Sunday, February 15, 2015

Liberal Lilith's Sexy Benefit Curves

Context:  Is Pragmatarianism (Tax Choice) Less Wrong?

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Note also that nothing in your system deals with the problem of public goods- people can benefit from something without paying for it and for many goods that's a natural situation. - JoshuaZ

Unless everybody boycotted the IRS and/or congress out of existence, then people would still pay taxes in a pragmatarian system.  The entirely reasonable economic argument for taxes is the free-rider problem.  The entirely reasonable economic argument for allowing people to choose where their taxes go is that they know, way better than their impersonal shoppers do, what benefits them.

It's certainly true through that in a pragmatarian system people are going to benefit from public goods that they haven't contributed to.  But is this a problem?

Let's consider Lilith's benefit curves...






So sexy or no sexy?

I sure hope the graph/chart is self-explanatory but it probably isn't.  Benefit and supply are both on scales from 0 (minimum) to 10 (maximum).  If the supply of environmental protection and national healthcare decreases... then so too would the amount of benefit that Lilith derives from them...but not equally so.  With defense however, a decrease in supply has no impact on the amount of benefit that Lilith derives from it.

Clearly Lilith is a pacifist and hardcore environmentalist... with moderate concern for healthcare.  Obviously she's going to have other public concerns, but these three public goods should suffice for illustrative purposes.

Can you predict how Lilith would allocate her taxes if the supply of environment, healthcare and defense were all at a 5?  It should be pretty straightforward that she'd maximize her benefit by giving all her taxes to the EPA.   In fact, the only time she wouldn't spend her taxes on the EPA would be if the supply was already at a 10.  In this case she'd spend her taxes on healthcare.

What are the chances though that the supply of environment would ever be at a 10 for Lilith?  If we imagine that she values the environment more than she values all the other public goods... then it would be impossible for the supply of environment to ever be at a 10 for her.  She'd always want more environment than anybody else.  Kinda like right now I'm the one person who wants more pragmatarianism than anybody else.  Which doesn't say much because nearly everybody else doesn't want any pragmatarianism.

In terms of the environment... Lilith is the exception rather than the rule.  We're dealing with a bell curve here.  Most people are going to value the environment less than Lilith does... and a few wackos aren't going to value it at all.  In economic terms... for a few people like Lilith the opportunity costs of protecting the environment will never be too high, for most people they will sometimes be too high... and for a few numskulls they will always be too high.

When we zoom out from an individual's benefit curves.... and consider the aggregate... we see an incredibly complex complementarity.  Think of a mighty Ficus tree with beautiful buttresses.  Lilith represents the part of the buttress that's furthest from the trunk.  On the complete opposite side of the tree you'd find conservative Conrad lending his support.  Most people would provide their support closer to the trunk but if all the support was close to the trunk then the tree wouldn't have nearly as much stability.

So it's really not a problem that, in a pragmatarian system, people would benefit from public goods that they hadn't contributed to.  The inherent differences and similarities of taxpayers, as expressed through their choices, which would reflect their opportunity costs, would provide our country with the most robust root system possible.  As a result of this incredibly strong and extensive root system, economic growth and prosperity would be maximized.

What's the alternative?  Allow congresspeople to continue treating our country like their own personal bonsai tree?  No thanks.  The opportunity cost of our current system is impossibly high.

If you need this explained somewhat differently... Value Deviation From The Crowd.

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