Wednesday, March 12, 2014

Opinions (Shouting) vs Values (Spending)

Comment on: Wars on Everything by Anthony Gregory

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It's probably not intentional but, unfortunately, you give the impression that shouts accurately convey demand. People will shout for all types of things...they'll shout for more regulations...they'll shout for more assistance for the poor...they'll shout for walls to be built to keep immigrants out...they'll shout for free lunches. It doesn't cost anything for people to shout or shake their fists...so how can these things accurately convey demand?

The efficient allocation of resources doesn't depend on opinions...it depends on values. Cheap talk surveys...and polls...and voting...communicate people's opinions...not their values. In order to accurately determine what people truly value, they have to be free to put their own money where their mouths are. Therefore, spending, not shouting, accurately conveys demand.

Creating a market in the public sector would solve the preference revelation problem. Clarifying the demand for public goods would show us that the vast majority of people, when confronted with the alternative uses of their own tax dollars, would decide that war wouldn't be worth the cost.

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