Wednesday, October 3, 2012

Dispersed Costs and Concentrated Benefits

My comment over at Troy Camplin's blog entry on Traffic, Economics, and Constructal Law ended up exceeding the maximum quantity of characters allowed for a comment.  Rather than making the effort to try and say more with less words...I'm just going to post my comment here...


"I still continue to see the cost-benefit pattern of traffic as more closely resembling democracy than the market."

On the freeway you have the freedom to act according to your individual foresight/insight.  The same could hardly be said about the public sector.  If I foresee a problem with Iran then I don't have the freedom to shift my own taxes to the Dept of Defense.  If I foresee a problem with global warming then I don't have the freedom to shift my own taxes to the EPA.

On the freeway if I foresee a problem with a drunk driver...then I...and everybody else...have the freedom to switch lanes in order to try and give the drunk driver as wide a berth as possible.  We also have the freedom to report them to the police...and many people will do so... because the very large majority of us want to get home as quickly but safely as possible.

The freeway gives us the freedom to use our means to try and achieve our diverse ends...the same could hardly be said of the government.  On the freeway...I have the freedom to put my car where my individual foresight/insight says it should go.  In the public sector...I do not have the freedom to put my taxes where my individual foresight/insight says they should go.

The market works because people have the freedom to put their own money where their mouths/minds/hearts are.  The people with the most accurate individual foresight/insight will benefit the most people.  As a direct result...they will have the most resources to allocate.  They earned the resources at their disposal by benefiting others.  In our society these people are taxpayers.

The public sector fails because it takes a large portion of the resources from 150 million of our most resourceful/insightful citizens and allows these resources to be spent by 538 congresspeople with significantly less resourcefulness/foresight.  If 538 people truly had the insight/foresight/resourcefulness to earn more than $3.5 trillion dollars then they wouldn't have to resort to taking this money from taxpayers.  Taxpayers, who would have to pay taxes anyways, would simply see the benefit in giving all their taxes to congress.  

Mises' "human action" describes behavior on a freeway...
We call contentment or satisfaction that state of a human being which does not and cannot result in any action. Acting man is eager to substitute a more satisfactory state of affairs for a less satisfactory. His mind imagines conditions which suit him better, and his action aims at bringing about this desired state. The incentive that impels a man to act is always some uneasiness. A man perfectly content with the state of his affairs would have no incentive to change things. He would have neither wishes nor desires; he would be perfectly happy. He would not act; he would simply live free from care.
...and it definitely does not describe our ability to act in the public sector.  What describes our public sector is the mass destruction of individual foresight/insight...
If the socialists mean that under extraordinary circumstances, for urgent cases, the state should set aside some resources to assist certain unfortunate people, to help them adjust to changing conditions, we will, of course, agree. This is done now; we desire that it be done better. There is, however, a point on this road that must not be passed; it is the point where governmental foresight would step in to replace individual foresight and thus destroy it. - Bastiat, Justice and Fraternity
How cars are distributed on a freeway is the result of the incorporation of each person's individual foresight/insight.  The same cannot be said about how taxes are distributed in the public sector.  And we already know the result...
The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder. - Adam Smith

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