Holocaust - The Extremely Inefficient Allocation Of Jews

Recently I explained that blocking nearly all of our country's competence from the public sector results in the inefficient allocation of competence.  Around the same time that I posted that entry... I stumbled upon a rigorous debate regarding the causes of The Holocaust.

What happens when you put 2 + 2 together?

Blocking nearly all of a country's competence from the public sector has, in the past, resulted in a huge amount of competence being allocated to the gas chambers.

In other words... the massive shortage of competence in Germany's public sector resulted in the massive misallocation of a multitude of Germany's most competent citizens.

More specifically... preventing Jews and other competent citizens from shopping in Germany's public sector resulted in millions of Jews being exterminated.

It's more than half a century later and Jews still can't shop in any country's public sector.

I was just crushed by the enormity of my responsibility/burden.  This made it way too tangible.  What I'm trying to teach, if it's correct, could keep all sorts of people out of the gas chamber.  So if I fail to teach my simple lesson...

This is what happens when you fondle the elephant so thoroughly.  I really don't want this responsibility.  I don't want to be the only one really pushing for a pubmar.  I really want to pass the cup on to all these far more qualified people...

• Alex Tabarrok, Tyler Cowen
• Bryan Caplan, Scott Sumner, David Henderson
• Robert Murphy
• Tom Woods
• Benjamin Powell
• Arnold Kling
• Jeffrey Tucker
• Deirdre McCloskey
• Thomas Sowell
• Peter Boettke
• Robert Higgs 
• Walter Williams
• Michael Huemer
• Don Boudreaux, Russ Roberts 
• David Friedman
• William Easterly
• Robin Hanson
• Randall Holcombe
• Roderick Long
• Walter Block

This is my cup list.  David Friedman is on this list.  When I asked him about pragmatarianism... this was his response...

I don't think that letting taxpayers allocate their taxes among options provided by the government solves the fundamental problems of government.

Is there a more fundamental problem than people ending up in gas chambers?  Or maybe this fundamental problem wouldn't have been solved by giving Jews and other competent people the freedom to shop in the public sector?  Is Friedman missing something... or am I?

The following is a bit of a non-sequitur... but please bear with me.  Right now there are people who are genuinely concerned with the rise of super intelligent (SI) robots.  These concerned citizens even have their own think tank... Machine Intelligence Research Institute (MIRI).  In their most recent blog entry... Davis on AI capability and motivation... I shared this comment...

************************************************

If you raised your AI like a child... and I did the same with my AI... and they both grew up to be SIs... would there be any disparity in their goals?

As humans, we all have different pieces of the puzzle which is why we are like blind men touching an elephant but coming to very different conclusions. Would our respective SIs, with their countless pieces of the puzzle, both converge on the correct conclusion? Or is it possible that one would conclude that humanity should be eradicated and the other would conclude that we should be protected like any other species on this planet? If they came to different conclusions it's hard to imagine that they wouldn't quickly compare information and exchange missing puzzle pieces. In essence their information would go from asymmetric to symmetric in no time flat.

If the two (or more) SIs did converge on the same conclusion... if your conclusion was different then would you trust your own conclusion or would you "lean not unto thine own understanding" and trust their conclusion instead?

It's funny because in my recent blog entry I mentioned that around 11 I stopped believing in God. And now I'm entertaining the possibility that when I'm 60 I'll start believing in God again.

Not sure if you're interested... but this blog entry... What Do Coywolves, Mr. Nobody, Plants And Fungi All Have In Common? has my theory on why we developed our exceptional intelligence.

************************************************

David Friedman and I are like two blind men fondling different parts of an elephant and coming to different conclusions.  If we were SIs... then we could quickly and easily synchronize our information and thus make it impossible to reach different conclusions.  But we aren't SIs!  We're humans.  It's impossible for us to achieve information symmetry.  We can however, with some effort, make our information marginally more symmetric.  Just like this.

Perhaps it will help to share some background information.  This isn't the first time that I've considered whether pragmatarianism would have prevented The Holocaust.  Like I mentioned though, it is the first time that I've thought about it so tangibly.

Back in 2011... I posted this thread over at the Ron Paul Forums... Ron Paul vs The Invisible Hand...

************************************************

If you had to choose between Ron Paul being elected president OR applying the invisible hand to the public sector...which would you choose?

Applying the invisible hand to the public sector would simply involve giving taxpayers the freedom to directly allocate their individual taxes among the various government organizations...aka pragmatarianism.

You have a good idea what Ron Paul would try to do if he was elected...but do you have a good idea what the invisible hand would do to the public sector if given the opportunity?

************************************************

I attached a poll that included two options...

1. Ron Paul
2. The Invisible Hand

Here are the results of the poll...

Two out of three respondents would have voted for Ron Paul.  Would the percentage be higher or lower if I posted the same thread but with Rand Paul?

One member of the forum, Conza88, was exceptionally nonplussed with the idea of allowing people to choose where their taxes go...

************************************************

Ron Paul... given your notion of the 'invisible hand' is clinically ______ed. Furthermore, since he would abolish the FED, Dept. of Education, Dept. of Labor, IRS, CIA, FBI etc....

You would implicitly condone their maintenance and existence, via 'pragmatarianism'. If we applied "pragmatarianism" back in National-Socialist Germany, your proposed system would support the continued funding of death camps.

NOR is what you suggest even close to resembling the process of the market and the 'invisible hand'. It is analogous to Robert Nozick's attempts at justifying an immaculate conception of the state. "every step of Nozick's invisible hand process is invalid: the process is all too conscious and visible"...

So the characterizing your 'invisible hand' process; AFTER the fact they have had NO choice in whether they are to be stolen or not, distorts reality. And is a massive misnomer.

It's still the re-distribution of wealth... and the free market option is not available. Who do you propose to implement this program? Politicians? Statists to give up their pie? Delusional. - Conza88

************************************************

All that emphasis was in the original.

Given enough eyeballs, all bugs are shallow?  Was Conza88 pointing out a genuine problem with pragmatarianism?

To say the least, Conza88 never really struck me as a particularly thoughtful person.  But I'm really glad that I never added him to my ignore list like he quickly added me to his!  Because even though I didn't think that the "bug" he was pointing out was a real bug... it definitely put pragmatarianism in a very different, but extremely important, frame.

Different frames can yield different insights.  But it's certainly a challenge to look at things differently.  Which is exactly why two heads are better than one.

The question is... would pragmatarianism have prevented The Holocaust?

Thanks to Conza88, that was the first time that I had ever asked myself this question.  And there's no doubt about it... it's a priceless question.  It would behoove everybody on my cup list to allocate their considerable competence to answering it to the best of their ability.  Publicly.  Not privately.  This way, if we come to different conclusions, everybody can compare the different information.

My information leads me to conclude that pragmatarianism would have prevented The Holocaust.

What's useful to consider is when pragmatarianism would have had to be implemented in order for The Holocaust to have been prevented.  A stitch in time saves nine.  If pragmatarianism truly helps to prevent a country's competence from being misallocated... then implementing it earlier is always better than later.

Every once in a while I'll daydream about trying to persuade Adam Smith to include a section on pragmatarianism in his book The Wealth of Nations.  Occasionally my daydream goes as far back as Socrates.  I try and imagine what pictures that I'd have to draw in order to overcome the language barrier.  Maybe blind men fondling an elephant??  Have you seen my drawing skills?!

Even though earlier is always better than later, what's the latest year that pragmatarianism could have have been implemented in order for The Holocaust to have been prevented?  Effectively answering this question requires a decent grasp of history.  Is it possible to be a good economist without having a decent grasp of history?  Is it possible to be a good historian without a decent grasp of economics?

As a quick aside... not sure if you've noticed but sometimes I like to attach more than one epiphyte to the same branch (> kill two birds with one stone).  If I'm going to set up and climb the ladder... then while I'm up there attaching one epiphyte... I might as well attach two... or three.  

With that in mind... have you read Pushing For A Pubmar yet?  If not, you really should.  In that blog entry I encourage my cup listers to try and imagine just how much credit they would have been able to take for Deng Xiaoping's gradual free-market reforms.  These reforms have lifted millions of people out poverty.

In that entry I shared this example of my drawing skills...

Deng Xiaoping began his market reforms around 1978.  We look back and take it as a given that there was enough support for China to take these small steps in the right direction.  But what if those small steps had never been taken because market enthusiasts were pushing for large steps in the right direction?

Mao Zedong took control of China around 1950... five years after the end of WWII.  In 1933, Hitler took control of Germany.  It's hard to imagine that pragmatarianism could have been implemented in Germany after 1932.  But what about in 1922?  That was when Hitler took control of the Nazi Party (National Socialist German Workers Party (NSDAP)).  Around that time it had less than 4,000 members.

On the completely opposite end of the ideological spectrum... 1922 is also the year that the Jewish economist Ludwig von Mises published his critique of government... Socialism.  Here's a snippet from that book...

The issue is always the same: the government or the market. There is no third solution. - Ludwig Von Mises, Socialism

No third solution?

I modified the image above accordingly...

What if, in 1922, Mises had pushed for a pubmar?  What if Socialism had made the really strong case that blocking competence from the public sector results in the inefficient allocation of competence?  What if all the other market enthusiasts had started to help him push for a pubmar?

If all the market supporters had pushed hard/smart enough... and both the US and Germany implemented pragmatarianism a few years after Mises published his book... then each country's public sector would have been flooded with competence.  What would this have averted?

1. The Great Depression (1929-39).  Market enthusiasts love to blame the depression on the government and liberals love to blame the depression on the market.  I think it's pretty reasonable to conclude that the depression was the result of blocking most of the country's competence from the public sector.  One head really isn't better than a thousand.  Given enough eyeballs, all bugs are shallow (Linus's Law).  In the multitude of counselors there is safety (Proverbs 11).  When you block nearly all the most competent heads/eyeballs from the public sector then it's guaranteed that there are going to be a myriad of important details that are missed.

2. The Holocaust/WWII (1939-45).  Hitler's rise to power was in no small part due to the depression.  He blamed the depression on the Jews and everybody else he didn't like.  This scapegoat strategy proved to be quite effective.  It wouldn't have been nearly as effective if Germany had been thriving.  When a country is growing and there's plenty of prosperity... the party that's not in power has a lot less ammunition to use against the party that's in power.  Also, pragmatarianism would have made political parties entirely redundant.  It's pointless to join a political party when everybody is free to shop for themselves in the public sector.

3. The Great Leap Forward (1958-61).  Without the depression, and without the war... communism/socialism (command economies) never would have spread around the world.  This would have spared millions and millions of lives.

What other disasters would have been averted?  And what would have been accomplished if so much competence hadn't been so majorly misallocated?  How much better would our world now be?

Hopefully it's clear that my point here really isn't to assign any sort of blame or responsibility to Mises.  I'm sure the thought of a pubmar never occurred to him.  We can certainly lament the fact that he didn't offer the world this third solution... but we can't blame him for failing to spot this Easter Egg.  Here we are now though, nearly a century later, looking at the possibility of a pubmar.  And history seems to strongly support the conclusion that the people on my cup list are potentially making a huge mistake by not pushing for a pubmar.

In my blog entry... Pushing for a Pubmar... I encouraged my cup listers to imagine just how much credit they would have been able to take for China's small, but extremely beneficial, steps in the right direction.  In this blog entry... it's sort of the same idea.  If Ludwig von Mises had managed to successfully push for a pubmar just like Deng Xiaoping managed to successfully push for a primar... then how much credit would my cup listers have been able to take for all the disasters that a pubmar would have averted?  How much credit would they have been able to take for all the benefit that a pubmar would have created?  If Mises had tried to push for a pubmar... but wasn't successful because he was the only one pushing... then how responsible would my cup listers be for all the disasters that logically resulted from blocking competence from the public sector?

As an anarcho-capitalist, David Friedman is pushing to abolish the government.  If Deng Xiaoping had pushed for abolishing the government... it's doubtful that China would have taken any steps in the right direction.  If Ludwig von Mises had pushed for abolishing the government... it's doubtful that the depression, or WWII, or The Holocaust, or The Great Leap Forward would have been averted.

If pragmatarianism truly would have prevented The Holocaust and other disasters, then it stands to reason that the opportunity cost of pushing for anything else is way too high.

So where's the bottleneck?  Could it be that the competence of Jews isn't appreciated?

By the way, during Germany’s Weimar Republic, Jews were only 1 percent of the German population, but they were 10 percent of the country’s doctors and dentists, 17 percent of its lawyers, and a large percentage of its scientific community. - Walter E. Williams, Diversity, Ignorance, and Stupidity

Nobel Prizes have been awarded to over 850 individuals, of whom at least 22% (without peace prize over 24%) were Jews, although Jews comprise less than 0.2% of the world's population (or 1 in every 500 people). Overall, Jews have won a total of 41% of all the Nobel Prizes in economics, 28% of medicine, 26% of Physics, 19% of Chemistry, 13% of Literature and 9% of all peace awards. - List of Jewish Nobel laureates

I don't know why it isn't painfully clear that we're really hurting ourselves by blocking all this competence from the public sector.

What's of particular relevance, and perhaps some explanation for their competence, is Jewish diligence when it comes to giving...

As a general matter, Jewish tradition encourages donors to investigate supplicants. Those who allocate community tzedakah funds must investigate recipients and must avoid giving to frauds. It is a violation of Jewish law to give to organizations that distribute communal funds if its managers are not competent to certify the worthiness of beneficiaries. There are a few exceptions. In emergency situations, as when an individual is starving, aid must be given immediately. Moreover, it is recommended by our tradition that one give at least a small amount to everyone who asks, whether Jewish or not. - Ira Kaminow, Tzedakah: Some Principles of the Jewish Way of Giving

In addition, one must be very careful about how one gives out tzedakah money. It is not sufficient to just give to anyone or any organization, rather, one must check the credentials and finances to be sure that your Tzedakah money will be used wisely, efficiently and effectively. - Tzedakah (Wikipedia)

There are eight degrees of tzedaka, each one superior to the other. The highest degree . . . is one who upholds the hand of a Jew reduced to poverty by handing him a gift or a loan, or entering into a partnership with him, or finding work for him, in order to strengthen his hand, so that he will have no need to beg from other people. - Maimonides, Mishneh Torah

If Jews endeavor to ensure that their Tzedakah money will be used wisely, efficiently and effectively... then doesn't it stand to reason that this is exactly how they would spend their tax money if given the opportunity to do so?  

Perhaps the US would benefit if it kicked all the Jews out of the country?  Clearly it wouldn't.  Yet, it's perceived that we somehow benefit when we prevent Jews from shopping in the public sector.

Another one of my cup listers, Bryan Caplan,  is also an anarcho-capitalist.  But more often than not he pushes for open borders.  Plenty of Jews left Germany before it was too late... so we know it wasn't impossible for them to do so.  But these open borders really didn't prevent The Holocaust.  From my perspective, The Holocaust would have been prevented if Jews had been free to vote with their taxes.  Yet, does Bryan Caplan push for people to be free to vote with their taxes?  Nope, he pushes for people to be free to vote with their feet.

Where's the bottleneck?

As I mentioned about the depression... liberals love to blame the market and market proponents love to blame the government.  It's pretty much the same situation when it comes to Hitler's rise to power.  Liberals love to blame big business for financing Hitler and market proponents love to blame liberals for failing to recognize the value of property rights.

As a result of this blame game, if you dig around for information regarding who bears responsibility for Hitler's rise to power... you'll find quite a bit of conflicting information.  So perhaps this explains why it's not so clear that allowing German taxpayers to choose where their taxes go would have prevented The Holocaust.

If all Germans back then were evil... then pragmatarianism certainly wouldn't have prevented The Holocaust.  Obviously not all Germans were evil.  The millions of Jews were clearly an exception.  But anybody who's seen Schindler's List would know that Jews weren't the only exceptions.  So perhaps the essence of Conza88's critique was that there weren't enough exceptional Germans.  Except, this is problematic for Conza88 because it would have him agreeing with liberal arguments that industrialists were largely responsible for Hitler and The Holocaust.  Even the anarcho-capitalist Murray Rothbard recognized the problem with this line of thinking...

A further point: in a profound sense, no social system, whether anarchist or statist, can work at all unless most people are "good" in the sense that they are not all hell-bent upon assaulting and robbing their neighbors. If everyone were so disposed, no amount of protection, whether state or private, could succeed in staving off chaos. - Murray Rothbard, Society without a State

If Conza88's premise was that most German people were truly hell-bent on assaulting and robbing their neighbors... then his conclusion... "let's abolish the state"... really didn't follow.

Of course I'd really like to believe that my "stitch in time" argument is more than adequate to support the conclusion that pragmatarianism would have prevented The Holocaust.  Flooding Germany's public sector with competence earlier rather than later would have prevented all the problems that logically resulted from blocking nearly all of Germany's competence from the public sector.  Hitler wouldn't have been able to exploit problems that didn't exist.  He wouldn't have been able to blame Jews for problems that didn't exist.

Even though I'd like to believe that my "stitch in time" argument is adequate... it is still probably a good idea to continue exploring the available evidence.

In 1933, there around 67 million people in Germany.  Out of 44,685,764 registered voters... 43.91% of them (17,277,180) voted for Hitler (source).  So even with a considerable effort on the part of the Nazis to intimidate and suppress other voters... the majority of Germans did not vote for Hitler.  And just because somebody did vote for Hitler, this does not necessarily mean that they would have been willing to put their taxes where their votes were...

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. Geoffrey Brennan, Loren Lomasky, Democracy and Decision

Voting is perceived to be a good deal if, and only if, the voter is under the impression that somebody else is going to pay for their "free" lunch.  This means that if, prior to 1933, the power of the purse had been transferred from government to taxpayers... then voting for Hitler wouldn't have been such a good deal.  Why would people have bothered voting for Hitler if there was absolutely no chance of him controlling the power of the purse?  It's only natural for people to quickly line up for a "free" lunch... but if you change the deal like so... free lunch... then the free-riders will disappear as quickly as they appeared.

The evidence is pretty clear that most Germans were not hell-bent upon assaulting and robbing their neighbors.  They weren't interested in Hitler's "free" lunch.  Yet, they were served it anyways.

So where's the bottleneck?

Maybe everybody who voted for Hitler was a taxpayer and everybody who didn't was not?  This line of argument is more or less consistent with the liberal argument that business/industry was largely responsible for Hitler's rise to power.  If this "most taxpayers are evil" argument is correct, then pragmatarianism definitely wouldn't have prevented The Holocaust.

If you read the Wikipedia article on Gustav Krupp von Bohlen und Halbach... then this is what you'll learn...

Unlike most of his fellow industrialists, Krupp opposed the National Socialists [Nazis]. As late as the day before Paul von Hindenburg appointed Adolf Hitler as Chancellor, Krupp tried to warn him against making such a choice. However, after Hitler won power, Krupp became, as Fritz Thyssen later put it, "a super Nazi" almost overnight.

Most German industrialists supported the Nazis?  This would certainly lend credence to Conza88's argument.  The citation for that Wikipedia passage is a book written by William Shirer and published in 1960... The Rise and Fall of the Third Reich.

We get a different story, however, from a book that Henry Ashby Turner wrote in 1985... German Big Business and the Rise of Hitler.  Here are some relevant passages from a few different reviews of this book...

Note that freedom from large subsidies enabled the NSDAP to propagate an extremely radical message unpalatable to elites then and now—apart from the PC radicalism of philo-Semitism, anti-white racism, and Leftism that has always been acceptable to elites. The NSDAP thereby satisfied the genuine needs and aspirations of its white constituency and generated an intensely loyal mass following. - Andrew Hamilton, Funding a Movement: German Big Business & the Rise of Hitler 

It may be true that contributions of various sorts came from big businessmen like Fritz Thyssen, the Berlin manufacturer Ernst von Borsig, and the retired coal executive Emil Kirdorf, but despite statements to the contrary, they were never a critical source of funding. Most of the NSDAP funds were derived from membership dues, interest-free loans, and the gate receipts from the many mass rallies the party held. After the parliamentary breakthrough in September 1930, sales from Mein Kampf skyrocketed, providing Hitler himself with a steady source of income. And during the depression the volunteer labor given by party activists helped ease the effects of the increasingly austere economic conditions. - John M. Ries, German Big Business and the Rise of Hitler (Review)

Still, more than a few voices critical of such historical hanky-panky have been raised. Perhaps the most influential is that of Henry A. Turner, Jr., who has provided an accurate and verifiable history of the Weimar period in his German Big Business and the Rise of Hitler. Turner sensibly avoids class struggle as a theme and simply asks if big business liked Hitler. Did business leaders support him? Did they give him money? Turner concludes that they did not. Only "through gross distortion can big business be accorded a crucial, or even major, role in the downfall of the Republic" (p. 340). Turner claims that bias "appears over and over again in treatments of the political role of big business even by otherwise scrupulous historians" (p. 350). - Larry Schweikart, Hitler and Big Business

From Turner we get the impression that prior to Hitler gaining control of the power of the purse, support from business was the exception rather than the rule.  Same as well from this source...

There is little evidence to support the view that Hitler received substantial financial support from big business. The conservative upper classes generally regarded Hitler as an uneducated demagogue and gutter politician. - David A. Meier, Adolf Hitler's Rise to Power

I highly recommend that source if you're looking for a good overview.

Once Hitler was in power, he transferred ownership and control of various factories in such a way as to try and maximize the productive capacity that was in the hands of supporters.  The Spanish economist Germa Bel wrote an excellent paper on this topic...Against the mainstream: Nazi privatization in 1930s Germany.  Some snippets...

It is likely that privatization—as a policy favourable to private property—was used as a tool for fostering the alliance between the Nazi government and big industrialists. The government sought to win support for its policies from big business, even if most industrialists had been reluctant to support the Nazi Party before it came to power.

...also...

The reprivatization of United Steelworks, which put Fritz Thyssen in the leading position in the company, appears to be an example of the use of privatization to increase political support.  It is worth recalling that Thyssen was one of only two leading industrialists to support the Nazi Party before it became the most powerful party on the political scene.  Another privatization that can be linked to politics is the sale of publicly owned shares in Hamburg-SudAmerika to a Hamburg syndicate in September 1936 when the Hamburg ship-owners had joined the Nazi Party as a group.

...and...

It seems clear that neither the Nazi Party nor Hitler was ideologically devoted to private ownership. In fact, Nazis used nationalization when they considered it necessary.  The case of the nationalization of two aircraft companies, the Arado and Junkers firms, is widely known.  As Wengenroth explains, 'uncooperative industrialists such as aircraft manufacturer Hugo Junkers were removed from their positions and replaced with Nazi governors.  This was not an explicit nationalization policy, but simply an attempt to control production and investment policies in the interest of rearmament'.  In fact, as stated by Overy, Hugo Junkers 'refused to produce warplanes for Goering and found his business nationalized'.  Indeed, Buchheim and Scherner note that state-owned plants were seen as necessary when private industry was not prepared to realize a war investment on its own. 

Any industrialists who failed to comply with Hitler's plan were quickly and easily replaced.

Let's review.

The Weimar Republic was established in Germany after the end of the first world war.  Taxpayers were not free to choose where their taxes went.  This blocked nearly all of Germany's competence from the public sector.  As a result, competence was inefficiently allocated.  Hitler exploited the subsequent problems and the "free" lunch democracy responded accordingly...

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

After Hitler took control of the power of the purse, the world became his chess board...

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder. - Adam Smith, Theory of Moral Sentiments

I want everyone to keep what he has earned subject to the principle that the good of the community takes priority over that of the individual. But the state should retain control; every owner should feel himself to be an agent of the State . . . The Third Reich will always retain the right to control property owners. - Adolph Hitler (1931)

However well balanced the general pattern of a nation's life ought to be, there must at particular times be certain disturbances of the balance at the expense of other less vital tasks. If we do not succeed in bringing the German army as rapidly as possible to the rank of premier army in the world...then Germany will be lost! - Adolf Hitler (1936)

It's only natural for people to compare Germany's political system after WWI to our current system here in the US.  People with Government 101 under their belt probably get the sense that, with our robust system of checks and balances, it's nearly impossible for any president to take control of the power of the purse.  Is "nearly" impossible really good enough though?  Wouldn't we be far better protected by decentralizing the power of the purse?  This decentralization could be easily achieved simply by shifting control of the purse to millions and millions of taxpayers around the country.

It's also natural to compare one person, Hitler, controlling the power of the purse to our 500 congresspeople controlling the power of the purse.  Perhaps the fact that our system hasn't resulted in the extremely inefficient allocation of Jews somehow proves that our system is good enough?  I agree that it's wonderful that our Jews haven't been extremely inefficiently allocated... but, given the fact that they can't shop in the public sector, combined with the fact that they are the rule rather than the exception, then why should we have any confidence that Jews, or any of us, are being efficiently allocated?  If you ever get the feeling that you're underemployed... then it's probably far more true than you can even begin to imagine.  To quote my favorite Crooked Timber liberal John Holbo... "I’d be perfect for a lot of way cool jobs that don’t happen to exist."

To put it in terms of the cup half empty vs half full... any defender of our government is saying, "look, at least our cup isn't only 0.000000003% full".  Yes, going from 0.000000003% to 0.0000017% is an improvement... but anybody who thinks that this is "enough" improvement is really missing the point.  Or I'm really missing the point.

So where's the bottleneck?

I'm under the impression that it always helps to share my favorite passage from my favorite liberal congresswoman...

There is nobody in this country who got rich on his own. Nobody.  You built a factory out there—good for you! But I want to be clear.  You moved your goods to market on the roads the rest of us paid for.  You hired workers the rest of us paid to educate.  You were safe in your factory because of police forces and fire forces that the rest of us paid for.  You didn’t have to worry that maurauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. - Elizabeth Warren

Does Warren know better than a Jewish business owner which public goods he needs to stay rich?  Did some German bureaucrat in the 1920s know better than a Jewish business owner which public goods he needed to stay rich?

If Warren truly knows which public goods bakery owners, farmers and manufacturers need to stay rich... then giving taxpayers the option to directly allocate their taxes will simply give competent business owners the opportunity to hand their taxes to Warren so that she can spend their taxes for them.  For some reason I highly doubt that very many business owners are going to want Warren, or any other politician, to spend their taxes for them.  And this strong suspicion that I have, combined with the available evidence, leads me to believe that pragmatarianism would have prevented The Holocaust.

This branch could use another epiphyte...





In this video, Michael Sandel, a professor of philosophy at Harvard, makes an eloquent and crystal clear case against market expansion into civic territory.  He's essentially the complete opposite of me.

Sandel's argument is that there are things that money can, but shouldn't, buy.  He gives numerous examples... one of which is how some schools have experimented with paying kids to read.  The concern of his, which his audiences have largely shared, is that money crowds out, or distorts, "intrinsic" value.

What's especially enjoyable about that video is that it has an exciting Easter Egg.  I didn't recognize anybody on the panel but when introductions were finally made... one name jumped out at me... Julian Le Grand.  Before I was banned from Wikipedia I created the articles for two of his books...

Motivation, Agency, and Public Policy
The Other Invisible Hand

These two books are the most relevant to the topic of tax choice.  If I'm mistaken, please let me know!

In the video, Le Grand hints at what this blog entry is trying to shout.  Even though it was just a hint... it seemed especially powerful because it was framed by Sandel's argument.  This passage by J.S. Mill comes to mind...

But the peculiar evil of silencing the expression of an opinion is, that it is robbing the human race; posterity as well as the existing generation; those who dissent from the opinion, still more than those who hold it. If the opinion is right, they are deprived of the opportunity of exchanging error for truth: if wrong, they lose, what is almost as great a benefit, the clearer perception and livelier impression of truth, produced by its collision with error. - J.S. Mill, On Liberty

Le Grand's point was especially bright because it was the only star in a pitch black sky.  The entire event really should have been a debate/discussion between Le Grand and Sandel.

Here's more of Sandel's argument (from his TED talk: Why we shouldn't trust markets with our civic life)...

Now, what this, even this brief debate, brings out is something that many economists overlook. Economists often assume that markets are inert, that they do not touch or taint the goods they exchange. Market exchange, they assume, doesn't change the meaning or value of the goods being exchanged. This may be true enough if we're talking about material goods. If you sell me a flat screen television or give me one as a gift, it will be the same good. It will work the same either way. But the same may not be true if we're talking about nonmaterial goods and social practices such as teaching and learning or engaging together in civic life. In those domains, bringing market mechanisms and cash incentives may undermine or crowd out nonmarket values and attitudes worth caring about. Once we see that markets and commerce, when extended beyond the material domain, can change the character of the goods themselves, can change the meaning of the social practices, as in the example of teaching and learning, we have to ask where markets belong and where they don't, where they may actually undermine values and attitudes worth caring about. But to have this debate, we have to do something we're not very good at, and that is to reason together in public about the value and the meaning of the social practices we prize, from our bodies to family life to personal relations to health to teaching and learning to civic life.

Where do markets belong?  They belong anywhere and everywhere that we want to effectively and accurately communicate what's most important to us.  Do we want to effectively and accurately communicate how important food is to us?  If so, then a market belongs in the private sector.  If we want to effectively and accurately communicate just how important any of the following things are to us...

• health
• education
• a safety net
• welfare
• space exploration
• infrastructure
• renewable energy
• the environment
• peace

... then it's imperative that we push for a pubmar.

The fact of the matter is that nobody is a mind reader.  If we want an abundance of anything that's truly important to us... then we have to be free to spend our own money accordingly.  We have to give both Jews and Gentiles alike the freedom to shop in the public sector.  Not just in their own country's public sector... but in any country's public sector.  And we shouldn't push for a pubmar because it's the "moral" thing to do...  we should push for it because it's the beneficial thing to do.  

Sympathy for the Devil

If it's true that blocking nearly all of a county's competence from the public sector results in the inefficient allocation of competence... then it would explain, in no small part, how Hitler himself ended up being so majorly misallocated.  He was a victim of society's failure to recognize the value of a pubmar.  All of us are victims... and we will continue to be until this fundamentally important lesson can be effectively taught to the world.

For your convenience... here's my cup list again...

• Alex Tabarrok, Tyler Cowen
• Bryan Caplan, Scott Sumner, David Henderson
• Robert Murphy
• Tom Woods
• Benjamin Powell
• Arnold Kling
• Jeffrey Tucker
• Deirdre McCloskey
• Thomas Sowell
• Peter Boettke
• Robert Higgs 
• Walter Williams
• Michael Huemer
• Don Boudreaux, Russ Roberts 
• David Friedman
• William Easterly
• Robin Hanson
• Randall Holcombe
• Roderick Long
• Walter Block

While it would be immensely valuable if everybody on this list thoroughly answered the extremely important question of whether pragmatarianism would have prevented The Holocaust... maybe it's a better strategy to single out one person.  And then they pick one person and so on.

It's a difficult choice... but I'm going to have to go with Alex Tabarrok.  That's who I especially select to thoroughly answer the question that I've attempted to answer in this blog entry.  Why Tabarrok?  Here are the two main considerations...

1. potential value of his answer
2. likelihood that he'll answer

Tabarrok's total score is the highest.

Perspectives Matter - Economics in One Lesson

Does your perspective matter?   Your perspective represents your ideas, interests, values, desires, wants, needs, priorities, concerns, fears, hopes, dreams, goals, experiences, preferences, and partial knowledge.  Does all that matter?  Here are your options...

1. No, your perspective does not matter
2. Yes, your perspective does matter

Let's consider both possibilities.

1. No, your perspective does not matter

If your perspective does not matter then one use of your limited resources is as good as any.  Therefore, it shouldn't matter if congress uses your taxes to clog toilets.

2. Yes, your perspective does matter

If your perspective does matter, then one use of your limited resources is not as good as any.  Therefore, it's entirely up to you to decide whether it matters if congress uses your taxes to clog toilets.

Here's the paradox.  You can't choose which government organizations you give your taxes to.  Therefore, your perspective does not matter.  In order to resolve this paradox you have to figure out why your perspective matters in the private sector but not in the public sector.  Why would the "best" use of your limited resources matter in the private sector but not in the public sector?  Why would economics, otherwise known as the study of scarcity, matter in the private sector but not in the public sector?  Either economics matters...or it does not.  Either your limited resources matter...or they do not.  Either your perspective matters...or it does not.

Too Many Eggs in One Basket

Let's consider a situation where people's perspectives did not matter at all...socialism.  A committee of government planners tried to determine the "best" uses of an entire nation's resources.  The result?  Epic fail.  Why though?  Simply because putting too many eggs in one basket minimizes rewards and maximizes risks.  We all have unique perspectives...yet we all make mistakes...aka fallibilism.  This is why it's not a good idea to put too many resources in the hands of government planners.

What about our system though?  Our system is a mixed economy.  We have two sectors...the private sector and the public sector.  In the private sector your perspective matters...you can determine the best use of your limited resources.  In the public sector, however, your perspective does not matter...you cannot determine the best use of your limited resources.  In essence, we follow the rules of economics in the private sector but not in the public sector.  What do you think the results are of disregarding the rules of economics in the public sector?  What do you think the consequences are of disregarding 150 million taxpayer's unique perspectives?

The consequences are substantial fails, depressions and recessions, which represent the misallocation of substantial resources.  Think about it on the individual level.  Let's say that you make a mistake and gamble your home on a failed business idea.  What are the results of putting all your eggs in one basket?  What are the consequences of misallocating your resources?  You lose your home.  But do any of your neighbors suffer from the consequences of your mistake?  Nope.

It follows, then, that a less centralized society has the advantage of a greater diversification of its performance across a larger number of preceptors.  This is because diversification here dilutes the impact of the ability, or the lack thereof, of each preceptor on the aggregate societal performance. - Raaj K. Sah, Fallibility in Human Organizations and Political Systems

Individuals and corporations simply do not control enough resources to cause substantial failures.  On the other hand, our committee of government planners, aka congress, does.  If the tax rate is 25% then we can imagine that 538 people control 1/4 of our nation's resources.  That is too many eggs in one basket.  Our mixed economy is part socialism...and we understand exactly why socialism fails...so why is it any surprise when our system substantially fails?  Yet, what happens when substantial failures occur?  Each party conveniently blames the other party.  And guess what?  You believe them and the pattern repeats itself.

As long as we disregard 150 million taxpayer's unique perspectives, we will have to deal with substantial failures.

Humility vs Conceit

The best analogy of economics, that I know of, is Buddha's parable of the blind men and the elephant.  Each blind person was touching a different part of the elephant.  We all have access to an essential part of the truth...which is our own unique perspective.  Economics, the study of scarcity, only has meaning in terms of our perspectives.

The trick is understanding that our perspectives, while unique, are extremely limited.  It requires humility for us to appreciate just how limited our perspectives truly are.  People that fail to appreciate just how limited their perspective truly are, can be said to suffer from conceit.  These conceited people erroneously believe that other people's perspectives do not matter.

In order to understand the dynamic between humility and conceit, let's consider Frederic Bastiat's perspective and then compare it to Elizabeth Warren's perspective.  Here's Bastiat's perspective...

This means that the terraces of the Champ-de-Mars are ordered first to be built up and then to be torn down. The great Napoleon, it is said, thought he was doing philanthropic work when he had ditches dug and then filled in. He also said: "What difference does the result make? All we need is to see wealth spread among the laboring classes." -  Frederic Bastiat, The Seen vs the Unseen

What difference do the results make?  That depends entirely on your perspective.

 In the first place, justice always suffers from it somewhat. Since James Goodfellow has sweated to earn his hundred-sou piece with some satisfaction in view, he is irritated, to say the least, that the tax intervenes to take this satisfaction away from him and give it to someone else. Now, certainly it is up to those who levy the tax to give some good reasons for it. We have seen that the state gives a detestable reason when it says: "With these hundred sous I am going to put some men to work," for James Goodfellow (as soon as he has seen the light) will not fail to respond: "Good Lord! With a hundred sous I could have put them to work myself." -
Frederic Bastiat, The Seen vs the Unseen

What are some good reasons for taxes?   That depends entirely on your perspective.

When James Goodfellow gives a hundred sous to a government official for a really useful service, this is exactly the same as when he gives a hundred sous to a shoemaker for a pair of shoes. It's a case of give-and-take, and the score is even. But when James Goodfellow hands over a hundred sous to a government official to receive no service for it or even to be subjected to inconveniences, it is as if he were to give his money to a thief. It serves no purpose to say that the official will spend these hundred sous for the great profit of our national industry; the more the thief can do with them, the more James Goodfellow could have done with them if he had not met on his way either the extralegal or the legal parasite. - Frederic Bastiat, The Seen vs the Unseen

Which brings us to Elizabeth Warren's perspective.  As I mentioned in my post on the opportunity costs of public transportation...she provides a perfect example of somebody who is conceited.  Here's the famous bit from her speech...

I hear all this, you know, “Well, this is class warfare, this is whatever.”—No!  There is nobody in this country who got rich on his own. Nobody.  You built a factory out there—good for you! But I want to be clear.  You moved your goods to market on the roads the rest of us paid for.  You hired workers the rest of us paid to educate.  You were safe in your factory because of police forces and fire forces that the rest of us paid for.  You didn’t have to worry that maurauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.  Now look, you built a factory and it turned into something terrific, or a great idea—God bless. Keep a big hunk of it.  But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along. - Elizabeth Warren

Do you think that Elizabeth Warren knows better than James Goodfellow what is and isn't essential for the successful operation of his business?  Why would anybody want their business to fail?  Why would anybody want their country to fail?  If Goodfellow has to pay taxes anyways...then why wouldn't he spend his taxes on the public goods which benefit his business the most?  If we have to pay taxes anyways....then why wouldn't we spend our taxes on the public goods which benefit our country the most?

If our perspectives do not matter then our country does not matter.  Value only has meaning in terms of our  perspectives.  We can maximize our country's value by allowing 150 million taxpayer's unique perspectives to determine the distribution of public funds.

Personal Shoppers

Congress functions as our personal shoppers for public goods.  Unlike in the private sector however, we do not have the option to shop for ourselves.  If you believe that congress is wasting your taxes then you should have the option to directly allocate your own taxes.  There's absolutely nothing wrong with having public personal shoppers...as long as taxpayers have the freedom to skip the middlemen and directly give their taxes to the government organizations that produce the "best" results.

What About Fairness?

Fairness is wonderful and admirable and desirable...but it does not trump certain failure.  Ignoring the rules of economics always results in failure.  If you want to support fairness...then it has to be with your own taxes.  No matter how you spin it...supporting fairness with other people's hard-earned taxes is nothing more than conceit.  You're assuming that your perspective is not as limited as somebody else's perspective.  We all have limited perspectives, which is exactly why we should strive to tolerate, if not respect, other people's perspectives.  Here's what Milton Friedman strongly emphasized...

If we can't persuade the public that it's desirable to do these things, then we have no right to impose them even if we had the power to do it.

If we can't persuade other taxpayers that fairness is desirable...then we shouldn't impose our perspective on them even if we had the power to do it.  This is because it's entirely possible that we might be wrong.  Therefore, we should hedge our bets by incorporating a multitude of unique perspectives into the public sector.

What About Information?

Persuasion isn't just valuable in terms of tolerance...it's also valuable in terms of the exchange of information.  In order to try and persuade other taxpayers that fairness matters...you would have to share your partial knowledge with them.  In order to try and persuade you that perspectives matter...I have to share my partial knowledge with you.  In order for government organizations to try and persuade us that their responsibilities matter...they would have to share their partial knowledge with us.  This is how we solve problems and make significant progress.

The problem is thus in no way solved if we can show that all the facts, if they were known to a single mind (as we hypothetically assume them to be given to the observing economist), would uniquely determine the solution; instead we must show how a solution is produced by the interactions of people each of whom possesses only partial knowledge. To assume all the knowledge to be given to a single mind in the same manner in which we assume it to be given to us as the explaining economists is to assume the problem away and to disregard everything that is important and significant in the real world. - Friedrich Hayek, The Use of Knowledge in Society

What is the total amount of information contained within the perspectives of 150 million taxpayers?  Does congress even know your name...let alone your ideas, interests, values, desires, wants, needs, priorities, concerns, fears, hopes, dreams, goals, experiences, preferences, and partial knowledge?  All that information is not conveyed by voting.  It can only be conveyed by allowing you to choose which government organizations you give your limited resources to.

It's important to be really clear on this...so here's a bit of redundancy.  Taxpayers should not serve the government...the government should serve taxpayers.  We should not exist to satisfy the demands of the government...the government should exist to satisfy our demands.  The government should not shape the perspectives of taxpayers....the perspectives of taxpayers should shape the government.  The government should not be the sculptor and taxpayers should not be the medium   The relationship between taxpayers and the government should not violate the rules of economics.  The longer that the government disregards our perspectives...the longer that we'll have to suffer the economic consequences.

Conclusion

Hedging our bets by allowing taxpayers to directly allocate their taxes minimizes the risk and maximizes the reward for our country as a whole.  It shouldn't matter whether an organization is public or private...what matters is whether it produces results.  Results only have meaning in terms of your perspective, which is exactly why you should have the freedom to choose which government organizations you give your limited resources to.  Sacrifice without reward is waste...and nobody wants their taxes wasted.

What is the value of 150 million taxpayers, each with their own unique perspective, striving to ensure that their sacrifices are not in vain?   From my perspective, the value of pragmatarianism is 150 million times greater than the value of 538 people spending money that they did not toil, strive, labor, sweat and sacrifice to earn.

The question then remains...does your perspective matter?

A Taxpayer Division of Labor

My drill sergeants at Ft. Benning Georgia told me that I was a lucky bastard for being assigned to an infantry unit down in Panama.  Their reasoning had nothing to do with the jungle...but that's what quickly wrapped its tendrils around my heart.  Heh....yeah, I can admit that I fell in love with the jungle.

A thousand shades of green, a countless array of intriguing chirps and buzzes, a wonderfully pungent aroma of earth mixed with rotting fruit...and so many fascinating creatures.  The jungle isn't for everybody though.  Certainly none of my buddies loved the jungle as much as I did.

The jungle was full of surprises...many were quite pleasant.  I remember walking past a spectacular display of orchids.  When I slowed slowed down and pointed them out to my friends...they just rolled their eyes, questioned my sexual orientation...and told me to keep up.  Another time while laying in the prone position I observed an amazingly brilliant golden beetle scurrying over leaf litter.  Then there were the Morpho butterflies with wings that were shocking blue on the inside and dull grey on the outside...when they fluttered around they looked like small blue neon signs blinking on and off here and there in the cathedral like gloom of a dense canopy.

In terms of less than pleasant surprises...Cebolla and I were doing some land navigation exercises when we decided to take a quick break and "beat the heat" by drinking some warm canteen flavored water.   Cebolla was my Mexican roommate from Idaho.  The "Mexican Mafia" (the Hispanic guys in our unit...mainly from Los Angeles) liked to joke that the "coyote" that brought Cebolla's family from Mexico got lost and ended up in Idaho.  So they gave him the nickname "Mr. Potato Head"...but Cebolla didn't mind though...he was the most mellow/chill guy ever.  We had barely gotten our canteens out when Mr. Potato Head started jumping up and down screaming that he was being stung.  I rushed over and discovered that he had unknowingly decided to stand right on top of a colony of .50-caliber ants.  We referred to them as ".50-caliber ants" for two reasons...1. they were very large and 2. their stings were said to be as painful as being shot.

The ants were swarming all over Cebolla's legs and making loud angry clicking noises.  We quickly moved away from the colony but Cebolla was shouting that the ants were in his boots.  His "ants in the pants" dance was so frantic that, as I was trying to give him a hand with his boots, he accidentally "buttstroked" me in the head with his rifle.  That knocked enough sense into me to realize that the ants were too large to actually get inside his boots...they'd been stinging him through the thick leather.  Ouch.  In Cebolla's defense though...unlike most ant colonies...the .50-caliber ant colony did not display any of the obvious signs of a typical ant colony.

It was also a very unpleasant surprise to be walking through the jungle and suddenly feeling strong filaments of spider web wrap around your body from head to toe.  This would slow you down literally as much as the ubiquitous "wait-a-minute" vines would.  It wasn't the only explanation why a macho guy would suddenly start jumping around strip searching himself in the middle of the jungle...shouting "Ack!!  Where is it?!  Ack!! Get it off me!"...but it would be a pretty good guess.

In other cases...the surprises came to you.  There I was sitting on a "safe" patch of jungle floor, enjoying a delicious chili mac MRE when suddenly, out of nowhere, a snake quickly crawled over my legs and disappeared into the grass before I even had time to react.  Even in the barracks you weren't necessarily safe from jungle surprises.  Walking back from a shower, I rounded the corner in the hallway and had to jump to just barely avoid the striking fangs from a 10ft boa constrictor.  The guys had put it there as a practical joke...hah...hah.  So of course I joined them and waited for the next guy to round the corner.

Oh man, we had shenanigans for days...but let me try and figure out what my point was.  Well...when you're walking in the jungle...you can't look straight ahead and down at the same time.  When you look down you forgo/sacrifice the ability to look straight ahead.  This is the opportunity cost concept.  The opportunity cost of looking down to try and avoid colonies of stinging ants and poisonous snakes (bushmasters, fur-de-lances) is that you increase the likelihood that you'll walk straight into the gigantic web of a spider that regularly captures and eats birds.  Well...that and you'll end up walking in circles if you don't look up often enough.

This ties into the basic infantry concept concerning patrolling: establishing a perimeter.  Basically we'd form a "wagon wheel"...and each person would be responsible for monitoring their own sector of fire.  If we could somehow "predict" exactly which direction the enemy might come from then there would have been no need to try and provide 360 degrees of coverage.

One word that I frequently hear in response to pragmatarianism is "disaster".  Three things though...disasters 1. already occur all around us 2. have the potential to come from anywhere and 3. are relative.

Is failing to conserve the jungle a disaster?  From my perspective it is.  It seems reasonable to say that the jungle has the potential to yield extremely beneficial and valuable surprises for humanity.  Closer to home...my girlfriend works for a non-profit organization.  She provides therapy for abused children from low-income families.  Needless to say I don't even want to hear her disaster stories anymore.  Then there's my doctor friend who works with the Center of Disease Control...he's got some of the scariest "potential" disaster stories.  Disasters can come from any direction at any time.

Even though we were all about Murphy's law in the military...when we formed perimeters in the jungles of Panama...we never monitored the sector directly above us.  It just seemed highly unlikely that ninjas...or the alien from the movie "Predator"...or asteroids...would present credible threats.  Although...the howler monkeys did throw their poop at us...and several guys were hospitalized after being attacked by killer bees.

Did you ever read Tom Clancy's book..."A Clear and Present Danger"?  It's been so long since I've read it that I can't even even remember what it was about.  That's ok though because the title says it all.  Clearly we all realize and appreciate that one person should not be responsible for shouldering the entire burden of determining and acting on "clear and present dangers"...right?  To drive that point home here is the quote that I shared in my entry on the Opportunity Costs of War...

However well balanced the general pattern of a nation's life ought to be, there must at particular times be certain disturbances of the balance at the expense of other less vital tasks. If we do not succeed in bringing the German army as rapidly as possible to the rank of premier army in the world...then Germany will be lost! - Adolf Hitler, 1936

That's why one person should never have sole control of the power of the purse.  But what if two people share the power of the purse...or three people...or 100 people?  Why not let each and every taxpayer have sole control over the power of their own purse?  Why not create a taxpayer division of labor?

When disasters can come from so many different possible directions...wouldn't you feel safer if America established a perimeter that consisted of millions and millions of concerned taxpayers?  A taxpayer division of labor would allow us to hedge our bets...it would allow groups of taxpayers to be responsible for monitoring the sectors that they cared about the most.

It's easy to imagine how the system would work because we can see the exact same type of division of labor in the non-profit sector.  It wouldn't make any sense to force donors to PETA and donors to the NRA to pool their donations and elect representatives to split the pool between the two organizations...so why does it make sense for taxpayers that care about the environment and taxpayers that care about national defense to pool their taxes and elect representatives to split the pool between the EPA and the DoD?  How does gridlock benefit anybody?  Why don't we recognize that hyperpartisan obstructionism is a byproduct of the structure itself?  Is it so hard for us to understand why people see taxes in such a negative light?  How much more willing would people be to pay more taxes if they had the freedom to directly use their taxes to support the public goods that they cared about the most?

Don't get me wrong...I understand how the current system itself represents a division of labor.  Most people don't worry about the provision of public goods because they've outsourced this responsibility to their "personal shoppers"...congresspeople.  I'm not saying that we should get rid of congress...I'm saying that anybody that does happen to worry about the provision of public goods should have the freedom to bypass congress and directly allocate their taxes themselves.

It's important to understand that the public sector is the sum of everybody's pet projects.  You wouldn't want to pay for somebody else's pet projects...yet for some reason you're ok with other people being forced to pay for your own pet projects.  When are we going to learn to respect, recognize or at least tolerate other people's values?  If you want other people to pay for your project...then you should have to convince them of the value of your project.  If people don't allocate enough of their taxes to your project to keep it going...then try fundraising.  With standard fundraising practices non-profits receive $5 for every $1 they spend...well...assuming that there is a demand for the public good in the first place.

The thing is...it's a "Fatal Conceit" for a small group of people to assume that they have enough information to make resource allocation decisions for the entire country.  The irony is that the Fatal Conceit concept, which was coined by the economist Friedrich Hayek, does not just apply to liberals…it applies to libertarians as well. We’re all just blind men arguing over the scope of government. The scope of government is so complex that it can only be accurately determined by allowing each and every taxpayer to use their taxes to highlight private sector supply failures.

Yet...parents make economic decisions for their kids...and knowledge is relative...right?  Incidentally...did any of you just think of Voltaire's Micromegas?  If it's reasonable for parents to make economic decisions for their children...then isn't it reasonable for knowledgeable adults to make economic decisions for all the ignorant adults?

To help understand the issue I'm currently watching that truTV series...World's Dumbest People.  Generally the only thing I watch on TV is C-Span and the Discovery Channel.  No really...I swear!  Heh...that's not true.  The episode I'm watching right now is the World's Dumbest Pranksters.  Honestly some of the pranks are really pretty funny.  Why are pranks so funny?

A long time ago I read one of Plato's works...maybe the Apology or something or other.  In Plato's book Socrates was trying to figure stuff out.  So he sought out the most knowledgeable people in society and engaged them in discourse.  In the process of trying to learn from these experts though...Socrates ended up discovering and revealing just how little they actually knew, "...it seems that I am wiser than he is to this small extent, that I do not think I know what I do not know."  Although the experts did not find the experience to be enjoyable...many other people did...and Socrates quickly gained a following.

Did you ever watch Ashton Kutcher's show Punk'd?  Ashton Kutcher publicly "punk'ing" celebrities was the modern day relative equivalent of Socrates publicly "punk'ing" intellectuals.  Imagine if we had a TV show called "The Pretense of Knowledge" that consisted of a modern day Socrates revealing to America just how little our public officials actually know.

You'd be able to flip channels back and forth between "The Pretense of Knowledge" and "World's Dumbest People".  The juxtapose would beg the question...what are the information disparities between the general public...taxpayers....and congress?  The trick is understanding that when it comes to the efficient allocation of resources...we're not looking at information averages...we're looking at information totals.  If we added up all the information held by millions and millions of taxpayers...how would this compare to the sum of information held by 538 congresspeople?

When trying to figure out how to convey this idea I remembered a photograph that I took while stationed in Afghanistan (see my post on Anarcho-capitalism vs Civilization).  It's of an American solider on one side of a make-shift seesaw with some Afghan kids on the other side.  Even though the average American solider weighs more than the average Afghan kid...the cumulative weight of 5 kids is greater than the weight of one solider.  

Even though the average congressperson might have more information than the average taxpayer...the cumulative information held by 150 million taxpayers far exceeds the cumulative information held by 538 congresspeople.  When it comes to the efficient allocation of public goods...we need to consider sums...not averages.  It's interesting to consider though just how many average taxpayers it would take to equal the amount of information held by the average congressperson.

The other day on C-Span I watched a portion of a town hall meeting that was held at the University of Maryland.  A congressman, Steny Hoyer, was asked the following question by a lady holding her crying baby (starts at 44:30)...



How awkward was that?  Well...it wasn't as awkward as an earlier question asked by a fan of LaRouche.  Of course, that's exactly how everybody would have perceived me if I had been there to ask my question...public goods allocation disparity question.  In any case though..the lady's question provides a decent real life example of the information disparity concept.  We all have some information but nobody has all the information.  Out of curiosity I tried looking up the bill in question and ended up finding the lady who asked the question...Liz Reitzig.  Well...at least I think that's her.

The point isn't to figure out whether the congressman is correct that the FDA is awesome or whether Reitzig is correct that it's absurd that the "Feds sting Amish farmers".  The point is to consider the information disparity between taxpayers and congress.  How does the information disparity impact the public goods allocation disparity?  Is this disparity divine or delusional?  Should Reitzig have the right to boycott the FDA?  Should pacifists have the right to boycott the DoD?

But it's not just about the information that we have...it's also about whether our information is accurate.  Here's the article by Arnold Kling that inspired me to write this entry...The Political Implications of Ignoring Our Own Ignorance.  In his article Kling references the book by Daniel Kahneman...Thinking Fast and Slow.  Both Kahneman and Kling agree that "our maps are highly inaccurate"...what's interesting is that they disagree on the political implications.  This provides a perfect example of how two very intelligent people can consider the same exact thing but come to opposite conclusions (for more on this check out my reply to Jason Brennan's Ethics of Voting).  But how strange would it have been if either of them had changed their ideological positions as a result of the "new" information?  For a third perspective on the same book here's David Friedman's blog entry...Thinking Fast and Slow.

From Kling's article I Google'd "Jeffrey Friedman radical ignorance".  That's when I fell down the rabbit hole of my own ignorance.  I mean...I learned just how little I knew about ignorance.  Or...at least...that's the feeling I got.  Incidentally...I just looked up the surname "Friedman" and discovered that "fried" is the German word for "peace".

It actually wasn't too long ago that I'd discovered Friedman's work.  In my entry where I offer "proof" that pragmatarianism is the third solution...I had fun juxtaposing his critique of libertarianism with Mises' dogmatic assertion that there was no third solution.  The third solution is for people to understand how pragmatism offers an alternative to dogmatism.  Here's a bit from Friedman's essay critiquing libertarianism..."Although there is a handful of exceptions, most libertarian empirical work displays an obvious impatience to reach a foreordained antigovernment conclusion."  I added the link...it's to my response to Kling's brief response to pragmatarianism.  For another pragmatic critique of libertarianism see David Brin's Essences, Orcs and Civilization: The Case for a Cheerful Libertarianism.  As you can tell from the title...Brin's critique is a bit more accessible than Friedman's critique.

The first search result for "Jeffrey Friedman radical ignorance" was this blog entry by Roger Koppl...Politics in One Lesson.  Koppl's one lesson was that politicians tend to signal goodness rather than actually doing anything good.  In the comments he uses this phrase, "concentrating benefits and dispersing costs".  If that phrase doesn't quite make sense then here's a two minute video that helps explain the concept...



Koppl's lesson struck me as pretty reasonable...but it's not the ONE lesson that I would have selected.  My selection for the ONE political/economic lesson would have to be Buddha's story of the blind men touching different parts of an elephant.

The reason that Koppl's blog entry popped up as the number one search result is because Friedman commented on his entry.  They went back and forth several times trying to clarify/understand their positions.  Koppl had a bit of trouble figuring out Friedman's criticism...so I don't feel too bad about being in the same boat as Koppl.  But if I had to venture a guess I'd say that Friedman's criticism was the same as Buddha's...that we are all just blind men arguing over the scope of government...but I could be wrong.

In the process of trying to better understand Friedman's argument I ended up at Peter Boettke's blog entry...which reviewed Friedman's book...Ignorance and the Financial Crisis.  The comments are all worth reading...Friedman offers some comments as well.  Many of the the comments offered quite a few leads to follow...and I followed them deeper and deeper down the rabbit hole.

Along the way I picked up several "souvenirs"/quotes...most can stand on their own but there are a couple that I wanted to relate to pragmatarianism.  The first "souvenir" is Jeffrey Friedman's position on how resources are efficiently allocated...and the second "souvenir" is Peter Boettke's position on the Paradox of Thrift.  Here's Friedman's passage...

This epistemic defense of the for-profit and nonprofit sectors requires us to accept that there is nothing like a real market that will weed out failed nonprofits or weed in successful ones.  But we needn't idealize nonprofits in order to see that they may be better than governments - because successes may be hiding amid the thousand points of light, while the reliance of state bureaucracies on social-scientific "expertise" is a virtual guarantee of failure.  Still, and without idealizing for-profits, it seems to me that the situation in the nonprofit world is worse than that in markets, where through profit and loss, firms that are successful in satisfying the test of consumer experimentation gain control over more resources, while the unsuccessful ones lose resources and go bankrupt.  This isn't to say that the nonprofit sector shouldn't be defended.  But I think the defense must be epistemically minimalist if it is to be consistent with a like defense of capitalism - and with Husock's identification of the main problem plaguing human endeavor in all fields: the problem of knowing what works. - Jeffrey Friedman, There is No Substitute for Profit and Loss

In a pragmatarian system...let's say that you wanted to "purchase" some security.  You would have the option of purchasing this good from any combination of the three sectors...1. the for-profit sector 2.  the non-profit sector and 3. the public sector.  In terms of the for-profit sector you could purchase a gun...hire a body guard...take self-defense classes...etc.  In terms of the non-profit sector you could donate money to your local neighborhood watch...or donate to after-school programs targeting at-risk youth...because...an ounce of prevention is worth two of cure.  In terms of the public sector you could allocate a portion of your taxes to the police...or jails...or the courts.

The idea is to promote "heterogeneous activity"...which is a term I picked up from the comments on Peter Boettke's blog entry reviewing Friedman's book...Ignorance and the Financial Crisis.  I'm fairly certain that heterogeneous activity is the same thing as hedging our bets.  In other words...we shouldn't put all our eggs in one basket.  If you wanted to "purchase" education you could spend money on a private school...and/or donate money to Khan Academy...and/or donate money to public schools via DonorsChoose.org...and/or allocate your taxes to specific public schools...and/or allocate your taxes to the Department of Education.

As Jeffrey Friedman said...it's all about how organizations gain or lose control of resources.  In other words...it's all about the efficient allocation of scarce resources.  Which of course boils down to opportunity costs and partial knowledge.  Whether education belongs in the for-profit sector and/or in the non-profit sector and/or in the public sector should be determined by consumers who have the freedom to spend their money based on their interpretation of the "facts".  Here's a "souvenir" from Tedra Osell's Crooked Timber blog entry on Schooling Anonymous Kids

Funnily enough, that concern was founded on an expectation that charter schools, freed from some of the regulations that public schools have to adhere to, would, in fact, manage to offer better educations. It turns out that that’s not actually the case, though; by now we all know that the results comparing charters to public schools are mixed; there is no clear advantage to charter schools. My guess is that founding schools based on half-baked theories and ideologically driven philosophies, or as for-profit institutions, rather than oh, say, based on actual evidence about what works in education, isn’t the way to go.

It's a Fatal Conceit for anybody to believe that they have a monopoly on "actual" evidence...Crooked Timber Liberals - Monopolizing the Facts.  It's great...awesome...wonderful...even fun to dispute the "actual" evidence...but at the end of the day it should be up to consumers to decide which organizations receive their money.  If somebody's evidence is truly "actual" then taxpayer's tax allocation decisions would shift to reflect the indisputably of the evidence.  At one time everybody knew that the world was flat...and now everybody knows that the world is round.  What do we all "know" today that could turn out to be patently false tomorrow?

Onto the second "sourvinir" that I wanted to comment on...Peter Boettke's, et. al., position on the Paradox of Thrift...

Stated this way, it should be clear that the overpessimistic bias of traders confronted with imperfect information is entirely rational. Imperfect information does not cause actors to behave suboptimally given the choices that confront them.  Rather, the optimal response of rational traders operating in this environment is precisely what leads to a lower rate of exchange than would have prevailed were it not for the fact that they have only imperfect information.  - Peter T. Leeson, Christopher J. Coyne, Peter J. Boettke, Does the Market Self-Correct? Asymmetrical Adjustment and the Structure of Economic Error  

Not quite sure if the term "Paradox of Thrift" is a general reference to the idea of thrift/saving or whether it is a specific reference to section 11. "Thrift and Luxury" in Frédéric Bastiat's essay on What Is Seen and What Is Not Seen.  In any case...the Keynesian argument is that government spending is necessary to end recessions.  In a pragmatarian system though...taxpayers obviously wouldn't have the option of being "thrifty" with their taxes.  Meaning...they couldn't just put their taxes under their mattress.  So Keynes would get his spending but it would be in terms of Hayek's decentralized knowledge.  Yes...taxpayers could perhaps "pessimistically" allocate their taxes...but you'd figure that plenty of people would follow the allocation suggestions of respected public leaders...see my reply to Jeffrey Sachs and my reply to Paul Krugman.

Ok, time to wrap this up!  Last night I ate some fast food while watching a chick flick.  Sigh.  I simultaneously shortened my life span and wasted the little time I do have.  I blame my girlfriend.  Naw...I accept responsibility...because doing so is a sure sign of maturity.  Besides...you'll burn out if you don't take breaks..."The flame that burns twice as bright burns half as long"...to quote Lao Tzu and Bladerunner.  Life is all about balance.  To help balance out the chick flick I immediately watched Apocalypse Now.  What a movie.  The opening scene is of a magnificent strand of palm trees.  The first thing that popped into my head was...I bet my buddy Gene knows exactly what species of palms those are.  As the palms were totally obliterated by napalm my second thought was...taxpayers should have the freedom to consider the opportunity costs of war.

Here's the mainstream libertarian perspective on voter ignorance...

The best response to voter ignorance is to reduce the size and scope of government. When people act in the market and civil society, they have much better incentives to make well-informed decisions. When a consumer decides whether to buy a product, he knows that his choice will be decisive and thus has reason to acquire needed information and consider it rationally. - Ilya Somin,  An Inconvenient Truth

The "inconvenient truth" for libertarians is that reducing the size and scope of government to the police, the courts and national defense would still allow a small group of "radically ignorant" public officials to be in charge of funding the police, the courts and national defense.

The "inconvenient truth"  for liberals is that, to steal Obama's favorite analogy, it doesn't matter who has the keys to the "car"...the car will always end up in the ditch as long as the driver is driving under the influence of conceit.

Ron Paul and Obama are both fatally conceited for believing that their "theories" on the scope of government are anything more than theories.  The only way to accurately test their theories would be to allow taxpayers to directly allocate their taxes.  Nothing would provide more conclusive evidence than millions and millions of taxpayers directly allocating their taxes.  Everybody wants the most bang for their buck... therefore... taxpayers would not waste their taxes in the public sector paying for something that they could "purchase" in the private sector for less money.  This taxpayer division of labor would reveal the division of labor between the public and private sectors that would maximize the benefit to society as a whole.

The  "inconvenient truth"  for pragmatarians is that, given the problem of confirmation bias, neither liberals nor libertarians are very likely to acknowledge their respective "inconvenient truths".  That being said...if you feel like there's an "inconvenient truth" that I'm either avoiding or rationalizing away or just plain missing...then I highly encourage you to bring it to my attention and to the attention of others.  I take it to be "actual" truth that nobody has a monopoly on "actual" truth...but I could be wrong....given that I don't have a monopoly on "actual" truth.

In parting...here are some articles to check out...

• Cognitive Hubris - Arnold Kling
• Is Ignorance Bliss? Or is it Red? - David Brin
• In Defense of Rumsfeld - John Quiggin
• The Trojan Horse Example - Bryan Caplan
• An Attempt to Answer Bryan's Question - Arnold Kling
• Ignorance is Bliss When it Comes to Challenging Social Issues
• How Ignorance, Greed and Ideology Are Warping Science and Hurting Democracy - Julian Brookes
• Citizen Scientists - Amy Dockser Marcus

...and a bunch of  "souvenirs" that I picked up along the way...

This division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion. It is the necessary, though very slow and gradual, consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another. - Adam Smith, Inquiry into the Nature and Causes of the Wealth of Nations

Descartes, by contrast, thought that all claims to knowledge should be questioned, because naturally and culturally perceived truths can be illusory. Descartes led to Hume, thence to Kant and Popper. Kant and Popper led to Hayek (Gray 1984; Clouatre 1987). Not surprisingly, then, Popper and Hayek were both keenly interested in ignorance and error, and in biological and scientific (and, in Hayek's case, economic) evolutionary processes by which ignorance can be overcome, errors corrected, and knowledge acquired. - Jeffrey Friedman, Ignorance as a Starting Point: From Modest Epistemology to Realistic Political Theory

We thus propose an epistemological theory of error that applies to all fields, including economics. According to this theory, people make genuine errors when they (a) are ignorant of relevant information (for any of the reasons just specified); (b) are misled by false information; (c) are misled by true but irrelevant information; or (d) misinterpret true and relevant information. - Anthony J. Evans, Jeffrey Friedman, "Search" vs. "Browse": A Theory of Error Grounded in Radical (Not Rational) Ignorance

Beyond these effects, tax choice enables individuals to compete more effectively with moneyed interests in policy-making. The politics of tax choice are appealing as well, drawing on both libertarian and conservative themes of individual empowerment and agency, as well as the progressive belief in good government. Tax choice would resonate across a broad political spectrum, and directly engage citizens in the administration of the republic. - Cait Lamberton, Your Money, Your Choice

Pure libertarianism needs something to curb its extremity. That something is pragmatism. Philosophical pragmatism is an essential American development. Its animating principle is that truth is social and constructed rather than transcendent and objective. It holds that ideas prove their worth in action, and that the results of an idea are the best criteria by which to judge its merit. And since what works for me might not work for you, pragmatism advocates a strenuous openness to all perspectives. - James Walsh, Liberty in Troubled Times: A Libertarian Guide to Laws, Politics and Society in a Terrorized World

The problem is thus in no way solved if we can show that all the facts, if they were known to a single mind (as we hypothetically assume them to be given to the observing economist), would uniquely determine the solution; instead we must show how a solution is produced by the interactions of people each of whom possesses only partial knowledge. To assume all the knowledge to be given to a single mind in the same manner in which we assume it to be given to us as the explaining economists is to assume the problem away and to disregard everything that is important and significant in the real world. - Friedrich Hayek, The Use of Knowledge in Society

Pragmatism is a philosophical perspective linked with the name of John Dewey and other 20-th century American philosophers.  As I tried to learn something about it, I discovered that there is an enormous literature on pragmatism that could easily fill a small library.  Luckily, in his paper Knight [2001] has taught us that the main message of the pragmatist perspective boils down to just a few guiding principles: (i) Evaluate ideas by their consequences (consequentialism); (ii) be aware that your ideas may be wrong and may fail (fallibilism); (iii) don’t be hypercritical (anti-skepticism); (iv) try out, debate, and evaluate alternatives (experimentalism). - Elmar Wolfstetter, A Pragmatist Approach to the Proper Scope of Government Comment

There is no need to deny that individual members of any public are ill informed or mal-adept at navigating various cognitive tasks.  After all, Dewey acknowledged much of what skeptics of his day took to be the facts of the matter.  But, in the first place, beginning with Peirce, pragmatists have seen knowledge as produced and held by communities of inquiry.  That means we should expect no single individual to either produce or possess all the knowledge or information required to address a given social, economic or political problem.  It means instead that we ought to conceive of epistemology in not just social but institutional terms.  Like Dewey, then, contemporary pragmatists remain critical of arrangements that accord too much of a role to experts or technocrats even as they simultaneously resist naively placing their faith in the capacities of the common man except, of course, insofar as those capacities are deployed under "proper conditions."  From our pragmatist perspective, then, there is little reason to characterize our argument as "psychologically unrealistic."  And there surely are grounds for responding to such complaints. - Jack Knight, James Johnson,  The Priority of Democracy: Political Consequences of Pragmatism

"Idiocracy" thus suggests what might be called an idiocratic theory: If the public is idiotic, as it surely is, then the least it can do, and the thing it must do in order to survive, is to submit to the rule of those who are its smartest and most capable members (even if the smartest are a bit dim themselves). - Mark Fenster, On Idiocratic Theory: Rejoinder to Wisniewsky
*Note* This is in reference to the movie Idiocracy which starred Luke Wilson and was directed by Mike Judge...the guy responsible for Beavis and Butthead.  For some reason I think it's just the coolest that Fenster decided to write this piece.

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

Isn't that the central basis for the libertarian creed? The notion that educated free adults can be trusted with matches... not to mention their bank accounts and votes? If the masses are intrinsically stupid -- sheep -- then the paternalists are right and no future society of maximized freedom will ever be possible.
- David Brin, Essences, Orcs and Civilization: The Case for a Cheerful Libertarianism

That said, Wisniewski is right to disagree with my critique of Edelman because, unlike Edelman and Wisniewski, I am not in fact an idiocrat. As lazy and stupid as the public may be, its members are not incapable of understanding at least the broad stakes of major political decisions.  In this regard consider the increased public knowledge and understanding of the nonexistence of Saddam Hussein's WMD program and ties to Al-Qaeda that have occurred over the past three years. Efforts to provide the public with better information in an effective and timely manner, whether by public or private institutions, are worthwhile, in the same way that efforts to manipulate the public by leaking or releasing false or misleading information can be quite effective. - Mark Fenster, On Idiocratic Theory: Rejoinder to Wisniewsky

Thus, the ignorance of the mass public may create opportunities for libertarian forces to undermine state autonomy. In the absence of detailed policy knowledge, such agents can always pose a simple question to the uninformed voter: "Why can't the government program or agency in question be replaced by a private firm or a market mechanism?" The very allure of libertarian metaphors and argument may, I hypothesize, depend upon widespread voter ignorance of particular policy issues and the relative simplicity and conceptual "obviousness" of notions such as "freedom," "competition," "incentives," "cost-benefit analysis," and "the market." - Daniel Carpenter,  The Leaning Tower of “Pisa”: Public Ignorance, Issue Publics, and State Autonomy: Reply to DeCanio

The lower sort of people and small proprietors are good judges enough of one not very distant from them in rank or habitation; and therefore, in their parochial meetings, will probably chuse the best, or nearly the best representative: But they are wholly unfit for county-meetings, and for electing into the higher offices of the republic. Their ignorance gives the grandees an opportunity of deceiving them. - David Hume, Idea of a Perfect Commonwealth 

"I have previously stated and I repeat now that the United States plans no military intervention in Cuba," said President John F. Kennedy as he planned military action in Cuba. "As president, it is my duty to the American people to report that renewed hostile actions against United States ships on the high seas in the Gulf of Tonkin have today required me to order the military forces of the United States to take action in reply," said President Lyndon Johnson as he fabricated an incident to justify expansion of American involvement in Vietnam. "We did not, I repeat, did not, trade weapons or anything else [to Iran] for hostages," said President Ronald Reagan in November, 1986, four months before admitting that U.S. arms had been traded to Iran in exchange for Americans being held hostage there. "Simply stated, there is no doubt that Saddam Hussein now has weapons of mass destruction," said Vice President Dick Cheney before the invasion of Iraq; when it turned out that these weapons did not exist, Assistant Defense Secretary Paul Wolfowitz explained that "for bureaucratic reasons, we settled on one issue, weapons of mass destruction [as justification for invading Iraq], because it was the one reason everyone could agree on"
(Cockburn and St. Clair 2003, 1). - Benjamin Ginsberg, Autonomy and Duplicity: Reply to DeCanio

If we can't persuade the public that it's desirable to do these things, then we have no right to impose them even if we had the power to do it. - Milton Friedman, The Proper Role of the Federal Government

Things will not be necessarily continuous.  The fact that they are something other than perfectly continuous ought not to be characterized as a pause.  There will be some things that people will see.  There will be some things that people won't see.  And life goes on. - Donald Rumsfeld, The Poetry of Donald Rumsfeld

It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance. - Murray N. Rothbard, How Stupid Are You About Economics

In a market -- one of your beloved markets -- an entrepreneur who presents the same product over and over, deriding customers for not buying it, would be the real fool. You'd laugh at such a fellow and tell him he deserves what he gets -- bankruptcy. Yet, you never view your political program that way, do you? - David Brin, Essences, Orcs and Civilization: The Case for a Cheerful Libertarianism

The signal to sentient human beings that they have been inadvertently ignorant is surprise (Kirzner 1997, 81). If we are surprised by something, it is almost certainly the case that we did not know it; or that we thought we knew something that has suddenly turned out to be false; or that we knew something that, it has suddenly turned out, we misinterpreted. Only surprises that are deliberately arranged for us (such as surprise parties) resemble the type of ‘‘ignorance’’ that mainstream neoclassical economics is prepared to accept (in this case, asymmetrical information). But our lives are peppered with unarranged surprises about matters that we didn’t know existed or that we thought we had a handle on but turned out to be wrong about. The absence of conceptual space for surprise, we maintain, is the missing dimension in mainstream economics, without which it cannot produce the needed theory of error. - Anthony J. Evans, Jeffrey Friedman, "Search" vs. "Browse": A Theory of Error Grounded in Radical (Not Rational) Ignorance

[T]here are known knowns; there are things we know we know.  We also know there are known unknowns; that is to say we know there are some things we do not know.  But there are also unknown unknowns – there are things we do not know we don't know. - Donald Rumsfeld, The Poetry of Donald Rumsfeld

It was Hayek, after all, who insisted that prices aggregate producers’ (and consumers’) local knowledge of actual supply and demand conditions.  (If it were not ‘‘knowledge’’ of actual conditions, it would be mere speculation.) Thus, only the central planning board is ignorant, because it does not have access to "knowledge of people, of local conditions, and of special circumstances" (Hayek 1945, 80). In that case, however, if we had some way to transmit this knowledge to the central planning board-as with portable telecommunications devices-the problem would be solved. - Anthony J. Evans, Jeffrey Friedman, "Search" vs. "Browse": A Theory of Error Grounded in Radical (Not Rational) Ignorance

He who knows not, and knows not that he knows not, is a fool; shun him.
He who knows not, and knows that he knows not, can be taught; teach him.
He who knows, and knows not that he knows, is asleep; wake him.
He who knows, and knows that he knows, is a prophet; follow him. - Persian Proverb

O how they cling and wrangle, some who claim
For preacher and monk the honored name!
For, quarreling, each to his view they cling.
Such folk see only one side of a thing. - Buddha, The Blind Men and the Elephant

Professor Juniper: And this is a plume fossil
Cilan and Ash: Oooo...Ahhhhh
Professor Juniper: Donated to us by Lenora from the Nacrene Museum
Cilan and Ash: Wow!
Ash: This is from Lenora?
Iris: Looks like a rock if you ask me
Cilan and Ash: What?!!
Professor Juniper: *cheerfully* I guess different people do see things in differernt ways
Pokemon, Archeops In The Modern World
*Note* Because...all the cool kids (Herman Cain) are referencing Pokemon...and...we all have a platypus controlling us.

The downside of competition among entrepreneurs who have different and fallible interpretations of "the data" is that some of them will necessarily be wrong, and will waste resources on their mistakes. The upside is that all the resources of an entire economy are not bet on the infallibility of the central planners’ interpretation of what to do, or on the interpretation of a single manager to whom this authority has been delegated. (Capitalism, of course, simply is the delegation of this authority to anyone and everyone who can get a hold of some capital.) - Anthony J. Evans, Jeffrey Friedman, "Search" vs. "Browse": A Theory of Error Grounded in Radical (Not Rational) Ignorance

Want to reach a predetermined conclusion? Choose a "fundamental" axiom that automatically produces that conclusion, making any argument with this conclusion futile! By anchoring such claims in bedrock, an ideologue makes further discussion impossible. Those who disagree are either evil or stupid. Voila.
- David Brin, Essences, Orcs and Civilization: The Case for a Cheerful Libertarianism

When that "divinity" which "doth hedge a king," and which in our day has left a glamour around the body inheriting his power, has quite died away - when it begins to be seen clearly that, in a popularly-governed nation, the government is simply a committee of management; it will also be seen that this committee of management has no intrinsic authority. The inevitable conclusion will be that its authority is given by those appointing it; and has just such bounds as they choose to impose. Along with this will go the further conclusion that the laws it passes are not in themselves sacred; but that whatever sacredness they have, is entirely due to the ethical sanction - an ethical sanction which, as we find, is derivable from the laws of human life as carried on under social conditions. And there will come the corollary that when they have not this ethical sanction they have no sacredness, and may be rightly challenged.

The function of Liberalism in the past was that of putting a limit to the powers of kings. The function of true Liberalism in the future will be that of putting a limit to the powers of Parliaments - Herbert Spencer, Contemporary Review