Thursday, February 13, 2014

Civic Crowdfunding Ethical Alternatives

Reply to: Oklahoma Restaurant: Not white, straight & rich? Screw you (context)

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I have a good friend who is gay and used to be my roommate. When we lived together he would love to complain that he was living in Glendale instead of West Hollywood. This had nothing to do with discrimination...and everything to do with a scarcity (relatively speaking) of things (in this case people) that matched my friend's preferences.

My gf, who is Korean (but a banana) was thrilled when a Kyochon Chicken opened up in Glendale. I love it as well...it's wonderfully spicy Korean BBQ chicken wings/legs. Having one in Glendale means that we wouldn't have to drive ALL the way to Korea Town (not that far). Unfortunately, it closed down shortly after it opened. Maybe the manager was inept...or maybe the demand wasn't there. I told my gf that, because she didn't go there often enough, it was her fault that they closed down. Glendale isn't Korea Town...it's Little Armenia. Zankou Chicken (which is also delicious) has been in business here for years.

Personally, I love the heck out of orchids. There's an awesome nursery in Santa Barbara...and an awesome one in San Diego...but none right in the middle...Los Angeles...which is next to Glendale where I live.

Should the mountain come to Mohammed...or should Mohammed go to the mountain?

One thing that I keep thinking about is the expression..."as happy as a kid in a candy store". Why is the kid so happy? Because there's a wide variety of items which really match his preferences. Isn't that what heaven would be like? Imagine going to heaven and discovering that there wasn't a wide variety of things that really matched your preferences...you'd want a refund...right?

If we want heaven on earth...then it's essential to understand the process by which candy stores come to have such a wide variety of things which really match kids' preferences. Basically, a kid has something that the candy producers want...money. So they are incentivized to innovate. They constantly try different combinations of inputs in order to put new and better options on the table. If the new option is truly better, then the kid gives them positive feedback by exchanging his money for the better option. And because no two kids have the same exact preferences...candy store owners strive to provide the variety of candies which will maximize their revenue.

What would a candy store look like today if kids had never been allowed to choose for themselves which candies they wanted? How could there be a wide variety of items which really match kids' preferences if they were never given the freedom to let the candy makers know what their preferences truly are? Without their individual input (spending decisions), it's a given that the selection of candies wouldn't be wide...and it wouldn't closely match their preferences. And kids wouldn't be so happy when they went to candy stores.

The standard for life is for everybody to be as happy as a kid in a candy store. There should be the widest variety of things that match our preferences as closely as possible. In order for this to happen, people have to be free to shop for themselves...and entrepreneurs have to be free to try and guess which combination of inputs will maximize their revenue.

Is this a rant? Or a random ramble? Maybe it's only remotely relevant to your questions? Is it possible that maybe your questions are the things that are only remotely relevant to reality?

The fact of the matter is...by critiquing the logistics of building an ethical alternative in Enid...you're making it clear that you don't really grasp the fundamental concepts.

Think about Las Vegas. I don't know how true the story is...but the idea is fascinating...somebody building a candy store in the middle of nowhere. Evidently, the candy closely matches people's preferences as so many of them are willing to make the drive. Just like I'm willing to make the drive to the orchid nurseries in Santa Barbara and San Diego.

Again, the point is that we really don't want to use a large amount of society's limited resources to only create a little value. Markets work because the amount of resources somebody uses reflects the amount of value they create for others.

A civil suit against Gary James would use a large amount of society's limited resources but we would never know the amount of value it created. Why? Because it was funded by people who didn't have a choice in the matter.

If a candy store owner could create the maximum value without the choices of each and every kid...then I would be confident that we would could create the maximum value by suing Gary James. But without the direct input of consumers, without their spending decisions...it's a given that we will be using a large amount of society's limited resources to only create a small amount of value.

Economically speaking, the greater the disparity between the demand and the supply, the more value that will be destroyed. If you demand a club sandwich, but I supply a knuckle sandwich, then value will be destroyed. Successful builders are the people who accurately guess the size of the unmet demand. Unsuccessful builders are those who waste society's limited resources trying to build something that there was insufficient demand for.

Ideally there should be a way for the people of Enid to show you their true demand for an ethical alternative. But true demand can't be revealed by cheap talk surveys...which is why voting doesn't reveal demand...it simply reveals opinions. True demand can only be revealed by individuals considering their circumstances and choosing...spending...sacrificing...accordingly.

This is why we have to create a market in the public sector. Doing so would give us the opportunity to create a government organization dedicated to building ethical alternatives. Taxpayers could give their money to this organization...and the organization would determine where an ethical alternative is most likely to create the most value. Then they could either build the alternative themselves...or grant the money to the most successful/qualified/experienced builders.

Of course, maybe a government middleman wouldn't be needed. You could start a crowdfunding website dedicated to ethical alternatives. People could propose ethical alternatives and anybody could contribute any amount to the projects. For example, you could propose an ethical restaurant in Enid...and people could contribute any amount to the project. If the funding goal was reached...then you would receive the money and get started building the restaurant. In order to increase your chances of reaching your funding goal...you'd have to show people that you did your homework. Plus, it would help if you had a few successful projects under your belt. What's really quite fascinating is that I think a new law makes it possible for people to be investors rather than just donors. If people are investors...then you have a crowd of people researching the viability/profitability of ethical alternatives. Given enough eyeballs, all bugs are shallow (Linus's Law). A crowdfunding site for ethical alternatives is a pretty brilliant idea. People could make money by doing good. I'd jump on it if pragmatarianism wasn't a thousand times more brilliant.

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