In real life, when you meet somebody for the first time, it's rarely the case that the moment is persevered like a dragonfly in amber. It's a different story on the internet. For example, here's the very first time that I met Koenfucius. I replied to his story and he replied to my reply. That was the extent of our exchange.
Around a month or so later I replied to another story of his... Trading Values. At the time, I didn't realize that he was the same guy that I had replied to a month before. We ended up trading many many many thoughts about economics. At some point I realized that I had previously replied to one of his stories.
What if I hadn't replied to the second story? I would have missed out on so much valuable economic discussion.
Recently we've been trading thoughts in the comments section of this blog entry... A Penguin Introduces Henry Farrell To Ronald Coase. Here's my reply to his most recent comment...
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I think that I remembered the problem with unbundling WTP and WTA. How do you ensure the accuracy/legitmacy of the WTA? Russ Roberts can input that his WTA for Trump is a gazillion dollars. Tucker Carlson can input that his WTA for Clinton is $100 gazillion dollars. Then what?
Consider an issue like abortion. It either is, or isn't, legal. If WTP and WTA are unbundled, then what's to stop people from entering the maximum possible WTA? We can certainly limit the amount that everybody can enter to a million dollars. But then everybody just puts a million dollars for their WTA. So it provides absolutely no useful/trustworthy/credible info.
When it comes to the legality of abortion, is it possible that there isn't a transaction that enhances welfare? Nope. Maximizing the welfare enhancement of the transaction depends on determining how much each side is willing to sacrifice. The winning side will be the side that is willing to spend the most money, all of which will be given to the losing side.
No matter which system is used, it's a logical fact that one side is going to get its way. Should it get its way for free? This is the premise of voting. But I'm pretty sure that this premise is fundamentally horrible and incredibly detrimental. Everyone would immensely benefit if everyone could clearly see and know the cost of what they want. Then, and only then, could they make adequately informed decisions about whether what they want is truly worth it.
Imagine that Elizabeth wants abortion to be illegal. How badly does she want it? Is she willing to sacrifice the opportunity to buy a pair of shoes, or a laptop, or a car, or a house? What is she willing to exchange?
Markets work because they facilitate the comparison of value/importance/relevance. Our desires greatly exceed our dollars so we have no choice but to prioritize. This is how society’s limited resources are put to more, rather than less, valuable uses. This is how we minimize the irrelevant uses of society’s limited resources.
I take it as a fact that people really don’t appreciate the comparison aspect of markets. My proof is that so many places/spaces aren’t markets! This means that people do not directly compare the value of so many different things, which means that so many of society's limited resources are irrelevantly used.
You asked about how coasianism, specifically bundling WTP and WTA, would work when there are several presidential candidates. In this case, I’m not sure if coasianism would be the best option. Coincidentally, here’s what I recently posted on the Debate.org website…
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Thanks for responding to my argument. If you get a chance, check out the thread I posted in the economics forum.
My argument is that spending is always better than voting. Presidents should be chosen by spending rather than by voting. Here are three ways that this could be done...
1. coasian market design (CMD)
2. bee market design (BMD)
3. pragmatarian market design (PMD)
For CMD we will consider Clinton VS Trump. For a fixed amount of time, spenders would have the opportunity to spend as much money as they wanted on their preferred candidate. After the window of participation closed, the totals would be calculated and revealed. Whichever candidate had the biggest total would be the winner. Let's say that Trump was the winner. All the spenders for Clinton would receive a full refund. Plus, they'd proportionally receive all the money that had been spent for Trump. Unlike voting, CMD is a win-win situation. You either get your preferred candidate, or you get compensated.
BMD would be a better option if we wanted to choose the president from a larger list of candidates...
Bernie Sanders
Chris Christie
Darrell Castle
Donald Trump
Evan McMullin
Gary Johnson
Hillary Clinton
James Hedges
Jeb Bush
Jill Stein
Marco Rubio
Mimi Soltysik
Ted Cruz
Tom Hoefling
Rand Paul
Rocky De La Fuente
Spenders could use their donations to determine the best order of the candidates. Whichever candidate was at the top when the window of participation had closed would be the winner. The government would keep all the money. So BMD essentially kills two birds with one stone...
1. Valuating
2. Fundraising
With PMD, people would use their tax dollars to determine the best order of the candidates. The candidates would keep all the tax dollars that had been allocated to them.
Your concern with replacing voting with spending is that bias exists in the world. Let's say that right now everybody is biased against robot candidates. In this case, no matter whether we used voting or spending, a robot candidate would not be elected. The next decade 90% of the citizens are biased against robot candidates. If voting was used, it's definitely going to be tyranny of the biased majority and the robot candidate will not be elected. If we used spending though, there's some chance that the robot candidate will be elected.
It took over 200 years to elect our first black president. We still haven't had a woman president, or an (openly) gay president, or an (openly) atheist president, or... it's a long list. I really don't think that voting in any way, shape or form helps to overcome detrimental biases held by the majority of the citizens. Spending, on the other hand, would facilitate the elimination of detrimental biases.
Think about backpacking. Before you go backpacking you have to decide whether things you want to take are worth the effort of carrying them. Sure, you'd love to take a big bottle of Tequila, but is it worth the effort of carrying it? Knowing, considering and comparing the carrying costs/benefits of different things allows you to make more rational decisions. In the absence of knowing, or paying, the carrying costs... it's impossible for your carrying decisions to be maximally rational.
Replacing voting with spending would allow everyone to consider and compare the actual costs of the things they want. Then, and only then, will people make maximally rational decisions.
"As was noted in Chapter 3, expressions of malice and/or envy no less than expressions of altruism are cheaper in the voting booth than in the market. A German voter who in 1933 cast a ballot for Hitler was able to indulge his antisemitic sentiments at much less cost than she would have borne by organizing a pogrom." - Loren Lomasky, Democracy and Decision
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Earlier this year the Libertarian Party (LP) used a BMD to choose its convention theme…
$6,327.00 - I"m That Libertarian!
$5,200.00 - Building Bridges, Not Walls
$1,620.00 - Pro Choice on Everything
$1,377.77 - Empowering the Individual
$395.00 - The Power of Principle
$150.00 - Future of Freedom
$135.00 - Life, Liberty and the Pursuit of Happiness
$105.00 - Rise of the Libertarians
$75.00 - Free Lives Matter
$42.00 - Be Me, Be Free
$17.76 - Make Taxation Theft Again
$15.42 - Taxation is Theft
$15.00 - Jazzed About Liberty
$15.00 - All of Your Freedoms, All of the Time
$5.00 - Am I Being Detained!
$5.00 - Liberty Here and Now
This system could work just as well for choosing presidents. I wonder how much money the government would raise?
Classtopia’s Communication Department uses a BMD for blog entries. So far it has raised $30 dollars.
Next month, as you already know, my epiphyte society plans on using a BMD for show entries.
It would be quite excellent if a BMD was also used for forum threads! Econhub provides an exceptionally good opportunity to do so. Not sure how much you know about it, but it was recently created in order to compete the Economics Job Market Rumors (EJMR) forum out of existence. I wrote about it here.
The response to Econhub has been underwhelming, to say the least. So far there are only 17 members. It would really suck to let a brand new economics forum go to waste. So we should really put it to good use.
If we created a BMD for Econhub, then the donated money could be used to draw the public’s attention to a page that listed the most important threads. Hopefully this would result in more people joining the forum and substantially participating in the prioritization process.
I shared this idea on Econhub but the owner hasn't responded to it yet. It would be nice to have him on board but it isn't essential. A Google sheet would be used to store the data, which could be displayed on a webpage of our choice. This is the page that we'd promote with the donations.
Maybe I'm a bit biased, but it really doesn't sound so crazy to pool our money in order to promote the best economic ideas.
Showing posts with label coasianism. Show all posts
Showing posts with label coasianism. Show all posts
Friday, August 25, 2017
Saturday, July 22, 2017
A Penguin Introduces Henry Farrell To Ronald Coase
I'm a penguin. I do normal penguin things... like swimming and fishing. But I also appreciate Ronald Coase. So I took a break from my normal penguin activities and read Henry Farrell's recent blog entry... Why Coase’s Penguin didn’t fly. Who was Coase's penguin? Am I?
The entry has a couple of main characters in it... Alex and Pat. We don't actually know their gender. As a penguin I find this to be a problem. But it's easy enough to fix... Alexander and Patricia.
The couple wants to do something together. She would prefer to watch a movie while he would prefer to take a walk in the woods. Here's what does not happen in Farrell's entry. She gets her phone out, opens the relevant app, finds Alex, clicks on his name, clicks "New" and then enters the two options...
1. Movies
2. Walk
After doing so she clicks "Create". Alex's phone goes *bleeeling!* and he gets it out. He opens the app and decides how much he'd be willing to pay to have his way. She decides how much she'd be willing pay to have her way. When they are both finished the app displays the result...
1. Movies: $3
2. Walk: $7
Alex is willing to pay more. Therefore, the most valuable option is for them to go for a walk. Since Pat isn't getting her way the app doesn't transfer $3 from her account to his. But it does transfer $7 from his account to hers.
The couple bared their hearts to each other. This is Ronald Coase. He's a really great guy.
Admittedly, I do have a bird brain. So maybe I'm misunderstanding that the problem with social cost is that it's hidden. Maybe Coase didn't perceive that costs need to be seen and known in order for mutually beneficial decisions to be made. And maybe I can't fly.
The entry has a couple of main characters in it... Alex and Pat. We don't actually know their gender. As a penguin I find this to be a problem. But it's easy enough to fix... Alexander and Patricia.
The couple wants to do something together. She would prefer to watch a movie while he would prefer to take a walk in the woods. Here's what does not happen in Farrell's entry. She gets her phone out, opens the relevant app, finds Alex, clicks on his name, clicks "New" and then enters the two options...
1. Movies
2. Walk
After doing so she clicks "Create". Alex's phone goes *bleeeling!* and he gets it out. He opens the app and decides how much he'd be willing to pay to have his way. She decides how much she'd be willing pay to have her way. When they are both finished the app displays the result...
1. Movies: $3
2. Walk: $7
Alex is willing to pay more. Therefore, the most valuable option is for them to go for a walk. Since Pat isn't getting her way the app doesn't transfer $3 from her account to his. But it does transfer $7 from his account to hers.
The couple bared their hearts to each other. This is Ronald Coase. He's a really great guy.
Admittedly, I do have a bird brain. So maybe I'm misunderstanding that the problem with social cost is that it's hidden. Maybe Coase didn't perceive that costs need to be seen and known in order for mutually beneficial decisions to be made. And maybe I can't fly.
Friday, July 14, 2017
Why Does Quadratic Voting Excite Miles Kimball?
Research continues on these issues. Quadratic voting is quite exciting.— Miles Kimball (@mileskimball) July 14, 2017
In yesterday's blog entry I endeavored to encourage Miles Kimball and Robin Hanson to supply a coherent economic story. Today I learned that Kimball is a fan of quadratic voting (QV).
The first time that I heard of QV was three years ago when memesteading.com asked me about it. Here was my response...
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Nope, hadn't seen it. Thanks for pointing it out. It's fun to pretend that they got the idea from this blog entry...Crooked Timber Liberals Do Not Advocate Selling Votes.
I just skimmed over the first search result...I'm not sure why 'quadratic'. It seems far more intuitive that the price of votes should be determined by the demand.
And it's a bit off to use quadratic voting or regular vote selling rather than tax choice when it comes to something like a public park.
For me vote selling would be relevant for things like gay marriage. If somebody is completely neutral on the topic...then they would simply sell their vote to the highest bidder.
The 'quadratic vote' people are on the right track though...the answers/outcomes are far more accurate when people are given the opportunity to put their own money where their mouths are (deep input).
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Since then I've read quite a bit about QV, but I still have the same issues. Perhaps Kimball can address them.
Why quadratic? Here's an explanation...
Simple vote trading won’t work, because buying a single vote is too cheap and thus a liquid buyer could accumulate too much political power. - Tyler Cowen, My thoughts on quadratic voting and politics as education
Let's take prostitution for example. I think it should be legal, Kimball disagrees. I offer to buy his vote. Should we assume that he will sell it too cheap? Why in the world would we assume this? Why would we assume that he only weakly cares about prostitution being illegal? The very point and purpose of a vote market would be to figure out the (opportunity) cost of a vote, yet Cowen's argument against the vote market is that a vote will be too cheap. Ouch, my brain.
What would count as "cheap" anyways? A penny sure is cheap, but what about a quarter, or a dollar? We'll say that Kimball decides to sell his vote for a quarter. From my perspective, I suppose this would be pretty cheap. Well, unless I was trying to buy a million votes for a quarter each.
If Kimball was willing to sell his vote for a quarter, then this would provide some evidence that he didn't strongly care about prostitution being illegal. Or, maybe he was super broke and could really use the quarter more than he could use the vote. In either case, what essentially occurred is that he exchanged some power in the public sector for some power in the private sector. I did the opposite. I gave up some influence in the private sector in order to gain some influence in the public sector. To be clear, it's entirely possible that Kimball will use the quarter that I gave him to buy a vote on an issue that he cares more strongly about.
With all of this in mind, what's the point of the quadratic aspect? What's the benefit of making it progressively more costly to buy additional votes?
If we eliminate the quadratic aspect, then the next question is, why do votes need to be involved? Kimball and I essentially made a mutually beneficial trade. But we really didn't need a vote to be part of the trade.
Here's how it would work without votes. Participants would have a window of opportunity to spend as much of their money as they wanted on their preferred outcome. After the window of opportunity closed, the totals would be calculated and revealed. Whichever side had spent the most money would get their preferred outcome. Not only would the other side receive a complete refund, but they would also proportionally receive all the money spent by the winning side. It would be a mutually beneficial trade. Votes are clearly unnecessary. This is coasianism.
Let's consider a small, real-life, example of coasianism. The students in my friend's 4th grade class needed to decide who should be in charge of their Justice Department. Rather than decide by voting, they decided by spending. Each student wrote three things on a piece of paper...
1. Their name
2. Their willingness to pay (WTP)
3. Their preferred candidate
After they had all turned in their papers, the teacher wrote the WTPs on the board...
Christopher was the winner, despite the fact that he was only preferred by one student... himself. Here's a picture of his piggy bank...
Christopher decided that it would be worth it to give up his $4 dollars in order to be in charge of the Justice Department. Of course he couldn't know beforehand how much money the other students were willing to pay for the other candidates. For all he knew, he might have lost. In that case, he would have been compensated. He won instead which meant that he compensated all the other students. Christopher essentially made a mutually beneficial trade with nearly 30 other students.
It should be crystal clear that votes really do not need to be part of the trade. All that matters is that participants have the incentive to use their own money to honestly reveal the true intensity of their preferences.
Quick summary about QV. Is the quadratic needed? Nope. Is the voting needed? Nope. All that's needed is the participants deciding how much of their own money they are willing to pay for the things they want.
QV is a hybrid made from democracy and markets. It's definitely far superior to pure democracy, but its democratic traits make it far inferior to pure markets.
A coasian market should be used to determine whether prostitution should be legal or illegal for a year. If the coasian market determines that it's more beneficial for prostitution to be illegal for a year, then a buchanian market should be used to determine how much money should be allocated to enforcing the law against prostitution. The buchanian market would simply involve each and every taxpayer having the option to decide how many of their own tax dollars to allocate to the enforcement of the law.
That's public finance in a very simple and straightforward nutshell.
After I tweeted yesterday's blog entry to Kimball, he replied with the following...
I am doing a lot of ranking of the sacred. Take a look at this column, & much more on the way in our research: https://t.co/EM9FWz31ux— Miles Kimball (@mileskimball) July 14, 2017
He gave people the opportunity to rank over 100 things according to their desirability. Here was my reply...
In a market, people use their limited dollars to rank their unlimited desires. Would this method incorrectly rank the sacred? #SkinInGame— Pragmatarian (@Pragmatarian) July 14, 2017
He didn't reply to this tweet, but he did reply to another one...
Xero: It would be revolutionary if cheap-talk surveys were remotely effective at measuring well-being. http://pragmatarianism.blogspot.com/2017/03/my-well-being-depends-on-artichokes.html @mileskimball
Kimball: In our approach, it isn't cheap talk. Local incentive compatibility: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3760035/
Xero: If not cheap-talk then the options can and should be sorted by the amount of money that was actually spent on them. http://classtopia.blogspot.com/p/blog-page_22.html
Kimball: You need a budget constraint, but it doesn't have to be money. Quadratic budget constraint with voting power has good properties.
Kimball: See paper here https://link.springer.com/article/10.1007/s11127-017-0414-3
and video of my talk:
https://bfi.uchicago.edu/video/quadratic-voting-application-normalized-gradient-addition-mechanism
I wasn't willing to spend $40 dollars to read the paper, but I was willing to spend an hour watching the video. I might be mistaken but it seems like he used QV to order the list of over 100 items. However, real money wasn't used, tokens were used instead.
Let's consider a real-life example of a different way to order a list. Earlier this year the Libertarian Party wanted to choose a theme for their convention. Here a list of the potential themes...
All of Your Freedoms, All of the Time
Am I Being Detained!
Be Me, Be Free
Building Bridges, Not Walls
Empowering the Individual
Free Lives Matter
Future of Freedom
I’m That Libertarian!
Jazzed About Liberty
Liberty Here and Now
Life, Liberty and the Pursuit of Happiness
Make Taxation Theft Again
Pro Choice on Everything
Rise of the Libertarians
Taxation is Theft
The Power of Principle
Rather than choose their convention theme by using a cheap-talk survey, the Libertarian Party decided to use a skin-in-game survey...
$6,327.00 - I’m That Libertarian!
$5,200.00 - Building Bridges, Not Walls
$1,620.00 - Pro Choice on Everything
$1,377.77 - Empowering the Individual
$395.00 - The Power of Principle
$150.00 - Future of Freedom
$135.00 - Life, Liberty and the Pursuit of Happiness
$105.00 - Rise of the Libertarians
$75.00 - Free Lives Matter
$42.00 - Be Me, Be Free
$17.76 - Make Taxation Theft Again
$15.42 - Taxation is Theft
$15.00 - Jazzed About Liberty
$15.00 - All of Your Freedoms, All of the Time
$5.00 - Am I Being Detained!
$5.00 - Liberty Here and Now
The "sacred" was ordered by sacrifice. We can clearly see the disparity in sanctity.
It's reasonable to guess that the free-rider problem affected the results. But if this problem had been solved, would "Taxation is Theft" have moved to the top of the list? I suppose it's logical that skin-in-game surveys will be biased against free-riders.
Why didn't Kimball use a skin-in-game survey to rank the items on his list? As far as I know, he's never even publicly considered a skin-in-game survey. Neither has any other economist. But Kimball and quite a few others have certainly considered QV.
Maybe QV solves problems that I'm overlooking. But the fact that economists haven't even publicly acknowledged skin-in-game surveys, makes it seem highly probable that they are the ones overlooking the obvious.
Thursday, July 13, 2017
Correctly Determining Importance: Miles Kimball vs Robin Hanson
Imagine a two lane road with a mountain on one side and a cliff on the other. There are two cars on the road that are driving towards each other. In the right lane robot Rob is driving Miles Kimball while in the left lane robot Rachel is driving Robin Hanson. Both economists are asleep. Just before the two cars are about to pass each other, a boulder suddenly lands in Kimball's lane. For the sake of the scenario, we'll pretend that he'll be killed if Rob tries to stop the car before it hits the boulder. Kimball will also be killed if the car does hit the boulder. Both economists will be killed if Rob swerves to avoid the boulder. Kimball will only survive if Rachel swerves Hanson's car into the boulder, or off the cliff. In any case, at least one of the economists is going to die. It stands to reason that the least important economist should die.
The creators of Rachel and Rob had realized that such situations were possible. They decided that the total importance of passengers in a vehicle should be calculated as soon as the passengers entered the vehicle. This would allow for more time to process more information in order to more correctly calculate importance. So each and every vehicle on the road has a rank. It isn't just used in life or death situations, it's also used to determine right of way. Lower ranked vehicles automatically get out of the way of higher ranked vehicles. As a result, more highly ranked vehicles more quickly reach their destinations.
The rank of Kimball's vehicle is 245. The rank of Hanson's vehicle is 275. Based on their relative ranking, Kimball should die and Hanson should not. But the decision isn't automatically made. There's still some time before a decision has to be made. It's not much time, but the robots take advantage of it to acquire and process even more information.
Rob and Rachel are surprised to discover that they are both carrying an economist. They decide to read everything that the two economists have written that is available online. It's a lot of information but the two robots process all of it in a fraction of a second. Given that they are ranking the economists, the two robots are especially interested in the parts where the economists themselves have discussed ranking.
Here's the most relevant thing that Hanson has written about ranking...
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Consider four possible acts:
Eating Twinkies
Watching Gilligan’s Island
Fighting cancer
Working for racial justice
Now consider pairwise comparisons of value between these acts. You might say which you prefer, or which matters more, or is more important or admirable.
It seems to me that we don’t mind ranking #1 vs #2. We might think the exercise silly, but we’d still be comfortable expressing an opinion. It also seems to me that we don’t mind puffing up our chest and intoning very seriously that either of #3,4 are more noble and admirable than either of #1,2, and looking sadly down on those who might say otherwise. But if asked to rank #3 vs #4, we are much less comfortable. In this case we could be seen as saying something against an act many find important and admirable. That isn’t the sort of thing we like to be quoted on. We don’t like to speak against the sacred.
Because of this, we end up sharing less info about relative rankings among the acts we most admire. Which, alas, are the acts most valuable to rank. We learn what others think of the relative ranking of silly tv shows and minor foods, but not about our most important choices. Silly humans.
I’m fond of this classic question pair: “What is the most important research question in your discipline?” followed by “Why aren’t you working on it?” - Robin Hanson, Ranking The Sacred
The creators of Rachel and Rob had realized that such situations were possible. They decided that the total importance of passengers in a vehicle should be calculated as soon as the passengers entered the vehicle. This would allow for more time to process more information in order to more correctly calculate importance. So each and every vehicle on the road has a rank. It isn't just used in life or death situations, it's also used to determine right of way. Lower ranked vehicles automatically get out of the way of higher ranked vehicles. As a result, more highly ranked vehicles more quickly reach their destinations.
The rank of Kimball's vehicle is 245. The rank of Hanson's vehicle is 275. Based on their relative ranking, Kimball should die and Hanson should not. But the decision isn't automatically made. There's still some time before a decision has to be made. It's not much time, but the robots take advantage of it to acquire and process even more information.
Rob and Rachel are surprised to discover that they are both carrying an economist. They decide to read everything that the two economists have written that is available online. It's a lot of information but the two robots process all of it in a fraction of a second. Given that they are ranking the economists, the two robots are especially interested in the parts where the economists themselves have discussed ranking.
Here's the most relevant thing that Hanson has written about ranking...
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Consider four possible acts:
Eating Twinkies
Watching Gilligan’s Island
Fighting cancer
Working for racial justice
Now consider pairwise comparisons of value between these acts. You might say which you prefer, or which matters more, or is more important or admirable.
It seems to me that we don’t mind ranking #1 vs #2. We might think the exercise silly, but we’d still be comfortable expressing an opinion. It also seems to me that we don’t mind puffing up our chest and intoning very seriously that either of #3,4 are more noble and admirable than either of #1,2, and looking sadly down on those who might say otherwise. But if asked to rank #3 vs #4, we are much less comfortable. In this case we could be seen as saying something against an act many find important and admirable. That isn’t the sort of thing we like to be quoted on. We don’t like to speak against the sacred.
Because of this, we end up sharing less info about relative rankings among the acts we most admire. Which, alas, are the acts most valuable to rank. We learn what others think of the relative ranking of silly tv shows and minor foods, but not about our most important choices. Silly humans.
I’m fond of this classic question pair: “What is the most important research question in your discipline?” followed by “Why aren’t you working on it?” - Robin Hanson, Ranking The Sacred
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Rob and Rachel really appreciate Hanson's perspective on the importance of ranking the sacred. After all, the two robots are ranking the lives of the two economists. So Rachel increases Hanson's rank from 275 to 277.
The two robots don't find any blog entries that Kimball has written specifically about ranking. But they do find a couple relevant Twitter exchanges. Here's the first...
Xero: #Sense8 can be freely copied, but it cost $9 million/episode to create. So scarcity really does not go out window. https://t.co/yDUXWSJQu0
Kimball: I agree
Xero: You agree that #Netflix subscribers should have the opportunity to divide their limited subscription dollars among the unlimited content?
Kimball: It would be great for them to have more of a way for them to signal *which* content was most valuable to them.
Xero: Do you also agree that @CatoInstitute donors should have the opportunity to divide their donated dollars among the content?
Kimball: I assume they do already have effective ways of communicating which things they are more eager to support.
Xero: Donors decide how to divide their dollars between @ASI and @mises. Is there a better way to signal the relevance of these two organizations?
The robots think it's incredible that Kimball seemed to really support the idea of Netflix subscribers using their subscription dollars to rank the content. But they wonder whether he truly does support the idea... given that he doesn't think that Cato donors should use their donated dollars to rank the content.
Kimball: New post: "Does the Journal System Distort Scientific Research?" @noahpinion https://blog.supplysideliberal.com/post/2017/7/11/does-the-journal-system-distort-scientific-research
Xero: Academic work isn't judged by markets, except for their books (ie MacLean). It would be great if you could solve this puzzle in future post.
Kimball: Markets are not perfect either. It is good to have multiple different judgments.
Xero: The optimal division of resources depends on the correct ranking of products. Voting more correctly ranks papers than spending could? Proof?
Rob and Rachel didn't vote or spend to rank Kimball and Hanson. Instead, the robots initially calculated the rank of the economists by considering and properly weighing different factors (age, health, income, number of children, etc). Now the robots are adjusting the ranking by seeing and comparing what the economists themselves have written about ranking.
It's not necessarily clear to the robots exactly how the economists would want to be ranked. Hanson clearly believes that it's important to rank even sacred things, but he doesn't mention whether they should be ranked by committees, democracies or markets. It's not clear how Kimball feels about ranking the sacred, but he believes that markets are only sometimes good for ranking things. Perhaps he believes they are good for ranking Netflix content and books, but not so good for ranking Cato content or other scholarly content. But what's his rule? Does he even have one?
Let's tweak the scenario by replacing one of the economists with myself. Both the robots read this blog entry. Here's what I want them to know.
More heads are better than less heads. In the multitude of counselors there is safety. Given enough eyeballs, all bugs and Easter eggs are shallow.
The robots can notify all the robots in the world that an important decision needs to be made. They certainly could vote on their preferred outcome...
A. I don't wake up
B. The economist doesn't wake up
The problem with voting can be seen when we compare it to spending.
Here's how spending would work. Each participant would spend as much money as they wanted on their preferred outcome. After the window of participation had closed, the side that was willing to spend the most money would get their preferred outcome. The other side would get a refund. Plus, they'd receive all the money that the winning side had spent. It would be proportionally divided. With this coasian trade, the winners would compensate the losers.
With spending, each and every participant decides how much money they are willing to spend on their preferred outcome. They can spend as little as a penny, or they can spend all their money. Willingness to pay certainly depends on the participant's ability to pay, but it also depends on their information. The better a participant's information, the greater their willingness to pay, and the greater their influence on the outcome.
With voting, all the participants have equal influence, despite the fact that they have unequal information. It's extremely detrimental for unequally informed individuals to have equal influence.
It should be clear that the importance of deciding between the economist and myself can only be determined by spending. The spending wouldn't be coasian though. It would just be regular spending. Rob and Rachel would spend their money to rank the decision that needed to be made. The more money they spent on it, the greater its rank/importance, and the greater the number of robots that would be competed away from other endeavors. These other robots could also spend their money to rank the decision... which would in turn recruit more robots.
With this two market system, spending would determine the optimal number of heads to make the decision, and they would make it by spending their own money.
Right now most vehicles aren't driven by robots. So it's a perfect time for Kimball and Hanson to clarify their positions on correctly determining importance.
Friday, June 30, 2017
Show Me The Economic Case For Democracy
Nancy MacLean is a liberal professor whose new book, Democracy In Chains, makes the case that James Buchanan's work is anti-democratic. He's my second favorite economist so I really appreciate the fact that she has given him so much attention. As far as I know, no other liberal has written a book that is primarily, or even significantly, about Buchanan.
MacLean is 100% correct that Buchanan's work is anti-democratic. Unfortunately, from what I've read about her book, she doesn't attack, or even acknowledge, his economic arguments against democracy. This is why I haven't purchased her book. But then again, I do love the fact that she has helped to direct so much attention to him. So I probably should purchase her book if for no other reason than to positively reinforce her decision to put a spotlight on Buchanan. I want the spotlight to be as big and bright as possible!
Even though I'm confident that Buchanan's work is anti-democratic, it's entirely possible that I'm wrong. Recently Michael Munger published a response to MacLean's book... On the Origins and Goals of Public Choice. He did not agree with MacLean that Buchanan's work is anti-democratic. Here's the recent twitter exchange between Munger and myself...
Buchanan preferred democracy? Let's get historical...
1776...
1835...
1846...
1861...
1896...
1933 (regarding)...
These thoughts, by such well-respected thinkers, are anti-democratic. But perhaps it doesn't necessarily mean that their work was anti-democratic?
In 1954 the Nobel economist Paul Samuelson wrote a paper that correctly recognized that private goods and public goods are different. People can benefit from national defense, for example, even if they don't help pay for it. If the amount of money that people spend on national defense does not accurately reflect their true valuation of it, then the wrong amount will be supplied. So the problem is not that people wrongly value national defense. The problem is false signals. Samuelson correctly argued that taxation is necessary and that the government should supply public goods. However, he simply assumed that government planners would be able to correctly guess the true signals.
Samuelson's assumption did not sit well with Buchanan. In 1963 he wrote a paper that argued that, since people are paying taxes anyways, if they are given the opportunity to earmark their tax dollars to specific public goods, they'd have no incentive to give false signals. If your valuation of national defense is $1000 of your tax dollars, but you only earmark $100 tax dollars to national defense, it doesn't mean that you'll be able to spend the difference on private goods (ie clothes, food). It means that you'll have $900 tax dollars to earmark to other public goods (ie education, healthcare)... which you value less than national defense. Therefore, there's absolutely no incentive to give false signals.
From my perspective, Buchanan's paper is blatantly and obviously anti-democratic. Why is it anti-democratic? Because it's pro-market. When markets expand, the alternatives contract.
Right now Netflix is in a market, but it is not a market. Subscribers can vote for specific content, but they aren't given the opportunity to decide how to divide their limited subscription dollars among the unlimited content. If Netflix did become a market, then people's spending decisions would logically subvert their voting decisions. It wouldn't matter how many "thumbs up" a show received, all that would matter is how many subscription dollars it had received. So it's logically absurd to prefer markets and democracy.
However, I acknowledge that Buchanan's one paper might not be truly representative of his work. Let's zoom out...
*********************
Historically, legislative bodies, through which the preferences of individual citizens are most directly represented, have exercised more control over revenue or tax decisions than they have over expenditure decisions. In part this asymmetry has its origin in the development of democratic political institutions out of monarchial institutions. Representative bodies, parliaments, first achieved the power to restrict the tax-gathering privileges of the kings. Before taxes could be levied on the people, representative bodies were given the right to grant their approval. No consideration was given to the spending side of the account because public expenses were assumed to benefit primarily the royal court, at least in the early days of constitutional monarchy. Taxes were viewed as necessary charges on the people, but they were not really conceived as any part of an "exchange" process from which the people secured public benefits. It was out of this conception of the fiscal process that both the modern institutions and the modern theory of public finance developed. - James Buchanan The Bridge Between Tax and Expenditure in the Fiscal Decision Process
The emerging of modern democratic states dramatically modified the setting for the fiscal process, but only recently has attention been paid to the necessity of revising age-old norms. As royal courts came to be replaced by executives, and monarchies by republics, taxes continued to be viewed as necessary to sustain the expenses of “government,” with the burden of these taxes to be minimized to the maximum extent possible. Surprisingly little recognition has been given, even yet, to the idea that taxes must, in the final analysis, be considered as the “costs” of those public goods and services which provide benefits to the same people who pay taxes. - James Buchanan, The Bridge Between Tax and Expenditure in the Fiscal Decision Process
A second analytical principle emerged more than a century after Smith’s Wealth of Nations, and it was not explicitly incorporated into the norms for policy. But it may have been implicitly recognized. It is important because it reinforces the classical principles from a different and essentially political or public-choice perspective. In 1896, Knut Wicksell noted that an individual could make an informed, rational assessment of various proposals for public expenditure only if he were confronted with a tax bill at the same time. Moreover, to facilitate such comparison, Wicksell suggested that the total costs of any proposed expenditure program should be apportioned among the individual members of the political community. These were among the institutional features that he thought necessary to make reasonably efficient fiscal decisions in a democracy. Effective democratic government requires institutional arrangements that force citizens to take account of the costs of government as well as the benefits, and to do so simultaneously. The Wicksellian emphasis was on making political decisions more efficient, on ensuring that costs be properly weighed against benefits. A norm of balancing the fiscal decision or choice process, if not a formal balancing of the budget, emerges directly from the Wicksellian analysis. - James Buchanan, Richard Wagner Democracy in Deficit: The Political Legacy of Lord Keynes
The necessity of relating decisions on public expenditures explicitly to decisions on taxes through the political process, and of assigning a definite revenue category to each single expenditure was stressed by Wicksell in his classic statement of the individualistic theory of public finance (see Knut Wicksell, "A New Principle of Just Taxation," in Classics in the Theory of Public Finance, ed. 1R. A. Musgrave and A. T. Peacock [London: International Economic Association, 1958], pp. 72-118, but esp. p. 94. The original Wicksell work is Finanztileorietisclie Uizlersuchlungen [Jena: Gustav Fischer, 1896]). - James Buchanan, The Economics of Earmarked Taxes
The most sophisticated contribution was made by Knut Wicksell in 1896. He explicitly identified the fundamental methodological error in the then-orthodox approach, and he combined positive criticism with normative suggestions for reforms. Wicksell recognized the necessity of bridging the two sides of the fiscal account, and he noted the indeterminacy of any proposed principles that were limited to tax-side considerations. - James Buchanan, Public Finance and Public Choice
In addition to the uncertainty factor, which can be readily understood to limit the range of rational calculus, the single individual loses the sense of decision-making responsibility that is inherent in private choice. Secure in the knowledge that, regardless of his own action, social or collective decisions affecting him will be made, the individual is offered a greater opportunity either to abstain altogether from making a positive choice or to choose without having considered the alternatives carefully. In a real sense, private action forces the individual to exercise his freedom by making choices compulsory. These choices will not be made for him. The consumer who refrains from entering the market place will starve unless he hires a professional shopper. Moreover, once having been forced to make choices, he is likely to be somewhat more rational in evaluating the alternatives before him. - Gordon Tullock, James Buchanan, Individuality Rationality in Social Choice
The introduction of the debt alternative to taxation makes the bridge between cost and benefit more difficult for the individual to construct. - James Buchanan, "Fiscal Policy" and Fiscal Choice
Institutionally, earmarking provides a means of compartmentalizing fiscal decisions. The individual citizen, as voter-taxpayer-beneficiary, is enabled to participate, separately, either directly or through his legislative representative, in the several public expenditure decisions that may arise. He may, through this device, "vote" independently on the funds to be devoted to schools, to sanitation, and so on, given the specified revenue sources. Only in this manner can he make "private" choices on the basis of some reasonably accurate comparison of the costs and the benefits of the specific public services, one at the time. By contrast, general-fund budgeting, or non-earmarking, allows the citizen to "vote" only on the aggregate outlay for the predetermined "bundles" of public services, as this choice is presented to him by the budgetary authorities. - James Buchanan, The Economics of Earmarked Taxes
Conceptually, an "ideal" institutional arrangement might be that of allowing individuals to "pay for" governmental goods and services in a manner analogous to that which they have found most convenient for financing consumer durables. The quarterly payments of tax on declarations of income above or outside withholding probably tend, on balance, to promote "logical" response to the income tax structure. It is the absence of any conscious sense of transfer, the absence of any monthly or quarterly bill, that represents the questionable feature of withholding, and one that may tend to create a Puviani-type illusion. - James Buchanan, Public Finance in Democratic Process: Fiscal Institutions and Individual Choice
Only one of these questions seems relatively easy to answer. If the individual can make separate fiscal choices for each public-goods program, which a structure of earmarked taxes conceptually allows him to do, directly or indirectly, he is informed as to the alternatives that he confronts, at least to the extent that the payment institutions allow, and subject, of course, to all of the qualifications noted in previous analysis. The uncertainty that he faces is clearly less than that which is present in the comparable decision on a “bundle” of public goods or services, with the mix among the separate components in the bundle to be determined in a separate decision process or through the auspices of a delegated budget-making authority. If this mix is not announced in advance to the voter-taxpayer, he must try to predict the outcome of another decision process, in which he may or may not participate, a process that need not exist at all in the more straightforward earmarking model where all revenue sources are specifically dedicated. - James Buchanan, Public Finance in Democratic Process: Fiscal Institutions and Individual Choice
In a balanced-budget context, a decision to spend publicly implies a decision to tax, and a decision to tax implies a decision to spend. Only if the actual institutions of fiscal choice are organized in such a way that this basic truism is reflected in the alternatives confronting the individual participant can these uncertainties be minimized. Much of the modern criticism of the United States Congress is directed at its failure to allow simultaneous consideration of expenditure and tax decisions. - James Buchanan, The Bridge Between Tax and Expenditure in the Fiscal Decision Process
Nevertheless, the fact remains that such choice embodies a direct correspondence between private cost and private benefit, the characteristic that is stressed here, and the one that is absent, in varying degree, from individual choice in collective decision processes. This central feature of market choice, rather than any implied assumption of rationality, makes individual behavior in organized markets useful as a benchmark from which we begin to assess collective choice institutions. - James Buchanan, Public Finance in Democratic Process
Similar behavior can be predicted on the spending side of the account. If the individual citizen were asked, in mid-1963, his opinions on proposed expansions in the federal space program, he could, roughly and in some fashion, measure benefits in terms of sport, national prestige, adventure, technological fallout, etc. But what were the costs? He would not have translated the costs of the space program into increased taxes. And for a very simple reason: the individual knew that he would not have to pay such taxes. The predictable result of a democratic choice process is the generation of budget deficits when borrowing is available as an alternative to taxation unless deficit creation is not somehow restrained by constitutional limitations. - James Buchanan, Public Finance in Democratic Process: Fiscal Institutions and Individual Choice
The Clay committee has at last discovered the fiscal version of Aladdin's wonderful lamp, and that henceforth all governmental “good things” such as super-super highways may come to us without our having to bear either the burden of taxation of the sufferings of conscience over increasing national debt. - James Buchanan, Painless Pavements: Highways by High Finance
Good things come at a cost, whether they be provided by the government or the grocery store. - James Buchanan, Painless Pavements: Highways by High Finance
The apparent splitting of the fiscal process into two parts was shown to produce potential gaps between preferred spending on public goods and services and preferred levels of taxation. Until and unless these gaps are eliminated, budget deficits tend to emerge from democratic decision processes. - James Buchanan, "Fiscal Policy" and Fiscal Choice
Under the assumption that public output enters positively into the utility functions of citizens, the expenditure by itself will secure support for the politician. The taxes, however, will reduce the disposable income of citizens, thereby affecting them negatively and reducing support for the politician. In a plurality electoral system, for given preferences and fixed tax institutions, the budget will be expanded so long as a majority would prefer the public service to the private goods they would have to sacrifice via taxation. - James Buchanan, Richard Wagner Democracy in Deficit: The Political Legacy of Lord Keynes
The restoration of the balanced-budget rule will serve only to allow for a somewhat more conscious and careful weighting of benefits and costs. The rule will have the effect of bringing the real costs of public outlays to the awareness of decision makers; it will tend to dispel the illusory “something for nothing” aspects of fiscal choice. - James Buchanan, Richard Wagner Democracy in Deficit: The Political Legacy of Lord Keynes
Randall Bartlett makes the same point, only he uses a visual rather than an auditory metaphor. In his framework, some tax forms have higher visibility than others. Starting with perfect visibility, taxes can be arrayed in descending order of visibility. In both his analysis and ours, changes in the institutional format for extracting revenues will influence citizen perceptions of the cost of government. See Randall Bartlett, Economic Foundations of Political Power (New York: Free Press, 1973), pp. 92-95. - James Buchanan, Richard Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes
**********************
Am I cherry picking? Maybe. But it's a fact that democracy and markets can't be equally effective at creating a bridge between choice and cost. Take prohibition for example. The majority voted for it. Evidently lots of people wanted it... so they got it. However, the amount of money spent on prohibition was not determined by voters, it was determined by government planners.
A = society's valuation of prohibition
B = the amount of money spent on prohibition
C = the difference between A and B
If Munger wants to argue that C is insignificant, then he should see markets as a massive waste of time and energy. It's pointless for everybody to decide how much money to spend on milk when government planners already know the answer.
If Munger wants to argue that C is significant, but B is more socially beneficial than A, then not only should he see markets as a massive waste of time and energy, he should see that they provide the wrong answer. It's incredibly undesirable for everybody to decide how much money to spend on milk when their answer is less correct than the answer already known by planners.
MacLean perceives that Buchanan's work is anti-democratic. Munger has an infinitely better grasp of Buchanan's work than MacLean does. Yet, for some reason, Munger doesn't perceive that Buchanan's work is anti-democratic.
From my perspective, Buchanan's work is anti-democratic because it's pro-truth. Buchanan and Samuelson both agreed that false signals are a problem. However, Samuelson was perfectly fine simply assuming that planners would have no problem correctly guessing the true signals. Buchanan rejected Samuelson's assumption. Buchanan correctly understood and endeavored to explain that true signals are a function of individual choices being directly informed/influenced by personal (opportunity) costs.
In his response/review, Munger wrote...
It helps to break prohibition down into two questions...
1. Should alcohol be illegal?
2. How much money should be spent on prohibition?
The second question is only asked if the first question is answered affirmatively. Coasianism is relevant to the first question, but it's really not relevant to the second one. The second question can only be correctly answered by a market in the public sector. Just like this question, "how much money should be spent on sci-fi shows?" can only be correctly answered by a market in Netflix.
So what does Munger mean that coasianism doesn't work for large groups? Imagine that Munger and I are the only two people answering the first question. He answers "yes" but I answer "no". Voting wouldn't work... but arm-wrestling would. So would coasianism. We'd both get our phones out and open the coasian app. He'd enter how much he'd be willing to pay for his preferred outcome and I'd enter how much that I'd be willing to pay for my preferred outcome. After we had both entered our amounts, the app would show us each other's amounts. If his amount was $100 dollars while my amount was only $25... then he would win. Alcohol would be illegal for a year. Since I didn't get my way, I wouldn't have to pay $25 dollars. Instead, I would receive the $100 dollars that he was willing to pay. Clearly the decision was made by facilitating a mutually beneficial trade. The decision was made by a market. It was made by a different type of market. It was made by a coasian market. It was made by coasianism.
Coasianism doesn't have an upper limit on the number of participants. It works just as well for 2 billion people. There might be technical issues to overcome but they don't diminish the desirability of coasianism.
With coasianism, people's choices are obviously informed/influenced by their consideration/comparison of the (opportunity) costs. So Buchanan's work is relevant to coasianism. But Buchanan didn't really focus on coasian markets. His focus was on buchanian markets.
Coasianism should be used to decide whether alcohol should be illegal. If coasianism determines that alcohol should be illegal, then there's the question of how much money to spend on prohibition. This question should be answered by buchanianism. Each and every taxpayer would consider/compare the (opportunity) costs of prohibition, and earmark their own tax dollars accordingly.
Each of the two questions is answered by each and every person having the chance to consider/compare/calculate the (opportunity) costs.
Making decisions without knowing/comparing/feeling the (opportunity) costs is really stupid. Therefore, democracy is really stupid. Buchanan was not stupid. Munger isn't stupid either. Neither is MacLean. Munger and MacLean can both understand why democracy is so stupid. But it should be easier and faster for him to do so given that he has a lot more economics under his belt.
Of course it's entirely possible that I'm wrong about everything. Munger can certainly make the case that I'm wrong about Buchanan. I'd be interested to see his case. But I'd be far more interested to see his case for democracy. When, exactly, is it beneficial for people to be clueless about costs? When, exactly, is it desirable for people to have no idea what they will have to sacrifice for the things they want?
[update]
MacLean is 100% correct that Buchanan's work is anti-democratic. Unfortunately, from what I've read about her book, she doesn't attack, or even acknowledge, his economic arguments against democracy. This is why I haven't purchased her book. But then again, I do love the fact that she has helped to direct so much attention to him. So I probably should purchase her book if for no other reason than to positively reinforce her decision to put a spotlight on Buchanan. I want the spotlight to be as big and bright as possible!
Even though I'm confident that Buchanan's work is anti-democratic, it's entirely possible that I'm wrong. Recently Michael Munger published a response to MacLean's book... On the Origins and Goals of Public Choice. He did not agree with MacLean that Buchanan's work is anti-democratic. Here's the recent twitter exchange between Munger and myself...
With much appreciation for remarkably fast work of my friends at @IndependentInst , my essay on DEMOCRACY IN CHAINS https://t.co/RnKzdRBuus— Michael Munger (@mungowitz) June 30, 2017
How central to Buchanan's work is fiscal equivalence (FE)? How compatible are FE and democracy?— Pragmatarian (@Pragmatarian) June 30, 2017
Buchanan was primarily a contractarian constitutionalist. Now, he preferred democracy. But ANYTHING people agreed was thereby justified.— Michael Munger (@mungowitz) June 30, 2017
Buchanan preferred democracy? Let's get historical...
1776...
The people feeling, during the continuance of the war, the complete burden of it, would soon grow weary of it, and government, in order to humour them, would not be under the necessity of carrying it on longer than it was necessary to do so. The foresight of the heavy and unavoidable burdens of war would hinder the people from wantonly calling for it when there was no real or solid interest to fight for. — Adam Smith, Wealth of Nations
1835...
Again, it may be objected that the poor are never invested with the sole power of making the laws; but I reply, that wherever universal suffrage has been established the majority of the community unquestionably exercises the legislative authority; and if it be proved that the poor always constitute the majority, it may be added, with perfect truth, that in the countries in which they possess the elective franchise they possess the sole power of making laws. But it is certain that in all the nations of the world the greater number has always consisted of those persons who hold no property, or of those whose property is insufficient to exempt them from the necessity of working in order to procure an easy subsistence. Universal suffrage does therefore, in point of fact, invest the poor with the government of society. - Alexis de Tocqueville, Democracy in America
1846...
The last point for consideration is the supposed disposition of the people to interfere with the rights of property. So essential does it appear to me, to the cause of good government, that the rights of property should be held sacred, that I would agree to deprive those of the elective franchise against whom it could justly be alleged that they consider it their interest to invade them. - David Ricardo, Observations on Parliamentary Reform
1861...
It is also important, that the assembly which votes the taxes, either general or local, should be elected exclusively by those who pay something towards the taxes imposed. Those who pay no taxes, disposing by their votes of other people's money, have every motive to be lavish, and none to economize. As far as money matters are concerned, any power of voting possessed by them is a violation of the fundamental principle of free government; a severance of the power of control, from the interest in its beneficial exercise. It amounts to allowing them to put their hands into other people's pockets, for any purpose which they think fit to call a public one; which in some of the great towns of the United States is known to have produced a scale of local taxation onerous beyond example, and wholly borne by the wealthier classes. That representation should be coextensive with taxation, not stopping short of it, but also not going beyond it, is in accordance with the theory of British institutions. But to reconcile this, as a condition annexed to the representation, with universality, it is essential, as it is on many other accounts desirable, that taxation, in a visible shape, should descend to the poorest class. In this country, and in most others, there is probably no labouring family which does not contribute to the indirect taxes, by the purchase of tea, coffee, sugar, not to mention narcotics or stimulants. But this mode of defraying a share of the public expenses is hardly felt: the payer, unless a person of education and reflection, does not identify his interest with a low scale of public expenditure, as closely as when money for its support is demanded directly from himself; and even supposing him to do so, he would doubtless take care that, however lavish an expenditure he might, by his vote, assist in imposing upon the government, it should not be defrayed by any additional taxes on the articles which he himself consumes. It would be better that a direct tax, in the simple form of a capitation, should be levied on every grown person in the community; or that every such person should be admitted an elector, on allowing himself to be rated extra ordinem to the assessed taxes; or that a small annual payment, rising and falling with the gross expenditure of the country, should be required from every registered elector; that so every one might feel that the money which he assisted in voting was partly his own, and that he was interested in keeping down its amount.
However this may be, I regard it as required by first principles, that the receipt of parish relief should be a peremptory disqualification for the franchise. He who cannot by his labour suffice for his own support, has no claim to the privilege of helping himself to the money of others. By becoming dependent on the remaining members of the community for actual subsistence, he abdicates his claim to equal rights with them in other respects. Those to whom he is indebted for the continuance of his very existence, may justly claim the exclusive management of those common concerns, to which he now brings nothing, or less than he takes away. As a condition of the franchise, a term should be fixed, say five years previous to the registry, during which the applicant's name has not been on the parish books as a recipient of relief. To be an uncertificated bankrupt, or to have taken the benefit of the Insolvent Act, should disqualify for the franchise until the person has paid his debts, or at least proved that he is not now, and has not for some long period been, dependent on eleemosynary support. Non-payment of taxes, when so long persisted in that it cannot have arisen from inadvertence, should disqualify while it lasts. - J.S. Mill, Considerations on Representative Government
1896...
If once the lower classes are definitely in possession of the power to legislate and tax, there will certainly be a danger that they may behave no more unselfishly than those classes which have so far been in power. In other words, there will be danger that the lower classes in power may impose the bulk of all taxes on the rich and may at the same time be so reckless and extravagant in approving public expenditures to which they themselves contribute but little that the nation’s mobile capital may soon be squandered fruitlessly. This may well break the lever of progress. — Knut Wicksell, A New Principle of Just Taxation
1933 (regarding)...
As was noted in Chapter 3, expressions of malice and/or envy no less than expressions of altruism are cheaper in the voting booth than in the market. A German voter who in 1933 cast a ballot for Hitler was able to indulge his antisemitic sentiments at much less cost than she would have borne by organizing a pogrom. — Loren Lomasky, Geoffrey Brennan Democracy and Decision
These thoughts, by such well-respected thinkers, are anti-democratic. But perhaps it doesn't necessarily mean that their work was anti-democratic?
In 1954 the Nobel economist Paul Samuelson wrote a paper that correctly recognized that private goods and public goods are different. People can benefit from national defense, for example, even if they don't help pay for it. If the amount of money that people spend on national defense does not accurately reflect their true valuation of it, then the wrong amount will be supplied. So the problem is not that people wrongly value national defense. The problem is false signals. Samuelson correctly argued that taxation is necessary and that the government should supply public goods. However, he simply assumed that government planners would be able to correctly guess the true signals.
Samuelson's assumption did not sit well with Buchanan. In 1963 he wrote a paper that argued that, since people are paying taxes anyways, if they are given the opportunity to earmark their tax dollars to specific public goods, they'd have no incentive to give false signals. If your valuation of national defense is $1000 of your tax dollars, but you only earmark $100 tax dollars to national defense, it doesn't mean that you'll be able to spend the difference on private goods (ie clothes, food). It means that you'll have $900 tax dollars to earmark to other public goods (ie education, healthcare)... which you value less than national defense. Therefore, there's absolutely no incentive to give false signals.
From my perspective, Buchanan's paper is blatantly and obviously anti-democratic. Why is it anti-democratic? Because it's pro-market. When markets expand, the alternatives contract.
Right now Netflix is in a market, but it is not a market. Subscribers can vote for specific content, but they aren't given the opportunity to decide how to divide their limited subscription dollars among the unlimited content. If Netflix did become a market, then people's spending decisions would logically subvert their voting decisions. It wouldn't matter how many "thumbs up" a show received, all that would matter is how many subscription dollars it had received. So it's logically absurd to prefer markets and democracy.
However, I acknowledge that Buchanan's one paper might not be truly representative of his work. Let's zoom out...
*********************
Historically, legislative bodies, through which the preferences of individual citizens are most directly represented, have exercised more control over revenue or tax decisions than they have over expenditure decisions. In part this asymmetry has its origin in the development of democratic political institutions out of monarchial institutions. Representative bodies, parliaments, first achieved the power to restrict the tax-gathering privileges of the kings. Before taxes could be levied on the people, representative bodies were given the right to grant their approval. No consideration was given to the spending side of the account because public expenses were assumed to benefit primarily the royal court, at least in the early days of constitutional monarchy. Taxes were viewed as necessary charges on the people, but they were not really conceived as any part of an "exchange" process from which the people secured public benefits. It was out of this conception of the fiscal process that both the modern institutions and the modern theory of public finance developed. - James Buchanan The Bridge Between Tax and Expenditure in the Fiscal Decision Process
The emerging of modern democratic states dramatically modified the setting for the fiscal process, but only recently has attention been paid to the necessity of revising age-old norms. As royal courts came to be replaced by executives, and monarchies by republics, taxes continued to be viewed as necessary to sustain the expenses of “government,” with the burden of these taxes to be minimized to the maximum extent possible. Surprisingly little recognition has been given, even yet, to the idea that taxes must, in the final analysis, be considered as the “costs” of those public goods and services which provide benefits to the same people who pay taxes. - James Buchanan, The Bridge Between Tax and Expenditure in the Fiscal Decision Process
A second analytical principle emerged more than a century after Smith’s Wealth of Nations, and it was not explicitly incorporated into the norms for policy. But it may have been implicitly recognized. It is important because it reinforces the classical principles from a different and essentially political or public-choice perspective. In 1896, Knut Wicksell noted that an individual could make an informed, rational assessment of various proposals for public expenditure only if he were confronted with a tax bill at the same time. Moreover, to facilitate such comparison, Wicksell suggested that the total costs of any proposed expenditure program should be apportioned among the individual members of the political community. These were among the institutional features that he thought necessary to make reasonably efficient fiscal decisions in a democracy. Effective democratic government requires institutional arrangements that force citizens to take account of the costs of government as well as the benefits, and to do so simultaneously. The Wicksellian emphasis was on making political decisions more efficient, on ensuring that costs be properly weighed against benefits. A norm of balancing the fiscal decision or choice process, if not a formal balancing of the budget, emerges directly from the Wicksellian analysis. - James Buchanan, Richard Wagner Democracy in Deficit: The Political Legacy of Lord Keynes
The necessity of relating decisions on public expenditures explicitly to decisions on taxes through the political process, and of assigning a definite revenue category to each single expenditure was stressed by Wicksell in his classic statement of the individualistic theory of public finance (see Knut Wicksell, "A New Principle of Just Taxation," in Classics in the Theory of Public Finance, ed. 1R. A. Musgrave and A. T. Peacock [London: International Economic Association, 1958], pp. 72-118, but esp. p. 94. The original Wicksell work is Finanztileorietisclie Uizlersuchlungen [Jena: Gustav Fischer, 1896]). - James Buchanan, The Economics of Earmarked Taxes
The most sophisticated contribution was made by Knut Wicksell in 1896. He explicitly identified the fundamental methodological error in the then-orthodox approach, and he combined positive criticism with normative suggestions for reforms. Wicksell recognized the necessity of bridging the two sides of the fiscal account, and he noted the indeterminacy of any proposed principles that were limited to tax-side considerations. - James Buchanan, Public Finance and Public Choice
In addition to the uncertainty factor, which can be readily understood to limit the range of rational calculus, the single individual loses the sense of decision-making responsibility that is inherent in private choice. Secure in the knowledge that, regardless of his own action, social or collective decisions affecting him will be made, the individual is offered a greater opportunity either to abstain altogether from making a positive choice or to choose without having considered the alternatives carefully. In a real sense, private action forces the individual to exercise his freedom by making choices compulsory. These choices will not be made for him. The consumer who refrains from entering the market place will starve unless he hires a professional shopper. Moreover, once having been forced to make choices, he is likely to be somewhat more rational in evaluating the alternatives before him. - Gordon Tullock, James Buchanan, Individuality Rationality in Social Choice
The introduction of the debt alternative to taxation makes the bridge between cost and benefit more difficult for the individual to construct. - James Buchanan, "Fiscal Policy" and Fiscal Choice
Institutionally, earmarking provides a means of compartmentalizing fiscal decisions. The individual citizen, as voter-taxpayer-beneficiary, is enabled to participate, separately, either directly or through his legislative representative, in the several public expenditure decisions that may arise. He may, through this device, "vote" independently on the funds to be devoted to schools, to sanitation, and so on, given the specified revenue sources. Only in this manner can he make "private" choices on the basis of some reasonably accurate comparison of the costs and the benefits of the specific public services, one at the time. By contrast, general-fund budgeting, or non-earmarking, allows the citizen to "vote" only on the aggregate outlay for the predetermined "bundles" of public services, as this choice is presented to him by the budgetary authorities. - James Buchanan, The Economics of Earmarked Taxes
Conceptually, an "ideal" institutional arrangement might be that of allowing individuals to "pay for" governmental goods and services in a manner analogous to that which they have found most convenient for financing consumer durables. The quarterly payments of tax on declarations of income above or outside withholding probably tend, on balance, to promote "logical" response to the income tax structure. It is the absence of any conscious sense of transfer, the absence of any monthly or quarterly bill, that represents the questionable feature of withholding, and one that may tend to create a Puviani-type illusion. - James Buchanan, Public Finance in Democratic Process: Fiscal Institutions and Individual Choice
Only one of these questions seems relatively easy to answer. If the individual can make separate fiscal choices for each public-goods program, which a structure of earmarked taxes conceptually allows him to do, directly or indirectly, he is informed as to the alternatives that he confronts, at least to the extent that the payment institutions allow, and subject, of course, to all of the qualifications noted in previous analysis. The uncertainty that he faces is clearly less than that which is present in the comparable decision on a “bundle” of public goods or services, with the mix among the separate components in the bundle to be determined in a separate decision process or through the auspices of a delegated budget-making authority. If this mix is not announced in advance to the voter-taxpayer, he must try to predict the outcome of another decision process, in which he may or may not participate, a process that need not exist at all in the more straightforward earmarking model where all revenue sources are specifically dedicated. - James Buchanan, Public Finance in Democratic Process: Fiscal Institutions and Individual Choice
In a balanced-budget context, a decision to spend publicly implies a decision to tax, and a decision to tax implies a decision to spend. Only if the actual institutions of fiscal choice are organized in such a way that this basic truism is reflected in the alternatives confronting the individual participant can these uncertainties be minimized. Much of the modern criticism of the United States Congress is directed at its failure to allow simultaneous consideration of expenditure and tax decisions. - James Buchanan, The Bridge Between Tax and Expenditure in the Fiscal Decision Process
Nevertheless, the fact remains that such choice embodies a direct correspondence between private cost and private benefit, the characteristic that is stressed here, and the one that is absent, in varying degree, from individual choice in collective decision processes. This central feature of market choice, rather than any implied assumption of rationality, makes individual behavior in organized markets useful as a benchmark from which we begin to assess collective choice institutions. - James Buchanan, Public Finance in Democratic Process
Similar behavior can be predicted on the spending side of the account. If the individual citizen were asked, in mid-1963, his opinions on proposed expansions in the federal space program, he could, roughly and in some fashion, measure benefits in terms of sport, national prestige, adventure, technological fallout, etc. But what were the costs? He would not have translated the costs of the space program into increased taxes. And for a very simple reason: the individual knew that he would not have to pay such taxes. The predictable result of a democratic choice process is the generation of budget deficits when borrowing is available as an alternative to taxation unless deficit creation is not somehow restrained by constitutional limitations. - James Buchanan, Public Finance in Democratic Process: Fiscal Institutions and Individual Choice
The Clay committee has at last discovered the fiscal version of Aladdin's wonderful lamp, and that henceforth all governmental “good things” such as super-super highways may come to us without our having to bear either the burden of taxation of the sufferings of conscience over increasing national debt. - James Buchanan, Painless Pavements: Highways by High Finance
Good things come at a cost, whether they be provided by the government or the grocery store. - James Buchanan, Painless Pavements: Highways by High Finance
The apparent splitting of the fiscal process into two parts was shown to produce potential gaps between preferred spending on public goods and services and preferred levels of taxation. Until and unless these gaps are eliminated, budget deficits tend to emerge from democratic decision processes. - James Buchanan, "Fiscal Policy" and Fiscal Choice
Under the assumption that public output enters positively into the utility functions of citizens, the expenditure by itself will secure support for the politician. The taxes, however, will reduce the disposable income of citizens, thereby affecting them negatively and reducing support for the politician. In a plurality electoral system, for given preferences and fixed tax institutions, the budget will be expanded so long as a majority would prefer the public service to the private goods they would have to sacrifice via taxation. - James Buchanan, Richard Wagner Democracy in Deficit: The Political Legacy of Lord Keynes
The restoration of the balanced-budget rule will serve only to allow for a somewhat more conscious and careful weighting of benefits and costs. The rule will have the effect of bringing the real costs of public outlays to the awareness of decision makers; it will tend to dispel the illusory “something for nothing” aspects of fiscal choice. - James Buchanan, Richard Wagner Democracy in Deficit: The Political Legacy of Lord Keynes
Randall Bartlett makes the same point, only he uses a visual rather than an auditory metaphor. In his framework, some tax forms have higher visibility than others. Starting with perfect visibility, taxes can be arrayed in descending order of visibility. In both his analysis and ours, changes in the institutional format for extracting revenues will influence citizen perceptions of the cost of government. See Randall Bartlett, Economic Foundations of Political Power (New York: Free Press, 1973), pp. 92-95. - James Buchanan, Richard Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes
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Am I cherry picking? Maybe. But it's a fact that democracy and markets can't be equally effective at creating a bridge between choice and cost. Take prohibition for example. The majority voted for it. Evidently lots of people wanted it... so they got it. However, the amount of money spent on prohibition was not determined by voters, it was determined by government planners.
A = society's valuation of prohibition
B = the amount of money spent on prohibition
C = the difference between A and B
If Munger wants to argue that C is insignificant, then he should see markets as a massive waste of time and energy. It's pointless for everybody to decide how much money to spend on milk when government planners already know the answer.
If Munger wants to argue that C is significant, but B is more socially beneficial than A, then not only should he see markets as a massive waste of time and energy, he should see that they provide the wrong answer. It's incredibly undesirable for everybody to decide how much money to spend on milk when their answer is less correct than the answer already known by planners.
MacLean perceives that Buchanan's work is anti-democratic. Munger has an infinitely better grasp of Buchanan's work than MacLean does. Yet, for some reason, Munger doesn't perceive that Buchanan's work is anti-democratic.
From my perspective, Buchanan's work is anti-democratic because it's pro-truth. Buchanan and Samuelson both agreed that false signals are a problem. However, Samuelson was perfectly fine simply assuming that planners would have no problem correctly guessing the true signals. Buchanan rejected Samuelson's assumption. Buchanan correctly understood and endeavored to explain that true signals are a function of individual choices being directly informed/influenced by personal (opportunity) costs.
In his response/review, Munger wrote...
For Buchanan, “politics” is a means for groups to overcome the transactions costs of negotiating and enforcing agreements in groups too large to foster Coasian (Coase, 1960) bargaining arrangements.
It helps to break prohibition down into two questions...
1. Should alcohol be illegal?
2. How much money should be spent on prohibition?
The second question is only asked if the first question is answered affirmatively. Coasianism is relevant to the first question, but it's really not relevant to the second one. The second question can only be correctly answered by a market in the public sector. Just like this question, "how much money should be spent on sci-fi shows?" can only be correctly answered by a market in Netflix.
So what does Munger mean that coasianism doesn't work for large groups? Imagine that Munger and I are the only two people answering the first question. He answers "yes" but I answer "no". Voting wouldn't work... but arm-wrestling would. So would coasianism. We'd both get our phones out and open the coasian app. He'd enter how much he'd be willing to pay for his preferred outcome and I'd enter how much that I'd be willing to pay for my preferred outcome. After we had both entered our amounts, the app would show us each other's amounts. If his amount was $100 dollars while my amount was only $25... then he would win. Alcohol would be illegal for a year. Since I didn't get my way, I wouldn't have to pay $25 dollars. Instead, I would receive the $100 dollars that he was willing to pay. Clearly the decision was made by facilitating a mutually beneficial trade. The decision was made by a market. It was made by a different type of market. It was made by a coasian market. It was made by coasianism.
Coasianism doesn't have an upper limit on the number of participants. It works just as well for 2 billion people. There might be technical issues to overcome but they don't diminish the desirability of coasianism.
With coasianism, people's choices are obviously informed/influenced by their consideration/comparison of the (opportunity) costs. So Buchanan's work is relevant to coasianism. But Buchanan didn't really focus on coasian markets. His focus was on buchanian markets.
Coasianism should be used to decide whether alcohol should be illegal. If coasianism determines that alcohol should be illegal, then there's the question of how much money to spend on prohibition. This question should be answered by buchanianism. Each and every taxpayer would consider/compare the (opportunity) costs of prohibition, and earmark their own tax dollars accordingly.
Each of the two questions is answered by each and every person having the chance to consider/compare/calculate the (opportunity) costs.
Making decisions without knowing/comparing/feeling the (opportunity) costs is really stupid. Therefore, democracy is really stupid. Buchanan was not stupid. Munger isn't stupid either. Neither is MacLean. Munger and MacLean can both understand why democracy is so stupid. But it should be easier and faster for him to do so given that he has a lot more economics under his belt.
Of course it's entirely possible that I'm wrong about everything. Munger can certainly make the case that I'm wrong about Buchanan. I'd be interested to see his case. But I'd be far more interested to see his case for democracy. When, exactly, is it beneficial for people to be clueless about costs? When, exactly, is it desirable for people to have no idea what they will have to sacrifice for the things they want?
[update]
Please quote exactly where Buchanan said...— Pragmatarian (@Pragmatarian) January 22, 2018
A. The optimal supply of public goods does *not* depend on people's true preferences.
...or...
B. Voting is more effective than spending at revealing people's true preferences.
Wednesday, November 9, 2016
Classtopia Coasianism
Yesterday our country used voting to decide that Donald Trump should be in charge of the country. Today a 4th grade class/country (Classtopia) used spending to decide that Isael should be in charge of their Department of Animals. The main difference between these two systems is that in the 4th grade class... the winners compensated the losers.
Today wasn't the first time that this class has used coasianism to make a group decision. I'll use this blog entry to consolidate the results of their spending decisions. For additional information please see...
Standing On The Right Shoulders
4th Grade Nation State
Classtopia Tax Choice
1. Deciding which book to read (29 Sept 2016)...
2. Deciding who should be in charge of their IRS (7 Oct 2016)...
3. Deciding what the class insect should be (11 Oct 2016)...
4. Deciding who should be in charge of their Gardening Department (28 Oct 2016)...
5. Deciding who should be in charge of their Animal Department (9 Nov 2016)...
6. Deciding who should be in charge of their Book Department (17 Nov 2016)...
7. Deciding who should be in charge of their Food Department (17 Nov 2016)...
8. Deciding what the name of their class/country should be (1 Dec 2016)
9. Deciding who should be in charge of their Communications (Blog) Department (9 Dec 2016)
10. Deciding who should be in charge of their Help Department (11 Jan 2017)
11. Deciding who should be in charge of their Photography Department (10 Feb 2017)
12. Deciding who should be in charge of their Justice Department (13 Mar 2017)
Christopher's batman piggy bank...
Today wasn't the first time that this class has used coasianism to make a group decision. I'll use this blog entry to consolidate the results of their spending decisions. For additional information please see...
Standing On The Right Shoulders
4th Grade Nation State
Classtopia Tax Choice
1. Deciding which book to read (29 Sept 2016)...
2. Deciding who should be in charge of their IRS (7 Oct 2016)...
3. Deciding what the class insect should be (11 Oct 2016)...
4. Deciding who should be in charge of their Gardening Department (28 Oct 2016)...
5. Deciding who should be in charge of their Animal Department (9 Nov 2016)...
6. Deciding who should be in charge of their Book Department (17 Nov 2016)...
7. Deciding who should be in charge of their Food Department (17 Nov 2016)...
8. Deciding what the name of their class/country should be (1 Dec 2016)
9. Deciding who should be in charge of their Communications (Blog) Department (9 Dec 2016)
10. Deciding who should be in charge of their Help Department (11 Jan 2017)
11. Deciding who should be in charge of their Photography Department (10 Feb 2017)
12. Deciding who should be in charge of their Justice Department (13 Mar 2017)
Christopher's batman piggy bank...
Thursday, November 3, 2016
Sorting Ideas
In this forum thread... 4th Grade Nation State... we've primarily been debating/discussing the idea of replacing voting with spending (coasianism). The thread is up to 27 pages. Here's a recent post...
*********************
According to Google, the US population, rounded to the nearest million, is 319 million.
Let's say that someone comes up with the idea that humans of a certain race/colour/religion are "less human" than others, and we should be able to own them like property. The overwhelming majority of people would consider this to be a very bad idea. Let's assume that 99.7% of Americans consider the idea of owning another human abhorrent. In raw numbers, this would be approximately 318 million people, with around 1 million people being pro-slavery.
The issue comes up for voting. It's dead in the water. Why? Because the majority of people recognise a disgusting idea when they see it.
The issue comes up for bidding. 318 million people spend an average of $1000 each on the "no" campaign. Some more, some less, depending on circumstances, but it averages to $1000 per person. That's $318 billion. 1 million people spend $320,000 on the "yes" campaign. That's $320 billion. Despite the overwhelming majority finding the idea detestable, slavery is now a thing because a couple of people have deeper pockets than the rest.
"Ah," you say, "but they'll get MONEY!"
Yes, they will. Their civil rights, liberty and personhood was valued at a little over 1 billion dollars. Given that they've lost their personhood and are no longer considered human, would they even receive it? That would depend on how the law that 0.3% of people actually wanted was written.
Now do you understand why coasianism is worse than voting? - Dazchan
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If Dazchan had been following the thread all along then he would have known that the issue of slavery had already been brought up by another member... Galloism. Alternatively, Dazchan could have figured this out if he had searched the thread for "slavery".
A thread consists of posts and each post is an idea. By default, the posts/ideas are sorted chronologically... oldest to newest.
But what if the pragmatarian model was applied to the forum? Each member would have to pay $1/month but they could choose which posts they spend their pennies on. Then it would be possible to sort threads and their posts by their total value.
Galloism would still have brought up his idea about slavery being an effective argument against coasianism. But then he, and everybody else, would have had the option to spend their pennies on his post. The more pennies that were spent on Galloism's post, the higher up it would have been placed on the list of posts/ideas when they were sorted by their value... and the more likely that Dazchan would have seen it.
Here are a couple of basic facts...
1. We all have limited attention/time/brainpower
2. Not all ideas are equally valuable
When we put these basic facts together, it should be clear that maximizing society's benefit depends on sorting ideas by their value.
With this in mind, let's consider Dazchan's concern about slavery and coasianism. Imagine that Bob posts in my thread, "slavery is wonderful". It is an idea... but most of us would consider it to be a bad idea. This means that, with the pragmatarian model, most of us would not be willing to spend our pennies on Bob's idea/post. As a result, when the posts/ideas in the thread were sorted by their value, Bob's idea would be at the bottom of the list.
Would we use coasianism for such a worthless idea? I don't think so. Then again, by this same measure, coasianism and pragmatarianism probably aren't currently much more valuable than the idea of slavery. Which is why we can't currently sort ideas by their value. All ideas have to start somewhere...
Yesterday morning, like most mornings, I was browsing Medium trying to find valuable ideas. Of course the ideas aren't sorted by their value. So it's a very challenging Easter Egg hunt. But I did manage to find a couple valuable Easter Eggs...
Each of these Easter Eggs is an idea... but each idea also contains several ideas. Let's consider some of the individual ideas...
This idea is another basic fact. I've previously referred to this basic fact as Tabarrok's Rule. Let's add it to the other two facts...
1. We all have limited attention/time/brainpower
2. Not all ideas are equally valuable
3. Spending improves rationality
Maximizing society's benefit depends on sorting ideas by their value... and determining an idea's value depends on spending.
Is this relevant to language?
The other day I mentioned to my friend Michelle that there's "real", "unreal" and "surreal" but no prefix for better than real. For over an hour she argued that A. there was no such concept and B. there were already words to express such a concept... ie "fantasy"... "utopia". I brought up the same topic a day or two later and she came up with "megareal". "Megareal"? I didn't think that it was a wonderful word... but, for lack of a better word, we've ended up using it. It is a useful word! When I say that it would be megareal if we could choose where our taxes go, she knows exactly what I'm talking about.
Michelle teaches 4th grade and she recently started applying coasianism and pragmatarianism to her classroom (Standing On The Right Shoulders). Right now her class has two departments... IRS and Gardening. Most of the kids owe taxes but so far none of them have paid any. A couple nights ago Michelle and I discussed the idea that the point of the kids paying taxes was for them to use their pennies to paint a picture of a megareal classroom.
What would happen if Pinker applied the pragmatarian model to language? He'd start a website where people could submit new words... or new meanings for old words. Every member of Pinker's website would pay $1/month but they could use their pennies to help sort the list of words/meanings. At the top of the list would be the most valuable new words/meanings... they would receive the most attention... which means that they would be more quickly integrated into the language. Determining people's willingness to pay (WTP) for new words/meanings would facilitate the efficient evolution of language. Language would go from real to megareal in less time... and so would society.
Right now there are markets for products that we can spend our money on (food, clothes, etc)... and "markets" for products that we can't spend our money on (coasianism, language, etc). If Cowen had pointed out this market dichotomy/paradox to Pinker... how would he have responded? How would Jonathan Haidt have responded? Would their responses have been as intelligent as they are? If not, then how many intelligent people would Cowen have to ask before an intelligent answer was provided?
It's not that we technically can't spend our money on the word "megareal", for example, it's just that there's no pragmatarian system for us to do so. Part of the premise of pragmatarianism is the free-rider problem...
1. We all have limited attention/time/brainpower
2. Not all ideas are equally valuable
3. Spending improves rationality
4. The free-rider problem is a real problem
With the pragmatarian model, the free-rider problem is solved. With Pinker's website, I might as well spend my pennies on "megareal" and on other new words/meanings that I value...
Would Pinker also be willing to spend $1/month on the new words/meanings that he values? Or does he want to maintain the belief that determining WTP isn't necessary for language/culture/society to efficiently evolve?
Right now I'm holding onto the idea that voting should be replaced with spending (coasianism). Am I holding onto the wrong idea?
These ideas are clearly conflicting. How should the conflict be resolved? By voting?
Not by voting? So by a market for ideas?
The idea of a market for ideas is really wonderful, but... it's really painful that this "market" is missing the idea of determining people's WTP for ideas. All markets should be based on WTP! Why? Again...
1. We all have limited attention/time/brainpower
2. Not all ideas are equally valuable
3. Spending improves rationality
4. The free-rider problem is a real problem
What would happen if the owners of the Washington Redskins used coasianism to decide whether or not to change the name? Then the relevant ideas would be sorted by their true social value. As a result, society's limited attention/time/brainpower would be efficiently allocated.
From my perspective, the Wealth of Nations is the most valuable book ever written. Here's what I consider to be the most valuable passage/idea in this most valuable book...
Right now the distribution of attention/time/brainpower is faulty. In other words, our limited resources are inefficiently allocated. This is simply because there are far too many "markets" that don't determine people's WTP. Why are there so many "markets" that don't determine people's WTP? Because there isn't a pragmatarian market that would allow myself, and everybody else, to sort books and their ideas by their true value.
Compare Adam Smith's passage to this passage by Andy Greenberg...
Google is allocating a massive amount of society's limited attention/time/brainpower in order to try and use AI to solve the problem of trolling and abusive comments. Why are they trying to use AI instead of IH (Invisible Hand)? Why does Google think that an AI feedback loop will improve behavior more than a IH feedback loop would?
It's one thing if Jared Cohen had said, "Yeah, we created an IH feedback loop for comments... but it didn't work. It turned out that the most abusive comments/ideas were actually the most valuable. So now we're allocating our resources to improving the AI feedback loop." The impression that I get is that Cohen doesn't even realize that the IH feedback loop is an option.
Those of us who truly value/understand the IH feedback loop have completely failed to bring it to the attention of Google and countless other organizations.
Caplan recently tweeted a link to one of his older blog entries...
In my previous blog entry I shared an experiment that Galloism helped to facilitate. At a local college, a psychology professor is allowing three of his classes to decide whether they have class outside or inside. One of the classes is using voting while the other two are using spending (coasianism).
Last Monday, all three classes decided to have class outside. In both of the coasianism classes, there were two individuals who successfully cheated.
All of the cheaters in the morning class got burned. Will their class have more or less cheaters the next time? In the afternoon class, none of the cheaters got burned. Will their class have more or less cheaters the next time?
Trying to play chicken with your class might be fun for some, but I'm guessing that it won't end up being a very profitable long-term strategy...
As the cheaters realize this, the two conflicting ideas (outside vs inside) will be accurately sorted by their value.
Last year Bryan Caplan posted a blog entry about the problem with seminars...
What was Caplan's solution? It sure wasn't this...
Once you have a forum based on the pragmatarian model, then the speaker can start a thread that members of the audience can reply to whenever they have an idea (question or comment). The "crowd" can use their pennies to sort the ideas by their value. The most valuable ideas will be at the top of the list. The speaker can easily find them and address them at any time. After the seminar is over, the group can continue using the thread to discuss/debate the topic and valuate/sort the ideas.
Each member of the group would efficiently/effectively tap into the group's collective intelligence/information. The people who share the most valuable ideas will be rewarded for improving the group's collective intelligence/information. Incentives matter...
1. We all have limited attention/time/brainpower
2. Not all ideas are equally valuable
3. Spending improves rationality
4. The free-rider problem is a real problem
5. Incentives matter
Scott Sumner also brought up the quality concern regarding comments...
And I tried to bring the IH solution to his attention. My favorite liberal economist, John Quiggin, also had the same issue with comments...
I also tried to bring the IH solution to his attention...
*********************
While I'm at it... I should point out that the solution to the comment problem really isn't to limit Plume's comments. The solution is to create a market in the comment section! Quiggin could spend his pennies on whichever comments he values most. Everybody else could do the same. Then, if people wanted to, they could sort the comments by their value. The most valuable comments would be at the top of the comment section and the least valuable comments would be at the bottom of the comment section.
If we think of Quiggin's blog entry as a home... then the comment section would be the garden. Plume is a weed that grows everywhere in the garden. He takes up way too much space in the garden. The thing is... it's a really big garden... and not all the space is equally valuable. The most valuable space is closest to the house. So the problem really isn't that Plume is taking up too much space... the problem is that he's taking up too much valuable space. All the valuable space that Plume takes up could be used for far more valuable plants. Sure, Quiggin could manually limit the amount of valuable space that Plume occupies... but a far more effective approach would be for Quiggin to give more water, food and love to the plants that he values most. They would grow more vigorously and, as a result, they would crowd out Plume and all the other weeds. Pretty soon all the most valuable space in the garden would be occupied entirely by the most valuable plants. The garden would still have weeds... but they would be located in the most remote part of the very big garden.
This is how and why markets work. Consumers can't pull weeds... but they can help nourish the most beneficial plants. The logical result of consumer choice is that resources are unevenly distributed among the unequally beneficial plants. Redistribution might seem fair... but it simply provides more valuable space to less valuable plants.
Nobody truly benefits when society's limited resources are placed in less beneficial hands. In other words, the opportunity cost of fairness is way too high.
*********************
And a bit here as well....
*********************
Some weeds are hard to get rid of! Clearly Quiggin doesn't value Plume's and Brett's contributions as highly as he values other people's contributions. Just like I don't value all the different plants in my garden equally. "Weeds" are the plants that I value the least. I'd be happy if my garden didn't have any weeds in it! In fact, I'd love to have a magic wand that would instantly turn each and every weed in my garden into an orchid! How awesome would that be? I would just wave the wand over a weed and voila! It would be instantly transformed into an orchid! Then my garden would provide me with much more value!
Quiggin definitely wants his blog's comment section to provide him with much more value. He also definitely opposes slavery. But honestly I'm not quite sure why he opposes slavery. I don't think that I've ever read a blog entry of his that he's dedicated to explaining why, exactly, he opposes slavery.
What's wrong with slavery? Let's take Brett for example. Right now he's a weed in Quiggin's garden. From Quiggin's perspective... all the space that Brett takes up in Quiggin's garden could be allocated to far more valuable plants. In other words... the opportunity cost of Brett is too high. What if Quiggin could wave his magic wand and transform Brett into an orchid? Wouldn't that be a good thing? And isn't slavery a magic wand that would do the trick? Then Brett would do whatever Quiggin wanted him to do.
*********************
Anyways, I think that you get my point. Ideas should be sorted by their value. This can only be accomplished when we determine people's WTP for ideas. As far as I can tell, according to the basic facts...
1. We all have limited attention/time/brainpower
2. Not all ideas are equally valuable
3. Spending improves rationality
4. The free-rider problem is a real problem
5. Incentives matter
... pragmatarianism and coasianism are two excellent ways to determine people's WTP for ideas.
*********************
According to Google, the US population, rounded to the nearest million, is 319 million.
Let's say that someone comes up with the idea that humans of a certain race/colour/religion are "less human" than others, and we should be able to own them like property. The overwhelming majority of people would consider this to be a very bad idea. Let's assume that 99.7% of Americans consider the idea of owning another human abhorrent. In raw numbers, this would be approximately 318 million people, with around 1 million people being pro-slavery.
The issue comes up for voting. It's dead in the water. Why? Because the majority of people recognise a disgusting idea when they see it.
The issue comes up for bidding. 318 million people spend an average of $1000 each on the "no" campaign. Some more, some less, depending on circumstances, but it averages to $1000 per person. That's $318 billion. 1 million people spend $320,000 on the "yes" campaign. That's $320 billion. Despite the overwhelming majority finding the idea detestable, slavery is now a thing because a couple of people have deeper pockets than the rest.
"Ah," you say, "but they'll get MONEY!"
Yes, they will. Their civil rights, liberty and personhood was valued at a little over 1 billion dollars. Given that they've lost their personhood and are no longer considered human, would they even receive it? That would depend on how the law that 0.3% of people actually wanted was written.
Now do you understand why coasianism is worse than voting? - Dazchan
*********************
If Dazchan had been following the thread all along then he would have known that the issue of slavery had already been brought up by another member... Galloism. Alternatively, Dazchan could have figured this out if he had searched the thread for "slavery".
A thread consists of posts and each post is an idea. By default, the posts/ideas are sorted chronologically... oldest to newest.
But what if the pragmatarian model was applied to the forum? Each member would have to pay $1/month but they could choose which posts they spend their pennies on. Then it would be possible to sort threads and their posts by their total value.
Galloism would still have brought up his idea about slavery being an effective argument against coasianism. But then he, and everybody else, would have had the option to spend their pennies on his post. The more pennies that were spent on Galloism's post, the higher up it would have been placed on the list of posts/ideas when they were sorted by their value... and the more likely that Dazchan would have seen it.
Here are a couple of basic facts...
1. We all have limited attention/time/brainpower
2. Not all ideas are equally valuable
When we put these basic facts together, it should be clear that maximizing society's benefit depends on sorting ideas by their value.
With this in mind, let's consider Dazchan's concern about slavery and coasianism. Imagine that Bob posts in my thread, "slavery is wonderful". It is an idea... but most of us would consider it to be a bad idea. This means that, with the pragmatarian model, most of us would not be willing to spend our pennies on Bob's idea/post. As a result, when the posts/ideas in the thread were sorted by their value, Bob's idea would be at the bottom of the list.
Would we use coasianism for such a worthless idea? I don't think so. Then again, by this same measure, coasianism and pragmatarianism probably aren't currently much more valuable than the idea of slavery. Which is why we can't currently sort ideas by their value. All ideas have to start somewhere...
Our creed is that the science of government is an experimental science, and that, like all other experimental sciences, it is generally in a state of progression. No man is so obstinate an admirer of the old times as to deny that medicine, surgery, botany, chemistry, engineering, navigation, are better understood now than in any former age. We conceive that it is the same with political science. Like those physical sciences which we have mentioned, it has always been working itself clearer and clearer, and depositing impurity after impurity. There was a time when the most powerful of human intellects were deluded by the gibberish of the astrologer and the alchemist; and just so there was a time when the most enlightened and virtuous statesman thought it the first duty of a government to persecute heretics, to found monasteries, to make war on Saracens. But time advances; facts accumulate; doubts arise. Faint glimpses of truth begin to appear, and shine more and more unto the perfect day. The highest intellects, like the tops of mountains, are the first to catch and reflect the dawn. They are bright, while the level below is still in darkness. But soon the light, which at first illuminated only the loftiest eminences, descends on the plain and penetrates to the deepest valley. First come hints, then fragments of systems, then defective systems, then complete and harmonious systems. The sound opinion, held for a time by one bold speculator, becomes the opinion of a small minority, of a strong minority, of a majority of mankind. Thus the great progress goes on, till schoolboys laugh at the jargon which imposed on Bacon, till country rectors condemn the illiberality and intolerance of Sir Thomas More. - Thomas Macaulay
Yesterday morning, like most mornings, I was browsing Medium trying to find valuable ideas. Of course the ideas aren't sorted by their value. So it's a very challenging Easter Egg hunt. But I did manage to find a couple valuable Easter Eggs...
Each of these Easter Eggs is an idea... but each idea also contains several ideas. Let's consider some of the individual ideas...
You actually put a person in a situation where there’s real money at stake, and all of a sudden they’re not so irrational. - Steven Pinker
This idea is another basic fact. I've previously referred to this basic fact as Tabarrok's Rule. Let's add it to the other two facts...
1. We all have limited attention/time/brainpower
2. Not all ideas are equally valuable
3. Spending improves rationality
Maximizing society's benefit depends on sorting ideas by their value... and determining an idea's value depends on spending.
Is this relevant to language?
That is Hayekian in the sense that no one planned the language to be optimal in satisfying one criterion. There are tradeoffs. There are multiple tugs, pushes, and pulls. As millions of speakers make little adjustments, as they use the language, as kids learn the language, the language itself spontaneously evolves with some balance. - Steven Pinker
The other day I mentioned to my friend Michelle that there's "real", "unreal" and "surreal" but no prefix for better than real. For over an hour she argued that A. there was no such concept and B. there were already words to express such a concept... ie "fantasy"... "utopia". I brought up the same topic a day or two later and she came up with "megareal". "Megareal"? I didn't think that it was a wonderful word... but, for lack of a better word, we've ended up using it. It is a useful word! When I say that it would be megareal if we could choose where our taxes go, she knows exactly what I'm talking about.
Michelle teaches 4th grade and she recently started applying coasianism and pragmatarianism to her classroom (Standing On The Right Shoulders). Right now her class has two departments... IRS and Gardening. Most of the kids owe taxes but so far none of them have paid any. A couple nights ago Michelle and I discussed the idea that the point of the kids paying taxes was for them to use their pennies to paint a picture of a megareal classroom.
What would happen if Pinker applied the pragmatarian model to language? He'd start a website where people could submit new words... or new meanings for old words. Every member of Pinker's website would pay $1/month but they could use their pennies to help sort the list of words/meanings. At the top of the list would be the most valuable new words/meanings... they would receive the most attention... which means that they would be more quickly integrated into the language. Determining people's willingness to pay (WTP) for new words/meanings would facilitate the efficient evolution of language. Language would go from real to megareal in less time... and so would society.
Right now there are markets for products that we can spend our money on (food, clothes, etc)... and "markets" for products that we can't spend our money on (coasianism, language, etc). If Cowen had pointed out this market dichotomy/paradox to Pinker... how would he have responded? How would Jonathan Haidt have responded? Would their responses have been as intelligent as they are? If not, then how many intelligent people would Cowen have to ask before an intelligent answer was provided?
It's not that we technically can't spend our money on the word "megareal", for example, it's just that there's no pragmatarian system for us to do so. Part of the premise of pragmatarianism is the free-rider problem...
1. We all have limited attention/time/brainpower
2. Not all ideas are equally valuable
3. Spending improves rationality
4. The free-rider problem is a real problem
With the pragmatarian model, the free-rider problem is solved. With Pinker's website, I might as well spend my pennies on "megareal" and on other new words/meanings that I value...
Under most real-world taxing institutions, the tax price per unit at which collective goods are made available to the individual will depend, at least to some degree, on his own behavior. This element is not, however, important under the major tax institutions such as the personal income tax, the general sales tax, or the real property tax. With such structures, the individual may, by changing his private behavior, modify the tax base (and thus the tax price per unit of collective goods he utilizes), but he need not have any incentive to conceal his "true" preferences for public goods. - James M. Buchanan, The Economics of Earmarked Taxes
Would Pinker also be willing to spend $1/month on the new words/meanings that he values? Or does he want to maintain the belief that determining WTP isn't necessary for language/culture/society to efficiently evolve?
Ideally, what we want is an arena in which the rules of the game make it so that no matter how emotionally tied you are to your belief, if it’s wrong, it’ll be shown to be wrong and it’ll just be too embarrassing to hold on to it or at least for other people to hold on to it indefinitely. That’s what I consider to be the ideal of what science is all about, and intellectual discourse in general. - Steven Pinker
Right now I'm holding onto the idea that voting should be replaced with spending (coasianism). Am I holding onto the wrong idea?
Let’s say if people say harmful things — take a classic case. There’s a football team called the Washington Redskins. I’m pretty sure most of its fans, the intent is not offense, but there is an offense there for many people. It’s called a harm, and there are some demands that name be changed. There is a public or social dimension to the name, that if certain groups are insulted enough times maybe there’s a demoralization or other kinds of prejudice become seen as more effective. How do you think through whether the Washington Redskins should be called the Washington Redskins, and does this not mean that on campus there should be some political correctness? - Tyler Cowen
These ideas are clearly conflicting. How should the conflict be resolved? By voting?
Once they start saying we’re going to put to a vote everything. Everyone gets to opine on whether we take down this, take down this. Before you know it, you’re taking down everything because presumably religious students are offended by certain things, conservative students are offended by certain things, everyone’s offended by something. - Jonathan Haidt
Not by voting? So by a market for ideas?
You have to see college campuses as being institutions that were designed or intended to be places where people come up against diverse ideas, they’re challenged, and as within the marketplace — monopoly destroys a lot of the value of the marketplace — if you have a monopoly on ideas in the intellectual marketplace, you kill the marketplace. Campuses are supposed to be places where nobody has a monopoly on ideas, but they’ve become that in the last few years. - Jonathan Haidt
The idea of a market for ideas is really wonderful, but... it's really painful that this "market" is missing the idea of determining people's WTP for ideas. All markets should be based on WTP! Why? Again...
1. We all have limited attention/time/brainpower
2. Not all ideas are equally valuable
3. Spending improves rationality
4. The free-rider problem is a real problem
What would happen if the owners of the Washington Redskins used coasianism to decide whether or not to change the name? Then the relevant ideas would be sorted by their true social value. As a result, society's limited attention/time/brainpower would be efficiently allocated.
Again, this is a critique from outside, but what a lot of people say which sounds right to me is that the early economists were great social theorists. My God, you read Adam Smith, what a brilliant world philosopher, historian, they thought so broadly and you tell me, but it seems there was a weird turn in the mid‑20th century towards mathematics. - Jonathan Haidt
From my perspective, the Wealth of Nations is the most valuable book ever written. Here's what I consider to be the most valuable passage/idea in this most valuable book...
It is thus that the private interests and passions of individuals naturally dispose them to turn their stocks towards the employments which in ordinary cases are most advantageous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and passions of men naturally lead them to divide and distribute the stock of every society among all the different employments carried on in it as nearly as possible in the proportion which is most agreeable to the interest of the whole society. - Adam Smith, Wealth of Nations
Right now the distribution of attention/time/brainpower is faulty. In other words, our limited resources are inefficiently allocated. This is simply because there are far too many "markets" that don't determine people's WTP. Why are there so many "markets" that don't determine people's WTP? Because there isn't a pragmatarian market that would allow myself, and everybody else, to sort books and their ideas by their true value.
Compare Adam Smith's passage to this passage by Andy Greenberg...
What’s more, some limited evidence suggests that this kind of quick detection can actually help to tame trolling. Conversation AI was inspired in part by an experiment undertaken by Riot Games, the videogame company that runs the world’s biggest multiplayer world, known as League of Legends, with 67 million players. Starting in late 2012, Riot began using machine learning to try to analyze the results of in-game conversations that led to players being banned. It used the resulting algorithm to show players in real time when they had made sexist or abusive remarks. When players saw immediate automated warnings, 92 percent of them changed their behavior for the better, according to a report in the science journal Nature. - Andy Greenberg, Inside Google’s Internet Justice League and its AI-Powered War on Trolls
It's one thing if Jared Cohen had said, "Yeah, we created an IH feedback loop for comments... but it didn't work. It turned out that the most abusive comments/ideas were actually the most valuable. So now we're allocating our resources to improving the AI feedback loop." The impression that I get is that Cohen doesn't even realize that the IH feedback loop is an option.
Those of us who truly value/understand the IH feedback loop have completely failed to bring it to the attention of Google and countless other organizations.
Caplan recently tweeted a link to one of his older blog entries...
Self-correction in markets and politics: https://t.co/vUyO1AwQy9— Bryan Caplan (@bryan_caplan) November 2, 2016
What prompts even unsophisticated consumers to practice self-correction? The reason is pretty obvious: In markets, self-correction saves the self-corrector money, quality, time, and/or convenience. If you don't self-correct, you get burned. Badly. And often.
The opposite holds in politics. Few voters exhibit even rudimentary self-correction.
In my previous blog entry I shared an experiment that Galloism helped to facilitate. At a local college, a psychology professor is allowing three of his classes to decide whether they have class outside or inside. One of the classes is using voting while the other two are using spending (coasianism).
Last Monday, all three classes decided to have class outside. In both of the coasianism classes, there were two individuals who successfully cheated.
All of the cheaters in the morning class got burned. Will their class have more or less cheaters the next time? In the afternoon class, none of the cheaters got burned. Will their class have more or less cheaters the next time?
Trying to play chicken with your class might be fun for some, but I'm guessing that it won't end up being a very profitable long-term strategy...
It is impossible for anyone, even if he be a statesman of genius, to weigh the whole community's utility and sacrifice against each other. - Knut Wicksell, A New Principle of Just Taxation
As the cheaters realize this, the two conflicting ideas (outside vs inside) will be accurately sorted by their value.
Last year Bryan Caplan posted a blog entry about the problem with seminars...
Can't speakers deflect the pointless interruptions to make the talk train run on time? It's tough. You can't just say, "Please, only good questions." And once you take one silly question, every other squeaky wheel feels entitled to put in his two cents. "Hey, my question's clearly better than the last guy's!" As a speaker, then, you have to choose between offending a fifth of the audience or boring the entirety. Professionally speaking, the former is the greater danger. - Bryan Caplan, How to Fix Seminars
What was Caplan's solution? It sure wasn't this...
What prompts even unsophisticated consumers to practice self-correction? The reason is pretty obvious: In markets, self-correction saves the self-corrector money, quality, time, and/or convenience. If you don't self-correct, you get burned. Badly. And often.
Once you have a forum based on the pragmatarian model, then the speaker can start a thread that members of the audience can reply to whenever they have an idea (question or comment). The "crowd" can use their pennies to sort the ideas by their value. The most valuable ideas will be at the top of the list. The speaker can easily find them and address them at any time. After the seminar is over, the group can continue using the thread to discuss/debate the topic and valuate/sort the ideas.
Each member of the group would efficiently/effectively tap into the group's collective intelligence/information. The people who share the most valuable ideas will be rewarded for improving the group's collective intelligence/information. Incentives matter...
1. We all have limited attention/time/brainpower
2. Not all ideas are equally valuable
3. Spending improves rationality
4. The free-rider problem is a real problem
5. Incentives matter
Scott Sumner also brought up the quality concern regarding comments...
I'm not going to even comment on the Ashley Madison case. I've found that Americans are so deranged when it comes to matters of gender, race, and sex that it's almost impossible to have an intelligent conversation on those subjects. So I generally try to avoid those topics. (Actually Bryan is one of the few people I know with whom I could have an intelligent conversation on any topic, if no commenters were listening in.) - Scott Sumner, Beyond victims and villains
And I tried to bring the IH solution to his attention. My favorite liberal economist, John Quiggin, also had the same issue with comments...
Plume, I agree with other commenters here. From now on, for my post, can you limit yourself to one comment per post per day. - John Quiggin, Income redistribution: Where should we start?
Brett, you were banned some time ago. I don’t want my discussion threads derailed by debates with you. Could other commenters refrain from responding to Brett, please. - John Quiggin, Locke’s Road to Serfdom
I also tried to bring the IH solution to his attention...
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While I'm at it... I should point out that the solution to the comment problem really isn't to limit Plume's comments. The solution is to create a market in the comment section! Quiggin could spend his pennies on whichever comments he values most. Everybody else could do the same. Then, if people wanted to, they could sort the comments by their value. The most valuable comments would be at the top of the comment section and the least valuable comments would be at the bottom of the comment section.
If we think of Quiggin's blog entry as a home... then the comment section would be the garden. Plume is a weed that grows everywhere in the garden. He takes up way too much space in the garden. The thing is... it's a really big garden... and not all the space is equally valuable. The most valuable space is closest to the house. So the problem really isn't that Plume is taking up too much space... the problem is that he's taking up too much valuable space. All the valuable space that Plume takes up could be used for far more valuable plants. Sure, Quiggin could manually limit the amount of valuable space that Plume occupies... but a far more effective approach would be for Quiggin to give more water, food and love to the plants that he values most. They would grow more vigorously and, as a result, they would crowd out Plume and all the other weeds. Pretty soon all the most valuable space in the garden would be occupied entirely by the most valuable plants. The garden would still have weeds... but they would be located in the most remote part of the very big garden.
This is how and why markets work. Consumers can't pull weeds... but they can help nourish the most beneficial plants. The logical result of consumer choice is that resources are unevenly distributed among the unequally beneficial plants. Redistribution might seem fair... but it simply provides more valuable space to less valuable plants.
Nobody truly benefits when society's limited resources are placed in less beneficial hands. In other words, the opportunity cost of fairness is way too high.
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And a bit here as well....
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Some weeds are hard to get rid of! Clearly Quiggin doesn't value Plume's and Brett's contributions as highly as he values other people's contributions. Just like I don't value all the different plants in my garden equally. "Weeds" are the plants that I value the least. I'd be happy if my garden didn't have any weeds in it! In fact, I'd love to have a magic wand that would instantly turn each and every weed in my garden into an orchid! How awesome would that be? I would just wave the wand over a weed and voila! It would be instantly transformed into an orchid! Then my garden would provide me with much more value!
Quiggin definitely wants his blog's comment section to provide him with much more value. He also definitely opposes slavery. But honestly I'm not quite sure why he opposes slavery. I don't think that I've ever read a blog entry of his that he's dedicated to explaining why, exactly, he opposes slavery.
What's wrong with slavery? Let's take Brett for example. Right now he's a weed in Quiggin's garden. From Quiggin's perspective... all the space that Brett takes up in Quiggin's garden could be allocated to far more valuable plants. In other words... the opportunity cost of Brett is too high. What if Quiggin could wave his magic wand and transform Brett into an orchid? Wouldn't that be a good thing? And isn't slavery a magic wand that would do the trick? Then Brett would do whatever Quiggin wanted him to do.
Anyways, I think that you get my point. Ideas should be sorted by their value. This can only be accomplished when we determine people's WTP for ideas. As far as I can tell, according to the basic facts...
1. We all have limited attention/time/brainpower
2. Not all ideas are equally valuable
3. Spending improves rationality
4. The free-rider problem is a real problem
5. Incentives matter
... pragmatarianism and coasianism are two excellent ways to determine people's WTP for ideas.
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