Saturday, March 7, 2015

The Opportunity Cost Of The Holocaust

Posted in various forums...

Epiphytic (out-of-the-box) thinking can help yield useful insights.  If we want to truly understand anything worth understanding then we have to think about it epiphytically.  

The Holocaust is worth understanding.   We can't ensure that something similar won't happen again unless we truly understand what happened.  Therefore... it behooves us to think about The Holocaust epiphytically.

There are many different ways to think about The Holocaust epiphytically.  Here's one such way...

The Holocaust was an extremely inefficient allocation of Jews.

If you google for "Inefficient Allocation Of Jews" then you'll learn that, as far as Google knows, nobody else has described The Holocaust exactly this way.  Therefore, it's a different way of thinking about The Holocaust.

What I've supplied is an economic description of The Holocaust.  As such, it uses economic jargon.

Economics is essentially the study of how resources are used.  It provides various tools that can help facilitate an understanding of how we might improve our institutions.  Chances are really good that most of you aren't familiar with economic tools/jargon so it will probably help if I endeavor to explain some of them.

From the economic perspective…

1. A resource is anything that can be put to productive uses.  Your time can be put to productive uses therefore your time is a resource.

2. An allocation is how a resource is used.  Right now you're spending your time reading this.  This is how you are allocating your time.

3. Any given resource can be allocated in many different ways.  You can spend your time reading this or you can spend your time watching House of Cards on Netflix or you can spend your time volunteering at a homeless shelter.  Your time can be allocated in many different ways.

4. No two allocations will create the same amount of value (see Evaluating Mistakes).  As a result, there is a value creation continuum that ranges from maximum (efficient) all the way to minimum (inefficient).  If you accuse somebody of wasting your time then, in economic terms, you are saying that they are inefficiently allocating your time.  

5. Every allocation of a resource has a true cost.  This true cost, which is referred to as the  "opportunity cost", is the value that would have been derived from the next most valuable  allocation of the resource in question.  Right now you're allocating your time to reading this post.  Let's say that it's going to take you 5 minutes to do so.  This 5 minutes is the cost.  The true cost… the opportunity cost… is the amount of value that you would have derived from allocating this 5 minutes to the next most valuable allocation/alternative... reading a book, or pulling weeds, or operating on somebody's brain.  If your friend calls you when you're in the middle of doing something important then you might say "I don't have the time to talk right now".  In economic terms you're saying, "the opportunity cost of talking right now is too high".

6. Values are subjective.  One person's trash is another person's treasure.  Just because allocating your time to reading this might be an inefficient allocation of your time doesn't necessarily mean that it will be an inefficient allocation of everybody's time.  In other economic terms... just because the opportunity cost is too high for you doesn't mean that it will be too high for everyone.  We all have a unique set of preferences/circumstances.  

7. It's better for society's limited resources to create more, rather than less, value for society.  This is Quiggin's Implied Rule of Economics.

With all of this in mind… let's take another look at the economic description of The Holocaust...

The Holocaust was an extremely inefficient allocation of Jews.

Nearly all of us would agree that there were far more valuable uses of Jews.  What went wrong was that the valuation process was exclusive rather than inclusive.

Have you heard of Amanda Palmer?  I just recently watched her TED talk.  She's an artist who was booted from her label because her album didn't sell enough copies.  So she started a kickstarter campaign with a fundraising goal of $100,000.  She didn't raise $100,000 dollars.  Instead, she ended up raising more than $1,000,000 dollars.

Everybody around the world was free to valuate how Amanda Palmer was allocating her time.  You're still free to do so… here's her Patreon page.  This is an example of inclusive valuation.  Nobody is excluded from participating in the valuation process.  As a result, we can be reasonably confident that the current total valuation of Amanda Palmer's current allocation accurately reflects society's valuation.  If we excluded women or men from the valuation process then the total valuation of Palmer's current allocation would be a far less accurate reflection of society's valuation.  

The Holocaust was an example of what can occur, and has occurred, when most people are excluded from the valuation process.    

The opportunity cost of The Holocaust was impossibly high.  This major misallocation of so many incredibly valuable resources would have been prevented if, prior to 1933, taxpayers around the world had been free to shop for themselves in Germany's public sector.  This means that pragmatarianism would have prevented The Holocaust.

If we want to ensure that Quiggin's Implied Rule of Economics is never again so horribly violated…then it's necessary to allow everybody to participate in the process of valuating what each and every government does with society's limited resources.

If you're interested in additional analysis/evidence then please see…

Holocaust - The Extremely Inefficient Allocation Of Jews

Is there a chance that I'm wrong?  Certainly.  If I'm wrong, then here's your opportunity to prove it.  But what if I'm right?  Then if I didn't make the effort to share this information with you then I'd be doing a fundamental disservice to humanity.

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