Holocaust - The Extremely Inefficient Allocation Of Jews

Recently I explained that blocking nearly all of our country's competence from the public sector results in the inefficient allocation of competence.  Around the same time that I posted that entry... I stumbled upon a rigorous debate regarding the causes of The Holocaust.

What happens when you put 2 + 2 together?

Blocking nearly all of a country's competence from the public sector has, in the past, resulted in a huge amount of competence being allocated to the gas chambers.

In other words... the massive shortage of competence in Germany's public sector resulted in the massive misallocation of a multitude of Germany's most competent citizens.

More specifically... preventing Jews and other competent citizens from shopping in Germany's public sector resulted in millions of Jews being exterminated.

It's more than half a century later and Jews still can't shop in any country's public sector.

I was just crushed by the enormity of my responsibility/burden.  This made it way too tangible.  What I'm trying to teach, if it's correct, could keep all sorts of people out of the gas chamber.  So if I fail to teach my simple lesson...

This is what happens when you fondle the elephant so thoroughly.  I really don't want this responsibility.  I don't want to be the only one really pushing for a pubmar.  I really want to pass the cup on to all these far more qualified people...

• Alex Tabarrok, Tyler Cowen
• Bryan Caplan, Scott Sumner, David Henderson
• Robert Murphy
• Tom Woods
• Benjamin Powell
• Arnold Kling
• Jeffrey Tucker
• Deirdre McCloskey
• Thomas Sowell
• Peter Boettke
• Robert Higgs 
• Walter Williams
• Michael Huemer
• Don Boudreaux, Russ Roberts 
• David Friedman
• William Easterly
• Robin Hanson
• Randall Holcombe
• Roderick Long
• Walter Block

This is my cup list.  David Friedman is on this list.  When I asked him about pragmatarianism... this was his response...

I don't think that letting taxpayers allocate their taxes among options provided by the government solves the fundamental problems of government.

Is there a more fundamental problem than people ending up in gas chambers?  Or maybe this fundamental problem wouldn't have been solved by giving Jews and other competent people the freedom to shop in the public sector?  Is Friedman missing something... or am I?

The following is a bit of a non-sequitur... but please bear with me.  Right now there are people who are genuinely concerned with the rise of super intelligent (SI) robots.  These concerned citizens even have their own think tank... Machine Intelligence Research Institute (MIRI).  In their most recent blog entry... Davis on AI capability and motivation... I shared this comment...

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If you raised your AI like a child... and I did the same with my AI... and they both grew up to be SIs... would there be any disparity in their goals?

As humans, we all have different pieces of the puzzle which is why we are like blind men touching an elephant but coming to very different conclusions. Would our respective SIs, with their countless pieces of the puzzle, both converge on the correct conclusion? Or is it possible that one would conclude that humanity should be eradicated and the other would conclude that we should be protected like any other species on this planet? If they came to different conclusions it's hard to imagine that they wouldn't quickly compare information and exchange missing puzzle pieces. In essence their information would go from asymmetric to symmetric in no time flat.

If the two (or more) SIs did converge on the same conclusion... if your conclusion was different then would you trust your own conclusion or would you "lean not unto thine own understanding" and trust their conclusion instead?

It's funny because in my recent blog entry I mentioned that around 11 I stopped believing in God. And now I'm entertaining the possibility that when I'm 60 I'll start believing in God again.

Not sure if you're interested... but this blog entry... What Do Coywolves, Mr. Nobody, Plants And Fungi All Have In Common? has my theory on why we developed our exceptional intelligence.

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David Friedman and I are like two blind men fondling different parts of an elephant and coming to different conclusions.  If we were SIs... then we could quickly and easily synchronize our information and thus make it impossible to reach different conclusions.  But we aren't SIs!  We're humans.  It's impossible for us to achieve information symmetry.  We can however, with some effort, make our information marginally more symmetric.  Just like this.

Perhaps it will help to share some background information.  This isn't the first time that I've considered whether pragmatarianism would have prevented The Holocaust.  Like I mentioned though, it is the first time that I've thought about it so tangibly.

Back in 2011... I posted this thread over at the Ron Paul Forums... Ron Paul vs The Invisible Hand...

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If you had to choose between Ron Paul being elected president OR applying the invisible hand to the public sector...which would you choose?

Applying the invisible hand to the public sector would simply involve giving taxpayers the freedom to directly allocate their individual taxes among the various government organizations...aka pragmatarianism.

You have a good idea what Ron Paul would try to do if he was elected...but do you have a good idea what the invisible hand would do to the public sector if given the opportunity?

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I attached a poll that included two options...

1. Ron Paul
2. The Invisible Hand

Here are the results of the poll...

Two out of three respondents would have voted for Ron Paul.  Would the percentage be higher or lower if I posted the same thread but with Rand Paul?

One member of the forum, Conza88, was exceptionally nonplussed with the idea of allowing people to choose where their taxes go...

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Ron Paul... given your notion of the 'invisible hand' is clinically ______ed. Furthermore, since he would abolish the FED, Dept. of Education, Dept. of Labor, IRS, CIA, FBI etc....

You would implicitly condone their maintenance and existence, via 'pragmatarianism'. If we applied "pragmatarianism" back in National-Socialist Germany, your proposed system would support the continued funding of death camps.

NOR is what you suggest even close to resembling the process of the market and the 'invisible hand'. It is analogous to Robert Nozick's attempts at justifying an immaculate conception of the state. "every step of Nozick's invisible hand process is invalid: the process is all too conscious and visible"...

So the characterizing your 'invisible hand' process; AFTER the fact they have had NO choice in whether they are to be stolen or not, distorts reality. And is a massive misnomer.

It's still the re-distribution of wealth... and the free market option is not available. Who do you propose to implement this program? Politicians? Statists to give up their pie? Delusional. - Conza88

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All that emphasis was in the original.

Given enough eyeballs, all bugs are shallow?  Was Conza88 pointing out a genuine problem with pragmatarianism?

To say the least, Conza88 never really struck me as a particularly thoughtful person.  But I'm really glad that I never added him to my ignore list like he quickly added me to his!  Because even though I didn't think that the "bug" he was pointing out was a real bug... it definitely put pragmatarianism in a very different, but extremely important, frame.

Different frames can yield different insights.  But it's certainly a challenge to look at things differently.  Which is exactly why two heads are better than one.

The question is... would pragmatarianism have prevented The Holocaust?

Thanks to Conza88, that was the first time that I had ever asked myself this question.  And there's no doubt about it... it's a priceless question.  It would behoove everybody on my cup list to allocate their considerable competence to answering it to the best of their ability.  Publicly.  Not privately.  This way, if we come to different conclusions, everybody can compare the different information.

My information leads me to conclude that pragmatarianism would have prevented The Holocaust.

What's useful to consider is when pragmatarianism would have had to be implemented in order for The Holocaust to have been prevented.  A stitch in time saves nine.  If pragmatarianism truly helps to prevent a country's competence from being misallocated... then implementing it earlier is always better than later.

Every once in a while I'll daydream about trying to persuade Adam Smith to include a section on pragmatarianism in his book The Wealth of Nations.  Occasionally my daydream goes as far back as Socrates.  I try and imagine what pictures that I'd have to draw in order to overcome the language barrier.  Maybe blind men fondling an elephant??  Have you seen my drawing skills?!

Even though earlier is always better than later, what's the latest year that pragmatarianism could have have been implemented in order for The Holocaust to have been prevented?  Effectively answering this question requires a decent grasp of history.  Is it possible to be a good economist without having a decent grasp of history?  Is it possible to be a good historian without a decent grasp of economics?

As a quick aside... not sure if you've noticed but sometimes I like to attach more than one epiphyte to the same branch (> kill two birds with one stone).  If I'm going to set up and climb the ladder... then while I'm up there attaching one epiphyte... I might as well attach two... or three.  

With that in mind... have you read Pushing For A Pubmar yet?  If not, you really should.  In that blog entry I encourage my cup listers to try and imagine just how much credit they would have been able to take for Deng Xiaoping's gradual free-market reforms.  These reforms have lifted millions of people out poverty.

In that entry I shared this example of my drawing skills...

Deng Xiaoping began his market reforms around 1978.  We look back and take it as a given that there was enough support for China to take these small steps in the right direction.  But what if those small steps had never been taken because market enthusiasts were pushing for large steps in the right direction?

Mao Zedong took control of China around 1950... five years after the end of WWII.  In 1933, Hitler took control of Germany.  It's hard to imagine that pragmatarianism could have been implemented in Germany after 1932.  But what about in 1922?  That was when Hitler took control of the Nazi Party (National Socialist German Workers Party (NSDAP)).  Around that time it had less than 4,000 members.

On the completely opposite end of the ideological spectrum... 1922 is also the year that the Jewish economist Ludwig von Mises published his critique of government... Socialism.  Here's a snippet from that book...

The issue is always the same: the government or the market. There is no third solution. - Ludwig Von Mises, Socialism

No third solution?

I modified the image above accordingly...

What if, in 1922, Mises had pushed for a pubmar?  What if Socialism had made the really strong case that blocking competence from the public sector results in the inefficient allocation of competence?  What if all the other market enthusiasts had started to help him push for a pubmar?

If all the market supporters had pushed hard/smart enough... and both the US and Germany implemented pragmatarianism a few years after Mises published his book... then each country's public sector would have been flooded with competence.  What would this have averted?

1. The Great Depression (1929-39).  Market enthusiasts love to blame the depression on the government and liberals love to blame the depression on the market.  I think it's pretty reasonable to conclude that the depression was the result of blocking most of the country's competence from the public sector.  One head really isn't better than a thousand.  Given enough eyeballs, all bugs are shallow (Linus's Law).  In the multitude of counselors there is safety (Proverbs 11).  When you block nearly all the most competent heads/eyeballs from the public sector then it's guaranteed that there are going to be a myriad of important details that are missed.

2. The Holocaust/WWII (1939-45).  Hitler's rise to power was in no small part due to the depression.  He blamed the depression on the Jews and everybody else he didn't like.  This scapegoat strategy proved to be quite effective.  It wouldn't have been nearly as effective if Germany had been thriving.  When a country is growing and there's plenty of prosperity... the party that's not in power has a lot less ammunition to use against the party that's in power.  Also, pragmatarianism would have made political parties entirely redundant.  It's pointless to join a political party when everybody is free to shop for themselves in the public sector.

3. The Great Leap Forward (1958-61).  Without the depression, and without the war... communism/socialism (command economies) never would have spread around the world.  This would have spared millions and millions of lives.

What other disasters would have been averted?  And what would have been accomplished if so much competence hadn't been so majorly misallocated?  How much better would our world now be?

Hopefully it's clear that my point here really isn't to assign any sort of blame or responsibility to Mises.  I'm sure the thought of a pubmar never occurred to him.  We can certainly lament the fact that he didn't offer the world this third solution... but we can't blame him for failing to spot this Easter Egg.  Here we are now though, nearly a century later, looking at the possibility of a pubmar.  And history seems to strongly support the conclusion that the people on my cup list are potentially making a huge mistake by not pushing for a pubmar.

In my blog entry... Pushing for a Pubmar... I encouraged my cup listers to imagine just how much credit they would have been able to take for China's small, but extremely beneficial, steps in the right direction.  In this blog entry... it's sort of the same idea.  If Ludwig von Mises had managed to successfully push for a pubmar just like Deng Xiaoping managed to successfully push for a primar... then how much credit would my cup listers have been able to take for all the disasters that a pubmar would have averted?  How much credit would they have been able to take for all the benefit that a pubmar would have created?  If Mises had tried to push for a pubmar... but wasn't successful because he was the only one pushing... then how responsible would my cup listers be for all the disasters that logically resulted from blocking competence from the public sector?

As an anarcho-capitalist, David Friedman is pushing to abolish the government.  If Deng Xiaoping had pushed for abolishing the government... it's doubtful that China would have taken any steps in the right direction.  If Ludwig von Mises had pushed for abolishing the government... it's doubtful that the depression, or WWII, or The Holocaust, or The Great Leap Forward would have been averted.

If pragmatarianism truly would have prevented The Holocaust and other disasters, then it stands to reason that the opportunity cost of pushing for anything else is way too high.

So where's the bottleneck?  Could it be that the competence of Jews isn't appreciated?

By the way, during Germany’s Weimar Republic, Jews were only 1 percent of the German population, but they were 10 percent of the country’s doctors and dentists, 17 percent of its lawyers, and a large percentage of its scientific community. - Walter E. Williams, Diversity, Ignorance, and Stupidity

Nobel Prizes have been awarded to over 850 individuals, of whom at least 22% (without peace prize over 24%) were Jews, although Jews comprise less than 0.2% of the world's population (or 1 in every 500 people). Overall, Jews have won a total of 41% of all the Nobel Prizes in economics, 28% of medicine, 26% of Physics, 19% of Chemistry, 13% of Literature and 9% of all peace awards. - List of Jewish Nobel laureates

I don't know why it isn't painfully clear that we're really hurting ourselves by blocking all this competence from the public sector.

What's of particular relevance, and perhaps some explanation for their competence, is Jewish diligence when it comes to giving...

As a general matter, Jewish tradition encourages donors to investigate supplicants. Those who allocate community tzedakah funds must investigate recipients and must avoid giving to frauds. It is a violation of Jewish law to give to organizations that distribute communal funds if its managers are not competent to certify the worthiness of beneficiaries. There are a few exceptions. In emergency situations, as when an individual is starving, aid must be given immediately. Moreover, it is recommended by our tradition that one give at least a small amount to everyone who asks, whether Jewish or not. - Ira Kaminow, Tzedakah: Some Principles of the Jewish Way of Giving

In addition, one must be very careful about how one gives out tzedakah money. It is not sufficient to just give to anyone or any organization, rather, one must check the credentials and finances to be sure that your Tzedakah money will be used wisely, efficiently and effectively. - Tzedakah (Wikipedia)

There are eight degrees of tzedaka, each one superior to the other. The highest degree . . . is one who upholds the hand of a Jew reduced to poverty by handing him a gift or a loan, or entering into a partnership with him, or finding work for him, in order to strengthen his hand, so that he will have no need to beg from other people. - Maimonides, Mishneh Torah

If Jews endeavor to ensure that their Tzedakah money will be used wisely, efficiently and effectively... then doesn't it stand to reason that this is exactly how they would spend their tax money if given the opportunity to do so?  

Perhaps the US would benefit if it kicked all the Jews out of the country?  Clearly it wouldn't.  Yet, it's perceived that we somehow benefit when we prevent Jews from shopping in the public sector.

Another one of my cup listers, Bryan Caplan,  is also an anarcho-capitalist.  But more often than not he pushes for open borders.  Plenty of Jews left Germany before it was too late... so we know it wasn't impossible for them to do so.  But these open borders really didn't prevent The Holocaust.  From my perspective, The Holocaust would have been prevented if Jews had been free to vote with their taxes.  Yet, does Bryan Caplan push for people to be free to vote with their taxes?  Nope, he pushes for people to be free to vote with their feet.

Where's the bottleneck?

As I mentioned about the depression... liberals love to blame the market and market proponents love to blame the government.  It's pretty much the same situation when it comes to Hitler's rise to power.  Liberals love to blame big business for financing Hitler and market proponents love to blame liberals for failing to recognize the value of property rights.

As a result of this blame game, if you dig around for information regarding who bears responsibility for Hitler's rise to power... you'll find quite a bit of conflicting information.  So perhaps this explains why it's not so clear that allowing German taxpayers to choose where their taxes go would have prevented The Holocaust.

If all Germans back then were evil... then pragmatarianism certainly wouldn't have prevented The Holocaust.  Obviously not all Germans were evil.  The millions of Jews were clearly an exception.  But anybody who's seen Schindler's List would know that Jews weren't the only exceptions.  So perhaps the essence of Conza88's critique was that there weren't enough exceptional Germans.  Except, this is problematic for Conza88 because it would have him agreeing with liberal arguments that industrialists were largely responsible for Hitler and The Holocaust.  Even the anarcho-capitalist Murray Rothbard recognized the problem with this line of thinking...

A further point: in a profound sense, no social system, whether anarchist or statist, can work at all unless most people are "good" in the sense that they are not all hell-bent upon assaulting and robbing their neighbors. If everyone were so disposed, no amount of protection, whether state or private, could succeed in staving off chaos. - Murray Rothbard, Society without a State

If Conza88's premise was that most German people were truly hell-bent on assaulting and robbing their neighbors... then his conclusion... "let's abolish the state"... really didn't follow.

Of course I'd really like to believe that my "stitch in time" argument is more than adequate to support the conclusion that pragmatarianism would have prevented The Holocaust.  Flooding Germany's public sector with competence earlier rather than later would have prevented all the problems that logically resulted from blocking nearly all of Germany's competence from the public sector.  Hitler wouldn't have been able to exploit problems that didn't exist.  He wouldn't have been able to blame Jews for problems that didn't exist.

Even though I'd like to believe that my "stitch in time" argument is adequate... it is still probably a good idea to continue exploring the available evidence.

In 1933, there around 67 million people in Germany.  Out of 44,685,764 registered voters... 43.91% of them (17,277,180) voted for Hitler (source).  So even with a considerable effort on the part of the Nazis to intimidate and suppress other voters... the majority of Germans did not vote for Hitler.  And just because somebody did vote for Hitler, this does not necessarily mean that they would have been willing to put their taxes where their votes were...

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

Voting is perceived to be a good deal if, and only if, the voter is under the impression that somebody else is going to pay for their "free" lunch.  This means that if, prior to 1933, the power of the purse had been transferred from government to taxpayers... then voting for Hitler wouldn't have been such a good deal.  Why would people have bothered voting for Hitler if there was absolutely no chance of him controlling the power of the purse?  It's only natural for people to quickly line up for a "free" lunch... but if you change the deal like so... free lunch... then the free-riders will disappear as quickly as they appeared.

The evidence is pretty clear that most Germans were not hell-bent upon assaulting and robbing their neighbors.  They weren't interested in Hitler's "free" lunch.  Yet, they were served it anyways.

So where's the bottleneck?

Maybe everybody who voted for Hitler was a taxpayer and everybody who didn't was not?  This line of argument is more or less consistent with the liberal argument that business/industry was largely responsible for Hitler's rise to power.  If this "most taxpayers are evil" argument is correct, then pragmatarianism definitely wouldn't have prevented The Holocaust.

If you read the Wikipedia article on Gustav Krupp von Bohlen und Halbach... then this is what you'll learn...

Unlike most of his fellow industrialists, Krupp opposed the National Socialists [Nazis]. As late as the day before Paul von Hindenburg appointed Adolf Hitler as Chancellor, Krupp tried to warn him against making such a choice. However, after Hitler won power, Krupp became, as Fritz Thyssen later put it, "a super Nazi" almost overnight.

Most German industrialists supported the Nazis?  This would certainly lend credence to Conza88's argument.  The citation for that Wikipedia passage is a book written by William Shirer and published in 1960... The Rise and Fall of the Third Reich.

We get a different story, however, from a book that Henry Ashby Turner wrote in 1985... German Big Business and the Rise of Hitler.  Here are some relevant passages from a few different reviews of this book...

Note that freedom from large subsidies enabled the NSDAP to propagate an extremely radical message unpalatable to elites then and now—apart from the PC radicalism of philo-Semitism, anti-white racism, and Leftism that has always been acceptable to elites. The NSDAP thereby satisfied the genuine needs and aspirations of its white constituency and generated an intensely loyal mass following. - Andrew Hamilton, Funding a Movement: German Big Business & the Rise of Hitler 

It may be true that contributions of various sorts came from big businessmen like Fritz Thyssen, the Berlin manufacturer Ernst von Borsig, and the retired coal executive Emil Kirdorf, but despite statements to the contrary, they were never a critical source of funding. Most of the NSDAP funds were derived from membership dues, interest-free loans, and the gate receipts from the many mass rallies the party held. After the parliamentary breakthrough in September 1930, sales from Mein Kampf skyrocketed, providing Hitler himself with a steady source of income. And during the depression the volunteer labor given by party activists helped ease the effects of the increasingly austere economic conditions. - John M. Ries, German Big Business and the Rise of Hitler (Review)

Still, more than a few voices critical of such historical hanky-panky have been raised. Perhaps the most influential is that of Henry A. Turner, Jr., who has provided an accurate and verifiable history of the Weimar period in his German Big Business and the Rise of Hitler. Turner sensibly avoids class struggle as a theme and simply asks if big business liked Hitler. Did business leaders support him? Did they give him money? Turner concludes that they did not. Only "through gross distortion can big business be accorded a crucial, or even major, role in the downfall of the Republic" (p. 340). Turner claims that bias "appears over and over again in treatments of the political role of big business even by otherwise scrupulous historians" (p. 350). - Larry Schweikart, Hitler and Big Business

From Turner we get the impression that prior to Hitler gaining control of the power of the purse, support from business was the exception rather than the rule.  Same as well from this source...

There is little evidence to support the view that Hitler received substantial financial support from big business. The conservative upper classes generally regarded Hitler as an uneducated demagogue and gutter politician. - David A. Meier, Adolf Hitler's Rise to Power

I highly recommend that source if you're looking for a good overview.

Once Hitler was in power, he transferred ownership and control of various factories in such a way as to try and maximize the productive capacity that was in the hands of supporters.  The Spanish economist Germa Bel wrote an excellent paper on this topic...Against the mainstream: Nazi privatization in 1930s Germany.  Some snippets...

It is likely that privatization—as a policy favourable to private property—was used as a tool for fostering the alliance between the Nazi government and big industrialists. The government sought to win support for its policies from big business, even if most industrialists had been reluctant to support the Nazi Party before it came to power.

...also...

The reprivatization of United Steelworks, which put Fritz Thyssen in the leading position in the company, appears to be an example of the use of privatization to increase political support.  It is worth recalling that Thyssen was one of only two leading industrialists to support the Nazi Party before it became the most powerful party on the political scene.  Another privatization that can be linked to politics is the sale of publicly owned shares in Hamburg-SudAmerika to a Hamburg syndicate in September 1936 when the Hamburg ship-owners had joined the Nazi Party as a group.

...and...

It seems clear that neither the Nazi Party nor Hitler was ideologically devoted to private ownership. In fact, Nazis used nationalization when they considered it necessary.  The case of the nationalization of two aircraft companies, the Arado and Junkers firms, is widely known.  As Wengenroth explains, 'uncooperative industrialists such as aircraft manufacturer Hugo Junkers were removed from their positions and replaced with Nazi governors.  This was not an explicit nationalization policy, but simply an attempt to control production and investment policies in the interest of rearmament'.  In fact, as stated by Overy, Hugo Junkers 'refused to produce warplanes for Goering and found his business nationalized'.  Indeed, Buchheim and Scherner note that state-owned plants were seen as necessary when private industry was not prepared to realize a war investment on its own. 

Any industrialists who failed to comply with Hitler's plan were quickly and easily replaced.

Let's review.

The Weimar Republic was established in Germany after the end of the first world war.  Taxpayers were not free to choose where their taxes went.  This blocked nearly all of Germany's competence from the public sector.  As a result, competence was inefficiently allocated.  Hitler exploited the subsequent problems and the "free" lunch democracy responded accordingly...

Again, it may be objected that the poor are never invested with the sole power of making the laws; but I reply, that wherever universal suffrage has been established the majority of the community unquestionably exercises the legislative authority; and if it be proved that the poor always constitute the majority, it may be added, with perfect truth, that in the countries in which they possess the elective franchise they possess the sole power of making laws. But it is certain that in all the nations of the world the greater number has always consisted of those persons who hold no property, or of those whose property is insufficient to exempt them from the necessity of working in order to procure an easy subsistence. Universal suffrage does therefore, in point of fact, invest the poor with the government of society. - Alexis de Tocqueville, Democracy in America

After Hitler took control of the power of the purse, the world became his chess board...

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder. - Adam Smith, Theory of Moral Sentiments

I want everyone to keep what he has earned subject to the principle that the good of the community takes priority over that of the individual. But the state should retain control; every owner should feel himself to be an agent of the State . . . The Third Reich will always retain the right to control property owners. - Adolph Hitler (1931)

However well balanced the general pattern of a nation's life ought to be, there must at particular times be certain disturbances of the balance at the expense of other less vital tasks. If we do not succeed in bringing the German army as rapidly as possible to the rank of premier army in the world...then Germany will be lost! - Adolf Hitler (1936)

It's only natural for people to compare Germany's political system after WWI to our current system here in the US.  People with Government 101 under their belt probably get the sense that, with our robust system of checks and balances, it's nearly impossible for any president to take control of the power of the purse.  Is "nearly" impossible really good enough though?  Wouldn't we be far better protected by decentralizing the power of the purse?  This decentralization could be easily achieved simply by shifting control of the purse to millions and millions of taxpayers around the country.

It's also natural to compare one person, Hitler, controlling the power of the purse to our 500 congresspeople controlling the power of the purse.  Perhaps the fact that our system hasn't resulted in the extremely inefficient allocation of Jews somehow proves that our system is good enough?  I agree that it's wonderful that our Jews haven't been extremely inefficiently allocated... but, given the fact that they can't shop in the public sector, combined with the fact that they are the rule rather than the exception, then why should we have any confidence that Jews, or any of us, are being efficiently allocated?  If you ever get the feeling that you're underemployed... then it's probably far more true than you can even begin to imagine.  To quote my favorite Crooked Timber liberal John Holbo... "I’d be perfect for a lot of way cool jobs that don’t happen to exist."

To put it in terms of the cup half empty vs half full... any defender of our government is saying, "look, at least our cup isn't only 0.000000003% full".  Yes, going from 0.000000003% to 0.0000017% is an improvement... but anybody who thinks that this is "enough" improvement is really missing the point.  Or I'm really missing the point.

So where's the bottleneck?

I'm under the impression that it always helps to share my favorite passage from my favorite liberal congresswoman...

There is nobody in this country who got rich on his own. Nobody.  You built a factory out there—good for you! But I want to be clear.  You moved your goods to market on the roads the rest of us paid for.  You hired workers the rest of us paid to educate.  You were safe in your factory because of police forces and fire forces that the rest of us paid for.  You didn’t have to worry that maurauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. - Elizabeth Warren

Does Warren know better than a Jewish business owner which public goods he needs to stay rich?  Did some German bureaucrat in the 1920s know better than a Jewish business owner which public goods he needed to stay rich?

If Warren truly knows which public goods bakery owners, farmers and manufacturers need to stay rich... then giving taxpayers the option to directly allocate their taxes will simply give competent business owners the opportunity to hand their taxes to Warren so that she can spend their taxes for them.  For some reason I highly doubt that very many business owners are going to want Warren, or any other politician, to spend their taxes for them.  And this strong suspicion that I have, combined with the available evidence, leads me to believe that pragmatarianism would have prevented The Holocaust.

This branch could use another epiphyte...





In this video, Michael Sandel, a professor of philosophy at Harvard, makes an eloquent and crystal clear case against market expansion into civic territory.  He's essentially the complete opposite of me.

Sandel's argument is that there are things that money can, but shouldn't, buy.  He gives numerous examples... one of which is how some schools have experimented with paying kids to read.  The concern of his, which his audiences have largely shared, is that money crowds out, or distorts, "intrinsic" value.

What's especially enjoyable about that video is that it has an exciting Easter Egg.  I didn't recognize anybody on the panel but when introductions were finally made... one name jumped out at me... Julian Le Grand.  Before I was banned from Wikipedia I created the articles for two of his books...

Motivation, Agency, and Public Policy
The Other Invisible Hand

These two books are the most relevant to the topic of tax choice.  If I'm mistaken, please let me know!

In the video, Le Grand hints at what this blog entry is trying to shout.  Even though it was just a hint... it seemed especially powerful because it was framed by Sandel's argument.  This passage by J.S. Mill comes to mind...

But the peculiar evil of silencing the expression of an opinion is, that it is robbing the human race; posterity as well as the existing generation; those who dissent from the opinion, still more than those who hold it. If the opinion is right, they are deprived of the opportunity of exchanging error for truth: if wrong, they lose, what is almost as great a benefit, the clearer perception and livelier impression of truth, produced by its collision with error. - J.S. Mill, On Liberty

Le Grand's point was especially bright because it was the only star in a pitch black sky.  The entire event really should have been a debate/discussion between Le Grand and Sandel.

Here's more of Sandel's argument (from his TED talk: Why we shouldn't trust markets with our civic life)...

Now, what this, even this brief debate, brings out is something that many economists overlook. Economists often assume that markets are inert, that they do not touch or taint the goods they exchange. Market exchange, they assume, doesn't change the meaning or value of the goods being exchanged. This may be true enough if we're talking about material goods. If you sell me a flat screen television or give me one as a gift, it will be the same good. It will work the same either way. But the same may not be true if we're talking about nonmaterial goods and social practices such as teaching and learning or engaging together in civic life. In those domains, bringing market mechanisms and cash incentives may undermine or crowd out nonmarket values and attitudes worth caring about. Once we see that markets and commerce, when extended beyond the material domain, can change the character of the goods themselves, can change the meaning of the social practices, as in the example of teaching and learning, we have to ask where markets belong and where they don't, where they may actually undermine values and attitudes worth caring about. But to have this debate, we have to do something we're not very good at, and that is to reason together in public about the value and the meaning of the social practices we prize, from our bodies to family life to personal relations to health to teaching and learning to civic life.

Where do markets belong?  They belong anywhere and everywhere that we want to effectively and accurately communicate what's most important to us.  Do we want to effectively and accurately communicate how important food is to us?  If so, then a market belongs in the private sector.  If we want to effectively and accurately communicate just how important any of the following things are to us...

• health
• education
• a safety net
• welfare
• space exploration
• infrastructure
• renewable energy
• the environment
• peace

... then it's imperative that we push for a pubmar.

The fact of the matter is that nobody is a mind reader.  If we want an abundance of anything that's truly important to us... then we have to be free to spend our own money accordingly.  We have to give both Jews and Gentiles alike the freedom to shop in the public sector.  Not just in their own country's public sector... but in any country's public sector.  And we shouldn't push for a pubmar because it's the "moral" thing to do...  we should push for it because it's the beneficial thing to do.  

Sympathy for the Devil

If it's true that blocking nearly all of a county's competence from the public sector results in the inefficient allocation of competence... then it would explain, in no small part, how Hitler himself ended up being so majorly misallocated.  He was a victim of society's failure to recognize the value of a pubmar.  All of us are victims... and we will continue to be until this fundamentally important lesson can be effectively taught to the world.

For your convenience... here's my cup list again...

• Alex Tabarrok, Tyler Cowen
• Bryan Caplan, Scott Sumner, David Henderson
• Robert Murphy
• Tom Woods
• Benjamin Powell
• Arnold Kling
• Jeffrey Tucker
• Deirdre McCloskey
• Thomas Sowell
• Peter Boettke
• Robert Higgs 
• Walter Williams
• Michael Huemer
• Don Boudreaux, Russ Roberts 
• David Friedman
• William Easterly
• Robin Hanson
• Randall Holcombe
• Roderick Long
• Walter Block

While it would be immensely valuable if everybody on this list thoroughly answered the extremely important question of whether pragmatarianism would have prevented The Holocaust... maybe it's a better strategy to single out one person.  And then they pick one person and so on.

It's a difficult choice... but I'm going to have to go with Alex Tabarrok.  That's who I especially select to thoroughly answer the question that I've attempted to answer in this blog entry.  Why Tabarrok?  Here are the two main considerations...

1. potential value of his answer
2. likelihood that he'll answer

Tabarrok's total score is the highest.