Sunday, February 7, 2016

Buchanan's Law

Reply to reply: The Demand For Defense?

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Because, when goods are rivalrous and excludable, with limited beneficial or detrimental externalities, market pricing reflects roughly the true cost.  While congress may, via advisors, come up with a cost that is approximately the true cost, they are not as precise as the market itself. - Galloism


When congress gives more money to the DoD... and the DoD spends this additional money on more resources... then this logically means that there will be less resources available for all the other possible uses... such as farming.  If the DoD hires Terence Tao... then all the brainpower that Tao allocates to defense can't also be allocated to farming.

Right now you're confident that congress gets the supply of defense right.  But you're not confident that congress can get the supply of food right.  This is logically absurd.  As I've tried to explain to you countless times before... it's impossible for congress to be able to get the supply of defense right without also being able to get the supply of food right.  This is because allocating more resources to defense logically means allocating less resources to food.  Every allocation requires sacrificing the alternatives.  This is the most fundamentally basic law of economics.

You can't logically be a part-time socialist.  If you trust a committee to determine how much of the country's resources should be allocated to defense... then by the most fundamentally basic law of economics... you must also trust the committee to determine how much of the country's resources should be allocated to food.

Except... committees have never done a good job determining the supply of food.  According to the most fundamentally basic law of economics... this means that committees have never done a good job of determining the supply of defense.   Which is why I'm not a socialist.  I believe that taxpayers should be free to choose where their taxes go.  Each and every consumer would decide for themselves whether we truly need more defense.  When making this decision... they will automatically consider whether more defense is worth less food.  Each and every consumer will decide for themselves whether Terence Tao should allocate his brainpower to improving the supply of...

A. defense
B. food
C. other

As an aside... it just struck me as really strange that I have to say... "the most fundamentally basic law of economics".  Doesn't this law have a name?  No.  It doesn't.  So, for efficiency sake, until somebody comes up with a better name... I'm going to refer to this law as Buchanan's Law.  Buchanan is my favorite recently dead economist.

A nation cannot survive with political institutions that do not face up squarely to the essential fact of scarcity: It is simply impossible to promise more to one person without reducing that which is promised to others. And it is not possible to increase consumption today, at least without an increase in saving, without having less consumption tomorrow. Scarcity is indeed a fact of life, and political institutions that do not confront this fact threaten the existence of a prosperous and free society. - James Buchanan, Richard Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes

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