Monday, March 20, 2017

The Opportunity Cost Of Market Ignorance

Today on Twitter I saw this tweet from William Easterly...




Here's the image again...





It most certainly is a great illustration, by Bill Bramhall, of the opportunity cost of government spending.  A tax dollar that is given to building a big wall is one less tax dollar that can be given to The National Endowment For The Arts (NEA).  Then again, a tax dollar that is given to the NEA is one less tax dollar that can be given to public education and public healthcare and space exploration and environmental protection and... it's a long list.  Here's how I've illustrated this...




More public art means less community gardens and less computers for needy schools and less meals on wheels for the elderly and disabled.

For way too long I was quite certain that the problem with society is that people really didn't understand the opportunity cost concept.  But then I had to accept the fact that even Paul Krugman grasps the opportunity cost concept.  So does my favorite liberal economist John Quiggin!  What Krugman and Quiggin and even Easterly really do not grasp is the benefit of everybody deciding for themselves, with their own tax dollars, which trade-offs are acceptable.

Everybody deciding for themselves, with their own money, which trade-offs are acceptable?  Does that sound familiar?  It should.  It's pretty much the definition of a market.  Which means that Krugman and Easterly and Quiggin really do not grasp the benefit of markets.

So the question is... how do you effectively illustrate the benefit of markets?

Also seen on Twitter today...




Public broadcasting?  Isn't that what happens in a market?  Don't we all prioritize using our own limited money to publicly broadcast the relative importance of our specific needs and wants?

Somehow I ended up on this Guardian article... Does Netflix changing its rating system matter? No, because people are still awful.  Netflix is planning to switch from a 5 star rating system to a thumbs up/down system.  Cheap talk is being replaced with... cheap talk.  Stuart Heritage is happy to judge people on the basis of their cheap talk.

Why doesn't Netflix simply give its subscribers the option to divide their fees among all the content?  Every subscriber would decide for themselves, with their own fees, which trade-offs are acceptable.  Is Krugman going to share this idea with Netflix?  Nope.  Is Quiggin?  Nope.  Is Easterly?  Nope.  Because again, none of them really grasp the benefit of markets.

At the end of the Guardian article I saw my favorite part...





Why doesn't the Guardian give supporters the option to divide their contributions among all the content?  Every supporter would decide for themselves, with their own money, which trade-offs are acceptable.  Is Krugman going to share this idea with the Guardian?  Nope.  Is Quiggin?  Nope.  Is Easterly?  Nope.  Because again, none of them really grasp the benefit of markets.

Another Guardian article caught my attention... Yuval Noah Harari: ‘Homo sapiens as we know them will disappear in a century or so’.  How intelligent is Harai?  How intelligent are all those people who asked him questions?






Do you like this juxtapose as much as I do?  Can you imagine the caveman who used his time and talent to create that painting?  He noticed that other cavemen sure seemed to spend a lot of time staring at his painting.  And he thought to himself... if they use it, if they like it, then why don't they pay for it?  It's only fair.  Then he shouted, "Make a contribution!!!" and clubbed them over their heads and took some of their Wooly Mammoth meat.

Here we are 10,000 years later still not intelligent enough to figure out that markets can work just as well for public goods as they do for private goods.

Fucking stone ages.

The opportunity cost of market ignorance is immense.  But there's hope.  The Libertarian Party is giving donors the chance to dollar vote for their preferred convention theme.  Every donor can decide for themselves, with their own money, which trade-offs are acceptable.  Unfortunately, and strangely, "The Invisible Hand Ordering Things" really isn't one of the potential themes.  So maybe we shouldn't get our hopes up.

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