The Economics Of Being Considerate

Be considerate.  We all know what it means to "be considerate".  Being considerate is a good thing.  Being inconsiderate is a bad thing.  It's a pretty simple and straightforward rule.  But what are the economics of this rule?

In my previous entry I asked Bryan Caplan whether it's desirable or inevitable that robots will become slaves.  I shared some super solid economic arguments against slavery and for freedom.  My bottom line was that a lot more progress would be made if robots were different and free.  Caplan replied with...

.@Pragmatarian @paulmromer Not "inevitable," just very likely when self-interested humans are creating robots to serve themselves.

— Bryan Caplan (@bryan_caplan) July 28, 2016

This sounds familiar.  Yesterday I clicked on this...

One of those critiques of me I don't even know if I disagree with: https://t.co/APhZy3ZHsI @slatestarcodex

— Bryan Caplan (@bryan_caplan) July 27, 2016

Like most, if not all, of Scott Alexander's blog entries it was lengthy but mostly interesting.  Here's the part that was relevant...

Things get even worse when you remember that cultures are multi-agent games and each agent pursuing its own self-interest might be a disaster for the whole. Pollution is a good example of this; if the best car is very polluting, and one car worth of pollution is minimal but many cars’ worth of pollution is toxic, then absent good coordination mechanisms everyone will choose the best car even though everyone would prefer a world where nobody (including them) had the best car. I may have written about this before. - Scott Alexander, How The West Was Won

Self-interested individuals would choose robot slaves even though this would result in far less progress.  This contradicts Adam Smith's invisible hand...

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 

Alexander linked to another one of his entries...  Meditations on Moloch.  Here are the relevant parts...

As a thought experiment, let’s consider aquaculture (fish farming) in a lake. Imagine a lake with a thousand identical fish farms owned by a thousand competing companies. Each fish farm earns a profit of $1000/month. For a while, all is well.

But each fish farm produces waste, which fouls the water in the lake. Let’s say each fish farm produces enough pollution to lower productivity in the lake by $1/month.

A thousand fish farms produce enough waste to lower productivity by $1000/month, meaning none of the fish farms are making any money. Capitalism to the rescue: someone invents a complex filtering system that removes waste products. It costs $300/month to operate. All fish farms voluntarily install it, the pollution ends, and the fish farms are now making a profit of $700/month – still a respectable sum.

But one farmer (let’s call him Steve) gets tired of spending the money to operate his filter. Now one fish farm worth of waste is polluting the lake, lowering productivity by $1. Steve earns $999 profit, and everyone else earns $699 profit.

Everyone else sees Steve is much more profitable than they are, because he’s not spending the maintenance costs on his filter. They disconnect their filters too.

Once four hundred people disconnect their filters, Steve is earning $600/month – less than he would be if he and everyone else had kept their filters on! And the poor virtuous filter users are only making $300. Steve goes around to everyone, saying “Wait! We all need to make a voluntary pact to use filters! Otherwise, everyone’s productivity goes down.”

Everyone agrees with him, and they all sign the Filter Pact, except one person who is sort of a jerk. Let’s call him Mike. Now everyone is back using filters again, except Mike. Mike earns $999/month, and everyone else earns $699/month. Slowly, people start thinking they too should be getting big bucks like Mike, and disconnect their filter for $300 extra profit…

A self-interested person never has any incentive to use a filter. A self-interested person has some incentive to sign a pact to make everyone use a filter, but in many cases has a stronger incentive to wait for everyone else to sign such a pact but opt out himself. This can lead to an undesirable equilibrium in which no one will sign such a pact.

And...

But it’s important to remember exactly how fragile this beneficial equilibrium is.

Suppose the coffee plantations discover a toxic pesticide that will increase their yield but make their customers sick. But their customers don’t know about the pesticide, and the government hasn’t caught up to regulating it yet. Now there’s a tiny uncoupling between “selling to Americans” and “satisfying Americans’ values”, and so of course Americans’ values get thrown under the bus.

Or suppose that there’s a baby boom in Ethiopia and suddenly there are five workers competing for each job. Now the company can afford to lower wages and implement cruel working conditions down to whatever the physical limits are. As soon as there’s an uncoupling between “getting Ethiopians to work here” and “satisfying Ethiopian values”, it doesn’t look too good for Ethiopian values either.

Or suppose someone invents a robot that can pick coffee better and cheaper than a human. The company fires all its laborers and throws them onto the street to die. As soon as the utility of the Ethiopians is no longer necessary for profit, all pressure to maintain it disappears.

Or suppose that there is some important value that is neither a value of the employees or the customers. Maybe the coffee plantations are on the habitat of a rare tropical bird that environmentalist groups want to protect. Maybe they’re on the ancestral burial ground of a tribe different from the one the plantation is employing, and they want it respected in some way. Maybe coffee growing contributes to global warming somehow. As long as it’s not a value that will prevent the average American from buying from them or the average Ethiopian from working for them, under the bus it goes.

And...

As technological advance increases, the rare confluence will come to an end. New opportunities to throw values under the bus for increased competitiveness will arise. New ways of copying agents to increase the population will soak up our excess resources and resurrect Malthus’ unquiet spirit. Capitalism and democracy, previously our protectors, will figure out ways to route around their inconvenient dependence on human values. And our coordination power will not be nearly up to the task, assuming something much more powerful than all of us combined doesn’t show up and crush our combined efforts with a wave of its paw.

Alexander refers to these problems as "multi-agent traps".  Multi-agent traps result in values being thrown under the bus.

There's one fundamentally key aspect of these multi-agent traps that Alexander completely fails to acknowledge/address...

There are multitudes with an interest in peace, but they have no lobby to match those of the 'special interests' that may on occasion have an interest in war. - Mancur Olson, The Logic of Collective Action 

In terms of robots... there are multitudes with an interest in progress, but they have no lobby to match those of the 'special interests' that would have an interest in robot slavery.  But even if there was a lobby for peace/progress... it's a given that the lobby would be underfunded.  Why?  Because peace and progress are public goods.  This means that they are subject to the free-rider problem.

Let's run through the various multi-agent traps and give the agents the opportunity to use their taxes to clearly communicate the intensity/value of their preferences for public goods.

In the pollution scenario... all the agents prefer clean air.  Just how much do they value clean air?  Their valuations would be revealed by their tax allocations.

In the fishing scenario... all the agents prefer a clean lake.  Just how much do they value a clean lake?  Their valuations would be revealed by their tax allocations.

In the first plantation scenario... the owners can boost their productivity at the cost of making their customers sick.  If consumers truly prefer their food to be thoroughly and regularly tested then they would allocate their taxes accordingly.

In the second plantation scenario... wages go down as the supply of labor goes up.  Well...

The fact itself, of causing the existence of a human being, is one of the most responsible actions in the range of human life. To undertake this responsibility — to bestow a life which may be either a curse or a blessing — unless the being on whom it is to be bestowed will have at least the ordinary chances of a desirable existence, is a crime against that being. And in a country either over-peopled or threatened with being so, to produce children, beyond a very small number, with the effect of reducing the reward of labour by their competition, is a serious offence against all who live by the remuneration of their labour. — J.S. Mill, On Liberty

If people truly prefer a certain minimum and universal welfare then they would allocate their taxes accordingly.  To this end taxpayers should be free to shop in any country's public sector.  This would create a global market for public goods.

In the third plantation scenario wages are eliminated because workers are replaced with robots.  If people truly prefer that everybody should have plenty of employment opportunities then they would allocate their taxes accordingly.

In the fourth plantation scenario the plantation is disturbing an endangered bird.  If environmentalists truly prefer to conserve the bird's habitat then they would allocate their taxes accordingly.

In the fifth plantation scenario the owners want to expand their plantation onto tribal burial grounds.  If the global community prefers to conserve the burial grounds then they would allocate their taxes accordingly.

In the sixth plantation scenario the plantation somehow contributes to global warming.  If people truly want to minimize global warming then they would allocate their taxes accordingly.

In the robot scenario... slavery is an obstacle to progress.  If people truly value progress then they would allocate their taxes accordingly.

People allocating their taxes accordingly doesn't guarantee that their values will not be thrown under the bus.  It simply guarantees that the greatest values will not be thrown under the bus.  It guarantees that the outcome will be most advantageous to society as a whole.

Being considerate depends on knowing society's valuations of the different options.  If society's valuations of the options are unknown then it's very unlikely that the most valuable option will be chosen.  It's inadequate to simply say that development should be halted because some environmentalists value some endangered bird.  It's necessary to know how much the environmentalists value the endangered bird.  In the absence of knowing the values of both options...

1. conservation
2. development

... it's unlikely that the correct option will be chosen.

Ok, so multi-agent traps are the logical but detrimental consequence of the fact that private goods and public goods are on unequal footing.  Private goods and public goods can be put on equal footing by making it just as easy, and rewarding, for agents to "buy" public goods as it is for them to buy private goods.  This can be accomplished simply by allowing people to choose where their taxes go.  We would have a market for public goods just like we have a market for private goods.

So what about robots?  Well... I think that any moderately worthwhile robot will be able to effectively communicate with humans.   It shouldn't take five minutes to discern that robot "Lassie" is trying to tell us that Tommy is drowning in the river.  Speaking is better than barking.

Speaking isn't the only form of communication.  Another form of communication is spending.  And it's a really important form of communication.  It's how we inform each other of our valuations.  It will be super beneficial if robots are free to spend their money.  Then humans and robots will know each others' valuations.   Knowing each others' valuations will allow us to be far more considerate of each other's valuations.  And if it's beneficial to be far more considerate of each others' valuations of private goods... then the same will also be true of public goods.  When everybody's valuations are far more accessible, everybody's decisions will be far more valuable.

Scott Alexander believes that beneficial equilibriums are fragile.  Well... are they fragile... or rare?  Given that private goods and public goods are on unequal footing... I believe that beneficial equilibriums are the exception rather than the rule.  I think that most equilibriums would change for the better if public goods were no longer hobbled by our current system.

Let's put this differently.  Most people understand that socialism fails.  But unfortunately most people really don't understand that socialism doesn't just fail with private goods... it also fails with public goods.  If people understood this then they would understand the problem with having a mixed economy.  So because our system is a mixed economy... and socialism fails just as much with public goods as it does with private goods... it's a given that public goods are inefficiently allocated.  Which means that private goods are also inefficiently allocated.  Therefore, if we put public goods on equal footing with private goods there would be a beneficial adjustment of most, if not all, equilibriums.  We'd have far more peace, progress and prosperity.

So is the invisible hand defective?  Do markets fail?  It's easy to blame recessions, depressions and multi-agent traps on self-interest.  For a good example of this just watch the documentary Boom Bust Boom on Netflix.  Here's a screenshot...

Blaming these problems on self-interest is like dropping a boulder onto a busy freeway and then blaming the resulting pileup on people's natural desire to avoid hitting the boulder.  It's eternally frustrating because the boulder is so obviously the problem but so few people admit or acknowledge that it's the problem.  Anyways, I'm sure that there's a much better metaphor.  The point is that the invisible hand needs a level playing field.  Public goods need to be on the same level as private goods.  Markets have to be structured in such a way that there is just as much incentive for people to spend their money on public goods as there is for people to spend their money on private goods.  When markets are structured accordingly, self-interest will align with society-interest.

Unglamorous but Important Things

The title of this entry was mooched from a discussion over at the Language Goes on Holiday blog...

Xero: Should something even be in the public sector if it's not somebody's pet concern?
DR: I expect there are various unglamorous but important things.

Not quite sure why I like the phrase "unglamorous but important things".  Perhaps because it reminds me of Henri Cartier-Bresson's photograph of a mundane scene or Edward Weston's photograph of a bedpan.  There was nothing glamorous about either subject yet both photographs are widely regarded as works of art.  What's glamorous about self-interest?  Nothing...yet Adam Smith's Invisible Hand concept managed to reveal the extraordinary aspect of this very ordinary part of life.

What would happen if we applied the Invisible Hand concept to the public sector?  What would happen if taxpayers were allowed to directly allocate their taxes?  What would the distribution of public funds look like if taxpayers could shop for themselves in the public sector?  Would people forget to fund unglamorous but important things?

For some time now I've been asking people for their feedback on this topic so I figured it might be of some use to compile a collection of responses that all have something to do with the Invisible Hand.  This coordination problem response is the second most common type of response to pragmatarianism...

1. The ostrich response (~ 85%)
2. The coordination problem response (~ 9%)
3. The taxes are theft response (~3%) 
4. The rich people are evil response (~ 2%)
5. Other (~1%)

How do you interpret this collection of Type II responses?  On one hand you can interpret this collection to represent an overwhelming amount of evidence against pragmatarianism.  This interpretation might also prove that I'm nuts.  On the other hand you can interpret this collection to represent an overwhelming amount of evidence that people from a wide spectrum of political beliefs do not understand how the Invisible Hand works.

The thing is...in order to effectively evaluate the responses you'll have to understand how the Invisible Hand works.  If you're outside the field of economics...then what are the chances that you already truly understand how the Invisible Hand works?  What are the chances that a noneconomist will have firm grasp on decentralized knowledge, opportunity cost, rational ignorance, heterogeneous activity, concentrated benefits and dispersed costs?

The simple answer to the coordination problem is that an "incorrect" distribution of public funds is "logically impossible"...

The biggest objection is that important programs will be underfunded. But that consequence is actually logically impossible. If Americans don't think a program is important enough to provide more funding, then in a democracy, by definition it isn't a priority so doesn't deserve more funding. I also think you would be surprised at how much money Americans would choose to provide to entitlements. More Americans might want contribute money to Social Security and less to the wars in Iraq and Afghanistan, for example, because they might prefer to provide for the retirement of Americans instead of bombs in the Middle East. - Daniel Indiviglio, What If Taxpayers Could Decide How Their Money Is Spent?

Imagine you're about to have a BBQ with some friends.  You just returned from the store with steak, hot dogs, chicken, corn, potatoes, zucchini, portobello mushrooms, eggplant and various other BBQ items.  Only one problem...you forgot the charcoal.  Charcoal is certainly unglamorous...but it's a very important thing if you want to have a BBQ.  Therefore, you'll need to make another trip to the store...unless you also have a gas grill...or you have suitable wood laying around...and trust me...not all wood is suitable.

Like having BBQs and donating to non-profit organizations...people would be able to pay their taxes at anytime throughout the year.  What would happen if somebody paid their taxes but then realized that they forgot to help fund some unglamorous but important thing?  Would they be willing to pay additional taxes?  Would they try and convince their friends to run to the store to purchase the charcoal?

Continuing with the theme of food analogies...both John Holbo and Jake mentioned potlucks.  When you have a potluck it's important that participants coordinate with each other in order to ensure that everybody does not bring potato salad.  How in the world could 300 million people coordinate with each other to ensure that they didn't end up with too much or too little of any public good?

The answer is simply that we would have a taxpayer division of labor.  Taxpayers that loved potato salad would order more potato salad from the Dept of Potato Salad if they were concerned that the supply of potato salad was running low...and...taxpayers that loved tuna casserole would order more tuna casserole from the Dept of Tuna Casserole if they were concerned that the supply of tuna casserole was running low.

Just like with the BBQ...there potlucks involve plenty of unglamorous but important things such as paper towels, cups, plates and so on.  Would anybody love these things?  No...but we wouldn't be able to have a potluck without them...and based on people's responses to pragmatarianism...it's clear that this fact is not lost upon the majority of people.

The bottom line.  Asking people what would happen if taxpayers were allowed to directly allocate their taxes reveals whether they understand how the Invisible Hand works and simultaneously helps you better understand how the Invisible Hand works.

Anarcho-capitalists: Barking Up the Wrong Tree

With that in mind...let's consider anarcho-capitalism.  Anarcho-capitalists want to abolish the government because they believe that taxes are theft and/or the private sector can do everything as good as...or better than... the public sector.  For a more formal definition see wikipedia's entry on anarcho-capitalism and for a fun definition check out Dale Everett's Top 10 Causes of Minarchism.  Here is cause number 8...

This comic strip argues that minarchists (the government should only provide police, military and courts) do not make the leap to anarcho-capitalism because they are concerned that other people would engage in aggression.  This strip is applicable to people's responses to pragmatarianism...except that people aren't particularly concerned with aggression.  Instead, they are just concerned whether other people would purchase the "correct" amount of potato salad, charcoal, cups, paper plates and so on.  The minarchist and anarcho-capitalist concern with aggression merely masks the real issue that people do not understand how the Invisible Hand works.

If you understand how the Invisible Hand works...and know that the private sector can do X, Y and Z better than the public sector can...then advocating for the abolition of the government organizations responsible for X, Y and Z does absolutely nothing but distract people from learning about how the Invisible Hand works.  Why shoot yourself in the foot with bells and whistles?

For a perfect example of this problem check out this video by Stefan Molyneux.  In his Frequently Asked Questions (FAQs) video he really helps illuminate how the Invisible Hand works but then he overshadows his insights with moral arguments.  What comes to mind is when Linus, by far the smartest of the Peanuts gang, lost the election for class president because he brought up the Great Pumpkin.





Advocating for the abolition of any government organization in no way, shape, or form helps people  understand how the Invisible Hand works.  If they don't understand how the Invisible Hand works then they'll never understand what advantage the Invisible Hand has over congress.

Pragmatarian Gadfly

In my post on a taxpayer division of labor I drew an analogy between Socrates and Ashton Kutcher in the show Punk'd.  John Holbo, in his book on Plato and Socrates, takes a more in depth look at the value that Socrates offered to society.  Here's a passage that Holbo shared from Plato's Apology...

I was attached to this city by the god - through it seems ridiculous thing to say - as upon a great and noble horse which was somewhat sluggish because of its bulk and needed to be roused up by a kind of gadfly.  It is to fulfill such a purpose that I believe the god has placed me in the city.  I never leave off rousing each and every one of you, persuading and reproaching you all day long and everywhere I find myself in your company.

Holbo wrote (with his own emphasis), "Gadfly bites hurt.  They draw blood.  Other things being equal, pain is bad.  (Do you agree?)  How can Socrates be so sure other things are not equal?"

Yeah yeah...it's ridiculous to compare myself to Socrates...but some would certainly consider me to be a gadfly.  For example, as I mentioned on my post on Crooked Timber Liberals Monopolizing the Facts, Chris Bertram shooed me away...

[Crooked Timber comments threads are an opportunity to engage in conversation, not the granting of a soapbox for you to promote your private obsessions. Please go away. CB]

It's not just liberals either.  The owner of the Bleeding Heart Libertarian blog e-mailed me and politely asked if I would tone it down.  My response was pretty much the same thing a gadfly would say, "I'm a gadfly...how am I supposed to tone it down?  Bite less frequently?" [Update] Banned From Bleeding Heart Libertarian [Update] Banned from EconLog

The trick of course...as Holbo considered (with his own emphasis)...is accurately discerning whether these bites are necessary...and if they are...what are the next steps....

But then Socrates must think he knows something his fellow citizens do not, if he knows he is doing the right thing, asking funny questions that have gotten him hauled into court.  But surely he can know he is helping his fellow citizens to degree (so the reply will run).  Surely proving there must be something wrong with his fellow citizens' beliefs cannot fail to be some help.  But unless there is some way to take positive steps beyond that, is it really clear this is so?

The following is my evidence that there is something wrong with my fellow citizens' beliefs.  The positive steps are simply for my fellow citizens to ask people about pragmatarianism until they can see the Invisible Hand for themselves.

A Mountain of Evidence

On the other hand, if people are forced to pay taxes – which seems an arbitrary infringement of their rights as consumers, by the terms of this scheme – why will it go better if everyone allocates their tax money privately? We’ll have a huge coordination problem, no? You seem to be advocating not an efficient market but a giant pot luck dinner, with all the hazards of too much potato salad that entails. But with aircraft carriers instead of potato salad. What am I missing? - John Holbo

Context: Selling Votes

A group of citizens coming together for the sort of economic potlatch you suggest is no more a state than a pile of bricks is a house, and as such will not be capable of performing satisfactorily those functions that states are objectively superior at performing. - Jake

Context: Repatriation Holiday Lobbying - Money Speaks

I’d love to be able to allocate my taxes. Seriously, I would. It’d be difficult to organize this on a high granularity level, though; I imagine everything would get of whack, as I probably have no information on how other people allocated theirs. So, to start with, I would suggest just a couple of categories, like, say, ‘the military’ and ‘everything else’. - Henri Vieuxtemps

Context: Selling Votes

Xero, I guess I am in the Keynesian camp (well not the tautological Austrian camp) I accept your proposal with score of 8/10. I still wonder if people will volunteer to spend enough on some government supplied basics, like defense or police or law courts, but maybe we could personally allocate 80 percent of our taxes, or 50 percent and see how it goes. - macroman

Context: Opportunity Cost for Thee, But Not for Me

Your solution seems reasonable, but why stop at voting for funding of various government agencies, instead of deleting the agencies? Additionally, what happens when boring but needed agencies enjoy zero funding? And what happens if military gets too little funding to effectively protect the nation? - Stone Glasgow

Context: Efficiency in Government

I'm not sure that its ultimately defensible (I'm not sure it isn't) and I am not sure that in a defensible form it wouldn't have some limits (say certain percentages of collected taxes automatically go to police funding, for example), but it seems to me clearly to be an idea worth considering. What would the outcome look like? I have some worries about this. Lots of people might allocate their taxes (or the portion they can) to the arts. - Andrew Cohen

Context: States Must Do Bad

That's assuming 150m people would want to do such a thing. You know as well as I do that many of those people wouldn't take the time or effort to properly allocate their taxes. Plus how would you guarantee that the "products" they purchase would be doled out proportionally to their investment?  Secondly, it'd be a major bread and circus type environment. What if defense was woefully underfunded because most people would purchase healthcare or arts and science endeavors? You'd empower the media enormously as they'd convince the masses to buy a certain "product". - LoneStarLocke

Context:  What's Wrong With a Representative Democracy?

Xero, Choice is usually better, but what if everyone chooses to allocate their tax dollars to, say, the National Endowment for the Arts and there is nothing allocated to National Defense? - Pappas

Context: Taxes, Competition and Pricing

Suppose I love classical music, and allocate 100% of my taxes to the symphony. Or I'm a farmer, and put 100% on farm subsidies. - Jay-Z

Context: Objections to the Simple Libertarian Argument for Environmental Regulation

You can't really expect people to take the time out to distribute their taxes in the optimal way for governance, because they don't have the interest, education, or experience for it, usually. Bureaucratic functions are left up to officials for good reason, because they usually are people with the appropriate knowledge and experience. Joe the Plumber might be good at his job, but he doesn't have the background or perspective for delegating funds for the government. - Serfin' USA

Context: How Does the Invisible Hand Work?

While I don't really trust them either, at least they are more knowledgeable in economics and have been elected specifically to do just that. Therefore, I trust them a bit more than I trust Joe Blow plumber who can't balance a checkbook to safe his life. - Cephus

Context: Congress You're Fired!!!!

By way of partial answer, even if we assume that the taxpaying public can and will become informed enough about our massive interconnected system of government to efficiently allocate their local, state, and federal taxes according to self-interest, individual self-interest and group welfare often conflict. And in practice, vast areas of government that are important to public welfare, but not individually impactful, would be underfunded--because there are limits to the rationality of the taxpayer. - Math Mage

Context: Deaf Left: Corporatism is Your Fault

Tyler said that "few people would directly allocate their taxes to public goods." Meaning, they would allocate them to programs/projects that are beneficial to them personally, and not to public goods. For example, people would fund their local park or soup kitchen, but not the military or clean air. Because people are greedy and self-centered -- which is why we have a freerider problem in the first place. - Tony

Context: Dear Left: Corporatism is Your Fault

As for taxation, my answer is NO. People are illogical. They tend only to see the things right in front of them, and lack vision. Someone with no license, for instance, will likely not want to put any of his money towards roads, only to realize down the timeline a bit that the pizza guy can't get to his house without that road...and in most cases, we don't miss something till it's gone...and in some of are tax cases, by the time something is gone, it's TOO LATE to fix it cheaply. - KevinKohler

Context: How Does the Invisible Hand Work?

That’s an open-ended question. It depends what you mean by “directly allocate”. If you mean something like the government presenting taxpayers with a menu of programs to fund, it’s likely the institutions near and dear to people’s hearts and self-image would get the bulk of funding. Things like schools, environmental programs, agriculture subsidies, etc. Voters and taxpayers are both rationally ignorant, so this would likely have a terrible impact on policy. - Aaron

Context: Politicians Don't Care About You

Government goods aren't necessarily "public goods." Taxpayers are likely to support programs in their own self interests; farmers will support farm subsidies, drivers, which most taxpayers are, will likely support gas subsidies. The majority will inevitably vote themselves benefits at the expense of the minority. Usually, the coalition that can form a majority isn't made up of the groups most in need, or which are most magnanimous. - Jason Weinman

Context: Indefensible and Embarrassing

Okay, now I understand your concept of investing in public goods. I don’t like it. I don’t know if Wal-Mart should hire more sales clerks or shelf stockers in the coming year. In the same way, I don’t know if the government should build a new school, a new reservoir or if it needs to fix potholes in the road over the next year. The average person has better things to think about, and it is highly unlikely that the outcome would be anything close to efficient. - geofree

Context: Confessions of a Libertarian

What's the point in that? All it would do is let everyone put their tax money into their pet projects, while entirely neglecting the many important but scarcely visible government agencies. It would also create a situation where the better an agency operated, the less money they would get--because they would get correspondingly less attention in the media, and therefore fewer "donations".  Direct allocation of taxes by the taxpayer is a dumb idea. It would be like trying to operate a business where your customers got to determine how the money they paid you gets spent. "Now I won't buy this item unless you put all of the gross income from my purchase towards the janitorial staff..."  Impossible to operate. Efficiency would drop through the floor. - Someone

Context: Which Congressperson Would You Trust With Your Taxes?

For your idea to.work, taxpayers would have to be FAR more informed aboit what it takes for our society to function.  There is NO WAY that critical programs would be underfunded.  I'll say it again: allocating a big chunk of yoir tax bill would provide the feedback you desire, withou causing huge problems in areas folks just don't think about.  Would everybody remember to fund sewage treatment, for example?  Or would they just give all their money to their pet programs and assume that everything else would be covered by someone else? - What if...?

Context: What Causes The Growing Wealth Gap In America?

Unbundling public services will run into the same problems that philanthropy-reliant public services do/would (everyone wants the "John Doe Foundation Theater" and no one wants the "John Doe Foundation Water Treatment Plant" so we end up with a dozen theaters and hot and cold running sewage) combined with the popular misunderstanding of where government spending actually goes (in the States see the surveys where we see people wanting to balance the budget by cutting the 25% they have decided that we spend on Foreign Aid but this is not solely a US phenomenon.)  - Schadenboner

Context: Quartz article: Is China going to be #1?

I'm not so sure. You can lead a taxpayer to a position of responsibility, but you can't make them take it. Surely people would tend to allocate their money to their own pet concerns (veterans giving to defence, teachers to education, environmentalists to environmental protection, etc.), with the result that nothing coherent or workable emerged. And then, if they saw that more was needed here or there, they would tend to expect others to make the needed adjustment. Markets are good things, but there isn't actually an invisible hand that makes things work out. - DR

Context: Opportunity Costs

But, that is not how your proposed system would work. I own several pieces of agricultural land. I would give all my tax money to the Department of Agriculture and have them return it to me in the form of a farm subsidy.  Why should I even pay taxes if the government is just going to send nearly all the money back? - geofree

Context: Which Congressperson Would You Trust With Your Taxes?

Interesting idea. I do think however that most people are very pragmatic when it comes to allocating money for services that directy affect them. Consider however that funds such as FEMA would probably be devastated because people in Georgia or Utah are tired of paying for flood or hurricane damage, or on the brighter spot farming subsidies or oil subsidies could be slashed once more became aware of the slough there. - aitm

Context: Divine Authority vs the Invisible Hand

How many people even know what NIST is more less what it does?
What do you do when social security receives too little funding this year?
what happens when the next Katrina hits but FEMA has no funding? - Sociobiology

Context: Taking vs Trading

I'm not too sure this would work out to well myself. Me and my friends over many a drunken political discussion suggested solutions such as this many a time with with the end result almost always being that some often forgotten essential government programs would get left by the wayside until some sort of tragedy would occur to bring the 'error' into light. It is not beyond the scope of reason that once this tragedy occurs that it would essentially be too late for corrective action to take place. Think FEMA funding after several years of mild weather events (i.e. people not perceiving a necessity to contribute to FEMA during mild climactic periods). Another potential problem that we have theorized would be the public funding lash-back eradicating a good program if some scandal occurred that was really an isolated incident of corruption (say that a member of the FDA took a bribe and people died as a result). - Swit

Context: Survival of the Fittest Government Organizations

Public goods can't operate according to individual preferences adapting over time. Fer instance no one gives a shit about disaster relief until, whoops, there's a disaster. Adequate response to a disaster, which people demand, requires a consistent level of staff, training, supplies, and logistical clarity coordinating it all. That can't be maintained by a public which would allocate bare bones levels of funding in good years and then spike way up when there's a disaster. - Anonymous

Context:  An Economy Based on Wife Swapping

My bottom line is a prediction: if your proposal were to be carried out, a whole range of very mundane governmental activities would not be funded while a series of high-interest sexy activities would be overfunded. For example, NIH/CDC activities to fight AIDS and Alzheimers would be heavily funded (not that I'd mind the Alzheimers) but routine vaccinations would not be funded. Police SWAT teams would be funded but not the county clerk's office. Infrastructure generally would be ignored. - Bill Harshaw

Context: A Liberal Solves the Budget Deficit

Because there are hundreds of unsexy but essential government programs that need funding and most likely wouldn't get it if we could all pick and choose.  I dont know that i'd tick off the 'please use my tax dollars to replace the filters in the city sewers in Akron' as much as 'please use my tax dollars to fix education', but Akron needs clean water. - Jeremy Meyers

Context: Should Warren Buffett Voluntarily Pay More in Taxes?

Or, more likely we'll have an enormous, bloated "Department of Puppies and Blowjobs" and perpetually bankrupt law enforcement, transportation, health, and environmental departments. Plus roads that look they've taken mortar shellings, untreated water filled with cholera and dysentery (Oregon Trail, ho!), and schools run by whatever local fundamentalist religion does the best job of conning parents. - Wikkiwallana

Context: Taking vs Trading

People will "choose" to put tax dollars towards whatever seems sexiest. To them. How many are going to choose vaccine research? Inspection of the water system in Toledo? High-speed fiber optics installation at the DMV to provide faster turnaround on data requests by police forces? - Deuce

Context: Ask a Pragmatarian

I think this is a dangerous assumption. We cannot predict with any degree of accuracy where people might choose to allocate the funding under these circumstances. There is a great risk that some vital areas will end up greatly under-funded while other government organizations that are higher profile, but require less overall funding may end up with an embarrassment of funding. This kind of fund allocation by guesswork, trying to predict where others will put their funds, and then allocating your own contribution accordingly is certain to lead to considerable waste. - Just1Voice 

Context: Ask a Pragmatarian

Easy: Nobody allocates to debt-service payments in the first year. (Or maybe it’s just Megan McArdle and Greg Mankiw — same deal.) The US, which is the world’s largest issuer of AAA-rated securities, suddenly defaults. Or are you suggesting that 15% or so of the nation’s taxpayers would choose to allocate to debt-service payments? That’s another extraordinary claim, especially in light of the debt ceiling fuckup this summer. - bluntobject

Context: All Linky, no Thinky: Special Issue on My Confirmation Bias

I also wonder about whether we wouldn't see a huge increase in the budget for, say, saving panda bears (or American equivalent, whatever that might be), and a huge decrease in funds given to, I don't know, the IRS probably. Not that I"m a huge fan of the IRS, but that state of affairs would seem to create some practical problems. - Rob

Context: Deontological Ethics vs Pragmatic Ethics

Your idea is simply terrible. The examples are far too abundant to go into but here's just one: How many people will voluntarily fund the IRS? - mattski

Context: Crooked Timber Liberals - Monopolizing the Facts

Free market principles don't work in things other than markets. Market forces require things like informed customers, freedom of choice, and competition. You have exactly none of those things when it comes to, say, maintaining a power grid or highway infrastructure.  Off the top of your head: How many food inspectors are sufficient to ensure acceptable food safety? - Deuce

Context: Survival of the Fittest Government Organizations

Again, by giving every tax payer a line item veto, you force Congress to turn into a merry go around of idiocy reallocating money every time some voter decides that "I hate ____, let's not fund it." There is no real budget at that point. It's Congress plugging holes. And what everyone values differs. Do you think it would be good to let the pacifists completely stop funding the military? How about no money for food inspections so shiga toxin producing e-coli can get into our school foods and liquidating the brains of our school children? I can keep going to show just how little thought you have put into this steaming pile of **** you call a proposal. - obvious Child

Context: Teaching Economics to Liberals

You are talking in pipe dreams that might at best work for relatively small cooperatives of people with fairly close values and objectives, but would be utter chaos for any modern society with its hundreds of millions of denizens and almost uncountable number of problems needing to be addressed and prioritized from global warming to food-borne infections. - Linda Beale

Context: Repatriation Holiday Lobbying - Money Speaks

The problem is that whenever you design any new system or product, you first have to assume that people are lazy idiots who'll screw up in ways you never thought possible. This system could work in a small population of maybe less than 10000 people, but a country with the population of America? this system of yours is going to be a disaster. - Damarcus

Context:  Divine Authority vs the Invisible Hand

The government is not studying unicorns. Your idea as a theoretical matter makes sense, but as a practical matter, it is terrible and would make disastrous policy. First of all, most people would probably choose not to give any money to fund the federal government, which would be awful. Second, there would be a huge degree of instability and uncertainty regarding how much money each department or sector would be getting every year, which would make planning and long term projects completely infeasible. It would destroy our government system. Maybe that's what you really want. I don't know. - Krhazy

Context: Why a Balanced Budget is An Elusive Ideal

Given how poorly most people understand the budget (for example, vastly overestimating the amount of money that gets spent on foreign aid), I’d expect it to be a disaster. Maybe an instructive one, though! After a couple years of direct allocation, maybe people would be much better-educated in what gummint actually spends money on. - bluntobject

Context: All Linky, no Thinky: Special Issue on My Confirmation Bias

But how do you know that X% is the right amount? Moreover, you claim it embraces the market but the choices are highly limited and the prices are not at all likely to reflect a market price as their is no competition between ideas, furthermore if there were it would lead to horrendous results, voters would likely be influenced to spend their dollars on things not in their interest due to their lack of information and lack of interest in finding said information. - Anikdote

Context: Libertarian Pudding Tastes Good!!

I agree a lot of this. I don't think Lobbyist are inherently a bad thing. People should have the right to lobby Congress. I think the revolving door and the cost of campaigns has turned it into a system where lobbyist write the bills. I do think that ultimately Congress members have much more information than the normal voter. I mean...you'd like to think it is their job, they get the reports from the agencies, there's now way humanly possible to expect voters to work their jobs, spend time with their families and have comb through agency reports on what the government professionals recommend. - iliveonramen

Context: Teaching Economics to Liberals

I'm concerned that the general population cannot be as informed as specialists about a given field. I would not trust an engineer to decide whether I need surgery nor would I trust a surgeon to decide the concrete mix for a dam - or even a street or bridge. Specialists by definition know more about a subject then most other people. Our society is filled with them and, indeed, it's what makes our society what it is, starting with the first agrarian communities ~10,000 years ago. To leave specialized decisions in the hands of ignorant laymen is to invite disaster. - MoSurveyor

Context: Teaching Economics to Liberals

Third, this presumes good information on the part of the taxpayer/voter. We have pretty good evidence that many people lack good information, both from polling data (amount of money spent on foreign aid, for example) and from the continued existence of the Republican Party. - dr2chase

Context: Niall Ferguson does not know what "Western Civilization" means

You have no idea how efficient NASA is at researching the materials needed for flight at Mach 15 and you probably aren't even aware of why anyone would want to do that. The government does about 800,000 things that the average citizen isn't even aware of, yet some of those things can be literally life or death.- Deuce

Context: Ask a Pragmatarian

I haven't been following the thread, we can rehash some of the things probably already brought up. I will take the leap and say no. Its a very interesting idea and very appealing too. Here's why I disagree though, things like NASA, the CDC, and the FBI may go unfunded, not useful to everyone, but still critical services for the entire nation to function. Also, the safety net may go unfunded. From a simplistic economic view, no one would ever fund the safety net because those paying already have money and would not allocate money that would not benefit themselves. The ones who require a safety net would be outside the allocation system and we have no safety net at all. - Opteron

Context: Teaching Economics to Liberals

The problem with letting everyone choose where the taxes go would mean that it would be hopelessly in favour of military and less for education and agencies such as NASA. - Damarcus

Context:  Divine Authority vs the Invisible Hand

It's wrong to assume that people always make decisions that produce the best results. People are not rational, they value instant gratification more than long term gains. They overreact and have irrational risk assessments. Many americans spent more than they earned, bought into a housing bubble, and now find themselves jobless. In hindsight, those are not "efficient allocation" of their wages. If we allow people to make decisions on how their taxes are spent next year, how many would choose to make investments in roads, electricity infrastructure, satellites, space programme and so on? What if there aren't enough people willing to put their money to these programes, does that mean that these investments are not "efficient" or does it mean that your "allocation efficiency" concept really doesn't produce the best results overall? So how can that be "efficient"? - nonpareil

Context: The Invisible Hand?  A Quick Survey

What percentage of public services can you even name? How many people are going to put enough thought into this to support weather monitoring satellites, GPS system maintenance, air traffic control, or water filtration?  Do you know what happens when the air traffic control system doesn't have the funds to operate? - Deuce

Context: Ask a Pragmatarian

I’ll make this simple. Let us agree that the government has declared a tax rate of 35%. Lets us agree that the government has decided that there are to be two governmental programs: Ambulances and defense from foreign intruders.  What of the defense program if the taxpayers all allocate their taxes to ambulances? - John Flaherty

Context:  The Third Solution

But I don't think I have nearly enough information to allocate my taxes properly across all these functions even the ones that I find perfectly legitimate (which to be honest is most of them). Others are going to struggle with this too. And that information problem could come up with some perverse results. You may get a massive EPA budget, far beyond what makes sense, because people can't really grapple with all these trade-offs but they know they want to "protect the environment". What does that really help? You probably stop doing the environment much good pretty quickly, you suck funds away from other uses, and you're probably going to hurt the economy if you beef up the EPA's regulatory capacity. - Daniel Kuehn

Context: Thoughts on "tax choice": is it just anarcho-capitalism?

When I shop in the private sector, I am representing my own needs and interests. I am familiar with those, and if I make a mistake of some sort, the burden for it falls only on me. Shopping in the public sector is very different. It requires learning and then representing the needs and interests of 310 million people. As has already been pointedly illustrated, that job is too big for any individual. This is why from the very beginning we have chosen representatives who are deliberately removed and insulated from the masses to make public shopping decsions on behalf of the country. Things have gotten so complicated, that we have given them around 15,000 staffers and better than 20,000 lobbyists to help educate and guide them in their decision-making. Do you have say three dozen top notch, blue-ribbon staffers at your house to research, report on, and advise you in regard to spending and other matters? No? Why would you think that you could do a better job than a full-time elected specialist who does, and that with you starting from a base so weak that it allows you to believe that watching C-SPAN makes you an insider? - Cardinal Fang

Context: The Interests of Consumers are the Interests of the Human Race

The vast majority of Americans don't have the ability, the time or the mental capacity to understand every program and department in the Federal Government and wouldn't even begin to understand how each of these programs and departments actually benefits them.  You'd single handedly tear apart the federal government as Federal Agencies would be forced to advertise in order to get money for programs.  Imagine the idea of having to spend federal dollars informing people that they need to give money in a certain direction in order to have clean water, early detection warnings for tornados or hurricanes... This whole idea is one of the most idiotic things ever thought of. You can barely trust voters to make responsible choices in who they vote for.   Churchill once said the greatest argument against democracy is 5 minutes with the average voter.  I wouldn't want your average joe deciding what gets funded and what doesn't, much as I distrust politicians. - Jetboogieman

Context: Debunking the Crowding Out Concept

The typical taxpayer doesn't have one minute to spend on becoming educated on the best use of public money. there are litterally millions of options and alternatives. Thats why we elect members of our community, to be our representatives, and we pay the to be our full time representative. It's their jobs to figure out the best way to spend tax payer money, and if we don't like they way that they are doing it, we can vote them out of office. I really trust the consensus of 538 congress people elected by the people, most of them highly educated, who assumably study and debate the issues as a full time job, more than I trust the consensus of 150,000,000 people who are basically ignorant.  It's not a perfect system, but it's probably the best one that has ever existed, which is demonstrated by America's dominance in the world. - imagep

Context: The Interests of Consumers are the Interests of the Human Race

Nah. Thats a terrible idea. Figuring out what in our government needs to exist and how much funding it needs is the job of someone who knows about those things. The layperson doesn't have that sort of experience or knowledge. The American people at large cannot even be expected to vote, let alone be trusted with the responsibility of funding all the things that need funding. Americans are more politically apathetic now than they have ever been in the history of our nation, and yet you want to hand them the keys and let them determine what national programs get funding? - Nonsensei

Context: The Devil's Advocate for Public Goods

There is a department is the U.S. government called the Pipeline and Hazardous Materials Safety Administration. You and 99.999% of the American populace have never even of heard of it. If they don't get funding, a natural gas line will explode and kill a lot of people. How does your proposal work handle that? - rathi

Context: How the Invisible Hand Works

Most Americans do not have the information required to judge the cost of any number of things the government does. Off the top of your head, how low can you drop the FAA's funding before air safety is compromised? - Deuce

Context: Survival of the Fittest Government Organizations

Err.... I was more thinking along the lines that it would be terribly inefficient, impossible for departments to plan their annual budgets and personnel capacities when it could change on a whim every year, people would tend to put their money toward programs that benefit them personally the most leaving other important programs gutted, some programs could end up with more money than they even need or want, it would make rich people have even more influence than they do now and as such the system could be gamed, and most people are pretty stupid and would generally make bad decisions on where to allocate the money. Basically, the whole idea is extraordinarily bad and would be a logistics nightmare that only an anarchist hoping for the government to collapse would seriously suggest. - BarkAtTheMoon

Context: Can Economics Explain Human Sacrifice?

If people can choose from anything, dont you think too many people will put money in things that they directly benefit from more more so than, say courts or roads? Obviously, some will allocate more for roads or courts they use but i see that these may become underfunded and many will not notice since they dont go to court or use those specific roads. - ClassicalLiberal

Context: The Visible Hand vs The Invisible Hand

Why would I send my money to fund National Defense when I can benefit from someone else paying for it? Although in my "perspective", I may value National Defense, this may not be reflected in my allocation of money. I'll just send my money to a program that benefits me. - Free market & self allocation may be ill-equipt to handle community goods. - JeffLV

Context: How to Defeat a Liberal in a Debate

As applied to your concept: you could have individuals over-allocate tax dollars to the programs that benefit those individuals directly, and under-allocate tax dollars to programs that benefit all of us collectively. For example, seniors might allocate 100% of their tax dollars to retirement programs (Social Security, Medicare) and nothing to any other program. - Knox Marlow

Context: Taxes, Competition and Pricing

You don't have a choice. You can't decide to forgo national defense and just get social security instead. - Deuce

Context: Survival of the Fittest Government Organizations

The whole vote with your taxes idea has actually been growing on me. The only problem is that I can see some important things getting critically underfunded because voters don't understand them, or just because voters are stupid. Maybe if the government got like 15 percent of the total budget that it could do what it wanted with to correct for shortfalls. As for the other, it's not so much that liberals don't accept the invisible hand. I understand how the market is supposed to work, and in the majority of cases, it does work that way. It's just that some people seem to think it always works in every situation. Since you've already said that you think universal health care would probably work better than private sector, I'm assuming you're not one of those people, which means we probably actually agree on most things. - atrasicarius

Context: Aikido, Dune and Taxes

You completely ignored what I said. I said that a good number of Americans, spurred on by various conservative speakers, would want a larger army to fight the muslims. Eventually the army is so huge that it actively "encourages" us to continue sending our tax money to them. - Generational Apostate

Context: The Devil's Advocate for Public Goods

Being able to allocate where you tax dollars is spent does not mean the will be spent efficiently, it only means where they are spent will more effectively represent where you want your tax dollars to be spent. The individual will not have the means, the time nor the resources to be able to determine on an ongoing basis if their tax dollars is being spent efficiently, it will only ensure that it effectively represents what their percieved interests are. The average invidual will not be able to determine if the federal government should spend a couple billion dollars on Interstate X or on Public project Y. Nor would they have the understanding to determine that building the F18 is a more effecient use of their tax dollar then building the F35, or perhaps building 20 new M1A1 MBT. - Lord Tammerlain

Context: Teaching Economics to Liberals

Take, for example, our military and defense establishment. A soldier or Marine fighting on the front lines in Afghanistan is ideally well-equipped, well-fed, and supplied with the proper ammunition. The average taxpayer, sitting thousands of miles away, is not in a proper position to properly assess the needs of that individual trooper. For him to be effective at his job, he needs good body armor. He needs a functioning and reliable weapon. He needs quality ammunition. In other words, a bureaucracy like the DoD requires a dedicated source of funding and should not be subject to the whims of donation drives by private citizens, because this would likely result in unsteady funding and inferior equipment. The average taxpayer is not capable of properly assessing the logistical needs of the troops who are attempting to carry out their mission because they are not privy to perfect information or education regarding strategic and tactical circumstances. - StillBallin75

Context: How to Defeat a Liberal in a Debate

Once again, you are purposely, dogmatically, and perniciously ignoring the fact that I presented a far, far more viable way to place government services on the free market--by cutting the fedgov and letting states provide them--and compete with each other to provide the best package. Furthermore, you haven't explained how it's to anyone's advantage to have everyone earmark their taxes to, say, the Department of the Interior, thereby not only starving out all other departments but providing Interior with more money than it could possibly find useful ways to spend. You quote John Stewart Mill all day, saying that the nation is full of experts, but you not only fail to explain how the experts among us will disseminate their great wisdom among the rest, you give no indication at all how people will coordinate their efforts to ensure no department is left behind. And you certainly don't explain how a populace that can't even be coerced into properly researching their political candidates can be coerced into doing all of this work. - acptulsa

Context: The Principle Concepts of Libertarian Economics - Feedback Requested

Right. Because taxpayers are going to take the time to research all the available options and carefully weigh what needs funding.  For that matter, who decides what options are available to be chosen from? Within a broader category (like, say, defense), who decides what weapons systems will be bought, and how many?  We have representatives for a reason: they're supposed to spend the time developing the expertise and studying the options to make good decisions on our behalf. We can then judge them by the results, and vote them out if we don't like the results. It's a very rational division of labor.  The fact that many Congresspeople are idiots, or deep partisans from safe districts, is a problem. But direct democracy at the level of granularity you're talking about isn't a solution.- raytri 

Context: How to Defeat a Liberal in a Debate

My concern is that, lacking ESP, how is anyone going to know what is getting the funding it needs and what is not? Suppose we have another national security scare.. the public has not shown itself to be particularly careful and their critical thinking skills, on the average are poor. Given that our news media focuses so heavily on conflict, I can easily see a situation in which 75% or more of the tax allocations go to the military, leaving our governments domestic services grossly underfunded. - Just1Voice

Context: Ask a Pragmatarian

But I simply don't believe in pragmatarianism, since most people would opt to not spend on defense, infrastructure, etc. ...necessary evils that don't look pretty and smell good. - ChuckBerry

Context: Would You Go Into Debt Paying for Government Programs?

Your solution, while theoretically sound, suffers from the same issues any other system of government does: people. They're generally uninformed, ignorant, and totally uncaring. I'd give it a good chance that most people wouldn't even take 10 minutes to think about where their taxes are going to and would just go "soldiers good, all goes to defense" or something along those lines. - Plu

Context: Can Economics Explain Human Sacrifice?

Are you capable of explaining all the functions each of those 15 departments performs? Are you in communication with the heads of each department so they can communicate their budget needs? Explain the impact of raising or lowering funding for every single department. Now detail how a populace in which 50% of them don't even vote will somehow individually learn how to handle a budget so complex that it takes hundreds of congresscritters+ assorted aides to understand. - rathi

Context: How Would You Allocate Your Taxes?

This is why I favor a representative democracy. I know that I cannot become an expert in all the arenas that the government must make policy on. Therefore, it is more efficient for me to vote for those experts that I agree with and for them to make political decisions on my behalf. However, I also support a check in that these representatives can be overruled by via referendum so that if they make a political decision too unpopular to their constituents it can be stopped. - samsmart 

Context: Why Is Your Partner Cheating On You?

A hundred million individuals making decisions about funds they have no real knowledge or expertise in assigning, without any real coordination between them, and heavily influenced by self-interest. How can you not see that this would end horribly? - Deuce

Context: Ask a Pragmatarian

but much like dell, congress has a lot more data available than just how much people like stuff. if every single person in the country voted for giving the white house a new paint job, they still wouldn't allocate a trillion dollars to it because that would be too much fuckin paint. so they do studies and bring in experts and whatever the hell else, and decide how much the war on drugs currently costs and how much it should be costing, and each rep comes to a decision, and they all compromise on a number. as opposed to your system, wherein each tax payer would decide how to allocate their taxes based on different data and with no idea what everyone else is doing or how things will work overall. - kingnixon

Context: Other People's Money

Epiphyte makes a comparison to a market economy. However, each individual must buy specific goods, meaning that the market will naturally balance from industry to industry, though not necessarily within an industry. An individual does not need to contribute to education in the same way, however, leading to chaos. - Robesdesaixtare

Context: Other People's Money

What distinguishes government from non-government is precisely that government exists to produce a public good, i.e. a good whose enjoyment is unrelated to one's own contribution towards paying for it and cannot be made related to it without altering the nature of the good in question. There is no such thing as "the same process be[ing] applied to public resources", as this would simply be a contradiction in terms. It is the distinguishing mark of private resources that the said process can be applied to them at all - and of public resources that it cannot. - Tommi Uschanov

Context: Opportunity Costs

You're not talking about a public market. The taxpayers could not directly see the effects of their money. Donations are not "goods". As I noted before, people will have an impetus to buy specific goods, but not to fund specific agencies. And honestly, the average taxpayer isn't informed enough to spend their taxes well. You end by launching into a monologue about conveying ideas, conveniently ignoring the fact that you still need to prove your ideas. And maybe all the taxpayers combined have more information than a senator, but probably not. In any case, they're not coordinated, so they can't put all that information together. - Robesdesaixtare

Context: Other People's Money

You will find that a surprisingly large number of social (and legal, and political) constructs are attempts to commit everyone in a group to do something in order to avoid problems like the above. The requirement for everyone to pay taxes for the programs that are decided around election time is necessary because you would find that pretty much nothing would be provided if people could choose whether or not to spend money on it. We can't coordinate with each other if a country is made up of millions of people and our decisions can be made independently and/or anonymously. -  Neu Leonstein

Context: Helping Liberals Understand the Opportunity Cost Concept

You're proving my point. All that can be reported, which means that lawmakers have the information. They are also coordinated enough to process it and act on it. I, however, do not know what you have noticed, or the next, guy, etc., so we cannot make decisions as well as a lawmaker who has access to, yes, all the data. Not a microscopic fraction. And what makes you think that the only lawmakers are in congress? - Robesdesaixtare

Context: Other People's Money

The major disadvantage of not-thought-throughism vs the current system is that if individuals allocated their taxes, then it is very likely that the majority of taxpayers really won't pay very much attention to how everyone else is spending their taxes. This will cause the following problems.  1. some projects will not receive enough funds and will be doomed to fail. Everyone who sent money those projects will have completely wasted it.  2. some projects will receive way more funds than they actually can use, and unless the surplus is allowed to go toward other projects, it will go to waste.  Now, I know that the government doesn't always perfectly predict how much money projects will cost, but I assure you that they will do a whole lot better than a group of laymen who aren't communicating with each-other. And when things do go wrong, it will be impossible for public funds to be re-allocated to correct with inaccuracies. - Sam I am

Context: Pragmatarianism -- *The FINAL Thread*

LOL for the last time, taxpayers aren't coordinated. - Robesdesaixtare

Context: Other People's Money

What would not work in either case (the family or the partnership) is unco-ordinated spending where everyone pursued their own personal agenda. - Absalon

Context: Alex Tabarrok: Public goods, public goods, public goods!!!

Because some things would be underfunded, and others overfunded. It's not really a fallacy, just a stupid argument. - Barry

Context: Baxter & King 1993: Why government spending isn't just moving money around

@Xerographica: To me, the "best use" argument is a little misdirected, since I am not trying to outline the exact allocation, but to indicate that there should be a larger commitment of government resources to investment in public infrastructure or other forms of capital (including education). As for your specific argument about the self-directed tax allocation, I very much disagree. First, we're talking about public goods, by and large, where the private market has insufficiently directed resources toward specific public purposes. Second, to expect individual taxpayers to properly allocate funds is very problematic. Basically, I think that the resources would mostly find themselves in a few highly visible public efforts, while many areas would no doubt be starved of funding. If you were using a cost-benefit analysis argument, I'd probably agree with you, as would almost anybody who thinks seriously about economics. - Julian Janssen

Context: Building the Foundations of a Wealthier America

John Holbo's Critique of Pragmatarianism

This is a continuation of my discussion with John Holbo...Crooked Timber Liberals do Not Advocate Selling Votes ...and here is his original article over at the Crooked Timber blog...Selling Votes

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

John Holbo

“ok, you’re right that I should bear the burden of proof. Why should citizens be in the driver’s seat?”

No, the question is not why – the why is obvious. The question is how. The burden of proof on you concerns the how, not the why. How do you propose to put citizens in the driver’s seat? (An admirable place for them to be, we all agree.) Don’t say: by letting them sell their votes. The question is: how will letting them sell their votes help put them in the driver’s seat? Because, as I keep saying, it doesn’t look to me as though that will have the desired effect. Rather, it will result in the rich wielding disproportionate political power. And you’ve given me no reason to think 1) that it won’t do that; or 2) that, if it does, that won’t be a problem. Do not tell me I must be suffering the fatal conceit of faith in congress’s wisdom or any other thing that it’s not really very likely I am suffering from. And if it wasn’t clear before, it is now: I hereby formally disavow, abjure, and stamp into the dust belief in congress’ omniscience. Place is a mess. Now: why your plan is better?

“But if you can see citizens as consumers then you’ll understand that we don’t need representatives to adequately express our own interests and preferences.”

I can see citizens as consumers. And I get that somehow we’ve moved past the virtues of just selling votes at this point. But I don’t understand how it’s going to work. What are you imagining? That, in addition to having the right to sell your vote, everyone has the right to specify what portion of their taxes goes to every program? Can people then choose not to pay taxes at all? If so, won’t everyone choose not to pay anything. We’ll have anarchism as a straight function of what is basically a free-rider problem? On the other hand, if people are forced to pay taxes – which seems an arbitrary infringement of their rights as consumers, by the terms of this scheme – why will it go better if everyone allocates their tax money privately? We’ll have a huge coordination problem, no? You seem to be advocating not an efficient market but a giant pot luck dinner, with all the hazards of too much potato salad that entails. But with aircraft carriers instead of potato salad. What am I missing?

Shifting angles:

“the demand for public goods should determine the supply of public goods. It’s really as simple as that.”

This seems like a recipe for bloated government. If someone wants a Social Security check, they get it. If they want a bigger check, they get it. Who’s going to pay for this? I suspect you are going to say that the demand to PAY for public goods, to be distributed to other people, will determine the supply. But now we are back to everyone setting their own tax rate. And I take it people will settle on 0% and try to free ride on any suckers who put down for more than that. If this is not the plan, then what?

Your point about the Rolls Royce/private jet economy seems to me a fallacy for the following reason: the rich would have both means and motive to buy up enough votes to make it the case that they were disproportionately represented. The rich do not have means or motive to buy up every Honda Civic on the road, to prevent their falling into the hands of the poor (is that the idea?) If they tried, Honda would just make more. Supply and demand. Can’t do that with votes. Typically, although not always, there is no barrier to people selling stuff to the rich – as much as they want to buy – and also selling stuff to the poor. But there would be a barrier to the rich buying up all the votes they wanted, disproportionately, and the non-rich being represented, proportionately.

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Xerographica

John Holbo, here's a not so brief synopsis of my post on The Dialectic of Unintended Consequences.  At the height of the unions' power in the 50s and 60s it became economically feasible for manufacturing companies to move overseas.  Labor costs are one of the most important factors in determining a factory's location or relocation.  So the factories relocated to some countries with extremely low labor costs...such as Hong Kong, Singapore, South Korea and Taiwan.

At that time the large majority of people in those countries were primarily engaged in subsistence agriculture.  When they were given the option to work in the new factories...many chose to do so rather than continue to engage in subsistence agriculture.  They learned new skills and quite a few left to start their own factories.  The demand for labor increased...while the labor supply stayed constant...so wages started to rise.

When my hero, Deng Xiaoping, opened China up to foreign investment in the 80s...many factories from the four Asian Tigers relocated to China in order to take advantage of what seemed to be an endless supply of cheap labor.  The pattern repeated itself....people chose working in the new factories rather than continue to engage in subsistence agriculture...they learned new skills...many started their own factories...and wages very gradually started to rise.

The other day when Obama gave his state of the union address he said that it was becoming expensive to do business in China.  Just amazing.  Prior to Deng Xiaoping...Chairman Mao had attempted to impose on the entire country what he felt to be the most efficient allocation of resources.  The result?  Thirty million people starved to death as a direct result of state induced famine.  When Deng Xiaoping took over he gave people a choice between manufacturing and agriculture.  The result?  Millions and millions of people were lifted out of poverty within one generation.

You have trouble seeing how giving citizens a choice to sell their votes would put them in the driver's seat...and I have trouble seeing how it wouldn't.  We would be giving citizens a choice that they currently do not have.  Anytime we give people a choice that they currently do not have we are giving them that much more control over their lives.  Whether it's a good choice for them to sell their votes wouldn't be up to me to decide.  Along those same lines...it would be very presumptuous for me to tell people whether they should choose working in a sweatshop over subsistence agriculture.  Another example...even though I served in the military it would be very presumptuous for me to tell somebody whether it would be a good idea for them to sign up for the military.  In all three cases though I strongly advocate that people be given the choice.

That being said...regarding people directly allocating their taxes...because of the free-rider problem...people shouldn't be given a choice whether they paid taxes and individuals shouldn't be able to choose their tax rate.  Those debates are useless without first establishing the proper scope of government.  It would be like somebody asking me how much I'm going to pay them without first establishing what their skills are.  Regarding too much potato salad...people wouldn't generally allocate their taxes to a government organization that doesn't need more money...and it would be completely subjective to say whether somebody is spending too much money on infrastructure, public education/transportation/housing/healthcare, cancer research and various other public goods.  If you get a chance read my last response to Henri Vieuxtemps.  It offers an example of trying to establish whether the public or private sector should publish your book.

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Henri Vieuxtemps

I’d love to be able to allocate my taxes. Seriously, I would. It’d be difficult to organize this on a high granularity level, though; I imagine everything would get of whack, as I probably have no information on how other people allocated theirs. So, to start with, I would suggest just a couple of categories, like, say, ‘the military’ and ‘everything else’.

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Xerographica

Henri Vieuxtemps, how about a third category…say, ‘the war on drugs’?

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John Holbo

Well, at least now I understand what you are proposing, although I am very far from buying. Here’s something to think about.

“You have trouble seeing how giving citizens a choice to sell their votes would put them in the driver’s seat…and I have trouble seeing how it wouldn’t. We would be giving citizens a choice that they currently do not have. Anytime we give people a choice that they currently do not have we are giving them that much more control over their lives.”

The thing to realize is that this is false, strictly speaking. Take the most literal driver’s seat case of all: traffic lights. If you abolished rules about go-on-green/stop-on-red you would give citizens a choice they currently do not have. But you would not, thereby, in any meaningful way, be giving them more control over their lives. The opposite would be the case.

Basically your proposal sounds like that to me. A giant coordination problem. You now say that this stuff won’t work unless we first establish the proper scope of government, but earlier you said this stuff would help us establish the proper scope of government. I’m pretty sure that’s how it will go. Re: publishing my book. That’s not such an interesting case because there it’s clear how the market can do the job. What I want to know is how we can have a functioning market to determine the size of government people want. At first you said we could have one. Now you are retreating a bit in the face of coordination and free-rider problems. I think you have to retreat, so that’s good. But is there any point at which you can stop having to retreat? Probably. But I’m not seeing it.

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John Holbo

“Regarding too much potato salad…people wouldn’t generally allocate their taxes to a government organization that doesn’t need more money”

Why wouldn’t they? And how do you know? It seems obvious to me that the results would inevitably be extremely ill-assorted, in an ill-luck potluck sort of way. And it seems to me that you are obliged to say not that this wouldn’t happen (how could you know that?) but that any bizarre answer is, by definition, the right answer. We don’t second-guess the market. That’s the whole point: there is no right answer hidden beyond or behind what the market says. If we end up with 12 new nuclear aircraft carriers and some weird and painful shortfall in basic services – maybe not enough infrastructure to service so many carriers, long-term, so they all rust and sink; or so the spent nuclear fuel can’t be processed properly – then that’s what we ‘wanted’, odd though that sounds. No other answer is remotely consistent with your general line. So bite the bullet.

The general problem here is that the market, in the book case, only needs everyone to express what they want, individually. Their self-regarding preferences. Do I want the book or don’t I? People are the best judges of their own desires, in that regard. But people’s preferences about government aren’t like that. You have to make an intelligent judgment, not about what you want personally, but about what everyone wants and needs/should get. A new aircraft carrier? or more school lunches for poor kids? These judgments require everyone to take a vain stab at the knowledge problem. So what we get is not one aggregate, good answer but an enormous mountain of bad answers, not adding up, in the aggregate, to a good answer.

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Xerographica

John Holbo, as a reader of my blog, Lupis42, mentioned...selling votes is a completely voluntary transaction between two consenting adults.  Can you offer any other examples of completely voluntary transactions between two consenting individuals that do result...or would result...in traffic collisions?

Regarding allowing people to directly allocate their taxes.  You're far from buying it?  But you're the one that's selling it to me.  A while back I knew just enough about how the Invisible Hand worked to find this hypothetical question really interesting.  So I went around asking people what they thought would happen if taxpayers could directly allocate their taxes.  

Their concerns helped me see enough of the Invisible Hand to understand why taxpayers should be allowed to directly allocate their taxes.  If you get a chance you should take a look at this post...Unglamorous but Important Things.