Monday, April 2, 2012

Troy Camplin's Critique of Pragmatarianism

In a recent post of mine...What Are Taxes Worth?...I commented on Peter Boettke's post highlighting  Don Boudreaux's perspective on Ludwig Lachmann.  Among the comments on Boettke's post...I found this one to be particularly agreeable...
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.

9 comments:

  1. I think you are more optimistic than am I regarding what people would do with their money and whether or not ideology matters.

    This is not to say I am not against this idea, per se. I think it would work -- as I think all governance would work -- at more local levels, and if there were ways to direct money in private directions. Socialists won't agree with this because they are against people making private decisions with their own property. Indeed, they are against the idea of property as such. But I see no more point in talking to them about this than I do talking to either Pat Buchanan or Betty Friedan about abortion, because they are extreme outliers on the issue. The rest can be reasoned with in regards to the range of options, public and private, one could donate to.

    Overall, if we are talking about donations at the federal level, give the size and scope of that government, I see nothing but distortions taking place, even when the donations are not self-serving. If we exclude self-serving donations, how would we do that? Who is to determine what is self-serving and what not? Wouldn't there have to be a government panel to decide that? And how would they get paid? Wouldn't donations to that government agency be designed to influence it -- which would itself be corrupting? Who polices the policemen?

    If one is given the option of private or public, then I do see how government can shrink. If, however, one is only given the option of donating to the government, how can it shrink? It would always be the same money going in, and it would all have to be directed somewhere. Also, would there still not be legislators? Would they not still be creating new laws, programs, etc.? And it's likely they would still be able to borrow money. They could just bypass everyone else by funding their projects with borrowed money. Those who donated to paying down the debt would thus be indirectly funding the government exactly as it's being funded now.

    I just can't share your optimism about human nature. I favor decentralization of power for the reason that I take a tragic world view of human nature. I think people can mostly be good, given the right institutions. I'm not sure that institutions that utilize power are ever good institutions, no matter how you fund them. The more local they are, and if people can vote with their feet, the more likely one is to find better government institutions. I agree that problems occur when you have only several hundred people spending for the rest of us. My solution would be to decentralize government, making the federal government incapable of doing anything at all except protecting the border from military invasion, with more power existing in more local governments, in a power law distribution. This would be a more natural structure anyway. Giving one the illusion of control while real control is still held by others doesn't help.

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    1. Is "optimism" or "pessimism" really the best way to evaluate people's choices in life? All I can know is that everybody wants the most bang for their buck. This is the universal economic principle. In one way or another...everybody asks themselves..."Is it worth it?"

      Taxpayers are the people in our society that are the most effective at getting the most bang for their buck. So what happens when we allow them to choose which government organizations they give their taxes to? Is government going to adapt...or are taxpayers going to adapt? Something will have to give...and I sincerely doubt it will be the people holding the purse strings.

      The point here is ceteris paribus. All things being equal...we're simply allowing market forces (the self-interested decisions of 150 millions taxpayers) to determine the distribution of public funds. To say that the scope of government will not shrink or expand...is to say that our past committees of congresspeople accurately predicted the proper scope of government.

      But how can any individual or committee possibly know what the actual values and priorities are of 150 million taxpayers? Let's pick a highly unlikely scenario. Say that we implemented pragmatarianism and all the taxpayers decided to give all their taxes to NASA. Clearly this would drastically shrink the scope of government...and perhaps in a few years we would have a fully self-sustaining colony on Mars. Would it be worth it?

      Why is that outcome unlikely? What distribution of public funds IS likely? Maybe taxpayers will decide that they aren't getting the most bang for their buck by funding the war on drugs? Maybe taxpayers will decide that they aren't getting the most bang for their buck by funding FEMA...or NPR...? Maybe they'll decide that they have "better" public goods to spend their taxes on...like public healthcare.

      Our most valuable resource is not any material resource...it's our ability to see new, valuable and productive uses of resources. Taxpayers have the most productive perspectives in our society. Therefore, taxpayers are our nation's most valuable resource. All things being equal...what happens when we allow taxpayers to determine the most productive use of resources in the public sector? All things being equal...what happens when we prevent taxpayers from determining the most productive use of resources in the public sector? In other words...what are the economic consequences of wasting our most productive resource?

      The point of pragmatarianism is to help people understand that perspectives should matter. By Keeping it Simple Stupid (KISS) there are no bells and whistles that might hamstring the goal of helping taxpayers understand that their perspectives should matter in the public sector.

      If you can sell your preferred approach of allowing taxpayers to choose to either pay taxes or make private donations...then that's great. But if you can't...then it helps to have another option to offer people. Pragmatarianism is that option.

      If you haven't already done so...check out all these responses from people that have rejected pragmatarianism...Unglamorous but Important Things. Their responses clearly reveal the obstacle that we are up against. Any solution we craft should be based on our firm understanding of their objections to pragmatarianism. What exactly is it about pragmatarianism that they are rejecting?

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  2. Optimism, pessimism, or hopefulness (which combines the first two) does matter. The socialist, for example, is an optimist. He believes that the impossible (central planning) is possible, that only good people will be in charge (or that only good people are in charge) of government, that people are fundamentally good all the time, etc. The pessimist thinks nobody is good, so need to be ruled. Someone with a tragic view of life (which would include Hayek, by his own admission), recognizes that even if you have good intentions, bad results can occur. What then matters is getting the incentives, organizations, structures, etc. right. Thus, attitude toward the world does matter. A lot.

    Thus, I am more interested in seeing how one could fix the problems I point out than seeing a defense of the idea (I hope the difference between the two is clear). I agree that this idea has merit. It is probably better than what we have. But does that mean the idea can't be made better? Criticisms such as mine ought to be taken as an opportunity to improve the idea. That's how mine, at least, are intended. I'm sure there's a model of this I could agree with. For me, it would have to include a reasonable way to opt for truly private ways of doing things. Competition is a discovery procedure, and the only way to ensure the best ways of doing things is if the government has to compete for public funds.

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    1. Criticisms like yours are extremely valuable in that they help me better understand my failure to explain the idea. When you say that taxpayers should have the freedom to "opt out for truly private ways of doing things" you're clearly basing your argument on the assumption that a truly private way of doing something already exists.

      For example, if I value space exploration...but only the government engages in space exploration...then opting to spend my money on private space exploration is a non-starter. If private space exploration DOES exist...then in a pragmatarian system I can easily opt out of paying for public space exploration simply by not giving any of my taxes to NASA. If nobody that values space exploration gives their taxes to NASA...then the scope of government would shrink...and taxpayers would put pressure on congress to lower the tax rate.

      Personally, I really value environmental protection. So why would I give any of my taxes to the EPA if private organizations are more effective at protecting the environment? People aren't tied to organizations...they are tied to results.

      I perfectly understand your argument...that there should be direct competition between the private and public sectors...but from my perspective, to argue for greater competition automatically implies that there are private organizations that are doing the same thing as the government. If there are already private sector organizations doing the same thing as the government...then why wouldn't the tax allocation decisions of 150 million taxpayers reflect exactly how well those private sector organizations are doing in comparison to the government?

      You want a more efficient method for the government to compete with the private sector. I can easily see how your preferred method would quickly shrink the government. But, assuming private organizations do exist that are more effective than government organizations, then I can also see how pragmatarianism would shrink the government as well...even though it would admittedly take a more circuitous path to do so.

      So what I'm saying is that...pragmatarianism offers taxpayers the freedom to opt out of paying for every single government organization...except for one. Is it worth it to have this freedom? Yes. Would this freedom fundamentally transform the government? Yes...how could it not? Would it be easy to gain this freedom? Noooooooo way.

      People don't trust congress with their taxes...but they trust congress with their taxes a lot more than they trust you with your own taxes. Why should they give you the freedom to choose which government organizations you give your own taxes to? How do they benefit from transferring the power of the purse from 538 congresspeople to 150 million taxpayers? What's the economic benefit of allowing the perspectives of 150 million of our most productive, talented, creative, innovative and insightful citizens to determine the distribution of public funds?

      Pragmatarianism, if nothing else, is a very simple model to try and encourage people compare the invisible hand (the tax allocation decisions of 150 million taxpayers) to the visible hand (the tax allocation decisions of 538 congresspeople). If we don't show people the value of the invisible hand...then we can't blame them when they choose the visible hand instead of the invisible hand.

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  3. You assume that the private sector is not doing things because they can't within a free market context. That's not necessarily the case.

    To use your space example, did you know that it is illegal in the U.S. to own a private launch platform? The way the federal government interprets it's anti-trust laws, you cannot own a launch platform, because if you did, you would have a monopoly on private launch platforms. So the second one cannot be built, because the first one cannot be built. Quite convenient. I would note, though, that there is a loophole with space planes, since airstrips already exist. Guess who is at the forefront of developing space planes? The private sector, not NASA.

    Many thing the private sector does not do is because the government directly or indirectly prohibits it. Further, the government can undermine private companies' services because the government doesn't have to show a profit. The government can always undercut its competition because of tax dollars. Of course, your idea would undermine this to some extent, but allowing donations to private organizations would certainly do so.

    More, if donations to private organizations were allowed, private organizations would arise to do the things they could get donations to do. So long as the job gets done, does it really matter who is doing it?

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    1. Deng Xiaoping frequently said that it didn't matter whether a cat was black or white...what mattered was whether it caught mice. Likewise, it shouldn't matter whether an organization is public or private...what matters is whether it produces results.

      Your focus is on the middle class taxpayer. After he pays taxes then he doesn't have any money left over to donate to private organizations. In your preferred system he would be able to spend his taxes on non-profit organizations and public organizations. The more taxes he spent in the non-profit sector... the more the government would shrink.

      My focus is on the taxpayers who already make substantial donations to non-profit organizations... for example...Bill Gates, Warren Buffett and Jeff Bezos. You can read about Jeff Bezos' investments in space exploration here...Bezos Invests in Space Travel. In a pragmatarian system...how they would spend their money in the non-profit sector would determine how they would spend their money in the public sector.

      Like I said before...personally, I would vote for your system. Strategy wise though...the problem is that liberals would easily see it as just another libertarian ploy to shrink the government. Pragmatarianism is completely immune to that critique. All it says is that 150 million taxpayers would distribute public funds more efficiently than 538 congresspeople ever could.

      Your focus is on the distribution of funds between the private and public sectors...my focus is entirely on the distribution of funds within the public sector. All things being equal...I believe it is worth it for public funds to be efficiently distributed among the various government organizations.

      We already know exactly how liberals respond and react and argue against libertarianism...so let's try a new tactic. Let's get them outside their comfort zone and force them to respond and react and argue against pragmatarianism. At worst we'll debate the invisible hand and at best we'll have the freedom to choose which government organizations we give our taxes to.

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    2. In the end, there will be no difference between government and market organizations -- but only insofar as there is no monopoly being enforced. The argument should be against monopoly of any sort.

      In other words, I don't want a distinction between government and market organizations in the procurement of public goods. I want the money to go to whatever organization will provide them at the least cost.

      And I'm still wondering about the issue of the government borrowing money to do whatever it wants anyway.

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    3. If you get a chance you should read this post of mine...Is There a Platypus Controlling You?

      What's interesting is that you aren't arguing against the concept of "public goods"...so it seems like perhaps you feel there still needs to be some nudge...or incentive...to encourage people to "invest" in the common good.

      Regarding the government borrowing money...the government would be so decentralized that...if the EPA did borrow money then only the taxpayers that value the EPA would be on the hook for paying off the loan.

      I don't think we see non-profit organizations taking on unreasonable amounts of debt. If they want more money then they just hold fundraisers. It's kind of hard to imagine government organizations engaging in fundraising activities...but I don't see why they shouldn't have to. Every organization...public or private...should have to persuade us to give them our money. Persuasion is how information is disseminated throughout our society.

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  4. Yes, I think there are, arguably, public goods. There are likely to be things that you have free rider problems with, and those are public goods. Policing, military, and fire protection come to mind.

    It seems to me that borrowing would be a good way to avoid decentralization and to ensure politicians continue to fund their pet projects. I think there needs to be more extensive reforms to fix that problem. This is not enough.

    I agree that government entities should engage in fundraising. They should beg for every penny.

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