The Opportunity Cost Of Market Ignorance

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

Cartoonists trump economists on showing trade-offs in government spending pic.twitter.com/UwaKwhQdKP

— William Easterly (@bill_easterly) March 20, 2017

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...

Don't cut funding for public broadcasting: @SesameStreet improves literacy & grades, reduces prejudice.https://t.co/TPHDlqN1J9

— Adam Grant (@AdamMGrant) March 20, 2017

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.

Superstar Theory: J.K. Rowling vs Elizabeth Warren

A couple days ago, in this thread... Epiphytes and Economics... I posted a reply that was all about Sherwin Rosen's Superstar Theory (ST).  Yesterday, Paul Krugman wrote a blog entry that was also all about ST... Jenny Lind, Taylor Swift, and Me.  Coincidence?

Surely it's a coincidence.  It's extremely unlikely that Krugman reads my blog.  If it was at all likely then I might be tempted to guess that he learned about my thread from this recent entry... Who Are You?  

It's a fun coincidence though because it gives you the wonderful and exciting opportunity to compare our economic perspectives on the same theory!  

I'll share my comment with you here.  But first it might help to share the comment that I was replying to...

I googled Elizabeth Warren. Prospect for U.S. president in 2016?  I live in Canada and had no idea who she was. - Beer w/Straw

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If people could choose where their taxes go... we'd create a lot more value by allowing Canadians to spend their taxes in America's public sector and vice versa.

In other words, we create more value by expanding, rather than shrinking, people's pool of potential trading partners. If you liked what Elizabeth Warren was doing for the public more than you liked what any Canadian was doing for the public... then you should be able to give her your taxes.

It should be pretty straightforward that we'd destroy, rather than create, a lot more value by preventing non British people from trading with J.K. Rowling.

If Elizabeth Warren is truly the J.K. Rowling of the common good... then we'd create a lot of value by allowing people all over the world to give her their taxes.

In the absence of global public market... then how in the world would we be able to tell whether Elizabeth Warren truly was the J.K. Rowling of the common good?

Not sure if irony is the right word, but creating a global public market would increase income inequality nearly as much as creating a global private market does. If only Brits could give their money to J.K. Rowling then there wouldn't be as much disparity in income. As J.K Rowling's pool of potential trading partners is expanded... there's a corresponding increase in income inequality.

If we created a global public market... then if Warren was truly as big a rockstar as Rowling... then Warren, a liberal, would receive far money than any other congressperson. Perhaps then she might appreciate that income inequality wasn't the problem. A significant disparity in income simply reflects the fact that a few people are exceptionally good at creating value for others.

We want these exceptionally good value creators to be massively rewarded. Huge rewards create bright value signals which attracts the best and brightest people in the world.

So if we want cancer and poverty to be cured sooner rather than later... then we need to create a global public market.

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What do you think?  Whose perspective do you prefer?

Honestly I'm a little confused regarding what it is that Krugman is trying to say about ST's relevance to music.  It kinda seems like he's saying that it's not very relevant.  That can't be right though.

How big a superstar would the Korean pop singer Psy be if his music/videos were only accessible to people in Korea?  Would he be 1/2 the superstar he is now?  Or 1/10th the superstar?  Or 1/100th the superstar?  Would Snoop Dog have jumped at the opportunity to collaborate with him?  Prolly not.

It's easy to see how much Psy benefits by having his pool of potential trading partners as large as it currently is.  Now he's making music videos with Snoop Dog!  Not to mention the fact that he's earned millions of dollars.

Unfortunately, it's not easy to see all the benefit that Psy has provided for the people that he's traded with.  This is because Psy's benefit is concentrated and tangible while his trading partners' benefit is dispersed and intangible.

If it was easy to see consumer benefit then I wouldn't be here having to explain that giving people the freedom to shop in the public sector would greatly expand our pool of potential trading partners which would greatly increase total benefit.  Pragmatarianism would have been implemented long before I was even born.

How in the world can we make it easier for people to "see" total consumer benefit?  Here's one attempt...

Is total consumer benefit greater than, or less than, or equal to Psy's benefit?

The basic theory is that you only trade when you have the expectation that what you gain will be greater than what you have to give up.  If what you expect to gain has less value than what you have to give up... then you wouldn't want to trade because if you did then you would suffer a loss.  If what you expect to gain has the same exact value to you as what you have to give up... then there's no point in making the trade.

For example... if the amount of benefit you expect to gain from seeing Psy live in concert has the same exact value to you as the opportunity cost of the ticket... then why bother buying the ticket?

We call contentment or satisfaction that state of a human being which does not and cannot result in any action. Acting man is eager to substitute a more satisfactory state of affairs for a less satisfactory. His mind imagines conditions which suit him better, and his action aims at bringing about this desired state. The incentive that impels a man to act is always some uneasiness. A man perfectly content with the state of his affairs would have no incentive to change things. He would have neither wishes nor desires; he would be perfectly happy. He would not act; he would simply live free from care. - Ludwig von Mises, Human Action

When people buy a ticket to see Psy in concert... they aren't eager to substitute their current state of affairs for an equally acceptable state of affairs.  So when somebody does buy a ticket to see Psy it's because they are hoping to improve their circumstances as much as possible.

Of course we all know that reality doesn't always live up to expectations.  When this happens we tend not to keep it a secret.  Same thing when reality exceeds our expectations.  This means that persistent exchange generally indicates the persistence of mutual benefit.
  
It should be clear that we would decrease total benefit by preventing Koreans from trading with the rest of the world.  Just like we would decrease total benefit by preventing Americans and Canadians from trading.  Just like we would decrease total benefit by preventing Americans and Brits from trading.

These things aren't clear though.  Because if they were... then people would understand that we destroy a lot of benefit by preventing consumers from trading with producers in the public sector.

Right now it's a fact that Krugman isn't helping to clarify the value of allowing consumers to trade with Elizabeth Warren as easily as they can trade with J.K. Rowling or Psy.  This fact seems to indicate that he doesn't "see" consumer benefit.  Why doesn't he see it?

If we can imagine pragmatarianism gaining momentum, then when would be the optimal time for Krugman to address it?  If he addresses it now then he would be risking too much.  But if he addresses it too late... then he would risk losing all his credibility/relevance.

Paul Krugman Responds To Income Inequality Value Signal

Check out this title...

Paul Krugman – Who Assails Income Inequality – Will Take Quarter-Million-Dollar Job With Income Inequality Institute

Hey Robert Gehl, how awesome is your title?  It's super awesome.  Way more awesome than my title.

The concept is...

In which our hero Krugman responds to the brightest value signal...

More about our hero... (Is This Forum A Market?)...


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Is it strange to think of pragmatarianism as a sort of economic incarnation of direct democracy? I've been thinking about that lately, and to an extent it seems to hold up. It's effectively a party list, proportional, direct democracy with an election threshold, and where each individual's voting power is determined by the proportion of tax receipts drawn from that individual. - Orham

It's not strange to think of pragmatarianism (PG) as a direct democracy. Just like it's not strange to think of a market as a direct democracy. Neither is it strange to think of participatory budgeting (PB) as a direct democracy.

However, PB and PG are very different. PB is shallow flowcilitation while PG is deep flowcilitation. And we should all understand that actions (deep input) speak louder than words (shallow input).

If a society is to put an economic democracy in place, this doesn't seem the way to have one. I mean, voting power being determined by one's individual proportion of tax receipts? - Orham

Let's do a bit of substitution...

Voting power = influence over how society's limited resources are used
proportion of tax receipts = proportion of productivity

Making the substitutions in your original sentence...

influence over how society's limited resources are used being determined by one's individual proportion of productivity

Well...yeah. Right?

Productivity can't just stand on its own though. Just because you're extremely efficient at producing poison oak doesn't mean that we should give you all the farm land.

A mind, just like farm land, truly is a terrible thing to waste...but a productive mind only has as much value as society assigns to the product.

Markets give everybody the freedom to go around determining how much other people's thoughts/products are worth.

As a result, if I want Paul Krugman's thoughts on pragmatarianism...then it's going to cost me a lot more than just a penny.

As a result, space in the New York Times is not divided equally. Should it be? Or should Super Krugman have a huge chunk of it? Is it fair for Krugman to have infinitely more space in the NY Times than I have? Why should Krugman have infinitely more influence than I have? Why should Elizabeth Warren have infinitely more influence than I have? Why should Obama have infinitely more influence than I have? What's going on here? Why is my megaphone, by comparison, microscopic?

It seems to me that this would be a serious problem. If we're all voting for pizza toppings, and everyone but me gets a single vote while I receive fifty votes, whose preferred pizza toppings are going to be served? Hope you like anchovies, because I do.- Orham

I do like anchovies.

Let's tweak your scenario. There's 50 of us at a party. We each have a vote. If you end up with 50 votes...would I call shenanigans? Maybe if you cheated.

Would it be cheating if you went around buying votes? I like anchovies too so I probably wouldn't charge you anything for my vote. So, all things being equal, the less somebody likes anchovies...the more you'll have to pay them. But if somebody voluntarily accepts your money in exchange for their vote...it stands to reason that the exchange was mutually beneficial.

What if you went around exchanging your epic homemade brownies for votes? What if you went around exchanging skillfully drawn portraits for votes? What if you went around exchanging sexual favors for votes?

If somebody voluntarily gives up one thing (x) for another (y)...then we can conclude that, from their perspective, y > x. This means that in a market, if you ended up with everybody's vote...then it was because everybody else ended up with things that they value more than their vote. So why would we complain about vote trading if the outcome is better as a result?

Whether we are talking about ballot votes or dollar votes, giving people the freedom to exchange votes certainly doesn't subvert the will of the people. On the contrary, it clarifies the will of the people. Deep flowcilitation is the realm of sacrifice...it shows us what's beneath the surface.

Allowing Krugman to have infinitely more space in the NY Times than I have doesn't subvert the will of the people. It reflects the will of the people. The question is...how accurately does it reflect the will of the people? More accuracy is certainly better...which is why deep input should always trump shallow input.

If we created a market in the public sector...then Krugman's megaphone would be infinitely larger than my own. This is because nobody is paying me a quarter of a million dollars a year to study income inequality or pragmatarianism or anything else. Neither is anybody giving me a huge chunk of space in the NY Times. Therefore, in a pragmatarian system, Krugman would have infinitely more influence/power/control than I would over how tax dollars were allocated.

The moral of the story is that preventing Krugman from using his large megaphone in the public sector doesn't just block his deep input...it blocks the deep input of the millions of people who have willingly sponsored Krugman's megaphone. The masses have magnified Krugman's influence. The multitude has multiplied Krugman's power. The crowd has clearly deified Krugman. This means that preventing Krugman from shopping in the public sector blatantly subverts the will of the people.


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The topic of this blog entry plucked the phrase..."in which our hero..." from my memory.  But I wasn't even vaguely close to remembering the source.  I thought it might have been from a poem.  Then I wondered whether it was from a song.  Surprisingly, I somehow managed to remember that it was from a song by Dntel... "In Which Our Hero is Decapitated by the Evil King"...






Here's the story from the album Something Always Goes Wrong...

"In Which Our Hero Begins His Long and Arduous Quest"
"In Which Our Hero Finds a Faithful Sidekick"
"In Which Our Hero Is Put Under a Spell"
"In Which Our Hero Dodges Bullets and Swords"
"In Which Our Hero Frees the Damsel in Distress"
"In Which Our Hero Is Decapitated by the Evil King"


In a better world...when anybody hears the word "decapitated" they will automatically think "obamerated"...

"In Which Our Hero Is Obamerated by the Evil King"

Would it help if I sent a letter to the Evil King?

Dear Evil King, 

Please don't obamerate Krugman.  We will be worse off if you block his deep input.  

Sincerely, 

Xero

Who is the Evil King?  He's anybody who wants to prevent Krugman from shopping in the public sector.  Except, doesn't Krugman want to prevent himself from shopping in the public sector?  Probably...right?  So Krugman is the hero and the Evil King.

It's self-obameration.

Clearly Krugman doesn't completely obamerate himself though...he partially obamerates himself.

It's partial self-obameration.

Like a man who wants to be chained when it's a full moon?  Krugman is our hero...except when the moon is full...then he turns into a blood thirsty werewolf.  In the absence of strong chains...he would devour all the people that he had previously rescued.

Krugman tells us something like...

In the private sector...I use my powers to help people....but in the public sector...I would have no choice but to use my powers to hurt people.  I can't be trusted in the public sector!  Whatever you do...please prevent me from shopping in the public sector!  It's imperative that you never allow me to allocate my tax dollars.  The results would certainly be catastrophic.  In the private sector I endeavor to fight income inequality...but in the public sector I would fight for income inequality.  

When Krugman is in the private sector he's Dr. Jekyll...a very informed, intelligent and capable person who endeavors to efficiently allocates his resources.  But in the public sector Krugman is Mr. Hyde....a very uniformed, unintelligent and incapable person who intentionally misallocates his resources.

We live in interesting times.  And by that I mean that we live in the Dark Ages.

John Holbo's Critique of Libertarianism

For those of you who haven't been following along at home...John Holbo is a liberal philosopher over at the Crooked Timber website.  He's kind of a tricky guy...but in a fun way.  For example...he tricked me into believing that he supported allowing people to sell their votes.  It turned out that he really didn't support the idea...but I enjoyed our discussion nonetheless...especially when he shared his critique of pragmatarianism.

Holbo's most recent trick was to pretend that he was a Bleeding Heart Libertarian (BHL)...I’m a bleeding-heart libertarian!  He didn't trick me this time though because I had already read on the BHL website that he was planning on doing a guest post.  Learning that he was scheduled to write a guest post was the highlight of my day.  Not trying to take credit here...but a while back I had encouraged him to write a post on the BHL project.  Unfortunately, I can't really say it was the highlight of my day when I finally got a chance to read it.

Did he go in there with guns blazing?  Yes...very yes.  Holbo was spraying snarky bullets everywhere.  Fortunately, he stuck around to respond to many of the comments and the subsequent discussion was far more constructive.  You can read more of the discussion on Jacob Levy's really admirable response...Further to Holbo.

Despite the snark, I gotta give Holbo props for jumping into the lion's den...so to speak.  But the fact that he was invited to write a guest post in the first place...reflects extremely well on the BHL project.  And honestly...I would be willing to bet $20 that the Crooked Timber blog would not invite Peter Boettke, Steven Horwitz, Gary Chartier, Andrew J. Cohen, or Jessica Flanigan to write a guest post there.  This came to mind when I read this comment in response to Holbo's post on the Crooked Timber website...

While I agree with the cheering here, it was a great minefield over there. I kinda agree with the commenter there that says something about guests pooping on our doorstep. So… I am looking forward to the upcoming Libertarian guests here on CrookedTimber. - seth

Ok, so enough back story...and onto my response to Holbo's critique.  I'm not going to pull any punches...it was light on specifics and heavy on paranoia.  This makes it a bit difficult to respond to.  So I've just been gathering a bunch of passages from here and there...and I honestly kind of doubted that I'd really ever organize them and it would just end up as one of my many unpublished drafts.   

Today though, a liberal shared this comment in response to a post of mine...

We know what causes recessions (at least big ones). The income gap produces a small class of very wealthy people who engage in high risk nonproductive "investing", also called bubbles, leading to inevitable collapse, especially if there is little regulation.
See Reich's "Aftershock". It goes into detail - head of joaquin

My response used pretty much the same passages that I had gathered for Holbo.  So the content is the same but my style and tone would be different.  Before I copy and paste my response though...here are a few comments from Holbo that were somewhat specific...

That's an excellent way to put it. Libertarianism as device for locking in your gains. Like regulatory capture. Nice. - John Holbo

Hume22, there are really two separate issues here: one, being consistent in my hermeneutics of suspicion; two, being consistent about justice. Frankly, I'm better at one than two. You can question my motives all you like. I can take it! But I tend to be a hypocrite regarding the high bar of justice. Like most American liberals, I worry more about the American middle-class than about impoverished Africans. It's hard for me to justify that. (I could say something about 'politics is the art of the possible' but that wouldn't fool you, would it? Didn't think so.) - John Holbo

So here's my response.  What I personally say isn't as important as the sources themselves.  Hopefully Holbo will take the opportunity to read each of them thoroughly...Lachmann's essay is especially great for understanding how markets redistribute wealth, Mitchell's paper is the best in terms of understanding regulatory capture and Krugman's article is outstanding for understanding the race to the top.

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We take 10 steps forward...and then one step back...and you use that one step back as an excuse for government intervention. Does the government prevent us from taking one step back? Sure...but it also prevents us from taking 10 steps forward. That's not a recipe for progress.

... an increase in the power of the State ... does the greatest harm to mankind by destroying individuality which lies at the heart of all progress... – Gandhi

How do you become wealthy?

In other words, people will start buying something in large numbers if it solves a big problem for them. But most first-world problems—needing an easier way to record your favorite TV programs or keep track of what’s in your fridge—just aren’t that pressing. In developing countries, on the other hand, technology can transform lives. - Christopher Mims, How a $20 tablet from India could blindside PC makers, educate billions and transform computing as we know it

You're blaming the wealthy for the income gap here in America but you tragically fail to understand that they are narrowing the gap between America and developing countries...

These improvements have not taken place because well-meaning people in the West have done anything to help--foreign aid, never large, has lately shrunk to virtually nothing. Nor is it the result of the benign policies of national governments, which are as callous and corrupt as ever. It is the indirect and unintended result of the actions of soulless multinationals and rapacious local entrepreneurs, whose only concern was to take advantage of the profit opportunities offered by cheap labor. It is not an edifying spectacle; but no matter how base the motives of those involved, the result has been to move hundreds of millions of people from abject poverty to something still awful but nonetheless significantly better. - Paul Krugman, In Praise of Cheap Labor

Rising wages in emerging markets and higher shipping costs are also closing the cost gap between developing markets and the United States. - Scott Malone and Ernest Scheyder, Outsourcing Losing Its Allure As China Costs Soar

Do you think Americans are the only ones who benefit from American innovation? The world benefits from American innovation just like we will benefit from the world's innovations. And you'll be able to thank the greedy capitalist pigs. Except...who these people are is constantly changing...

These economic facts have certain social consequences. As the critics of the market economy nowadays prefer to take their stand on “social” grounds, it may be not inappropriate here to elucidate the true social results of the market process. We have already spoken of it as a leveling process. More aptly, we may now describe these results as an instance of what Pareto called “the circulation of elites.” Wealth is unlikely to stay for long in the same hands. It passes from hand to hand as unforeseen change confers value, now on this, now on that specific resource, engendering capital gains and losses. The owners of wealth, we might say with Schumpeter, are like the guests at a hotel or the passengers in a train: They are always there but are never for long the same people. - Lachmann, The Market Economy and the Distribution of Wealth

As protected firms become less innovative, a country’s overall economic growth may suffer. This is because, as Schumpeter emphasized nearly a century ago, economic growth thrives on “creative destruction.” In a healthy economy, new firms constantly arise to challenge older, less-innovative behemoths. - Matthew Mitchell, The Pathology of Privilege: The Economic Consequences of Government Favoritism

But have you ever asked yourselves sufficiently how much the erection of every ideal on earth has cost? How much reality has had to be misunderstood and slandered, how many lies have had to be sanctified, how many consciences disturbed, how much "God" sacrificed every time? If a temple is to be erected a temple must be destroyed: that is the law - let anyone who can show me a case in which it is not fulfilled! - Nietzsche

The problem is that you're not thinking things through...

But matters are not that simple, and the moral lines are not that clear. In fact, let me make a counter-accusation: The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers. - Paul Krugman, In Praise of Cheap Labor

If you think things through then you'll understand that any step back in the private sector can be offset by 10 steps forward in the public sector. How? Simply by allowing taxpayers to use their own taxes to reward the government organizations that are doing new and better things with society's limited resources.

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Let me add a few more things...

In Krugman's article he begins by talking about people scavenging on garbage heaps.  Here's a photo I took in Afghanistan of a mother and her son on such a garbage heap...

...which ties into...

Women employed in factories are the only women in the labouring rank of life whose position is not that of slaves and drudges; precisely because they cannot easily be compelled to work and earn wages in factories against their will. For improving the condition of women, it should, in the contrary, be an object to give them the readiest access to independent industrial employment, instead of closing, either entirely or partially, that which is already open to them. - J.S. Mill  

The basic idea is that an entrepreneur could set up a factory in Kandahar and offer the Afghan mother one new option.  If her new option, working in a factory, is better than her currently best option, scavenging, then it stands to reason that she would choose to work in the factory.  

As well might it be said, that of two trees, sprung from the same stock one cannot be taller than another but from greater vigor in the original seedling.  Is nothing to be attributed to soil, nothing to climate, nothing to difference of exposure - has no storm swept over the one and not the other, no lightning scathed it, no beast browsed on it, no insects preyed on it, no passing stranger stripped off its leaves or its bark?  If the trees grew near together, may not the one which, by whatever accident, grew up first, have retarded the other's development by its shade?  Human beings are subject to an infinitely greater variety of accidents and external influences than trees, and have infinitely more operation in impairing the growth of one another; since those who begin by being strongest, have almost always hitherto used their strength to keep the others weak.- J.S. Mill, The Negro Question

Much of Holbo's paranoia surrounded racism...but a sound understanding of how markets work...the idea of solving problems and offering people better options...dispels any basis for such concern...

The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another. – Milton Friedman

Let's imagine that a person who was racist against everybody but Canadians discovered a cure for cancer.  Therefore, he would only employ Canadians and only sell the cure to Canadians.  It does sound less than ideal...but however you spin it...it's still progress.  The Canadians who are employed were given a better option and the Canadians with cancer had a big problem solved.  And yes, I know that Canadians aren't a race of people.

The basic idea is that we can't say that John Holbo has an obligation to solve any problems...big or small...and he doesn't have an obligation to offer the Afghan mother a better option.  Really understanding that we don't have these obligations is key to appreciating it when entrepreneurs (in the broadest sense of the word) actually do solve problems...for any amount of people...and offer any amount of people better options.

The question is...how many Canadians with cancer would engage in ethical consumerism and boycott the company?

Even if right now some dude said 'I'm going to say a bunch of racist stuff but afterwards I'll give you a biscuit' I’d be like that’s a weird deal but I'll take it. Because I hate racism...but I love a good biscuit. - Aziz Ansari

Reply to Paul Krugman

Here's a comment I posted in reply to Paul Krugman over at the New York Times...

The primary failure of the market is that, because of the free-rider problem, there is little financial incentive to produce public goods.  The primary failure of the government is that planners only have access to a microscopic percentage of the information available to society as a whole.

So you and your opponents can go round and round perusing the horizon like that fellow in the Stephen Crane poem...or you can both make some basic concessions.

Conservatives will concede that taxes are necessary and you'll concede that donations to government organizations should be 100% tax deductible.  This idea is known as pragmatarianism.  Kind of like how Deng Xiaoping said that he didn't care whether the cat was black or white...what mattered was whether it caught mice.

Forcing taxpayers to consider the opportunity costs of their individual taxes is the only way to ensure that limited public resources are allocated as efficiently as possible.  It's also the only way to ensure that government organizations will operate as efficiently as possible.  Plus, it's the only way that taxpayers will ever be happy about paying taxes.

What's so strange is that both liberals and conservatives believe that congress is somehow uniquely qualified to allocate public resources.  They seem to forget that congress only has this job because nearly 1000 years ago they fired the king and quickly filled the vacancy.

It was admittedly a very liberal move for them to have done so.  Likewise, it will be a very liberal move when control of taxes is passed from congress to taxpayers themselves. Not sure if any event in the past 100 years could be considered more "progressive".

Next time you talk to your buddy Obama...please offer pragmatarianism as an example of something that qualifies as legitimate and genuine "change". We're tired of all this hyperpartisan obstructionism and would like to have a real opportunity to directly support the government organizations that we value.