Disparity Between Individual Influence And Collective Opportunity Cost

My second favorite liberal, John Quiggin, is still working on his book about opportunity cost...  Intellectual property: Extract from Economics in Two Lessons (expanded and amended).

Eventually he's going to finish his book.  Then what?  Then I'll buy it.  Unless the opportunity cost is too high.  Right?  I'm assuming that he's not going to charge an arm and a leg for his book.

Am I going to be the only person in the entire world to purchase Quiggin's book?  Probably not.  We can imagine a bunch of people buying Quiggin's book.  We can imagine them considering the available information, weighing the alternative uses of their money and deciding that the opportunity cost isn't too high.

When a bunch of people take money out of their own pocket... and put it into Quiggin's pocket... then the distribution of influence will shift accordingly.  A bunch of people voluntarily and willingly give up a little influence... and Quiggin gains the influence that they were willing to give up.  Consumers exchange their influence for Quiggin's book.  Quiggin exchanges his book (his time and energy) for consumers' influence.  

Does this make sense?  Quiggin spends a lot of time/energy producing something that lots of people positively value and, as a result, lots of people reward him accordingly.  His reward is more influence over society's limited resources.

Can you see the parity?  Quiggin's influence roughly reflects consumers' valuations of his productivity.  When their valuation of his productivity increases... so will his influence.  This parity isn't perfect because in reality one price does not fit all.  And we should certainly endeavor to figure out how to eliminate any disparity that exists.  Why?  Because it should be intuitive that the smaller the disparity... the larger the benefit.  Conversely, the larger the disparity... the smaller the benefit.

Given that I plan on buying Quiggin's book... clearly I approve of a liberal writing a book about opportunity cost.  But, it's kinda something that his book isn't going to be relevant to something as economically basic, and fundamentally important, as a bunch of people buying his book.

The fact is that it's impossible for liberals to really dig into the basic relationship between influence and opportunity cost.  What is Quiggin going to argue?  He's going to argue that there's nothing problematic about massive disparities?  Which would mean what?  He would either be arguing that his book, and all books, should be entirely free... or he would be arguing that everybody should have to spend far more money than they truly want to on all books.  Authors should either have far less, or far more, influence than they truly deserve.

If Quiggin acknowledges that it is problematic when disparities exist... then he would essentially be attacking the fundamental premise of democratically elected leaders.  Right now there's a massive disparity between Obama's influence and the collective's valuation of his productivity.  And the same will be true for the next president just like it was true of the previous president.

Here I am writing my gazillionth blog entry.  And I haven't been paid a penny!  Because... absolutely nobody in the world values my productivity at all?  Or... because of the free-rider problem?  Clearly because of the free-rider problem!   The free-rider problem is a problem, and only a problem, because it results in disparities between influence and (valuations of) productivity.  Right now, because of the free-rider problem, I have less influence than I truly deserve.  Mandatory contributions are only beneficial when they decrease, rather than increase, disparities.  But the only way that mandatory contributions can decrease disparities is when they incorporate everybody's valuations.

Everybody in the world has some influence.  The goal should be to structure society in such a way that everybody's influence perfectly reflects how much their productivity is worth to other people.  Nobody should have more, or less, influence than they truly deserve.

Is There a Platypus Controlling You?

Over on the Ron Paul forums I started this thread...Is Christmas Coercion?  My goal in starting the thread was to try and imagine the resource allocation disparity between a world with and without Christmas...in order to help try and imagine what the resource allocation disparity might be between pragmatarianism and anarcho-capitalism.

Nearly everybody who responded to the thread completely missed my point and instead tried to refute any possible coercive element of Christmas.  Most of the comments were fairly predictable...except for the comments by wistfulthinker.  His comments were extremely exceptional.  In my opinion it is well worth it to sign up to the Ron Paul forums just to read his comments.  You might not agree with his content...but personally it was like receiving a totally unexpected but very enjoyably ironic gift.  It helps to read the entire thread to fully appreciate the irony.

Everybody is coerced/controlled by something/someone to some degree...right?  Personally...I wish I didn't have to eat or sleep.  But there are plenty of people that take great joy in eating and sleeping.

How many times in our life have we been coerced into doing something good?  How many times in our life have we been coerced into doing something bad?  "Peer pressure" generally has a negative connotation but traditions are nothing more than peer pressure amplified into social pressure.  There's incredible pressure to conform...people who fail to conform in a bad way are considered deviants while people who fail to conform in a good way are considered nonconformists.  Whether somebody is a deviant or nonconformist is subjective and relative though.

When it comes to the scope/responsibilities of government ...are you a deviant...or a conformist...or a nonconformist?  Here's a bell curve diagram that represents society's views on what the government should or shouldn't do...

There's a continuum that ranges from people that believe the government should do everything (socialists) all the way to people that believe that the government shouldn't do anything (anarcho-capitalists).  In between are liberals and libertarians.  If you scroll down my entry on libertarianism you'll find a timeline of the perspectives of prominent libertarians on the proper scope of government.

Another way of thinking about the political ideology continuum is to organize the various ideologies based on their views on how pervasive the free-rider problem is...The Blind Men and the Scope of Government.

Do we really need the government to act like our parents?  What type of parenting style should the government adhere to?  Authoritarian parenting style...soft-paternalism parenting style...maternal parenting style...permissive parenting style?

It's entirely possible that anarcho-capitalists are correct that as a society we're grown up enough to stand on our own two feet.  But can we ever truly know whether somebody is responsible enough to stand on their own two feet without completely withdrawing our support?

The kicker is that we know exactly how grown up we truly are as a society.  The challenge is to understand that the answer is collectively known.  The sum of our individual answers is the true answer.  To arrive at the true answer we need to integrate our perspectives.

How can we integrate our perspectives?  By allowing taxpayers to directly allocate their taxes.  This will allow taxpayers to use their taxes to highlight the areas where we still have some growing up to do.  Their tax allocation decisions will address the shortcomings of the private sector...AND...the shortcomings of the public sector.

Control is a very serious matter...but I strive not to take myself too seriously.  With that in mind...






Vanessa: Dad?
Heinz Doofenshmirtz: Oh, hi, Vanessa!
Vanessa: Dad, what are you doing?
Heinz Doofenshmirtz: Well I'll be honest I don't really understand
But I fell down this hill and I got glue on my hands
Now I got records on my fingers
Kids: Whaaaat?
Heinz Doofenshmirtz: Records on my fingers
I got records on my fingers and I just can't stop
Kids: Don't stop
Heinz Doofenshmirtz: I can't stop I got a platypus controlling me
Kids: WHAAAAT?
Heinz Doofenshmirtz: I got a platypus controlling me
Now let me sum it up
It was a strange set of circumstances
Kids: Strange set of circumstances?
Heinz Doofenshmirtz: I fell down the hill, I got glue on my hands now I got records on my fingers
And I just can't stop
Kids: DON'T STOP DON'T STOP
Heinz Doofenshmirtz: Well I would if I was able
there's a platypus controlling me he's underneath the table
Kids: There's a platypus controlling him—WHAAAT?
Kid: Oh I get it, platypus is a metaphor for whatever is keeping you down
Kids: Corporations are a platypus
The government's a platypus
Your teacher is a platypus
Weird Kid: My teacher is a panda
Kids: Society's a platypus
My parents are a platypus
The media's a platypus
It's all just propaganda
We've all got platypus controlling us
Heinz Doofenshmirtz: No just me
Kids: We've all got platypus controlling us
Heinz Doofenshmirtz: I'd stop if I was able
Kids: We've all got platypus controlling us
Heinz Doofenshmirtz: I'm not speaking metaphorically
the platypus controlling me is underneath the table
Oh wait, no, he's gone!
Heyyy! There's no platypus controlling me...
There's no platypus controlling me!

Power and Control

Politics is all about power and control...which is why we need checks and balances.

Frank Herbert -  "He who controls the spice, controls the universe!" - Dune

Pragmatarianism would transfer some control of taxes from congress to taxpayers.  The amount of control transfered would be determined by taxpayers themselves and would reflect their confidence in congress.  This check on the power of congress would have been supported by Herbert Spencer.

Herbert Spencer 

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

     The function of Liberalism in the past was that of putting a limit to the powers of kings. The function of true Liberalism in the future will be that of putting a limit to the powers of Parliaments - Contemporary review, Volume 46

For a few weeks now a Marxist concept that I learned while studying International Development at UCLA has been on my mind but the word wasn't even on the tip of my tongue.  Surprisingly, I just remembered it..."comprador bourgeoisie".  Basically, they were well-connected, upper class, middlemen in developing countries.  A multinational corporation (MNC) would go into a developing country and deal with the local comprador bourgeoisie...who would help "facilitate" the MNC's exploitation of local resources.  The MNCs and the comprador bourgeoisie would get rich and very little, if any, money would trickle down to the proletariat.

Is it a bit much to think of congress as comprador bourgeoisie?  Perhaps...but, in a pragmatarian system, that would be up to each taxpayer to decide.  I kind of just wanted to write it down in case I forgot it again.

Another term that I struggled to remember was "moral hazard".  I'll just be lazy and grab this one from Wikipedia...

Moral hazard also arises in a principal-agent problem, where one party, called an agent, acts on behalf of another party, called the principal. The agent usually has more information about his or her actions or intentions than the principal does, because the principal usually cannot completely monitor the agent. The agent may have an incentive to act inappropriately (from the viewpoint of the principal) if the interests of the agent and the principal are not aligned.

It's straightforward to see that the interests of congress (the agent) and taxpayers (the principle) are not completely aligned.  The primary goal of politicians is to be (re)elected so their interests are strongly aligned with whoever will finance their campaign.

Guido Calabresi 

In a market regime, some are made richer and some made poorer; in a command structure, some have greater authority and some less. It is equally clear that, in an all-market regime, wealth constitutes authority, and that, in an all-command structure, authority results in wealth. Also true, but perhaps less plain, is the fact that in mixed systems like ours people will use their distributional advantage in one medium to overcome their distributional disadvantage in the other by 'altering' or 'corrupting' that other medium. The use of money to influence or 'corrupt' those in authority is easy enough to understand, whether through bribes or campaign contributions.- The Origins of Law and Economics: Essays by the Founding Fathers

This is also know as rent-seeking behavior...when special interest groups and big business attempt to influence congress.

Some decades before Herbert Spencer was worrying about how the power of parliament would be limited...Alexis de Tocqueville was worrying about tyranny of the majority.  

Alexis de Tocqueville

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. - Democracy in America

As I pointed out in my entry on taxpayers, taxpayers are better educated than the general public.  Therefore, pragmatarianism would help function as a check against any possible tyranny of the majority.

To review, pragmatarianism would...

1. help check the power of congress
2. help check tyranny of the majority
3. result in an optimal division of labor between the private and public sector
4. ensure that public goods would be produced with maximum efficiency
5. ensure levels of all public goods would accurately reflect society's values
6. provide greater freedom
7. allow taxpayers to joyfully contribute to public goods