Wednesday, February 12, 2014

The Free Market Easter Egg Hunt Analogy

I have already explained exactly why tax-earmarking is unlikely to lead to a private property society (aka anarcho-capitalism). There is just no reason for the one to lead to the other. The incentives are not there. There's no connection. - helmuth_hubener, Public vs Private System of Representation

Imagine it's Easter and there are a 100 kids about to go out on an Easter Egg hunt. The whistle blows...and the Easter Egg hunt begins! Except, the kids don't take off in a flash. They just kinda stand there looking bored. So you ask one kid why he isn't off trying to find the Easter Eggs.

HH: Hey kid, how come you're not making the effort to find the Easter Eggs?
Kid: The incentives aren't there.
HH: What do you mean?
Kid: The Easter Eggs were replaced with poop.

Yes helmuth, the incentives won't be there in a pragmatarian system because taxpayers won't have money to spend...they'll just have their poop to spend. Boy, you've really managed to disprove pragmatarianism! How could I have been so dumb to miss something so obvious? Of course organizations won't be incentivized to try and put better options on the table. Why would they try and innovate if all they get is a bunch of poop for their effort? LOL!

Seriously? Seriously? Seriously?

Once taxpayers can choose where their taxes (aka money aka something that everybody wants more of) go...then producers will be incentivized to use society's limited resources in new and better ways. Not just government organizations but all organizations. If a private organization comes up with some excellent health care innovation...then more taxpayers will want to spend more money in the private sector and less money in the public sector. Therefore, congress will increase its revenue by lowering the tax rate. It's ridiculously simple and straightforward.

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helmuth_hubener used up his allotment of my patience a long time ago.

But I am loving the Easter Egg hunt analogy and have been thinking about it for quite a while now.  And ever since my very first (and only) exchange with Steve Horwitz* I've been curious about who gets credit for analogies.

So I googled "market process" Easter Egg hunt and was *shocked* to discover that I wasn't the first one to think of the analogy.  But it wasn't at all surprising that the person using the analogy was my favorite economist James M. Buchanan...the intellectual father of tax choice.  Buchanan gave credit for the analogy to Richard Wagner...another excellent economist.

Searching for "free market" "easter egg" hunt found me this Easter Egg...
“Listen son, when the egg hunt begins, you need to pick up as many eggs as you can and drop them in your basket. Don’t stop to take the time to open the eggs to see what’s inside- there will be time for that later. Just find an area where no other kids are looking and search there for the eggs.” - Nick Shell, The Subtle Capitalist Message Of Easter Egg Hunts
This ties into Kirzner's emphasis on the importance of discovery...
Entrepreneurial discovery represents the alert becoming aware of what has been overlooked. The essence of entrepreneurship consists in seeing through the fog created by the uncertainty of the future. When the Misesian human agent acts, he is determining what indeed he 'sees' in this murky future. He is inspired by the prospective pure profitability of seeing that future more correctly than others do. These superior visions of the future inform entrepreneurial productive and exchange activity. The dynamic market process is made up of such profit-motivated creative acts in regard to the future. - Israel M. Kirzner, How Markets Work
It also invokes the idea of heterogeneous activity.  An Easter Egg hunt is a decentralized system.  You can imagine that far less ground would be covered if you tied all the kids together.  This is why centralized systems (socialism) find far less Easter Eggs.  And it's exactly why we should create a market in the public sector.

*I accidentally lied...The Failure of Market Failure

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