Saturday, August 8, 2015

Centralized vs Decentralized Government

Reply to replies: "senseless human greed"

So it sounds like Xerox's limited understanding of economics is based on the "rational choice" model. No wonder his posts are such bollocks. - Strange

If this is your perception then you're not familiar with either model. The rational choice model is based on the idea that people usually make rational economic choices.

The rational consequence model, on the other hand, doesn't say anything about "usually". Instead, it's based on the idea that irrational choices have rational consequences. If Bob, who inherits $50,000, spends that money irrationally, then this will logically decrease his influence (over how society's limited resources are used). If, on the other hand, he spends that money rationally, then this will increase his influence.

Because irrational choices have rational consequences... there's no point in debating whether or not people are Homo economicus. Anybody who consistently makes irrational choices will have decreasingly smaller amounts of resources to irrationally allocate.

Therefore, the market doesn't need everybody to always make rational choices in order for it to maximize benefit. It just needs to punish irrational choices and reward rational choices... and that's exactly what it does. Taxpayers have more income/influence as a consequence of rational choices that they've made in the past. Arbitrarily decreasing their influence in the public sector places massive amounts of resources in less rational hands.

What i see as the major problem with this idea is how the hell is anyone of the agencies supposed to do any sort of budgeting? The constant flux of funds with no predictability would make it impossible and shut most of them down in rapid order. - Paleoichneum

Countless for-profit and non-profit organizations in the private sector manage to budget themselves despite the fact that they are fully subjected to the vagaries of demand. What's the alternative?

Should your favorite restaurant get paid to serve people who aren't there? Should you pay some kid to shovel snow during summer? Should people continue giving Apple the same amount of money regardless of what Apple does with it?

People don't exist to ensure that McDonald's is optimally funded. McDonald's exists to ensure that people's hunger is optimally satisfied. The more effectively McDonald's does its job... the more money it will receive.

Severing the direct connection between performance and reward will have logically detrimental consequences.

We don't exist for the government... the government exists for us. What the government does with our limited resources should provide us with the maximum benefit. And this can only occur when people are given the freedom to use their tax dollars to accurately communicate which government organizations (GOs) are providing them with the most benefit. Less beneficial GOs will have less resources to allocate and more beneficial resources will have more resources to allocate. Influence will be correctly proportioned to benefit provided.

What tool does evolution use for managing a species that, due to the error we call "mutation", ceases to be the most fit for its niche? Extinction. To avoid that outcome, we wield our governmental power differently than we wield our private purchasing power. - billvon

Centralization decreases the risk of extinction? So having humans all on one planet decreases the risk of extinction? You've got it really backwards. Decentralization is how we decrease the risk of extinction. - Xero

Nope, never claimed that. That is a strawman you have created.
It is difficult to have a serious discussion with someone who resorts to such childish tactics. - billvon

You said that we need the government as it currently is (centralized) in order to decrease the risk of extinction. Because I'm pretty sure that you didn't say that we need a decentralized government (pragmatarianism) in order to decrease the risk of extinction. And those are pretty much your only two options.

Pragmatarianism is better than the current system for two main reasons...

1. Maximizing benefit
2. Maximizing progress

These two things are closely related but they are definitely different. If you love a steak, and you're really in the mood for steak, then ordering, receiving and eating a great steak will maximize your benefit/enjoyment/utility/value. Your benefit will not be maximized if, instead of receiving a steak, you receive a big bowl of quinoa. Just like how Jacob's benefit was not maximized when, after working so many years to earn the right to marry Rachel, he was tricked into marrying her sister instead...

21 And Jacob said unto Laban, Give me my wife, for my days are fulfilled, that I may go in unto her.
22 And Laban gathered together all the men of the place, and made a feast.
23 And it came to pass in the evening, that he took Leah his daughter, and brought her to him; and he went in unto her.
24 And Laban gave unto his daughter Leah Zilpah his maid for an handmaid.
25 And it came to pass, that in the morning, behold, it was Leah: and he said to Laban, What is this thou hast done unto me? did not I serve with thee for Rachel? wherefore then hast thou beguiled me? - Genesis 29.

Hey Lynx_Fox... since you know so much about the reliability of Bible stories... what do you say about this one? Real or fake? Whether it's fact or fiction, it still makes me laugh whenever I read it.

Getting what we order maximizes benefit.

But...there's always room for improvement. Even great steaks have room for improvement. It's entirely possible that we could use laboratories, science and technology to "grow" steaks that are way more delicious than even the best "real" steaks. This would free-up millions and millions of acres currently used for cattle. We could free-up even more acres by doing the same thing with chicken and pigs. It would certainly make vegetarians really happy if we stopped slaughtering so many animals. And of course it would be entirely nonsensical to continue allocating the same amount of resources to raising and slaughtering animals once the need for doing so has been eliminated. Fortunately for us, markets largely ensure that irrational choices have rational consequences.

Just because there's always room for improvement though doesn't necessarily mean that it will always be easy to find and make improvements. The problem with a centralized system is that it severely limits the number of places that people look for improvements. Not only does it place too many eggs in too few baskets... but it also severely limits the incentive to look for improvements. Therefore, because of these two things, centralization results in less progress being made and... by extension... increases the risk of causing (or failing to prevent) very large failures... including extinction. Humans, because we are all different, naturally engage in diverse economic activities. Centralization decreases the variety of human activity and as such, stifles the very source of our progress and subjects us all to much greater risk.

To summarize... centralization decreases both benefit and progress. More often than not there's a disparity between what we order and what we receive. This disparity decreases the benefit that we derive from society's limited resources. Long-term benefit is also decreased because the items on the menu are less frequently improved in terms of their variety and benefit.

The problems of centralization could easily be eliminated simply by allowing people to choose where their taxes go. People would receive what they ordered and government organizations would have the maximum incentive to find and make improvements.

I think there's at least some concern that allowing people to choose where their taxes go would mean a lot more work for everybody. Who wants more work!?

This concern is really unfounded. It's like saying that everybody has to work more just because we're free (more or less) to shop in Africa. Nobody is forcing you to shop in both America and Africa. If you don't see any benefit of shopping in Africa then you're free not to shop in Africa. But just because you don't see the benefit doesn't mean that other people won't see the benefit.

Same thing with Home Depot and Bed Bath and Beyond. Just because you have the option to shop in these places doesn't mean that you are forced to do so. Clearly many people do choose to shop in these places... so it's a given that society increases its benefit by giving people the option to do so.

With pragmatarianism, because of the free-rider problem... paying taxes won't be optional. However, anybody that doesn't want to shop in the public sector will have the option to give their taxes to their impersonal shoppers (congress). How many people will choose this option? In other words, what's the demand for impersonal shoppers? We don't know. It would behoove us to find out given that congresspeople are currently spending several trillion dollars a year.

If most taxpayers choose to give their taxes to congress... then no harm, no foul. Evidently congress is doing an adequate job of divining the demand for public goods. But if, on the other hand, many taxpayers choose to spend their taxes themselves... then they'll only make this effort because they perceive a benefit to doing so. Their efforts to correct the disparities between supply and demand will greatly increase society's total benefit. What if most taxpayers choose to spend their taxes themselves? Then evidently congress is doing a terrible job of divining demand.

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