Thursday, March 5, 2015

The Assumption Of Omniscience And Benevolence

Reply to reply:  Epiphytes and Economics

It might help to read this first... Thoroughly Fondling The Elephant

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As you are the only person claiming that "omniscience" is relevant or assumed, perhaps you need to provide some evidence to support that claim. Or we can just assume that it is yet another thing you have made up. (Having a fertile imagination is no substitute for evidence.) - Strange
Heh. Samuelson's paper, the best (most widely cited) defense of government, the one I mentioned right before exchemist's quote on omniscience... is the evidence. Yet, here you are asking for evidence. Either you didn't bother reading Samuelson's paper or you tried to but you didn't understand it.

If you didn't bother reading Samuelson's paper... then are you genuinely interested in learning? If you did try to read his paper... then that's a good sign but... progress is going to be painfully slow if you're afraid to admit when you don't understand something. I'm not a mind reader!

Hopefully you grasp that Samuelson's paper has to do with the free-rider problem (FRP) and public goods (PGs)...

FRP * PGs = ?

What would that equal? Here's the answer...

FRP * PGs = Prag

Unfortunately, this really isn't Samuelson's conclusion. His paper is the best defense of our current system of government. So we know what's on the other side of the equation...

FRP * PGs = Rep

We don't choose where our taxes go... representatives do. But you can't have the same exact equation result in two very different conclusions. Therefore, something is missing from Samuelson's equation...

(FRP * PGs) + ? = Rep

In order to arrive at the conclusion that I should spend your money for you... it must follow that I have access to your preferences. Therefore, Samuelson's equation looks like this...

(FRP * PGs) + Omni = Rep

Well... just because I have access to your preferences doesn't necessarily mean that I'll care about them. So we need something like...

(FRP * PGs) + Omni + Ben = Rep

This says that... when we apply the free-rider problem to public goods and throw in omniscience and benevolence on the part of government planners... then we arrive at our current system of government.

Samuelson didn't actually include benevolence... but clearly it's necessary. And in his paper he doesn't use the word "omniscient"... he just takes people's preferences as a given. In other papers he does use the word "omniscient" so yeah, the two things are synonymous.

Ben and omni are clearly absurd... but you need them to arrive at our current system of government. When you remove these two absurd conditions... you arrive at a pragmatarian system of government.

To be fair, Samuelson was just making a pretty model for our current government. In reality he didn't actually believe that congresspeople are omniscient or benevolent. He just figured that they could do a good enough job of figuring out people's preferences. He figured the same thing with command economies...

The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive. - Paul A. Samuelson
Right now you're under the impression that the government does a good enough job of supplying public goods. Except, where's your evidence for this? Are you surrounded by it? Is the public school you went to... and the roads you drive on... and the military who defends you and the police who ticket you... are these all your evidence?

In a market system... producers are by no means omniscient. When I produced this thread... when I supplied this additional option... I couldn't truly know how many people would spend how much of their limited time consuming it. My supply was merely a guess. Evidently it wasn't a bad guess because here you and other people are!

But if we look through this forum... it should be a self-evident truth that not all guesses are equally good. But in the absence of consumer choice... then how in the world could we possibly know just how good a guess is?

If we created a market in the public sector... then if your "evidence" is really good... consumer choice will confirm this.

What's important to understand and really appreciate is.... in a pragmatarian system... directly allocating your taxes is completely optional. Congress will still be there. If you don't have the time, or interest, to bother directly allocating your taxes then you'd be free to give them to congress to allocate for you.

So if you want to predict that it's going to be a huge mess and everybody's going to allocate their taxes "wrongly"... then you're also predicting that nearly everybody is going to choose to directly allocate their taxes rather than have their congresspeople do it for them. In other words, you're also predicting that barely anybody will have adequate evidence to believe that congresspeople are benevolent/omniscient.

What I'm trying to say is that you can't have your cake and eat it too. If you want to argue that the current supply of public goods is more than adequate... then you have to predict that few people are going to see the point of directly allocating their taxes. But if, on the other hand... you want to predict that nearly everybody is going to see the point of directly allocating their taxes... then you really can't argue that the current supply of public goods is more than adequate. How can it possibly be adequate when so few people have any evidence to believe that congress knows, or cares about, their preferences?

How fundamentally absurd would it be if we are supplying the services of congress to the entire country when nobody actually demands their services? The only reason that there wouldn't be any demand for congress is because people would derive far more value from the alternative uses of their tax dollars. This would mean that supplying congress results in the wholesale destruction of value.

If you'd like more evidence of the relevance of the assumption of omniscience... The Logical Absurdity of Libertarianism - Partial Omniscience. But having a basic grasp of economics is all you need to understand that there's a problem when the supply of goods doesn't follow from the preferences of consumers. You demanded evidence regarding the relevance of the omniscience assumption and that's exactly what I supplied.

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See also: Succeeding vs Failing At Other Minds

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