Tuesday, February 24, 2015

Football Fans vs Nature Fans

Reply to reply... Nature: Supply and Demand

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Lynx_Fox, if Netflix users could allocate their monthly fees... would this new information confirm, or contradict, what Netflix already knows about its users?

I gave The Man From Nowhere and The Man From Earth both 5 stars. Does this mean that I value them equally? Nope. Even though I enjoyed them both, I value Earth far more than I value Nowhere. This means that, if given the opportunity, I'd give Earth all of my dollar votes (monthly allocation).

Right now Netflix doesn't have access to my valuations. You're under the impression that Netflix doesn't need my valuations, or anybody else's valuations, in order for society's limited resources to be put to their most valuable uses.

You then blame the epic loss of nature on valuations. Uh, whose valuations? Mine? Yours? Society's? The "minor" detail is that we can't choose where our taxes go just like Netflix users can't allocate their monthly fees.

Let's review...

First you argue that our valuations are frivolous (Netflix doesn't need them) and then you argue that our valuations (Government doesn't have them) are to blame for the terribly inadequate supply of conservation.

Here in Southern California we used to have one native freshwater shrimp... Syncaris pasadenae. We don't have it anymore because of channelization and the Rose Bowl... which is only 10 minutes away from where I live.

You think this is a failure of valuation? No, it's the complete opposite. It's a failure of the absence of valuation.

To put it in perspective, imagine if Brazil was considering whether to build a soccer stadium in an area that would destroy the native habitat of a very endangered freshwater shrimp. Which do you value more... the soccer stadium or the shrimp? According to you, this information is frivolous. Unfortunately you're not the only one with this perspective. As a result, the decision to build the soccer stadium is made in a valuation vacuum.

If people were free to choose where their taxes go, and their options weren't arbitrarily limited by geography, then we would learn whether the world values an additional soccer stadium more than it values the existence of the shrimp.

At first glance it might not seem like much of a contest. Soccer is the most popular sport in the world. But with a longer glance it's not immediately apparent whether soccer fans pay more taxes than nature fans do. Also, would a soccer fan in China value this new stadium in Brazil more than an American environmentalist values the Brazilian shrimp?

Clearly I can't know the outcome, but I really wouldn't be surprised if conservationists around the world allocated enough of their taxes to the Brazilian EPA in order for them to outbid the developers for the land.

It stands to reason though that any development projects whose value was not greater than the global conservation value of the land in question wouldn't go through.

Right now conservationists have been fighting with both hands tied behind their back. The government takes a huge chunk of their money for public goods. Conservation is a public good... but the government has no idea how much conservationists value it. Therefore, of course the supply of conservation is wrong.

Allowing taxpayers to choose where their taxes go would give conservationists a fighting chance. Most taxpayers aren't going to chip in to support the development of some strip mall in Ecuador that they'll never shop at. But conservationists around the world will chip in to support the conservation of the necessary land if it's worth it to do so. Even if they never get to visit the habitat... they'll contribute to its conservation in order to give their children, and their grandchildren and their great grandchildren the opportunity to see more, rather than less, of Ecuador's nature.

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Ack, it's tripping me out.  Like, drugs man, too many drugs!  Not the kind of drugs that you smoke or swallow... but situational drugs.  Situational drugs can get you so high!

You want to get high with me?  Yeah?  Ok!

Compare what I wrote above to this passage that Rothbard wrote in 1981...
In the first place, how much of the deficient good should be supplied? What criterion can the State have for deciding the optimal amount and for gauging by how much the market provision of the service falls short? Even if free riders benefit from collective service X, in short, taxing them to pay for producing more will deprive them of unspecified amounts of private goods Y, Z, and so on. We know from their actions that these private consumers wish to continue to purchase private goods Y, Z, and so on, in various amounts. But where is their analogous demonstrated preference for the various collective goods? We know that a tax will deprive the free riders of various amounts of their cherished private goods, but we have no idea how much benefit they will acquire from the increased provision of the collective good; and so we have no warrant whatever for believing that the benefits will be greater than the imposed costs. The presumption should be quite the reverse. And what of those individuals who dislike the collective goods, pacifists who are morally outraged at defensive violence, environmentalists who worry over a dam destroying snail darters, and so on? In short, what of those persons who find other people's good their "bad?" Far from being free riders receiving external benefits, they are yoked to absorbing psychic harm from the supply of these goods. Taxing them to subsidize more defense, for example, will impose a further twofold injury on these hapless persons: once by taxing them, and second by supplying more of a hated service. - Murray Rothbard, The Myth of Neutral Taxation
Rothbard was right on.  He even mentions environmentalists being concerned about a dam wiping out a tiny species of fish... Snail darter controversy.

Now let's see where else Rothbard was right on...
One of the most absurd procedures based on a constancy assumption has been the attempt to arrive at a consumer’s preference scale . . . Through quizzing him by questionnaires. In vacuo, a few consumers are questioned at length on which abstract bundle of hypothetical commodities they would prefer to another abstract bundle, etc. Not only does this suffer from the constancy error, no assurance can be attached to the mere questioning of people. Not only will a person’s valuations differ when talking about them than when he is actually choosing, but there is also no guarantee that he is telling the truth. - Murray Rothbard, Toward a Reconstruction of Utility and Welfare Economics
Right on!  Talk is cheap.  Actions speak louder than words.  Put your money where your mouth is.

From the same paper...
Individual valuation is the keystone of economic theory.
Really right on!  Rothbard published that paper in 1956.

To help appreciate the situation we can borrow this illustration from this blog entry... Progress as a Function of Freedom




The majority of people are on the wrong path because they believe that valuation is frivolous.  Rothbard was on the right path because he appreciated the fundamental problem with congress taking money from environmentalists and spending it on the destruction of the habitats that critically endangered species depend on.

Yet, here I am!  Why in the world am I here?  Why am I having to explain to Lynx_Fox what Rothbard explained so many years ago?

In the illustration we see Rothbard all by himself taking the right path.  But in reality, Rothbard had and still has plenty of followers.  CJay Engel is a perfect example.  From my blogroll I learned that this is what he recently posted... Progressive Libertarians Against the Old Guard.

It's a really well written account of the libertarian movement.  Of course it leaves out a few essential facts, but when I read it I got the sense that CJay Engel is a smart guy... maybe even smarter than I am.  So why isn't he doing a better job than I am at helping people understand the importance of valuation?

The detail that I've left out is that Rothbard came to the conclusion that the government should be abolished (anarcho-capitalism).  He reached this conclusion because he assumed that the government was beyond repair.  For whatever reason, Rothbard never considered the possibility of allowing taxpayers to choose where their taxes go.  It evidently never occurred to him that the government could operate on the basis of valuation just by creating a market in the public sector.  Environmentalists would spend their taxes on conservation rather than destruction and pacifists would spend their taxes on peace rather than war.

Rothbard's oversight didn't just send him down the wrong path... it sent all his followers down the wrong path as well.  Rather than CJay Engel applying his intelligence to helping people understand the importance of valuation and how government can easily be repaired... his intelligence is applied to helping people understand the importance of abolishing the government.

Is the situation tripping you out now?  Rothbard took the really right path... but he also took the really wrong path.  His followers also took the really wrong path.  And here I am on the way too lonely right path.

Can you imagine where we'd be right now if Rothbard had argued that we could easily repair the government by integrating valuation?  All of his followers would have allocated their intelligence to helping people understand the immense benefit of creating a market in the public sector.  If they'd been pushing for a pubmar then we'd be so much farther along the right path.

Am I crying over spilled milk?  Maybe a little.  But primarily I'm tripping out over the situation.

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