far bigger than yourself. It teaches you how to use your opponent's size and strength against them.

Pragmatarianism is the political equivalent of Aikido. It's the only way that you're going to be able to defeat taxes.

The first move in pragmatarianism is by far the hardest. It is to completely embrace the tax rate. This will feel totally unnatural for conservatives, libertarians and anarcho-capitalists. But you most not fear. Because fear is the little-death that will bring total obliteration. You must face your fear. You must permit it to pass over you and through you. And when it has gone past you will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only you will remain.*

If you don't face your fear then you'll never get close enough to your opponent in order to apply the invisible hand technique. This is the second move...taxpayers will directly allocate their taxes among the various government organizations at anytime throughout the year.

Once you apply the invisible hand to government then people's spending decisions in the private sector will determine their spending decisions in the public sector. This is the key concept. If the Red Cross is more effective and efficient than FEMA then people who value disaster relief might not allocate any of their taxes to FEMA. If FEMA loses all funding then the scope of government will narrow. As we already know, narrowing the scope of government will lower the tax rate.

At this point your opponent will be off balance. To utterly destroy your opponent you'll need to ensure that there are private organizations that make every single government organization completely redundant. Not only that but these private organizations must provide more bang for taxpayers' bucks than the government organizations.

The beauty of this concept is that, the more you try and defeat taxes the more we all benefit from the increased competition between the two sectors. Government organizations will either operate efficiently or they will be replaced by efficient private organizations. Either way we win.

Not only that but there's no logical reason for liberals to oppose this system. Everything is evidence based. No leap of faith is required.  The majority of taxpayers won't care whether an organization is public or private...they'll just spend their money on whatever organizations produce the best results at the lowest costs.

In reality though...I wonder which is more unlikely...libertarians accepting taxes or liberals accepting the invisible hand?

*Dune

Thursday, October 6, 2011

Public Goods vs Private Goods

It is, of course, not desirable that anything should be done by funds derived from compulsory taxation, which is already sufficiently well done by individual liberality. - J.S. Mill
Thus, considered in themselves, in their own nature, in their normal state, and apart from all abuses, public services are, like private services, purely and simply acts of exchange. - Bastiat, Private and Public Services
The only difference between public goods and private goods is that people can free-ride off the contributions that others make to public goods.  To fix that problem we simply force people to pay taxes. Once we force people to pay taxes then public goods become in essence no different than private goods.

We've long since established that markets are more effective than planners at efficiently allocating private goods.  For example, some of the countries that still have planned economies are...Cuba, Libya, North Korea, Saudi Arabia, Belarus, and Myanmar.  So if planners fail at allocating private goods...and public goods are not essentially different than private goods...then why do we still allow planners (aka congress) to allocate public goods?

The solution is simply to allow taxpayers to directly allocate their taxes among the various government organizations.  For example, at anytime throughout the year you could visit the Environmental Protection Agency website and directly submit a payment.

This system, also known as tax choice, would allow taxpayers to consider the opportunity costs of their allocation decisions.  The result would be a far more efficient allocation of public funds.

For those not familiar with the economic term..."opportunity cost" refers to how much of one good somebody would be willing to forgo in order to gain more of another good. For example, how much public education would you be willing to sacrifice for a secure border? How much defense would you be willing to sacrifice for improved infrastructure?  Your opportunity cost decisions allow everything you know ("partial knowledge") and value to help determine how society's limited resources are used.

In each of the following quotes I underlined the sections that are relevant to the concept of opportunity cost.
Nevertheless, the classic solution to the problem of underprovision of public goods has been government funding - through compulsory taxation - and government production of the good or service in question. Although this may substantially alleviate the problem of numerous free-riders that refuse to pay for the benefits they receive, it should be noted that the policy process does not provide any very plausible method for determining what the optimal or best level of provision of a public good actually is. When it is impossible to observe what individuals are willing to give up in order to get the public good, how can policymakers access how urgently they really want more or less of it, given the other possible uses of their money? There is a whole economic literature dealing with the willingness-to-pay methods and contingent valuation techniques to try and divine such preference in the absence of a market price doing so, but even the most optimistic proponents of such devices tend to concede that public goods will still most likely be underprovided or overprovided under government stewardship. - Patricia Kennett, Governance, globalization and public policy
The working out of financial arrangements between collective consumption units and production units is one of the most difficult problems faced by entrepreneurs in the public economy. Without market prices and market transactions, the act of paying for a good generally occurs at a time and place far from the act of consuming the good: individual costs are widely separated from individual benefits. Yet a principle of fiscal equivalence--that those receiving the benefits from a service pay the costs for that service--must apply in the public economy just as it applies in a market economy. Costs must be proportioned to benefits if people are to have any sense of economic reality. Otherwise beneficiaries may assume that public goods are free goods, that money in the public treasury is "the government's money," and that no opportunities are foregone in spending that money. When this happens the foundations of a democratic society are threatened. The alternative is to adhere as closely as possible to the principle of fiscal equivalence and to proportion taxes as closely as possible to benefits received. - Vincent Ostrom and Elinor Ostrom, Public Goods and Public Choices (PDF)

Tuesday, October 4, 2011

Children's Suffrage

Everybody should have the right to try and protect their interests.  This is the basis for both universal suffrage and pragmatarianism.  

Universal suffrage is far from universal in that it still excludes around 25% of the population from voting.  So for some time now I've been advocating children's suffrage.  It's fun to promote because every argument that adults give against kids voting can also be used against adults voting.  Therefore, either everybody votes or nobody votes.  

Here are some of the places where I have promoted universal suffrage...
Just recently I ran across this great paper advocating children's suffrage.  The author, Leo Semashko, offers a ton of very persuasive arguments why kids should be enfranchised.  However, rather than advocating that children should be allowed to directly vote the author makes the argument that they should be allowed to vote by proxy.  This type of voting by proxy is known as Demeny Voting.  Semashko's reasoning for not allowing kids to vote is that they are incapable of articulating their interests.  

Heck, sometimes I have a hard time articulating my interests.  I'm certainly interested in the invisible hand but struggle when trying to describe the concept to some random person.  Same thing with pragmatarianism.  The point of this blog is to hopefully catch the attention of somebody that can more effectively articulate the idea of pragmatarianism.  

Again, we see that every argument against kids voting can also be used against adults voting.  We shouldn't need persuasive reasons to allow kids to vote.  We should just recognize and respect that everybody should have the right to try and protect their interests...even if their interests conflict with our own.