What Austrian believes any free market economy could ever be "optimal"? That's the mistake made by mainstream economists, believing such nonsense, not Austrians. Complexity implies messiness, redundancy, etc. Complexity implies both coordination and discoordination. That is, it implies equilibrium is impossible to achieve. Which, again, is what all the Austrians I have ever read have ever said. If Austrians believe anything, it's that the economy is a far-from-equilibrium process. Thus, Lachmann's ideas are rightly understood to be Austrian. - Troy Camplin...so I visited Camplin's blog...Interdisciplinary World...and really enjoyed reading his entries. Figured it wouldn't hurt to ask him for his perspective on pragmatarianism...and he was nice enough to oblige me... Troy Camplin's Critique of Pragmatarianism
In this first part of the critique he recognizes that people would be forced to put their taxes where their mouths are. But he doesn't necessarily seem to find much value in this. How much value is there in only being able to spend your own taxes? How much value is there in preventing other people from spending your own taxes? From my perspective this is priceless. This would allow 150 million of our most productive citizens to ask themselves whether it was worth it to give their own hard-earned money to the government. How many taxpayers would truly believe that they would be getting their money's worth of public goods?
The second part of his critique leaned heavily on the political party heuristic...liberals vs conservatives...in order to guesstimate the values of 150 million taxpayers. According to his analysis, conservatives would spend their taxes on national defense and liberals would spend their taxes on welfare. Well...this strikes me as a much too hasty generalization that does not accurately represent myself...nor anybody that I've ever met. Don't get me wrong...it's not that I don't rely on this heuristic myself...but perfect caricatures of political ideologies are exceptions rather than the rule.
Pragmatarianism is the epitome of political pluralism. Rather than having 3 or 4 or 10 political parties...we would have 150 million completely unique political parties. From my perspective...a much more effective heuristic to consider would be Maslow's Hierarchy of Needs...
This can help us grasp the idea that taxpayers would allocate their taxes according to their priorities. If a liberal felt like another country genuinely threatened their safety...then chances are pretty good that their priorities would change...they would sacrifice funding welfare in order to spend their taxes on solutions that might peacefully resolve our disagreements with the other country.
Basically, there's more than one way to skin a cat. The idea of giving 150 million of our most productive citizens the freedom to directly allocate their taxes is based on that simple concept. We all have limited perspectives....therefore we all make mistakes. Yet, we all have unique perspectives...therefore we can see problems from different angles.
Perhaps the individual taxpayer feels better about where their money is going, but I also see how this can result in much deeper divisions in the country, where people become resentful that their neighbors are not supporting their pet projects.Well...our society is based on the idea of a division of labor...which I addressed in my post on a taxpayer division of labor. But do a substantial number of people really become resentful when their neighbors don't invest in their pet projects? Here's kind of a ridiculously oversimplified version of how I see it playing out between neighbors.
Bob: Hey Sally...you should really spend more of your taxes on the EPA
Sally: Actually...the news said that Canada might try and invade us
Bob: Oh, that would be no good. I better check the fundraising progress bar on the DoD website
In my post on Perspectives Matter - Economics in One Lesson...I pointed out that persuasion is instrumental in ensuring the dissemination of partial knowledge throughout society. People would certainly debate which government organizations needed the most funding...and that debate would be priceless.
The next critique Camplin offers has to do with corruption. How could decentralizing power and control increase corruption? Right now if you want to "corrupt" the government it's relatively easy to do given that we have too many eggs in one basket. You only need to go to one location...Washington DC. If you wanted to engage in some "corruption" in a pragmatarian system you'd have to buy an ad on TV just like the rest of the organizations that want to persuade us change our priorities.
Regarding subsidies...a chain is only as strong as its weakest link. Farmers would only be shooting themselves in the foot if they ignored other links that were essential to the successful operation of their business. To quote the bible, "For what shall it profit a man, if he shall gain the whole world, and lose his own soul?" What good is it to subsidize your own industry...if there are no roads to transport your products...no police to protect your property...no courts to handle disputes...no military to prevent Canada from invading? In my post on the opportunity costs of public transportation I address this concept from the aspect of public transportation.
Pragmatarianism is also valuable because it begs the question of what organizations should qualify as tax recipients. Should farming really qualify if only farmers allocate their taxes to it? How many taxpayers would have to allocate their taxes to something for it to be considered a genuine "public" good? That important debate would certainly be a positive externality of considering pragmatarianism.
Lastly, Camplin suggests a more acceptable system...where private donations would be 100% tax deductible. Sure, I would have no problem with this compromise...but I doubt many liberals would find it acceptable. This was the point I addressed in my entry on Libertarianism and the Free-rider Problem.
But what I didn't quite get from Camplin was an explanation as to why pragmatarianism wouldn't result in anarcho-capitalism. Given that Austrian economists believe that the private sector does everything better than the public sector...why wouldn't giving self-interested, utility maximizing, psychic profit-seeking consumers (taxpayers) the freedom to choose which government organizations they give their taxes to shrink the scope of government down to nothing? Why would consumers give their taxes to public organization B if private organization A offered them more bang for their buck? If no government organizations are truly fit...then why wouldn't applying survival of the fittest to the public sector result in the mass extinction of all government organizations?
In the beginning of his critique, Camplin acknowledged that pragmatarianism would force taxpayers to put their money where their mouths are...but I don't think he quite recognized that pragmatarianism itself represents an opportunity for socialists, liberals, libertarians and anarcho-capitalists to put their money where their political ideologies are. What does it mean when people aren't willing to allow 150 million taxpayers to use their hard-earned taxes to determine the proper scope of government? Socialists, liberals, libertarians and anarcho-capitalists can't all be right...so perhaps the possibility of being right is far better than the possibility of being proved wrong.
The proof is in the pudding.