Back in 2012 the birth of civic crowdfunding tricked me into imagining that we were on the path to pragmatarianism. Now there's a similar innovation that has me imagining the same thing. Once burnt twice shy? Or am I going to be like Charlie Brown who is forever tricked by Lucy?
There are two websites, both still in beta, where users can use their money to "grade" the content... Cent and Honest Cash. I shared some relevant thoughts in a comment that I just posted on Simon de la Rouviere's website...
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You already know that Cent is doing something similar... "seeding"... but not sure if you know that so is Honest Cash. It is like Cent, but a lot newer, and closer to Medium in design. Check out my post... The Greatest Movie Ever? People could reply to it with their nomination, unless it has already been nominated, in that case they'd spend their money on it. My main point was that it would be very useful to be able to sort the replies/nominations by value.
For both Cent and Honest Cash it's possible for participants to spend money on ideas, but neither startup currently allows demand to drive their development. Well, neither website has a page that displays all the feature requests sorted by value... yet.
I think the following quote does a good job of summarizing the startup status quo...
"We are biased toward the democratic/republican side of the spectrum. That’s what we’re used to from civics classes. But the truth is that startups and founders lean toward the dictatorial side because that structure works better for startups. It is more tyrant than mob because it should be. In some sense, startups can’t be democracies because none are. None are because it doesn’t work. If you try to submit everything to voting processes when you’re trying to do something new, you end up with bad, lowest common denominator type results. ”— Peter Thiel, Girard in Silicon Valley
What's remarkable is that he doesn't even consider the possibility of a startup being steered by a market. He doesn't say that having a market at the helm would be good, or bad, or horrible, he just doesn't even mention it. Like, the thought didn't even cross his libertarian mind.
And now I'm a user on two startups where we can spend our money on any and all proposals for the startup. For example, the demand for autosaving drafts on Cent is $.75 cents. What's the demand for this feature on Youtube? I don't know. Nobody knows. Youtube might know how many users want this feature, but this would only reveal its popularity... not its value.
Basically this boils down to whether or not it's truly beneficial to see and know the demand for things. If it is, then... there goes the status quo. There goes democracy, dictatorships and committees. Right? If so, this is big. Really big. Impossibly big! And so far it seems like I'm the only one that sees this possibility, so I might just be crazy. What do you think?
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Now I'm thinking about Murray Rothbard fantasizing about a button that he could push to destroy the state. He really hated the state. Personally, I think the state is merely a symptom of economic ignorance. If either or both websites cure the disease, then the state will be fixed.
Is it sad that Rothbard won't be around to see the state fixed? I'd like to travel back in time... "Hi Mr. Rothbard, I'm from the future and... uh, where are you going?" It would be convenient if I could show him my cell phone or something.
Seldon, a godlike AI in the future, will resurrect Rothbard by reverse engineering his mind using everything that he wrote, which is quite a bit. Rothbard will be reborn full of hatred for the state? Heh. I'm guessing that Seldon will fill in a few blanks.
On Robin Hanson's blog I had a debate with Nitronaut about uploading your mind. He kept bringing up the point about consciousness not carrying over and I kept trying to explain that the only thing that mattered was the continuation of the mind.
Anyways, hopefully Simon de la Rouviere will reply to my comment and share his perspective. Two heads are better than one.
Showing posts with label demand clarity. Show all posts
Showing posts with label demand clarity. Show all posts
Tuesday, January 8, 2019
Wednesday, October 3, 2018
Markets Should Be At The Helm
Citizinvestor bit the dust... Learning From the Civic Tech Graveyard. I found that article because I subscribe to Google alerts for "civic crowdfunding".
Here's the feedback that I shared with the website...
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Hi,
I just finished reading your interesting article "LEARNING FROM THE CIVIC TECH GRAVEYARD" and wanted to share my thoughts.
Here's a relevant quote from Peter Thiel...
"We are biased toward the democratic/republican side of the spectrum. That’s what we’re used to from civics classes. But the truth is that startups and founders lean toward the dictatorial side because that structure works better for startups. It is more tyrant than mob because it should be. In some sense, startups can’t be democracies because none are. None are because it doesn’t work. If you try to submit everything to voting processes when you’re trying to do something new, you end up with bad, lowest common denominator type results."
From his perspective, a dictator rather than a mob should be at the helm of a company. But then what's the issue with a dictator being at the helm of an entire country? It's not like any given individual is wiser when they are in charge of a company. The difference is that it's easier for people to leave a company than it is to leave a country. Abandoning a sinking company is easier than abandoning a sinking country.
I agree with Thiel that democracy is worse than dictatorships for companies. Yet... our country uses democracy to choose who should be at our country's helm. The result is lowest common denominator leadership. Basically, we end up with idiots at the helm.
So Thiel considers dictatorships to be better than democracy for companies.... but there's one alternative that he didn't even consider... the market.
After reading your article I was disappointed that there wasn't a comment section. I like the topic so I enjoyed reading your thoughts on it, and would have also enjoyed reading other people's thoughts on the topic. Obviously I would have also enjoyed the opportunity to publicly share my own thoughts with other people interested in the topic.
With your organization's current system a dictator decides whether to facilitate comments. Obviously your dictator has decided against comments. What are the chances though that this is the best decision? If the chances were good, then it wouldn't be an issue for countries to have dictators. It stands to reason that an even poorer decision would be made by allowing everybody to vote for or against comments. My best guess is that the best decision would be made by donations. Whichever option received the most donations would be implemented.
Every significant decision could, and should be, a fundraiser for your organization. The market would steer your organization in the most valuable direction. If not, then we shouldn't allow the market to steer the entire private sector.
Here's the feedback that I shared with the website...
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Hi,
I just finished reading your interesting article "LEARNING FROM THE CIVIC TECH GRAVEYARD" and wanted to share my thoughts.
Here's a relevant quote from Peter Thiel...
"We are biased toward the democratic/republican side of the spectrum. That’s what we’re used to from civics classes. But the truth is that startups and founders lean toward the dictatorial side because that structure works better for startups. It is more tyrant than mob because it should be. In some sense, startups can’t be democracies because none are. None are because it doesn’t work. If you try to submit everything to voting processes when you’re trying to do something new, you end up with bad, lowest common denominator type results."
From his perspective, a dictator rather than a mob should be at the helm of a company. But then what's the issue with a dictator being at the helm of an entire country? It's not like any given individual is wiser when they are in charge of a company. The difference is that it's easier for people to leave a company than it is to leave a country. Abandoning a sinking company is easier than abandoning a sinking country.
I agree with Thiel that democracy is worse than dictatorships for companies. Yet... our country uses democracy to choose who should be at our country's helm. The result is lowest common denominator leadership. Basically, we end up with idiots at the helm.
So Thiel considers dictatorships to be better than democracy for companies.... but there's one alternative that he didn't even consider... the market.
After reading your article I was disappointed that there wasn't a comment section. I like the topic so I enjoyed reading your thoughts on it, and would have also enjoyed reading other people's thoughts on the topic. Obviously I would have also enjoyed the opportunity to publicly share my own thoughts with other people interested in the topic.
With your organization's current system a dictator decides whether to facilitate comments. Obviously your dictator has decided against comments. What are the chances though that this is the best decision? If the chances were good, then it wouldn't be an issue for countries to have dictators. It stands to reason that an even poorer decision would be made by allowing everybody to vote for or against comments. My best guess is that the best decision would be made by donations. Whichever option received the most donations would be implemented.
Every significant decision could, and should be, a fundraiser for your organization. The market would steer your organization in the most valuable direction. If not, then we shouldn't allow the market to steer the entire private sector.
Tuesday, August 28, 2018
Feedback For FEE.org
Reply to reply on The Good Intentions Fallacy Is Driving Support for Democratic Socialism by Barry Brownstein
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If FEE was doing a good job disseminating information/knowledge, then you would thoroughly understand and love Hayek's argument (against command economies) that knowledge is decentralized/dispersed. As a group, FEE's readers have FAR more knowledge, including economics knowledge, than FEE itself (leadership + staff) has. As a group, FEE's readers have read FAR more books, including economics books, than FEE itself has. As a group, FEE's readers have done FAR more jobs, lived in FAR more countries and had FAR more life experiences than FEE itself. As a group, FEE's readers have FAR more eyeballs, ears and most importantly... brains.... than FEE itself. Thanks to consumer choice, market economies utilize/harness FAR more collective intelligence and information than command economies do. This is why markets succeed while socialism fails. It's a fact that right now FEE is not a market system... it is a socialist system. Therefore, FEE is failing to do a good job educating everybody about economics.
If you need additional proof that FEE is failing to do a good job, then here it is... you don't appreciate the difference between cheap signals (ie voting) and costly signals (ie spending). The fact that lots of people voted for prohibition, for example, informs us that it was popular, but it does not at all even remotely reveal the demand for prohibition. Demand can only be revealed by each and every consumer reaching into their own pocket and putting their own money where their mouth is. What was the demand for prohibition? We don't know. Consumers were not given the opportunity to spend their own money on prohibition.
On Netflix... what is the demand for nature show? Netflix does not know. It knows how many votes nature shows receive, it knows how many hours people spend watching them, but it doesn't actually know the demand for them.
Think about a "free" lunch. Just because lots of people will vote for a "free" lunch doesn't reveal the demand for the meal. Just because lots of people will line up and eat a "free" lunch doesn't reveal the demand for the meal.
Here's what a liberal wrote...
How could he possibly know what the demand is for welfare? Voting for welfare doesn't reveal the demand for it and neither does using it. The demand for welfare can only be known by giving Konczal, and all the other liberals, the opportunity to put their own money where their mouths/hearts are. When liberals are given the opportunity to decide how they divide their own dollars between welfare, public education and public healthcare then, and only then, will the demand for welfare truly be known.
When FEE's readers are given the opportunity to decide how they divide their donated dollars between articles about the Invisible Hand and articles about other topics then, and only then, will the demand for articles about the Invisible Hand truly be known.
1. As a group FEE's readers have FAR more intelligence/information than FEE itself does. It's a basic fact that two heads are better than one.
2. In order to fully harness/utilize the collective intelligence/information of its readers, FEE needs to give each and every reader the opportunity to put their money where their mouth is. It's a basic fact that actions speak louder than words.
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If FEE was doing a good job disseminating information/knowledge, then you would thoroughly understand and love Hayek's argument (against command economies) that knowledge is decentralized/dispersed. As a group, FEE's readers have FAR more knowledge, including economics knowledge, than FEE itself (leadership + staff) has. As a group, FEE's readers have read FAR more books, including economics books, than FEE itself has. As a group, FEE's readers have done FAR more jobs, lived in FAR more countries and had FAR more life experiences than FEE itself. As a group, FEE's readers have FAR more eyeballs, ears and most importantly... brains.... than FEE itself. Thanks to consumer choice, market economies utilize/harness FAR more collective intelligence and information than command economies do. This is why markets succeed while socialism fails. It's a fact that right now FEE is not a market system... it is a socialist system. Therefore, FEE is failing to do a good job educating everybody about economics.
If you need additional proof that FEE is failing to do a good job, then here it is... you don't appreciate the difference between cheap signals (ie voting) and costly signals (ie spending). The fact that lots of people voted for prohibition, for example, informs us that it was popular, but it does not at all even remotely reveal the demand for prohibition. Demand can only be revealed by each and every consumer reaching into their own pocket and putting their own money where their mouth is. What was the demand for prohibition? We don't know. Consumers were not given the opportunity to spend their own money on prohibition.
On Netflix... what is the demand for nature show? Netflix does not know. It knows how many votes nature shows receive, it knows how many hours people spend watching them, but it doesn't actually know the demand for them.
Think about a "free" lunch. Just because lots of people will vote for a "free" lunch doesn't reveal the demand for the meal. Just because lots of people will line up and eat a "free" lunch doesn't reveal the demand for the meal.
Here's what a liberal wrote...
Hoover, in Hawley’s words, allowed for the New Deal to emerge because of his “reluctance to recognize that the private sector was inherently incapable of meeting the demand for social services on its own.” - Mike Konczal, The Voluntarism Fantasy
How could he possibly know what the demand is for welfare? Voting for welfare doesn't reveal the demand for it and neither does using it. The demand for welfare can only be known by giving Konczal, and all the other liberals, the opportunity to put their own money where their mouths/hearts are. When liberals are given the opportunity to decide how they divide their own dollars between welfare, public education and public healthcare then, and only then, will the demand for welfare truly be known.
When FEE's readers are given the opportunity to decide how they divide their donated dollars between articles about the Invisible Hand and articles about other topics then, and only then, will the demand for articles about the Invisible Hand truly be known.
1. As a group FEE's readers have FAR more intelligence/information than FEE itself does. It's a basic fact that two heads are better than one.
2. In order to fully harness/utilize the collective intelligence/information of its readers, FEE needs to give each and every reader the opportunity to put their money where their mouth is. It's a basic fact that actions speak louder than words.
Wednesday, July 4, 2018
The Market Is The Most Useful Tool
Comment on: If Socialists Understand the Free-Rider Problem, Then Why Are They Socialists?
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Do your readers equally value your blog entries? Are your entries equally useful/beneficial/important? Do you think that you can accurately guess the demand for topics? If so, then markets wouldn't be so incredibly useful.
Right now, as far as I can tell, your blog isn't a market. Readers don't have the freedom to "donate vote" for your best entries. This means that you don't know the demand for topics, which means that your supply of topics is suboptimal.
Just like your blog isn't a market, and just like your products aren't equally useful, the same is true of unions. This means that unions don't know the demand for their products, which means that their supply of products is suboptimal.
In order to help socialists, and your readers, understand why the market is such an incredibly useful tool, you first have to actually understand this yourself. If you genuinely desire this understanding then turn your blog into a market. Give readers the freedom to use their donations to reveal their demand for your products. See if the supply noticeably improves.
So no, the problem isn't that socialists don't understand the free-rider problem. The problem is that libertarians don't understand how and why markets work. The market is the most useful tool, but libertarians fail to use it to improve their products.
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Do your readers equally value your blog entries? Are your entries equally useful/beneficial/important? Do you think that you can accurately guess the demand for topics? If so, then markets wouldn't be so incredibly useful.
Right now, as far as I can tell, your blog isn't a market. Readers don't have the freedom to "donate vote" for your best entries. This means that you don't know the demand for topics, which means that your supply of topics is suboptimal.
Just like your blog isn't a market, and just like your products aren't equally useful, the same is true of unions. This means that unions don't know the demand for their products, which means that their supply of products is suboptimal.
In order to help socialists, and your readers, understand why the market is such an incredibly useful tool, you first have to actually understand this yourself. If you genuinely desire this understanding then turn your blog into a market. Give readers the freedom to use their donations to reveal their demand for your products. See if the supply noticeably improves.
So no, the problem isn't that socialists don't understand the free-rider problem. The problem is that libertarians don't understand how and why markets work. The market is the most useful tool, but libertarians fail to use it to improve their products.
Monday, June 18, 2018
Voting With Donations
My comment on Bob Murphy's blog entry... For the Purposes of the Current Debate, I Don’t Think Hayek Supported a “Basic Income Guarantee”
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Three years ago on Medium the liberal economist James Kwak also made the case that Friedrich Hayek supported basic income. I responded to his story with more or less your same point... that he was neglecting the context.
Now, three years later, for me the real issue is that Kwak doesn't understand what markets are good for. Markets are incredibly useful because correctly guessing demand is incredibly difficult. The crazy thing is that this critique of Kwak's understanding is also applicable to even the staunchest market defenders such as yourself. This is easy enough to prove.
Here you supplied a story about basic income. But what would you guess is truly the demand for this topic? Again, if correctly guessing demand was so easy, then markets wouldn't be so useful. Your blog is not a market... therefore it's clear that you don't truly understand what markets are good for.
Turning your blog into a market would be really easy. Readers could simply "donation vote" (DV) for their favorite stories. DV is most commonly associated with people using donations to decide who will kiss a pig, or get a pie in the face, or get dunked into a water tank. Sometimes zoos use it to name a baby animal. But DV is also used to rank/sort/order/prioritize all the non-profits in the world. The Red Cross, for example, receives very many donation votes which is why it can use a very large portion of the world's limited resources.
Right now FEE is searching for a new president. How are the candidates going to be ranked? They definitely aren't going to be ranked by DV. Therefore, FEE doesn't truly understand what markets are good for.
Last year, much to my very pleasant surprise, the libertarian party (LP) used DV to choose its convention theme. Unfortunately, the LP didn't also use DV to choose the convention location, date and speakers. So just because an organization uses DV doesn't guarantee that it knows why the market is so useful.
The market is an incredibly useful tool. On a daily basis we use this tool to help each other prioritize. Yet, the LP has only once used this tool to improve its own priorities. FEE has never used this tool to improve its priorities. As a pro-market blogger you're in the same boat. Strange as it might seem, right now I'm the only person preaching the benefits of DV. Does this mean that I'm the only person in the world who truly understands what markets are good for? I guess. I'm the only person in this boat. Either I'm in the wrong boat, or everybody else is. I'd really hate to be in the wrong boat so please, if you think that I am, then I'm all ears. Make the case that some producers, such as pro-market bloggers, should be exempt from receiving specific and substantial feedback from consumers. Or make the case that cheap signals are just as credible as costly signals.
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Three years ago on Medium the liberal economist James Kwak also made the case that Friedrich Hayek supported basic income. I responded to his story with more or less your same point... that he was neglecting the context.
Now, three years later, for me the real issue is that Kwak doesn't understand what markets are good for. Markets are incredibly useful because correctly guessing demand is incredibly difficult. The crazy thing is that this critique of Kwak's understanding is also applicable to even the staunchest market defenders such as yourself. This is easy enough to prove.
Here you supplied a story about basic income. But what would you guess is truly the demand for this topic? Again, if correctly guessing demand was so easy, then markets wouldn't be so useful. Your blog is not a market... therefore it's clear that you don't truly understand what markets are good for.
Turning your blog into a market would be really easy. Readers could simply "donation vote" (DV) for their favorite stories. DV is most commonly associated with people using donations to decide who will kiss a pig, or get a pie in the face, or get dunked into a water tank. Sometimes zoos use it to name a baby animal. But DV is also used to rank/sort/order/prioritize all the non-profits in the world. The Red Cross, for example, receives very many donation votes which is why it can use a very large portion of the world's limited resources.
Right now FEE is searching for a new president. How are the candidates going to be ranked? They definitely aren't going to be ranked by DV. Therefore, FEE doesn't truly understand what markets are good for.
Last year, much to my very pleasant surprise, the libertarian party (LP) used DV to choose its convention theme. Unfortunately, the LP didn't also use DV to choose the convention location, date and speakers. So just because an organization uses DV doesn't guarantee that it knows why the market is so useful.
The market is an incredibly useful tool. On a daily basis we use this tool to help each other prioritize. Yet, the LP has only once used this tool to improve its own priorities. FEE has never used this tool to improve its priorities. As a pro-market blogger you're in the same boat. Strange as it might seem, right now I'm the only person preaching the benefits of DV. Does this mean that I'm the only person in the world who truly understands what markets are good for? I guess. I'm the only person in this boat. Either I'm in the wrong boat, or everybody else is. I'd really hate to be in the wrong boat so please, if you think that I am, then I'm all ears. Make the case that some producers, such as pro-market bloggers, should be exempt from receiving specific and substantial feedback from consumers. Or make the case that cheap signals are just as credible as costly signals.
Monday, June 11, 2018
Questions For Vitalik Buterin
Here's the comment that I just posted on Tyler Cowen's blog entry... What should I ask Vitalik Buterin?
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Yes! This! What does Buterin think about Cowen's critique of quadratic voting (QV)? I perceive QV to be a hybrid between voting and spending. How will Buterin determine whether QV is better than its parents at ranking things?
Is Buterin familiar with the idea of donation voting (DV)? DV is most commonly associated with using donations to decide who will kiss a pig, or get a pie in the face, or get dunked into a tank of water. Sometimes zoos use DV to decide what to name a baby animal.
The thing is, whenever anybody makes a donation, each dollar they donate is essentially a vote. This means that DV is used to rank/sort/order/prioritize all the non-profits. The Red Cross, for example, receives very many donation votes, which allows it to use a huge amount of society's limited resources.
Personally, I would be very surprised if QV is more effective than DV at ranking things. I can't imagine why it would be beneficial to arbitrarily diminish the Red Cross's control over society's limited resources. Perhaps though I'd be singing a very different tune if the Red Cross and the KKK were switched in the rankings.
My best guess is that it would be maximally beneficial if we used DV to rank potential people for Cowen to interview. DV should also be used to rank potential questions for Cowen to ask people that he plans to interview. All the money raised could be given to me. Alternatively, it could be given to Marginal Revolution University, which would allow it to compete more resources away from other uses.
It can be said that DV gives too much influence to the wealthy. But it can also be said that it gives the smallest amount of influence to the biggest free-riders.
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Yes! This! What does Buterin think about Cowen's critique of quadratic voting (QV)? I perceive QV to be a hybrid between voting and spending. How will Buterin determine whether QV is better than its parents at ranking things?
Is Buterin familiar with the idea of donation voting (DV)? DV is most commonly associated with using donations to decide who will kiss a pig, or get a pie in the face, or get dunked into a tank of water. Sometimes zoos use DV to decide what to name a baby animal.
The thing is, whenever anybody makes a donation, each dollar they donate is essentially a vote. This means that DV is used to rank/sort/order/prioritize all the non-profits. The Red Cross, for example, receives very many donation votes, which allows it to use a huge amount of society's limited resources.
Personally, I would be very surprised if QV is more effective than DV at ranking things. I can't imagine why it would be beneficial to arbitrarily diminish the Red Cross's control over society's limited resources. Perhaps though I'd be singing a very different tune if the Red Cross and the KKK were switched in the rankings.
My best guess is that it would be maximally beneficial if we used DV to rank potential people for Cowen to interview. DV should also be used to rank potential questions for Cowen to ask people that he plans to interview. All the money raised could be given to me. Alternatively, it could be given to Marginal Revolution University, which would allow it to compete more resources away from other uses.
It can be said that DV gives too much influence to the wealthy. But it can also be said that it gives the smallest amount of influence to the biggest free-riders.
Friday, March 16, 2018
The Pragmatarian Model For The Seattle Times
Any excuse to pitch pragmatarianism...
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Marginal Revolution is an economics blog that I read. One of their entries included a snippet of your article...
https://www.seattletimes.com/nation-world/britain-playgrounds-learning-to-accept-risk-and-occasional-owie/
I wanted to read the entire article but, when I clicked on the link, I was notified by your website that I'd either have to turn off my ad-blocker or subscribe to your paper. The reason that I have the ad-blocker turned on is because I hate ads. It turns out that my hate for ads is greater than my interest in reading the article.
I can't remember the last time that Marginal Revolution, or any other economics blog that I read, has linked to your paper. Since most of your content doesn't match my preferences, I'm not interested in subscribing to your paper.
However, I would be very interested in subscribing to your paper... if you gave subscribers the opportunity to "earmark" their subscription dollars to the most useful articles. To be clear, I'm not suggesting the iTunes model for newspapers. Individual articles would not be behind a paywall. Instead, each month each subscriber would have the opportunity to divide their subscription dollars among all the articles.
Right now the Seattle Times is in a market (I'm free to decide whether I spend my money on it)... but it is not a market... (if I subscribed I wouldn't be free to decide whether to spend my subscription dollars on economics articles). So what, exactly, are markets are good for? What's the point of revealing the demand for the Seattle Times? Demand is the most effective way to measure usefulness. The more useful the Seattle Times is... the more resources it should be able to compete away from other organizations.
The top story currently on your homepage is an article about the Seahawks. Sports aren't at all useful to me. Right now you know how popular sports articles are... but you don't actually know how truly useful they are to your subscribers. This virtually guarantees that there's a disparity between supply and demand. Nobody truly benefits when you supply more, or less, sports articles than your subscribers truly need. Nobody truly benefits when your organization is far less useful than it could, and should, be.
As you can tell, economics matches my preferences... and so does evolution. These are useful topics that I'd be willing to allocate my subscription dollars to. How many other subscribers would be in the same boat? Right now you don't know, but if you did know, then your organization would win. Your organization would quickly become far more useful than its competition.
It's a pretty basic fact that two heads are better than one. Your subscribers, as a group, have far more heads than your organization does. If your subscribers were given the freedom to earmark their subscription dollars, they really wouldn't do so randomly. Their allocation decisions would be based on all their information. Collectively speaking, it's a lot of information. Putting all this information to good use would guarantee that you'd beat all your competitors. At least until they figured out the "secret" of your success. Your website has zero results for "Joseph Henrich".
If your organization became a market then the most useful information would be put on a pedestal... and all your subscribers would become better informed. It would be a virtuous cycle.
Right now your organization largely caters to popularity. As a result, you end up putting the news equivalent of cat videos on a pedestal. It's a vicious cycle. You can be the very first newspaper to break this vicious cycle.
Please let me know if you have any questions.
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Marginal Revolution is an economics blog that I read. One of their entries included a snippet of your article...
https://www.seattletimes.com/nation-world/britain-playgrounds-learning-to-accept-risk-and-occasional-owie/
I wanted to read the entire article but, when I clicked on the link, I was notified by your website that I'd either have to turn off my ad-blocker or subscribe to your paper. The reason that I have the ad-blocker turned on is because I hate ads. It turns out that my hate for ads is greater than my interest in reading the article.
I can't remember the last time that Marginal Revolution, or any other economics blog that I read, has linked to your paper. Since most of your content doesn't match my preferences, I'm not interested in subscribing to your paper.
However, I would be very interested in subscribing to your paper... if you gave subscribers the opportunity to "earmark" their subscription dollars to the most useful articles. To be clear, I'm not suggesting the iTunes model for newspapers. Individual articles would not be behind a paywall. Instead, each month each subscriber would have the opportunity to divide their subscription dollars among all the articles.
Right now the Seattle Times is in a market (I'm free to decide whether I spend my money on it)... but it is not a market... (if I subscribed I wouldn't be free to decide whether to spend my subscription dollars on economics articles). So what, exactly, are markets are good for? What's the point of revealing the demand for the Seattle Times? Demand is the most effective way to measure usefulness. The more useful the Seattle Times is... the more resources it should be able to compete away from other organizations.
The top story currently on your homepage is an article about the Seahawks. Sports aren't at all useful to me. Right now you know how popular sports articles are... but you don't actually know how truly useful they are to your subscribers. This virtually guarantees that there's a disparity between supply and demand. Nobody truly benefits when you supply more, or less, sports articles than your subscribers truly need. Nobody truly benefits when your organization is far less useful than it could, and should, be.
As you can tell, economics matches my preferences... and so does evolution. These are useful topics that I'd be willing to allocate my subscription dollars to. How many other subscribers would be in the same boat? Right now you don't know, but if you did know, then your organization would win. Your organization would quickly become far more useful than its competition.
It's a pretty basic fact that two heads are better than one. Your subscribers, as a group, have far more heads than your organization does. If your subscribers were given the freedom to earmark their subscription dollars, they really wouldn't do so randomly. Their allocation decisions would be based on all their information. Collectively speaking, it's a lot of information. Putting all this information to good use would guarantee that you'd beat all your competitors. At least until they figured out the "secret" of your success. Your website has zero results for "Joseph Henrich".
If your organization became a market then the most useful information would be put on a pedestal... and all your subscribers would become better informed. It would be a virtuous cycle.
Right now your organization largely caters to popularity. As a result, you end up putting the news equivalent of cat videos on a pedestal. It's a vicious cycle. You can be the very first newspaper to break this vicious cycle.
Please let me know if you have any questions.
Tuesday, March 13, 2018
The Economics of Netflix
My comment on The Economics of Netflix’s Bright, a Netflix Original Movie Starring Will Smith (available on Netflix dot com) by spivonomist
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Netflix doesn't know the demand for its content. Netflix knows exactly how many subscribers watched Bright. Netflix knows exactly how many times each subscriber watched Bright. Netflix knows exactly how many subscribers gave Bright a thumbs up/down. But Netflix does not know the demand for Bright.
Netflix could easily reveal the demand for Bright simply by giving subscribers the freedom to "earmark" their subscription dollars to their favorite content. To be clear, this isn't the iTunes model. Bright would not be behind a paywall. Netflix subscribers would not have to pay to watch Bright. Instead, each month subscribers would have the opportunity to allocate as many of their $10 subscription dollars as they wanted to Bright. The total amount of subscription dollars allocated to Bright would be the demand for it.
I'm guessing that each month you would allocate $0 subscription dollars to Bright. Netflix has 100 million subscribers though. They don't equally hate/love Bright. Out of 100 million subscribers, one subscriber loves this movie the most. How many subscription dollars would this subscriber be willing to allocate to Bright in one month... in one year... in one decade?
Which movie/show on Netflix do you love the most? How many subscription dollars would you be willing to allocate to it in one decade? Personally, I love The Man From Earth. In a decade perhaps I'd be willing to allocate $840 subscription dollars to it, assuming that Netflix didn't supply a movie that I loved even more. Is this a reasonable assumption?
Consider these three things...
A. Criticizing the worst content
B. Giving a thumbs up to the best content
C. Allocating many subscription dollars to the best content
Which one would most improve Netflix's supply of content?
The biggest problem in the world is that most people don't understand the benefit of knowing the demand for things.
*************************************
Netflix doesn't know the demand for its content. Netflix knows exactly how many subscribers watched Bright. Netflix knows exactly how many times each subscriber watched Bright. Netflix knows exactly how many subscribers gave Bright a thumbs up/down. But Netflix does not know the demand for Bright.
Netflix could easily reveal the demand for Bright simply by giving subscribers the freedom to "earmark" their subscription dollars to their favorite content. To be clear, this isn't the iTunes model. Bright would not be behind a paywall. Netflix subscribers would not have to pay to watch Bright. Instead, each month subscribers would have the opportunity to allocate as many of their $10 subscription dollars as they wanted to Bright. The total amount of subscription dollars allocated to Bright would be the demand for it.
I'm guessing that each month you would allocate $0 subscription dollars to Bright. Netflix has 100 million subscribers though. They don't equally hate/love Bright. Out of 100 million subscribers, one subscriber loves this movie the most. How many subscription dollars would this subscriber be willing to allocate to Bright in one month... in one year... in one decade?
Which movie/show on Netflix do you love the most? How many subscription dollars would you be willing to allocate to it in one decade? Personally, I love The Man From Earth. In a decade perhaps I'd be willing to allocate $840 subscription dollars to it, assuming that Netflix didn't supply a movie that I loved even more. Is this a reasonable assumption?
Consider these three things...
A. Criticizing the worst content
B. Giving a thumbs up to the best content
C. Allocating many subscription dollars to the best content
Which one would most improve Netflix's supply of content?
The biggest problem in the world is that most people don't understand the benefit of knowing the demand for things.
Monday, January 22, 2018
Surveys: Voting VS Spending
Which is a better way to rank options... voting or spending? In other words, which is better... democracy or markets?
Poll: 73% support bill protecting undocumented "DREAMers." pic.twitter.com/5dMcivgcQG— Fox News (@FoxNews) January 22, 2018
I felt compelled to tip! Have I been ‘nudged’ by Caffè Nero? #behavioralscience @rorysutherland pic.twitter.com/72Hy9IJJBc— Chris Thurling (@ChrisThurling) January 11, 2018
It would be very helpful if you gave people the opportunity to use donations to help rank potential speakers. It would be a survey, but with spending instead of voting. https://t.co/idSS3I3awF Last year the @LPNational used this system to rank potential convention themes. pic.twitter.com/qbtZaEbqJQ
— Pragmatarian (@Pragmatarian) January 23, 2018
Scholarly papers are ranked by cheap signals (citations). Webpages are also ranked by cheap signals (links). Politicians/proposals/policies are also ranked by cheap signals (voting). Wouldn't it be a vastly bigger improvement to replace these cheap signals with costly signals?
— Pragmatarian (@Pragmatarian) January 30, 2018
Part of science is evidence. Do you have any evidence that voting is better than spending at measuring satisfaction? https://t.co/BlwKvfUv4c
— Pragmatarian (@Pragmatarian) February 1, 2018
Where's the proof that voting is better than spending at ranking politicians?
— Pragmatarian (@Pragmatarian) January 30, 2018
Who told you that voting is more useful than spending at measuring usefulness? https://t.co/BlwKvfUv4c
— Pragmatarian (@Pragmatarian) January 29, 2018
Recently I realized that democracy, capitalism and socialism are all about ranking options. Options are either ranked by voting, spending or committee. Do you think that scientists have ranked these three ranking systems?
— Pragmatarian (@Pragmatarian) January 24, 2018
Please quote exactly where Buchanan said...
— Pragmatarian (@Pragmatarian) January 22, 2018
A. The optimal supply of public goods does *not* depend on people's true preferences.
...or...
B. Voting is more effective than spending at revealing people's true preferences.
Which is a more useful measure of usefulness... voting or spending?
— Pragmatarian (@Pragmatarian) January 19, 2018
Do you have any evidence that voting is better than spending at measuring quality?
— Pragmatarian (@Pragmatarian) February 3, 2018
Do you have any evidence that voting (a cheap signal) is better than spending (a costly signal) at measuring usefulness?
— Pragmatarian (@Pragmatarian) February 3, 2018
What's truly insane is that democracy gives unequally irrational people equal influence.
— Pragmatarian (@Pragmatarian) February 4, 2018
Wednesday, January 17, 2018
Obama Presidential Center VS Public Park
The proposed plan is for 20 acres of Chicago’s Jackson Park to be destroyed and replaced with the Obama Presidential Center. Here’s the comment that I posted on the Dezeen story…
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Imagine a survey…
Should the presidential center be built in the park?
Yes
No
But instead of participants simply voting for their preferred option, they would spend any amount of money on it. This system has two benefits…
1. Everybody would see and know the actual demand for/against the proposal.
2. The city would raise money to help reduce its ridiculously huge debt.
From my perspective, the world needs a lot more trees than buildings. So I’d definitely spend my money on the “No” option.
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The Suburbanist gets credit for bringing this issue to my attention…
http://ideaplug.org/?t=Chicago_feedback
***************************
Imagine a survey…
Should the presidential center be built in the park?
Yes
No
But instead of participants simply voting for their preferred option, they would spend any amount of money on it. This system has two benefits…
1. Everybody would see and know the actual demand for/against the proposal.
2. The city would raise money to help reduce its ridiculously huge debt.
From my perspective, the world needs a lot more trees than buildings. So I’d definitely spend my money on the “No” option.
***************************
It is impossible for anyone, even if he be a statesman of genius, to weigh the whole community’s utility and sacrifice against each other. — Knut Wicksell, A New Principle of Just Taxation
The Suburbanist gets credit for bringing this issue to my attention…
Carve 20 acres out of Central Park for a library? What an awful idea. Better to buy the land for housing. https://t.co/MyrXMAPb6t— The Suburbanist (@The_Suburbanist) January 17, 2018
http://ideaplug.org/?t=Chicago_feedback
Saturday, December 16, 2017
Spotlight On Max Sawicky
Most people love attention, me no less than anyone... - Max Sawicky
I just finished reading Henry Farrell's response to Sawicky's review of Brink Lindsey's and Steven M. Teles' new book The Captured Economy. Since Sawicky loves attention, I figured that I'd give him some of mine. Will he love it?
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Dear Sawicky,
If you look above this blog entry you'll see a tab that says "Resources". That page has a list of over 50 links to some of the most important articles, blog entries, scholarly papers and books about economics. So far there is only one link to the jacobinmag.com website... Can We Criticize Foucault?
Have you read that article? It's pretty great. To be honest, I value it more than your own article...
Foucault article > your article
Which article do you value more? Which jacobinmag article do you value most? Does it matter?
Personally, I think that people's valuations really matter. So it's very troubling to me how many places there are where people aren't given the opportunity to share their valuations. In other words, I'm troubled by all the places that aren't markets.
Netflix, for example, is not a market. Each month Netflix decides how to divide my $10 dollars among all its products. This wouldn't be so problematic if Netflix was a mind-reader. Or my best friend forever. Or my lover. Or my brother. Or my mother. But Netflix is none of these things. It's just some company.
Vons is also just some company. But, unlike Netflix, Vons does give me the opportunity to decide for myself how I divide my money among all its products.
What difference would it make if Netflix subscribers could decide for themselves how to divide their dollars? I've already asked a few economists but they really didn't know. How could they not know what difference the Invisible Hand would make?
Do you know what difference the Invisible Hand would make?
The stage, and spotlight, they are all yours. Please make good use of them.
Sincerely,
Xero
Saturday, August 19, 2017
NPR
My letter to NPR
**************************
I just read "Readers Rankled By 'Democracy In Chains' Review" by Elizabeth Jensen. It made me laugh. Yes, it's progress to at least publicly consider and address the issue of whether a historian, rather than a novelist, should have reviewed Nancy MacLean's book. But the fact of the matter is that the subject of the book is a Nobel economist's evaluation of democracy. How can a historian possibly be qualified to effectively judge the validity of James Buchanan's economic arguments? Of course this is the inherent problem with MacLean's book.
Since I'm here anyways, I might as well endeavor to explain the relevant economic concepts...
"NPR has made a push in the past year to review or interview the authors of all major nonfiction books that are published, and as close to publication date as possible."
Why just the major nonfiction books? Why not the minor ones as well? It's because NPR's resources are limited. So it makes sense for NPR to allocate its limited resources to the more important books. But it's also the case that the major books aren't equally important. So then the real issue is... how, exactly, do you determine the importance of a book?
The NY Times maintains a list of the bestselling books. Why should we care how many people have purchased a book? Why does it matter how many people have been willing to pay for a book? Would it be more effective to use voting (democracy) to determine the importance of books? Or would it be more effective to vote for the representatives who vote to determine the importance of books?
One book that has never made the NY Times' list of bestsellers is The Wealth of Nations by Adam Smith. Does this mean that it's less important than Thomas Piketty's book, which has made the list? The issue is that, unlike Piketty's book... Smith's book is freely available. This means that the two books are on an extremely unlevel playing field.
In order for NPR to optimally/efficiently divide its limited resources between these two books, it's necessary to correctly determine their importance. Here are some possibilities...
1. Direct democracy. NPR could give the public the opportunity to vote to determine the importance of the two books.
2. Representative democracy. NPR could give the public the opportunity to vote for the representatives who will vote to determine the importance of the two books.
3. Charitable market. NPR could give the public the opportunity to donate to NPR and earmark their donations to determine the importance of the two books.
Which system would most correctly determine the importance of the two books, which, in turn, would most efficiently divide NPRs limited resources between them?
This is what Buchanan worked on. Well... unfortunately his work was entirely theoretical. He never devised any experiments to test the effectiveness of these very different allocation systems. But it's hard to blame him for failing to stand on his own shoulders. Especially since these fundamental issues continue to be almost entirely overlooked/ignored by most economists.
We use representative democracy to allocate around a third of our country's limited resources. Yet, this system has never been scientifically tested. We all assume that it works, but there's absolutely no credible evidence that it works better than the alternatives would. Historians can certainly explain how we ended up with this system, but they definitely can't prove or justify it. For this we need economics/experiments/science. We really don't need a novelist reviewing a book written by a historian criticizing an economist's work on public finance.
Let's say that NPR conducted an experiment to determine the importance of Smith's book and Piketty's book. With direct democracy... historians and novelists would certainly have no problem voting for Piketty's book. Neither would they have a problem voting for representatives who would vote for Piketty's book. With the charitable market though, perhaps they'd have no problem donating and earmarking $5 dollars... or perhaps $20 dollars to Piketty's book. But with larger amounts of money, they'd have to seriously confront the limits of their economic knowledge. Would it be worth it for them to spend so much money on a subject outside their area of expertise? For most it wouldn't be worth it. So the charitable market would do by far the best job of filtering out public ignorance. Which is pretty much the same thing as minimizing virtue signalling. The outcome/results would embody/reflect public knowledge... which would logically help to eliminate public ignorance. It would be a virtuous cycle. If this system expanded to include all books, then the most valuable knowledge in each field would cross-pollinate all the different fields.
NPR can, and should be, the platform that we, the people, use to help bring the most valuable knowledge to each other's attention.
**************************
See also:
- Evonomics
- Public Finance For Andy Seal
- Show Me The Economic Case For Democracy
- The Pragmatarian Model For The NY Times
**************************
I just read "Readers Rankled By 'Democracy In Chains' Review" by Elizabeth Jensen. It made me laugh. Yes, it's progress to at least publicly consider and address the issue of whether a historian, rather than a novelist, should have reviewed Nancy MacLean's book. But the fact of the matter is that the subject of the book is a Nobel economist's evaluation of democracy. How can a historian possibly be qualified to effectively judge the validity of James Buchanan's economic arguments? Of course this is the inherent problem with MacLean's book.
Since I'm here anyways, I might as well endeavor to explain the relevant economic concepts...
"NPR has made a push in the past year to review or interview the authors of all major nonfiction books that are published, and as close to publication date as possible."
Why just the major nonfiction books? Why not the minor ones as well? It's because NPR's resources are limited. So it makes sense for NPR to allocate its limited resources to the more important books. But it's also the case that the major books aren't equally important. So then the real issue is... how, exactly, do you determine the importance of a book?
The NY Times maintains a list of the bestselling books. Why should we care how many people have purchased a book? Why does it matter how many people have been willing to pay for a book? Would it be more effective to use voting (democracy) to determine the importance of books? Or would it be more effective to vote for the representatives who vote to determine the importance of books?
One book that has never made the NY Times' list of bestsellers is The Wealth of Nations by Adam Smith. Does this mean that it's less important than Thomas Piketty's book, which has made the list? The issue is that, unlike Piketty's book... Smith's book is freely available. This means that the two books are on an extremely unlevel playing field.
In order for NPR to optimally/efficiently divide its limited resources between these two books, it's necessary to correctly determine their importance. Here are some possibilities...
1. Direct democracy. NPR could give the public the opportunity to vote to determine the importance of the two books.
2. Representative democracy. NPR could give the public the opportunity to vote for the representatives who will vote to determine the importance of the two books.
3. Charitable market. NPR could give the public the opportunity to donate to NPR and earmark their donations to determine the importance of the two books.
Which system would most correctly determine the importance of the two books, which, in turn, would most efficiently divide NPRs limited resources between them?
This is what Buchanan worked on. Well... unfortunately his work was entirely theoretical. He never devised any experiments to test the effectiveness of these very different allocation systems. But it's hard to blame him for failing to stand on his own shoulders. Especially since these fundamental issues continue to be almost entirely overlooked/ignored by most economists.
We use representative democracy to allocate around a third of our country's limited resources. Yet, this system has never been scientifically tested. We all assume that it works, but there's absolutely no credible evidence that it works better than the alternatives would. Historians can certainly explain how we ended up with this system, but they definitely can't prove or justify it. For this we need economics/experiments/science. We really don't need a novelist reviewing a book written by a historian criticizing an economist's work on public finance.
Let's say that NPR conducted an experiment to determine the importance of Smith's book and Piketty's book. With direct democracy... historians and novelists would certainly have no problem voting for Piketty's book. Neither would they have a problem voting for representatives who would vote for Piketty's book. With the charitable market though, perhaps they'd have no problem donating and earmarking $5 dollars... or perhaps $20 dollars to Piketty's book. But with larger amounts of money, they'd have to seriously confront the limits of their economic knowledge. Would it be worth it for them to spend so much money on a subject outside their area of expertise? For most it wouldn't be worth it. So the charitable market would do by far the best job of filtering out public ignorance. Which is pretty much the same thing as minimizing virtue signalling. The outcome/results would embody/reflect public knowledge... which would logically help to eliminate public ignorance. It would be a virtuous cycle. If this system expanded to include all books, then the most valuable knowledge in each field would cross-pollinate all the different fields.
NPR can, and should be, the platform that we, the people, use to help bring the most valuable knowledge to each other's attention.
**************************
See also:
- Evonomics
- Public Finance For Andy Seal
- Show Me The Economic Case For Democracy
- The Pragmatarian Model For The NY Times
Sunday, June 25, 2017
The Efficient Allocation Of Blame
Netflix recently canceled one of my favorite shows... Sense8. The show is about 8 strangers who share a psychic connection that allows them to utilize each other's strengths and knowledge. Sense8 is by far the best fictional depiction of Hayek's important concept of partial knowledge. So I really want to blame somebody for Sense8's cancellation. Netflix is the obvious choice... but is it truly the best choice? I really don't want to inefficiently allocate blame.
In order to efficiently allocate blame, it's necessary to thoroughly understand exactly why Netflix canceled Sense8. From what I've read, the audience was too small. Not enough people watched it. Far more people watched 13 Reasons Why. In other words, 13 Reasons Why was more popular than Sense8...
Which show should Netflix have canceled? If this is all the information that we have to go on, then Netflix should have canceled Sense8. It is obviously less popular. So I should blame all the people who didn't watch the show? Not necessarily.
Just because something isn't popular doesn't mean that it isn't valuable. Let's imagine that Netflix gave each and every subscriber the opportunity to divide their subscription dollars however they wanted among all the different content. To be clear, it would not be like iTunes or Blendle where specific content requires payment to access it. Netflix subscribers would simply have the option to divide their $10 dollar monthly fee however they wanted between Sense8 and 13 Reasons Why and all the other content. The more dollars that subscribers spent on a show, the greater its value.
Let's imagine how subscribers might divide their dollars between 13 Reasons Why and Sense8...
Now which show should Netflix have canceled? If this is all the information that we have to go on, then Netflix should have canceled 13 Reasons Why. It's obviously less valuable. It's less beneficial.
There's one more thing that we'd need to know in order to make a truly informed cancellation decision... the cost of each show. I'm guessing that Sense8 was more costly than 13 Reasons Why.
Right now Netflix knows the cost of each show, but it doesn't know the benefit of each show. It's a bit difficult to make an intelligent cost/benefit decision if the benefit isn't actually known!!!!!
Check out this article by Steven Horwitz... The Economist’s Superpower. In it he applies Frederic Bastiat's Seen vs Unseen to the Wonder Woman movie. I haven't watched the movie but evidently it involves Wonder Woman contemplating the true causes of war. Let's make a list...
Sense8
13 Reasons Why
Wonder Women movie
What Is Seen and What Is Not Seen
The Economist's Superpower
war
One of these things is not like the others. There is only one thing on this list that we can actually see the demand for... the Wonder Women movie. We can't see the demand for Sense8. We can't see the demand for 13 Reasons Why. We can't see the demand for What Is Seen and What Is Not Seen. We can't see the demand for The Economist's Superpower. We can't see the demand for war. But we can see the demand for the Wonder Women movie.
Is this the Seen vs Unseen that Horwitz discussed in his article? No. It really isn't. Let's consider Bastiat's Seen vs Unseen. He was like yeah, a broken window requires that the owner will have to buy a new window, but if it hadn't been broken in the first place, then the owner would have spent his money on things that he truly needed. Yeah, war requires that a lot of money be spent, but if the war hadn't been started in the first place, people would have spent their money on things that they truly needed. Yeah, the pyramids required that a lot of money be spent, but if they hadn't been built in the first place, then people would have spent their money on things that they truly needed.
Let's break it down...
1. It matters what people truly need
2. People's true needs can only be revealed by their spending decisions
3. When people aren't given the opportunity to decide how to spend their money, they end up paying for things that they don't truly need
We can't see how much money Horwitz was paid for his article. Maybe he didn't receive any money? In any case, FEE certainly does receive money. It decides how to divide all the money that it receives among all the articles/authors. This logically means that the donors aren't given the opportunity to decide for themselves how they divide their own money among all the articles. Therefore, the donors end up paying for articles that they don't truly need.
Netflix and FEE are based on different models. Netflix receives money from subscribers while FEE receives money from donors. But in neither case do the supporters have the opportunity to use their money to signal the value/benefit of specific products. So neither organization knows the actual benefit of any of its products. This entirely prevents both organizations from making adequately informed cost/benefit decisions. As a result, the supporters end up paying for products that they don't truly need.
It boils down to a very simple question... how much do you need this? If you, as a supporter, can't answer this question with your money, then you're going to end up paying for things that you don't truly need.
FEE and Netflix are two non-market spaces. There are countless non-market spaces. The largest such space is of course the government...
Because the government is a non-market space, taxpayers pay for goods and services that they don't truly need. It might seem like Bastiat's solution was to decrease the size of the government's space. If the government is going to waste people's money, then it should be given less money. A small defective government is better than a large defective government. However, Bastiat definitely wanted the government to be effective.
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Thus, considered in themselves, in their own nature, in their normal state, and apart from all abuses, public services are, like private services, purely and simply acts of exchange. — Frédéric Bastiat, Private and Public Services
When James Goodfellow gives a hundred sous to a government official for a really useful service, this is exactly the same as when he gives a hundred sous to a shoemaker for a pair of shoes. It's a case of give-and-take, and the score is even. But when James Goodfellow hands over a hundred sous to a government official to receive no service for it or even to be subjected to inconveniences, it is as if he were to give his money to a thief. It serves no purpose to say that the official will spend these hundred sous for the great profit of our national industry; the more the thief can do with them, the more James Goodfellow could have done with them if he had not met on his way either the extralegal or the legal parasite. - Frederic Bastiat, What Is Seen and What Is Not Seen
If the socialists mean that under extraordinary circumstances, for urgent cases, the state should set aside some resources to assist certain unfortunate people, to help them adjust to changing conditions, we will, of course, agree. This is done now; we desire that it be done better. There is, however, a point on this road that must not be passed; it is the point where governmental foresight would step in to replace individual foresight and thus destroy it. - Frederic Bastiat, Justice and Fraternity
What do we want with a Socialist then, who, under pretence of organizing for us, comes despotically to break up our voluntary arrangements, to check the division of labour, to substitute isolated efforts for combined ones, and to send civilization back? Is association, as I describe it here, in itself less association, because every one enters and leaves it freely, chooses his place in it, judges and bargains for himself on his own responsibility, and brings with him the spring and warrant of personal interest? That it may deserve this name, is it necessary that a pretended reformer should come and impose upon us his plan and his will, and as it were, to concentrate mankind in himself? - Frédéric Bastiat, What Is Seen and What Is Not Seen
Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority. — Frédéric Bastiat, The Law
*******************
People should get just as much benefit from public goods as they do from private goods... but government planners really aren't above mankind, and they certainly can't concentrate mankind in themselves... therefore... ?
Most libertarians argue that the solution is to shrink the size of the government's space. "Starve the beast". But that's like arguing that FEE and Netflix should be smaller spaces. The real problem isn't the size of a non-market space, it's the fact that the supporters can't decide for themselves how they divide their contributions among all the different goods in the space. So the real solution is to transform non-market spaces into market spaces.
Bastiat correctly identified the problem. Unfortunately, he only hinted at the correct solution. Or, he flirted with it. Or, he danced around it. In any case, I feel like I can slightly blame Bastiat for Sense8 being canceled. But if Netflix does become a market then he will certainly deserve a decent share of the credit.
What about Horwitz? He is far more blameworthy than Bastiat. Not only does Horwitz have the opportunity to stand on Bastiat's shoulders, but he also has the opportunity to stand on Mises' shoulders, and on Hayek's shoulders, and on Friedman's shoulders, and on Buchanan's shoulders. Despite these incredible opportunities to see far more of the economic picture than previous economists, Horwitz still doesn't see the incredible benefit of transforming non-market spaces into market spaces.
Then again, you really shouldn't need a PhD in economics or an MBA from Harvard to understand that making an intelligent cost/benefit decision depends on actually knowing the benefit.
A few days ago I mentioned the cost/benefit problem in a Medium reply that I tweeted to Noah Smith...
How much blame should I allocate to Noah? Here's the very first comment that I ever made on his blog...
I made that comment in 2010. Then I made a "few" more comments on his entries. Finally, in 2012 he replied...
Let's switch the government with Netflix...
Let's consult Adam Smith...
Recently Noah Smith published a post about the shouting class but he didn't even mention Adam Smith...
A couple years ago I tweeted the following to Noah Smith...
So did he accept any responsibility for Sense8 being canceled?
I'm certainly happy to make his day weirder, but it sure doesn't seem like he quite grasped why I asked him, of all people, whether he accepts any responsibility for Sense8's cancellation. The question was random in the sense that it was out of the blue. But it was relevant in terms of all the information that I've shared with him over the past 7 years.
If you lead a horse to water, but it doesn't drink, do you blame the horse? Not if it isn't thirsty.
Honestly I do want to allocate some blame to Noah Smith for Sense8 being canceled. But maybe it isn't his fault that he doesn't thirst for economic enlightenment. Perhaps it's his professors' fault.
I think Miles Kimball was one of Noah's professors. He does deserve some of the blame for Sense8's cancellation.
But I'm pretty sure that Bryan Caplan deserves more blame than Kimball. In a recent blog entry Caplan wrote...
For thou, even thou only, knowest the hearts of all the children of men? Figuring out what's truly important to people is what markets are good for. In theory, Caplan is extremely pro-market. I say "in theory" because he has never made the case that Netflix should be a market. As far as I know, he has never once argued in favor of transforming any non-market space into a market space. And it's not like he's unfamiliar with the concept... Bryan Caplan Please Show Us The Unseen.
Can Caplan be truly pro-market if he is indifferent to the countless spaces that aren't markets? If he deeply loves markets, then for sure he'd notice, and be pained by, their absence. But it's not like he's ever argued that prisons or schools should be markets. Instead, he spends lots of time arguing that borders should be open.
The free flow of people and other resources is only beneficial to the extent that they flow to where they are most needed. Knowing where resources are most needed depends on accurate value signals. The minimum wage is an inaccurate value signal. As a result, it inefficiently allocates people... especially poor people.
It's important that problems are tackled in the correct order. Before borders are opened, it's necessary to abolish minimum wages. In order to abolish minimum wages, people have to understand the importance of accurate value signals. But before people can understand the importance of accurate value signals, they first have to understand the importance of value signals. The best way to help people understand the importance of value signals is to help them understand that valuable, but unpopular shows, will be canceled if their value is unseen.
I don't actually know if this is the best way. But the fact is that everybody hates it when their favorite show is cancelled. It doesn't matter if somebody is a socialist or anarcho-capitalist, they are pained by the loss of their favorite show. People are very different, but not so different that some people enjoy loss. Everybody hates losing their keys. Life is all about avoiding/minimizing loss. So it's really important to efficiently allocate the blame for our loss of Sense8.
Where it gets tricky is how to divide the blame between Bryan Caplan and Alex Tabarrok. As far as I know, Caplan hasn't publicly addressed the economics of bundling content. Tabarrok, on the other hand, has. Unfortunately, he supports bundling. I endeavored to explain the problem with bundling content and he addressed my critique on his blog. Even though I didn't manage to persuade him, he did draw attention to my arguments against bundling.
Caplan and Tabarrok were both colleagues of James Buchanan. This is interesting because he is a super strong contender for deserving the least blame for Sense8's cancellation...
Netflix subscribers are already paying a monthly fee. So if they are given the opportunity to earmark their fees to their favorite content, they wouldn't have any incentive to conceal their "true" preferences.
I tried really hard to explain this concept (here and here) to Jeff Jarvis. He responded to my first attempt but didn't respond to my second. So perhaps it wouldn't be entirely unreasonable to allocate some blame to him for Sense8's cancellation.
Buchanan's paper was written in response to a contender for the most blameworthy...
Samuelson correctly understood that false signals are a problem, but then he simply assumed that planners would be able to divine the true signals. Voila! Sense8 is cancelled!
For some reason I think that "Voila!" should be reserved for when decent things are pulled from a magician's hat. So "Voila!" really doesn't seem like the appropriate word for Samuelson pulling Sense8's cancellation from his butt. Let me try again...
Samuelson simply assumed that planners would be able to divine the true signals. Oh shit! Sense8 is canceled!
It's better but not quite anti-magical enough.
Oh yeah, I should probably mention that Buchanan's paper wasn't nearly as popular as Samuelson's paper. The importance of a paper is largely determined by how many times it's been cited.
Can we blame Kelly for not reading Buchanan's paper? Google didn't read Buchanan's paper either...
Surely I can blame Surowiecki for not appreciating the difference between a regular vote and a dollar vote.
The importance of webpages isn't determined by a market. The importance of academic papers isn't determined by a market. The importance of shows on Netflix isn't determined by a market. So many many many markets are missing. But so few few few people even notice their absence.
To be honest though, I'm pretty sure that I deserve most of the blame for Sense8's cancellation. This blog entry isn't wonderfully written or organized, there's a severe shortage of cleverness, and my diagrams aren't eye-catching. This really isn't my forte. But it's the most important job that nobody else is doing. Voila! Here I am! I've got the heart of a champion! I'm doing my very best to do the most important job. I'm arguing, albeit poorly, that not-markets should be markets. I'd make a super strange comic book hero.
But if you're reading this, then guess what? Now you know the problem and the solution. So if your favorite show gets canceled despite its social benefit being unknown, then you'll be partly responsible. This thought provides me with some comfort.
While I'm at it, I kinda want to blame this guy...
Given the opportunity, I'm guessing that he wouldn't allocate any of his subscription dollars to Master of None. I gave it a thumbs up but not sure if I would allocate any dollars to it either. It's good but it's not great. It's charming, but it's not nearly as charming as Amelie.
Part of the reason that I want to blame deBoer is that I sent him an e-mail about Classtopia but he didn't reply. So it's not like he's ignorant about the idea of transforming non-markets into markets.
Scott Alexander is in the same general category. Alexander and deBoer could both do a far better job than I am at selling Netflix being a market. Except they aren't likely to do so if even Caplan and Tabarrok aren't interested in doing so. Does that make sense?
*scratches head*
On Facebook we can see how many thumbs up a post has received. On Youtube we can see how many thumbs up (and down) a video has received. But on Netflix we can't see how many thumbs up/down a show/movie has received. Subscribers can judge content by its cover, but not by its popularity, or lack thereof.
If Netflix subscribers could divide their dollars among all the content, then I'd definitely want to see how many dollars a show has received. Some content would receive a lot more dollars than other content. Just like some cars are a lot more expensive than other cars? Well... cars are private goods while the content, in the context of Netflix, is a public good.
I can't take a random Lamborghini for a ride, but I could certainly watch a "luxury" show. Eh? Let's consult Smith...
I'm guessing that a coach and six was the equivalent of a Lamborghini. Thanks to rich people being willing to pay so much money for fancy rides, better and better rides became more and more affordable. Orchids and oranges and many other things used to be luxury goods, but now they are common goods.
What about books? Books are certainly a lot more affordable than they used to be. But we don't generally hear about any modern books being luxury items. Luxury cars? Yes. Luxury books? No. It's tricky because books are simply vehicles for ideas. A faster car can more quickly transport a person from point A to point B. But there's no such thing as a faster book that can more quickly transport ideas from the book to your brain. Too bad!
A bestselling book doesn't mean that many people especially appreciated the physical book itself, it means that they especially appreciated the ideas that the book contains. However, even when somebody truly loves some ideas in a book, it's not like they are going to continue buying the same book. They might buy it for others. Personally, I love the ideas in the Wealth of Nations but it's not like I've ever bought it for myself or others. Why buy the cow when you can get the milk for free?
The story, at least for shows and movies, would be very different if Netflix becomes a market. Let's consider a hypothetical subscriber named Samantha. She isn't going to spend her subscription dollars to buy Sense8 like she buys a book or an orchid. She already "bought" the show when she subscribed to Netflix. So there's absolutely no need for her to buy it again. Instead, she needs to communicate how much benefit she derives from the show. This crucial information could be accurately transmitted by Samantha using her subscription dollars to grade the benefit/value/relevance/quality of the show. Each month she would have the opportunity to decide how many of her $10 dollars to spend on Sense8. If she really loves it, then each month she would spend many of her dollars on it.
Each month Samantha spends some money on chocolate. And each month she spends some money on Sense8. The show is canceled so it's not like she's spending her money on new episodes. And she might not even be rewatching the episodes. But each month she still highly values the idea of Sense8. She communicates her high valuation of the show by spending many of her subscription dollars on it. She would be using her money to say, "This is still the best show on Netflix."
Every subscriber would essentially use their subscription dollars to help create a treasure map. Sense8 would be one treasure chest on the map. The size of each and every treasure chest would be determined by subscribers deciding how to divide their limited subscription dollars among all the different chests.
The treasure map would help subscribers decide how to divide their limited time and attention among all of the content. It would also help content creators decide how to divide their limited time and creativity among all the different topics.
It stands to reason that some treasure chests are going to be a lot larger than other treasure chests. Some shows are going to receive a lot more money than other shows. So there will certainly be luxury ideas. Will 20% of the ideas get 80% of the dollars?
It's hard to wrap my mind around the idea of luxury ideas. Luxury items are pretty much defined by most people's inability to afford them. As oranges became more and more affordable, they become less and less luxurious.
So maybe it's technically impossible for there to ever be luxury ideas. There will simply be super high quality ideas that most people can afford.
When the highest quality ideas have the brightest value signals, all the subscribers are going to quickly spot and respond to them. An entire country's worth of people will take the highest quality ideas and combine them to create the next crop of ideas.
The Wealth of Nations was published in 1776. Around 230 years later, I had the idea to apply Smith's idea of the Invisible Hand to the government. A few years later I discovered that, 15 years before I was even born, Buchanan had come up with the same idea. And now here I am with the idea to apply his idea to Netflix and all the other non-markets.
Right now, because so many spaces aren't markets, we don't see or know the social value of countless ideas. Oh shit! Super slow synthesis!
If every space was a market, then we'd see and know the social value of every idea. Voila! Super swift synthesis!
Speaking of which, here's one last blame candidate...
Do we need to know how much society values an ingredient? Of course! Right now we don't know the social value of Buchanan's "The Economics of Earmarked Taxes". This means that people can't make adequately informed decisions whether to include it in their recipes. The same is true of the Wealth of Nations.
A couple times (here and here) I endeavored to explain to Romer the importance of knowing the social value of ingredients. Unfortunately, but unsurprisingly, he didn't publicly examine my explanation. So I'm pretty sure that he also deserves some of the blame for Sense8's cancellation.
It's time to stop the senseless cancellations. It's time to know the social value of each and every idea. It's time to fully utilize the best ideas. It's time to transform every non-market into a market.
In order to efficiently allocate blame, it's necessary to thoroughly understand exactly why Netflix canceled Sense8. From what I've read, the audience was too small. Not enough people watched it. Far more people watched 13 Reasons Why. In other words, 13 Reasons Why was more popular than Sense8...
Which show should Netflix have canceled? If this is all the information that we have to go on, then Netflix should have canceled Sense8. It is obviously less popular. So I should blame all the people who didn't watch the show? Not necessarily.
Just because something isn't popular doesn't mean that it isn't valuable. Let's imagine that Netflix gave each and every subscriber the opportunity to divide their subscription dollars however they wanted among all the different content. To be clear, it would not be like iTunes or Blendle where specific content requires payment to access it. Netflix subscribers would simply have the option to divide their $10 dollar monthly fee however they wanted between Sense8 and 13 Reasons Why and all the other content. The more dollars that subscribers spent on a show, the greater its value.
Let's imagine how subscribers might divide their dollars between 13 Reasons Why and Sense8...
Now which show should Netflix have canceled? If this is all the information that we have to go on, then Netflix should have canceled 13 Reasons Why. It's obviously less valuable. It's less beneficial.
There's one more thing that we'd need to know in order to make a truly informed cancellation decision... the cost of each show. I'm guessing that Sense8 was more costly than 13 Reasons Why.
Right now Netflix knows the cost of each show, but it doesn't know the benefit of each show. It's a bit difficult to make an intelligent cost/benefit decision if the benefit isn't actually known!!!!!
Check out this article by Steven Horwitz... The Economist’s Superpower. In it he applies Frederic Bastiat's Seen vs Unseen to the Wonder Woman movie. I haven't watched the movie but evidently it involves Wonder Woman contemplating the true causes of war. Let's make a list...
Sense8
13 Reasons Why
Wonder Women movie
What Is Seen and What Is Not Seen
The Economist's Superpower
war
One of these things is not like the others. There is only one thing on this list that we can actually see the demand for... the Wonder Women movie. We can't see the demand for Sense8. We can't see the demand for 13 Reasons Why. We can't see the demand for What Is Seen and What Is Not Seen. We can't see the demand for The Economist's Superpower. We can't see the demand for war. But we can see the demand for the Wonder Women movie.
Is this the Seen vs Unseen that Horwitz discussed in his article? No. It really isn't. Let's consider Bastiat's Seen vs Unseen. He was like yeah, a broken window requires that the owner will have to buy a new window, but if it hadn't been broken in the first place, then the owner would have spent his money on things that he truly needed. Yeah, war requires that a lot of money be spent, but if the war hadn't been started in the first place, people would have spent their money on things that they truly needed. Yeah, the pyramids required that a lot of money be spent, but if they hadn't been built in the first place, then people would have spent their money on things that they truly needed.
Let's break it down...
1. It matters what people truly need
2. People's true needs can only be revealed by their spending decisions
3. When people aren't given the opportunity to decide how to spend their money, they end up paying for things that they don't truly need
We can't see how much money Horwitz was paid for his article. Maybe he didn't receive any money? In any case, FEE certainly does receive money. It decides how to divide all the money that it receives among all the articles/authors. This logically means that the donors aren't given the opportunity to decide for themselves how they divide their own money among all the articles. Therefore, the donors end up paying for articles that they don't truly need.
Netflix and FEE are based on different models. Netflix receives money from subscribers while FEE receives money from donors. But in neither case do the supporters have the opportunity to use their money to signal the value/benefit of specific products. So neither organization knows the actual benefit of any of its products. This entirely prevents both organizations from making adequately informed cost/benefit decisions. As a result, the supporters end up paying for products that they don't truly need.
It boils down to a very simple question... how much do you need this? If you, as a supporter, can't answer this question with your money, then you're going to end up paying for things that you don't truly need.
FEE and Netflix are two non-market spaces. There are countless non-market spaces. The largest such space is of course the government...
This means that the terraces of the Champ-de-Mars are ordered first to be built up and then to be torn down. The great Napoleon, it is said, thought he was doing philanthropic work when he had ditches dug and then filled in. He also said: "What difference does the result make? All we need is to see wealth spread among the laboring classes. - Frédéric Bastiat, What Is Seen and What Is Not Seen
Because the government is a non-market space, taxpayers pay for goods and services that they don't truly need. It might seem like Bastiat's solution was to decrease the size of the government's space. If the government is going to waste people's money, then it should be given less money. A small defective government is better than a large defective government. However, Bastiat definitely wanted the government to be effective.
*******************
Thus, considered in themselves, in their own nature, in their normal state, and apart from all abuses, public services are, like private services, purely and simply acts of exchange. — Frédéric Bastiat, Private and Public Services
When James Goodfellow gives a hundred sous to a government official for a really useful service, this is exactly the same as when he gives a hundred sous to a shoemaker for a pair of shoes. It's a case of give-and-take, and the score is even. But when James Goodfellow hands over a hundred sous to a government official to receive no service for it or even to be subjected to inconveniences, it is as if he were to give his money to a thief. It serves no purpose to say that the official will spend these hundred sous for the great profit of our national industry; the more the thief can do with them, the more James Goodfellow could have done with them if he had not met on his way either the extralegal or the legal parasite. - Frederic Bastiat, What Is Seen and What Is Not Seen
If the socialists mean that under extraordinary circumstances, for urgent cases, the state should set aside some resources to assist certain unfortunate people, to help them adjust to changing conditions, we will, of course, agree. This is done now; we desire that it be done better. There is, however, a point on this road that must not be passed; it is the point where governmental foresight would step in to replace individual foresight and thus destroy it. - Frederic Bastiat, Justice and Fraternity
What do we want with a Socialist then, who, under pretence of organizing for us, comes despotically to break up our voluntary arrangements, to check the division of labour, to substitute isolated efforts for combined ones, and to send civilization back? Is association, as I describe it here, in itself less association, because every one enters and leaves it freely, chooses his place in it, judges and bargains for himself on his own responsibility, and brings with him the spring and warrant of personal interest? That it may deserve this name, is it necessary that a pretended reformer should come and impose upon us his plan and his will, and as it were, to concentrate mankind in himself? - Frédéric Bastiat, What Is Seen and What Is Not Seen
Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority. — Frédéric Bastiat, The Law
*******************
People should get just as much benefit from public goods as they do from private goods... but government planners really aren't above mankind, and they certainly can't concentrate mankind in themselves... therefore... ?
Most libertarians argue that the solution is to shrink the size of the government's space. "Starve the beast". But that's like arguing that FEE and Netflix should be smaller spaces. The real problem isn't the size of a non-market space, it's the fact that the supporters can't decide for themselves how they divide their contributions among all the different goods in the space. So the real solution is to transform non-market spaces into market spaces.
Bastiat correctly identified the problem. Unfortunately, he only hinted at the correct solution. Or, he flirted with it. Or, he danced around it. In any case, I feel like I can slightly blame Bastiat for Sense8 being canceled. But if Netflix does become a market then he will certainly deserve a decent share of the credit.
What about Horwitz? He is far more blameworthy than Bastiat. Not only does Horwitz have the opportunity to stand on Bastiat's shoulders, but he also has the opportunity to stand on Mises' shoulders, and on Hayek's shoulders, and on Friedman's shoulders, and on Buchanan's shoulders. Despite these incredible opportunities to see far more of the economic picture than previous economists, Horwitz still doesn't see the incredible benefit of transforming non-market spaces into market spaces.
Then again, you really shouldn't need a PhD in economics or an MBA from Harvard to understand that making an intelligent cost/benefit decision depends on actually knowing the benefit.
A few days ago I mentioned the cost/benefit problem in a Medium reply that I tweeted to Noah Smith...
Hey @Noahpinion, do you accept any responsibility for #Sense8 being canceled? https://t.co/IOAi8en5qa— Pragmatarian (@Pragmatarian) June 22, 2017
How much blame should I allocate to Noah? Here's the very first comment that I ever made on his blog...
Allowing tax payers to vote with their taxes would lead to the most efficient division of labor between the public and private sector.
The only difference between public and private goods is that, with public goods, people can free-ride off the contributions of others. Add the element of coercion (taxes) and the invisible hand can allocate public resources as efficiently as it can allocate private resources.
I made that comment in 2010. Then I made a "few" more comments on his entries. Finally, in 2012 he replied...
FWIW, people choosing which programs their tax dollars go to presents a coordination problem. Imagine if the budget last year for highway-building was $50B. Now imagine that everyone thinks they did a good job and highways are important, so they allocate more to highways. But since they all do it at once, the highway-building dept. now has $500B this year. What do they do with all that extra cash?
FWIW, people choosing which programs their subscription dollars go to presents a coordination problem. Imagine if the budget last year for sci-fi shows was $50B. Now imagine that everyone thinks they did a good job and sci-fi shows are important, so they allocate more to sci-fi shows. But since they all do it at once, sci-fi producers now have $500B this year. What do they do with all that extra cash?
Let's consult Adam Smith...
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
Recently Noah Smith published a post about the shouting class but he didn't even mention Adam Smith...
The people feeling, during the continuance of the war, the complete burden of it, would soon grow weary of it, and government, in order to humour them, would not be under the necessity of carrying it on longer than it was necessary to do so. The foresight of the heavy and unavoidable burdens of war would hinder the people from wantonly calling for it when there was no real or solid interest to fight for. - Adam Smith, Wealth of Nations
A couple years ago I tweeted the following to Noah Smith...
Attention @Noahpinion: Let me know if this is an exception to your Hayek invoking rule... The Economics of Sense8 http://t.co/hlp2yuc6nH— Pragmatarian (@Pragmatarian) June 8, 2015
So did he accept any responsibility for Sense8 being canceled?
— Noah Smith (@Noahpinion) June 22, 2017
I'm certainly happy to make his day weirder, but it sure doesn't seem like he quite grasped why I asked him, of all people, whether he accepts any responsibility for Sense8's cancellation. The question was random in the sense that it was out of the blue. But it was relevant in terms of all the information that I've shared with him over the past 7 years.
If you lead a horse to water, but it doesn't drink, do you blame the horse? Not if it isn't thirsty.
Honestly I do want to allocate some blame to Noah Smith for Sense8 being canceled. But maybe it isn't his fault that he doesn't thirst for economic enlightenment. Perhaps it's his professors' fault.
I think Miles Kimball was one of Noah's professors. He does deserve some of the blame for Sense8's cancellation.
But I'm pretty sure that Bryan Caplan deserves more blame than Kimball. In a recent blog entry Caplan wrote...
The heart of the left isn't helping the poor, or reducing inequality, or even minority rights. The heart of the left is being anti-market.
For thou, even thou only, knowest the hearts of all the children of men? Figuring out what's truly important to people is what markets are good for. In theory, Caplan is extremely pro-market. I say "in theory" because he has never made the case that Netflix should be a market. As far as I know, he has never once argued in favor of transforming any non-market space into a market space. And it's not like he's unfamiliar with the concept... Bryan Caplan Please Show Us The Unseen.
Can Caplan be truly pro-market if he is indifferent to the countless spaces that aren't markets? If he deeply loves markets, then for sure he'd notice, and be pained by, their absence. But it's not like he's ever argued that prisons or schools should be markets. Instead, he spends lots of time arguing that borders should be open.
The free flow of people and other resources is only beneficial to the extent that they flow to where they are most needed. Knowing where resources are most needed depends on accurate value signals. The minimum wage is an inaccurate value signal. As a result, it inefficiently allocates people... especially poor people.
It's important that problems are tackled in the correct order. Before borders are opened, it's necessary to abolish minimum wages. In order to abolish minimum wages, people have to understand the importance of accurate value signals. But before people can understand the importance of accurate value signals, they first have to understand the importance of value signals. The best way to help people understand the importance of value signals is to help them understand that valuable, but unpopular shows, will be canceled if their value is unseen.
I don't actually know if this is the best way. But the fact is that everybody hates it when their favorite show is cancelled. It doesn't matter if somebody is a socialist or anarcho-capitalist, they are pained by the loss of their favorite show. People are very different, but not so different that some people enjoy loss. Everybody hates losing their keys. Life is all about avoiding/minimizing loss. So it's really important to efficiently allocate the blame for our loss of Sense8.
Where it gets tricky is how to divide the blame between Bryan Caplan and Alex Tabarrok. As far as I know, Caplan hasn't publicly addressed the economics of bundling content. Tabarrok, on the other hand, has. Unfortunately, he supports bundling. I endeavored to explain the problem with bundling content and he addressed my critique on his blog. Even though I didn't manage to persuade him, he did draw attention to my arguments against bundling.
Caplan and Tabarrok were both colleagues of James Buchanan. This is interesting because he is a super strong contender for deserving the least blame for Sense8's cancellation...
Under most real-world taxing institutions, the tax price per unit at which collective goods are made available to the individual will depend, at least to some degree, on his own behavior. This element is not, however, important under the major tax institutions such as the personal income tax, the general sales tax, or the real property tax. With such structures, the individual may, by changing his private behavior, modify the tax base (and thus the tax price per unit of collective goods he utilizes), but he need not have any incentive to conceal his "true" preferences for public goods. - James M. Buchanan, The Economics of Earmarked Taxes
Netflix subscribers are already paying a monthly fee. So if they are given the opportunity to earmark their fees to their favorite content, they wouldn't have any incentive to conceal their "true" preferences.
I tried really hard to explain this concept (here and here) to Jeff Jarvis. He responded to my first attempt but didn't respond to my second. So perhaps it wouldn't be entirely unreasonable to allocate some blame to him for Sense8's cancellation.
Buchanan's paper was written in response to a contender for the most blameworthy...
But, and this is the point sensed by Wicksell but perhaps not fully appreciated by Lindahl, now it is in the selfish interest of each person to give false signals, to pretend to have less interest in a given collective consumption activity than he really has, etc. — Paul Samuelson, The Pure Theory of Public Expenditure
Samuelson correctly understood that false signals are a problem, but then he simply assumed that planners would be able to divine the true signals. Voila! Sense8 is cancelled!
For some reason I think that "Voila!" should be reserved for when decent things are pulled from a magician's hat. So "Voila!" really doesn't seem like the appropriate word for Samuelson pulling Sense8's cancellation from his butt. Let me try again...
Samuelson simply assumed that planners would be able to divine the true signals. Oh shit! Sense8 is canceled!
It's better but not quite anti-magical enough.
Oh yeah, I should probably mention that Buchanan's paper wasn't nearly as popular as Samuelson's paper. The importance of a paper is largely determined by how many times it's been cited.
Citation indexing is currently employed to map the breaking "hot" areas of science. Clusters of a few extremely highly cited papers can indicate a rapidly moving area of research. An unintended corollary of this system is that government fund-givers use the Citation Index to assist them in determining whose research to fund. They count the total number of citations -- adjusted for the "weight" or stature of the journal publishing the paper -- of an individual scientist's work in order to indicate the importance of that scientist. But like any network, citation evaluation breeds the opportunity for a positive feedback loop: the more funding, the more papers produced, the more citations garnered, the more funding secured, and so on. And it engenders the identical reverse loop of no funding, no papers, no citations, no funding. - Kevin Kelly, Out of Control
Can we blame Kelly for not reading Buchanan's paper? Google didn't read Buchanan's paper either...
Now, Google is a republic, not a perfect democracy. As the description says, the more people that have linked to a page, the more influence that page has on the final decision. The final vote is a "weighted average" - just as a stock price or an NFL point spread is - rather than a simple average like the ox-weighters' estimate. Nonetheless, the big sites that have more influence over the crowd's final verdict have that influence only because of all the dollar votes that smaller sites have given them. If the smaller sites were giving the wrong sites too much influence, Google's search results would not be accurate. In the end, the crowd still rules. To be smart at the top, the system has to be smart all the way through. - James Surowiecki, The Wisdom of Crowds
Surely I can blame Surowiecki for not appreciating the difference between a regular vote and a dollar vote.
The importance of webpages isn't determined by a market. The importance of academic papers isn't determined by a market. The importance of shows on Netflix isn't determined by a market. So many many many markets are missing. But so few few few people even notice their absence.
To be honest though, I'm pretty sure that I deserve most of the blame for Sense8's cancellation. This blog entry isn't wonderfully written or organized, there's a severe shortage of cleverness, and my diagrams aren't eye-catching. This really isn't my forte. But it's the most important job that nobody else is doing. Voila! Here I am! I've got the heart of a champion! I'm doing my very best to do the most important job. I'm arguing, albeit poorly, that not-markets should be markets. I'd make a super strange comic book hero.
But if you're reading this, then guess what? Now you know the problem and the solution. So if your favorite show gets canceled despite its social benefit being unknown, then you'll be partly responsible. This thought provides me with some comfort.
While I'm at it, I kinda want to blame this guy...
It’s like some asshole coming up to you at the bus stop and saying “Ready to have your mind blown? Modern life is often alienating and lonely.” Thanks for the insight, Socrates, I’ve never been exposed to such wisdoms before. - Freddie deBoer, you people are out of your minds, Master of None is terrible
Given the opportunity, I'm guessing that he wouldn't allocate any of his subscription dollars to Master of None. I gave it a thumbs up but not sure if I would allocate any dollars to it either. It's good but it's not great. It's charming, but it's not nearly as charming as Amelie.
Part of the reason that I want to blame deBoer is that I sent him an e-mail about Classtopia but he didn't reply. So it's not like he's ignorant about the idea of transforming non-markets into markets.
Scott Alexander is in the same general category. Alexander and deBoer could both do a far better job than I am at selling Netflix being a market. Except they aren't likely to do so if even Caplan and Tabarrok aren't interested in doing so. Does that make sense?
*scratches head*
On Facebook we can see how many thumbs up a post has received. On Youtube we can see how many thumbs up (and down) a video has received. But on Netflix we can't see how many thumbs up/down a show/movie has received. Subscribers can judge content by its cover, but not by its popularity, or lack thereof.
If Netflix subscribers could divide their dollars among all the content, then I'd definitely want to see how many dollars a show has received. Some content would receive a lot more dollars than other content. Just like some cars are a lot more expensive than other cars? Well... cars are private goods while the content, in the context of Netflix, is a public good.
I can't take a random Lamborghini for a ride, but I could certainly watch a "luxury" show. Eh? Let's consult Smith...
The market price of every particular commodity is regulated by the proportion between the quantity which is actually brought to market, and the demand of those who are willing to pay the natural price of the commodity, or the whole value of the rent, labour, and profit, which must be paid in order to bring it thither. Such people may be called the effectual demanders, and their demand the effectual demand; since it may be sufficient to effectuate the bringing of the commodity to market. It is different from the absolute demand. A very poor man may be said in some sense to have a demand for a coach and six; he might like to have it; but his demand is not an effectual demand, as the commodity can never be brought to market in order to satisfy it. - Adam Smith, Wealth of Nations
I'm guessing that a coach and six was the equivalent of a Lamborghini. Thanks to rich people being willing to pay so much money for fancy rides, better and better rides became more and more affordable. Orchids and oranges and many other things used to be luxury goods, but now they are common goods.
What about books? Books are certainly a lot more affordable than they used to be. But we don't generally hear about any modern books being luxury items. Luxury cars? Yes. Luxury books? No. It's tricky because books are simply vehicles for ideas. A faster car can more quickly transport a person from point A to point B. But there's no such thing as a faster book that can more quickly transport ideas from the book to your brain. Too bad!
A bestselling book doesn't mean that many people especially appreciated the physical book itself, it means that they especially appreciated the ideas that the book contains. However, even when somebody truly loves some ideas in a book, it's not like they are going to continue buying the same book. They might buy it for others. Personally, I love the ideas in the Wealth of Nations but it's not like I've ever bought it for myself or others. Why buy the cow when you can get the milk for free?
The story, at least for shows and movies, would be very different if Netflix becomes a market. Let's consider a hypothetical subscriber named Samantha. She isn't going to spend her subscription dollars to buy Sense8 like she buys a book or an orchid. She already "bought" the show when she subscribed to Netflix. So there's absolutely no need for her to buy it again. Instead, she needs to communicate how much benefit she derives from the show. This crucial information could be accurately transmitted by Samantha using her subscription dollars to grade the benefit/value/relevance/quality of the show. Each month she would have the opportunity to decide how many of her $10 dollars to spend on Sense8. If she really loves it, then each month she would spend many of her dollars on it.
Each month Samantha spends some money on chocolate. And each month she spends some money on Sense8. The show is canceled so it's not like she's spending her money on new episodes. And she might not even be rewatching the episodes. But each month she still highly values the idea of Sense8. She communicates her high valuation of the show by spending many of her subscription dollars on it. She would be using her money to say, "This is still the best show on Netflix."
Every subscriber would essentially use their subscription dollars to help create a treasure map. Sense8 would be one treasure chest on the map. The size of each and every treasure chest would be determined by subscribers deciding how to divide their limited subscription dollars among all the different chests.
The treasure map would help subscribers decide how to divide their limited time and attention among all of the content. It would also help content creators decide how to divide their limited time and creativity among all the different topics.
It stands to reason that some treasure chests are going to be a lot larger than other treasure chests. Some shows are going to receive a lot more money than other shows. So there will certainly be luxury ideas. Will 20% of the ideas get 80% of the dollars?
It's hard to wrap my mind around the idea of luxury ideas. Luxury items are pretty much defined by most people's inability to afford them. As oranges became more and more affordable, they become less and less luxurious.
So maybe it's technically impossible for there to ever be luxury ideas. There will simply be super high quality ideas that most people can afford.
When the highest quality ideas have the brightest value signals, all the subscribers are going to quickly spot and respond to them. An entire country's worth of people will take the highest quality ideas and combine them to create the next crop of ideas.
The Wealth of Nations was published in 1776. Around 230 years later, I had the idea to apply Smith's idea of the Invisible Hand to the government. A few years later I discovered that, 15 years before I was even born, Buchanan had come up with the same idea. And now here I am with the idea to apply his idea to Netflix and all the other non-markets.
Right now, because so many spaces aren't markets, we don't see or know the social value of countless ideas. Oh shit! Super slow synthesis!
If every space was a market, then we'd see and know the social value of every idea. Voila! Super swift synthesis!
Speaking of which, here's one last blame candidate...
To understand how persistent growth, even accelerating growth is possible, it helps to step back and ask where growth comes from. At the most basic level, an economy grows when whenever people take resources and rearrange them in a way that makes them more valuable. A useful metaphor for rearrangement as value creation comes from the kitchen. To create valuable final products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance. Human history teaches us, however, that economic growth springs from better recipes, not just from more cooking. New recipes produce fewer unpleasant side effects and generate more economic value per unit of raw material. - Paul Romer, Economic Growth
Do we need to know how much society values an ingredient? Of course! Right now we don't know the social value of Buchanan's "The Economics of Earmarked Taxes". This means that people can't make adequately informed decisions whether to include it in their recipes. The same is true of the Wealth of Nations.
A couple times (here and here) I endeavored to explain to Romer the importance of knowing the social value of ingredients. Unfortunately, but unsurprisingly, he didn't publicly examine my explanation. So I'm pretty sure that he also deserves some of the blame for Sense8's cancellation.
It's time to stop the senseless cancellations. It's time to know the social value of each and every idea. It's time to fully utilize the best ideas. It's time to transform every non-market into a market.
Monday, May 8, 2017
The Pragmatarian Model For The LA Times
Today I submitted the following idea to the LA Times...
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My friend has helped her 4th grade class to become a country...
http://classtopia.blogspot.com/
Recently a page was created to highlight their best blog entries...
http://classtopia.blogspot.com/p/blog-page_22.html
The value of the entries is determined by civic crowdfunding. Right now the crowd is pretty small. It consists of the students, their teacher and myself. But in theory the crowd could be as large as everyone in the world. Everyone could use their donated dollars to help "grade" the students' work. If the students are going to do a lot of work anyways, then they might as well do the most relevant work. Can you imagine if all the students in the world used their time, energy, creativity and brainpower to solve the most relevant problems?
This idea is just as relevant to newspapers. Actually knowing the relevance/value of your stories would allow you to far better serve your readers.
Does this idea seem far-fetched? It shouldn’t. Grocery stores allow consumers to substantially and specifically participate in the prioritization process. You have the wonderful and incredibly important opportunity to use your dollars to "grade" the relevance/value of the products that are available at your local grocery store.
This last Friday the Helpful Honda folks gave a really high "grade" to Classtopia by donating 24 chromebooks. Fox 11 was there to cover the event...
https://youtu.be/q5cPSsIvHRE
It was a pretty great overview. But the idea definitely merits wider coverage and deeper analysis. Either grocery stores are doing it wrong... or newspapers and schools are doing it wrong. Which is it? It would behoove us to figure out the correct answer sooner rather than later.
***********************************
My friend has helped her 4th grade class to become a country...
http://classtopia.blogspot.com/
Recently a page was created to highlight their best blog entries...
http://classtopia.blogspot.com/p/blog-page_22.html
The value of the entries is determined by civic crowdfunding. Right now the crowd is pretty small. It consists of the students, their teacher and myself. But in theory the crowd could be as large as everyone in the world. Everyone could use their donated dollars to help "grade" the students' work. If the students are going to do a lot of work anyways, then they might as well do the most relevant work. Can you imagine if all the students in the world used their time, energy, creativity and brainpower to solve the most relevant problems?
This idea is just as relevant to newspapers. Actually knowing the relevance/value of your stories would allow you to far better serve your readers.
Does this idea seem far-fetched? It shouldn’t. Grocery stores allow consumers to substantially and specifically participate in the prioritization process. You have the wonderful and incredibly important opportunity to use your dollars to "grade" the relevance/value of the products that are available at your local grocery store.
This last Friday the Helpful Honda folks gave a really high "grade" to Classtopia by donating 24 chromebooks. Fox 11 was there to cover the event...
https://youtu.be/q5cPSsIvHRE
It was a pretty great overview. But the idea definitely merits wider coverage and deeper analysis. Either grocery stores are doing it wrong... or newspapers and schools are doing it wrong. Which is it? It would behoove us to figure out the correct answer sooner rather than later.
***********************************
See also:
The Pragmatarian Model For The NY Times (22 Dec 2016)
The Pragmatarian Model For The Economist (22 Aug 2016)
Saturday, April 15, 2017
Markets Are The Most Exciting Thing Ever!!!!!!!!!
Some discussion in: Netflix And Virtue Signalling
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It feels like you're focusing on the word "demand" rather than on the "money spent" part. For me it's significant and meaningful and important and useful to know how much money people are willing to spend on things. It's convenient to use the word "demand" to refer to the amount of money that people are willing to spend on things. But we can also use the letter "X" or the word "fhqwhgads" or "zeitgeist" or any other combination of letters you want. I'm less interested in the word than in the concept. So it would be great if you focused on the concept.
Spending money is a sacrifice. The more money that is spent, the bigger the sacrifice. Since spending money is a sacrifice... generally people don't randomly spend their money. They didn't exchange their limited time and effort for money just so that they can flush it down the toilet.
It's easy to prove this... all I have to do is ask for your money. Of course you're going to want to know why you should give me any money. So in order to persuade you to give me your money, I'd have to provide you with some information. You'd compare the information that I gave you with all the information that you have and then decide whether or not to give me money. If you decided not to give me any money, well, in theory I could endeavor to provide you with different and better information. And again you'd compare this new information with all your information in order to decide whether to give me money.
This process of persuasion involves lots of brainpower being used and lots of information being shared, considered and compared. So it's significant and meaningful and important to know how much money individuals and groups of individuals are willing to spend.
I was disappointed that Person of Interest was canceled...
It was canceled despite the fact that nobody knew how much money that I was willing to spend on the show. And I suppose this could potentially sound egocentric. So let me zoom out. It was canceled despite the fact that nobody knew how much money that any subscribers were willing to spend on the show. This fact makes me acutely feel like I'm living in the stone ages. Where I have to go around trying to convince people that fire and wheels are useful. I'm extremely grateful that I live in an era where I don't have to try and convince anybody that fire and wheels are useful... but I'm also extremely disappointed that I live in an era where I do have to try and convince everybody that it's useful to know how much money people are willing to spend on things.
Consider how much better off your life is because you live in an era where everybody knows that fire and wheels are useful. Now double or triple or quadruple that amount of betterness to try and appreciate how much better off your life would be if you lived in an era where everybody knows that it's essential to know how much money people are willing to spend on things.
Admittedly I have absolutely no idea how much money everybody would be willing to spend on Person of Interest... so of course I can't guarantee that, if ignorance (of willingness to pay) had been eliminated, the show would have been continued rather than canceled. But I can guarantee that the deciders, whoever they were, would have made a far more informed decision.
The world will be infinitely better off when everybody makes far more informed decisions.
Let's imagine that people could choose where their taxes go. Some people want to go to war with Canada. The shape of the demand looks like this...
What would you say about the shape of the demand? I'd say that it's certainly tall enough... but it's way too skinny. Too few people are truly willing to pay for war with Canada. Sure, these few people are willing to pay a lot... but that really doesn't overrule the fact that there aren't nearly enough of them to justify this particular use of their tax dollars. So the DoD would use the money for other things besides invading Canada.
Using technical terms I'd say that the breadth of the demand is insufficient. The shape is too skinny. The fatter (wider) it is... the greater the justification for using those tax dollars to attack Canada.
In terms of the public sector, being concerned with the shape of the demand makes sense because the point of taxes really isn't to spend them on things that only a relatively few people are going to benefit from. We really don't want rich people to be able to spend their taxes on private golf courses or private yachts or private airports. We want everybody, rich or poor, to spend their taxes on things that lots of people are going to benefit from. Maybe like healthcare?
The shape isn't super tall... but it's pretty fat. There's definitely more than enough demand breadth to justify these tax dollars being spent on healthcare. Although perhaps it's not quite correct to compare something more general (healthcare) with something more specific (war with Canada). It would probably be more correct to compare war with Canada to cancer research. We can reasonably guess that the demand for the latter would be far broader than the demand for the former.
In any case, it certainly makes sense to consider the shape of the demand when we're talking about tax dollars. The thing is, we really weren't talking about tax dollars. We really weren't talking about the public sector. We were talking about donors to the Libertarian Party using their donations to signal the value of the potential convention themes. Yet, you definitely thought that the shape of demand was very relevant!
If the entire point of the public sector is to have a space where it's unacceptable for money to be spent on things that will only benefit a few people... then it's gotta be the case that the entire point of the private sector is to have a space where it is entirely acceptable for money to be spent on things that will only benefit a few people.
If one person alone wants to spend enough money to choose the theme for the Libertarian Party convention... then that's entirely acceptable. If one person alone wants to spend enough money to prevent Person of Interest from being canceled... then that's entirely awesome. If one person alone wanted to spend enough money to pay for the Statue of Liberty's pedestal... then that also would have been entirely awesome.
If somebody is completely broke then clearly we can't know how much money they'd be willing to spend on defense, healthcare, Person of Interest, the Statue of Liberty's pedestal, food, clothes, computers or anything else. Homeless people don't have much or any money... this is certainly true. But does this really mean that we can't know the demand for anything? Does it really mean that it's irrelevant how much money people are willing to spend on things? Markets should be entirely discarded and replaced with... voting? I'm sure that this is not what you're suggesting... yet you're bringing up ability to pay as if it would somehow only be relevant to donors to the Libertarian Party using their donations to signal the value of potential convention themes. Actually, the ability to pay (or the lack thereof) is relevant to all markets. So if you're arguing that it invalidates the spending info for one market... then your argument has to be applicable to all markets.
If we prevent people from using their money to help determine the value of things... then things will be incorrectly valued. When things are incorrectly valued, things will be incorrectly used. When things are incorrectly used, people will be worse off. Therefore, the degree and extent to which people are currently worse off... reflects the degree and extent to which we prevent people from using their money to help determine the value of things.
Right now you believe that the products at your grocery store are going to be correctly continued or discontinued because shoppers are allowed to use their money to help determine the value of the products.
Yet you also believe that the shows on Netflix are going to be correctly continued or canceled despite the fact that subscribers aren't allowed to use their money to help determine the value of the shows.
And of course you don't believe that Netflix can read the minds of its subscribers. Instead, you believe that subscribers already provide enough information for Netflix to make adequately informed decisions. But even Netflix acknowledges that ratings are less trustworthy than viewing habits. Except, how can viewing habits be more trustworthy than spending decisions? And it's not like Netflix can compare the two sets of information. It doesn't even see the point in having the information about spending. And there isn't a single subscriber who is interested in providing this information. Except for me. And one of my friends. I suppose there might be a few more people out there who would see the point of using their fees to inform Netflix. In any case we certainly aren't the rule.
The idea of using our money to inform each other sounds so simple and solid. We already do use our money to inform each other. We subscribe to Netflix. This informs everyone that we value Netflix's content more than we value the alternative uses of our money...
Netflix's content > alternative uses
We clearly and obviously empower Netflix to compete society's limited resources away from less valuable alternative uses. Yay!!!!!
There's one very basic premise here: we don't equally value Netflix and the alternatives. Except, this is just as true for Netflix's content! Nobody equally values Netflix's content.
If we could spend our fees on our favorite content, then this would inform Netflix that we value our favorite content more than we value the alternative uses of our fees...
favorite content > alternative content
We would clearly and obviously empower the producers of our favorite content to compete society's limited resources away from the producers of less valuable content. Yay!!!!!!!!! Yay?
People get excited about finding a $100 dollar bill on the sidewalk...and graduating... and getting engaged... and having a baby... and getting a promotion... and writing a bestseller... and winning the lottery. Yes, these things and many more are very reasonable justifications for excitement. But in the grand scheme of things.... all of these things are subordinate to empowering more beneficial producers to compete society's limited resources away from less beneficial producers. Therefore, nothing should excite us more than markets. We should be the most excited about markets because they facilitate the most excitement. If Netflix was a market... then we'd be able to use our fees to inform everyone how excited we are about our favorite shows. Netflix and other producers would be able to use this information to supply even more exciting shows. Yay!!!!!!!!!
***********************
The money wouldn't necessarily be given to the content producers anyway - it would go to the people who own the IP. Netflix can't change that. Even if it did and even if we assume people didn't just lazily dump the fee into the first thing they see because they get to access everything anyway, money spent wouldn't necessarily reflect demand. - Conscentia
It feels like you're focusing on the word "demand" rather than on the "money spent" part. For me it's significant and meaningful and important and useful to know how much money people are willing to spend on things. It's convenient to use the word "demand" to refer to the amount of money that people are willing to spend on things. But we can also use the letter "X" or the word "fhqwhgads" or "zeitgeist" or any other combination of letters you want. I'm less interested in the word than in the concept. So it would be great if you focused on the concept.
Spending money is a sacrifice. The more money that is spent, the bigger the sacrifice. Since spending money is a sacrifice... generally people don't randomly spend their money. They didn't exchange their limited time and effort for money just so that they can flush it down the toilet.
It's easy to prove this... all I have to do is ask for your money. Of course you're going to want to know why you should give me any money. So in order to persuade you to give me your money, I'd have to provide you with some information. You'd compare the information that I gave you with all the information that you have and then decide whether or not to give me money. If you decided not to give me any money, well, in theory I could endeavor to provide you with different and better information. And again you'd compare this new information with all your information in order to decide whether to give me money.
This process of persuasion involves lots of brainpower being used and lots of information being shared, considered and compared. So it's significant and meaningful and important to know how much money individuals and groups of individuals are willing to spend.
Distributing the fee to the content does not guarantee that more such content will be made. Fans of Star Trek TNG could regularly dump their whole fee into the show but it's not going to be renewed for another season regardless. The show has long been finished. Netflix isn't Patreon. The money doesn't go to fund content. As such there is no sense is spending the fee into order to voice demand, and I'd expect user behaviour to reflect this. - Conscentia
I was disappointed that Person of Interest was canceled...
As CBS’s chairman, president, and CEO Leslie Moonves told The Hollywood Reporter recently, the company “broke even” on Person of Interest last year, but because Warner Bros., not CBS, profits from the show’s back end (DVD sales, foreign rights, streaming, syndication), it was literally not worth it to renew the show. - Kate Aurthur, “Person Of Interest” And The Mysteries Of Cancellation
It was canceled despite the fact that nobody knew how much money that I was willing to spend on the show. And I suppose this could potentially sound egocentric. So let me zoom out. It was canceled despite the fact that nobody knew how much money that any subscribers were willing to spend on the show. This fact makes me acutely feel like I'm living in the stone ages. Where I have to go around trying to convince people that fire and wheels are useful. I'm extremely grateful that I live in an era where I don't have to try and convince anybody that fire and wheels are useful... but I'm also extremely disappointed that I live in an era where I do have to try and convince everybody that it's useful to know how much money people are willing to spend on things.
Consider how much better off your life is because you live in an era where everybody knows that fire and wheels are useful. Now double or triple or quadruple that amount of betterness to try and appreciate how much better off your life would be if you lived in an era where everybody knows that it's essential to know how much money people are willing to spend on things.
Admittedly I have absolutely no idea how much money everybody would be willing to spend on Person of Interest... so of course I can't guarantee that, if ignorance (of willingness to pay) had been eliminated, the show would have been continued rather than canceled. But I can guarantee that the deciders, whoever they were, would have made a far more informed decision.
The world will be infinitely better off when everybody makes far more informed decisions.
No. That the one rich guy spent 6000 times more does not mean the demand is 6000 times greater. It just means he can afford to spend more. Even if he does want it more, so what? That one rich guy is still just one guy. - Conscentia
Let's imagine that people could choose where their taxes go. Some people want to go to war with Canada. The shape of the demand looks like this...
What would you say about the shape of the demand? I'd say that it's certainly tall enough... but it's way too skinny. Too few people are truly willing to pay for war with Canada. Sure, these few people are willing to pay a lot... but that really doesn't overrule the fact that there aren't nearly enough of them to justify this particular use of their tax dollars. So the DoD would use the money for other things besides invading Canada.
Using technical terms I'd say that the breadth of the demand is insufficient. The shape is too skinny. The fatter (wider) it is... the greater the justification for using those tax dollars to attack Canada.
In terms of the public sector, being concerned with the shape of the demand makes sense because the point of taxes really isn't to spend them on things that only a relatively few people are going to benefit from. We really don't want rich people to be able to spend their taxes on private golf courses or private yachts or private airports. We want everybody, rich or poor, to spend their taxes on things that lots of people are going to benefit from. Maybe like healthcare?
The shape isn't super tall... but it's pretty fat. There's definitely more than enough demand breadth to justify these tax dollars being spent on healthcare. Although perhaps it's not quite correct to compare something more general (healthcare) with something more specific (war with Canada). It would probably be more correct to compare war with Canada to cancer research. We can reasonably guess that the demand for the latter would be far broader than the demand for the former.
In any case, it certainly makes sense to consider the shape of the demand when we're talking about tax dollars. The thing is, we really weren't talking about tax dollars. We really weren't talking about the public sector. We were talking about donors to the Libertarian Party using their donations to signal the value of the potential convention themes. Yet, you definitely thought that the shape of demand was very relevant!
If the entire point of the public sector is to have a space where it's unacceptable for money to be spent on things that will only benefit a few people... then it's gotta be the case that the entire point of the private sector is to have a space where it is entirely acceptable for money to be spent on things that will only benefit a few people.
If one person alone wants to spend enough money to choose the theme for the Libertarian Party convention... then that's entirely acceptable. If one person alone wants to spend enough money to prevent Person of Interest from being canceled... then that's entirely awesome. If one person alone wanted to spend enough money to pay for the Statue of Liberty's pedestal... then that also would have been entirely awesome.
Willingness to pay reflects ability to pay, and as such is not a measure of demand. One cannot be willing to pay money one doesn't have, regardless of whether one wants something. - Conscentia
If somebody is completely broke then clearly we can't know how much money they'd be willing to spend on defense, healthcare, Person of Interest, the Statue of Liberty's pedestal, food, clothes, computers or anything else. Homeless people don't have much or any money... this is certainly true. But does this really mean that we can't know the demand for anything? Does it really mean that it's irrelevant how much money people are willing to spend on things? Markets should be entirely discarded and replaced with... voting? I'm sure that this is not what you're suggesting... yet you're bringing up ability to pay as if it would somehow only be relevant to donors to the Libertarian Party using their donations to signal the value of potential convention themes. Actually, the ability to pay (or the lack thereof) is relevant to all markets. So if you're arguing that it invalidates the spending info for one market... then your argument has to be applicable to all markets.
If we prevent people from using their money to help determine the value of things... then things will be incorrectly valued. When things are incorrectly valued, things will be incorrectly used. When things are incorrectly used, people will be worse off. Therefore, the degree and extent to which people are currently worse off... reflects the degree and extent to which we prevent people from using their money to help determine the value of things.
Right now you believe that the products at your grocery store are going to be correctly continued or discontinued because shoppers are allowed to use their money to help determine the value of the products.
Yet you also believe that the shows on Netflix are going to be correctly continued or canceled despite the fact that subscribers aren't allowed to use their money to help determine the value of the shows.
And of course you don't believe that Netflix can read the minds of its subscribers. Instead, you believe that subscribers already provide enough information for Netflix to make adequately informed decisions. But even Netflix acknowledges that ratings are less trustworthy than viewing habits. Except, how can viewing habits be more trustworthy than spending decisions? And it's not like Netflix can compare the two sets of information. It doesn't even see the point in having the information about spending. And there isn't a single subscriber who is interested in providing this information. Except for me. And one of my friends. I suppose there might be a few more people out there who would see the point of using their fees to inform Netflix. In any case we certainly aren't the rule.
The idea of using our money to inform each other sounds so simple and solid. We already do use our money to inform each other. We subscribe to Netflix. This informs everyone that we value Netflix's content more than we value the alternative uses of our money...
Netflix's content > alternative uses
We clearly and obviously empower Netflix to compete society's limited resources away from less valuable alternative uses. Yay!!!!!
There's one very basic premise here: we don't equally value Netflix and the alternatives. Except, this is just as true for Netflix's content! Nobody equally values Netflix's content.
If we could spend our fees on our favorite content, then this would inform Netflix that we value our favorite content more than we value the alternative uses of our fees...
favorite content > alternative content
We would clearly and obviously empower the producers of our favorite content to compete society's limited resources away from the producers of less valuable content. Yay!!!!!!!!! Yay?
People get excited about finding a $100 dollar bill on the sidewalk...and graduating... and getting engaged... and having a baby... and getting a promotion... and writing a bestseller... and winning the lottery. Yes, these things and many more are very reasonable justifications for excitement. But in the grand scheme of things.... all of these things are subordinate to empowering more beneficial producers to compete society's limited resources away from less beneficial producers. Therefore, nothing should excite us more than markets. We should be the most excited about markets because they facilitate the most excitement. If Netflix was a market... then we'd be able to use our fees to inform everyone how excited we are about our favorite shows. Netflix and other producers would be able to use this information to supply even more exciting shows. Yay!!!!!!!!!
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