Tuesday, April 1, 2014

Can David Brin Cite Hayek And Smith?

Comment on: A Brincipiled take on things

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This was the first search result for "neoreaction "adam smith"". Turns out that if it wasn't for Brin...this post wouldn't have been a result.

I'm going to try and help both of you out...
Isn't that the central basis for the libertarian creed? The notion that educated free adults can be trusted with matches... not to mention their bank accounts and votes? If the masses are intrinsically stupid -- sheep -- then the paternalists are right and no future society of maximized freedom will ever be possible. - David Brin, Essences, Orcs and Civilization: The Case for a Cheerful Libertarianism
The problem isn't with the masses being stupid sheep. Nope. It has to do with the fact that they all want a free lunch. They are only too happy to try and externalize the costs of their benefits. As a result of this very faulty input, resources are redirected from more valuable uses to less valuable uses.

Neoreactionaries correctly discern that there is a problem with democracy...but they lack the economics to correctly diagnose the problem. As a result, they end up barking up the really wrong tree. Brin should have, but didn't, point this out. Why didn't he?

The solution is simple...we create a market in the public sector. If Brin doesn't support this solution...can he still cite Hayek and Smith?
I have just summarized Hayek and Smith correctly. And dig this… neo reactionaries want to set up systems that will reduce the net number of deliberators, decision makers and allocators FAR below the requisite smart mob that Smith and Hayek recommend. Do not cite Smith or Hayek, you insult them.
Nope, if Brin doesn't support tax choice (many more "allocators and deciders")...then he can't cite Smith or Hayek either. Personally, I can cite both for days...
It is thus that the private interests and passions of individuals naturally dispose them to turn their stocks towards the employments which in ordinary cases are most advantageous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and passions of men naturally lead them to divide and distribute the stock of every society among all the different employments carried on in it as nearly as possible in the proportion which is most agreeable to the interest of the whole society. - Adam Smith, Wealth of Nations
If government planners can't discern the "natural proportion" of milk, then clearly they can't discern the "natural proportion" of defense. By definition, you can't discern one without the other. If Smith could have stood on his own shoulders...then he certainly would have figured it out. Hayek missed it because Mises missed it. Rothbard caught it...but then his solution was to destroy the entire public sector. Errr...yeah. He missed the part where taxation and individual taxation are not mutually exclusive.

So...I'm just kidding about revoking Brin's citation rights. We need more, not less, people citing Smith and Hayek.

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In case anybody is curious...the reason I searched for "neoreaction "adam smith"" was because I was curious whether any neoreactionaries had shared this passage from Smith...
Even a bad sovereign feels more compassion for his people than can ever be expected from the farmers of his revenue. He knows that the permanent grandeur of his family depends upon the prosperity of his people, and he will never knowingly ruin that prosperity for the sake of any momentary interest of his own. - Adam Smith, Wealth of Nations
If any neoreactionary wants to cite Adam Smith in defense of monarchism...then I suppose that would be a pretty decent passage to use.  But if any neoreactionary wants to defend monarchism...then...errrr...perhaps they should do a "bit" more reading.

14 comments:

  1. "If government planners can't discern the "natural proportion" of milk"

    Milk markets and the dairy industry in general have a long history of State involvement/intervention. So it's difficult to say how that market and industry would have performed in the absence of such involvement/intervention.

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    1. The point is to clarify the demand for public goods in order to determine the breadth of demand for milk subsidies.

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    2. I don't agree with this 'choose where your taxes go' idea.

      Tax money doesn't belong to the taxpayer once it is paid, any more than the money paid on rent belongs to the rent payer once it is paid. The tax revenue belongs to the State.

      In fact if you think about it, in a fiat monetary system the State doesn't actually 'get' anything from you when it collects taxes. It issues fiat money, which is just a State liability, when it spends, and then 'destroys' that fiat money (or cancels the liability) when it collects taxes. The State gets things from people when it *spends* money, not when it taxes. And people choose to accept the money in exchange for goods and services.

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    3. If we unbundled cable then we would have a more accurate insight into people's true preferences for entertainment. If we unbundled government then we would have a more accurate insight into people's true preferences for public goods.

      How can resources be put to their most valuable uses if we don't know which uses people value most?

      Accurately gauging demand will result in an accurate supply. If you think the supply will be accurate in the absence of accurately gauged demand...then please do everybody a favor by actually studying the topic before you reach a conclusion...preference revelation problem.

      If you don't know who Samuelson was...and you have no idea why I'm mentioning him...then you don't have enough information to make an informed decision.

      I'm happy to answer any questions that you might have...but please demonstrate that you've done at least a little homework.

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    4. "If we unbundled government then we would have a more accurate insight into people's true preferences for public goods. "

      No you wouldn't. Government in theory belongs to all citizens equally, and tax revenue belongs to the government. We have one vote each and elect representatives to vote on how to spend the government's money. Your scheme is simply about giving wealthy people a larger ownership share of government and its revenues. Doing this in no way gives us a more accurate insight into people's true preferences for public goods, it simply strips people of their rights as citizens.

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    5. What does "insufficient demand breadth" mean?

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    6. Say, for example, that you have a population of 100 people.

      Within that population, 10 people earn 50% of the total income, and pay 50% of the total taxes. The other 90 people, of course, also earn 50% of the total income and pay 50% of the total taxes. The tax revenue belongs to the government, and the government is elected by the people, with each person having one vote.

      The 90 people who collectively pay 50% of the taxes want to build a school, which requires an expenditure equal to 70% of the total tax revenue. The other 10 people don't want to build a school, as they already have private tutors for their children, let's say. Nonetheless the representatives of the 90 people win the vote and so the school is built.

      Now what happens under your scheme? Let's say the 10 people who don't want to build a school want to build a battleship instead, which requires an expenditure equal to 50% of the total tax revenue. Under your scheme the battleship is built and the school is not built. Under your scheme the preferences of 10 people are satisfied, whilst the preferences of 90 people go unsatisfied.

      Now here's another possible scenario. In the one-person-one-vote system, as before, 90 people want to build a school and 10 people want to build a battleship. But because the government issues its own money, it decides it can pay for both. Total government expenditure is then equal to 120% of tax revenue, meaning that the government runs a deficit. The money the government spends in excess of tax revenue is then saved by the population, and added to their pension pot. That pension pot equals the debt of the government, to the penny.

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    7. A lazy man does twice as much work.

      If you had made the effort to learn what "insufficient demand breadth" means...then you wouldn't have expended your energy writing a scenario that is made entirely irrelevant by "insufficient demand breadth".

      As I explained and illustrated in the very first link I shared with you...clarifying the demand for public goods...if too few people spend their money on a public good (insufficient demand breadth)...then it would be removed from the menu.

      In your scenario...if only 10% of the population was willing to spend their money on a battleship...then the battleship would be removed from the menu. Why? Because of "insufficient demand breadth". Therefore, the money that would have been spent on the battleship would instead be spent on the school.

      In a pragmatarian system, demand breadth determines what's on the menu.

      In case you missed it...the irony is that by attacking pragmatarianism... you're actually attacking the solution to your problem.

      With our current system, because of demand opacity, the benefit of the many is sacrificed for the benefit of the few. Pragmatarianism would eliminate demand opacity.

      Now please do us both a favor and carefully read this blog entry... clarifying the demand for public goods.

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    8. Ok, here's another example, same initial situation as before.

      The 90% of people who pay 50% of total taxes want to spend 70% of total tax revenue on building a school, and 30% of total tax revenue on police. The other 10% of people want to spend 100% of total tax revenue on police, and nothing on the school, because a public school = socialism.

      In a one-person-one-vote system the representatives of the 90% win the vote, and so 70% of tax revenue is spent on the school and 30% is spent on police. The preferences of 90% of the population are satisfied, whilst the preference of 10% are largely unsatisfied.

      What happens under your scheme?

      The 90% allocate 70% of the taxes they pay to building a school, and 30% to police. The 10% allocate 100% of the taxes they pay to police. The result is that 35% of total tax revenue is spent on building a school, and 65% of total tax revenue is spent on police. As such the school can't be finished because there aren't enough funds.

      Given the same preferences as above, under your scheme the preferences of 90% of the population are unsatisfied, whilst the preferences of 10% of the population are largely satisfied.

      In the first case the 90% have more of a say, and in the second case the wealthiest 10% have more of a say.

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    9. Ok, in that scenario you would win if...democracy accurately conveyed the preferences of voters. But, if you want to argue that democracy accurately conveys the preferences of voters...then you have to agree that taxation should be voluntary.

      Personally, I accept that everybody wants a free lunch (cost externalization)...therefore I have to accept that taxation must be compulsory and democracy fails. But consumer choice does have extremely beneficial consequences...so I choose tax choice.

      Also, if you're interested, you might consider posting your concerns in this ongoing discussion...Is This Forum A Market?

      Then more people would benefit from your scenarios. It would be more collaborative. The more the merrier. Plus, you could benefit from other people's critiques.

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    10. Even if you assume that, in practice, democracy doesn’t accurately convey the preferences of voters, my example demonstrates, in a simplified way, a perfectly plausible scenario in which your “tax choice” scheme completely fails to satisfy, or even recognize, the preferences of the vast majority of citizens, whilst giving inordinately more power over public resources to the wealthiest minority. As such the following assertion made by you is shown to be extremely misleading at best, or simply false at worst:

      “If we unbundled government then we would have a more accurate insight into people's true preferences for public goods.”

      In my example 90% of the population want 70% of the total tax revenue to be spent on building a school, and 30% to be spent on police. The end result under your scheme is that only 35% of total tax revenue is spent on the school, and 65% is spent on police. This represents a complete failure of your scheme to recognize or satisfy the preferences of the majority of citizens. What happens instead under your scheme is that the wealthiest 10% are given more say over how to use public resources than the rest of the population. Your scheme is systematically undemocratic, and as such it strips people of their rights as citizens.

      You might personally think that, in my example, the wealthiest 10% deserve disproportionately more power over public resources because they pay 50% of the taxes. If that’s the sort of thing you believe then you should just say it, instead of misleadingly claiming that the aim of your scheme is simply to “clarify the demand for public goods”.

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    11. Again, you certainly win if you want to simply assume that voting accurately conveys preferences. You also win if you want to assume that government planners are omniscient. Either of those two assumptions will negate the necessity of pragmatarianism.

      If you drop those assumptions...then pragmatarianism might not allocate resources perfectly...but at least we will know what the preferences of the majority are. Once the preferences of the majority are known...then there will be an incentive to cater to those preferences. Anybody who does so will make money. Which is exactly why some people have more money than other people. Which is exactly why some blogs have more followers than other blogs.

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    12. As I said before, the basic error in your argument is you assume that tax revenue belongs to the individual taxpayer after it has been paid to the State. In reality tax revenue belongs to the State, which is equally ‘owned’ by all citizens. It’s this confusion over ownership which leads you to make false and misleading statements about preferences.

      Citizens can be thought of as equal ‘shareholders’ in the State, with each citizen owning one share and thus one vote. In essence this is no different to a hypothetical company in which each shareholder owns one share, and has an equal vote on what to do with the company that they all own.

      Voting on how to use the State’s funds is, in this sense, no different to shareholders voting on how to use a company’s funds. In the same way that shareholders can express their preferences through voting, so citizens can express their preferences through voting.

      There is in theory no “free lunch” here. Citizens vote on how to use resources that belong to the State, in which they are all equal shareholders – not on how to use resources that belong to other people.

      “pragmatarianism might not allocate resources perfectly...but at least we will know what the preferences of the majority are”

      That is completely incorrect. Given that the State belongs to all citizens equally, citizens should have an equal say on how to use the State’s funds. Under your scheme however, wealthy individuals are given the right to allocate more of the State’s funds than poor individuals. This does not provide any more insight into the preferences of the majority at all – in fact it does the exact opposite. All it does is effectively disenfranchise most of the population.

      Under your scheme the wealthy effectively get a “free lunch”, as they get to spend funds that belong to all citizens equally, as if they belonged to them personally.

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    13. If you think pragmatarianism would disenfranchise most of the population...then you need to read up on modular representation vs monolithic representation.

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