Have you read Adam Smith's book of essays? I was surprised that he wrote a 100 page essay on the history of astronomy. Especially since he is largely responsible for the idea of the division of labor. I think it's possible for labor to be overly divided. Take the handicap principle for example. Nowhere in the Wikipedia entry does it mention the fact that spending money is a costly signal. Smith also shared some enjoyable thoughts on music. Basically the main theme is on how things are ordered.
In the book's intro is this interesting bit...
The change in his habits which his removal to Edinburgh produced, was not equally favourable to his literary pursuits. The duties of his office, though they required but little exertion of thought, were yet sufficient to waste his spirits and to dissipate his attention; and now that his career is closed, it is impossible to reflect on the time they consumed, without lamenting, that it had not been employed in labours more profitable to the world, and more equal to his mind. - Dugald Stewart, An Account of the Life and Writings of Adam Smith
Imagine seeing Smith or Newton waiting in a line. You'd think, "Yikes! The opportunity cost is too high!" Or, "Something is really preventing the Invisible Hand from doing its job!"
While I'm here, I hope you don't mind if I share some ideas that I'd appreciate your thoughts on.
1. What if everybody had to do 100 push-ups before they purchased anything? The cost of trade would increase, so the quantity of trade would decrease, and so would the rate of progress. The reverse is true if the earliest native Americans had used horses. Horses would have reduced the cost of allocating resources, trading would have been less costly, the quantity of trade would have increased, and more progress would have been made.
2. Becoming bipedal reduced our ancestors' allocation costs. This increased the frequency of allocation, but it also meant having to more frequently solve allocation problems, which meant greater selection pressure on intelligence. The invention of bags and using other animals to carry things made the allocation problems even harder. Nowadays the allocation problems are even harder still, but good or bad allocation decisions rarely impact our reproduction. Therefore, we've reached peak intelligence.
3. Markets with prices work much better than socialism because prices transmit at least some information about people’s perception of importance. This would mean that the efficiency of allocation depends on the quantity of information about importance. Prices can never be optimal because they almost always fail to transmit all the information about importance. The economic term for the hidden information is of course “consumer surplus”. In theory, pragma-socialism would be the optimal economic system because it would entirely eliminate consumer surplus.
Every orchid sexual encounter is a ménage à trios— an orchid which wants to deliver its pollen to another orchid and a pollinator that is seduced into being their delivery boy. The hummingbird, of course, has no interest in this love tryst but is bribed with nectar into doing their reproductive work. - Carol Siegel, Orchids And Hummingbirds: Sex In The Fast Lane
Our economy is based on a division of labor. Simply put, few people are a jack of all trades. Specialization has greatly boosted productivity. However, sometimes it really seems like the division of labor goes... boink.
All the media experts are scratching their heads and spending lots of money in order to try and find the solution. Here's how Jarvis concluded his story...
To accomplish that, I believe the industries need cross-pollination. Perhaps the greatest benefit of Google’s Digital News Initiative and its Newsgeist events is that each side learns more about the other. At our next convening of product development executives in news, we will invite product (sorry: not business development) people from platforms so they can dig into specifics on small matters (e.g., Facebook and Google treat a news organization’s desire to update the news differently) and large (can we begin to build standards for data exchange?). News companies are desperate to hire technologists. I also suggest that the platforms would be well-served to hire senior journalists — just a few — not to build competitive news operations (who wants to go into that business?) but to act as translators between our cultures and, more importantly, to help the platforms better serve their own users. That is what we all want to do. None of us are kings. We are all merely servants of the public.
Jarvis is correct that cross-pollination is needed... but even though he argued that media should focus on value... he really doesn't seem to see the relevance of economists. So here I am! Kinda like a hummingbird!
Amditis is correct that John Oliver isn’t responsible for saving journalism. But there's absolutely no need for Oliver to save journalism. A Nobel Prize economist saved journalism half a century before it even needed to be saved!!!
1954: The Nobel Prize winning economist Paul Samuelson writes The Pure Theory of Public Expenditure. It has been cited nearly 8,000 times and is by far the most widely cited (popular) economic justification for government. Samuelson's surprisingly short, yet quite dense, paper was basically about the free-rider problem. He argued that we can't trust people to honestly communicate their valuations of public goods. Why buy the cow when you can get the milk for free?
So did Samuelson save journalism? Nope. He correctly recognized that the free-rider problem was a real problem... but his solution was taxation (subscription) and planners (editors) simply assuming people's preferences.
1956: A young whipper snapper, Charles Tiebout, challenges Samuelson's conclusion by writing... A Pure Theory of Local Expenditures. It's been cited around 15,000 times. So it's even more popular than Samuelson's paper. Tiebout argued that people can and do honestly communicate their valuations of public goods... simply by moving to municipalities that offer bundles of public goods which more closely match their preferences. Aka voting with their feet... "foot voting".
So did Tiebout save journalism? Nope. Like Samuelson, he correctly recognized that the free-rider was a real problem. And like Samuelson, his solution was taxation (subscriptions) and planners (editors) simply assuming people's preferences. The difference is that in Tiebout's story, taxpayers (subscribers) communicate their preferences simply by moving to whichever municipality (newspaper) supplies the bundle of public goods (articles) which most closely match their preferences. Of course this is a much better solution for articles than for other public goods because it's incredibly easier to move to a new newspaper than it is to move to a new city, state or country. However, this is one of the solutions currently being used to save journalism... and it's obviously not working.
1963: The Nobel Prize winning economist James Buchanan writes The Economics of Earmarked Taxes. It's by far the least popular paper out of the three and has been cited less than 300 times. Buchanan basically argued that since people are paying taxes anyways, how they would earmark/allocate them, if given the opportunity to do so, would accurately communicate/reflect their preferences for public goods.
So did Buchanan save journalism? Yes! Very yes! Like Samuelson and Tiebout, Buchanan recognized that the free-rider problem was a real problem. So he appreciated the necessity of taxes. However, unlike Samuelson and Tiebout, Buchanan had a problem with planners (editors) simply assuming people's preferences. So his solution was for taxpayers (subscribers) to allocate their taxes (fees) to the public goods (articles) which most closely matched their preferences.
To be perfectly honest I wasn't quite sure if an editor was the closest equivalent to a government planner. So I searched for "role of editors in newspapers" and found this...
The news editor is called upon to use his discretion, discrimination and imagination in reading the public mind and select the stories which have real news value and can be called important by his readers-quite a large number to be allotted a "splash" position on the main news pages according to the subject matter [or] field of activity they are concerned with. - Praveen Karthick, What is the Role of News Editor of a Newspaper?
Samuelson had quite a bit of faith in the ability of planners to accurately read the public's mind...
The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive. - Paul Samuelson
Buchanan really did not share Samuelson's faith. With newspapers, the assumption of omniscience doesn't have horrible consequences because it's relatively easy for unsatisfied customers to "move" to a different newspaper. Of course, the less newspapers there are... the more problematic the assumption of omniscience becomes.
But even if there is some optimal number of newspapers for consumers to choose from... why rely on omniscience? Why not give subscribers the opportunity to use their fees to communicate their valuation of the articles?
Reading through the replies on Javis's story I found this one by Collin Ferry:
I’ve been envisioning automatic (but refundable) micropayments on a per-content basis as an alternative to paywalls and ad-blockers. It could be more lucrative than advertising, create a premium experience, reduce dependency on advertising and eliminate the widespread use of click-bait articles. Do you have an opinion on micropayment solutions Jeff?
Yes, and you’re not going to like my opinion. I do not see micopayments saving us any more than pay walls have. Same problems: we produce a commodity — information — rather than a unique product like entertainment. There’s no end of competition. The half-life of our value is the length of a click. There’ll always be someone to undercut your price, even if it’s micro.
Jarvis incorrectly assumes that it's micropayments OR paywalls. However, Buchanan's solution was micropayments AND paywalls. Subscribers would use their fees to communicate, via micropayments, their valuation of the articles.
Let's take Medium for example. Right now Medium doesn't have micropayments OR paywalls. Here's what it might look like if we added coin and dollar buttons below the stories...
If Jarvis valued my story, then he could click on the $0.50 button in order to clearly communicate his valuation of my content. Fifty cents would be automatically withdrawn from his digital wallet and deposited into mine. The total value of the story would also automatically increase by 50 cents. When people searched for stories the default sorting would be by total value. So it would be super quick and easy to find the most valuable stories.
It should be really intuitive that it's beneficial for society when it's easier, rather than harder, for people to give each other money. Giving each other money is a very important form of communication. So we can do some substitution and say that.... it should be really intuitive that it's beneficial for society when it's easier, rather than harder, for people to communicate with each other. Well yeah. Obviously.
Facilitating micropayments would solve the payment problem (eliminate payment costs)... but it wouldn't solve the free-rider problem. Why should Jarvis "buy" my story when he can read it for free? That being said, around $300 billion dollars are donated each year in the US. So the free-rider problem doesn't mean that nobody will pay anything... it simply means that we can reasonably expect voluntary payments to be a lot less than people's true valuations...
allocations < valuations
With micropayments though... when valuing a story is as easy as "Liking" it.... then we can reasonably suspect that lots of people will be happy to chip in a few cents. However, we can also reasonably expect that, because of the free-rider problem, their allocations will be less than their valuations...
allocations < valuations
In order to tackle the free-rider problem.... Medium could create a small paywall by charging people a very reasonable $1 dollar/month. Each month subscribers would have 100 pennies to use in order to communicate their valuation of the stories. They'd have absolutely no incentive to understate their valuations because doing so wouldn't decrease their fees.
Maybe it's just me but semantically it feels a bit awkward to think of these payments as voluntary. So I think maybe we can instead say that these payments are "pragmatary". Heh, that's pretty awkward as well but I think there are pretty important distinctions between...
1. voluntary payments (donations)
2. pragmatary payments (allocating your fees)
3. coerced payments (no choice where your payments go)
It would be very easy to ascertain whether $1 dollar/month was a truly reasonable subscription fee. The earlier in the month that subscribers allocated all their pennies... the more reasonable the fee. If most subscribers allocated all their pennies half-way through the month.... then perhaps the fee was too reasonable and it could be reasonably increased to $2 dollars. But if, on the other hand, there were too many subscribers with unallocated pennies at the end of the month... then perhaps the $1 fee wasn't very reasonable. However, this situation wouldn't last very long!
When subscribers use their fees to communicate their valuation of the content, they would be creating value signals...
Like Batman sees the bat signal and responds to it... talented writers would see and respond to the value signals created by the allocations of subscribers. This would logically increase Medium's supply of valuable stories... which would logically lead to more subscribers... and brighter value signals. It would be a virtuous cycle. A larger pool of subscribers would be able to support a wider variety of niche topics.
Let's consider Netflix. A while back I sat down and figured out how I might allocate one month’s worth of fees ($10 dollars)…
1. Amelie: $1.50
2. Black Mirror: $0.25
3. Castaway on the Moon: $0.25
4. Rake: $1.25
5. Shaolin Soccer: $0.50
6. Sidewalls: $0.25
7. Snatch: $0.25
8. Spaced: $1.00
9. The League: $0.75
10. The Man From Earth: $4.00
These were all movies and shows that I had given 5 stars to. But the graph should make it painfully and obviously clear that I don't value all this content equally. Maybe the star rating system is better than no communication between producers and consumers... but the value signals they create are very inaccurate.
For sure though it's a lot easier to rate content with unlimited stars than it is to valuate content with very limited fees. It was really hard to figure out how to allocate my fees! I truly and sincerely felt the opportunity costs. But consumers considering the opportunity costs of their allocations is the only way to ensure the optimal brightness (accuracy) of value signals. Accurate value signals are the only way to ensure that we don't waste society's limited creativity and talent on less valuable endeavors.
Ok, let's review...
1. Buchanan provided solution to media problem decades before it was even a problem
2. The media isn't aware of Buchanan's solution
Is it really fair though to blame the media's lack of awareness on the division of labor? Well no. The division of labor isn't the problem. The problem is that experts in different fields can't clearly see each other's value signals. In other words, the problem is a lack of accurate communication between experts in different fields.
Right now, with the current system, it's pretty easy to see which scholarly papers are the most popular... but we have no idea which papers are the most valuable. How could we solve this problem? We could easily solve this problem by applying Buchanan's solution to scholarly papers! Subscribers would use their fees to clearly communicate which papers were most worthy of the public's attention. Journalists would be able to easily see the brightest value signals in the different fields and use their wonderful words to help the public understand the importance and relevance of the most valuable papers.
At this point maybe I should mention that I'm a little... unclear... about the division of credit for Buchanan's solution. Clearly Buchanan didn't argue that we should apply his solution to Medium or Netflix. But why didn't he argue that we should apply his solution to scholarly papers? Unfortunately, he's no longer around for us to ask. So I'll be happy to take a reasonable and fair amount of credit for, and ownership of, this immensely valuable intellectual property. And accordingly, I'll expect a reasonable and fair amount of compensation for any implementation of this idea. What's reasonable and fair? Ideally that should be up to some group of subscribers to decide. These subscribers should be able to decide how to divvy up their fees among all the different people responsible for breathing life into Buchanan's idea. If Jarvis, for example, takes Buchanan's idea and runs with it farther and faster than I have been able to ... then it's only fair and reasonable that he should receive more fees than I would. If subscribers decide that some technologist was largely responsible for bringing Buchanan's idea to life... then they should use their fees to communicate their valuation of his contribution.
So far I'm the only one trying to breath life into Buchanan's idea. As far as I know, nobody else seems to appreciate how his idea solves the problem with government and media. And it's entirely possible that there are some minor, or major, details that I'm missing! But it's not like Jarvis, for example, is arguing that Buchanan's solution is the wrong solution because of... x, y and z. Jarvis doesn't seem to realize that Buchanan's solution even exists!
It's sort of a catch-22 because it's not like I can allocate my fees to Buchanan's paper in order to help bring it more people's attention.
In conclusion maybe I should say something about the fact that all the economists that I've mentioned in this entry are dead. So yeah... it's a ménage à trois with dead economists and live journalists and... me... the hummingbird. Heh. Well... we certainly have a lot to learn from dead economists but I probably should give a shout out to a few live economists...
Peter Boettke - Loves Buchanan, hates the assumption of omniscience, but rarely, if ever, writes about the importance and relevance of earmarking. It's a mystery.
You really did the theory of evolution justice! I, on the other hand, really suck at doing theories justice. Watch...
So... humans are exceptionally intelligent. What is exceptional intelligence good for? It's good for solving exceptionally hard problems. But why did early humans, out of all the animals, need to solve exceptionally hard problems? It's because out of all the animals, early humans had the greatest ability to (simultaneously) allocate the widest variety of resources. This exceptional ability was the result of having hands, arms and... walking upright.
With quadrupeds... all four limbs are primarily dedicated to allocating a single resource... the animal itself. But this specialization is a continuum that ranges from horses to raccoons to chimps. Horses obviously have four legs. All their limbs are quite specialized to allocating only the horse itself. None of the horse's limbs are remotely capable of allocating other resources. What about raccoons? Do they have four legs? Well, their front limbs are reasonably capable of allocating other resources. Chimps definitely do not have four legs. They have two legs and feet and two arms and hands. They are quite capable of allocating other resources with their arms and hands.
As front limbs become less dedicated to only allocating the animal itself and more generalized to allocating other resources... there's an increase in the total variety of resources that can be (simultaneously) allocated. This creates a more difficult/complex allocation problem.... which requires more brain power/storage to optimally solve. Well... a distinct advantage is given to exceptionally intelligent individuals.
Since you're fond of using lions as an example... let's compare them to zebras. It would seem that the front limbs of the lion aren't as specialized to self-allocation as the front limbs of the zebra are. Lions certainly use their front limbs to allocate themselves... but they also use their front limbs to allocate their prey. But perhaps the biggest difference is that the mouths of lions are quite capable of carrying/allocating resources (food, cubs, other?). Do zebras use their mouths to carry anything? Not so much? Therefore, lions are faced with more complex (allocation) problems than zebras.... and we should suspect that lions are more intelligent as a result.
So.... for lack of a better word... more "resourceful" body types put greater selection pressure on intelligence. Humans are the most intelligent animals because our body types are the most "resourceful".
I really like this theory! It’s very thoughtful and interesting.
One question I have: how can this approach explain why octopods don’t have as advanced symbol manipulation and culture as humans. Surely more of their bodies is able to allocate resources more flexibly and in a greater number of ways, yes? - Greg Stevens
According to Wikipedia... octopuses are "highly" intelligent. But why aren't they even more intelligent? One explanation might be that they die after reproduction. No matter how exceptionally intelligent an individual is... it's not going to exert significantly more influence on the gene pool than any other individuals.
With early humans... exceptionally intelligent individuals were more likely to optimally solve complex carrying problems... which meant that they were more likely to live to produce many more offspring than other individuals. This shifted the gene pool in a more intelligent direction. With modern humans though it's a different story. Survival/reproduction is far less dependent on successfully solving complex carrying problems. Therefore, exceptionally intelligent individuals are not going to shift the gene pool in a more intelligent direction.
We've reached peak intelligence! Of course this might change if we start seriously colonizing space.
With octopuses there's also the issue that they don't seem to have 100% control over their limbs! We have far less "carrying parts"... but we do have 100% control over them.
Perhaps another issue is that carrying things in water is easier than carrying things on land. This means that there's less of an energy cost when the wrong things are carried in water. Of course in both land and water the opportunity cost is equally high when the wrong things are carried.
Also, octopuses don't have a very distinct division of labor between carrying limbs and locomotion limbs. As the saying goes, a jack of all trades is a master of none. As humans we have legs for walking and arms/hands for carrying. So we maximize two factors... distance and difference. We can carry the widest variety of different resources over the greatest distances. I'd bet that any aliens that visited our planet would have, or used to have, a similarly distinct division of limb labor.
Farmers use the subsidized water to transform desert into prime agricultural land. But turning a California desert into cropland makes about as much sense as building greenhouses in Alaska! America already has plenty of land on which cotton can be grown cheaply. Spending billions of dollars to dam rivers and transport water hundreds of miles to grow a crop which can be grown more cheaply in Georgia is a waste of resources, a deadweight loss. The water used to grow California cotton, for example, has much higher value producing silicon chips in San Jose or as drinking water in Los Angeles than it does as irrigation water.
The natural advantages which one country has over another in producing particular commodities are sometimes so great that it is acknowledged by all the world to be in vain to struggle with them. By means of glasses, hotbeds, and hot walls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expence for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines merely to encourage the making of claret and burgundy in Scotland?
My drill sergeants at Ft. Benning Georgia told me that I was a lucky bastard for being assigned to an infantry unit down in Panama. Their reasoning had nothing to do with the jungle...but that's what quickly wrapped its tendrils around my heart. Heh....yeah, I can admit that I fell in love with the jungle.
A thousand shades of green, a countless array of intriguing chirps and buzzes, a wonderfully pungent aroma of earth mixed with rotting fruit...and so many fascinating creatures. The jungle isn't for everybody though. Certainly none of my buddies loved the jungle as much as I did.
The jungle was full of surprises...many were quite pleasant. I remember walking past a spectacular display of orchids. When I slowed slowed down and pointed them out to my friends...they just rolled their eyes, questioned my sexual orientation...and told me to keep up. Another time while laying in the prone position I observed an amazingly brilliant golden beetle scurrying over leaf litter. Then there were the Morpho butterflies with wings that were shocking blue on the inside and dull grey on the outside...when they fluttered around they looked like small blue neon signs blinking on and off here and there in the cathedral like gloom of a dense canopy.
In terms of less than pleasant surprises...Cebolla and I were doing some land navigation exercises when we decided to take a quick break and "beat the heat" by drinking some warm canteen flavored water. Cebolla was my Mexican roommate from Idaho. The "Mexican Mafia" (the Hispanic guys in our unit...mainly from Los Angeles) liked to joke that the "coyote" that brought Cebolla's family from Mexico got lost and ended up in Idaho. So they gave him the nickname "Mr. Potato Head"...but Cebolla didn't mind though...he was the most mellow/chill guy ever. We had barely gotten our canteens out when Mr. Potato Head started jumping up and down screaming that he was being stung. I rushed over and discovered that he had unknowingly decided to stand right on top of a colony of .50-caliber ants. We referred to them as ".50-caliber ants" for two reasons...1. they were very large and 2. their stings were said to be as painful as being shot.
The ants were swarming all over Cebolla's legs and making loud angry clicking noises. We quickly moved away from the colony but Cebolla was shouting that the ants were in his boots. His "ants in the pants" dance was so frantic that, as I was trying to give him a hand with his boots, he accidentally "buttstroked" me in the head with his rifle. That knocked enough sense into me to realize that the ants were too large to actually get inside his boots...they'd been stinging him through the thick leather. Ouch. In Cebolla's defense though...unlike most ant colonies...the .50-caliber ant colony did not display any of the obvious signs of a typical ant colony.
It was also a very unpleasant surprise to be walking through the jungle and suddenly feeling strong filaments of spider web wrap around your body from head to toe. This would slow you down literally as much as the ubiquitous "wait-a-minute" vines would. It wasn't the only explanation why a macho guy would suddenly start jumping around strip searching himself in the middle of the jungle...shouting "Ack!! Where is it?! Ack!! Get it off me!"...but it would be a pretty good guess.
In other cases...the surprises came to you. There I was sitting on a "safe" patch of jungle floor, enjoying a delicious chili mac MRE when suddenly, out of nowhere, a snake quickly crawled over my legs and disappeared into the grass before I even had time to react. Even in the barracks you weren't necessarily safe from jungle surprises. Walking back from a shower, I rounded the corner in the hallway and had to jump to just barely avoid the striking fangs from a 10ft boa constrictor. The guys had put it there as a practical joke...hah...hah. So of course I joined them and waited for the next guy to round the corner.
Oh man, we had shenanigans for days...but let me try and figure out what my point was. Well...when you're walking in the jungle...you can't look straight ahead and down at the same time. When you look down you forgo/sacrifice the ability to look straight ahead. This is the opportunity cost concept. The opportunity cost of looking down to try and avoid colonies of stinging ants and poisonous snakes (bushmasters, fur-de-lances) is that you increase the likelihood that you'll walk straight into the gigantic web of a spider that regularly captures and eats birds. Well...that and you'll end up walking in circles if you don't look up often enough.
This ties into the basic infantry concept concerning patrolling: establishing a perimeter. Basically we'd form a "wagon wheel"...and each person would be responsible for monitoring their own sector of fire. If we could somehow "predict" exactly which direction the enemy might come from then there would have been no need to try and provide 360 degrees of coverage.
One word that I frequently hear in response to pragmatarianism is "disaster". Three things though...disasters 1. already occur all around us 2. have the potential to come from anywhere and 3. are relative.
Is failing to conserve the jungle a disaster? From my perspective it is. It seems reasonable to say that the jungle has the potential to yield extremely beneficial and valuable surprises for humanity. Closer to home...my girlfriend works for a non-profit organization. She provides therapy for abused children from low-income families. Needless to say I don't even want to hear her disaster stories anymore. Then there's my doctor friend who works with the Center of Disease Control...he's got some of the scariest "potential" disaster stories. Disasters can come from any direction at any time.
Even though we were all about Murphy's law in the military...when we formed perimeters in the jungles of Panama...we never monitored the sector directly above us. It just seemed highly unlikely that ninjas...or the alien from the movie "Predator"...or asteroids...would present credible threats. Although...the howler monkeys did throw their poop at us...and several guys were hospitalized after being attacked by killer bees.
Did you ever read Tom Clancy's book..."A Clear and Present Danger"? It's been so long since I've read it that I can't even even remember what it was about. That's ok though because the title says it all. Clearly we all realize and appreciate that one person should not be responsible for shouldering the entire burden of determining and acting on "clear and present dangers"...right? To drive that point home here is the quote that I shared in my entry on the Opportunity Costs of War...
However well balanced the general pattern of a nation's life ought to be, there must at particular times be certain disturbances of the balance at the expense of other less vital tasks. If we do not succeed in bringing the German army as rapidly as possible to the rank of premier army in the world...then Germany will be lost! - Adolf Hitler, 1936
That's why one person should never have sole control of the power of the purse. But what if two people share the power of the purse...or three people...or 100 people? Why not let each and every taxpayer have sole control over the power of their own purse? Why not create a taxpayer division of labor?
When disasters can come from so many different possible directions...wouldn't you feel safer if America established a perimeter that consisted of millions and millions of concerned taxpayers? A taxpayer division of labor would allow us to hedge our bets...it would allow groups of taxpayers to be responsible for monitoring the sectors that they cared about the most.
It's easy to imagine how the system would work because we can see the exact same type of division of labor in the non-profit sector. It wouldn't make any sense to force donors to PETA and donors to the NRA to pool their donations and elect representatives to split the pool between the two organizations...so why does it make sense for taxpayers that care about the environment and taxpayers that care about national defense to pool their taxes and elect representatives to split the pool between the EPA and the DoD? How does gridlock benefit anybody? Why don't we recognize that hyperpartisan obstructionism is a byproduct of the structure itself? Is it so hard for us to understand why people see taxes in such a negative light? How much more willing would people be to pay more taxes if they had the freedom to directly use their taxes to support the public goods that they cared about the most?
Don't get me wrong...I understand how the current system itself represents a division of labor. Most people don't worry about the provision of public goods because they've outsourced this responsibility to their "personal shoppers"...congresspeople. I'm not saying that we should get rid of congress...I'm saying that anybody that does happen to worry about the provision of public goods should have the freedom to bypass congress and directly allocate their taxes themselves.
It's important to understand that the public sector is the sum of everybody's pet projects. You wouldn't want to pay for somebody else's pet projects...yet for some reason you're ok with other people being forced to pay for your own pet projects. When are we going to learn to respect, recognize or at least tolerate other people's values? If you want other people to pay for your project...then you should have to convince them of the value of your project. If people don't allocate enough of their taxes to your project to keep it going...then try fundraising. With standard fundraising practices non-profits receive $5 for every $1 they spend...well...assuming that there is a demand for the public good in the first place.
The thing is...it's a "Fatal Conceit" for a small group of people to assume that they have enough information to make resource allocation decisions for the entire country. The irony is that the Fatal Conceit concept, which was coined by the economist Friedrich Hayek, does not just apply to liberals…it applies to libertarians as well. We’re all just blind men arguing over the scope of government. The scope of government is so complex that it can only be accurately determined by allowing each and every taxpayer to use their taxes to highlight private sector supply failures.
Yet...parents make economic decisions for their kids...and knowledge is relative...right? Incidentally...did any of you just think of Voltaire's Micromegas? If it's reasonable for parents to make economic decisions for their children...then isn't it reasonable for knowledgeable adults to make economic decisions for all the ignorant adults?
To help understand the issue I'm currently watching that truTV series...World's Dumbest People. Generally the only thing I watch on TV is C-Span and the Discovery Channel. No really...I swear! Heh...that's not true. The episode I'm watching right now is the World's Dumbest Pranksters. Honestly some of the pranks are really pretty funny. Why are pranks so funny?
A long time ago I read one of Plato's works...maybe the Apology or something or other. In Plato's book Socrates was trying to figure stuff out. So he sought out the most knowledgeable people in society and engaged them in discourse. In the process of trying to learn from these experts though...Socrates ended up discovering and revealing just how little they actually knew, "...it seems that I am wiser than he is to this small extent, that I do not think I know what I do not know." Although the experts did not find the experience to be enjoyable...many other people did...and Socrates quickly gained a following.
Did you ever watch Ashton Kutcher's show Punk'd? Ashton Kutcher publicly "punk'ing" celebrities was the modern day relative equivalent of Socrates publicly "punk'ing" intellectuals. Imagine if we had a TV show called "The Pretense of Knowledge" that consisted of a modern day Socrates revealing to America just how little our public officials actually know.
You'd be able to flip channels back and forth between "The Pretense of Knowledge" and "World's Dumbest People". The juxtapose would beg the question...what are the information disparities between the general public...taxpayers....and congress? The trick is understanding that when it comes to the efficient allocation of resources...we're not looking at information averages...we're looking at information totals. If we added up all the information held by millions and millions of taxpayers...how would this compare to the sum of information held by 538 congresspeople?
When trying to figure out how to convey this idea I remembered a photograph that I took while stationed in Afghanistan (see my post on Anarcho-capitalism vs Civilization). It's of an American solider on one side of a make-shift seesaw with some Afghan kids on the other side. Even though the average American solider weighs more than the average Afghan kid...the cumulative weight of 5 kids is greater than the weight of one solider.
Even though the average congressperson might have more information than the average taxpayer...the cumulative information held by 150 million taxpayers far exceeds the cumulative information held by 538 congresspeople. When it comes to the efficient allocation of public goods...we need to consider sums...not averages. It's interesting to consider though just how many average taxpayers it would take to equal the amount of information held by the average congressperson.
The other day on C-Span I watched a portion of a town hall meeting that was held at the University of Maryland. A congressman, Steny Hoyer, was asked the following question by a lady holding her crying baby (starts at 44:30)...
How awkward was that? Well...it wasn't as awkward as an earlier question asked by a fan of LaRouche. Of course, that's exactly how everybody would have perceived me if I had been there to ask my question...public goods allocation disparity question. In any case though..the lady's question provides a decent real life example of the information disparity concept. We all have some information but nobody has all the information. Out of curiosity I tried looking up the bill in question and ended up finding the lady who asked the question...Liz Reitzig. Well...at least I think that's her.
The point isn't to figure out whether the congressman is correct that the FDA is awesome or whether Reitzig is correct that it's absurd that the "Feds sting Amish farmers". The point is to consider the information disparity between taxpayers and congress. How does the information disparity impact the public goods allocation disparity? Is this disparity divine or delusional? Should Reitzig have the right to boycott the FDA? Should pacifists have the right to boycott the DoD?
But it's not just about the information that we have...it's also about whether our information is accurate. Here's the article by Arnold Kling that inspired me to write this entry...The Political Implications of Ignoring Our Own Ignorance. In his article Kling references the book by Daniel Kahneman...Thinking Fast and Slow. Both Kahneman and Kling agree that "our maps are highly inaccurate"...what's interesting is that they disagree on the political implications. This provides a perfect example of how two very intelligent people can consider the same exact thing but come to opposite conclusions (for more on this check out my reply to Jason Brennan's Ethics of Voting). But how strange would it have been if either of them had changed their ideological positions as a result of the "new" information? For a third perspective on the same book here's David Friedman's blog entry...Thinking Fast and Slow.
From Kling's article I Google'd "Jeffrey Friedman radical ignorance". That's when I fell down the rabbit hole of my own ignorance. I mean...I learned just how little I knew about ignorance. Or...at least...that's the feeling I got. Incidentally...I just looked up the surname "Friedman" and discovered that "fried" is the German word for "peace".
It actually wasn't too long ago that I'd discovered Friedman's work. In my entry where I offer "proof" that pragmatarianism is the third solution...I had fun juxtaposing his critique of libertarianism with Mises' dogmatic assertion that there was no third solution. The third solution is for people to understand how pragmatism offers an alternative to dogmatism. Here's a bit from Friedman's essay critiquing libertarianism..."Although there is a handful of exceptions, most libertarian empirical work displays an obvious impatience to reach a foreordained antigovernment conclusion." I added the link...it's to my response to Kling's brief response to pragmatarianism. For another pragmatic critique of libertarianism see David Brin's Essences, Orcs and Civilization: The Case for a Cheerful Libertarianism. As you can tell from the title...Brin's critique is a bit more accessible than Friedman's critique.
The first search result for "Jeffrey Friedman radical ignorance" was this blog entry by Roger Koppl...Politics in One Lesson. Koppl's one lesson was that politicians tend to signal goodness rather than actually doing anything good. In the comments he uses this phrase, "concentrating benefits and dispersing costs". If that phrase doesn't quite make sense then here's a two minute video that helps explain the concept...
Koppl's lesson struck me as pretty reasonable...but it's not the ONE lesson that I would have selected. My selection for the ONE political/economic lesson would have to be Buddha's story of the blind men touching different parts of an elephant.
The reason that Koppl's blog entry popped up as the number one search result is because Friedman commented on his entry. They went back and forth several times trying to clarify/understand their positions. Koppl had a bit of trouble figuring out Friedman's criticism...so I don't feel too bad about being in the same boat as Koppl. But if I had to venture a guess I'd say that Friedman's criticism was the same as Buddha's...that we are all just blind men arguing over the scope of government...but I could be wrong.
In the process of trying to better understand Friedman's argument I ended up at Peter Boettke's blog entry...which reviewed Friedman's book...Ignorance and the Financial Crisis. The comments are all worth reading...Friedman offers some comments as well. Many of the the comments offered quite a few leads to follow...and I followed them deeper and deeper down the rabbit hole.
Along the way I picked up several "souvenirs"/quotes...most can stand on their own but there are a couple that I wanted to relate to pragmatarianism. The first "souvenir" is Jeffrey Friedman's position on how resources are efficiently allocated...and the second "souvenir" is Peter Boettke's position on the Paradox of Thrift. Here's Friedman's passage...
This epistemic defense of the for-profit and nonprofit sectors requires us to accept that there is nothing like a real market that will weed out failed nonprofits or weed in successful ones. But we needn't idealize nonprofits in order to see that they may be better than governments - because successes may be hiding amid the thousand points of light, while the reliance of state bureaucracies on social-scientific "expertise" is a virtual guarantee of failure. Still, and without idealizing for-profits, it seems to me that the situation in the nonprofit world is worse than that in markets, where through profit and loss, firms that are successful in satisfying the test of consumer experimentation gain control over more resources, while the unsuccessful ones lose resources and go bankrupt. This isn't to say that the nonprofit sector shouldn't be defended. But I think the defense must be epistemically minimalist if it is to be consistent with a like defense of capitalism - and with Husock's identification of the main problem plaguing human endeavor in all fields: the problem of knowing what works. - Jeffrey Friedman, There is No Substitute for Profit and Loss
In a pragmatarian system...let's say that you wanted to "purchase" some security. You would have the option of purchasing this good from any combination of the three sectors...1. the for-profit sector 2. the non-profit sector and 3. the public sector. In terms of the for-profit sector you could purchase a gun...hire a body guard...take self-defense classes...etc. In terms of the non-profit sector you could donate money to your local neighborhood watch...or donate to after-school programs targeting at-risk youth...because...an ounce of prevention is worth two of cure. In terms of the public sector you could allocate a portion of your taxes to the police...or jails...or the courts.
The idea is to promote "heterogeneous activity"...which is a term I picked up from the comments on Peter Boettke's blog entry reviewing Friedman's book...Ignorance and the Financial Crisis. I'm fairly certain that heterogeneous activity is the same thing as hedging our bets. In other words...we shouldn't put all our eggs in one basket. If you wanted to "purchase" education you could spend money on a private school...and/or donate money to Khan Academy...and/or donate money to public schools via DonorsChoose.org...and/or allocate your taxes to specific public schools...and/or allocate your taxes to the Department of Education.
As Jeffrey Friedman said...it's all about how organizations gain or lose control of resources. In other words...it's all about the efficient allocation of scarce resources. Which of course boils down to opportunity costs and partial knowledge. Whether education belongs in the for-profit sector and/or in the non-profit sector and/or in the public sector should be determined by consumers who have the freedom to spend their money based on their interpretation of the "facts". Here's a "souvenir" from Tedra Osell's Crooked Timber blog entry on Schooling Anonymous Kids
Funnily enough, that concern was founded on an expectation that charter schools, freed from some of the regulations that public schools have to adhere to, would, in fact, manage to offer better educations. It turns out that that’s not actually the case, though; by now we all know that the results comparing charters to public schools are mixed; there is no clear advantage to charter schools. My guess is that founding schools based on half-baked theories and ideologically driven philosophies, or as for-profit institutions, rather than oh, say, based on actual evidence about what works in education, isn’t the way to go.
It's a Fatal Conceit for anybody to believe that they have a monopoly on "actual" evidence...Crooked Timber Liberals - Monopolizing the Facts. It's great...awesome...wonderful...even fun to dispute the "actual" evidence...but at the end of the day it should be up to consumers to decide which organizations receive their money. If somebody's evidence is truly "actual" then taxpayer's tax allocation decisions would shift to reflect the indisputably of the evidence. At one time everybody knew that the world was flat...and now everybody knows that the world is round. What do we all "know" today that could turn out to be patently false tomorrow?
Onto the second "sourvinir" that I wanted to comment on...Peter Boettke's, et. al., position on the Paradox of Thrift...
Stated this way, it should be clear that the overpessimistic bias of traders confronted with imperfect information is entirely rational. Imperfect information does not cause actors to behave suboptimally given the choices that confront them. Rather, the optimal response of rational traders operating in this environment is precisely what leads to a lower rate of exchange than would have prevailed were it not for the fact that they have only imperfect information. - Peter T. Leeson, Christopher J. Coyne, Peter J. Boettke, Does the Market Self-Correct? Asymmetrical Adjustment and the Structure of Economic Error
Not quite sure if the term "Paradox of Thrift" is a general reference to the idea of thrift/saving or whether it is a specific reference to section 11. "Thrift and Luxury" in Frédéric Bastiat's essay on What Is Seen and What Is Not Seen. In any case...the Keynesian argument is that government spending is necessary to end recessions. In a pragmatarian system though...taxpayers obviously wouldn't have the option of being "thrifty" with their taxes. Meaning...they couldn't just put their taxes under their mattress. So Keynes would get his spending but it would be in terms of Hayek's decentralized knowledge. Yes...taxpayers could perhaps "pessimistically" allocate their taxes...but you'd figure that plenty of people would follow the allocation suggestions of respected public leaders...see my reply to Jeffrey Sachs and my reply to Paul Krugman.
Ok, time to wrap this up! Last night I ate some fast food while watching a chick flick. Sigh. I simultaneously shortened my life span and wasted the little time I do have. I blame my girlfriend. Naw...I accept responsibility...because doing so is a sure sign of maturity. Besides...you'll burn out if you don't take breaks..."The flame that burns twice as bright burns half as long"...to quote Lao Tzu and Bladerunner. Life is all about balance. To help balance out the chick flick I immediately watched Apocalypse Now. What a movie. The opening scene is of a magnificent strand of palm trees. The first thing that popped into my head was...I bet my buddy Gene knows exactly what species of palms those are. As the palms were totally obliterated by napalm my second thought was...taxpayers should have the freedom to consider the opportunity costs of war.
Here's the mainstream libertarian perspective on voter ignorance...
The best response to voter ignorance is to reduce the size and scope of government. When people act in the market and civil society, they have much better incentives to make well-informed decisions. When a consumer decides whether to buy a product, he knows that his choice will be decisive and thus has reason to acquire needed information and consider it rationally. - Ilya Somin, An Inconvenient Truth
The "inconvenient truth" for libertarians is that reducing the size and scope of government to the police, the courts and national defense would still allow a small group of "radically ignorant" public officials to be in charge of funding the police, the courts and national defense.
The "inconvenient truth" for liberals is that, to steal Obama's favorite analogy, it doesn't matter who has the keys to the "car"...the car will always end up in the ditch as long as the driver is driving under the influence of conceit.
Ron Paul and Obama are both fatally conceited for believing that their "theories" on the scope of government are anything more than theories. The only way to accurately test their theories would be to allow taxpayers to directly allocate their taxes. Nothing would provide more conclusive evidence than millions and millions of taxpayers directly allocating their taxes. Everybody wants the most bang for their buck... therefore... taxpayers would not waste their taxes in the public sector paying for something that they could "purchase" in the private sector for less money. This taxpayer division of labor would reveal the division of labor between the public and private sectors that would maximize the benefit to society as a whole.
The "inconvenient truth" for pragmatarians is that, given the problem of confirmation bias, neither liberals nor libertarians are very likely to acknowledge their respective "inconvenient truths". That being said...if you feel like there's an "inconvenient truth" that I'm either avoiding or rationalizing away or just plain missing...then I highly encourage you to bring it to my attention and to the attention of others. I take it to be "actual" truth that nobody has a monopoly on "actual" truth...but I could be wrong....given that I don't have a monopoly on "actual" truth.
In parting...here are some articles to check out...
...and a bunch of "souvenirs" that I picked up along the way...
This division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom, which foresees and intends that general opulence to which it gives occasion. It is the necessary, though very slow and gradual, consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another. - Adam Smith, Inquiry into the Nature and Causes of the Wealth of Nations
Descartes, by contrast, thought that all claims to knowledge should be questioned, because naturally and culturally perceived truths can be illusory. Descartes led to Hume, thence to Kant and Popper. Kant and Popper led to Hayek (Gray 1984; Clouatre 1987). Not surprisingly, then, Popper and Hayek were both keenly interested in ignorance and error, and in biological and scientific (and, in Hayek's case, economic) evolutionary processes by which ignorance can be overcome, errors corrected, and knowledge acquired. - Jeffrey Friedman, Ignorance as a Starting Point: From Modest Epistemology to Realistic Political Theory
We thus propose an epistemological theory of error that applies to all fields, including economics. According to this theory, people make genuine errors when they (a) are ignorant of relevant information (for any of the reasons just specified); (b) are misled by false information; (c) are misled by true but irrelevant information; or (d) misinterpret true and relevant information. - Anthony J. Evans, Jeffrey Friedman, "Search" vs. "Browse": A Theory of Error Grounded in Radical (Not Rational) Ignorance
Beyond these effects, tax choice enables individuals to compete more effectively with moneyed interests in policy-making. The politics of tax choice are appealing as well, drawing on both libertarian and conservative themes of individual empowerment and agency, as well as the progressive belief in good government. Tax choice would resonate across a broad political spectrum, and directly engage citizens in the administration of the republic. - Cait Lamberton, Your Money, Your Choice
Pure libertarianism needs something to curb its extremity. That something is pragmatism. Philosophical pragmatism is an essential American development. Its animating principle is that truth is social and constructed rather than transcendent and objective. It holds that ideas prove their worth in action, and that the results of an idea are the best criteria by which to judge its merit. And since what works for me might not work for you, pragmatism advocates a strenuous openness to all perspectives. - James Walsh, Liberty in Troubled Times: A Libertarian Guide to Laws, Politics and Society in a Terrorized World
The problem is thus in no way solved if we can show that all the facts, if they were known to a single mind (as we hypothetically assume them to be given to the observing economist), would uniquely determine the solution; instead we must show how a solution is produced by the interactions of people each of whom possesses only partial knowledge. To assume all the knowledge to be given to a single mind in the same manner in which we assume it to be given to us as the explaining economists is to assume the problem away and to disregard everything that is important and significant in the real world. - Friedrich Hayek, The Use of Knowledge in Society
Pragmatism is a philosophical perspective linked with the name of John Dewey and other 20-th century American philosophers. As I tried to learn something about it, I discovered that there is an enormous literature on pragmatism that could easily fill a small library. Luckily, in his paper Knight [2001] has taught us that the main message of the pragmatist perspective boils down to just a few guiding principles: (i) Evaluate ideas by their consequences (consequentialism); (ii) be aware that your ideas may be wrong and may fail (fallibilism); (iii) don’t be hypercritical (anti-skepticism); (iv) try out, debate, and evaluate alternatives (experimentalism). - Elmar Wolfstetter, A Pragmatist Approach to the Proper Scope of Government Comment
There is no need to deny that individual members of any public are ill informed or mal-adept at navigating various cognitive tasks. After all, Dewey acknowledged much of what skeptics of his day took to be the facts of the matter. But, in the first place, beginning with Peirce, pragmatists have seen knowledge as produced and held by communities of inquiry. That means we should expect no single individual to either produce or possess all the knowledge or information required to address a given social, economic or political problem. It means instead that we ought to conceive of epistemology in not just social but institutional terms. Like Dewey, then, contemporary pragmatists remain critical of arrangements that accord too much of a role to experts or technocrats even as they simultaneously resist naively placing their faith in the capacities of the common man except, of course, insofar as those capacities are deployed under "proper conditions." From our pragmatist perspective, then, there is little reason to characterize our argument as "psychologically unrealistic." And there surely are grounds for responding to such complaints. - Jack Knight, James Johnson, The Priority of Democracy: Political Consequences of Pragmatism
"Idiocracy" thus suggests what might be called an idiocratic theory: If the public is idiotic, as it surely is, then the least it can do, and the thing it must do in order to survive, is to submit to the rule of those who are its smartest and most capable members (even if the smartest are a bit dim themselves). - Mark Fenster, On Idiocratic Theory: Rejoinder to Wisniewsky
*Note* This is in reference to the movie Idiocracy which starred Luke Wilson and was directed by Mike Judge...the guy responsible for Beavis and Butthead. For some reason I think it's just the coolest that Fenster decided to write this piece.
Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority. - Frédéric Bastiat, The Law
Isn't that the central basis for the libertarian creed? The notion that educated free adults can be trusted with matches... not to mention their bank accounts and votes? If the masses are intrinsically stupid -- sheep -- then the paternalists are right and no future society of maximized freedom will ever be possible.
- David Brin, Essences, Orcs and Civilization: The Case for a Cheerful Libertarianism
That said, Wisniewski is right to disagree with my critique of Edelman because, unlike Edelman and Wisniewski, I am not in fact an idiocrat. As lazy and stupid as the public may be, its members are not incapable of understanding at least the broad stakes of major political decisions. In this regard consider the increased public knowledge and understanding of the nonexistence of Saddam Hussein's WMD program and ties to Al-Qaeda that have occurred over the past three years. Efforts to provide the public with better information in an effective and timely manner, whether by public or private institutions, are worthwhile, in the same way that efforts to manipulate the public by leaking or releasing false or misleading information can be quite effective. - Mark Fenster, On Idiocratic Theory: Rejoinder to Wisniewsky
Thus, the ignorance of the mass public may create opportunities for libertarian forces to undermine state autonomy. In the absence of detailed policy knowledge, such agents can always pose a simple question to the uninformed voter: "Why can't the government program or agency in question be replaced by a private firm or a market mechanism?" The very allure of libertarian metaphors and argument may, I hypothesize, depend upon widespread voter ignorance of particular policy issues and the relative simplicity and conceptual "obviousness" of notions such as "freedom," "competition," "incentives," "cost-benefit analysis," and "the market." - Daniel Carpenter, The Leaning Tower of “Pisa”: Public Ignorance, Issue Publics, and State Autonomy: Reply to DeCanio
The lower sort of people and small proprietors are good judges enough of one not very distant from them in rank or habitation; and therefore, in their parochial meetings, will probably chuse the best, or nearly the best representative: But they are wholly unfit for county-meetings, and for electing into the higher offices of the republic. Their ignorance gives the grandees an opportunity of deceiving them. - David Hume, Idea of a Perfect Commonwealth
"I have previously stated and I repeat now that the United States plans no military intervention in Cuba," said President John F. Kennedy as he planned military action in Cuba. "As president, it is my duty to the American people to report that renewed hostile actions against United States ships on the high seas in the Gulf of Tonkin have today required me to order the military forces of the United States to take action in reply," said President Lyndon Johnson as he fabricated an incident to justify expansion of American involvement in Vietnam. "We did not, I repeat, did not, trade weapons or anything else [to Iran] for hostages," said President Ronald Reagan in November, 1986, four months before admitting that U.S. arms had been traded to Iran in exchange for Americans being held hostage there. "Simply stated, there is no doubt that Saddam Hussein now has weapons of mass destruction," said Vice President Dick Cheney before the invasion of Iraq; when it turned out that these weapons did not exist, Assistant Defense Secretary Paul Wolfowitz explained that "for bureaucratic reasons, we settled on one issue, weapons of mass destruction [as justification for invading Iraq], because it was the one reason everyone could agree on"
(Cockburn and St. Clair 2003, 1). - Benjamin Ginsberg, Autonomy and Duplicity: Reply to DeCanio
If we can't persuade the public that it's desirable to do these things, then we have no right to impose them even if we had the power to do it. - Milton Friedman, The Proper Role of the Federal Government
Things will not be necessarily continuous. The fact that they are something other than perfectly continuous ought not to be characterized as a pause. There will be some things that people will see. There will be some things that people won't see. And life goes on. - Donald Rumsfeld, The Poetry of Donald Rumsfeld
It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance. - Murray N. Rothbard, How Stupid Are You About Economics
In a market -- one of your beloved markets -- an entrepreneur who presents the same product over and over, deriding customers for not buying it, would be the real fool. You'd laugh at such a fellow and tell him he deserves what he gets -- bankruptcy. Yet, you never view your political program that way, do you? - David Brin, Essences, Orcs and Civilization: The Case for a Cheerful Libertarianism
The signal to sentient human beings that they have been inadvertently ignorant is surprise (Kirzner 1997, 81). If we are surprised by something, it is almost certainly the case that we did not know it; or that we thought we knew something that has suddenly turned out to be false; or that we knew something that, it has suddenly turned out, we misinterpreted. Only surprises that are deliberately arranged for us (such as surprise parties) resemble the type of ‘‘ignorance’’ that mainstream neoclassical economics is prepared to accept (in this case, asymmetrical information). But our lives are peppered with unarranged surprises about matters that we didn’t know existed or that we thought we had a handle on but turned out to be wrong about. The absence of conceptual space for surprise, we maintain, is the missing dimension in mainstream economics, without which it cannot produce the needed theory of error. - Anthony J. Evans, Jeffrey Friedman, "Search" vs. "Browse": A Theory of Error Grounded in Radical (Not Rational) Ignorance
[T]here are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – there are things we do not know we don't know. - Donald Rumsfeld, The Poetry of Donald Rumsfeld
It was Hayek, after all, who insisted that prices aggregate producers’ (and consumers’) local knowledge of actual supply and demand conditions. (If it were not ‘‘knowledge’’ of actual conditions, it would be mere speculation.) Thus, only the central planning board is ignorant, because it does not have access to "knowledge of people, of local conditions, and of special circumstances" (Hayek 1945, 80). In that case, however, if we had some way to transmit this knowledge to the central planning board-as with portable telecommunications devices-the problem would be solved. - Anthony J. Evans, Jeffrey Friedman,"Search" vs. "Browse": A Theory of Error Grounded in Radical (Not Rational) Ignorance
He who knows not, and knows not that he knows not, is a fool; shun him.
He who knows not, and knows that he knows not, can be taught; teach him.
He who knows, and knows not that he knows, is asleep; wake him.
He who knows, and knows that he knows, is a prophet; follow him. - Persian Proverb
O how they cling and wrangle, some who claim
For preacher and monk the honored name!
For, quarreling, each to his view they cling.
Such folk see only one side of a thing. - Buddha, The Blind Men and the Elephant
Professor Juniper: And this is a plume fossil
Cilan and Ash: Oooo...Ahhhhh
Professor Juniper: Donated to us by Lenora from the Nacrene Museum
Cilan and Ash: Wow!
Ash: This is from Lenora?
Iris: Looks like a rock if you ask me
Cilan and Ash: What?!!
Professor Juniper: *cheerfully* I guess different people do see things in differernt ways Pokemon, Archeops In The Modern World
*Note* Because...all the cool kids (Herman Cain) are referencing Pokemon...and...we all have a platypus controlling us.
The downside of competition among entrepreneurs who have different and fallible interpretations of "the data" is that some of them will necessarily be wrong, and will waste resources on their mistakes. The upside is that all the resources of an entire economy are not bet on the infallibility of the central planners’ interpretation of what to do, or on the interpretation of a single manager to whom this authority has been delegated. (Capitalism, of course, simply is the delegation of this authority to anyone and everyone who can get a hold of some capital.) - Anthony J. Evans, Jeffrey Friedman, "Search" vs. "Browse": A Theory of Error Grounded in Radical (Not Rational) Ignorance
Want to reach a predetermined conclusion? Choose a "fundamental" axiom that automatically produces that conclusion, making any argument with this conclusion futile! By anchoring such claims in bedrock, an ideologue makes further discussion impossible. Those who disagree are either evil or stupid. Voila.
- David Brin, Essences, Orcs and Civilization: The Case for a Cheerful Libertarianism
When that "divinity" which "doth hedge a king," and which in our day has left a glamour around the body inheriting his power, has quite died away - when it begins to be seen clearly that, in a popularly-governed nation, the government is simply a committee of management; it will also be seen that this committee of management has no intrinsic authority. The inevitable conclusion will be that its authority is given by those appointing it; and has just such bounds as they choose to impose. Along with this will go the further conclusion that the laws it passes are not in themselves sacred; but that whatever sacredness they have, is entirely due to the ethical sanction - an ethical sanction which, as we find, is derivable from the laws of human life as carried on under social conditions. And there will come the corollary that when they have not this ethical sanction they have no sacredness, and may be rightly challenged.
The function of Liberalism in the past was that of putting a limit to the powers of kings. The function of true Liberalism in the future will be that of putting a limit to the powers of Parliaments - Herbert Spencer, Contemporary Review
Conservatives argue that if Warren Buffett thinks that the rich should pay more taxes then he should just donate his money to the government. So far Warren Buffett has not put his money where his mouth is. Instead, he donates his money to non-profit organizations rather than to government organizations. Clearly his actions speak louder than his words.
Here's the liberal counterargument...
The animating motivation behind paying taxes is not the unalloyed joy of writing checks to the government but rather the knowledge that you are part of a collective system that is funding a government and its policies. - Derek Thompson, Rich People: Raise Our Taxes
Why do people feel a warm glow when they donate to charities but feel a cold prickle when they pay taxes? What’s the difference? Both contribute to the common good.
The difference is choice.
If we allow taxpayers to choose which government organizations receive their individual taxes...then liberals, conservatives and libertarians will all joyfully write checks to the government. Will they still be a part of the collective system that funds government and its policies? Yes, of course!
Liberals will be joyful because they won’t have to pay for self-fulfilling wars, conservatives will be joyful because they won't have to pay for ineffective welfare and libertarians will be joyful because they’ll only have to pay for defense and the courts.
To be clear...everybody would still have the same exact tax rate.
Not sure how joyful anarcho-capitalists will be. Their theory is that the private sector can do everything better than the public sector can. So they'll be forced to pay for the single least redundant government organization. If their theory is correct though…then the most redundant and inefficient government organizations will lose funding and go extinct…the scope of government will narrow…and the tax rate will decrease proportionally.
Will socialists be overjoyed? Their theory is that the public sector can do everything better than the private sector. So they'll be writing more than their fair share of checks. If their theory is correct though…then the most redundant and inefficient private organizations will lose revenue and go extinct…the scope of government will broaden…and the tax rate will increase proportionally.
In essence, allowing for a division of labor between taxpayers will reveal the perfect division of labor between the public and private sector. At long last the age old debate regarding the responsibilities and duties of government will be conclusively and definitely resolved.
