Wednesday, January 29, 2014

Hey Mungerfesto, Prices OR Consumer Sovereignty?

Over at the Bleeding Heart Libertarian blog... Mike Munger posted this entry...A Libertarian Mungerfesto, Part IV: Consumer Sovereignty, and Getting “The Things” There

It's pretty long, but pretty good...except for this part...
We have no basis for assuming that “the things” will be there, unless prices and profits can perform their directive functions. Without the promise of profit, the things are not there. In fact, the things are not even “things” yet, but rather ideas that no one has ever thought about until some entrepreneur imagines them.
It reminds me of this blog entry of mine...Prices and the Efficient Allocation of Resources...where Nicholas and I went back and forth discussing the necessity of prices.

If we created a market in the public sector...there wouldn't be prices or profits.  Taxpayers would be able to spend as much or as little as they wanted on any public good.  And obviously there wouldn't be profits. But there would certainly be consumer sovereignty...taxpayers would shop for themselves and government organizations would gain or lose revenue accordingly.   So it would definitely be a market...there would certainly be a directive function..."the things" would be there...and this would take place without any prices or profits.

It's not prices or profit that are essential...it's opportunity cost.  You don't have to spend $1 to read this and reply...but any time you spend here can't also be spent doing the other things that you also value.  Which use of your limited time do you value most?  Whichever use you choose is the one that you value most at that point in time.  So as long as we can choose how we use/allocate our own limited resources...the result will be the most valuable distribution of society's limited resources (efficient allocation).  Maybe understanding that it's opportunity cost rather than prices/profit is part of the difference between libertarianism and pragmatarianism.

Speaking of which...this is probably the best I've ever described the difference between libertarianism and pragmatarianism (Division of Representation) ...

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Well...in some cases...perhaps the more you study something the more likely you are to see certain differences as more significant than somebody who hasn't studied the same thing. Take for example Platyceriums.

But I think there's a pretty significant difference between abolishing the government (anarcho-capitalism) and limiting the scope of government (libertarianism). It's like the difference between killing somebody and putting them on a diet.

Practically speaking...in terms of communicating...it's extremely inefficient (hence annoying) if somebody says they are a libertarian instead of just saying that they are actually an anarcho-capitalist. It's a waste of time to needlessly drill down to figure out somebody's real stance on the proper scope of government...especially when there's already a perfectly good word for it. So for practical purposes...if somebody is an anarcho-capitalist then they should just say so.

Regarding the difference between pragmatarianism and libertarianism/anarcho-capitalism...I don't believe it's a small difference either. Those two ideologies both advocate throwing the baby out with the bath water (obviously to different degrees)...while pragmatarianism advocates allowing each and every taxpayer to use their taxes to protect/support the parts that they believe are most valuable (baby).

Libertarians and anarcho-capitalists have a vision of exactly what the government should look like. They want to impose that vision on the entire country by attacking the government with scalpels. As a pragmatarian, I fundamentally disagree with that approach. I want each and every taxpayer to use their own taxes to add some clay where they feel it is most needed. I have no idea what the final sculpture will look like...but given the collaborative process of individual valuation...it's a given that it will be the most valuable form possible.

Basically...libertarianism/anarcho-capitalism are tearing down (destructive)...while pragmatarianism is building up (constructive). I can't remove a piece you added to the sculpture...I can't take away the $500 you gave to the EPA...all I can do is spend my own tax dollars where I feel they are most needed.

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A Bit Of Fry And Laurie to lighten things up?  From the Library Vs Cricket Sketch...

Librarian: Because may I say that I find your continued efforts to drag down and smear this country of ours to be frankly disgusting.
Laurie: I'm not trying to smear and drag down anybody.
Librarian: I suppose you'd rather read books about England losing at cricket than winning, wouldn't you?
Laurie: Well, yes, if it's true.
Librarian: Then I feel sorry for you.
Mrs Pert: He's a knocker, that's what he is.
Librarian: I agree with you, Mrs Pert.
Mrs Pert: Oh, it's very easy to knock, isn't it? You with your snide university ways.
Laurie: Snide University?
Mrs Pert: Or wherever it is you went.
Librarian: So often these days, sir, we see, don't we, these so-called clever people who just can't wait to tear down and destroy.
Mrs Pert: And knock.
Librarian: And knock, yes.  But do they ever have anything to put in the place of things that they destroy? No.  It's wanton destruction.

Libertarians and anarcho-capitalists are knockers.  Yup.  I'm not a knocker because even though I'm tearing libertarianism and anarcho-capitalism down...I have something better to put in their place...pragmatarianism.

So it seems that I made a mistake with this illustration I created a while back (Our Mixed Economy - Capitalism vs Socialism)...




Pragmatarianism wouldn't be millions and millions of taxpayers chiseling away the parts of government that they don't value...it would be millions and millions of taxpayers contributing to the parts of government that they do value.  I think this is a fundamentally important distinction.

So libertarianism/anarcho-capitalism is kind of like Eric Cantor's YouCut...while pragmatarianism would be more like YouBuild...or YouConstruct.

Of course...the resources used to construct one building can't also be used to construct another...
But have you ever asked yourselves sufficiently how much the erection of every ideal on earth has cost? How much reality has had to be misunderstood and slandered, how many lies have had to be sanctified, how many consciences disturbed, how much "God" sacrificed every time?  If a temple is to be erected a temple must be destroyed: that is the law - let anyone who can show me a case in which it is not fulfilled! - Friedrich Nietzsche
If you help "erect" pragmatarianism...the resources you use will be taken from libertarianism and anarcho-capitalism.  As pragmatarianism goes up...they will go down.  It's creative destruction.

A few passages that Munger shared in his Mungerfesto...
Entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services. - Joseph Schumpeter
The introduction [of new products] is achieved by founding new businesses, whether for production or for employment or for both.  What have the individuals under consideration contributed to this?  Only the will and the action; not the concrete goods, for they bought these—either from others or from themselves; not the purchasing power with which they bought, for they  borrowed this—from others or, if we also take account of acquisition in earlier periods, from themselves.  And what have they done?  They have not accumulated any kind of good, they have created no original means of production, but have employed existing means of production differently, and more appropriately, more advantageously.  They have “carried out new combinations.”  They are entrepreneurs.  And their profit, the surplus, to which no liability corresponds, is an entrepreneurial profit. - Joseph Schumpeter
An entrepreneur is an economic agent who unites all means of production- land of one, the labour of another and the capital of yet another and thus produces a product. By selling the product in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit. He shifts economic resources out of an area of lower and into an area of higher productivity and greater yield. - J.B. Say  
Personally, I'm certain (enough) that pragmatarianism will result in higher productivity and greater yield than libertarianism/anarcho-capitalism.  Maybe I'm wrong?  Maybe I'm right?  You can certainly try and hedge your bets.  It's easy enough to like both the libertarian party and the tax choice party on facebook.  It only takes a second to invite your friends to do the same.  Who knows...maybe some of your friends that aren't interested in the libertarian party will be interested in the tax choice party?  Only one way to find out.  So go ahead and put both options on the table and let your friends choose which one they prefer.  That's how and why markets work.  And it's exactly why we should create a market in the public sector.  Let's find out which public goods people value most.

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