Monday, August 24, 2015

Ryan Cooper vs Economics

The other day I noticed a nice spike in my blog's web traffic.  Google wasn't extremely helpful though because this is the URL that it credited for the traffic bump... http://t.co/drVQJUUabW.  If you clicked on that link you'd discover that it takes you to this blog entry of mine... Matt Bruenig vs Poverty.  A while back, thanks to my second favorite liberal, I finally figured out that the "t.co" type of abbreviated URLs are actually from twitter.  So I went on twitter and searched for "pragmatarianism" and voila!




Heh.  I solved that mystery!  But...I stumbled upon two new mysteries.  Who is Ryan Cooper?  And what, exactly, did he think was so "extremely weird" about my blog entry?

The first mystery was easy enough to solve.  Ryan Cooper is a writer for The Week.  Have you heard of The Week before?  I hadn't.  Turns out that it's a very liberal magazine.

As a quick aside... when I say "liberal" I feel the tiniest twinge of guilt because I think of Daniel Klein's sincere entreaties for people to stop using the word "liberal" to refer to government lovers.  Klein even has a couple websites dedicated to the cause... Lost Language and Liberalism Unrelinquished.  It's for sure that "liberal" is a nice word... and it's too bad that the other side stole it... but we're the side of builders/entrepreneurs.  And builders aren't supposed to cry over split milk. If Klein isn't happy with the word "libertarian" then he should channel his inner wordsmith and create a better word.  Because... there's always room for improvement.

Solving the mystery of Cooper's identity was easy enough... but only he can truly solve the mystery of why he thinks that my blog entry is extremely weird.  All I can do is guess.  But I certainly do enjoy a good guessing game.

As a real writer... Cooper probably doesn't choose his words randomly... so why did he choose the word "weird" rather than "wrong"?  And it's not like he used up his allotment of characters... so he could have written... "this is extremely weird and wrong..."  

A big part of the mystery is that my blog entry was a bundle of thoughts...

1. I love Australians
2. Ranking my favorite liberals
3. Looking for a fourth favorite liberal
4. The value of clarifying demand

Does Cooper think it's extremely weird that I love Australians?  Heh.  Maybe Cooper doesn't particularly love Australians or any other group of people?  He loves everybody equally?  Is that even possible?  If I had to guess... I'd guess that Cooper doesn't think it's extremely weird that I *heart* Australians.

So does Cooper think it extremely weird that I *heart* some liberals more than other liberals?  How's this any different from *hearting* some nationalities more than other nationalities?  I'm sure that Cooper doesn't *heart* all liberals equally.  But perhaps he thinks it's extremely weird that I'm completely transparent with my *heart* rankings?  Heh.  If the Bible gets anything right it's the part about not hiding your light under a bushel.

Perhaps Cooper thinks it's extremely weird that I'm looking for a liberal to *heart* in fourth place?  Let's review my *heart* rankings of liberals!

1st Place - John Holbo!  Primarily because of this... Crooked Timber Liberals Do Not Advocate Selling Votes.  I enjoyed our rather extensive public discussion/debate/disagreement.

2nd Place - John Quiggin!  Primarily because he's Australian!  Secondly because he's writing a book about opportunity cost!  For some more insight... John Quiggin And David Boaz Fusion Food For Thought.  Thirdly because of this...


3rd Place - Noah Smith!  Smith and I go way back.  Here's an overview of our history... Noah Smith's Critique of Pragmatarianism

4th Place - ???

5th Place - ???


There are definitely a few different factors that determine my *heart* rankings of liberals... but the main factor is the quantity/quality of public interaction.

As an aside... I think it would be a lot funner if Daniel Klein tried to take back the word "intercourse".  Take it back from who though?!  Whose fault is it that "intercourse" is now synonymous with "sexual intercourse"?

The absence of liberals in 4th and 5th place doesn't reflect a lack of public interaction.  For the tip of my public interaction iceberg please see... Unglamorous but Important Things.  I've had lots of public interactions with liberals... but precious few of the interactions were quality enough to warrant any of the liberals being placed in my top 5 *heart* ranking.

In the case of Matt Bruenig... all he had to do to become my 4th favorite liberal was simply publicly address the points that I brought up.  Bruenig is intelligent enough so the quality of his response probably wouldn't have been an issue.  But unfortunately, he showed absolutely no interest in publicly addressing my points!  And he's not alone in this boat...



I'm sure that I'm forgetting a few liberals.  Admittedly, none of my... errr... "wooing attempts"...  were probably the most suave approaches to soliciting public interaction.  But my point is that my 4th and 5th spots don't remain unoccupied for lack of effort.

Does my struggle to find liberals to love strike Ryan Cooper as extremely weird?  Heh.  It's not my fault that there isn't already an app for this!  Talk about market failure!

Now, I really don't want to come off as desperate... but Ryan Cooper is looking kinda good!  He's a liberal... and his articles are intelligent enough... and he's already linked to my blog!  Linking to my blog definitely put him in my top 10 *heart* ranking... well if I had one.  Should I have one?  Isn't that just being greedy?  Do I really have enough *heart* for 10 liberals?  Probably... not.

It is tempting to make Cooper my fifth favorite liberal.  What other more or less prominent liberals have linked to my blog?  Just Quiggin!?  Even if Cooper's link wasn't exactly a ringing endorsement... his tweet was still a link!  Thanks Cooper!  So yeah, heck with it, Cooper is my fifth favorite liberal.  It will be kinda awkward not having a fourth favorite liberal but it's not like I can't handle some awkwardness... and plus... hopefully it will only be a temporary predicament.  Cooper can easily grab the fourth spot simply by responding to some of my substantial points.

Which brings us to our fourth and final suspect in the case of the mystery of the extremely weird blog entry... clarifying demand!  Clarifying demand was the the gist of my blog entry.  It's the gist of most of my blog entries.  Does Cooper think that clarifying demand is extremely weird?

Clarifying demand is simply when people use their own money to communicate their preferences.  For example... Cooper goes to Whole Foods, grabs a shopping cart, looks at his list, locates the items, puts them into his shopping cart, waits in line to check out, whips out his wallet and pays for the things that he wants.  This is how he clarifies his demand for groceries.  Does he think that this process is extremely weird?

I think that the alternative would be extremely weird!  Cooper sits at home, Whole Foods delivers some groceries to him, he pays for them... and somehow, without having to clarify his demand, the groceries he paid for are exactly the ones that he would have put into his shopping cart.  Voila!?  Abracadabra!?  As if Whole Foods was able to read his mind.  Somehow Whole Foods knew that he had a mean craving for artichokes.  That's some spooky shit for sure.  It's extremely weird to believe that any producer is omniscient.

If clarifying demand makes sense when it comes to food... then wouldn't it also make sense for everything else that we could possibly want?  I sure think so.  And so far... very few prominent liberals have even attempted to explain what's so weird about clarifying the demand for everything.  They are fine clarifying the demand for some things... but who knows where and why they draw the line?!

Let's consider one of Cooper's "blog entries"... Rand Paul compared taxation to slavery — and betrayed the emptiness of his political philosophy.

Firstly... I should probably point out that I'm really not a libertarian.  Unlike Rand Paul... I don't believe that the government is omniscient when it comes to the demand for defense/offense or anything else.  This is a hugely important distinction.  It's so important that I had to invent a new label for it... "pragmatarian".  I'm a pragmatarian.  I believe that taxpayers should be free to choose where their taxes go.  In other words... clarifying the demand for public goods is just as important as clarifying the demand for private goods.  Here's the FAQ.

Secondly... I don't see anything extremely weird about Cooper's entry/article.  It's pretty standard liberalism.  It's wrong... but it's not weird.  He concludes his critique by saying of taxation and brutal slavery, "Only a moral idiot would think to make such an equivalence."  Taxation and brutal slavery aren't equivalent?  Does this mean that taxation and gentle slavery are equivalent?  I'm pretty sure that slavery is a continuum of brutality.  If we tie the morality of slavery to the degree of brutality... it gets kinda morally iffy.  As if slavery isn't so bad if brutality is removed from the equation.  Well... yeah?  But... therefore?  Gentle slavery is morally permissible?

Pragmatarianism is so wonderful because there's no moral ambiguity... it's purely consequential.  The focus is entirely on results... progress, prosperity, abundance and so on.  Results depend entirely on clarifying demand.  More demand clarity means more progress.  Taxation and slavery are equivalent in the sense that they both prevent demand from being clarified.  Of course, it's important to note that taxation itself doesn't prevent demand from being clarified.  Demand isn't obscured when taxes are collected... it's obscured when elected representatives decide how the money is spent.  Unless of course we assume that representatives are omniscient... or that voting accurately communicates preferences.

Which brings us to the heart of this potential debate!  The issue that no liberal dares to address!  So by bringing it up I'm probably guaranteeing that Cooper won't publicly respond to this. Shucks.

Here it is:  the free-rider problem isn't just a critique of the private provision of public goods... it's also a critique of democracy.

This throws liberals for an existential loop.  When it comes to the free-rider problem... liberals are very accustomed to wielding it as a weapon.  Liberals use the free-rider problem to try and clobber libertarians.  Well... liberals who know what they are talking about.  For the most part, libertarians try their hardest to downplay the size of the free-rider problem.  If you ask 100 libertarians who aren't entirely ignorant... 99 will tell you that the free-rider problem is only a problem when it comes to "real" public goods...defense, courts and police.

Because libertarians try their hardest to downplay the size and extent of the free-rider problem... they can't very well use it to attack liberals.  Nope.  But again... I'm not a libertarian.  I'm a pragmatarian.  I perceive that the free-rider problem is a truly big and extensive problem.  It doesn't just apply to the private provision of public goods... it also applies to democracy.

I attack liberals with their very best weapon.  And they are absolutely defenseless.  What are they going to say?  The free-rider problem is big enough to warrant taxation... but it's not big enough to warrant severely limiting democracy?

If Cooper *hearts* something it's definitely democracy (his emphasis)...

That's why the democratic basis of any socialist project is absolutely indispensable — an electoral movement to legitimately win power based on the traditional political mechanisms of labor and community organization. - Ryan Cooper, Bernie Sanders is right: It's time for democratic socialism

The question is... does Cooper *heart* democracy enough to throw Paul Samuelson under the bus?  Out of curiosity I searched Google for "Ryan Cooper" and "Paul Samuelson" and didn't find any relevant results.  I had a bit more luck searching for "Ryan Cooper" and free-rider...

Getting insurance will be part of living in a decent society where everyone chips in when they can afford it, and free-riding is frowned upon — and over time, young people will come to see this as part of being a responsible citizen. - Ryan Cooper, Why millennials will come around on Obamacare

The free-rider problem is applicable to Obamacare... but it's not applicable to democracy?  What if Obamacare only exists because the free-rider problem is applicable to democracy?

I wasn't able to find any other relevant passage by Cooper on the free-rider problem.  Then again, I didn't search that hard.

In 1954... the Nobel liberal economist Paul Samuelson published the best (most widely cited) economic defense of government... The Pure Theory of Public Expenditure...

But, and this is the point sensed by Wicksell but perhaps not fully appreciated by Lindahl, now it is in the selfish interest of each person to give false signals, to pretend to have less interest in a given collective consumption activity than he really has, etc. - Paul Samuelson, The Pure Theory of Public Expenditure

In the private sector... people have a clear incentive to pretend to have less interest in a public good than they truly have... "No... I don't value cancer research that much..."   So it's a given that the private sector will undersupply public goods.  Hence the need for taxation.

With democracy on the other hand... most voters have the incentive to pretend to have more interest in a public good than they truly have.  This is because around half of the country doesn't pay income taxes.  And among the people who do pay income taxes, the burden is very unevenly distributed (progressive taxation).  The logical conclusion is that democracy, which Cooper loves, is untrustworthy... it will send false signals.

Cooper can argue that false signals aren't a real problem.  But he wouldn't just be throwing Samuelson under the bus... he'd also be throwing the best economic argument for taxation under the bus as well.

In his paper... Samuelson never even mentioned democracy.  Instead, he simply assumed that government planners are omniscient.  They magically and mysteriously pull our preferences out of a hat.  Voila!  Abracadabra!  Clearly Samuelson didn't really believe that planners are omniscient.  He did, however, perceive that the preference revelation problem was a minor detail.  As a result... he got a few other minor details kinda wrong...

The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive. - Paul Samuelson, Economics

What's our public sector?  It's a socialist command economy + democracy (false signals) = thriving.  That's the epitome of bad math.

Maybe Cooper will want to argue that democracy's false signals aren't that bad because there's little harm in fleecing the rich to oversupply things like welfare, healthcare and education.  He might want to consider the following...


1776...

The people feeling, during the continuance of the war, the complete burden of it, would soon grow weary of it, and government, in order to humour them, would not be under the necessity of carrying it on longer than it was necessary to do so. The foresight of the heavy and unavoidable burdens of war would hinder the people from wantonly calling for it when there was no real or solid interest to fight for. — Adam Smith, Wealth of Nations

1835...

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

1846...

The last point for consideration is the supposed disposition of the people to interfere with the rights of property.  So essential does it appear to me, to the cause of good government, that the rights of property should be held sacred, that I would agree to deprive those of the elective franchise against whom it could justly be alleged that they consider it their interest to invade them. - David Ricardo, Observations on Parliamentary Reform

1861...

It is also important, that the assembly which votes the taxes, either general or local, should be elected exclusively by those who pay something towards the taxes imposed. Those who pay no taxes, disposing by their votes of other people's money, have every motive to be lavish, and none to economize. As far as money matters are concerned, any power of voting possessed by them is a violation of the fundamental principle of free government; a severance of the power of control, from the interest in its beneficial exercise. It amounts to allowing them to put their hands into other people's pockets, for any purpose which they think fit to call a public one; which in some of the great towns of the United States is known to have produced a scale of local taxation onerous beyond example, and wholly borne by the wealthier classes. That representation should be coextensive with taxation, not stopping short of it, but also not going beyond it, is in accordance with the theory of British institutions. But to reconcile this, as a condition annexed to the representation, with universality, it is essential, as it is on many other accounts desirable, that taxation, in a visible shape, should descend to the poorest class. In this country, and in most others, there is probably no labouring family which does not contribute to the indirect taxes, by the purchase of tea, coffee, sugar, not to mention narcotics or stimulants. But this mode of defraying a share of the public expenses is hardly felt: the payer, unless a person of education and reflection, does not identify his interest with a low scale of public expenditure, as closely as when money for its support is demanded directly from himself; and even supposing him to do so, he would doubtless take care that, however lavish an expenditure he might, by his vote, assist in imposing upon the government, it should not be defrayed by any additional taxes on the articles which he himself consumes. It would be better that a direct tax, in the simple form of a capitation, should be levied on every grown person in the community; or that every such person should be admitted an elector, on allowing himself to be rated extra ordinem to the assessed taxes; or that a small annual payment, rising and falling with the gross expenditure of the country, should be required from every registered elector; that so every one might feel that the money which he assisted in voting was partly his own, and that he was interested in keeping down its amount.  
However this may be, I regard it as required by first principles, that the receipt of parish relief should be a peremptory disqualification for the franchise. He who cannot by his labour suffice for his own support, has no claim to the privilege of helping himself to the money of others. By becoming dependent on the remaining members of the community for actual subsistence, he abdicates his claim to equal rights with them in other respects. Those to whom he is indebted for the continuance of his very existence, may justly claim the exclusive management of those common concerns, to which he now brings nothing, or less than he takes away. As a condition of the franchise, a term should be fixed, say five years previous to the registry, during which the applicant's name has not been on the parish books as a recipient of relief. To be an uncertificated bankrupt, or to have taken the benefit of the Insolvent Act, should disqualify for the franchise until the person has paid his debts, or at least proved that he is not now, and has not for some long period been, dependent on eleemosynary support. Non-payment of taxes, when so long persisted in that it cannot have arisen from inadvertence, should disqualify while it lasts. - J.S. Mill, Considerations on Representative Government

1896...

If once the lower classes are definitely in possession of the power to legislate and tax, there will certainly be a danger that they may behave no more unselfishly than those classes which have so far been in power. In other words, there will be danger that the lower classes in power may impose the bulk of all taxes on the rich and may at the same time be so reckless and extravagant in approving public expenditures to which they themselves contribute but little that the nation’s mobile capital may soon be squandered fruitlessly. This may well break the lever of progress. — Knut Wicksell, A New Principle of Just Taxation

1933 (regarding)...

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. — Loren Lomasky, Geoffrey Brennan Democracy and Decision

After 9/11... plenty of people shouted for war.  Why not?  It's not like the money would come out of their pockets.

When it comes to the private provision of public goods... the free-rider problem means that war would be undersupplied.  When it comes to democracy... the free-rider problem means that war will be oversupplied.  Is it worth having welfare, healthcare and education oversupplied if it means that war will also be oversupplied?

The free-rider problem is a real problem because we really don't want public goods to be undersupplied or oversupplied.  Society thrives when all goods are optimally supplied.  And the only way to ensure that all goods are optimally supplied is by clarifying demand.

Let's summarize!

Why did Cooper think my blog entry was extremely weird?  Was it because I *heart* Australians?  Because I *heart* rank my favorite liberals?  Because I'm looking for another liberal to *heart*?  Or... because I believe that clarifying demand is so extremely important?

Cooper's a liberal!  And he's intelligent!  And he linked to my blog!  So I made him my fifth favorite liberal. w00t!!!  If he has any interest in becoming my fourth favorite liberal all he has to do is publicly share his thoughts on whether or not the free-rider problem is applicable to democracy.  Or... he could publicly share his thoughts on clarifying demand.  Or... he could publicly share his thoughts on taxpayers being free to choose where their taxes go.

While I sincerely hope that Cooper will publicly respond to my arguments... it won't be a total loss if he doesn't.  I'll simply add him to my list of liberals who chose to bravely run away.  The longer the list... the shorter their credibility.

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