Tuesday, August 4, 2015

Choosing Wrongly

Reply to: Going with your example of Bob and his bakery, I do trust him to know best what decisions he makes…

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Why would Bob choose to spend his tax dollars on medical research? How can infrastructure funds possibly be put to their most valuable uses without Bob’s valuation?

Your concern is that Bob is going to spend his tax dollars on the wrong things. How many tax dollars do you imagine Bob spending in the public sector? Maybe $1,000 dollars? Or $10,000 dollars? Or $100,000 dollars? Or $1,000,000 dollars? The smaller his tax obligation… the less harmful the misallocation… the weaker your argument. The more tax dollars that Bob is able to wield in the public sector… the greater the potential damage… and the stronger your argument. Except for one minor detail…

If Bob is likely to make such terrible allocation decisions… then how did he earn so much money? Absolutely nothing is preventing baker Bob from randomly spending all his revenue on medical research. He has the freedom to do so. He has the freedom to spend his revenue on a gazillion other equally irrelevant things. So why doesn’t he? My guess is that it’s because he strongly prefers making, rather than losing, money.

I’m pretty sure that you’re not going to find Bob at Home Depot filling up his shopping cart with a bunch of expensive items which he has absolutely no need for. At least not regularly. Just like I’m pretty sure that you’re not going to find items at Home Depot that few people are putting into their shopping carts.

If you trust that Bob isn’t going to put a dozen unnecessary lawnmowers in his shopping cart… then why do suspect that he’s going to be inclined to put a bridge to nowhere in his shopping cart?

Thanks for the book recommendations. Not familiar with Fukuyama’s work but I’ve read a few things on behavioral economics. Just recently I think that Cass Sunstein might have somehow choice architectured me into writing a blog entry about the privatization of marriage.

It’s interesting digging into the psychology of human error… but it’s “funny” that the takeaway is usually more top down control. It’s as if human error doesn’t apply to voters and to the people they elect to prevent us from making the wrong decisions.

Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority. — Frédéric Bastiat, The Law

People are fallible…except for public servants? People are fallible… therefore… we should put more eggs into one basket?

For me fallibilism means tolerance. It means giving people the freedom to choose where their taxes go… even when I strongly suspect that they are choosing wrongly.

Nobody’s written a book about pragmatarianism yet. Perhaps the closest books on the topic have been written by Julian Le Grand.

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