Beautiful = Very Efficient Allocation Of Resources

Reply to comment:  Economic arguments as stalking horses

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Jumble of words? I inefficiently allocate words? Are you accusing me of violating Quiggin's Implied Rule of Economics?

QIRE = Society's resources (ie "words") should be put to more, rather than less, valuable uses

QIRE = Society's resources (ie "sounds") should be put to more, rather than less, valuable uses.

My gf was loudly chewing and I was unable to concentrate. I was like, "Hey! Would you mind not violating QIRE?!"

She ignored me... as usual. So I started playing this song... Peacock Tail by Boards of Canada.

Oh shit. It's so beautiful.

Beautiful = very efficient allocation of resources

Would you agree that Peacock Tail is so beautiful? Or do you think it's a jumble of sounds? Do you want to argue that Boards of Canada violate QIRE?

For me, Peacock Tail is heaven. But the rest of life... not so much. There's a big disparity.

You know where BoC are from? Scotland. You know who else was from Scotland? Adam Smith. Adam Smith allocated words like BoC allocates sounds.

The Wealth of Nations = Peacock Tail

Unfortunately, I'm not from Scotland. I'm from California. This is my excuse for jumbling words.

Does Noah Smith jumble words? Well... he's written quite a few blog entries. But I sure don't see heaven in them. He wants the government to do a lot... but there's no assurance that the government will put society's resources to their most valuable uses.

Either Noah's hiding a huge assumption... or he's hiding a huge answer. But why would he hide a huge answer?

Here's Adam Smith's answer...

"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."

Oh shit! So beautiful!

Hey Noah Smith! What about the government? Is there ever a faulty distribution? If so, then how is it altered? By voting? We should trust people's words? Even Paul Samuelson realized that we can't trust people's words.

After 911... what was the demand for war? Do you know? If so, how? If not, then why don't you care that you don't know?

The world will be a lot closer to heaven when enough people understand the problem with not knowing the demand for war.

Aikido, Dune and Taxes

On some forum an anarcho-capitalist asked me how to get rid of taxes. This was my reply...

People say the only two certainties in life are death and taxes. Taxes have probably been around for a lot longer than 2000 years. By trying to fight taxes you're pretty much going up against an immortal. You are not going to defeat this opponent by tackling it head on.

Aikido is a pretty good martial art if you want to go up against an opponent that is far bigger than yourself. It teaches you how to use your opponent's size and strength against them.

Pragmatarianism is the political equivalent of Aikido. It's the only way that you're going to be able to defeat taxes.

The first move in pragmatarianism is by far the hardest. It is to completely embrace the tax rate. This will feel totally unnatural for conservatives, libertarians and anarcho-capitalists. But you most not fear. Because fear is the little-death that will bring total obliteration. You must face your fear. You must permit it to pass over you and through you. And when it has gone past you will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only you will remain.*

If you don't face your fear then you'll never get close enough to your opponent in order to apply the invisible hand technique. This is the second move...taxpayers will directly allocate their taxes among the various government organizations at anytime throughout the year.

Once you apply the invisible hand to government then people's spending decisions in the private sector will determine their spending decisions in the public sector. This is the key concept. If the Red Cross is more effective and efficient than FEMA then people who value disaster relief might not allocate any of their taxes to FEMA. If FEMA loses all funding then the scope of government will narrow. As we already know, narrowing the scope of government will lower the tax rate.

At this point your opponent will be off balance. To utterly destroy your opponent you'll need to ensure that there are private organizations that make every single government organization completely redundant. Not only that but these private organizations must provide more bang for taxpayers' bucks than the government organizations.

The beauty of this concept is that, the more you try and defeat taxes the more we all benefit from the increased competition between the two sectors. Government organizations will either operate efficiently or they will be replaced by efficient private organizations. Either way we win.

Not only that but there's no logical reason for liberals to oppose this system. Everything is evidence based. No leap of faith is required.  The majority of taxpayers won't care whether an organization is public or private...they'll just spend their money on whatever organizations produce the best results at the lowest costs.

In reality though...I wonder which is more unlikely...libertarians accepting taxes or liberals accepting the invisible hand?

*Dune

Does Congress Have More Information Than Taxpayers?

There are quite a few people who believe that the average congressperson is better informed than the average taxpayer.  While this may or may not be true pragmatarianism doesn't deal with averages...it deals with sums.

When trying to figure out how to convey this idea I remembered a photograph that I took while stationed in Afghanistan.  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 outweighs the average Afghan kid...the cumulative weight of 5 kids equals that of the one solider.  

So the question is...how many taxpayers would it take to equal the public goods information of one congressperson?  If we say that there are around 150,000,000 taxpayers and 535 congresspeople then there are nearly 300,000 taxpayers for every congressperson.  How in the world could 1 congressperson effectively and efficiently evaluate as much information as 300,000 taxpayers could?

Even if 300,000 taxpayers only encountered 3 seconds worth of public goods information in their daily lives they would still consider 10 times more information than one congressperson working 24 hours a day could.  

Obviously we need congresspeople to write laws but there's just no way that they can allocate public resources as effectively or as efficiently as the invisible hand could.  Taxpayers should be able to choose to directly allocate their individual taxes to the various government organizations at any time throughout the year.  

What's very important to understand is that this system already works for the private sector...

As I've mentioned before, there are some major problems with gov't spending on programs. And these revolve around measurability and self-correction. When private businesses are running their businesses poorly and not delivering value, the free market drives revenues down and the business either corrects itself or it goes out of business. The gov't doesn't have such mechanisms. They often put in bogus measurements on how effective the program is, and when it doesn't work the first year, they double down and put more money into the program. No self-correction mechanism. - James L, Greta Wire Blog

The government can easily have the same self-correcting mechanism by allowing taxpayers to decide which government organizations receive their taxes.

For this is the salient point: private organizations, whether for-profit or non-profit, perform or lose their customers or their donors. When a private entity fails to deliver on its promise, or actually causes harm, it is held liable for the failure and pays the damages. When government fails, it gets a bigger budget and even more power. - Mary L. G. Theroux, Public and Private Responses to Katrina

Given the choice, would you allocate any of your taxes to a government organization that continually fails to perform?

Because of the existence of consumer and donor choice, private services are rarely offered by only one provider -- there is competition for funding which encourages both quality and affordability as service providers seek to outdo one another. Government services, however, tend to be monopolies because they do not have to fight for funding from countless individual sources. - Bryan, The Government Vs Private Charity

Giving taxpayers a choice is fundamental.  Forcing government organizations to fight for funding from countless individual taxpayers is the only way to ensure that government operates efficiently.

Charitable organizations are better than government as a source of aid. First, it is easier for donors to hold charitable organizations accountable than it is for taxpayers to hold government accountable. A failed government program can go on forever. An ineffective charity has a more difficult time obtaining funding. - Arnold Kling, Libertarianism and Poverty

It's not difficult to make it easy for taxpayers to hold government accountable.

Although the term 'NPM' suffers from a degree of concept stretch, Hood (1991) sets out some broad reformist priniciples in which the public choice heritage can be clearly observed. The first is that the focus of public sector reform should be on structural reorganization rather than policy. It is the structure of the public sector that fails to provide adequate incentives for the public sector organizations to respond to citizens' preferences for government goods and services. The provision of public services should be made more competitive, both between publilc sector providers and between the public and private sectors. Contracting out, quasi markets and seperation of the questions of who pays (public finance) from who provides (public provision), are all hallmarks of NPM. They follow from the government failure logic and the objective of greater efficiency in particular. As discussed above, individual contracts in the public sector will generally fail to provide efficiency-enhancing incentives, but the public choice view is that increased competition in the provision of public services will. - Patricia Kennett, Governance, globalization and public policy

The concepts of New Public Management (NPM) seem to be the closest to pragmatarianism.  

We have to pay taxes but there's no reason why the act of paying taxes can't simultaneously force government to be accountable to the people who fund its existence.   

Justification for Government

On Kent's "Hooligan Libertarian" Blog I was asked..."Do you have a justification for government?".  I'm guessing that the person who asked the question is an anarcho-capitalist so that's how I'll approach it.

The founder of anarcho-capitalism, Murray Rothbard, really hated the state.  He said if there was a button that would completely destroy all of government in an instant...then he would push that button until his thumb blistered.  If, after pushing that button, it turned out that a state was necessary…then what?  Do we just hit ctrl + z?

To his credit, Rothbard didn’t just hate the state because he hated paying taxes.  He wrote numerous books with detailed explanations how the free-market could provide all public goods better than the state.  Were his explanations any good?  Liberal academics didn’t think so…they were considerably more threatened by the limited government ideas of Robert Nozick.

If the free-market can provide all public goods better than the government can, then is government justified?  It’s a Catch 22 though because the only way we can truly know if government is redundant is by getting rid of government.  Most would agree this approach is too risky…and since we live in a democracy…we have to take the majority’s opinion into consideration.  

Rather than one button that would destroy government in one fell swoop…what if all tax payers had a button that when pushed would deprive redundant government organizations of their tax dollars?  This is the pragmatarian approach.

If a government organization is redundant…but none of your taxes fund its existence…is there any reason to hate that government organization?

I’d say that at least 99.9% of people think at least one government organization is absolutely necessary.  For you .1% of people that think otherwise…the solution is simply to work together to provide free-market alternatives to that one government organization.  

The more say people have how their taxes are spent the more justified a government is.  The American Revolution occurred because people were being taxed without representation.  

The current government is only partially justified because people only have a very imperfect say with regards to how their taxes are spent.  They lose their say if the person they vote for is not elected and there's no guarantee that a representative will accurately represent the interests of the people who voted for them.

Incidentally, in contrast to the anarcho-capitalist perspective of hating the state...Reason magazine shared five reasons why libertarians should love the state.  My favorite is number #4..."Government bashing alienates those you want to reach"...

Incessant government-bashing may make you feel good, but alienates most everybody who knows and loves a police officer, firefighter, teacher, social worker, anyone who has ever collected an unemployment check, and anyone who saw NASA put a man on the moon.

Government Efficiency

Last month Tad DeHaven wrote an article on government efficiency... ‘Government Efficiency’

The article was based on the premise that "government cannot operate like a business because it isn’t a business." True or false?

False! Government can easily operate more like a business simply by allowing tax payers to decide which public goods they "purchase" with their taxes. Because of free-riders we can't allow people to choose whether they pay taxes but we can allow people to choose which public goods their taxes help fund. This would force government organizations to compete for our taxes and the result would be greater government efficiency.

In the aftermath of Mao Zedong's devastating policies Deng Xiaoping led China from a command economy to a market economy. His most famous saying was that he didn't care if a cat was black or white...as long as it caught mice. In other words...results matter more than rigid adherence to ideology. This is the foundation of pragmatarianism.

Political Ideology Diagrams

Here are a few diagrams I created to help illustrate that tenets can be used to help define where one political ideology ends and another political ideology begins.

The first political ideology Venn diagram depicts shared tenets while the second and third bell curve, public goods spectrum diagrams depict the scope of government.

The scope of government* should be determined by allowing taxpayers to directly allocate their individual taxes among the various government organizations.  For example, at anytime throughout the year you could visit the Environmental Protection Agency website and directly submit a tax payment.  This is known as pragmatarianism and/or tax choice.

Liberals believe that the government should do a lot more (have a broader scope) while conservatives and libertarians believe that the government should do a lot less (have a narrower scope).  In a tax choice system, if the Red Cross is more effective and efficient than FEMA then people who value disaster relief might not allocate any of their taxes to FEMA. This would narrow the scope of government.  Conversely, because private healthcare is so expensive perhaps more and more taxpayers might allocate their taxes to public healthcare.  The amount of money that public healthcare received would determine what percentage of the population qualified for coverage.  This would broaden the scope of government.  Allowing for a division of labor between taxpayers would reveal the proper scope of government.

One significant problem with the current system is that without allowing taxpayers to consider the opportunity costs of their taxes then there's no way for the government to know how to prioritize spending.  Somebody can say that they value defense, public healthcare, infrastructure, etc but the only way to accurately determine exactly how much they truly value infrastructure is by giving them the freedom to choose how much defense and public healthcare they would be willing to forgo in order to pay for more infrastructure.  Tax choice allows taxpayers to reveal their preferences which is the only way that public funds can be efficiently distributed among the various government organizations.

Pragmatarianism also solves the problem of government inefficiency.  Organizations in the private sector are forced to operate efficiently or they either lose customers (in the case of businesses) or they lose donors (in the case of non-profits).  Government organizations currently receive the same amount of money irrespective of how well they use it.  Without a strong incentive to operate efficiently they have become extremely inefficient.  With pragmatarianism, taxpayers would not willingly give their taxes to a government organization that would just waste their money.

*For a highly entertaining yet very informative historical perspective on the scope of government please see Herbert Spencer's comment at the end of my post on Absurdity-Spotting.

Here is the political ideology Venn diagram.  This diagram helps illustrate that libertarian socialism can more accurately be thought of as anarcho-socialism.

Here is the public goods spectrum / scope of government bell curve diagram.  On the far left the government would provide all the goods (socialism) and on the far right the market would provide all the goods (anarcho-capitalism).  As I mentioned above, allowing for a division of labor between taxpayers would reveal the ideal division of labor between the public and private sectors.  

Here is the same public goods spectrum / scope of government bell curve diagram.  The difference is that it depicts the liberal spectrum.  

Thanks to karmaisking for his suggestion to include control of money/banks on the diagrams!