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.

Markets: The Freedom To Reallocate Your Brainpower

Reply to reply: MMT = Moronic Monetary Theory

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So what????? we might not have enough defense to defend ourselves and we'd get killed! Do you understand that living is important? - James972

Of course I understand that living is important. You understand this as well. But what you don't understand is that our standard of living depends on how well our country utilizes all its brainpower.

Right now you think it's a good idea to prevent taxpayers from having the option to choose where their taxes go. This means that you think it's a good idea to prevent nearly all of our country's brainpower from being applied to public goods. You don't understand that blocking nearly all of our country's brainpower from the public sector is just as detrimental as it would be to block nearly all of our country's brainpower from the private sector.

Imagine that everybody on this forum was stranded on an island. Let's say that somehow you had the power to enslave all of us. If you did so, would your standard of living be better or worse? Of course it would be worse! Because by enslaving all of us you would essentially be wasting all of our brainpower. All of our significant activities would only reflect your brainpower. Our island society would only fully utilize one person's brain... your own. Maybe you would be fully utilizing our labor... but our brainpower, which is infinitely more valuable, would be entirely wasted. Our standard of living would reflect this.

Of course you object to slavery. But you object to it for moral reasons rather than for economic reasons. If you actually understood why slavery is economically stupid then you would understand why it's also economically stupid to prevent people from having the option to directly allocate their taxes.

I'm guessing that you support democracy. But are you seriously under the impression that voting fully utilizes everybody's brainpower? Do you think it takes just as much brainpower for you to decide who to vote for as it would take for you to decide how to spend your tax dollars?

To be clear... you can't utilize more than 100% of your brainpower. If you had the option to directly allocate your taxes... obviously you wouldn't be required to use 200% of your brainpower. You would simply have the option to decide how you wanted to allocate your brainpower between the private sector and the public sector. If you didn't want to allocate any of your brainpower to the public sector... then you would simply continue to allow congress to spend 100% of your taxes for you. If nobody chose the option to directly allocate any of their taxes... then the public sector wouldn't gain any brainpower.

Perhaps the closest real world situation occurred in 1978. This is when Deng Xiaoping began to gradually give foreigners the option to shop in China. Prior to 1978... nobody, not even the Chinese, had the option to shop in China. Right now, thanks to Deng Xiaoping, you have the option to shop in China's private sector. Right now you have the freedom to decide how you want to allocate your brainpower between our private sector and their private sector. We all have this same freedom. Do you think we benefit from having this freedom? I sure think so. Even though I don't allocate much, if any, of my own brainpower to shopping in China... my standard of living has definitely improved as a result of all the people who have allocated significant amounts of their brainpower to shopping in China.

Here we are allocating our brainpower to this forum. Are we better off as a result of having this option to do so? I sure think so.

The thing is... this website...

1. doesn't have a market
2. isn't a market

This website doesn't have a market because you don't have the option to spend your money on the threads and posts that you value. In other words, this website doesn't have a market because it doesn't facilitate micropayments. Should this website facilitate micropayments? Yes? No? Right now you don't have the option to spend your money on your preferred answer. Therefore, this website is not a market.

This website would be infinitely better if it had a market and it was a market. Why? Because it would be infinitely better at utilizing all our brainpower. But it's not entirely problematic that this website doesn't have a market and it isn't a market. Because, as soon as somebody does create a website that has a market and/or is a market... then we are entirely free to leave this website and participate on the website that does a better job of utilizing the brainpower of all its members.

The fact that this website is in a market means that we are entirely free to reallocate our brainpower as soon as we deem it beneficial to do so.   If you understand the benefit of people being free to reallocate their brainpower... then you should be able to understand the benefit of giving people the option to reallocate their brainpower to the public sector.

Modern Monetary Theory Is Moronic

Forum thread: MMT = Moronic Monetary Theory

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MMT is incredibly moronic.

Imagine that it's Trump versus Clinton. Let's say that Trump loses the election by 125 electoral votes. But what are electoral votes? They are simply electronic numbers... they aren't by any means real. Therefore... we could simply give Trump more electoral votes than Clinton and voila! Trump would be our next president! Yay for fiat votes! Yay for subverting the will of the people!!!

The point of voting is to figure out who should have more influence. And the incredibly obvious thing about influence is that it is mutually exclusive. This is painfully obvious. It's stupidly obvious. Influence is a zero-sum game? Yes... DUH.

Let's say that all the MMT members of this forum decide to dollar vote for me. We'll pretend that there are 10 MMT members and each one of them paypals me $1000 dollars. That's a lot of dollar votes! I would gain $10,000 dollars worth of influence. But, because influence is a zero-sum game... it was only possible for me to gain this influence because each one of these 10 members was willing to voluntarily give up a $1000 dollars worth of influence. My gain was their loss. Their loss was my gain. This is how influence works.

Now let's apply this incredibly obvious concept to our entire economy. But, let's keep it simple stupid and say that our entire economy only produces two goods...

1. food (a private good)
2. defense (a public good)

The private sector produces food and the public sector produces defense. What would happen if we gave the defense producers more influence? Clearly this would mean that the food producers would have less influence. As a result, defense producers would be able to compete more of society's limited quantity of "Einsteins" away from food producers. More Einsteins solving defense related problems means less Einsteins solving food related problems. So we'd see more improvement/progress in the supply of defense and less improvement/progress in the supply of food.

If Forest Gump had been a real person then even he would have been able to understand this. His IQ was theoretically 75. Anybody who fails to understand how and why MMT is incredibly moronic must have an IQ that's lower than 75.

If you can understand how and why MMT would subvert the will of the people... then clearly your IQ is over 75. But is your IQ over 95? Let's find out.

In the private sector we all use our dollar votes to determine how influence should be distributed. And since your IQ is over 75... you understand that influence is a zero sum game. So what happens when, via democracy, we give people like Barak Obama and Elizabeth Warren more influence? It means that the people that we dollar voted for will have less influence.

If you can understand how and why democracy subverts the will of the people... then clearly your IQ is over 95.

Here are two ways that we can help prevent the will of the people from being subverted...

1. Replace voting with spending
2. Allow people to choose where their taxes go

What Is Alex Tabarrok’s Biggest Mistake?

Alex Tabarrok is my favorite living economist.  Here's his most recent blog entry... What Was Gary Becker’s Biggest Mistake?

Becker's biggest mistake was incoherent economics.  It's also Tabarrok's biggest mistake.

In his entry, Tabarrok wrote that he favors "more police on the street to make punishment more quick, clear, and consistent."

Let's consult my favorite recently-dead economist...

A nation cannot survive with political institutions that do not face up squarely to the essential fact of scarcity: It is simply impossible to promise more to one person without reducing that which is promised to others. And it is not possible to increase consumption today, at least without an increase in saving, without having less consumption tomorrow. Scarcity is indeed a fact of life, and political institutions that do not confront this fact threaten the existence of a prosperous and free society. - James Buchanan, Richard Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes 

More guns, less butter.  More cops, less coaches.  A coach is the opportunity cost of a cop... and vice versa.  What is the optimal ratio of cops and coaches?

Let's consult my favorite long-dead economist...

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

The optimal proportion depends on people's priorities.  How do we know people's priorities?  By how they spend their money.

Three facts...

1. Nobody's omniscient
2. The optimal proportion depends on people's priorities
3. People's priorities are revealed/communicated by their spending decisions

Getting back to Buchanan...

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 Buchanan, The Economics of Earmarked Taxes

Buchanan appreciated that clarifying demand is just as important for public goods as it is for private goods.  Buchanan stood on Adam Smith's shoulders.  Is Tabarrok standing on Buchanan's shoulders?

We know that Tabarrok believes that it would be beneficial if there were more police.  We also know that he believes that it would be beneficial if there was more asteroid defense...

I am also a contributor to an Indiegogo campaign to develop a planetary defense system–yes, seriously! I don’t expect the campaign to succeed because, as our principles of economics textbook explains, too many people will try to free ride. But perhaps the campaign will generate some needed attention. In the meantime, check out this video on public goods and asteroid defense from our MRU course (as always the videos are free for anyone to use in the classroom.) - Alex Tabarrok, Planetary Defense is a Public Good

What we don't know is whether more police or more asteroid defense is a bigger priority for Tabarrok.  Why don't we know this?  It's because 1. we aren't omniscient and 2. Tabarrok does not have the freedom to use his tax dollars to tell us what his true priorities are.  Information is asymmetrical.  I kinda get the impression that Tabarrok would prefer more information symmetry...

Still, the passing of many information asymmetries will lead easier trade, higher productivity, and better matches of people to jobs and to each other. - Alex Tabarrok, Tyler Cowen, The End of Asymmetric Information

But does Tabarrok want the freedom to shop in the public sector?  I don't know!  He certainly didn't mention it in that article... or any other.

Tabarrok kinda recognizes that demand opacity is a problem...

Voting and other democratic procedures can help to produce information about the demand for public goods, but these processes are unlikely to work as well at providing the optimal amounts of public goods as do markets at providing the optimal amounts of private goods.  Thus, we have more confidence that the optimal amount of toothpaste is purchased every year ($2.3 billion worth in recent years) than the optimal amount of defense spending ($549 billion) or the optimal amount of asteroid deflection (close to $0).  In some cases, we could get too much of the public good with many people being forced riders and in other cases we could get too little of the public good. - Tyler Cowen, Alex Tabarrok, Modern Principles of Economics

Why do markets provide the optimal amounts of private goods?

Many more people need a kidney than there are kidneys available for transplant. Economists such as Gary Becker (and I) have argued that the quantity supplied would increase if we lifted the ban on paying for organs. - Alex Tabarrok,  Matchmaker, Make Me a Market

If people had the freedom to pay for kidneys then we would know the demand for kidneys.  Knowing the demand for kidneys would facilitate more informed decisions.  Correctly deciding whether to keep or sell an item depends entirely on knowing its true market value.  Supply optimality depends entirely on demand clarity.

Tabarrok, more than most, appreciates the importance of clarifying the demand for public goods...

The free rider problem is a challenge to the market provision of public goods. In my paper on dominant assurance contracts I use game theory to show how some public goods can be produced by markets using a special contract.  In an assurance contract, people pledge to fund a public good if and only if enough others pledge to fund the public good. Assurance contracts were not well-known when I began to write on this topic but have now become common due to organizations like Groupon and Kickstarter, which work on this principle (indeed, I have been credited with the ideas behind Groupon, although sadly for my bank account, I don’t think that claim would stand in a court of law). Since no money is paid unless the total pledges are high enough to fund the public good, assurance contracts remove the fear that your contribution will be wasted if other people fail to contribute. - Alex Tabarrok, A Test of Dominant Assurance Contracts

Also...

Tiebout identified a force, voting with one's feet, that would discipline local governments and provide information about which public goods and services are most valued by residents. - Alex Tabarrok, Market Challenges and Government Failure

There's a shortage of consistency though...

In other words, the Federal government spends more on preventing trade than on preventing murder, rape and theft. I call it the anti-nanny state. It’s hard to believe that this truly reflects the American public’s priorities. - Alex Tabarrok, The Anti-Nanny State

We really shouldn't have to guess what the public's priorities actually are.  We should already know the public's priorities.  Several decades ago Buchanan informed us that, when it comes to public goods, it's entirely possible to know the public's priorities.  Yet, here we are... still in the dark age of public goods.

The biggest mistake of every economist is that they don't adequately appreciate, or emphasize, or explain the importance of clarifying demand.  No two biggest mistakes are equally big though.  The bigger the mistake, the more incoherent the economics.

Let's expand the "more police" snippet from Tabarrok...

I favor more police on the street to make punishment more quick, clear, and consistent. I would be much happier with more police on the street, however, if that policy was combined with an end to the “war on drugs”...

Tabarrok doesn't want a police bundle that includes the war on drugs?  Yet, Tabarrok is not a fan of unbundling cable.  Tabarrok wants his cable dollars spent on terrible shows... but he doesn't want his tax dollars spent on the drug war.  Except, as far as I know, he's never once argued that people should be free to choose how they spend their tax dollars in the public sector.  Sometimes his preferences matter... othertimes they do not.  Sometimes he wants to use his dollars to communicate his priorities... othertimes he doesn't.  Where and why does he draw the line?  What is his rule?

Is it greedy of me to want more economic coherence from my favorite living economist?

Tabarrok clearly believes that no two activities that cops engage in are equally valuable.  Unfortunately, he doesn't pounce on the opportunity to channel Smith or Buchanan.  So he leaves readers with the incredibly wrong impression that the public's priorities can be adequately known and the public's funds can be adequately allocated despite the fact that people don't have the freedom to communicate their priorities by spending their tax dollars.

As Buchanan pointed out... scarcity is a fact of life.  No single resource can be in two places at the same exact time.  Are there any exceptions to this rule?  Maybe?  Well... for sure a cop isn't one of them.  A cop definitely can't be in two different places at the same exact time.  If a cop is here... then he can't be there.  And if he's there... then he can't be here.

If we're going to pay some guy to be a cop... then it stands to reason that we really want him to be in the most valuable location.  This is Quiggin's Implied Rule of Economics (QIRE): society's limited resources should be put to more, rather than less, valuable uses.

QIRE is exactly where Tabarrok drops the ball.  Or, it's where he doesn't pick up the ball and run with it.  Or, it's where he doesn't run fast/far enough with it.

How do we determine where in the world the cop will create the most value for society?  How can we know where in the world the cop will provide taxpayers with the most bang for their buck?  How can we determine the most efficient allocation of the cop?

According to Buchanan, the most efficient allocation of the cop depends entirely on the preferences of taxpayers.  This is because values are entirely subjective.  Benefit is in the eye of the beholder.  One person's trash is another person's treasure.  One person's weed is another person's epiphyte.

Understanding and appreciating the fact that values are entirely subjective is essential in order to understand and appreciate how to determine the correct answer to the single most important question:  How should society's limited resources be used?  Because values are entirely subjective, every single person knows a different part of the correct answer.  People communicate their unique part of the correct answer when they are free to spend their own money on whichever allocations provide them with the most value.  The more people participating in the valuating/choosing/spending process, the more valuable/correct the answer.  The less people participating in the valuating/choosing/spending process, the less valuable/correct the answer.  Inclusive valuation is more valuable than exclusive valuation.

Imagine that I assign a value to every possible location that one cop could be in.  Tabarrok also assigns a value to every possible location that the same cop could be in.  Would our valuations be perfectly equal?  Of course not.  I live in California... Tabarrok lives in Virginia.  I'd benefit more if the cop was located closer to where I live... and presumably Tabarrok would benefit more if the cop was located closer to where he lives.

What if the other 300 million people in America assigned a value to every possible location that the cop could be in?  Where in America would the cop create the most value?

Location isn't the only variable.  Activity is another variable.

How many different locations are there in America?  How many different activities can a cop engage in?

When we combine all the different locations with all the different activities with all the different cops with all the different preferences and circumstances of 300 million Americans... we end up with quite a few different possible combinations/allocations.  Some of these possible allocations are a lot more valuable than other possible allocations.

Socialism is the idea that cops can be adequately allocated without the invisible hand.  I think that Tabarrok is under the impression that cops can be adequately allocated without the invisible hand.  Well... as far as I know, he's never said, "we need the invisible hand to efficiently allocate cops".  But he certainly has said that cable doesn't need to be unbundled.  If clarifying the demand for content isn't necessary... then there's no reason that it should be necessary for cops.  If every single individual's unique part of the answer isn't needed to determine whether enough cop shows are being supplied... then every single individual's unique part of the answer isn't needed to determine whether enough cops are being supplied.  

Tabarrok has never endorsed people voting with their taxes... but he's certainly a huge fan of people voting with their feet.  How could he be a huge fan of one but not the other?  The benefit of foot voting is that it helps clarify the demand for public goods...

Tiebout identified a force, voting with one's feet, that would discipline local governments and provide information about which public goods and services are most valued by residents. - Alex Tabarrok, Market Challenges and Government Failure

Tabarrok loves the idea of private cities...

So, people who live in cities are much more productive than in the agriculture. We know in agriculture in Africa, in Asia, that it's essentially subsistence living. So, they are really just making enough to stay alive, to support themselves. While in the city, you can have people making much higher, much above subsistence level. So there's definitely room there for a large profit opportunity. And in fact that is what has created modern China--it's getting hundreds of millions of people out of subsistence agriculture and into the cities where they can make much more. The question is: Are we just going to pile them into the cities and hope for the best, or can we have a planning system? The public planning is usually not going to work, because the incentives aren't there, the bureaucracy is inefficient, it's corrupt, and so forth. Can we have a private planning system? That's at least what the hope is. It worked with Walt Disney World. It worked with Jamshedpur, in India. I think it can work in other cities as well. - Alex Tabarrok, On Private Cities

Maybe Disney World is the heart of Tabarrok's biggest mistake?  Disney World seems to work perfectly fine despite the fact that residents can't use their taxes to communicate their priorities.  Perhaps this leads Tabarrok to perceive that, as long as people are free to vote with their feet, then there's no point for people to be free to vote with their taxes.  But if there's no point in people being free to vote with their tax dollars... then what's the point of people being free to vote with their non-tax dollars?  Dollar voting is entirely pointless?

Can you imagine a world with all foot voting and no dollar voting?  If a vegetarian didn't want her dollars spent on meat... then she could simply quit her enjoyable job, sell her nice house, say goodbye to her friends and family, say goodbye to her favorite bookstore, say goodbye to her favorite boutique, say goodbye to her favorite masseuse and hairstylist and mechanic... and move to a town that didn't spend any money on meat.  Would eliminating dollar voting be a marginal revolution?  Not so much.  It would be the epitome of throwing the baby out with the bath water.  Vegetarians would certainly be free to clarify their demand for no meat... but it would cost them an arm and a leg to do so.

Imagine if foot voting was the only way to break up with someone.  It's a given that a lot more people would be stuck in less than beneficial relationships.

If it's really important to know people's true priorities... then wouldn't it be beneficial to make it easier for people to share their true priorities?

Allowing people to vote with their tax dollars would be the most important marginal revolution of all time.  But you certainly wouldn't know it from reading Tabarrok's blog!

Unlike Gary Becker, Tabarrok is still alive.  This means that he has the wonderful opportunity to try and correct his biggest mistake.  Or, he has the opportunity to do an excellent job of explaining away his economic incoherence.

Would I personally spend my taxes on more cops?  Well... the thing is... cops endeavor to take away some people's best options.  Let's say that a guy wants to rob a convenience store.  Evidently, from his perspective, robbing the store is his best option.  This best option would probably be eliminated if there was a cop located outside the store.

Most of us would agree that robbing a convenience store is a terrible best option.  But it's extremely important to understand that taking away a terrible best option from somebody really isn't the same thing as giving them a better option.

A sweatshop is a terrible first option.  But eliminating this option really isn't the same thing as giving people the option to work in an air-conditioned factory.  Tearing down really isn't the same as building up. Destroying isn't the same as creating.

In a world without scarcity... then sure, let's have one more cop on the block.  However, our world really isn't an exception to the rule of scarcity.  So one more cop means one less coach.  I'm using the word "coach" to refer to anybody who helps, in some way, to create better options.  Do we want a larger market for coaches... or a larger market for cops?

Perhaps what pushes Le Guin onto the wrong track is that there are more (inter)-national blockbusters than ever before which gives some people the impression that variety is declining. It’s not a contradiction, however, that niche products can become more easily available even as there are more blockbusters–as Paul Krugman explained the two phenomena are part and parcel of the same logic of larger markets. It’s important, however, to keep one’s eye on the variety available to individuals. Variety has gone up for every person even as some measures of geographic variety have gone down. - Alex Tabarrok, Why Does Ursula K. Le Guin Hate Amazon?

The more cops there are... the less coaches there are.  The less coaches there are... the less variety of opportunities that will be available to individuals.  The less variety of opportunities available.... the less likely it is that individuals will find their niche.  The less likely it is that individuals will find their niche... the more likely it is that individuals will commit crimes.

We really don't want anybody to have terrible first options.  Which is why it's so important to understand that taking away terrible first options does absolutely nothing to increase the supply of better options.  In fact, because of scarcity, allocating more resources to destroying options means that less resources will be allocated to creating options.  The result is a vicious cycle.

Creating a market in the public sector would help ensure that cops were efficiently allocated.  With cops engaging in the most valuable activities in the most valuable locations... we would be a lot better protected with far fewer cops.  This would free-up more people to be coaches... which would decrease the demand for cops... which would free-up even more people to be coaches...   It would be a virtuous cycle.

Basically, the more resources that we allocate to cultivating, the less resources we will need to allocate to weeding.  With this in mind... let's jump back to private cities.

Unlike the government, private cities would have the maximum incentive to try and discern people's true priorities.  The profit motive would ensure that we'd see some increase in the diversity of the supply of public goods.  But how, exactly, would the owners of the private cities do a better job of discerning people's true priorities?  More cheap talk surveys?  More cheap talk town hall meetings?  Whichever methods were used... none of them would come even close to the preference revelation effectiveness and accuracy of giving taxpayers the freedom to vote with their tax dollars.  Foot voting is the epitome of a blunt instrument.  Opinion voting is the epitome of an inaccurate instrument.  Dollar voting is the epitome of a precise and accurate instrument.

Humans are diverse... which means that demand is naturally diverse.  Creating a market in the public sector would ensure that the supply of public goods is just as diverse as the demand for public goods.  Maximizing supply diversity would maximize niche diversity.

Here are some passages that have something to do, more or less, with niches...

It is, after all, not necessary to fly right into the middle of the sun, but it is necessary to crawl to a clean little spot on earth where the sun sometimes shines and one can warm oneself a little. - Franz Kafka,  Kafka’s Remarkable Letter to His Abusive and Narcissistic Father

Ecological Homogenization - Part of the problem for our native bees is our human desire for neatness and uniformity. Pretty lawns with no bare spots. Non-flowering grass, or pollen-less flowers. Paved spots where a sand bank or brush pile may have been before. All places where a native bee might have made her home or found a snack. - Gwen Pearson, You're Worrying About The Wrong Bees

That on the multiplicity of those wants depended all those mutual services which the individual members of a society pay to each other: and that consequently, the greater variety there was of wants, the larger number of individuals might find their private interest in labouring for the good of others, and united together, compose one body. - Bernard Mandeville, The Fable of the Bees and Other Writings 

The solution, as I believe, is that the modified offspring of all dominant and increasing forms tend to become adapted to many and highly diversified places in the economy of nature. - Charles Darwin, On the Origin of Species by Means of Natural Selection 

If it were only that people have diversities of taste, that is reason enough for not attempting to shape them all after one model. But different persons also require different conditions for their spiritual development; and can no more exist healthily in the same moral, than all the variety of plants can in the same physical, atmosphere and climate. The same things which are helps to one person towards the cultivation of his higher nature, are hindrances to another. The same mode of life is a healthy excitement to one, keeping all his faculties of action and enjoyment in their best order, while to another it is a distracting burthen, which suspends or crushes all internal life. Such are the differences among human beings in their sources of pleasure, their susceptibilities of pain, and the operation on them of different physical and moral agencies, that unless there is a corresponding diversity in their modes of life, they neither obtain their fair share of happiness, nor grow up to the mental, moral, and aesthetic stature of which their nature is capable. - J.S. Mill, On Liberty

Tree crowns consist of a heterogeneous mosaic of microhabitats resulting from a complex combination of biotic and abiotic variables (Benzing 1978, 2000; Callaway et al. 2002; Hietz & Briones 1998; Madison 1977; Scheffknecht et al. 2012; Winkler et al. 2005). Within the canopy, radiation, temperature, wind velocity, and water and nutrient availability vary spatiotemporally, creating microclimatic gradients that may differentially affect the germination of different epiphytic species (Benzing 1978; Hietz & Briones 1998; Zotz & Andrade 2002). These variables change from one phorophyte to another, depending on their height, crown size and shape, leaf habit, bark characteristics (texture, stability and water retention capacity), branch thickness, position in the canopy, the presence of allelopathic compounds or other minerals washed from the phorophyte, i.e., lixiviates (Bennett 1986; Benzing 1978, 1990; Callaway et al. 2002; Castro et al. 1999; Frei et al. 1972; Mehltreter et al. 2005). - Mondragon et al, Population Ecology of Epiphytic Angiosperms: A Review

Biodiversity is a function of niche diversity.  The greater the variety of niches... the greater the richness of life.  Niche diversity is just as important for the economy as it is for the environment.  As J.S. Mill so wonderfully explained... people, like plants, are all different.  Human diversity means that demand is inherently diverse.  When demand is perfectly clarified... supply will be just as diverse as demand.  Supply diversity will create a "heterogeneous mosaic of microhabitats".  Every individual will have a niche to thrive in and coaches will be extremely good at helping people find their optimal niches.

The efficient allocation of individuals depends entirely on demand clarity.  Right now demand is far from clear.  This is because economists struggle to get their stories straight.  Every economist's biggest mistake is that their economic story is not coherent.  My favorite living economist certainly isn't an exception.  Tabarrok largely acknowledges that people's preferences matter... even when it comes to public goods... but then he doesn't recognize the value of unbundling cable or the government.  This begs the question... where and why are markets necessary?

From my perspective... markets are necessary wherever there's scarcity.  Scarcity is everywhere so markets should be everywhere as well.  Wherever markets are missing... people's true priorities will not be known... and Quiggin's Implied Rule of Economics will be violated.    

My economic story is the least incoherent... but I'm sure that Tabarrok could do a much better job of standing on Buchanan's shoulders.  

And again, I do get the feeling that it's greedy of me to expect more from Tabarrok when he's already done so much.  But life is too short not to be greedy!  If markets are only needed in certain circumstances... then Tabarrok should show us the rule.  And if he can't show us the rule... then he should admit it.  If nothing else, publicly acknowledging a lack of knowledge will help point future economists in the right direction.  

See also:

• Opposite Of Mistake
• Chris Edwards' Rothberror
• Evaluating Mistakes on an X Y Graph 

Celebrating Diversity Means Embracing Inequality

Reply to: One dollar equals one vote in the economy

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

Great story! Dollar voting is a very important concept. The thing is though… the three areas you listed as needing a lot more improvement… energy, public transportation and welfare… are not primarily in the realm of dollar voting. They are primarily in the realm of ballot voting. This is because they are mainly public goods. Supplying public goods is the point of government.

The heart of the issue involves figuring out whether things improve faster with dollar voting or ballot voting.

Personally, I’ve never once dollar voted for sports in my life. Yet, my taxes have subsidized sports despite the fact that, from my perspective, there are far more important things in life.

Sports really aren’t a priority for me. But they are a priority for some people. People have different priorities because we are all different. We aren’t all equally productive, effective, responsible, perceptive, careful, intelligent, informed, competent, prudent, insightful, diligent, creative, talented, resourceful or rational.

Dollar voting reflects our inequality… ballot voting does not. We all have an unequal amount of dollar votes and an equal amount of ballot votes.

In the public sector it’s one person one vote. Each person has the same say in determining who are representatives are. And our representatives determine our country’s budget for public goods.

People will of course argue that it’s only fair that everybody be given the same amount of ballot votes. But I have yet to see a good, or even a bad, argument that fairness helps to improve public goods in any way.

Fairness doesn’t make everybody equally rational. And giving unequally rational people equal influence really isn’t the recipe for improving any goods… public or private.

If we want public goods to improve at the same rate as private goods… then we simply have to give taxpayers the freedom to choose where their taxes go (pragmatarianism).

It’s a fact that some people pay a lot more taxes than other people… which reflects the fact that some people receive a lot more dollar votes than other people… which reflects the fact that some people are better than other people at using society’s limited resources… which reflects the fact that we are all different.

Celebrating human diversity means embracing human inequality.

Accurately Communicating Value

This blog entry is dedicated to Beth Cody.  Who's Beth Cody you ask?  According to her website... she's a libertarian writer who believes that "information and ideas should travel freely".  So it's not very surprising that our very first interaction took place in the Disqus comments section of this article by Jeffrey Tucker... Steal Our Stuff, Please.

Here's a screenshot of our interaction...

As you can see in the screenshot, Beth left a comment on Tucker's article four months ago.  Because her comment was liked by four other people, it was the very first comment that I saw after I finished reading Tucker's article.  Curious to learn why Beth's comment was the most popular... I read it.  It was well-written!  But... missing something.   So I hit the reply button, wrote some words, rearranged some words, deleted some words, added some words, reread my words and then... voila!  Beth received her first reply!  She posted her comment four months ago and that's how long it took before some random person (me!) came along and decided that what she wrote was worth replying to.  Shortly afterwords, my e-mail notified me that she had replied back.  I was also notified that she had commented on the blog entry that I had linked her to... Fee.org - Thumbs Up vs Quarters Up.

Back in February, thanks to Tyler Cowen's Assorted links... I learned that some website that I'd never heard of had actually started to charge people $2 to leave a comment on an article... Tablet magazine starts charging commenters.  According to the editor... the primary goal wasn't to raise money... it was to raise the quality of the comments.

Tablet's innovative approach to comments generated quite a bit of buzz...

• Guardian digital chief: Killing off comments ‘a monumental mistake’
• Comment Sections Fall Out of Fashion
• Troll toll: Tablet is now charging its readers for the right to comment
• Tablet Web Comments: Pay to Play?
• Comments Will Cost You: Tablet Magazine Now Charges $2 Per Post
• An ingenious way to save the comments section
• A Jewish magazine is testing an unusual solution for toxic internet comments
• Jewish online magazine starts charging commenters to deter 'offenders'
• In possible first, Tablet website charging for comments

The reviews were mixed... but none really got close to the economic heart of the matter.  So here I am!

If you read through my discussion with Beth Cody then you should already know that in my reply to her comment I made the case that Fee.org should charge its members a very reasonable amount...say $12 per year... but allow them to choose which articles they allocate their nickles, dimes and quarters to.  So rather than giving articles "thumbs up"... members could give them "quarters up".  Fee.org would take its cut and pass the rest of the money onto the writers.

To my pleasant surprise, Beth had absolutely no problem recognizing the value of this feedback mechanism.  In her comment on my blog entry she wrote that Fee.org and Liberty.me "are the sites that would understand and value the concept most".  She even took the additional step of sharing my blog entry with the editor of Fee.org... Max Borders.  It wasn't very surprising to learn that Borders himself had a similar idea a while back but was stymied by micropayments not being feasible yet.

I'd really love it if either Fee.org or Liberty.me was the first to implement "quarters up".  Fee.org in particular has a long and commendable history of endeavoring to help the public better understand economics.  So it would be especially fitting if they were the first to lead the way.  Hopefully this would generate a lot more buzz than Tablet generated when they started charging for comments.

While I agree with Beth that Fee.org and Liberty.me are more likely than other websites to recognize the value of "quarters up"... it's entirely possible that it's not currently feasible for them to take this small, but super significant, step in the right direction.  And because their mission is to endeavor to help the public understand economics... I'm sure that they will appreciate it if I don't put all my eggs in their basket.  The educational opportunities are just too huge!  So both Fee.org and Liberty.org should agree that "quarters up" should be implemented by some website sooner rather than later.

With that in mind...

A letter to the editor of Tablet

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

Dear Alana Newhouse,

I commend you on the boldness of your move to charge for comments!  However, I feel compelled to suggest a much better solution.

Rather than just using money to create a barrier to entry... why not use money to lift the most valuable comments to the top of the comments section?

You could achieve this efficient allocation of comments simply by giving your readers the opportunity to use their nickles, dimes and quarters to lift the most valuable comments higher up on the page.  If you write an article... then the comment that was lifted to the very top of the comments section would be the one comment that the crowd felt was most worthy of your attention.

If anybody didn't want to read the lesser valuable comments... or they didn't have the time to do so... then they simply wouldn't scroll any further down.

Think of it like this.  The reason that you've probably heard of Harry Potter isn't because money was used to block the bad writers... it's because the crowd used their money to lift J.K. Rowling's book to the top of the books "section".

This method works for "lengthy" writing such as books... and it will work for "short" writing such as comments... so it will also work for "medium" writing such as articles.  It would be quite excellent if members on your website could "quarters up" comments and articles.  Just like how members on Youtube can give their favorite videos a "thumbs up".   The difference is that "quarters up" would speak louder than "thumbs up" do.

This "quarters up" feedback mechanism for content would allow the crowd to...

1. ...accurately communicate their content preferences
2. ...easily find the most valuable content

Unfortunately, there aren't any examples of websites, that I know of, that use "quarters up" for content.  Which is a problem because it reflects the fact that people don't really understand how and why markets work!  But, given that you've already demonstrated considerable boldness... I figured that perhaps this same boldness could be used for our mutual benefit.  Your website would benefit from better feedback/sorting... and I'd benefit because I could refer to your website in order to help illustrate the value of crowd sponsored content.

For background, conceptual and technical aspects of this approach... please see... http://pragmatarianism.blogspot.com/2015/03/accurately-communicating-value.html

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

The opportunity cost of economic ignorance

Here's how I've wonderfully illustrated the concept of crowd lifting/amplification...

Shopping is the process by which we endeavor to find valuable voices.  When we find a voice that we value... we use our money to help amplify it.  Money is volume.  A dollar is a unit of volume.   The more dollars that the crowd gives to a writer... the more people that will hear her voice.   This is why nearly everybody in the world has heard of Harry Potter.  A very large crowd of people reached into their own pockets and helped to create a very large megaphone for J.K. Rowling.  This means that the size of her megaphone is proportional to the amount of value that she has created for the crowd.  A large crowd sponsors her because she sponsors a large crowd.  The value of her productivity to others has determined the amount of influence/control/power she has to allocate society's limited resources.

Unfortunately, the benefit of dollar voting really isn't understood by most people.  There's an endless supply of evidence to support this fact.  Here's just a small sample of the evidence...

Sector	MMC	BV	DV
Blogger		x
Facebook		x
Fee		x
Flickr		x
Gov	x	x
Kindle Unl.	x	x
Less Wrong		x
Liberty	x	x
Medium		x
Non-profit			x
Patreon			x
Netflix	x	x
Reddit		x
Spotify	x
Tablet	x	x
Youtube		x

MMC = mandatory minimum contribution
BV = ballot voting (thumbs up, likes, favorites, etc)
DV = dollar voting (quarters up, dimes up, etc)

All these sectors, and countless more, should be MMC + DV.  Take Amazon Unlimited for example.  Every person who pays Amazon $9.99/month (MMC) to read over 700,000 titles should have the option to use their nickles/dimes/quarters to lift their favorite titles higher up.

Why MMC?  Two reasons...

1. All the goods in question are non-rivalrous
2. Everybody wants a free lunch (free-rider problem)

Right now there's a book on my coffee table.  It's Toleration by Andrew Cohen.  Here's how I've wonderfully illustrated our exchange...

In this illustration I'm buying Cohen's book from him in person.  But in reality, I purchased his book on Amazon.  Amazon really helped to facilitate this trade.  Amazon made it stupid easy for me to dollar vote for Cohen's content.

The question is... would I have given Cohen $20 if I could download his book for free?  Maybe not.  What about $10?  Or $1?

With the free-rider problem we end up shooting ourselves in the foot.  We rationalize that, in the grand scheme of things, it's not a big deal if we don't spend a dollar on a "free" book.  What difference can a dollar possibly make?  And if a dollar can't make much of a difference... then neither will anything under a dollar.

Coincidentally, I just found this article when I searched Google for "Youtube"...

No one is pulling down the kind of money internet sensation PewDiePie rakes in ($4 million a year, according to the Wall Street Journal), but you don’t have to make millions to quit your job and earn a living doing what you love. - Chris Kohler, Why Does Nintendo Want This Superfan’s YouTube Money? 

If Youtube charged a very reasonable $12/year (MMC)... but allowed members to "quarters up" their favorite videos... then I think that quite a few people would be able to quit their day job and earn a living doing what they love.  This wouldn't just benefit the creators of the content... it would also benefit the consumers of the content.  Consumers really benefit when they they use their dollars to point producers in the most valuable directions.  Consumers really don't benefit when they give producers bad directions.  If producers were omniscient then there wouldn't be any need for consumers to clearly communicate their preferences/valuations.

Maybe you need a hand visualizing the logistics?  Ok.  Here's a modified screenshot from the Youtube page of one of my favorite songs... Geppetto by Optiganally Yours.

I highly doubt that this is the best layout... and it's definitely not the best style... but hopefully you get the idea.

In this example, $3.50 is how much money that I've given to this song and $250.01 is how money much the crowd has given to it.  Giving this song a "quarters up" would be as easy as giving it a "thumbs up".  All it would take is one click to give this song a quarter.  Youtube would be making it stupid easy for me to trade with Rob Crow and all my other favorite artists.

Yes, I do realize that "truebigmacmaster" probably isn't Rob Crow.  But once Youtube makes it stupid easy for us to trade with our favorite artists... then it probably won't take very long before its stupid easy for us to find our favorite artists on Youtube.

Unlike Youtube... Netflix already has MMC... it just needs the DV.  Here are 10 of my favorite movies/shows...

1. Amelie
2. Black Mirror
3. Castaway on the Moon*
4. Rake
5. Shaolin Soccer
6. Sidewalls
7. Snatch
8. Spaced*
9. The League
10. The Man From Earth*

It's not my absolute top 10 list... I tried to give more weight to content that you can currently stream on Netflix.  The ones with an asterisk unfortunately are no longer available for streaming.  Castaway on the Moon isn't even available from Amazon... but I linked to it anyways just so you could read the reviews if you were so inclined.

Assuming a monthly fee of $10.00 dollars... here's what my allocation would look like for a month...

Assuming I didn't change my allocation for an entire year...

Here's the breakdown...

Movie/Show	Month	Year
1. Amelie	$1.50	$18.00
2. Black Mirror	$0.25	$3.00
3. Castaway on the Moon	$0.25	$3.00
4. Rake	$1.25	$15.00
5. Shaolin Soccer	$0.50	$6.00
6. Sidewalls	$0.25	$3.00
7. Snatch	$0.25	$3.00
8. Spaced	$1.00	$12.00
9. The League	$0.75	$9.00
10 The Man From Earth	$4.00	$48.00
	$10.00	$120.00

Believe you me... it was not easy to come up with the allocation!  This is a perfect example of one of the most important economic concepts... opportunity cost.  Every allocation requires the sacrifice of alternative allocations.  A dollar that I spend on The Man From Earth is a dollar that I can't spend on any of the other movies/shows that I also love.  This is why it's informative when I do give a dollar to The Man From Earth.  If we don't have this chance to accurately communicate our valuations... then it's a given that society's limited resources will not be put to their most valuable uses.  Producers can't make informed decisions when the bulk of information is locked away in our heart of hearts.

Opportunity cost is the key to unlocking hearts.  This is why "quarters up" would speak louder than "stars up".   Do "stars up" have an opportunity cost?  Nope.  Do "thumbs up" have an opportunity cost?  Nope.  Allocating a "thumbs up" to a video doesn't require the sacrifice of alternative allocations.  Youtube gives everyone a "thumbs up" to spend on every video.  It doesn't cost Youtube a thing to supply an infinite number of thumbs.  Thumbs are cheap.  Stars are cheap.  Talk is cheap.  Quarters?  Not so cheap.  Youtube would go broke if it handed them out like thumbs.

Every valuable resource has an infinite number of different uses.  These different uses have to be prioritized... but they can't be correctly (efficiently) prioritized when consumers aren't given the chance to prioritize.  We can only arrive at the truth of people's priorities by giving people the chance to put their money where their mouths are.  True priorities are a function of personal sacrifice.

Right now there are a vast multitude of people stuck doing jobs that they really hate.  This is the logical consequence of countless sectors that haven't made it stupid easy for people to put their money where their mouths are.  If these sectors implemented MMC + DV then people who are vastly underemployed would be given significantly better options (builderism).

As more and more sectors implemented MMC + DV, the demand for cool jobs would increase.  As a result, the supply of labor would shift accordingly.  When you have more people doing cool jobs... there are less people available to do crap jobs. If the demand for crap jobs stays the same... but there's a decrease in the supply of available labor... then the cost of labor (wages) for crap jobs would increase.  This means that, if you want somebody to do a crap job... then you're going to have to pay them more to do it.

Better options are a function of the efficient allocation of resources.  And what does the efficient allocation of resources depend on?  Accurate information.

Let's get a little technical

It seems like the two main approaches to "quarters up" are in-house and out-house.  Uh.  Maybe internal and external.

Internal

This is the system that I mentioned in this blog entry... Fee.org - Thumbs Up vs Quarters Up.  You would pay Fee.org, for example, $12 dollars and they would credit your account accordingly.  This would allow you to spend 48 "quarters up" or 120 "dimes up" or 240 "nickles up".  When you gave an article a "quarters up", there wouldn't be any "real" money involved.  Your bank wouldn't be involved... Paypal wouldn't be involved... your credit card wouldn't be involved... there wouldn't be any transaction costs... it would just be Fee.org updating some numbers in its database.  Real money would only be involved when you've ran out of "quarters up"... or content creators wished to cash out.

External

This system would be similar to how Disqus works.  None of the comments on Fee.org articles are stored in their own database... they are all stored in Disqus databases.  In terms of micropayments... none of the transactions would be tracked by Fee.org... they would all be tracked and stored by a third party.  When you clicked the "quarters up" button for an article on Fee.org... the information would be sent to the third party who would update their database accordingly.  Just like a third party is responsible for keeping track of and "serving" how many times this article... Steal Our Stuff, Please... has been shared... a third party would be responsible for keeping track and "serving" how much money has been spent on it.

The internal approach isn't at all technically difficult.  It's not fundamentally different than Youtube keeping track of how many "thumbs up" a video has received or Flickr keeping track of how many "faves" a photo has.

Like I mentioned, I don't know of any sites that use "quarters up" for content.  According to the Wikipedia entry for micropayments... some work has been done in this area... but most of it hasn't been successful.  Perhaps Flattr is the closest example of an external "quarters up" system.  On their website they say in big bold letters... "Add money to your likes"... which is really great!  But...when you scroll down you'll discover that they also say this...

One budget for all microdonations - Support all the creators you want without thinking about the cost. The monthly budget you choose is divided by the number of flattrs you make.

Not so great.  It's better than Facebook "likes", but it's definitely not as good as a "quarters up" system.  This is because with Flattr's system you're lifting all your favorite content equally high.

Take another look at my monthly allocation for Netflix...

With Netflix's current system... all I can do is give all these shows/movies 5 stars.  There's no opportunity cost involved so there's a huge communication failure.  Flattr's system would be better because I'd only choose to allocate my money to these shows/movies. I'd be putting my money where my stars are... so there would be some opportunity cost involved.  This means that the communication wouldn't be as big of a failure.  The problem is that my favorite shows/movies would all be bundled together.  So with Flattr's system I'd be communicating that I value all these shows/movies equally.  Which, as you can see from the graph, is entirely untrue.  I really don't value Black Mirror as much as I value The Man From Earth.

Flattr's definitely on the right track though so I'll send them a link to this entry.  It would be really outstanding if they could adjust their system so that it's based on sound economics.

Doing a bit more digging into micropayments I found this Stanford project... Micropayments: A Viable Business Model?  I've only just skimmed it but it seems like a pretty great overview... especially the tab/section on solutions.  Rather than the internal/external approach that I used... they have three categories for micropayments...

1. Pay-As-You-Go
2. Prepay
3. Postpay

They give descriptions, pros/cons and examples of each.  They conclude that, because of the transaction costs, the pay-as-you-go form is a no-go.

The prepay form is pretty much what I had in mind.  Out of the examples that they give... the most relevant seems to be an online gaming website... Nexon.  You give them real money and they give you their currency which you can spend on (allocate to) whichever games of theirs most closely matches your preferences.  I think all the games are produced by Nexon.... but the mechanism is pretty much the same.  So if I had to share one website with the editor of Tablet magazine then it would probably be Nexon.  It does, however, take a bit of imagination to make the connection between "quarters up" for games and "quarters up" for articles/comments.  But as every good economist knows... every allocation is a gamble!

Tablet currently uses TinyPass online payment system in order to charge people to submit comments on their articles.  From what I read, TinyPass indicated that Tablet is the only customer they have that puts comments behind a paywall.  Looking over TinyPass's website... it seems that all their other customers use more or less standard subscription models.  I'd definitely be interested to know TinyPass's thoughts on the feasibility of their customers giving subscribers the chance to "quarters up" their preferred content.

Determining the optimal MMC

Right now neither Blogger or Medium have an MMC.  Or, we could think of it as both of them having an MMC of $0.00/year.  If Medium increases its MMC to $6.00/year... and makes it stupid easy for members to "quarters up" their favorite entries... then Medium would be more effective than Blogger is at facilitating trades. If you're going to blog... then why not blog where it's stupid easy for readers to give you money?  Google's not dumb though.  So Blogger would increase its MMC to $10/year... and also make it stupid easy for members to "quarters up" their favorite entries.  If Blogger writers started to make more money than Medium writers... then Medium would increase its MMC to $14/year.  If Blogger writers still continued to make more money than Medium writers... then perhaps $10/year is closer to the optimal MMC than $14/year.

We can imagine that with an MMC of $6.00/year... given how stupid easy it is for readers to "quarters up" their favorite entries... we can guess that lots of people are going to run out of quarters half way through the year.  That equals 4 "quarters up" per month.   And since these readers clearly enjoyed helping to lift their favorite entries... it will be worth it for them to pay for another 24 quarters.  Conversely, if the MMC is say $18.00/year... then maybe by the end of the year there would be plenty of people with unspent quarters.

We can run through the same exercise with Youtube vs Spotify.  Which sector would make it more stupid easy for me to trade with Rob Crow?

There's an infinite number of ways that a sector can help to facilitate trades.  "Quarters up" is one such way.  If Tablet successfully implements "quarters up"... then it will be extremely easy to see all the trading that is being facilitating.  We'll be able to see how much money is spent on each and every article.  We'll be able to see how much money is spent on the most valuable comments.  This information would motivate other sectors to follow suit.  They would be incentivized to adopt this superior "trait".  Any sector that failed to do so would lose resources to "fitter" sectors of the economy.

It would be survival of the fittest markets.  When a website implements "quarters up"... it's no longer just a website... it essentially becomes a market within a market.  We'd have thousands and thousands of websites all striving to become better markets.  Why?  Because there would be millions and millions of producers and consumers all striving to participate in better markets.

My main argument is that it's better when demand is clarified.  With this in mind...

The same illustration as earlier but I added a bit of insight.  You can see that there's a huge disparity between how much I paid for the book and how much I valued it.  I'm not saying this was the case in real life when I purchased Cohen's book... I'm just trying to clarify the concept.

Everybody loves getting a deal.  In this illustration you can clearly see that I'm getting an excellent deal.  It's really easy to believe that markets are quite wonderful when consumers get a bunch of really great deals.  But, when we embrace and fully appreciate the idea that money is a message... then when we pay the really wrong amounts of money... we send the really wrong messages to producers.  And consumers really don't benefit when they send the wrong messages to producers.  A much larger future benefit is sacrificed for a much smaller momentary pleasure.  We end up with more of what we want less and less of what we want more.

This concept has all sorts of broad reaching implications.  Some are easy for me to reach... while others remain tantalizingly just out of reach.  One easy implication to reach is that taxpayers should be able to choose where their taxes go.  Another easy implication is that each and every school should be a market within a market.  What's harder to reach is the implication when it comes to truly private goods...like shoes.    If we really don't want to send the wrong messages when it comes to public goods... hence the need for MMC + DV... then why in the world would we want to send the wrong messages when it comes to private goods?  But does this mean that we need MMC + DV for private goods as well?  Uhhh...

Let's shelf private goods for a second and think about MMC + DV for public goods.  When we have thousands of websites striving to become better markets... the "winners" will be the markets that do a better job of ensuring that payments accurately communicate values.  Consumers in these better markets will send more accurate messages... and, as a result, producers in these markets will be able to make better informed decisions.  The supply will more accurately reflect the demand.  Society's limited resources will be put to more, rather than less, valuable uses.  Markets with better information will produce more benefit.

When more people see, understand and study this process... then we'll be able to better determine how we might apply MMC + DV to private goods.  Given enough eyeballs, all Easter Eggs are exposed (Linus's Law).

Exclusion

Right now Netflix prevents non-members from "consuming" its content.  This is an example of exclusion.  If Netflix allowed its members to "quarters up" content... then would Netflix still exclude non-members?  If it did, then would this facilitate trade... or hinder it?

At first glance it seems straightforward that there might not be very many people who would pay $10.00 dollars per month for content that they can get for free.   After all... everybody wants a free lunch...

One of the selling points is that Tidal is “artist-friendly,” but as plenty of people have pointed out, if the average person cared all that much about artist royalties, Napster never would have happened. - Cortney Harding, TIDAL Wave or Shallow Pool?

Then again, the non-profit sector isn't exactly small.  More specifically... consider the musician Amanda Palmer.  She tried to raise $100,000 on Kickstarter but... she ended up with a bit more.  And thanks to Patreon (Amanda Palmer is Creating Art) she receives nearly $30,000 for every thing that she creates.  If you're even vaguely interested in the topic then I highly recommend watching her TED Talk... The Art of Asking.

Let's say that there's a knock on my door.  I open it and lo and behold... it's Frank, from the future.  He informs me that 50 years from now... exclusion and MMCs will have both been removed from the market "gene pool".  It turns out that they discovered a certain combination of different market "traits" that were far more effective at facilitating trades.  Would I be surprised to learn this?  Maybe a little bit.  Mostly about the 50 years part.  I'm pretty sure I'm the Herman Melville of economics.

Odds and ends

This entry is pretty much over... except for a few odds and ends.  If I was a better writer then I wouldn't have so much stuff left over.  Kinda like how a better surgeon doesn't have so much stuff left over after he operates.

You'd want to work harder/longer/smarter...

... if it was stupid easy to spend money in the Youtube sector of the economy.  Is this true?

If someone like Sten could individually choose the level of environmental quality, he would choose a higher level than the level set by the collective choice of society given his personal marginal cost.  In turn in order to pay for this higher level of environmental quality, Sten would work more. - Nicholas Flores, Philip E. Graves, The Valuation of Public Goods: Why Do We Work? 

Who's my Netflix buddy?  

Right now Netflix has around 50 million members.  Which of these 50 million members has a monthly allocation that most closely matches my own?  Who's my Netflix buddy!!??

In An Explanation and Some Reflections... Reed Hastings says...

For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.

He also says...

In hindsight, I slid into arrogance based upon past success. We have done very well for a long time by steadily improving our service, without doing much CEO communication. Inside Netflix I say, “Actions speak louder than words,” and we should just keep improving our service. 

So what have we learned from Reed Hastings?

1. Become great at new things that people want
2. Actions speak louder than words

I'm sure Hastings will agree that "quarters up" speak louder than "stars up".  Right?  And then Netflix will move too fast in this direction.  Right?

Speaking of content buddies...

Who in the world gave this song the most money??!!  It would be awesome to be able to click on the $250.01 and find out.  There'd be a list of members sorted by how much they allocated to this song.  When I clicked on the member at the top of the list... Frank??... his page would have a tab for recent valuations and a tab for highest valuations.  What songs/videos would I find?  Probably other artists that I'd also want to give some "quarters up" to.  This is just one way, out of an infinite number of ways, that Youtube and other sectors could facilitate trades.

Bryan Caplain hates bad questions

In a really nice bit of synchronicity... the economist Bryan Caplan recently posted a blog entry that focused on a problem with seminars and how it can be fixed.  Here's how he starts off...

I'm sick of academic seminars.  Even if the presenter has a good paper and speaks well, the audience ruins things.  How?  Two minutes into any talk, the fruitless interruptions begin.  Half the time, they're premature quality control: "Are you going to deal with ability bias?"  "Uh, yes.  On the next slide."  The other half the time, they're bizarre pet peeves.  "How does this relate to sequential equilibrium?"  "Uh, it doesn't.  It's an empirical paper."  "Yes, but that reminds me of something Rudi Dornbusch once said.  Now I'm going to talk for four minutes."

Caplan's predicament was pretty darn close to Tablet's predicament.  But wait!  There's a twist!  Tablet's solution was a lot more economical than Caplan's solution.  Rather than attempting to determine people's willingness to pay for the opportunity to question/comment... Caplan's solution simply involves telling people to hold their questions until the end.  Somehow this would make it "easier for the speaker to filter out bad questions". 

Reading through the comments... I managed to find one that was a lot closer to the "best" solution....

The answer is simple:
Have some kind of chat room or reddit-like thread open where people can post questions and you can see them on a screen. Between slides look down, if there's something important that you're not already going to answer, answer it, if not, move on. - Borrowed_Username

Very close!  But rather than simply having the crowd ballot vote for the best questions/comments... the crowd could "quarters up" the most valuable questions/comments.  People in the audience could get paid for posting valuable questions/comments!  How cool would that be?  

In an earlier comment Tyler Cowen wrote, "I find this an oddly non-Caplanian post."  I agree.  But it's certainly quite useful for illustrative purposes.  

In defense of trolls

This may come as a huge shock, but I've been accused of trolling before.  Maybe once... or twice.  So I was very tempted to share this passage by J.S. Mill in my letter to the editor of Tablet...

Mankind can hardly be too often reminded, that there was once a man named Socrates, between whom and the legal authorities and public opinion of his time, there took place a memorable collision. Born in an age and country abounding in individual greatness, this man has been handed down to us by those who best knew both him and the age, as the most virtuous man in it; while we know him as the head and prototype of all subsequent teachers of virtue, the source equally of the lofty inspiration of Plato and the judicious utilitarianism of Aristotle, "i maëstri di color che sanno," the two headsprings of ethical as of all other philosophy. This acknowledged master of all the eminent thinkers who have since lived—whose fame, still growing after more than two thousand years, all but outweighs the whole remainder of the names which make his native city illustrious—was put to death by his countrymen, after a judicial conviction, for impiety and immorality.  To pass from this to the only other instance of judicial iniquity, the mention of which, after the condemnation of Socrates, would not be an anti-climax: the event which took place on Calvary rather more than eighteen hundred years ago. The man who left on the memory of those who witnessed his life and conversation, such an impression of his moral grandeur, that eighteen subsequent centuries have done homage to him as the Almighty in person, was ignominiously put to death, as what? As a blasphemer. - J.S. Mill, On Liberty

Epiphytic thinking

What about Uber for Welfare?  I really want to like it but, unfortunately, Miles Kimball and Scott Sumner like it.  Seriously though... I do want to like it.  But it would require ignoring everything that I've endeavored to explain in this entry.  They say that repetition helps with learning so...

Is this a better market?  Nope.  Andrew Cohen's megaphone ends up being a lot smaller than it really should be.  Now here's what Morgan Warstler is recommending...

Is this a better market?  Nope.  Andrew Cohen's megaphone ends up being a lot larger than it really should be.  Poverty is the logical consequence of society's failure to understand the problem with people's megaphones being the wrong sizes.  Nobody truly benefits when we violate Quiggin's Implied Rule of Economics.  Even when somebody ends up with a much larger megaphone than they really should have... then just imagine some rich guy who's got it all... including cancer.  I'm not saying that cancer would already have been cured by now if megaphones were the correct sizes... I'm saying that nobody's balance is as beneficial as it really should be.  Again, we end up with more of what we want less and less of what we want more.

What about Star Trek?

I sort of love that Star Trek forces us to think about a society that has no money but still operates with individual freedom and without central planning. I love that democracy is still in place. I love that people can still buy and sell things. It’s real. It’s a more realistic vision of post-capitalism than I have seen anywhere else. Scarcity still exists to some extent, but society produces more than enough to satisfy everyone’s basic needs. The frustrating thing is that we pretty much do that now, we just don’t allocate properly. And allocating properly cannot be done via central planning. - Rick Webb, The Economics of Star Trek

It's a very entertaining entry... and it's certainly true that we aren't allocating properly and central planning isn't the solution.  But Webb doesn't explain that the reason that we aren't allocating properly is because consumers aren't given the opportunity to send the right messages.

Want some more epiphyte on epiphyte action?  Ok...

Futarchy
Proprietism
Quadratic voting
Razotarianism

Medium

I joined Medium!  Consider these snippets...

At Medium, how we work is just as important as the product we work on, and growing as an individual is just as important as contributing to the organization. We constantly look for new ways to better ourselves. -  Gianni, Watching Medium

When considering potential partnerships for your business, you might be missing a big opportunity for collaboration right in front of you — your audience. - Brian Honigman, Startups, Partner With Your Audience 

But that type of thinking— and guys like me, who work in media but haven’t done anything to help support creative industries— is why these businesses are crumbling on all sides. You can’t just take take take. You have to give back. Because these systems are vital to the creation, transmission, consumption and exchange of ideas. And those ideas are what make our society great. - Paul Cantor, Why I Started Paying for Music, Movies, Newspapers and Magazines Again

Napster was awesome because it made taking stupid easy.  Will Medium be even more awesome because it makes giving stupid easy?   Will Medium make it stupid easy to give this entry a "quarters up"?  Will Medium get the quarter rolling?  Or will it be Fee.org?  Or Tablet?  Or Reed Hastings?  Whoever it is... hopefully they'll do it sooner rather than later!

See also

• Crowd Sponsored Results
• The Satt - Economic Coherence Test
• Data Mining Reveals How The “Down-Vote” Leads To A Vicious Circle Of Negative Feedback
• #BeTheChange? Hit ‘Em Where It Hurts!
• Business Ecosystems
• A Sense of History (errrr...)

See also update [3 Apr 2015]

Just stumbled upon this excellent and relevant article... Our economies are messed up. And the cause is the Internet.  I probably should have searched Medium for "micropayment" before I posted this!

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