Monday, January 30, 2012

Unglamorous but Important Things

The title of this entry was mooched from a discussion over at the Language Goes on Holiday blog...

Xero: Should something even be in the public sector if it's not somebody's pet concern?
DR: I expect there are various unglamorous but important things.

Not quite sure why I like the phrase "unglamorous but important things".  Perhaps because it reminds me of Henri Cartier-Bresson's photograph of a mundane scene or Edward Weston's photograph of a bedpan.  There was nothing glamorous about either subject yet both photographs are widely regarded as works of art.  What's glamorous about self-interest?  Nothing...yet Adam Smith's Invisible Hand concept managed to reveal the extraordinary aspect of this very ordinary part of life.

What would happen if we applied the Invisible Hand concept to the public sector?  What would happen if taxpayers were allowed to directly allocate their taxes?  What would the distribution of public funds look like if taxpayers could shop for themselves in the public sector?  Would people forget to fund unglamorous but important things?

For some time now I've been asking people for their feedback on this topic so I figured it might be of some use to compile a collection of responses that all have something to do with the Invisible Hand.  This coordination problem response is the second most common type of response to pragmatarianism...
  1. The ostrich response (~ 85%)
  2. The coordination problem response (~ 9%)
  3. The taxes are theft response (~3%) 
  4. The rich people are evil response (~ 2%)
  5. Other (~1%)
How do you interpret this collection of Type II responses?  On one hand you can interpret this collection to represent an overwhelming amount of evidence against pragmatarianism.  This interpretation might also prove that I'm nuts.  On the other hand you can interpret this collection to represent an overwhelming amount of evidence that people from a wide spectrum of political beliefs do not understand how the Invisible Hand works.

The thing is...in order to effectively evaluate the responses you'll have to understand how the Invisible Hand works.  If you're outside the field of economics...then what are the chances that you already truly understand how the Invisible Hand works?  What are the chances that a noneconomist will have firm grasp on decentralized knowledge, opportunity cost, rational ignoranceheterogeneous activity, concentrated benefits and dispersed costs?

The simple answer to the coordination problem is that an "incorrect" distribution of public funds is "logically impossible"...
The biggest objection is that important programs will be underfunded. But that consequence is actually logically impossible. If Americans don't think a program is important enough to provide more funding, then in a democracy, by definition it isn't a priority so doesn't deserve more funding. I also think you would be surprised at how much money Americans would choose to provide to entitlements. More Americans might want contribute money to Social Security and less to the wars in Iraq and Afghanistan, for example, because they might prefer to provide for the retirement of Americans instead of bombs in the Middle East. - Daniel Indiviglio, What If Taxpayers Could Decide How Their Money Is Spent?
Imagine you're about to have a BBQ with some friends.  You just returned from the store with steak, hot dogs, chicken, corn, potatoes, zucchini, portobello mushrooms, eggplant and various other BBQ items.  Only one problem...you forgot the charcoal.  Charcoal is certainly unglamorous...but it's a very important thing if you want to have a BBQ.  Therefore, you'll need to make another trip to the store...unless you also have a gas grill...or you have suitable wood laying around...and trust me...not all wood is suitable.

Like having BBQs and donating to non-profit organizations...people would be able to pay their taxes at anytime throughout the year.  What would happen if somebody paid their taxes but then realized that they forgot to help fund some unglamorous but important thing?  Would they be willing to pay additional taxes?  Would they try and convince their friends to run to the store to purchase the charcoal?

Continuing with the theme of food analogies...both John Holbo and Jake mentioned potlucks.  When you have a potluck it's important that participants coordinate with each other in order to ensure that everybody does not bring potato salad.  How in the world could 300 million people coordinate with each other to ensure that they didn't end up with too much or too little of any public good?

The answer is simply that we would have a taxpayer division of labor.  Taxpayers that loved potato salad would order more potato salad from the Dept of Potato Salad if they were concerned that the supply of potato salad was running low...and...taxpayers that loved tuna casserole would order more tuna casserole from the Dept of Tuna Casserole if they were concerned that the supply of tuna casserole was running low.

Just like with the BBQ...there potlucks involve plenty of unglamorous but important things such as paper towels, cups, plates and so on.  Would anybody love these things?  No...but we wouldn't be able to have a potluck without them...and based on people's responses to pragmatarianism...it's clear that this fact is not lost upon the majority of people.

The bottom line.  Asking people what would happen if taxpayers were allowed to directly allocate their taxes reveals whether they understand how the Invisible Hand works and simultaneously helps you better understand how the Invisible Hand works.

Anarcho-capitalists: Barking Up the Wrong Tree

With that in mind...let's consider anarcho-capitalism.  Anarcho-capitalists want to abolish the government because they believe that taxes are theft and/or the private sector can do everything as good as...or better than... the public sector.  For a more formal definition see wikipedia's entry on anarcho-capitalism and for a fun definition check out Dale Everett's Top 10 Causes of Minarchism.  Here is cause number 8...



This comic strip argues that minarchists (the government should only provide police, military and courts) do not make the leap to anarcho-capitalism because they are concerned that other people would engage in aggression.  This strip is applicable to people's responses to pragmatarianism...except that people aren't particularly concerned with aggression.  Instead, they are just concerned whether other people would purchase the "correct" amount of potato salad, charcoal, cups, paper plates and so on.  The minarchist and anarcho-capitalist concern with aggression merely masks the real issue that people do not understand how the Invisible Hand works.

If you understand how the Invisible Hand works...and know that the private sector can do X, Y and Z better than the public sector can...then advocating for the abolition of the government organizations responsible for X, Y and Z does absolutely nothing but distract people from learning about how the Invisible Hand works.  Why shoot yourself in the foot with bells and whistles?

For a perfect example of this problem check out this video by Stefan Molyneux.  In his Frequently Asked Questions (FAQs) video he really helps illuminate how the Invisible Hand works but then he overshadows his insights with moral arguments.  What comes to mind is when Linus, by far the smartest of the Peanuts gang, lost the election for class president because he brought up the Great Pumpkin.





Advocating for the abolition of any government organization in no way, shape, or form helps people  understand how the Invisible Hand works.  If they don't understand how the Invisible Hand works then they'll never understand what advantage the Invisible Hand has over congress.

Pragmatarian Gadfly

In my post on a taxpayer division of labor I drew an analogy between Socrates and Ashton Kutcher in the show Punk'd.  John Holbo, in his book on Plato and Socrates, takes a more in depth look at the value that Socrates offered to society.  Here's a passage that Holbo shared from Plato's Apology...
I was attached to this city by the god - through it seems ridiculous thing to say - as upon a great and noble horse which was somewhat sluggish because of its bulk and needed to be roused up by a kind of gadfly.  It is to fulfill such a purpose that I believe the god has placed me in the city.  I never leave off rousing each and every one of you, persuading and reproaching you all day long and everywhere I find myself in your company.
Holbo wrote (with his own emphasis), "Gadfly bites hurt.  They draw blood.  Other things being equal, pain is bad.  (Do you agree?)  How can Socrates be so sure other things are not equal?"

Yeah yeah...it's ridiculous to compare myself to Socrates...but some would certainly consider me to be a gadfly.  For example, as I mentioned on my post on Crooked Timber Liberals Monopolizing the Facts, Chris Bertram shooed me away...
[Crooked Timber comments threads are an opportunity to engage in conversation, not the granting of a soapbox for you to promote your private obsessions. Please go away. CB]
It's not just liberals either.  The owner of the Bleeding Heart Libertarian blog e-mailed me and politely asked if I would tone it down.  My response was pretty much the same thing a gadfly would say, "I'm a gadfly...how am I supposed to tone it down?  Bite less frequently?" [Update] Banned From Bleeding Heart Libertarian [Update] Banned from EconLog

The trick of course...as Holbo considered (with his own emphasis)...is accurately discerning whether these bites are necessary...and if they are...what are the next steps....
But then Socrates must think he knows something his fellow citizens do not, if he knows he is doing the right thing, asking funny questions that have gotten him hauled into court.  But surely he can know he is helping his fellow citizens to degree (so the reply will run).  Surely proving there must be something wrong with his fellow citizens' beliefs cannot fail to be some help.  But unless there is some way to take positive steps beyond that, is it really clear this is so?
The following is my evidence that there is something wrong with my fellow citizens' beliefs.  The positive steps are simply for my fellow citizens to ask people about pragmatarianism until they can see the Invisible Hand for themselves.

A Mountain of Evidence


On the other hand, if people are forced to pay taxes – which seems an arbitrary infringement of their rights as consumers, by the terms of this scheme – why will it go better if everyone allocates their tax money privately? We’ll have a huge coordination problem, no? You seem to be advocating not an efficient market but a giant pot luck dinner, with all the hazards of too much potato salad that entails. But with aircraft carriers instead of potato salad. What am I missing? - John Holbo
Context: Selling Votes
A group of citizens coming together for the sort of economic potlatch you suggest is no more a state than a pile of bricks is a house, and as such will not be capable of performing satisfactorily those functions that states are objectively superior at performing. - Jake
Context: Repatriation Holiday Lobbying - Money Speaks
I’d love to be able to allocate my taxes. Seriously, I would. It’d be difficult to organize this on a high granularity level, though; I imagine everything would get of whack, as I probably have no information on how other people allocated theirs. So, to start with, I would suggest just a couple of categories, like, say, ‘the military’ and ‘everything else’. - Henri Vieuxtemps
Context: Selling Votes
Xero, I guess I am in the Keynesian camp (well not the tautological Austrian camp) I accept your proposal with score of 8/10. I still wonder if people will volunteer to spend enough on some government supplied basics, like defense or police or law courts, but maybe we could personally allocate 80 percent of our taxes, or 50 percent and see how it goes. - macroman
Context: Opportunity Cost for Thee, But Not for Me
Your solution seems reasonable, but why stop at voting for funding of various government agencies, instead of deleting the agencies? Additionally, what happens when boring but needed agencies enjoy zero funding? And what happens if military gets too little funding to effectively protect the nation? - Stone Glasgow
Context: Efficiency in Government
I'm not sure that its ultimately defensible (I'm not sure it isn't) and I am not sure that in a defensible form it wouldn't have some limits (say certain percentages of collected taxes automatically go to police funding, for example), but it seems to me clearly to be an idea worth considering. What would the outcome look like? I have some worries about this. Lots of people might allocate their taxes (or the portion they can) to the arts. - Andrew Cohen
Context: States Must Do Bad
That's assuming 150m people would want to do such a thing. You know as well as I do that many of those people wouldn't take the time or effort to properly allocate their taxes. Plus how would you guarantee that the "products" they purchase would be doled out proportionally to their investment?  Secondly, it'd be a major bread and circus type environment. What if defense was woefully underfunded because most people would purchase healthcare or arts and science endeavors? You'd empower the media enormously as they'd convince the masses to buy a certain "product". - LoneStarLocke
Context:  What's Wrong With a Representative Democracy?
Xero, Choice is usually better, but what if everyone chooses to allocate their tax dollars to, say, the National Endowment for the Arts and there is nothing allocated to National Defense? - Pappas
Context: Taxes, Competition and Pricing
Suppose I love classical music, and allocate 100% of my taxes to the symphony. Or I'm a farmer, and put 100% on farm subsidies. - Jay-Z
Context: Objections to the Simple Libertarian Argument for Environmental Regulation
You can't really expect people to take the time out to distribute their taxes in the optimal way for governance, because they don't have the interest, education, or experience for it, usually. Bureaucratic functions are left up to officials for good reason, because they usually are people with the appropriate knowledge and experience. Joe the Plumber might be good at his job, but he doesn't have the background or perspective for delegating funds for the government. - Serfin' USA
Context: How Does the Invisible Hand Work?
While I don't really trust them either, at least they are more knowledgeable in economics and have been elected specifically to do just that. Therefore, I trust them a bit more than I trust Joe Blow plumber who can't balance a checkbook to safe his life. - Cephus
Context: Congress You're Fired!!!!
By way of partial answer, even if we assume that the taxpaying public can and will become informed enough about our massive interconnected system of government to efficiently allocate their local, state, and federal taxes according to self-interest, individual self-interest and group welfare often conflict. And in practice, vast areas of government that are important to public welfare, but not individually impactful, would be underfunded--because there are limits to the rationality of the taxpayer. - Math Mage
Context: Deaf Left: Corporatism is Your Fault
Tyler said that "few people would directly allocate their taxes to public goods." Meaning, they would allocate them to programs/projects that are beneficial to them personally, and not to public goods. For example, people would fund their local park or soup kitchen, but not the military or clean air. Because people are greedy and self-centered -- which is why we have a freerider problem in the first place. - Tony
Context: Dear Left: Corporatism is Your Fault
As for taxation, my answer is NO. People are illogical. They tend only to see the things right in front of them, and lack vision. Someone with no license, for instance, will likely not want to put any of his money towards roads, only to realize down the timeline a bit that the pizza guy can't get to his house without that road...and in most cases, we don't miss something till it's gone...and in some of are tax cases, by the time something is gone, it's TOO LATE to fix it cheaply. - KevinKohler
Context: How Does the Invisible Hand Work?
That’s an open-ended question. It depends what you mean by “directly allocate”. If you mean something like the government presenting taxpayers with a menu of programs to fund, it’s likely the institutions near and dear to people’s hearts and self-image would get the bulk of funding. Things like schools, environmental programs, agriculture subsidies, etc. Voters and taxpayers are both rationally ignorant, so this would likely have a terrible impact on policy. - Aaron
Context: Politicians Don't Care About You
Government goods aren't necessarily "public goods." Taxpayers are likely to support programs in their own self interests; farmers will support farm subsidies, drivers, which most taxpayers are, will likely support gas subsidies. The majority will inevitably vote themselves benefits at the expense of the minority. Usually, the coalition that can form a majority isn't made up of the groups most in need, or which are most magnanimous. - Jason Weinman
Context: Indefensible and Embarrassing
Okay, now I understand your concept of investing in public goods. I don’t like it. I don’t know if Wal-Mart should hire more sales clerks or shelf stockers in the coming year. In the same way, I don’t know if the government should build a new school, a new reservoir or if it needs to fix potholes in the road over the next year. The average person has better things to think about, and it is highly unlikely that the outcome would be anything close to efficient. - geofree
Context: Confessions of a Libertarian
What's the point in that? All it would do is let everyone put their tax money into their pet projects, while entirely neglecting the many important but scarcely visible government agencies. It would also create a situation where the better an agency operated, the less money they would get--because they would get correspondingly less attention in the media, and therefore fewer "donations".  Direct allocation of taxes by the taxpayer is a dumb idea. It would be like trying to operate a business where your customers got to determine how the money they paid you gets spent. "Now I won't buy this item unless you put all of the gross income from my purchase towards the janitorial staff..."  Impossible to operate. Efficiency would drop through the floor. - Someone
Context: Which Congressperson Would You Trust With Your Taxes?
For your idea to.work, taxpayers would have to be FAR more informed aboit what it takes for our society to function.  There is NO WAY that critical programs would be underfunded.  I'll say it again: allocating a big chunk of yoir tax bill would provide the feedback you desire, withou causing huge problems in areas folks just don't think about.  Would everybody remember to fund sewage treatment, for example?  Or would they just give all their money to their pet programs and assume that everything else would be covered by someone else? - What if...?
Context: What Causes The Growing Wealth Gap In America?
Unbundling public services will run into the same problems that philanthropy-reliant public services do/would (everyone wants the "John Doe Foundation Theater" and no one wants the "John Doe Foundation Water Treatment Plant" so we end up with a dozen theaters and hot and cold running sewage) combined with the popular misunderstanding of where government spending actually goes (in the States see the surveys where we see people wanting to balance the budget by cutting the 25% they have decided that we spend on Foreign Aid but this is not solely a US phenomenon.)  - Schadenboner
Context: Quartz article: Is China going to be #1?
I'm not so sure. You can lead a taxpayer to a position of responsibility, but you can't make them take it. Surely people would tend to allocate their money to their own pet concerns (veterans giving to defence, teachers to education, environmentalists to environmental protection, etc.), with the result that nothing coherent or workable emerged. And then, if they saw that more was needed here or there, they would tend to expect others to make the needed adjustment. Markets are good things, but there isn't actually an invisible hand that makes things work out. - DR
Context: Opportunity Costs
But, that is not how your proposed system would work. I own several pieces of agricultural land. I would give all my tax money to the Department of Agriculture and have them return it to me in the form of a farm subsidy.  Why should I even pay taxes if the government is just going to send nearly all the money back? - geofree
Context: Which Congressperson Would You Trust With Your Taxes?
Interesting idea. I do think however that most people are very pragmatic when it comes to allocating money for services that directy affect them. Consider however that funds such as FEMA would probably be devastated because people in Georgia or Utah are tired of paying for flood or hurricane damage, or on the brighter spot farming subsidies or oil subsidies could be slashed once more became aware of the slough there. - aitm
Context: Divine Authority vs the Invisible Hand
How many people even know what NIST is more less what it does?
What do you do when social security receives too little funding this year?
what happens when the next Katrina hits but FEMA has no funding? - Sociobiology
Context: Taking vs Trading
I'm not too sure this would work out to well myself. Me and my friends over many a drunken political discussion suggested solutions such as this many a time with with the end result almost always being that some often forgotten essential government programs would get left by the wayside until some sort of tragedy would occur to bring the 'error' into light. It is not beyond the scope of reason that once this tragedy occurs that it would essentially be too late for corrective action to take place. Think FEMA funding after several years of mild weather events (i.e. people not perceiving a necessity to contribute to FEMA during mild climactic periods). Another potential problem that we have theorized would be the public funding lash-back eradicating a good program if some scandal occurred that was really an isolated incident of corruption (say that a member of the FDA took a bribe and people died as a result). - Swit
Context: Survival of the Fittest Government Organizations
Public goods can't operate according to individual preferences adapting over time. Fer instance no one gives a shit about disaster relief until, whoops, there's a disaster. Adequate response to a disaster, which people demand, requires a consistent level of staff, training, supplies, and logistical clarity coordinating it all. That can't be maintained by a public which would allocate bare bones levels of funding in good years and then spike way up when there's a disaster. - Anonymous
Context:  An Economy Based on Wife Swapping
My bottom line is a prediction: if your proposal were to be carried out, a whole range of very mundane governmental activities would not be funded while a series of high-interest sexy activities would be overfunded. For example, NIH/CDC activities to fight AIDS and Alzheimers would be heavily funded (not that I'd mind the Alzheimers) but routine vaccinations would not be funded. Police SWAT teams would be funded but not the county clerk's office. Infrastructure generally would be ignored. - Bill Harshaw
Context: A Liberal Solves the Budget Deficit
Because there are hundreds of unsexy but essential government programs that need funding and most likely wouldn't get it if we could all pick and choose.  I dont know that i'd tick off the 'please use my tax dollars to replace the filters in the city sewers in Akron' as much as 'please use my tax dollars to fix education', but Akron needs clean water. - Jeremy Meyers
Context: Should Warren Buffett Voluntarily Pay More in Taxes?
Or, more likely we'll have an enormous, bloated "Department of Puppies and Blowjobs" and perpetually bankrupt law enforcement, transportation, health, and environmental departments. Plus roads that look they've taken mortar shellings, untreated water filled with cholera and dysentery (Oregon Trail, ho!), and schools run by whatever local fundamentalist religion does the best job of conning parents. - Wikkiwallana
Context: Taking vs Trading
People will "choose" to put tax dollars towards whatever seems sexiest. To them. How many are going to choose vaccine research? Inspection of the water system in Toledo? High-speed fiber optics installation at the DMV to provide faster turnaround on data requests by police forces? - Deuce
Context: Ask a Pragmatarian
I think this is a dangerous assumption. We cannot predict with any degree of accuracy where people might choose to allocate the funding under these circumstances. There is a great risk that some vital areas will end up greatly under-funded while other government organizations that are higher profile, but require less overall funding may end up with an embarrassment of funding. This kind of fund allocation by guesswork, trying to predict where others will put their funds, and then allocating your own contribution accordingly is certain to lead to considerable waste. - Just1Voice 
Context: Ask a Pragmatarian
Easy: Nobody allocates to debt-service payments in the first year. (Or maybe it’s just Megan McArdle and Greg Mankiw — same deal.) The US, which is the world’s largest issuer of AAA-rated securities, suddenly defaults. Or are you suggesting that 15% or so of the nation’s taxpayers would choose to allocate to debt-service payments? That’s another extraordinary claim, especially in light of the debt ceiling fuckup this summer. - bluntobject
Context: All Linky, no Thinky: Special Issue on My Confirmation Bias
I also wonder about whether we wouldn't see a huge increase in the budget for, say, saving panda bears (or American equivalent, whatever that might be), and a huge decrease in funds given to, I don't know, the IRS probably. Not that I"m a huge fan of the IRS, but that state of affairs would seem to create some practical problems. - Rob
Context: Deontological Ethics vs Pragmatic Ethics
Your idea is simply terrible. The examples are far too abundant to go into but here's just one: How many people will voluntarily fund the IRS? - mattski
Context: Crooked Timber Liberals - Monopolizing the Facts
Free market principles don't work in things other than markets. Market forces require things like informed customers, freedom of choice, and competition. You have exactly none of those things when it comes to, say, maintaining a power grid or highway infrastructure.  Off the top of your head: How many food inspectors are sufficient to ensure acceptable food safety? - Deuce
Context: Survival of the Fittest Government Organizations
Again, by giving every tax payer a line item veto, you force Congress to turn into a merry go around of idiocy reallocating money every time some voter decides that "I hate ____, let's not fund it." There is no real budget at that point. It's Congress plugging holes. And what everyone values differs. Do you think it would be good to let the pacifists completely stop funding the military? How about no money for food inspections so shiga toxin producing e-coli can get into our school foods and liquidating the brains of our school children? I can keep going to show just how little thought you have put into this steaming pile of **** you call a proposal. - obvious Child
Context: Teaching Economics to Liberals
You are talking in pipe dreams that might at best work for relatively small cooperatives of people with fairly close values and objectives, but would be utter chaos for any modern society with its hundreds of millions of denizens and almost uncountable number of problems needing to be addressed and prioritized from global warming to food-borne infections. - Linda Beale
Context: Repatriation Holiday Lobbying - Money Speaks
The problem is that whenever you design any new system or product, you first have to assume that people are lazy idiots who'll screw up in ways you never thought possible. This system could work in a small population of maybe less than 10000 people, but a country with the population of America? this system of yours is going to be a disaster. - Damarcus
Context:  Divine Authority vs the Invisible Hand
The government is not studying unicorns. Your idea as a theoretical matter makes sense, but as a practical matter, it is terrible and would make disastrous policy. First of all, most people would probably choose not to give any money to fund the federal government, which would be awful. Second, there would be a huge degree of instability and uncertainty regarding how much money each department or sector would be getting every year, which would make planning and long term projects completely infeasible. It would destroy our government system. Maybe that's what you really want. I don't know. - Krhazy
Context: Why a Balanced Budget is An Elusive Ideal
Given how poorly most people understand the budget (for example, vastly overestimating the amount of money that gets spent on foreign aid), I’d expect it to be a disaster. Maybe an instructive one, though! After a couple years of direct allocation, maybe people would be much better-educated in what gummint actually spends money on. - bluntobject
Context: All Linky, no Thinky: Special Issue on My Confirmation Bias
But how do you know that X% is the right amount? Moreover, you claim it embraces the market but the choices are highly limited and the prices are not at all likely to reflect a market price as their is no competition between ideas, furthermore if there were it would lead to horrendous results, voters would likely be influenced to spend their dollars on things not in their interest due to their lack of information and lack of interest in finding said information. - Anikdote
Context: Libertarian Pudding Tastes Good!!
I agree a lot of this. I don't think Lobbyist are inherently a bad thing. People should have the right to lobby Congress. I think the revolving door and the cost of campaigns has turned it into a system where lobbyist write the bills. I do think that ultimately Congress members have much more information than the normal voter. I mean...you'd like to think it is their job, they get the reports from the agencies, there's now way humanly possible to expect voters to work their jobs, spend time with their families and have comb through agency reports on what the government professionals recommend. - iliveonramen
Context: Teaching Economics to Liberals
I'm concerned that the general population cannot be as informed as specialists about a given field. I would not trust an engineer to decide whether I need surgery nor would I trust a surgeon to decide the concrete mix for a dam - or even a street or bridge. Specialists by definition know more about a subject then most other people. Our society is filled with them and, indeed, it's what makes our society what it is, starting with the first agrarian communities ~10,000 years ago. To leave specialized decisions in the hands of ignorant laymen is to invite disaster. - MoSurveyor
Context: Teaching Economics to Liberals
Third, this presumes good information on the part of the taxpayer/voter. We have pretty good evidence that many people lack good information, both from polling data (amount of money spent on foreign aid, for example) and from the continued existence of the Republican Party. - dr2chase
Context: Niall Ferguson does not know what "Western Civilization" means
You have no idea how efficient NASA is at researching the materials needed for flight at Mach 15 and you probably aren't even aware of why anyone would want to do that. The government does about 800,000 things that the average citizen isn't even aware of, yet some of those things can be literally life or death.- Deuce
Context: Ask a Pragmatarian
I haven't been following the thread, we can rehash some of the things probably already brought up. I will take the leap and say no. Its a very interesting idea and very appealing too. Here's why I disagree though, things like NASA, the CDC, and the FBI may go unfunded, not useful to everyone, but still critical services for the entire nation to function. Also, the safety net may go unfunded. From a simplistic economic view, no one would ever fund the safety net because those paying already have money and would not allocate money that would not benefit themselves. The ones who require a safety net would be outside the allocation system and we have no safety net at all. - Opteron
Context: Teaching Economics to Liberals
The problem with letting everyone choose where the taxes go would mean that it would be hopelessly in favour of military and less for education and agencies such as NASA. - Damarcus
Context:  Divine Authority vs the Invisible Hand
It's wrong to assume that people always make decisions that produce the best results. People are not rational, they value instant gratification more than long term gains. They overreact and have irrational risk assessments. Many americans spent more than they earned, bought into a housing bubble, and now find themselves jobless. In hindsight, those are not "efficient allocation" of their wages. If we allow people to make decisions on how their taxes are spent next year, how many would choose to make investments in roads, electricity infrastructure, satellites, space programme and so on? What if there aren't enough people willing to put their money to these programes, does that mean that these investments are not "efficient" or does it mean that your "allocation efficiency" concept really doesn't produce the best results overall? So how can that be "efficient"? - nonpareil
Context: The Invisible Hand?  A Quick Survey
What percentage of public services can you even name? How many people are going to put enough thought into this to support weather monitoring satellites, GPS system maintenance, air traffic control, or water filtration?  Do you know what happens when the air traffic control system doesn't have the funds to operate? - Deuce
Context: Ask a Pragmatarian
I’ll make this simple. Let us agree that the government has declared a tax rate of 35%. Lets us agree that the government has decided that there are to be two governmental programs: Ambulances and defense from foreign intruders.  What of the defense program if the taxpayers all allocate their taxes to ambulances? - John Flaherty
Context:  The Third Solution
But I don't think I have nearly enough information to allocate my taxes properly across all these functions even the ones that I find perfectly legitimate (which to be honest is most of them). Others are going to struggle with this too. And that information problem could come up with some perverse results. You may get a massive EPA budget, far beyond what makes sense, because people can't really grapple with all these trade-offs but they know they want to "protect the environment". What does that really help? You probably stop doing the environment much good pretty quickly, you suck funds away from other uses, and you're probably going to hurt the economy if you beef up the EPA's regulatory capacity. - Daniel Kuehn
Context: Thoughts on "tax choice": is it just anarcho-capitalism?
When I shop in the private sector, I am representing my own needs and interests. I am familiar with those, and if I make a mistake of some sort, the burden for it falls only on me. Shopping in the public sector is very different. It requires learning and then representing the needs and interests of 310 million people. As has already been pointedly illustrated, that job is too big for any individual. This is why from the very beginning we have chosen representatives who are deliberately removed and insulated from the masses to make public shopping decsions on behalf of the country. Things have gotten so complicated, that we have given them around 15,000 staffers and better than 20,000 lobbyists to help educate and guide them in their decision-making. Do you have say three dozen top notch, blue-ribbon staffers at your house to research, report on, and advise you in regard to spending and other matters? No? Why would you think that you could do a better job than a full-time elected specialist who does, and that with you starting from a base so weak that it allows you to believe that watching C-SPAN makes you an insider? - Cardinal Fang
Context: The Interests of Consumers are the Interests of the Human Race
The vast majority of Americans don't have the ability, the time or the mental capacity to understand every program and department in the Federal Government and wouldn't even begin to understand how each of these programs and departments actually benefits them.  You'd single handedly tear apart the federal government as Federal Agencies would be forced to advertise in order to get money for programs.  Imagine the idea of having to spend federal dollars informing people that they need to give money in a certain direction in order to have clean water, early detection warnings for tornados or hurricanes... This whole idea is one of the most idiotic things ever thought of. You can barely trust voters to make responsible choices in who they vote for.   Churchill once said the greatest argument against democracy is 5 minutes with the average voter.  I wouldn't want your average joe deciding what gets funded and what doesn't, much as I distrust politicians. - Jetboogieman
Context: Debunking the Crowding Out Concept
The typical taxpayer doesn't have one minute to spend on becoming educated on the best use of public money. there are litterally millions of options and alternatives. Thats why we elect members of our community, to be our representatives, and we pay the to be our full time representative. It's their jobs to figure out the best way to spend tax payer money, and if we don't like they way that they are doing it, we can vote them out of office. I really trust the consensus of 538 congress people elected by the people, most of them highly educated, who assumably study and debate the issues as a full time job, more than I trust the consensus of 150,000,000 people who are basically ignorant.  It's not a perfect system, but it's probably the best one that has ever existed, which is demonstrated by America's dominance in the world. - imagep
Context: The Interests of Consumers are the Interests of the Human Race
Nah. Thats a terrible idea. Figuring out what in our government needs to exist and how much funding it needs is the job of someone who knows about those things. The layperson doesn't have that sort of experience or knowledge. The American people at large cannot even be expected to vote, let alone be trusted with the responsibility of funding all the things that need funding. Americans are more politically apathetic now than they have ever been in the history of our nation, and yet you want to hand them the keys and let them determine what national programs get funding? - Nonsensei
Context: The Devil's Advocate for Public Goods
There is a department is the U.S. government called the Pipeline and Hazardous Materials Safety Administration. You and 99.999% of the American populace have never even of heard of it. If they don't get funding, a natural gas line will explode and kill a lot of people. How does your proposal work handle that? - rathi
Context: How the Invisible Hand Works
Most Americans do not have the information required to judge the cost of any number of things the government does. Off the top of your head, how low can you drop the FAA's funding before air safety is compromised? - Deuce
Context: Survival of the Fittest Government Organizations
Err.... I was more thinking along the lines that it would be terribly inefficient, impossible for departments to plan their annual budgets and personnel capacities when it could change on a whim every year, people would tend to put their money toward programs that benefit them personally the most leaving other important programs gutted, some programs could end up with more money than they even need or want, it would make rich people have even more influence than they do now and as such the system could be gamed, and most people are pretty stupid and would generally make bad decisions on where to allocate the money. Basically, the whole idea is extraordinarily bad and would be a logistics nightmare that only an anarchist hoping for the government to collapse would seriously suggest. - BarkAtTheMoon
Context: Can Economics Explain Human Sacrifice?
If people can choose from anything, dont you think too many people will put money in things that they directly benefit from more more so than, say courts or roads? Obviously, some will allocate more for roads or courts they use but i see that these may become underfunded and many will not notice since they dont go to court or use those specific roads. - ClassicalLiberal
Context: The Visible Hand vs The Invisible Hand
Why would I send my money to fund National Defense when I can benefit from someone else paying for it? Although in my "perspective", I may value National Defense, this may not be reflected in my allocation of money. I'll just send my money to a program that benefits me. - Free market & self allocation may be ill-equipt to handle community goods. - JeffLV
Context: How to Defeat a Liberal in a Debate
As applied to your concept: you could have individuals over-allocate tax dollars to the programs that benefit those individuals directly, and under-allocate tax dollars to programs that benefit all of us collectively. For example, seniors might allocate 100% of their tax dollars to retirement programs (Social Security, Medicare) and nothing to any other program. - Knox Marlow
Context: Taxes, Competition and Pricing
You don't have a choice. You can't decide to forgo national defense and just get social security instead. - Deuce
Context: Survival of the Fittest Government Organizations
The whole vote with your taxes idea has actually been growing on me. The only problem is that I can see some important things getting critically underfunded because voters don't understand them, or just because voters are stupid. Maybe if the government got like 15 percent of the total budget that it could do what it wanted with to correct for shortfalls. As for the other, it's not so much that liberals don't accept the invisible hand. I understand how the market is supposed to work, and in the majority of cases, it does work that way. It's just that some people seem to think it always works in every situation. Since you've already said that you think universal health care would probably work better than private sector, I'm assuming you're not one of those people, which means we probably actually agree on most things. - atrasicarius
Context: Aikido, Dune and Taxes
You completely ignored what I said. I said that a good number of Americans, spurred on by various conservative speakers, would want a larger army to fight the muslims. Eventually the army is so huge that it actively "encourages" us to continue sending our tax money to them. - Generational Apostate
Context: The Devil's Advocate for Public Goods
Being able to allocate where you tax dollars is spent does not mean the will be spent efficiently, it only means where they are spent will more effectively represent where you want your tax dollars to be spent. The individual will not have the means, the time nor the resources to be able to determine on an ongoing basis if their tax dollars is being spent efficiently, it will only ensure that it effectively represents what their percieved interests are. The average invidual will not be able to determine if the federal government should spend a couple billion dollars on Interstate X or on Public project Y. Nor would they have the understanding to determine that building the F18 is a more effecient use of their tax dollar then building the F35, or perhaps building 20 new M1A1 MBT. - Lord Tammerlain
Context: Teaching Economics to Liberals
Take, for example, our military and defense establishment. A soldier or Marine fighting on the front lines in Afghanistan is ideally well-equipped, well-fed, and supplied with the proper ammunition. The average taxpayer, sitting thousands of miles away, is not in a proper position to properly assess the needs of that individual trooper. For him to be effective at his job, he needs good body armor. He needs a functioning and reliable weapon. He needs quality ammunition. In other words, a bureaucracy like the DoD requires a dedicated source of funding and should not be subject to the whims of donation drives by private citizens, because this would likely result in unsteady funding and inferior equipment. The average taxpayer is not capable of properly assessing the logistical needs of the troops who are attempting to carry out their mission because they are not privy to perfect information or education regarding strategic and tactical circumstances. - StillBallin75
Context: How to Defeat a Liberal in a Debate
Once again, you are purposely, dogmatically, and perniciously ignoring the fact that I presented a far, far more viable way to place government services on the free market--by cutting the fedgov and letting states provide them--and compete with each other to provide the best package. Furthermore, you haven't explained how it's to anyone's advantage to have everyone earmark their taxes to, say, the Department of the Interior, thereby not only starving out all other departments but providing Interior with more money than it could possibly find useful ways to spend. You quote John Stewart Mill all day, saying that the nation is full of experts, but you not only fail to explain how the experts among us will disseminate their great wisdom among the rest, you give no indication at all how people will coordinate their efforts to ensure no department is left behind. And you certainly don't explain how a populace that can't even be coerced into properly researching their political candidates can be coerced into doing all of this work. - acptulsa
Context: The Principle Concepts of Libertarian Economics - Feedback Requested
Right. Because taxpayers are going to take the time to research all the available options and carefully weigh what needs funding.  For that matter, who decides what options are available to be chosen from? Within a broader category (like, say, defense), who decides what weapons systems will be bought, and how many?  We have representatives for a reason: they're supposed to spend the time developing the expertise and studying the options to make good decisions on our behalf. We can then judge them by the results, and vote them out if we don't like the results. It's a very rational division of labor.  The fact that many Congresspeople are idiots, or deep partisans from safe districts, is a problem. But direct democracy at the level of granularity you're talking about isn't a solution.- raytri 
Context: How to Defeat a Liberal in a Debate
My concern is that, lacking ESP, how is anyone going to know what is getting the funding it needs and what is not? Suppose we have another national security scare.. the public has not shown itself to be particularly careful and their critical thinking skills, on the average are poor. Given that our news media focuses so heavily on conflict, I can easily see a situation in which 75% or more of the tax allocations go to the military, leaving our governments domestic services grossly underfunded. - Just1Voice
Context: Ask a Pragmatarian
But I simply don't believe in pragmatarianism, since most people would opt to not spend on defense, infrastructure, etc. ...necessary evils that don't look pretty and smell good. - ChuckBerry
Context: Would You Go Into Debt Paying for Government Programs?
Your solution, while theoretically sound, suffers from the same issues any other system of government does: people. They're generally uninformed, ignorant, and totally uncaring. I'd give it a good chance that most people wouldn't even take 10 minutes to think about where their taxes are going to and would just go "soldiers good, all goes to defense" or something along those lines. - Plu
Context: Can Economics Explain Human Sacrifice?
Are you capable of explaining all the functions each of those 15 departments performs? Are you in communication with the heads of each department so they can communicate their budget needs? Explain the impact of raising or lowering funding for every single department. Now detail how a populace in which 50% of them don't even vote will somehow individually learn how to handle a budget so complex that it takes hundreds of congresscritters+ assorted aides to understand. - rathi
Context: How Would You Allocate Your Taxes?
This is why I favor a representative democracy. I know that I cannot become an expert in all the arenas that the government must make policy on. Therefore, it is more efficient for me to vote for those experts that I agree with and for them to make political decisions on my behalf. However, I also support a check in that these representatives can be overruled by via referendum so that if they make a political decision too unpopular to their constituents it can be stopped. - samsmart 
Context: Why Is Your Partner Cheating On You?
A hundred million individuals making decisions about funds they have no real knowledge or expertise in assigning, without any real coordination between them, and heavily influenced by self-interest. How can you not see that this would end horribly? - Deuce
Context: Ask a Pragmatarian
but much like dell, congress has a lot more data available than just how much people like stuff. if every single person in the country voted for giving the white house a new paint job, they still wouldn't allocate a trillion dollars to it because that would be too much fuckin paint. so they do studies and bring in experts and whatever the hell else, and decide how much the war on drugs currently costs and how much it should be costing, and each rep comes to a decision, and they all compromise on a number. as opposed to your system, wherein each tax payer would decide how to allocate their taxes based on different data and with no idea what everyone else is doing or how things will work overall. - kingnixon
Context: Other People's Money
Epiphyte makes a comparison to a market economy. However, each individual must buy specific goods, meaning that the market will naturally balance from industry to industry, though not necessarily within an industry. An individual does not need to contribute to education in the same way, however, leading to chaos. - Robesdesaixtare
Context: Other People's Money
What distinguishes government from non-government is precisely that government exists to produce a public good, i.e. a good whose enjoyment is unrelated to one's own contribution towards paying for it and cannot be made related to it without altering the nature of the good in question. There is no such thing as "the same process be[ing] applied to public resources", as this would simply be a contradiction in terms. It is the distinguishing mark of private resources that the said process can be applied to them at all - and of public resources that it cannot. - Tommi Uschanov
Context: Opportunity Costs
You're not talking about a public market. The taxpayers could not directly see the effects of their money. Donations are not "goods". As I noted before, people will have an impetus to buy specific goods, but not to fund specific agencies. And honestly, the average taxpayer isn't informed enough to spend their taxes well. You end by launching into a monologue about conveying ideas, conveniently ignoring the fact that you still need to prove your ideas. And maybe all the taxpayers combined have more information than a senator, but probably not. In any case, they're not coordinated, so they can't put all that information together. - Robesdesaixtare
Context: Other People's Money
You will find that a surprisingly large number of social (and legal, and political) constructs are attempts to commit everyone in a group to do something in order to avoid problems like the above. The requirement for everyone to pay taxes for the programs that are decided around election time is necessary because you would find that pretty much nothing would be provided if people could choose whether or not to spend money on it. We can't coordinate with each other if a country is made up of millions of people and our decisions can be made independently and/or anonymously. -  Neu Leonstein
Context: Helping Liberals Understand the Opportunity Cost Concept
You're proving my point. All that can be reported, which means that lawmakers have the information. They are also coordinated enough to process it and act on it. I, however, do not know what you have noticed, or the next, guy, etc., so we cannot make decisions as well as a lawmaker who has access to, yes, all the data. Not a microscopic fraction. And what makes you think that the only lawmakers are in congress? - Robesdesaixtare
Context: Other People's Money
The major disadvantage of not-thought-throughism vs the current system is that if individuals allocated their taxes, then it is very likely that the majority of taxpayers really won't pay very much attention to how everyone else is spending their taxes. This will cause the following problems.  1. some projects will not receive enough funds and will be doomed to fail. Everyone who sent money those projects will have completely wasted it.  2. some projects will receive way more funds than they actually can use, and unless the surplus is allowed to go toward other projects, it will go to waste.  Now, I know that the government doesn't always perfectly predict how much money projects will cost, but I assure you that they will do a whole lot better than a group of laymen who aren't communicating with each-other. And when things do go wrong, it will be impossible for public funds to be re-allocated to correct with inaccuracies. - Sam I am
Context: Pragmatarianism -- *The FINAL Thread*
LOL for the last time, taxpayers aren't coordinated. - Robesdesaixtare
Context: Other People's Money
What would not work in either case (the family or the partnership) is unco-ordinated spending where everyone pursued their own personal agenda. - Absalon
Context: Alex Tabarrok: Public goods, public goods, public goods!!!
Because some things would be underfunded, and others overfunded. It's not really a fallacy, just a stupid argument. - Barry
Context: Baxter & King 1993: Why government spending isn't just moving money around
@Xerographica: To me, the "best use" argument is a little misdirected, since I am not trying to outline the exact allocation, but to indicate that there should be a larger commitment of government resources to investment in public infrastructure or other forms of capital (including education). As for your specific argument about the self-directed tax allocation, I very much disagree. First, we're talking about public goods, by and large, where the private market has insufficiently directed resources toward specific public purposes. Second, to expect individual taxpayers to properly allocate funds is very problematic. Basically, I think that the resources would mostly find themselves in a few highly visible public efforts, while many areas would no doubt be starved of funding. If you were using a cost-benefit analysis argument, I'd probably agree with you, as would almost anybody who thinks seriously about economics. - Julian Janssen
Context: Building the Foundations of a Wealthier America


Friday, January 27, 2012

John Holbo's Critique of Pragmatarianism

This is a continuation of my discussion with John Holbo...Crooked Timber Liberals do Not Advocate Selling Votes ...and here is his original article over at the Crooked Timber blog...Selling Votes

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John Holbo

“ok, you’re right that I should bear the burden of proof. Why should citizens be in the driver’s seat?”

No, the question is not why – the why is obvious. The question is how. The burden of proof on you concerns the how, not the why. How do you propose to put citizens in the driver’s seat? (An admirable place for them to be, we all agree.) Don’t say: by letting them sell their votes. The question is: how will letting them sell their votes help put them in the driver’s seat? Because, as I keep saying, it doesn’t look to me as though that will have the desired effect. Rather, it will result in the rich wielding disproportionate political power. And you’ve given me no reason to think 1) that it won’t do that; or 2) that, if it does, that won’t be a problem. Do not tell me I must be suffering the fatal conceit of faith in congress’s wisdom or any other thing that it’s not really very likely I am suffering from. And if it wasn’t clear before, it is now: I hereby formally disavow, abjure, and stamp into the dust belief in congress’ omniscience. Place is a mess. Now: why your plan is better?

“But if you can see citizens as consumers then you’ll understand that we don’t need representatives to adequately express our own interests and preferences.”

I can see citizens as consumers. And I get that somehow we’ve moved past the virtues of just selling votes at this point. But I don’t understand how it’s going to work. What are you imagining? That, in addition to having the right to sell your vote, everyone has the right to specify what portion of their taxes goes to every program? Can people then choose not to pay taxes at all? If so, won’t everyone choose not to pay anything. We’ll have anarchism as a straight function of what is basically a free-rider problem? On the other hand, if people are forced to pay taxes – which seems an arbitrary infringement of their rights as consumers, by the terms of this scheme – why will it go better if everyone allocates their tax money privately? We’ll have a huge coordination problem, no? You seem to be advocating not an efficient market but a giant pot luck dinner, with all the hazards of too much potato salad that entails. But with aircraft carriers instead of potato salad. What am I missing?

Shifting angles:

“the demand for public goods should determine the supply of public goods. It’s really as simple as that.”

This seems like a recipe for bloated government. If someone wants a Social Security check, they get it. If they want a bigger check, they get it. Who’s going to pay for this? I suspect you are going to say that the demand to PAY for public goods, to be distributed to other people, will determine the supply. But now we are back to everyone setting their own tax rate. And I take it people will settle on 0% and try to free ride on any suckers who put down for more than that. If this is not the plan, then what?

Your point about the Rolls Royce/private jet economy seems to me a fallacy for the following reason: the rich would have both means and motive to buy up enough votes to make it the case that they were disproportionately represented. The rich do not have means or motive to buy up every Honda Civic on the road, to prevent their falling into the hands of the poor (is that the idea?) If they tried, Honda would just make more. Supply and demand. Can’t do that with votes. Typically, although not always, there is no barrier to people selling stuff to the rich – as much as they want to buy – and also selling stuff to the poor. But there would be a barrier to the rich buying up all the votes they wanted, disproportionately, and the non-rich being represented, proportionately.

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Xerographica

John Holbo, here's a not so brief synopsis of my post on The Dialectic of Unintended Consequences.  At the height of the unions' power in the 50s and 60s it became economically feasible for manufacturing companies to move overseas.  Labor costs are one of the most important factors in determining a factory's location or relocation.  So the factories relocated to some countries with extremely low labor costs...such as Hong Kong, Singapore, South Korea and Taiwan.

At that time the large majority of people in those countries were primarily engaged in subsistence agriculture.  When they were given the option to work in the new factories...many chose to do so rather than continue to engage in subsistence agriculture.  They learned new skills and quite a few left to start their own factories.  The demand for labor increased...while the labor supply stayed constant...so wages started to rise.

When my hero, Deng Xiaoping, opened China up to foreign investment in the 80s...many factories from the four Asian Tigers relocated to China in order to take advantage of what seemed to be an endless supply of cheap labor.  The pattern repeated itself....people chose working in the new factories rather than continue to engage in subsistence agriculture...they learned new skills...many started their own factories...and wages very gradually started to rise.

The other day when Obama gave his state of the union address he said that it was becoming expensive to do business in China.  Just amazing.  Prior to Deng Xiaoping...Chairman Mao had attempted to impose on the entire country what he felt to be the most efficient allocation of resources.  The result?  Thirty million people starved to death as a direct result of state induced famine.  When Deng Xiaoping took over he gave people a choice between manufacturing and agriculture.  The result?  Millions and millions of people were lifted out of poverty within one generation.

You have trouble seeing how giving citizens a choice to sell their votes would put them in the driver's seat...and I have trouble seeing how it wouldn't.  We would be giving citizens a choice that they currently do not have.  Anytime we give people a choice that they currently do not have we are giving them that much more control over their lives.  Whether it's a good choice for them to sell their votes wouldn't be up to me to decide.  Along those same lines...it would be very presumptuous for me to tell people whether they should choose working in a sweatshop over subsistence agriculture.  Another example...even though I served in the military it would be very presumptuous for me to tell somebody whether it would be a good idea for them to sign up for the military.  In all three cases though I strongly advocate that people be given the choice.

That being said...regarding people directly allocating their taxes...because of the free-rider problem...people shouldn't be given a choice whether they paid taxes and individuals shouldn't be able to choose their tax rate.  Those debates are useless without first establishing the proper scope of government.  It would be like somebody asking me how much I'm going to pay them without first establishing what their skills are.  Regarding too much potato salad...people wouldn't generally allocate their taxes to a government organization that doesn't need more money...and it would be completely subjective to say whether somebody is spending too much money on infrastructure, public education/transportation/housing/healthcare, cancer research and various other public goods.  If you get a chance read my last response to Henri Vieuxtemps.  It offers an example of trying to establish whether the public or private sector should publish your book.

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Henri Vieuxtemps

I’d love to be able to allocate my taxes. Seriously, I would. It’d be difficult to organize this on a high granularity level, though; I imagine everything would get of whack, as I probably have no information on how other people allocated theirs. So, to start with, I would suggest just a couple of categories, like, say, ‘the military’ and ‘everything else’.

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Xerographica

Henri Vieuxtemps, how about a third category…say, ‘the war on drugs’?

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John Holbo

Well, at least now I understand what you are proposing, although I am very far from buying. Here’s something to think about.

“You have trouble seeing how giving citizens a choice to sell their votes would put them in the driver’s seat…and I have trouble seeing how it wouldn’t. We would be giving citizens a choice that they currently do not have. Anytime we give people a choice that they currently do not have we are giving them that much more control over their lives.”

The thing to realize is that this is false, strictly speaking. Take the most literal driver’s seat case of all: traffic lights. If you abolished rules about go-on-green/stop-on-red you would give citizens a choice they currently do not have. But you would not, thereby, in any meaningful way, be giving them more control over their lives. The opposite would be the case.

Basically your proposal sounds like that to me. A giant coordination problem. You now say that this stuff won’t work unless we first establish the proper scope of government, but earlier you said this stuff would help us establish the proper scope of government. I’m pretty sure that’s how it will go. Re: publishing my book. That’s not such an interesting case because there it’s clear how the market can do the job. What I want to know is how we can have a functioning market to determine the size of government people want. At first you said we could have one. Now you are retreating a bit in the face of coordination and free-rider problems. I think you have to retreat, so that’s good. But is there any point at which you can stop having to retreat? Probably. But I’m not seeing it.

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John Holbo

“Regarding too much potato salad…people wouldn’t generally allocate their taxes to a government organization that doesn’t need more money”

Why wouldn’t they? And how do you know? It seems obvious to me that the results would inevitably be extremely ill-assorted, in an ill-luck potluck sort of way. And it seems to me that you are obliged to say not that this wouldn’t happen (how could you know that?) but that any bizarre answer is, by definition, the right answer. We don’t second-guess the market. That’s the whole point: there is no right answer hidden beyond or behind what the market says. If we end up with 12 new nuclear aircraft carriers and some weird and painful shortfall in basic services – maybe not enough infrastructure to service so many carriers, long-term, so they all rust and sink; or so the spent nuclear fuel can’t be processed properly – then that’s what we ‘wanted’, odd though that sounds. No other answer is remotely consistent with your general line. So bite the bullet.

The general problem here is that the market, in the book case, only needs everyone to express what they want, individually. Their self-regarding preferences. Do I want the book or don’t I? People are the best judges of their own desires, in that regard. But people’s preferences about government aren’t like that. You have to make an intelligent judgment, not about what you want personally, but about what everyone wants and needs/should get. A new aircraft carrier? or more school lunches for poor kids? These judgments require everyone to take a vain stab at the knowledge problem. So what we get is not one aggregate, good answer but an enormous mountain of bad answers, not adding up, in the aggregate, to a good answer.

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Xerographica

John Holbo, as a reader of my blog, Lupis42, mentioned...selling votes is a completely voluntary transaction between two consenting adults.  Can you offer any other examples of completely voluntary transactions between two consenting individuals that do result...or would result...in traffic collisions?

Regarding allowing people to directly allocate their taxes.  You're far from buying it?  But you're the one that's selling it to me.  A while back I knew just enough about how the Invisible Hand worked to find this hypothetical question really interesting.  So I went around asking people what they thought would happen if taxpayers could directly allocate their taxes.  

Their concerns helped me see enough of the Invisible Hand to understand why taxpayers should be allowed to directly allocate their taxes.  If you get a chance you should take a look at this post...Unglamorous but Important Things.

Friday, January 20, 2012

Crooked Timber Liberals Do Not Advocate Selling Votes

It's true!  But I sure did get tricked!  The Crooked Timber Liberal, John Holbo, recently posted this fascinating blog entry on selling votes.

Here was my response...and then his response...and then my response...and...?

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Xerographica

John Holbo, I literally did a double take when I saw this in my google reader. I was like..."What...is this really coming from the Crooked Timber website?" When I was reading your article I kept waiting for the..."Now here's why this would destroy society as we know it..."

My point is...you have my vote...which I wouldn't sell for anything less than $10,000 dollars.

The goal of voting is to determine which side cares the most. It surely wouldn't make sense for the side that could care less to win. People get confused though and think that just because one side has more numbers it automatically means that they care more. Yet...it's fairly reasonable to say that one person who would sell his/her kidney for an additional vote obviously cares more about the issue than one person who would sell his vote for only $1.

That's why limiting campaign contributions would be as counterproductive as limiting how many hours people could volunteer for a cause that they care about. Time is money.

So the question shouldn't be: Do you care about an issue? Rather...it should be: How much do you care about an issue? That's why we have the common expressions..."put your money where your mouth is" and "actions speak louder than words". It's one thing to just "like" a cause on facebook and it's another thing to volunteer for that cause in real life.

Not too long ago Jason Brennan wrote a book on the ethics of voting. In his book he argues against "bad" voting. Of course..."bad" voting for a libertarian isn't necessarily the same thing as "bad" voting for a liberal...and vice-versa. Here's my comment on his BHL blog entry (you have to sort the comments from oldest to newest). In my comment I argue why it's perfectly reasonable for people to sell their votes.

Also, here's my 10 topic Self-Ownership Survey where I juxtapose the issue of campaign contributions with children's suffrage, procreation licenses, consensual slavery, etc. in order to encourage people to evaluate where they stand with regards to self-ownership.

The bottom line is...if it was easy for people to think objectively about voting then we would have embraced universal suffrage from the get-go. As it is...people automatically evaluate voting issues in terms of the outcomes that they desire.

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John Holbo

Xerographica: “My point is…you have my vote…which I wouldn’t sell for anything less than $10,000 dollars.”

I’m not surprised, nor horrified, that some people actually think it makes sense, my little scheme. I would be surprised if some propertarian-libertarian hasn’t worked out the details long ago.

But just to be clear: I strongly disapprove of this scheme. But I think it wouldn’t actually be much worse – if at all – that the system we’ve got. I do think this is a big mistake: “Yet…it’s fairly reasonable to say that one person who would sell his/her kidney for an additional vote obviously cares more about the issue than one person who would sell his vote for only $1.”

This is reasonable, but willingness to spend large amounts of money is not a good indication of intensity of preference if some people are very poor and others very rich.

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Xerographica


John Holbo, well...you broached the topic in a well thought out manner...so you still have my vote. But...I'm going to have to drop my selling price to $500.

Sure, it's a given that people have different levels of disposable time/money. But are you truly going to argue that you can generalize other people's values based on how much disposable time/money that they have? If so...do you have any evidence to support your generalization? Many many many people have claimed that a correlation exists between wealth and values but none have been able to substantiate their claims.

"This is reasonable, but willingness to spend large amounts of money is not a good indication of intensity of preference if some people are very poor and others very rich."

Are you familiar with the Bible story of the widow's mite? Many small sacrifices can certainly equal a few large sacrifices. Otherwise...Obama probably wouldn't have been elected. This the long-tail concept. We're not looking at averages here...we're looking at totals. In terms of voting the question is..."which side cares the most?"...not..."which side on average cares the most?".

If opportunity costs are not a good indication of intensity of preference...then what are the alternatives? What are the opportunity costs of completely foregoing an integration of intensity?  How can we determine the best possible use of limited resources unless we allow people to choose one thing that they value over another thing that they value?

Would you be fine giving your kidney to somebody with two perfectly healthy kidneys? That is an example of the inefficient allocation of limited resources. If it doesn't make sense on the individual level...why would it make sense on the national level?

Now, would it make sense for me...a completely stranger...to decide for you how you can best use your kidney? Can resources truly be efficiently allocated by proxy?

Speaking of kidneys...during the C-Span lesser known New Hampshire presidential candidate debate....Vermin Supreme stood up and lifted up his shirt to show everybody the scar he received from having donated his kidney to his mother. While doing so he preached why everybody should donate their kidneys. Because...it's all about convincing. For a real dose of of poignancy mixed with humor...check out his blog entry where he talks about giving his kidney to his mother rather than his friend who also needed one. It's all about opportunity costs.

The hard part to convey is that if we allowed people to directly allocate their individual taxes then the outcome might be a viable form of socialism. Once we integrate intensity (reveal preferences) then we would solve the incentive problem and the problem of allocative inefficiency. The incentive problem would be solved because a government organization's revenue would be directly tied to its productivity. Nobody would choose to waste their hard-earned taxes anymore than you would choose to waste your kidney. The allocative inefficiency problem would be solved given that taxpayers would consider the opportunity costs of their tax allocation decisions. The result would be a taxpayer division of labor.

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Latro

I find it interesting that we focus a lot on the freedom/right/duty to vote and not on the freedom/right/duty? of being able to present your platform and yourself as alternatives in the political process.

The whole “you cant ban donations and all that, thats against freedom of speech”. What about the freedom of having your ideas about how to run the country taken as seriously, as it should be your right as a citizen, as the ones of the mega-rich-backed candidates?

In short, why dont we (everywhere, I’m not American but the problem is similar everywhere), give to each candidate – defined as whoever wants to be one – and party – same – the same means of communication, the same alloted time, the same OBLIGATORY presence in debates, and all that, as to ensure all voices get the same, equal treatment and the deciding citizens can vote fully informed?

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Xerographica

Latro, guess you missed the the C-Span debates on the Lesser Known New Hampshire candidates? Sure, I'd want Vermin Supreme to receive the same amount of exposure as Obama and Ron Paul...but for me to advocate changing the process would reflect my inability to consider the process objectively.

The process is one of survival of the fittest ideas. I obviously have my own hare-brained ideas regarding changes we need to make. Would I like to see them discussed on C-Span and CNN? Of course I would...because I don't believe that my ideas are truly hare-brained. But why should C-Span or CNN spend their limited time discussing topics that have not been vetted by bloggers?  It's an issue of opportunity cost.

On my blog entry on Vermin Supreme...in the second youtube video...here's what Dan Rather had to say about giving air time to Vermin Supreme...
But as a reporter, I am under no obligation to pay any attention to him. We've got a very valuable, small amount of air time at abc-news...I wish we had more. And that air time ought to be devoted to bringing to the public the plans, the hopes, the dreams, the aspirations, the qualifications of people who are serious about it. And people who if they get to be president of the United States may do something for this country. I should spend our time on Vermin Surpreme? Not a chance.
Do I disagree with Dan Rather's assessment?  Certainly...but that's part of the process.  Our current system works to vet ideas.  As Milton Friedman said...."If we can't persuade the public that it's desirable to do these things, then we have no right to impose them even if we had the power to do it."

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John Holbo

Getting back to xerographica: “You certainly aren’t the first to suggest that there is a correlation between wealth and values…but you would certainly be the first if you were able to substantiate your claim.”

I’m not sure I fully understand this. (I did click through for a quick look.) Presumably if you study income and party affiliation and so forth you can find some meaningful correlations. Probably the Pew values survey would be a good place to look. But my argument and attitude doesn’t depend on any particular social science results. Consider three ways of allocating votes.

You get more votes the longer you are willing to sit in a chair in a room for hours on end with nothing but nothing to do.

You get more votes the longer you are willing to do the downward-facing dog.

You get more votes the more you pay.

These are all potential methods of measuring intensity of preference. In some ways they are all better than the system we have got, because they all attempt to measure intensity at all, whereas one person-one vote does not. That said, they are all obviously flawed. The first will skew voting to people who don’t have jobs or things they really need to do that keep them from sitting in a boring room doing nothing. The second will skew voting to yoga practitioners. The third will skew voting to rich people. Now do I know for sure that, say, yoga practitioners have different values than everyone else has, so that this skew will be a problem? No. If I had to guess, yoga skews left. But maybe that’s totally wrong and there is no correlation between being good at the downward-facing dog and any kind of political value that anyone might be called upon to express with a vote. All the same, I’m not inclined to adopt a system that gives a group disproportionate representation, for an irrelevant reason, even if that disproportion does not clearly create a problem. The basic equality proposition underlying one person-one vote, and also the pragmatics of it, suggest that you should not be giving someone more votes than someone else gets for an obviously irrelevant reason.

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Xerographica

John Holbo, have you read this article by the progressive Cait Lamberton...Your Money, Your Choice?  In the article she makes a case for tax choice.
Further, taxpayers’ allocations reveal a strong preference for more butter and fewer guns. Thus, allowing taxpayers some choice in where their taxes go may slowly shift the nation’s spending priorities toward more socially productive investments.
Do you think she still would have written the article if the taxpayers' allocation decisions had been skewed to the right...as in more guns less butter?

Would allowing people to sell their votes skew the results to the left or to the right? Would allowing children to vote skew the results to the left or to the right? Did allowing women to vote skew the results to the left or to the right? Did allowing minorities to vote skew the results to the left or to the right?

Do you want an accurate reflection of interests...or do you want equality of representation? If you want equality of representation then why not write a blog entry on the benefit of giving each social group one vote? In your post you could consider the following questions...

Do gay people and atheists think it's fair that Christians can engage in tyranny of the majority? Do minorities think it's fair that white people can engage in tyranny of the majority? Do young people think it's fair that old people can engage in tyranny of the majority? Do rich people think it's fair that poor people can engage in tyranny of the majority? Do smart people think it's fair that dumb people can engage in tyranny of the majority?

You're either going to have tyranny of the minority or tyranny of the majority. It's not fair...but tyranny is an inherent feature of voting. One group is always going to impose its interests onto another group. The question is...who should do the imposing...the group that cares most...or the group that cares less?

Just like we should support free-speech even when it has an unfavorable skew....we should not let the possibility of an unfavorable skew diminish our support for people's right to try and protect their interests. As a nation we shouldn't be afraid to take a close look in the mirror.  What's kind of funny is that each side is concerned that the reflection will be skewed to the other side. As individuals we have trouble fathoming something as complex as the values of an entire nation...which is why we developed the left/right heuristic.

As a pragmatarian I have no desire to try and shift our nation's spending priorities in any one direction. My goal is for our spending priorities...aka supply... to accurately reflect interests...aka demand. Just like it doesn't make sense for you to give your kidney to somebody with two perfectly healthy kidneys....it doesn't make sense for our nation to purchase more guns when there's a demand for more butter.

The selling votes concept, combined with pragmatarianism, would have a much narrower application. People's tax allocation decisions would determine the scope of government and their votes would determine social issues. There would be no need to vote on guns vs butter because the allocation of public goods would accurately reflect exactly how much society values those public goods. Instead, we would vote on things like whether polygamy should be legal.

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John Holbo

Xerographica: “That being said…I don’t get the feeling like you’ve made a real case…or any case…for equality…in the sense that it trumps revealing intensity. That’s kind of the equivalent of a libertarian that holds “liberty” as argument enough.”

It’s true that I haven’t made the case for equality, but that’s because if you don’t accept the basic proposition that people should be given equal political rights and equal representation, I don’t see why you want to devise a better democratic voting scheme at all. Democratic voting only makes moral sense on the assumption that, basically, we want equality for citizens. Attempts to reveal intensity of preferences are not alternatives to valuing equality, in my sense. Such attempts only have a coherent motive as refinements – not replacements of – attempts to realize basic political equality, plus liberty. You want to give the people what they want. And you are starting from a baseline of equality of persons.

You write about ‘efficiency’. It is more efficient if we can measure intensity of preference better? But efficiency for what? Why do you want to measure this stuff? Presumably because you want to have a more refined, nuanced sense of what ‘most people really want’. But why would you care about that unless you think that what most people really want is morally important? And why would you think that unless you think that, given that everyone is equal, what most people really want is what we need to go for, in most cases.

I mean, if you are a divine right of kings monarchist-type, you won’t believe any of this equality guff, but then you won’t care about revealed preferences of anyone but God and the king either. Just for example. So what gives?

You give the rich more votes if you think the rich deserve more political power, for being rich. Just like you give more votes to yoga practitioners, if you think doing yoga makes you a spiritual aristocrat more deserving of wielding political power. You don’t do either of these things, ideally, if you don’t believe these things. Even if you think it would be politically harmless – a wash at the ballot box – you don’t go generating random aristocracies. It’s just bad design, at best.

A simple question: do you think that selling votes, as a scheme, is superior in any way to the more votes for more downward-facing dog scheme? If so: why?

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Xerographica

John Holbo, I just purchased your book...Reason & Persuasion: Three Dialogues by Plato...for $32.50 from Amazon.  And I intentionally kept your Amazon tag in the above link.  Rather than just thinking of it as me "purchasing" your book...let's think of it as me "voting" for you...and Amazon...and Pearson Education...and...

Take a few moments to trip out on that.  Right here we see Bastiat's opportunity cost concept...and Hayek's partial knowledge concept in action.  We see allocative efficiency...and the invisible hand...and pragmatarianism...all in action.  I just voted for you.

Wealthy people are wealthy because many people voted for them.  When I purchased your book on  Amazon we both voted for Jeff Bezos.  Why should Jeff Bezos be able to buy 10,000 more votes than we ever could?  Because we...and millions of other people...voted for him.

If you didn't like how Jeff Bezos was voting with his money...then you would be able to boycott Amazon and encourage others to do the same.  If you were allowed to directly allocate your taxes...then you would be able to boycott any war that we ever engaged in.  On the other hand...conservatives and libertarians would be able to boycott the government's war on poverty.  Then again...liberals would be able to boycott the government's war on drugs.

The eternal question has been...what should the government do?  What is the proper scope of government?  What are the proper duties of government?  What should the responsibilities of government be?  The answer to this fundamental question is simple.  The government should do what we pay it to do.

Why did I purchase your book?  Well...because we're having this discussion...because you're seriously considering an idea that I really value...because you're exceptional among Crooked Timber Liberals for doing so...because I should read more Plato...

Now...my blog, which is dedicated to allowing taxpayers to directly allocate their taxes, only has 4 followers (errr...now 5).  Does that mean that pragmatarianism isn't a valuable idea?  It's very well possible.  I could certainly have wasted many hours barking up the wrong tree.

Did the people behind the Magna Carta ever stop and wonder if they were barking up the wrong tree?  I mean...they were challenging the divine right of kings.  The thing is, we've been challenging authority ever since Eve ate the fruit from the Tree of the Knowledge of Good and Evil (see my post on the Devil's Advocate for Public Goods).

I don't want to just keep replacing kings...I don't want to just keep replacing presidents...I don't want to just keep replacing congresspeople.  I want to directly integrate everything you know...and everything I know...and everything Jeff Bezos knows...into determining exactly what the government should do.  Along those same lines...I want everybody to be able to boycott anything the government does that they believe it should not be doing.

So to answer your simple question...selling votes is superior to the downward facing dog scheme because you and I voted for the people who can buy votes.

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John Holbo


Thanks for buying the book! I hope you like it.

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John Holbo

“selling votes is superior to the downward facing dog scheme because you and I voted for the people who can buy votes.”

OK, I’ll respond quickly to this. It seems to me circular. In a world in which people have been downward-facing dogging (on behalf of) the candidates for some time, the people to whom (for whom) one downward-face are also the people to whom (for whom, one behalf of whom) one has downward-faced in the past. Just as the people who buy votes are the people who bought votes in the past, ex hypothesi. But ‘we’ve always done it this way before, so it must be a good way of doing it’ is not an argument, especially not when we are arguing hypothetially about things we actually haven’t done before. (If this is not your argument, then I don’t see what you your argument is.)

The only difference, it seems to me, is that there is no market in selling instances of performance of the downward-facing dog. Whereas you can sell votes. But there is no particular reason why that should making selling preferably. Our interest in settling an optimal voting system is not a desire to create a commercial industry, per se.

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Xerographica

John Holbo, your argument is that it's not fair for the founder of Amazon.com...Jeff Bezos...to be able to purchase more votes than you or I would be able to.  My counter argument was that you "voted" for Bezos by selling your book on Amazon and I "voted" for Bezos when I purchased your book on Amazon.

We didn't literally "vote" for Bezos given that he is not running for office.  We figuratively voted for him by making him that much more wealthy.  

The question is...would you still have sold your book on Amazon if you knew that Bezos was going to use your money to purchase literal votes that were against your interests?  We can see that the beauty of your idea is that it would establish a culture of ethical consumerism.

Like pragmatarianism, your idea would allow us to objectively discern the proper scope of government.  There's no need to debate the proper scope of Jeff Bezos.  Why is that?  It's simply because we've all used our money to figuratively vote for exactly what it is that Jeff Bezos should be doing...running Amazon.com.  

If we allow people to sell their votes...and directly allocate their taxes....then the government would simply do what we pay it to do.  Would you pay the government to do something that it was bad at doing?  No...nobody would  We would all only pay the government to do what it was good at doing.

If anybody disagrees with something that the government is doing then they would have the freedom to engage in ethical consumerism by boycotting that government organization.  If you support the concept of ethical consumerism in the private sector...then why wouldn't you support applying the same concept to the public sector?  Wouldn't you value the freedom to boycott unnecessary wars?

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Alex
Just like we should support free-speech even when it has an unfavorable skew….we should not let the possibility of an unfavorable skew diminish our support for people’s right to try and protect their interests.
If we’re to take this principle to its logical conclusion, presumably you would have no objection if e.g. impoverished people hired your neighbours to come redistribute your property. After all, they’re only trying to “protect their interests”.

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Xerographica

Alex, how is that the logical conclusion?  The context of my statement is the current system.  It refers to people spending their time and money to try and modify the current system.  With the current system what you described is illegal (well...at least in terms of the private sector).

If you want what you described to be legal...then even though it's against my interests...I wouldn't want to limit your right to spend as much time/money as you wanted to try and protect your interests.

Just to be clear...my issue isn't the taxing...it's the spending.  I could care less if there was 100% public ownership of the means of production...as long as 1. taxpayers were allowed to directly allocate their taxes and 2. people were allowed to sell their votes.

Socialism really could work...as long as we solved the incentive problem and the partial knowledge problem.  By allowing 1. taxpayers to directly allocate their taxes and 2. people to sell their votes we would definitively solve both those problems.

Would the outcome be socialism...or anarcho-capitalism...or somewhere in between?  I have no idea...nobody could truly know the outcome.  That being said...what I'm fairly certain of is that if there was a shift...then the shift would benefit our country as a whole...completely irrespective of the direction the shift took.

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Mike Huben 

Xerographica (@98) wrote:
“There’s no need to debate the proper scope of Jeff Bezos. Why is that? It’s simply because we’ve all used our money to figuratively vote for exactly what it is that Jeff Bezos should be doing…running Amazon.com. ”

No, it is because we have long ago decided the proper scope of businessmen like Bezos, and decided that they should not be able to compete coercively: we don’t need mafias. By centralizing and democratizing government, we prevent wasteful combative competition that would lead to positive feedback.

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Xerographica

Mike Huben, last year on your blog entry...What is Libertarianism?...I provided specific examples to refute your arguments.

Sure...I agree that we don't need mafias...but you're going to have to offer some specific examples of how Jeff Bezos would have anything to do with mafias. How is Bezos offering to buy your vote in the same league as mafia extortion? Is he going to send thugs to your house to beat you up if you didn't want to sell him your vote? Would he really risk going to jail for one vote?

Would legalizing the sale of kidneys help or hurt the black market for kidneys? Would legalizing drugs help or hurt the illegal drug trade? Did ending prohibition help or hurt the mafia?

Was it easier to corrupt a king or corrupt congress? Would it be easier to corrupt congress or corrupt millions and millions of taxpayers and/or voters?  The more centralized that power is...

1. the easier it is for the corrupter...given that all the eggs are in one basket
2. the greater the likelihood for corruption...given that there will be many many many offers
3. the greater the negative impact of corruption...given that all the eggs are in one basket.


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John Holbo

“My counter argument was that you “voted” for Bezos by selling your book on Amazon and I “voted” for Bezos when I purchased your book on Amazon.

We didn’t literally “vote” for Bezos given that he is not running for office. We figuratively voted for him by making him that much more wealthy”

The big problem here is that we didn’t vote for Bezos, literally or figuratively, for office, by making him more wealthy. The reason we didn’t vote for him for office, in virtue of our purchase, has nothing to do with the fact that he’s not running for office. (He could have been, and we still wouldn’t have been.) By buying a product from Amazon, we reveal a preference for the product, not for Bezos in office.

So your counter-argument is really a counter-premise, like so: wealthy people are, in virtue of their wealth, inherently more deserving of wielding political power. Period. End of story. That’s fine, insofar as that makes clear where the rest of us get off the bus: namely, with this first step.

Making the point from another angle …

Suppose we change my downward-facing dog case around a bit: everyone gets votes to the extent that are musicians who sell dance records. By buying their records, you ‘vote’ for them. The problem here – which is precisely analogous to the Bezos problem – is that it’s simply false to say that, literally or figuratively, you vote for them FOR OFFICE by buying their records. At most you vote for them as being pretty good dance music creators. By buying from Amazon I may, figuratively, vote for Jeff Bezos as the guy most likely to sell me what I want for a reasonable price (this is already a stretch, but let it go.) But there is a long way to go between this and Jeff Bezos FOR SENATE, or whatever office he may seek.

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Xerographica

John Holbo...how is it a problem that Bezos isn't running for office?  You figuratively voted for Jeff Bezos to be one of America's Best Leaders.  Another leader on that list is Jeffrey Sachs...what difference does it make whether Sachs is a professor or a senator?  What difference does it make that Lady Gaga and Bono aren't politicians?

They either do...or they don't...represent a portion of your interests.  Do you have any idea how many different people represent some portion of your interests on a daily basis?  That's why I really struggle with the idea that one congressperson can effectively represent the interests of half a million people.  That's a joke...which is why it was funny when the comedian Daniel Tosh said, "The idea that any of these candidates represent my interests is absurd."

It's perfectly fine though if you believe that congresspeople do an excellent job at functioning as our personal shoppers for public goods.  Maybe Daniel Tosh, myself...and nearly everybody else I know...are extremely exceptional.  If that's truly the case though, then why would you be hesitant to allow consumers to figuratively vote for congress?

One of your interests is clearly to try and protect the interests of those who are unable to protect their own interests.  But is your interest in this area so exceptional that nobody else would figuratively vote to protect it?  Do you think that just because conservatives are skeptical of the government's ability to truly help people in need that it means that they don't care?  Isn't it possible that perhaps people are more complex than that?

If you don't want to disproportionately empower the rich...then you can't just get off the bus.  That's not where this story ends.  You need to stay on the bus long enough to understand where your money is going and how it is being used.  Like I said....that is the beauty of your pseudo-proposal.  It doesn't allow you to dissociate yourself from the indirect consequences of your consumption decisions.

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John Holbo

Xerographica, I am afraid I just don’t get it. Obviously I get the idea that the current system has problems. My objection to what you are proposing is not based on the assumption that the current system is excellent, or that the people running it are unusually excellent at their jobs. But what I don’t get is why Bezos and Gaga are peculiarly suited to overcome existing problems, simply because they are rich. Their riches would allow them to buy votes. Fine. But why is it valuable to enable them to do that? Why are we more concerned to reveal the political preferences of Bezos and Gaga than the man on the street?

“Do you have any idea how many different people represent some portion of your interests on a daily basis?”

I would assume: a lot. A huge number. But why is this relevant?

“why would you be hesitant to allow consumers to figuratively vote for congress?”

Well, I would need to be told why it is supposed to be a good idea. Again, doesn’t it just come down to a kind of axiom: wealthy people are more worthy of wielding political power. Obviously if that’s true, then consumerism plus selling votes becomes a kind of glorious engine of political virtue. Because it makes some people rich, ergo makes them worthy of wielding political power, while at the same time making them politically powerful. But why should I buy the main premise?

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Xerographica

John Holbo, we are not more concerned to reveal the political preferences of Bezos and Gaga than the man on the street.  The concept that I'm failing to convey is how the political preferences of Bezos and Gaga reflect a portion of the preferences of the people on the street.  If we want correct political answers then we need to integrate everybody's social and economic preferences.  Politics is simply a reflection of economic and social preferences.  The more accurate the reflection the more accurate the answers.

Let's consider the question of what the private sector should produce.  How many different people does it take to come up with this answer?  It takes every single one of us.  If we took your preferences out of the equation then would the answer still be correct?  No...it wouldn't be.  It would be extremely close to being correct but it would still be wrong.  Each person we take out of the equation the more incorrect the answer becomes.

This is the basic premise of why socialism fails.  Socialism is resource allocation by proxy.  Unlike capitalism...it only allows you to indirectly communicate your preferences.  If it was just a 1 to 1 ratio it wouldn't be so bad.  For example...I would give you all my money...and communicate my preferences to you...and you would buy me what I wanted.  The economy wouldn't work as well but it probably wouldn't fail.  But what about a 1 to 2 ratio?  Or a 1 to 3 ratio?  Or a 1 to 100,000 ratio?

Everybody has some information but nobody has all the information.  This is not a new concept.  Socrates said, "...it seems that I am wiser than he is to this small extent, that I do not think I know what I do not know."   Buddha expressed this in terms of the blind men each feeling different parts of an elephant.  More recently...Hayek referred to this as the "Fatal Conceit".  You don't have to agree with this concept...but it helps at least to understand it...given that it's the very foundation of conservatism and libertarianism.  The irony is that conservatives and libertarians do not realize how they are nearly as guilty of this "Fatal Conceit" as liberals are.  For more on this see my post on a taxpayer division of labor.

If we understand that it takes every single one of us to correctly answer the question of what the private sector should produce...then it shouldn't be much of a stretch to understand that it would require every single one of us to correctly answer the question of what the public sector should produce.  That in no way implies that we should all be forced to literally vote...it simply conveys the value of allowing people to directly communicate their preferences via the selling of their votes and the direct allocation of their taxes.

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John Holbo 

Xerographica,

I guess I fail to see the relevance. I understand why it would be nice if election and voting revealed voter preference in richer fashion. But, given that people have unequal economic endowments, it won’t work. All you are doing is revealing, disproportionately, the preferences of those with lots of money. It’s as bad as the downward-facing dog scheme. It’s a measure of preference-intensity, but obviously badly skewed. This was the point of the post. It’s every bit as bad as the system we’ve got. And surely any utopia we devise ought to be less bad than that!

” The irony is that conservatives and libertarians do not realize how they are nearly as guilty of this “Fatal Conceit” as liberals are.”

I would say the irony is that they are guiltier, but we can let it go, for argument purposes. Granted, we’ve got a knowledge problem. The existing system tries to deal with it with one man-one vote. Your system seems to me no better because although it is more sensitive, in a sense, it is badly skewed. So the sensitivity all goes to waste, in effect.

We are, actually, recapitulating old debates. It has standardly been argued that the rich are more politically virtuous and should disproportionately wield power. (You are playing theme and variations on this timeless line.) The poor shouldn’t vote because they are too dumb and uninterested and uneducated about general issues. One of the main arguments against that is that is that the poor may not know a lot of things, but they know one thing. What bothers them. If you strip them of the franchise, their grievances will be neglected and will fester and that’s bad. Likewise, if you let them sell their vote, you are – as likely as not – actually making the knowledge problem worse. It’s now harder, not easier, to get information about what the poor want, in a political policy sense.

At this point you could argue that we are still getting information from the sale of votes. And that’s true. But the signal is thinner than it has to be. And the system is set up in such a way that the signal will be ignored, not attended to, by those with political power. So, to repeat, I don’t see how you have proposed any solution to the knowledge problem. You keep saying: the Buddha thing. Yeah, I get it. (When you get your copy of the book you’ll see that I actually drew a cartoon elephant to illustrate the parable. The concept is stock and familiar.) But now what?

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Xerographica

John Holbo, do we have different interpretations of the parable of the blind men and the elephant? My interpretation is that we all have unique but extremely limited perspectives. Based on my interpretation of the parable it would be counterproductive to group people together based on their net worth. Yet, your argument seems to indicate that all the rich people are touching the elephant's left ear while all the poor people are touching the elephant's tail.

Am I misinterpreting the parable or is there a disparity between the parable and your argument? If we all have unique perspectives...how would allowing us to directly communicate our perspectives skew the outcome towards any arbitrary grouping of people? In my opinion...allowing people to directly communicate their perspectives would skew the outcome towards reality. In other words...it would correct the skew of misrepresentation.

In terms of our argument...the elephant represents the proper scope of government. We argue over the scope of government like blind men arguing over what it is that they are touching. It's conceited for one blind person to think they can "see" more than another blind person. This conceit is the basis of socialism...and dictatorships...and monarchies. It requires humility for me to accept that maybe I'm wrong and maybe you're right. This humility is a two way street that leads us towards political tolerance. In other words...while I might disagree with who you sold your vote to...or how you allocated your taxes...I would strongly support your right to do so.

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John Holbo

“My interpretation is that we all have unique but extremely limited perspectives.”

That’s pretty much it. My concern is that your proposal deals poorly with this state of affairs, but you seem to think your proposal deals well with it.

“Yet, your argument seems to indicate that all the rich people are touching the elephant’s left ear while all the poor people are touching the elephant’s tail.”

No, the problem is that I’m a bit more skeptical than you about whether we can know a thing like that. You are assuming we know that rich and poor are more or less equally distributed around the elephant. Law of averages. They aren’t clumped or clustered in any way, preferences and interests and values-wise. I say we don’t know that. How could we?

I guess maybe it comes down to this: you think there can’t be any harm in disproportionately enfranchising the rich because, after all, there are rich men and women, and Republicans and Democrats and so forth. I think there perfectly well could be. There’s one study, linked above, suggesting as much. But my point doesn’t depend on being convinced by that one study. The abstract problem is this: I’m basically handing over political power to a minority. Do I know that this minority will represent everyone’s interests and preferences optimally? No, I think I don’t know that. (Nor do you. You are sizing up the elephant and you figure the rich are pretty well distributed over it’s surface. But, again, what makes you so special that you can see the whole beast?) So the proposal is unattractive. It’s a bold shift to a new system that … doesn’t seem any better than the old system. No worse, maybe, but no better. It’s not worth a bold revolution to meet the new boss, same as the old boss.

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John Holbo

I think we’ve actually come full circle now, which feels like a conclusion (at least to me). You started by saying (once you realized we disagreed): “You certainly aren’t the first to suggest that there is a correlation between wealth and values…but you would certainly be the first if you were able to substantiate your claim.”

You took me to be on the wrong side of the knowledge problem because of this. But to me that gets the evidential presumption wrong. It’s your job to prove that there isn’t such a correlation, not my job to prove that there is one. So you are actually the one on the wrong side of the knowledge problem.

Why is it your job, not mine? Well, you’re trying to engineer a robust machine for revealing preferences here. It’s the job of the engineer to give reasonable assurances that it won’t blow up. It’s not good enough for the engineer to say that no one has yet proven that it will blow up.

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Xerographica

John Holbo, every day you have no choice but to consider the costs of the things you want...yet for some reason the burden is on me to prove to you that voters should be forced to consider the costs, as well as the benefits, of the things that they want from government.

A while back Obama's favorite analogy was how the Republicans drove the "car" into the ditch.  Do you really think it's simply a matter of which party is behind the wheel?  How can one party know our preferences more than the other party?  Without knowing our preferences they might as well be driving while blindfolded.

If you want proof...then see how long you can make it without looking at price tags.  The fact of the matter is that opportunity costs are just as essential in the public sector as they are in the private sector.

Also...in terms of handing political power over to a minority...can you do me a favor and tell me more about this political power that you have in the first place?  Personally I have no political power...so being able to sell my vote...or directly allocate my taxes...would be a positive gain for me...and nearly everybody else.

Our gain would of course represent somebody else's loss...specifically...538 congresspeople.  How small a minority are they?  I don't know them...they don't know me...yet I'm supposed to expect that they will represent my interests better than I can?  I think not.  If I had to choose between 150 million taxpayers each representing their own interests or 538 congresspeople trying to represent the interests of 300 million people...it wouldn't even be a contest.  Everybody would benefit from A) 150 million people considering the price tags on all the public goods that they want and B) 300 million people considering the price tags on their votes.

Speaking of price tags...your book arrived yesterday.  I think it's well worth the $30...but my girlfriend did not.  Eh...she's more into the beat poets than philosophy.  What is the value of your book to society?  It's simply the revenue that your book generated.  What is the value of any public good?  It's simply the revenue that it would generate if people were allowed to directly allocate their taxes.  We all benefit by considering the price tags on the things we want...and we all stand to lose by ignoring those price tags.  The only people that benefit when the "car" ends up in the ditch are the politicians in the opposite party.  How perverse is that.  I wonder how many more times the keys will have to pass back and forth before people start noticing a pattern.

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reason 

“Speaking of price tags…your book arrived yesterday. I think it’s well worth the $30…but my girlfriend did not. Eh…she’s more into the beat poets than philosophy. What is the value of your book to society? It’s simply the revenue that your book generated….”

No this is not true. This argument ignores consumer surplus and externalities. Think about water or air. Their value far exceeds their price.

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Xerographica

reason, the overall point though is that it wouldn't make any sense if we allowed 538 congresspeople to decide how many copies of John's book should be printed. There's absolutely no logical basis for believing that resources can be efficiently allocated by proxy.  It just doesn't work for any resource.

I'm sure you would vote for John's book...but whether you'd actually purchase his book offers an infinitely more accurate reflection of your own unique and valuable perspective. If you haven't purchased his book it means that you have better things with greater positive externalities that you could spend that $30 on. If you have purchased his book it means you were willing to forgo those other things that you value. The greater the quantity of unique and valuable perspectives that determine the answer...the more accurate the answer will be.

How many copies of John's book should be printed? How much money should be allocated to public education? How much money should be allocated to national defense? How much money should be allocated to public transportation? How much money should be allocated to everything that Rachel Maddow wants? How much money should be allocated to all those awesome things that Obama listed in his state of the union address?

All those questions should not be answered by 538 congresspeople. Instead...they should be answered by millions and millions of consumers each with their own valuable and unique perspectives. It's a fatal conceit for 538 congresspeople to think that they can answer any of those questions more accurately than our entire nation can. Don't get me wrong...if you're happy with congress's answers then I wouldn't try and stop you from giving them your taxes any more than I would try and stop you from believing in Santa Claus or the Tooth Fairy or God.  But if I'm going to concede that maybe you're right and maybe I'm wrong...it's going to cost you the same exact concession.  Once we both make that same concession then we would each allocate our own taxes and sell our own votes according to our own unique and valuable perspectives.

None of us knows what the exact outcome would be of allowing people to sell their votes or directly allocate their taxes...but it would defy everything we know to argue that our country as a whole wouldn't positively benefit from the efficient allocation of limited resources.

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Xerographica

John Holbo, quite frequently I'm really envious of people with great illustration skills such as yourself. Here's what I would draw if I had your skills...

Obama, Romney and Ron Paul would all be blindfolded and fighting over the keys to a car (which would be in the background). A fourth person, representing the American public, would be standing there without a blindfold on. The illustration's caption would read..."Aren't you tired of being a passenger? How many more times will you have to push the car out of the ditch before you decide to take the keys?"

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John Holbo

Xerographica,

“It’s a fatal conceit for 538 congresspeople to think that they can answer any of those questions more accurately than our entire nation can.”

Yes, but it’s not MY conceit, so its fatality – which I grant, for sake of argument – is by the by.

We keep coming back to the same point. You keep suggesting that the reason I should accept your proposal is that it would be so much better of we could, as you say, put the citizens themselves in the driver’s seat. But my objection is not that this is undesirable but that I do not have any particular reason to believe your proposal would tend to bring this about. It looks to me like you are selling me a blender on the grounds that I need a refrigerator.

“John Holbo, every day you have no choice but to consider the costs of the things you want…yet for some reason the burden is on me to prove to you that voters should be forced to consider the costs, as well as the benefits, of the things that they want from government.”

The burden is on you, just as the burden is on someone who proposes, say, a dictatorship of the proletariat, as a solution to the problem of how to reveal everyone’s preferences.

The analogy is apt. The idea of the dictatorship of the proletariat is that this one group, only a subset of the citizenry, will be optimally expressive of the interests of the whole population. Your idea is sort of the same on the other end of the income scale: not a dictatorship of the rich, but a promise that one group – the rich – which is only a subset of the citizenry – will, if given predominant political power, adequately express the interests and preferences of the whole citizenry.

Both idea have been tried. Various communist revolutions. The history of aristocratic representative government in Europe. (Historically, your proposal is the norm, in representative government. Only those with money – with property/land – wield political power.) The track record is poor in both cases. So, yes, the burden is on you, as it is on the communist, to show how and why the next time will be better.

There is another problem, incidentally. Market forces can ‘decide’ that the iPhone is awesome: everyone buys it. But market forces cannot design and build iPhones. For that you need designers and engineers and so forth. Probably that’s 500 people at least. And now we are back to the fatal conceit. How can 500 people presume to think they know what everyone wants? Well, they do and they don’t. It’s a fatal conceit in many cases. Companies go bust. Still, the solution is not to have millions of consumers each contribute some small bit of the engineering design and etc. process.

Now we go back to politics as usual. 500 people – congresscritters – are supposed to ‘build a product’ – i.e. a piece of legislation. They hope that it, like the iPhone, will be popular not unpopular. If it isn’t, they will be voted out … is the idea (though not the sordid reality, we may grant). Now what are you proposing, to change this? Somehow we can eliminate the middle-man of representative government? The millions of citizens themselves will write the legislation themselves? But that doesn’t seem practical. No more so than it would be practical for Apple to fire its designers and engineers and replace them with its consumer base, in some diffuse way (thereby presumably greating saving on design costs.) So what are you proposing?

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Xerographica


John Holbo, ok, you're right that I should bear the burden of proof.  Why should citizens be in the driver's seat?  Because they know what they want.  Are they capable of expressing their wants?  Yes, they clearly express their wants in the for-profit sector and in the non-profit sector.

In other words...the demand for public goods should determine the supply of public goods.  It's really as simple as that.

Historically my proposal has been the norm?  During what part of history have consumers ever been in the driver's seat?  First the king was in the driver's seat...but then some barons took the keys away from him when he kept driving the country into war.  After a while the barons became parliament and then parliament became congress.

Like I mentioned to "reason"...I'm not proposing to eliminate congress any more than I'd propose to dissuade people of their belief in Santa Claus or God.  What I'm proposing is that believers show tolerance for us non-believers.  If they believe that congress knows their interests better than they do...then so be it...they can give all their taxes to congress.  Personally, I'm highly skeptical that congress can know my interests despite never even having met me.  In other words...I'm skeptical that congress is omniscient.  What I'm proposing is simply that people have a choice to sell their votes and directly allocate their taxes.

"a promise that one group – the rich – which is only a subset of the citizenry – will, if given predominant political power, adequately express the interests and preferences of the whole citizenry."

The challenge is to see citizens as consumers.  If we applied your argument to the private sector then we would expect that transportation options would only consist of private jets and Rolls Royces...which would reflect a failure for the rich to adequately represent our interests.  But if you can see citizens as consumers then you'll understand that we don't need representatives to adequately express our own interests and preferences.

Consumers would have a choice which government organizations received their taxes and they would have a choice if and who they sold their votes to.  If you weren't happy with other people's choices then you would  bear the burden of convincing them why your choices were better.  Why should you have to convince them?  Because maybe they are right and maybe you are wrong.  That's the biggest challenge...for people to accept the possibility that they might be wrong.  This humility is essential to foster a culture of political tolerance.

To summarize...consumers would be coerced into paying taxes...but they would have a choice which government organizations received their taxes and they would have a choice whether to sell their votes or not...and if you disagreed with their choices then it would be up to you to convince them otherwise.

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Henri Vieuxtemps

"it wouldn’t make any sense if we allowed 538 congresspeople to decide how many of John’s book should be printed"

This example doesn’t sound very convincing. True, it would be difficult for the congresspeople to guess how many copies need to be printed, but by selling the book for $30 you’re not going to arrive at the right number either. Presumably, you need to print as many copies as many people might be interested in reading or browsing the book, and the $30 pricetag (an equivalent half-day labor at the minimum wage) is a serious distortion.

Arguably, the congresspeople could administer a poll and come up with a better number, no?

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Xerographica

Henri Vieuxtemps, for me the question is whether the public sector and/or the private sector should supply John's book.  Let's imagine that taxpayers could directly allocate their taxes...

In order for the public sector to supply John's book there would have to be a Department of Literature (DoLit).  The DoLit wouldn't sell books...it would just give them away based on an income qualification.  This income qualification would be determined by how many taxpayers allocated how much of their taxes to the DoLit.  The more revenue that the DoLit received the higher the income with which you could qualify to receive your X amount of books per week/month/year.

Let's say though that your income was well above the income qualification so you wouldn't be able to receive any books.  Would you still allocate any of your taxes to the DoLit?  Well...that would depend on how much you valued increasing the accessibility of good literature to lower income families.

The people who worked at the DoLit would want to keep their jobs...so their goal would be to keep taxpayers satisfied.  Would they publish John's book?  I don't know...their jobs would be at stake though so it would behoove them to engage in due diligence.  Would John want the DoLit to publish his book?  It might depend on how much money they offered him...or maybe he would just want to get his name out there...or maybe he would just want to donate his book to help support the DoLit.

As a pragmatarian...I don't have a personal preference for the public or the private sector...as long as taxpayers are allowed to directly allocate their taxes.  If taxpayers are not allowed to directly allocate their taxes then if I was going to err it would be on the side of the sector where people strive to keep their jobs.

From the above example though...we can see that everybody would benefit from John having the opportunity to decide whether he wanted the public and/or private sector to publish his book.

From this perspective we can then ask...what value would congress bring to the table?  As a society we either do...or we do not...value increasing the accessibility of good literature to low income families.  If we do value it then we are the best judges of whether the public and/or private sector should be responsible for supplying books to low income families.  If we do not value it then the public sector shouldn't be spending our taxes on something we do not value.

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This discussion is continued here...John Holbo's Critique of Pragmatarianism