Monday, March 31, 2014

Samuelson, Tiebout, Buchanan and Exit Granularity

There are 25 irrelevant search results for "Exit Granularity"

Reply to reply: Is This Forum A Market?

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[note]I say this sincerely and with no malice: you're taking peoples' complaints about the repetitive nature of your threads far too seriously. - Orham[/note]
It's just a helpful reminder. Kinda like some people need a friendly reminder that coffee from McDonald's is hot.
Eh, I'll go with the "forums are economies" metaphor. It's not entirely baseless, though it's not strictly true either. Anyway, on to the nitty-gritty then. - Orham
I like the part where you're the first person to point out that this forum is a mixed economy. Except, you didn't even come close to tackling my actual argument.

You spent quite a bit of time spelling out the obvious...that the supply of police isn't determined by the demand for police...but then when it came time to explaining why the visible hand wouldn't work for threads (my actual argument)...this is all the magic I got for my moment...
A moderation market, and especially an unregulated one (which it would need to be in order to be a characteristically pure market rather than a regulated market), would be unable to deliver objective rulings guided solely by the forum's equivalent to rule of law. - Orham
Your mission, if you choose to accept, is to explain to me why it wouldn't work to elect representatives to choose which threads consumers reply to. I know the answer...do you? If you don't know the answer...then how can you know that your answer regarding police is correct?
See? Supply and demand, as far as moderation is concerned, aren't being guided by market activity. The moderation supply is being rationed, distributed according to a planned schedule and set protocol which operates independently of present demand levels or consumer preferences for a particular sort or amount. - Orham
If the command outcome for police is more valuable than the market outcome would be...then why isn't this also true for threads? This is my question...which is based on my argument...which you entirely failed to address.
This forum, if it is to be metaphorically examined as an economy at all, is definitely neither a pure market system nor a pure command system. It is certainly a mixed system, and the reason why is because some services it provides are delivered according to command principles rather than market principles. - Orham
You missed my argument the first time. And I thought it was quite obvious. So perhaps it will help if I make it even more obvious. So...ok...I'm not disagreeing that this forum is a mixed economy. And, mad props for pointing that out. But, it doesn't help us tackle the issue of why elected representatives couldn't create more value by choosing which threads we replied to.
Xero, there are forums and websites where moderators are elected officials rather than appointed ones. Rational Wiki is an example. - Orham
Again, and again, and again...there aren't any forums which choose for you which threads you reply to. Should there be? If not, then why not? If so, then please let me know when you start one. Maybe then you'll learn why command economies fail. How priceless would it be to have that knowledge?
You dug yourself pretty deep with this one considering there are sites which charge premiums for use of their services (online tutoring services come to mind), forum moderators may or may not be elected officials (Rational Wiki), and NS is a profitable site regardless of the fact that its moderation services are rationed. - Orham
Again, again, again and again...there aren't any forums which determine which threads you spend your time on. Why is that?
...really, you've dug so deep I can't even see you anymore. - Orham
Errrr...you've simply closed your eyes...that's why you can't see me anymore. If you want to bury me that badly...then start a forum where elected representatives choose which threads you reply to. If it thrives...then my world view would be annihilated. It will be an extremely unpleasant feeling. But so be it. I prefer reality. What about yourself?

If you had a million dollars laying around...I'm sure you wouldn't hesitate throwing $10,000 at the development of your proof. But that's not the case right? And I don't think you're going to sell your car to start a representative forum. And you're probably not going to ask the bank for a loan. So why not try and crowdfund it?

If you try and crowdfund it...then you can see if there's any demand for a forum where elected representatives dictate which threads you reply to.

While I'm here...let me share a bit of my reality with you.

In my OP I mentioned The Pure Theory of Public Expenditure. It was written in 1954 by the Nobel Prize winning liberal economist Paul Samuelson. It is by far the most widely cited economic justification for government.

His argument was that, because people can benefit from public goods without having to pay for them, it wouldn't work to simply ask people how much they value public goods. People would have an incentive to state that they value public goods less than they actually do. As a result, public goods would be undersupplied. Therefore, compulsory taxation is necessary.

Samuelson and I agree on this pretty fundamental point. Everybody wants a free lunch. We all want to externalize costs.

This leaves us with the issue of determining how much people truly value public goods. Is it important to figure this out? Well...yeah...the optimal supply depends on this information. You can't say, "hey man nice shot" if you don't know where the target is. In economics, the target is demand. The value of the supply is judged by its proximity to demand. How valuable is this thread? The answer depends on how closely it matches the preferences of consumers.

What Samuelson did was simply assume that government planners already know what our preferences are. In other words, he just assumed that government planners are omniscient. Seriously. I really disagree with Samuelson on this fundamental point. And I sure wasn't the only one.

Two years after Samuelson published his paper...Charles Tiebout published A Pure Theory of Local Expenditures. It's been cited over 10,000 times...which gives you a pretty decent idea of its importance.

Tiebout's paper was a response to Samuelson's argument that it was impossible to discern people's true preferences for public goods. In his paper, Tiebout argued that people will move to whichever communities supply levels of public goods which most closely match their preferences. Basically, foot voting solves the preference revelation problem. Well...it was a great argument because there was a decent amount of truth to it...but many economists were not very satisfied with the answer. Therefore, many economists have been trying to figure out other ways to get people to reveal how much they value public goods.

Now, I'm pretty sure you've never even heard of Tiebout or his extremely well cited paper. Just like I'm sure you've never heard of any of the economists since then who've attempted to solve the preference revelation problem. Clearly you're not even aware of the preference revelation problem.

I'm especially bringing up Tiebout though because of his relevance to your post. In the real world...there are significant costs to moving to a new community. Foot voting is not cheap. So the push/pull has to be pretty significant before you'll move to the next community...let alone to another country.

But this really isn't the case with forums. Foot voting for a different forum is far less costly than foot voting for a different real life community. It was pretty much the easiest thing for people to migrate from Friendster to MySpace to Facebook. And unlike real communities...we can live simultaneously in numerous online communities. This means that the supply of public goods in forums will more closely match the preferences of consumers than the supply of public goods in towns will. It's far easier to start a new forum than it is to start a new town.

So you're right that this forum is a mixed economy...but the supply of public goods is more accurate/valuable (closer to the target) because leaving (exit) is relatively easy. If it was just as easy to move in the real world...then it wouldn't be as important to try and help people understand why pragmatarianism is by far the best option.

In 1963, seven years after Tiebout published his paper, the Nobel Prize winning market economist, James Buchanan, published The Economics of Earmarked Taxes. It's only been cited 246 times. Sometimes it takes the crowd a while to recognize an Easter Egg. That being said, the crowd finds infinitely more Easter Eggs than government planners can.

Buchanan's argument was basically that if people have to pay taxes anyways, then it's in their selfish interest to spend their taxes on the public goods that most closely match their preferences. If your buck is a foregone conclusion, then you might as well spend it on whatever gives you the most bang. If your moment is a foregone conclusion, then you might as well spend it on whatever gives you the most magic. If you've already paid for a buffet...then you might as well select the dishes that you find most delicious. When consumers are free to spend their time/money on the items that most closely match their preferences...producers have the strongest possible incentive to try and supply better items. As I said in an earlier post...consumer choice has very beneficial consequences.

To summarize...

1954 - Samuelson - omniscient government planners
1956 - Tiebout - foot voting
1963 - Buchanan - tax voting

Foot voting and tax voting are by no means mutually exclusive. But it's the epitome of throwing the baby out with the bath water if people totally exit because they don't have the option to specifically exit. It would destroy value if the only way you could exit from this thread would be to exit from this forum. Therefore, you should be free to exit from funding the war on drugs just like you're free to exit from this thread. You should be free to exit from funding the DoD just like you're free to exit from the NRA.

Imagine how absurd it would be if the only way vegetarians could avoid buying meat would be to move to a town where nobody purchased meat. If you take that absurdity and multiply it by a really giant number you end up with our public sector.

First you move your money/time...and if that doesn't work...then you move yourself.

I like your sig by the way. At this stage in the game...there's no such thing as bad publicity.

Also, out of curiosity...have you ever wondered whether you're more analytical than most?

Sunday, March 30, 2014

Forced Rider Problem vs Free Rider Problem

Post over at the Libertarian reddit... Which problem is worse...forced riders or free riders?

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My reply to Gordon Clark On Unionism

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I created the Wikipedia page for the forced rider problem. It was butchered by the same idiots who got me banned from Wikipedia. One of the things they did was change the title from "Forced rider problem" to "Forced rider". They also removed the part about unions. Here's the original version...forced rider problem...with some relevant passages.

Check out the disparity in article traffic statistics between the forced rider problem article and the free-rider problem article...

Forced_rider has been viewed 166 times in the last 30 days
Free_rider_problem has been viewed 19,408 times in the last 30 days

How crazy is that?

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The existence of Wikipedia means that clearly there are significant exceptions to the free rider problem.  But the fact that I was the only one developing not just the forced rider problem article but numerous other market articles means that the free-rider problem is a real problem.

If you're a libertarian...then chances are good that you want the government to do far less than it currently does.  But if you kick "public goods" over to the public sector...then yes, you eliminate the forced rider problem, but you risk subjecting the public goods to the free-rider problem.

If you're aware of the beneficial consequences of consumer choice...then you could make a convincing argument that a smaller quantity of an effective public good is superior to a larger quantity of a defective public good.  For example, a smaller supply of effective private education is superior to a larger supply of defective public education.  How effective could public education really be when the Wikipedia entry on the forced rider problem only received 166 visits in the past month?

But if you're aware of the beneficial consequences of consumer choice...then why not avoid the free-rider problem critique altogether by supporting tax choice?

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Two comments at Of Free Riders and Forced Riders: America's Cup edition

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Taxpayers are invited to allocate their taxes to various bits of it (probably in small increments continuously so as to avoid everyone dumping everything into their favourite programs). In that model, not unlike a kickstarter for the entire program of government expenditure, and in the present time, I strongly suspect that "the yacht race" would get its proposed funding without a single one of "your" tax dollars being contributed to it. - Michael Albert 
While I can perhaps fantasize about systems like the one you suggest (which also has problems), I simply hope that, at the margin, things like America's Cup could be flipped over to voluntary payment regimes. - Eric Crampton
[My reply to Albert]  Every tax dollar spent on a yacht race is a tax dollar that couldn't be spent on public healthcare. So I'm pretty sure that, in a pragmatarian system, insufficient demand breadth would remove a yacht race from the "menu".

What about football though? Would the average joe rather spend 1 tax dollar on subsidizing the popular pastime or on public healthcare? No idea. But at least he would have no choice but to internalize the cost.

It gets interesting when we imagine taxpayers being able to order from any country's "menu". How well subsidized would the World Cup be? Maybe more well subsidized than the Brazilian EPA? Personally, protecting the rainforest is a far more urgent priority than watching a ball get kicked back and forth.

[My reply to Crampton]  Oooooooo, I'd really love to read your in-depth analysis of those problems. For reference...tax choice FAQ and tax choice economics.

Friday, March 28, 2014

The Beneficial Consequences Of Consumer Choice

There are zero search results for "The Beneficial Consequences Of Consumer Choice"

Reply to reply: Is This Forum A Market?

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"Representative democracy" has zero to do with markets. It can't be turned into a command economy, because it's not a fucking economy. There's no trade involve, merely free distribution. It's no more a market than throwing things out of a window is. - Salandriagado
Representative democracy is where impersonal shoppers choose which items are placed in your shopping cart. For all intents and purposes it is a command economy.
I'm not giving you time. I am choosing to spend my time throwing my opinions around the internet. - Salandriagado
Of course you're giving me time. You're clearly allocating your time to this product that I created.
There is no trade involved, no exclusivity. This is no more a market than walking around outside shouting my opinions is. - Salandriagado
I agree that walking around shouting your opinions is not a market...any more than a song is a market. Products aren't markets.

If you walk around outside shouting your opinions...and people can choose to spend their time listening to your sermon on the mount...then it's a market.

If the sidewalk is full of street performers...and you can choose which performances you spend your time/money consuming...then it's a market.

If the bar is full of single ladies...and you can choose which ladies you spend your time chatting up...then it's a market.

If the class is full of students...and you can choose which students you spend your time studying with...then it's a market.

If the forum is full of threads...and you can choose which threads you spend your time replying to...then it's a market.

All forums, without exception, are markets. Why is that? Not a single person has attempted to answer this extremely straightforward question.

Consumer choice has logical and extremely beneficial consequences. Something happens to the supply of goods...

Variety? Skyrocket
Quality? Skyrocket
Cost? Plummet

If you eliminate consumer choice...then what do you think happens to the supply?

Variety? Plummet
Quality? Plummet
Cost? Skyrocket

If kids couldn't choose which candies they spent their money on...then what do you think would happen to the supply of candies?

Variety? Plummet
Quality? Plummet
Cost? Skyrocket

Right now consumers can't choose which public goods they spend their money on. But if they could...what would happen to the supply of public goods?

Variety? Skyrocket
Quality? Skyrocket
Cost? Plummet

The increase of demand, besides, though in the beginning it may sometimes raise the price of goods, never fails to lower it in the run. It encourages production, and thereby increases the competition of the producers, who, in order to undersell one another, have recourse to new divisions of labour and new improvements of art which might never otherwise have been thought of. The miserable effects of which the company complained were the cheapness of consumption and the encouragement given to production, precisely the two effects which it is the great business of political œconomy to promote. - Adam Smith, Wealth of Nations

Thursday, March 27, 2014

Cleaver Greene's Speech

Nuclear attack, marauding refugees, avian flu, communists in broom closets, White-tailed spiders...so many things we fear.  Scary scary women we fear.  So many things we fear...including, sometimes, the truth.  There is, is there not, ladies and gentlemen of the jury, so much we can learn about ourselves if we have the integrity, the courage, to stand up and not only tell the truth, but to listen to it.  It has a distinctive ring to it the truth. A purifying timbre that will not be silenced, even by the monotonous drone of governments and corporations.   Joshua  Floyd has reminded us that the truth exists and defines itself as a function of who we are. It may be ugly, it may be unwelcome, it may be the very last thing we wish to confront, but the only way that we can confront it, is to know it, to embrace it. The only way we can move onward, is to know that which is manifest about ourselves. - Cleaver Greene, Rake

Rake is a really wonderful show.  Recently watched it on Netflix and felt the need to give it a bit of public love.

Not exactly sure how it happened...but I ended up with a taste for Australia cinema.  Maybe it was The Man From Snowy River?  And then perhaps Crocodile Dundee sealed the deal.  I was just a kid when I watched them.  Then I remember loving Strictly Ballroom.  Genre wise...it really didn't fit with the movies I was watching at the time.  Next was Siam Sunset and now...Rake.

Why did I choose to share this speech?  It's because we don't know what the demand is for public goods.  And there doesn't seem to be much interest in clarifying the demand.  But it's absolutely imperative that we open our eyes.  To steal Greene's words...the demand for public goods may be ugly, it may be unwelcome, it may be the very last thing we wish to confront, but the only way we can confront it, is to know it, to embrace it.  The only way we can move onward, is to know that which is manifest about ourselves.

If we created a market in the public sector, then the way people spent their taxes would reveal the wide variety of things that they fear...and love.
If a woman told us that she loved flowers, and we saw that she forgot to water them, we would not believe in her "love" for flowers.  Love is the active concern for the life and the growth of that which we love.  Where this active concern is lacking, there is no love. - Erich Fromm, The Art of Loving
This right here is my active concern for Rake.  Could I truly say that I loved the show if I didn't bother telling anybody about it?  Of course not.  So here I am spending my time writing about the show and sharing it with whoever finds this blog entry.  This is my input...it's what is manifest about myself...and it's free to flow.

In the absence of our input (active concern)...how could resources possibly be put to their most valuable uses?  How could Rake and Australian cinema possibly grow and thrive if people around the world aren't free to express and communicate their active concern?  How could Platycerium superbum possibly grow and thrive without rain?

Right now we aren't free to choose which public goods we put in our shopping carts.  And that's a problem.  We might not agree with what other people put in their shopping carts...but how can we possibly know where there's the greatest need for improvement if we don't know where people's hearts truly are?

Wednesday, March 26, 2014

Why Is Every Forum A Market?

A thread I posted over at the Nation States forum...Is This Forum A Market?

Linked to it from reddit...

Libertarian subreddit: Challenge to Liberals:  1 upvote, 6 downvotes
Dark Enlightenment subreddit: Challenge to Liberals:  4 upvotes, 1 downvote
Economics subreddit: Challenge to Liberals:  1 upvote, 3 downvotes

The economics subreddit is mostly liberals...so that makes sense.  But I'm not sure how to explain the disparity between the libertarians and the neoreactionaries.

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[note]You don't have to be here. Really.[/note]

In a few threads I've argued that this forum is a market. Nearly everybody categorically rejects the concept.

In the most recent thread where I brought it up, I was given the green light to create a thread dedicated to the topic.

So here I am. Why do I think this forum is a market?

First off...it's not just this forum...any forum is a market. Forums are markets because they have...

1. demand
2. supply
3. choice

Right now I'm being a producer. I'm using society's limited resources to create/produce/supply a new option (builderism). The resources that I'm using are...

My own resources...

-Brain
-Time
-Energy
-Calories
-Keyboard
-Computer
-Monitor
-Mouse
-Internet
-Electricity
-etc

This website's resources...

-Software
-Server
-Storage space
-etc

The variety of resources required to create this one thread are really too numerous to list in their entirety. This concept was wonderfully illustrated by the I, Pencil video.

So here I am taking these resources and putting them to a new use. I'm actually being quite unreasonable...
The reasonable man adapts himself to the conditions that surround him. The unreasonable man adapts surrounding conditions to himself. All progress depends on the unreasonable man. - George Bernard Shaw
The economist who has by far done the most work in the area of entrepreneurship is Israel M. Kirzner...
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
I'm sure some of you will quickly object, "Hey! But you're not making any money by creating this thread!"

As a society we do tend to equate profit with money...but it's more accurate to think of profit as gain. I'm making the effort to put a new option on the table because my individual foresight indicates that it might be worth the risk to do so. Clearly I want the largest benefit for the smallest cost. If I perceived that the only thing that I'd gain from this endeavor was an old dirty sock...then I would do other things with my resources.

Personally I like to dream that this new thread/product/option will help everybody understand how markets work. Economic enlightenment has extremely beneficial consequences.

It's important for me to emphasize that it's my potential personal gain/benefit that incentivizes me to make the effort to put a new option on the table. Incentives really matter.
Land occupied by such tenants is properly cultivated at the expence of the proprietor as much as that occupied by slaves. There is, however, one very essential difference between them. Such tenants, being freemen, are capable of acquiring property, and having a certain proportion of the produce of the land, they have a plain interest that the whole produce should be as great as possible, in order that their own proportion may be so. A slave, on the contrary, who can acquire nothing but his maintenance, consults his own ease by making the land produce as little as possible over and above that maintenance. - Adam Smith, Wealth of Nations
Once I put this new option/thread/product on the table...then it's up to you, the consumer, to decide whether you'll "buy" it. Buying this thread won't cost you money...it will cost you time. And your time is an extremely limited resource. This isn't a video game where we get unlimited lives. Not yet at least.
It is through the gaze of my extinguished self that I realize the limitations that make scarcity necessary. Through this gaze into my own limitedness - a limit always established by the impending cessation of space and time for me - through this gift of death, I discover in nature the best way to be efficient. Thanks to death I must choose x rather than y. This has become a feature of 'nature' - a demystified 'nature' that bears no possibility of participation in the eternal. This is consistent with capitalism. - D. Stephen Long
You, as the consumer, inherently understand that any time you spend on this thread (x) can't also be spent on other threads (y). This is one of the most important economic concepts...opportunity cost.

Given that your time is limited...you desire to get the most value for your time. The most mucus for your minute. Ugh, that's really not right. The most marjoram for your minute? The most mayo for your minute? The most mustard for your minute? The most macadamias for your minute? The most maybelline for your minute? The most muscles for your minute? The most music for your minute? HAHA...I got it! The most magic for your minute! The most magic for your moment? The most magic for your musical moments?

Markets are magic because of consumer choice. You, the consumer, you know your preferences, you consider your circumstances, you survey your situation, you ponder your priorities, you weigh the alternative uses of your time and you sacrifice the least valuable uses. As a result of your choice (demand/input), how society's resources are used (supply/output) becomes that much more relevant/valuable/magical to you. Consumer choice is consumer sovereignty.

But if only one person buys my product (this thread)...then my buddy and I...we aren't going to significantly shift the supply in our direction. In order for more resources to flow in our direction...more and more consumers would have to agree that this is a valuable direction. Imagine 100 people replying....1,000 people replying....10,000 people replying. Visualize people joining this forum in droves in order to reply.

More and more replies to this thread would require more and more servers and more and more servers require more and more space...one warehouse...one block...two blocks...more and more blocks of server space.

In a market, supply shifting is the epitome of a group valuation/vetting process. Significant supply shifts require crowd vouching.

The multitudes vouching for my use of society's resources means that I'd receive a mountain of minutes...a moon of moments. A mountainous moon of magically musical moments. And it's easy to see the moon...and it's easy to see that I'm the only one who owns it...and it's easy to think that it's unfair. But is it unfair? Did I force anybody to give me their time? In case you missed it, you don't have to be here. Really.

Some threads in this forum are more magical than others...and resources are allocated accordingly. As a result of the free flow of input, the allocation (distribution) of resources is efficient. This means that redistributing moments would definitely destroy magic. It would destroy magic to mandate the minimum amount of minutes/replies that every member of this forum earns.

People want minimum wages just like they fail to grasp that this forum is a market. The two are one in the same. If somebody grasps that this forum is a market then they won't want minimum wages to be mandated.

If this forum wasn't a market...then it would be a command economy. We wouldn't be able to shop around for the most valuable threads to spend our time on. Instead, we'd be marionettes, our time would be allocated for us. Planners would create threads and allocate our time/replies accordingly. It's a given that we'd spend most of our limited time reading and writing about topics that really didn't match our preferences.

Do you think it's a coincidence that there isn't a single forum that is a command economy or a representative democracy? Maybe? Perhaps it's just been overlooked? It's entirely possible that nobody thought to create a forum structured exactly like our public sector. Well...now the thought is out there. If you truly believe that our public sector creates so much value...then you'll jump at the chance to earn your own magic moon by starting a representative forum.

Just take your business proposal to the bank. Tell the loan officer that you want to start a forum that works exactly like our public sector. How could he possibly doubt the business model? Or, if you want to be ironic, try and crowdfund your top down forum.

Boy...wouldn't I be surprised if one of you actually did it? I'd be even more surprised if you made any money. Holy cow would you make me eat my words. How awesome would that be for you? You'd have plenty of money and real evidence that command economies can function and even thrive.

It's funny because the Nobel Prize winning liberal economist who provided the best (most widely cited) economic justification for our government is the same guy who said, "the Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive."

C'mon you believer...create your command forum. If the proof doesn't quickly materialize then cry aloud to Samuelson; for he is a god; either he is talking, or he is pursuing, or he is in a journey, or peradventure he sleepeth, and must be awaked.

Friday, March 21, 2014

The Reality Of Compulsory Taxation

Mike Konczal really wants to have his cake and eat it too.  His essay over at the Democracy Journal,  The Voluntarism Fantasy, was a very valiant attempt to destroy the conservative and libertarian dream of replacing government welfare with private charity.

In order to clearly see the glaring and gaping logical flaw in Konczal's argument, it's necessary to see things from an economic perspective.  Let me try and help you with that...

The Nobel Prize winning liberal economist, Paul Samuelson, provided the best (most widely cited) economic justification for government...The Pure Theory of Public Expenditure.

Samuelson's argument was basically that compulsory taxation is necessary because if we simply ask people (surveys, voting, polls) how much they value public goods then it would be in their selfish interest to give false signals.

Unlike with private goods, people can benefit from public goods without having to pay for them.  It stands to reason that far too many of you are only far too happy to take the benefits of public goods and pass the costs onto others.  Everybody wants a free lunch (cost externalization).

So sorry Mike Konczal.  I know that you really want to have your cake and eat it too...but you really can't have it both ways.  If you agree with Samuelson that people want a free lunch...then you can't trust their superficial signals when it comes to public goods.  If you disagree with Samuelson that people want a free lunch...then you must agree that taxes should be voluntary.

Now let's get super dialectical.  Starting with Konczal...
One reason Progressives looked to the state to provide social insurance was that it was seen as necessarily compulsory. By making it universal, low-wage workers could be included. Also, forcing employers to participate was fair because they would directly benefit from such coverage. As Rubinow argued, American workers “must learn to see they have a right to force at least part of the cost and waste of sickness back upon the industry and society at large, and they can do it only when they demand that the state use its power and authority to help them, indirectly at least, with as much vigor as it has come to the assistance of the business interests.” Because of all this, insurance had a direct public purpose, and should in turn be publicly provided. - Mike Konczal
Corporations and unions both want to pass the costs of their benefits onto others.  Again, everybody wants a free lunch...
As it is the interest of the freemen of a corporation to hinder the rest of the inhabitants from employing any workmen but themselves, so it is the interest of the merchants and manufacturers of every country to secure to themselves the monopoly of the home market. - Adam Smith, The Wealth of Nations  
Back to Konczal...
He later backtracked, creating the Reconstruction Finance Corporation to provide emergency credit to hard-pressed relief agencies as well as banks and railroads. However, these loans were not made available until early 1933. Hoover, in Hawley’s words, allowed for the New Deal to emerge because of his “reluctance to recognize that the private sector was inherently incapable of meeting the demand for social services on its own.” - Mike Konczal
The demand for social services?  As in...counting all the people who line up for free lunches?   Konczal completely fails to give any plausible way to truly measure the unmet demand for public goods...



More from Konczal...
This is precisely what they did in the decades after the Great Depression. As the historian Andrew Morris describes in The Limits of Voluntarism, FWAA members began adding the term “service” to their titles, as well as “welfare,” both of which suggested character-building enterprises. There were also extensive moves into marriage counseling, and other ways to supplement civil life outside of providing bare necessities. Rather than simply crowding out private charity, the welfare state allowed it to evolve and become more targeted. There would be a new arrangement between the public and the private sector, with the public taking on the heavy weight that the private sector could no longer bear. - Mike Konczal
The line for free lunches was too long for the private sector?  Because nobody saw that coming...
When the state is responsible for establishing fraternity [distributive justice] on behalf of its citizens, we shall see the entire people transformed into petitioners. Landed property, agriculture, industry, commerce, shipping, industrial companies, all will bestir themselves to claim favors from the state. The public treasury will be literally pillaged. Everyone will have good reasons to prove that legal fraternity should be interpreted in this sense: “Let me have the benefits, and let others pay the costs.” Everyone’s effort will be directed toward snatching a scrap of fraternal privilege from the legislature. The suffering classes, although having the greatest claim, will not always have the greatest success. - Frédéric Bastiat, Justice and Fraternity
Yup, this is definitely brand new territory...
This monopoly has so much increased the number of some particular tribes of them that, like an overgrown standing army, they have become formidable to the government, and upon many occasions intimidate the legislature. The Member of Parliament who supports every proposal for strengthening this monopoly is sure to acquire not only the reputation of understanding trade, but great popularity and influence with an order of men whose numbers and wealth render them of great importance. If he opposes them, on the contrary, and still more if he has authority enough to be able to thwart them, neither the most acknowledged probity, nor the highest rank, nor the greatest public services can protect him from the most infamous abuse and detraction, from personal insults, nor sometimes from real danger, arising from the insolent outrage of furious and disappointed monopolists. - Adam Smith, The Wealth of Nations
Another passage from Konczal...
The first is what Salamon describes as philanthropic insufficiency. This occurs when the voluntary sector can’t generate enough resources to provide social insurance at a sufficient scale, which, as noted, is exactly what happened in 2008. There is also the problem here of geographic coverage. As Hoover discovered, charity will exist in some places more abundantly than in others; the government has the ability to provide a more universal baseline of coverage. - Mike Konczal
Again with the "shortcomings" of the private sector.  Again and again, how does Konczal know what the actual size is of the unmet demand for public goods?   Is he going to argue that Samuelson was wrong about the incentive that people have to give false signals?  Maybe people's shouts really do reveal their true preferences?
As was noted in Chapter 3, expressions of malice and/or envy no less than expressions of altruism are cheaper in the voting booth than in the market.  A German voter who in 1933 cast a ballot for Hitler was able to indulge his antisemitic sentiments at much less cost than she would have borne by organizing a pogrom. - Geoffrey Brennan, Loren Lomasky, Democracy and Decision 
Maybe popular feelings, opinions and sentiments really do reveal true preferences?
They will not indeed submit to more labours and privations than other people, for the relief of distressed fellow creatures: but they make amends by whining over them more.  It is not difficult to trace this sort of affectation to its cause. It originates in the common practice of bestowing upon feelings that praise which actions alone can deserve. - J.S. Mill 
Maybe an absence of active concern means absolutely nothing?
If a woman told us that she loved flowers, and we saw that she forgot to water them, we would not believe in her "love" for flowers.  Love is the active concern for the life and the growth of that which we love.  Where this active concern is lacking, there is no love. - Erich Fromm, The Art of Loving
More from Konczal...
The third element of voluntary failure relevant here is philanthropic paternalism. Instead of charity representing a purely spontaneous response by civil society, or a community of equals responding to issues in the commons, there is, in practice, a disproportionate amount of power that rests in the hands of those with the greatest resources. This narrow control of charitable resources, in turn, channels aid toward the interests and needs of those who already hold large amounts of power. Prime examples of this voluntary failure can be seen in the amount of charitable giving that goes to political advocacy, or to elite colleges in order to help secure admission for already privileged children, even as the needs of the truly desperate go unmet. - Mike Konczal
The amount of charitable giving that goes to political advocacy?  It's a lot?  So the wealthy want a free lunch too?  Of course that's what happens when the tit's that big.

Back to Konczal...
At a basic level, much of our elite charitable giving is about status signaling, especially in donations to elite cultural and educational institutions. And much of it is also about political mobilization to pursue objectives favorable to rich elites. As the judge Richard Posner once wrote, a charitable foundation “is a completely irresponsible institution, answerable to nobody” that closely resembles a hereditary monarchy. Why would we put our entire society’s ability to manage the deadly risks we face in the hands of such a creature? - Mike Konczal
Hey Posner...what's going on?  How could a non-profit fail to be answerable to the people who voluntarily contribute to its continued existence?  Who would choose to continue to fund a non-profit that failed to respond?  Imagine the horror of contributing more and more of your life to an unresponsive organization that you weren't free to exit from...
The distinguishing characteristic of [public] goods is not only that they can be consumed by everyone, but that there is no escape from consuming them unless one were to leave the community by which they are provided. Thus he who says public goods says public evils. The latter result not only from universally sensed inadequacies in the supply of public goods, but from the fact that what is a public good for some - say, a plentiful supply of police dogs and atomic bombs - may well be judged a public evil by others in the same community. It is also quite easy to conceive of a public good turning into a public evil, for example, if a country's foreign and military policies develop in such a way that their "output" changes from international prestige to international disrepute. - Albert O. Hirschman, Exit, Voice, and Loyalty
We can easily exit from private hands...just ask Lenny Bruce...
Capitalism is the best. It's free enterprise. Barter.  Gimbels, if I get really rank with the clerk, 'Well I don't like this', how I can resolve it? If it really gets ridiculous, I go, 'Frig it, man, I walk.' What can this guy do at Gimbels, even if he was the president of Gimbels? He can always reject me from that store, but I can always go to Macy's. He can't really hurt me. Communism is like one big phone company.  Government control, man. And if I get too rank with that phone company, where can I go? I'll end up like a schmuck with a dixie cup on a thread. - Lenny Bruce
...but exiting from public hands isn't so easy...
But in the case of PGs they may not have an avenue for criticism nor a feasible exit opportunity. They may be compelled to consume a particular good. Therefore, it is important to ascertain whether a good’s publicness in form goes hand in hand with publicness in substance – actual enjoyment of the good by all. - Inge Kaul, Public Goods: Taking the Concept to the 21st Century
Posner wants to redeem himself (a bit) by sharing some insight into why liberals think it's ok to block the exit from public hands...
The problem would disappear if government were omniscient, as implicitly assumed by Hotelling, but government is not omniscient and throughout his career Coase has insisted very sensibly that in evaluating the case for public intervention one must compare real markets with real government, rather than real markets with ideal government assumed to work not only flawlessly but costlessly. - Richard A. Posner, Nobel Laureate: Ronald Coase and Methodology
Why would anybody want to exit from God's hands?
This brings us back to President Truman’s vision of true charity. The public’s role in combating the Four Horsemen by providing for social insurance doesn’t kill private charity. It allows it to fully thrive. It enables private charity to respond with targeted and nimble aid for individuals and communities, rather than shouldering the huge, cumbersome burden of alleviating the income insecurities of a modern age. A public social insurance state gives every individual the security necessary to take risks, which enriches both our economy and our society. And it also establishes a baseline of equality and solidarity among all citizens, so that charity enhances the lives of the less fortunate instead of forcing them to rely on those with money and luck. - Mike Konczal
How are we forced to rely on those with money and luck?  The market works because producers are forced to rely on their ability to cater to the true preferences of consumers.  If a producer fails to make our lives more fortunate, then, just like Lenny Bruce, we can take our money and head for the exit.

The freedom to exit from specific organizations has extremely beneficial consequences.  It's understandable for liberals to fail to grasp how beneficial these consequences truly are (that's why they are liberals)...but what excuses do conservatives and libertarians have?  Their "solution" is to exit more or less entirely from the public sector.  Seriously?  They should really know better.

The only thing wrong with the public sector is that we aren't free to exit from specific government organizations.  That's it.  We can't pull a Lenny Bruce in the public sector.  Reducing the size of the public sector doesn't change that.  All it does is ignore the painfully obvious fact that everybody wants a free lunch.  Therefore, the real solution is simply to facilitate exit from specific government organizations...aka pragmatarianism aka tax choice.

So libertarians and conservatives...it's imperative that you stop attacking the size/scope of government.  This will free up your creative energy for far more beneficial uses...such as turning the contents of this messy blog entry of mine into a reality that even Mike Konczal wouldn't choose to exit from.

******

HT Marginal Revolution

Thursday, March 20, 2014

Concentrated Benefits and Dispersed Costs, House of Cards And Wikipedia





In my last post...Free Lunches Require Externalizing Costs...I mentioned that I'm banned from Wikipedia.  Today when I watched this excellent video it incentivized me to share some insight into why that is.

Did any of you who watched this video think, "hey, how come the House of Cards WP page doesn't mention public choice or rent seeking?" Or maybe, "hey, how come there isn't a Wikipedia entry for concentrated benefits and dispersed costs?"

Maybe one or two of you asked those questions?  If so, you're in luck.  The short answer is that I tried and failed (the knockers won)...
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.
Here's the long answer...


 *******  9 December 2012‎  *******


I created a stub for concentrated benefits and diffuse costs.


 *******  13 December 2012‎  *******


Rubin informally nominates it for deletion..."rarely used term, and the article only consists of a (disputed) definition and a series of (probably excessive) quotes."   I removed the deletion nomination because the "concept is noteworthy enough to warrant an article".


*******  15 December 2012‎‎  ******* 

Rubin formally nominates the article for deletion.

Rubin: PROD reason was: rarely used term, and the article only consists of a (disputed) definition and a series of (probably excessive) quotes; and was removed by article creator. In addition, the rare uses seem to be, with the exception of some libertarian think-tanks, primarily referring to corporate lobbying, rather than the more general concept implied here.

The result of the vote...
2 keep
2 delete
1 redirect

An admin, BWilkins (DangerousPanda), decided to redirect the article to tragedy of the commons.


*******  22 December 2012‎  *******

Xero: You recently redirected concentrated benefits and diffuse costs to tragedy of the commons...however, as far as I can tell, there are absolutely no reliable sources that specify a connection between the two concepts. Also, the results of the AfD were 2 keep, 2 delete and 1 redirect. Yet, there are plenty of reliable sources which support the notability of this concept:


BWilkins: There were actually 2 who mentioned redirect. I felt it was a better choice than the delete it would have been, as per WP:PRESERVE. So why not expand the other term with some of the ref's you provided so that it makes even more sense?

Xero: They mentioned redirect but failed to offer any reliable sources to substantiate their suggestion. That's because it's a concept within public choice theory. It's discussed in the special interests section...which now contains a link that erroneously redirects to the tragedy of the commons. So...given that I seem to be the only active editor who's familiar with the field of public choice...it would be great if you could read over those references or take my word for it that CB/DC is notable enough to warrant its own entry.

BWilkins: I'll be happy to go back and change it to delete - which was the only other possible close based on my reading of the ref's and policy-based arguments provided.

Xero: Can you please articulate the shortcomings of the ref's and specify exactly which policy based arguments that you are referring to? As far as I can tell...it's a notable concept with numerous reliable sources supporting its notability. It was only proposed for deletion because the editor was unfamiliar with the field of public choice.

Rubin: It was nominated for deletion because X presented no evidence that the concept is notable, or that most of the quotes relate to the concept. He's now created a second article about the same concept under a different name, although, he's added some (unsourced) background, and at least one of the quotes appears to be on-topic. He's created a number of articles which consist only of a dictionary definition and a collection of quotes.


*******  25 December 2012‎  ******* 

Rich: The discussion about deleting "Concentrated benefits and diffuse costs" was closed. The result was to redirect to ToC. Arthur Rubin was correct WRT to the redirect and your efforts to revive the article were disruptive. Please stop.

Xero: Do you know how I can bring this issue to the attention of any editors who might care about the fact that there are absolutely no reliable sources to support the redirect?

Rich: 1. You are missing the point. The discussion about concentrated benefits was closed and a decision was made. Rubin was implementing the decision and you improperly reverted it. 2. The guidance about RS does not apply to creating redirects -- when articles, such as those you created -- lack RS, it is proper to tag them as unreferenced and/or create the re-direct to an article which will cover the topic. 3. The burden to keep the material, when clearly unreferenced or of doubtful relevance, is on you. See: WP:PROVEIT. 4. "This issue" (whatever you mean by this is a mystery to me) is out there for editors to discuss. We do so on talk pages. As these are new articles they do not have followers, so the point is not a big one -- but you can raise them as you wish on WikiProject talk pages. 5. Your articles lack RS. As has been repeatedly stated, they are little more than WP:QUOTEFARMs. The guidance says: "This means that a quotation is visually on the page, but its relevance is not explained anywhere."

Xero: The entry on concentrated benefits and diffuse costs had numerous reliable sources...all of which can be found on the entry on legal plunder. Yet, there are absolutely no RS to support the redirect to tragedy of the commons. They are two completely separate and distinct concepts...concept A and concept B. By redirecting A to B you are saying that A = B when there are no RS sources to support that.

Rubin: The proper (from the point of view of Wikipedia) way of dealing with this would be to move legal plunder to wiktionary, and soft-redirect "concentrated benefits and diffused costs" there. You have not demonstrated the potential of a Wikipedia article on the subject. We would need to have people talking about the concept, not giving examples or consequences.

By that way, a redirect from A to B means only that A should be discussed in "B", not that A is B. May I suggest that you bring up the matter on Wikipedia talk:WikiProject Economics, if you want an expert opinion.

You might also bring up the redirect at WP:RfD, but, keep in mind, this would prohibit you from recreating the article in its present form anywhere in article-space, not just under the name, as the result of the AfD was "redirect".


*******  26 December 2012‎  ******* 
My talk page


Rubin: If you think I'm following you around, you're correct. If you want to point to any other editors who are primarily creating articles consisting of quotefarms, with "See also" sections pointing to all articles in a topic, such as public choice theory, I'll follow them around, too.


*******  2 January 2013‎  *******


N2e: Hi Bwilkins. I saw only today that you closed the AfD for Wikipedia:Articles for deletion/Concentrated benefits and diffuse costs on 22 Dec 2012.

I did not see the AfD until today, and therefore of course, could not have participated in it. While I regularly teach on the concept of "Concentrated benefits and diffuse costs" in Economics classes I teach at a small liberal arts college, and I could provide additional sources for the concept (if the article existed), I realize it is too late to have that discussion now.

But I have a different question: one about the process of the closure. Since it would appear that no consensus was reached, with about 50% favoring keep and 50% favoring a redirect or delete, what was the rationale under those circusmstances for making a change, and essentially removing the concept from Wikipedia?

I'm not an expert on AfD's, but it would seem that no consensus to make the change occurred in this particular article, and that the article should have remained in place.
Cheers.


*******  7 - 9 January 2013‎  *******


N2e: Hey Bwilkins. That was a serious question, and I am very much assuming good faith. I sincerely do not understand the criteria that was used to close that discussion, as it did not appear to have a consensus. Would appreciate your thoughts.

Herostratus: Hi N2e. Yes I agree that this change was problematical. I see a 3-2 headcount in favor of deleting or redirecting, which is not much of a quorum and not a supermajority, while the delete/redirect camp did not really have the upper hand in the argument either. So you're right. But you know, we have to work fast here, so mistakes like this crop up on occasion.

If the article had been deleted, you could go Wikipedia:Deletion Review. However, it was made into a redirect, so it's different. At any rate, while the concept is notable, the article was not too good, consisting mostly of a series of quoted passages (which are also copyright violations; we are allowed under fair use to quote short excerpts for certain purposes (such as describing/discussing the quoted work), but not to construct articles by pasting together string of copyrighted quotes). I suspect that's a main reason why the article was made into a redirect.

However, it still exists, and the history exists. I made a copy of the old version and put it in your userspace, here: User:N2e/Concentrated benefits and diffuse costs. What I suggest is that you create an improved version (if you want to) off-line, then edit the article and paste your work over the redirect in one edit. If the quality is reasonable I don't think anyone will object to this.

If you want to work on it here on Wikipedia -- say, if you want to ask User:Xerographica, the main editor of the article so far, if to work on it with you -- you can, but then instead of a simple copy-and-paste you have to a more complicated procedure called "history merge", which requires an admin to do. BWilkins or any admin will do this for you.

Xero: Why would you disparage the quality of the entry? Do you not understand how Wikipedia works? It's a notable concept...so I created a stub+...which anybody could have contributed to. The problem had absolutely nothing to do with the quality of the entry and everything to do with editors and admins editing way outside their areas of expertise.

Here are three entries that I just created...are any of them not up to your standard of quality? If so...then, rather than making the effort to improve them, why not just nominate them for deletion? Better yet...why not redirect them to the tragedy of the commons?

BWilkins: PLEASE NOTE: This was discussed at length further up this page - if it was your intent to continue that discussion, it should have been done there - or at least you should have read it before starting a new section. In my review of the article, and the quality of the policy-based discussions, the article was actually going to be a delete - this isn't a vote, so beginning the discussion with numerical counts is a bit of a red herring - the keep arguments were policy-weak, while the delete and redirect were strong enough to well outweigh the keep !votes. As part of WP:PRESERVE I chose the redirect option. Yes, you CAN take this to WP:DRV if you believe the closure was policy-incorrect

N2e: Hey, Bwilkins. I'm the one who started this Talk page section to ask YOU about YOUR rationale for closing the discussion without a real consensus one way or the other. I was not aware of any discussion higher up in the page, and had not seen it. I think you are confusing the comments of Xerographica with me.
I think your explanation of what was behind the closure answers my question, as does the helpful comment of Herostratus, above. I would be totally in support of poorly written and poorly sourced material being purged from the encyclopedia, at least temporarily, and then it can be re-added when/if it is ever better done by someone who cares enough to do it.

Xero: I cared enough to find all the reliable sources that supported the creation of a stub for a notable concept...a stub that anybody could have contributed to. Wikipedia is a collaborative project. It's based on Hayek's concept of partial knowledge. Expecting people to pop out perfectly polished entries goes against the entire concept of CROWD sourcing. And speaking of WP:BURDEN...where are the reliable sources that support concentrated benefits and dispersed costs being redirected to tragedy? It's been two weeks since I asked Rubin and BWilkins (see section above) to WP:PROVEIT and both have failed to do so.

N2e: Xerographica, as you can see above, I'm partially with you, in the sense that I know that Concentrated benefits and dispersed costs is a viable concept in economics, is notable, etc. As I said, I teach this stuff, and it is in the college textbook I assign to my classes.

Having said that, you should slow down, and self-monitor your behavior so we can all make this encyclopedia better together. Wikipedia will be just fine if it takes a few weeks, or a few months, to get the article back.

As you can see in the discussion above, the administrator who closed the discussion did so based principally on the poor quality of the article. It sounds to me like, based on that admin (BWilkins) and the other commenter (Herostratus), that the article, were it to be improved to meet article criteria, could simply replace the redirect at some point in the future, when some editor or set of editors [[WP:BURDEN|cares enough to ensure that all of it is well-sourced. That could be me, if I get around to having the time to follow the idea Herostratus left for me. But if not, it will emerge in time. But you will hurt your own ability to be constructive in improving the encyclopedia if continue to be disruptive. Relax. Cheers.

Herostratus: Just to clarify, it's not really the quality of the article. For all I know, creating a set of passages quoted from other works is a fine way to get some concepts across. It is, however, also against our rules because it violates the copyrights of the quoted works. Whoever works on the article in future needs to describe the concept in their own words.

Xero: Herostratus, you should really head over to the Wikiquote project and let them know that they are violating copyrights.

N2e, you're not addressing the reason that the article was nominated for deletion in the first place...
PROD reason was: rarely used term, and the article only consists of a (disputed) definition and a series of (probably excessive) quotes; and was removed by article creator. In addition, the rare uses seem to be, with the exception of some libertarian think-tanks, primarily referring to corporate lobbying, rather than the more general concept implied here. - Arthur Rubin
...and again...Wikipedia:Articles_for_deletion/Tax_choice
No sources have been provided that the name is used, and very few of the sources can be verified to discuss the same topic. I would accept a merge somewhere, if relevance is established, once the quotes are removed or placed in footnotes. - Arthur Rubin
...and again? Evidently we have different definitions of disruptive behavior.


*******  6 - 7 Feb 2013‎  *******

Xero: I created the "See also" section and added public choice theory to it. Rich removed it with the following explanation "Jesh, opening a SA section for various economic/political theories is not encyclopedic or constructive."

For those of you who've watched the series, it should be readily apparent just how relevant public choice theory is to the show. In fact, rent seeking should be mentioned somewhere in the article. Actually "Rent Seeking" would be a far more accurate, if somewhat less catchy, title for the show.

For those of you not familiar with Wikipedia See also policy...links do not require reliable sources to be listed...they just need to be at least "tangentially related". Public choice is directly related to this show...and as such, it should be included in the See also section.

Rich: Correction to your quote. It is "...tangentially related topics." [Emphasis added.] The topic of the article is the television show. Not beltway politics, or musings about economic ideas, or poor excuses to add "See also" listings.

Xero: Would an accurate synopsis of the show mention rent seeking?

Rich: No. It is a drama about "Kevin Spacey as Francis "Frank" Underwood, a ruthless politician with his eye on the top job in Washington, DC." Not "Kevin Spacey as Francis "Frank" Underwood, a ruthless politician who considers rent seeking when he evaluates his career prospects."

Xero: Underwood sucks on the tit, he doesn't provide it. Try again.

Rich: I don't care what he sucks on. (Would fellatio be tangentially related to the show and thereby appropriate as a see also?) The topic of the article is the TV show, nothing more than that.

Xero: The topic of the article is the TV show and a strong recurring theme in the TV show is rent seeking. Have you even seen the show?

Rich: As you say, the topic of the article is the TV show. The topic of the article is not recurring themes of the show. Your tangentially related argument does not cut it. Why did I mention fellatio? Well, by your logic, if I take it to an extreme, fellatio is appropriate because it is a type of sexual activity, e.g., it involves sucking on a body part. Tit sucking is related to both breastfeeding and the mechanics of human sexuality because it is sucking on a body part, similar to fellatio. Since the show mentions tit sucking, which has a strong allusion to breastfeeding and since breastfeeding is tangentially related to sexual activity (both pre-partum and post-partum), and since fellatio is a sexual activity, fellatio must be a proper tangentially related see also for the article. (And keep your inquiries as to whether I (or anyone) has seen the show (or read material) to yourself. If I/we answer yes, then you'd likely respond "well, then, you don't understand what you saw/read" and if I/we answer no, you'd have another smart remark about my/our ability to figure out whether this is an appropriate see also.)

Xero: Yeah, you really nailed my logic there. Why don't you watch the show and then come back so we can have an informed discussion on whether breastfeeding or rent-seeking is more relevant.

McDoobAU93: I would agree with Xerographica's statement on reliable sources and the "see also" section, but do we cross into original analysis territory by saying "well I've seen this concept in the show, so we should link to that". If a reliably-sourced critique of the series appeared that mentions that terminology and concept, then I would be all for it being described in the article. I don't think a "see also" section would be needed if the concept were introduced by way of critical commentary on the series.


*******  6 Feb 2013‎  *******


Xero: Speaking of rent-seeking...
Like "Veep," HBO's satirical half-hour, "Cards" remains somewhat coy about party affiliations for no clear reason, but Willimon exhibits a strong ear for the corrupting aspects of politics. Referring to a lobbyist throwing around money, Underwood drawls, "When the tit's that big, everybody gets in line." - Brian Lowry, House of Cards
Willimon clearly is having fun with the writing on this series, and he’s deftly able to make it shift characters and moods with ease. That means Francis isn’t always devouring people. In one scene, we find that he -- like so many others -- owes a great deal to lobbyists. And when he’s shown being threatened to make promises come true, he says to the camera: "It’s degrading, I know. But everybody gets in line when the tit’s that big." - Tim Goodman, House of Cards: TV Review
At a bare minimum...public choice theory should be added to the See also section.


*******  3 Mar 2013‎  *******


Bwilkins bans me indefinitely from Wikipedia


*******  13 Oct 2013‎  *******


Mark7-2 redirects CB/DC from ToC to Public Choice.

Free Lunches Require Externalizing Costs

The Wikipedia entry on cost externalizing really wants you to believe that only businesses have an incentive to pass costs onto others.  How convenient...right?  It's only companies that want a free lunch?  Voters don't also want a free lunch?  Unions don't also want a free lunch?

Unfortunately, I'm banned from Wikipedia so I can't internalize the cost of correcting the Wikipedia page.  How convenient...right?  The easiest improvement to make would be to edit the See Also section and add a link to the There ain't no such thing as a free lunch entry.

Reply to reply:  Future of Labor Unions in Changing U.S. Economy

*********************************************************

Xero

We have compulsory taxation because we don't think it's unreasonable that people want a free lunch. Yet, what structures do we have in place that prevent voters, unions and corporations from ordering free lunches and/or congresspeople from serving free lunches?

Does the data reflect the absence of these necessary structures?

A. it does
B. it doesn't

If B...then why doesn't it?

A. people don't really want a free lunch
B. there are necessary structures in place

If B...then what are the necessary structures? I'm certainly not aware of any that actually work. You'd have to be blind to fail to appreciate that the government hands out free lunches left and right.

As far as I can tell...the only structure that would work would be to clarify the demand for public goods.

RGacky3

The structures we have are elections ....

Also sometimes a free lunch is neccessary for the economy.

Xero

"The structures we have are elections ...."

Infinite patience.

Xero: Hey Samuelson! What's going on man? The benefit principle is pretty great...why can't taxes be voluntary?
Samuelson: If we simply ask people (survey, voting) how much they value public goods then it would give them the opportunity to try and snatch some selfish benefit.
Xero: Can you put it another way?
Samuelson: Sure...people can benefit from public goods without having to pay for them...so it is in their selfish interest to give false signals.
Xero: Oh, yeah, that does make sense. We wouldn't want to give people the opportunity to externalize costs. But how do you propose we determine what people's true preferences are with regards to public goods?
Samuelson: Easy, we just assume that government planners are omniscient.
Xero: That sounds iffy.
Samuelson: The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive
Xero: I'm actually still kinda skeptical. Why don't we just allow taxpayers to choose where their taxes go? If the cost is a foregone conclusion...then it would be in their selfish interest to give true signals.
Samuelson: It's easier to just assume that government planners are omniscient.
Xero: But if we created a market in the public sector then people wouldn't be able to externalize costs.
Samuelson: I'm just a stupid monkey.
Xero: That's true.

"Also sometimes a free lunch is neccessary for the economy."

Externalized costs are sometimes necessary for the economy?

The economy is an equation. If we enter accurate input...then the output will be accurate.

Accurate input = internalized costs = what I buy with my own credit card
Inaccurate input = externalized costs = what I buy with your credit card

Do you think that I'd buy the same things with your credit card that I'd buy with my credit card? It's easy enough to find out.

RGacky3

Yes sometimes free lunches are necessary, when everyone gets together to build a road, a community, through taxes or other mechanism, the guy who uses it more is getting a free lunch.

Xero

The guy who uses the road most is passing the cost of his benefit onto others? Why not just give him the opportunity to internalize the cost of his benefit? All that's required is creating a market in the public sector.

Why do you want the supply of public goods to reflect externalized costs rather than internalized costs? How could the supply possibly be correct when everybody is trying to benefit at the expense of everybody else?





[Update:  28 Dec 2014]  Couldn't remember which blog entry had this video and a google search really didn't help...which is because this entry didn't contain the words "Adventure Time" or "City of Thieves" or this passage by Bastiat...
When the state is responsible for establishing fraternity [distributive justice] on behalf of its citizens, we shall see the entire people transformed into petitioners. Landed property, agriculture, industry, commerce, shipping, industrial companies, all will bestir themselves to claim favors from the state. The public treasury will be literally pillaged. Everyone will have good reasons to prove that legal fraternity should be interpreted in this sense: “Let me have the benefits, and let others pay the costs.”  Everyone’s effort will be directed toward snatching a scrap of fraternal privilege from the legislature. The suffering classes, although having the greatest claim, will not always have the greatest success… - Frédéric Bastiat

Wednesday, March 19, 2014

Divining The Benefit Breakdown

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Reply to reply: Block vs Flow

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People assign other people the task of making decisions for them on many subjects they have no information about. - csbrown28
How familiar are you with the work of Nobel Prize winning liberal economist Paul Samuelson? What about the work of Nobel Prize winning market economist James M. Buchanan? How well do you understand the opportunity cost concept? Do you thoroughly grasp the implications of partial knowledge?

I have far more information than you do about economics. What I showed you wasn't even the tip of the iceberg. So do you want me to make a decision for you about pragmatarianism? Do you want me to decide for you how much of your time/money/energy you allocate to pragmatarianism? Let me know how you spend your time and I'll let you which uses can be sacrificed.

Right now you and I have a relationship. Here we are exchanging our limited time and perspectives with each other. Given that we're choosing to sacrifice the alternative uses of our time...it stands to reason that we each derive a certain amount of benefit from our relationship. Can you predict how long this will last? I sure can't. I didn't even predict that this relationship would begin.

How would you react if I told you that I'm not going to let you decide when this relationship ends? If I could somehow actually prevent you from ending our relationship...it wouldn't be a problem as long as you derived quite a bit of benefit from our interaction. So your inability to leave becomes a problem when the amount of benefit you derive starts to decrease.

From the Wikipedia entry on Albert O. Hirschman's book Exit, Voice, and Loyalty...
The basic concept is as follows: members of an organization, whether a business, a nation or any other form of human grouping, have essentially two possible responses when they perceive that the organization is demonstrating a decrease in quality or benefit to the member: they can exit (withdraw from the relationship); or, they can voice (attempt to repair or improve the relationship through communication of the complaint, grievance or proposal for change).
From the book itself...
The distinguishing characteristic of [public] goods is not only that they can be consumed by everyone, but that there is no escape from consuming them unless one were to leave the community by which they are provided. Thus he who says public goods says public evils. The latter result not only from universally sensed inadequacies in the supply of public goods, but from the fact that what is a public good for some - say, a plentiful supply of police dogs and atomic bombs - may well be judged a public evil by others in the same community. It is also quite easy to conceive of a public good turning into a public evil, for example, if a country's foreign and military policies develop in such a way that their "output" changes from international prestige to international disrepute. - Albert O. Hirschman, Exit, Voice, and Loyalty
There are words in that quote that are italicized in the original...but you can't see which words because this forum italicized the entire quote. As you can see here...Not Italicizing Quotes Would Increase Our Wealth... I voiced my concern. But clearly it's not a big enough concern for me to exit from this forum.

Right now you're telling me that there are situations when it's ok for the exit to be blocked. Clearly you feel that this right here right now is not one of them. I'm sure you want to be free to exit from our relationship. And of course I also want you to have that freedom.
What do we want with a Socialist then, who, under pretence of organizing for us, comes despotically to break up our voluntary arrangements, to check the division of labour, to substitute isolated efforts for combined ones, and to send civilization back? Is association, as I describe it here, in itself less association, because every one enters and leaves it freely, chooses his place in it, judges and bargains for himself on his own responsibility, and brings with him the spring and warrant of personal interest? That it may deserve this name, is it necessary that a pretended reformer should come and impose upon us his plan and his will, and as it were, to concentrate mankind in himself? - Frédéric Bastiat
In the US we have a mixed economy...we have a market economy in the private sector and a command economy in the public sector. In the private sector people are free to enter into and exit from any relationships. Not so in the public sector...
But in the case of PGs they may not have an avenue for criticism nor a feasible exit opportunity. They may be compelled to consume a particular good. Therefore, it is important to ascertain whether a good’s publicness in form goes hand in hand with publicness in substance – actual enjoyment of the good by all. - Inge Kaul, Public Goods: Taking the Concept to the 21st Century
In a pragmatarian system, people would be able to exit from specific government organizations. However, unlike anarcho-capitalism, people would not be able to exit from the public sector. Taxes would still be compulsory.

Should taxes be compulsory? Unlike with private goods, people can benefit from public goods without paying for them. So I don't think it's unreasonable for taxes to be compulsory. It's still a block though. It definitely limits input. Like I said in the OP...every appropriate block has an optimal allocation that can only be determined by free flow. In a pragmatarian system...taxpayers would be free to enter into and exit from relationships with congress and the IRS.

Right now I'm using society's limited resources to supply pragmatarianism. How many resources am I using? Not even a drop in the ocean. But that would change if more people started "buying" pragmatarianism. And that would only happen if people derived a benefit from doing so. So the amount of resources allocated to an activity is determined by the amount of benefit that the activity produces. More benefit means more resources.

The alternative is to believe that somehow planners can divine the benefit breakdown and allocate resources accordingly. If, in the absence of your input, planners can know how much benefit you derive from any given activity then there's absolutely nothing wrong with your input being blocked.