My comment on Bob Murphy's blog entry... For the Purposes of the Current Debate, I Don’t Think Hayek Supported a “Basic Income Guarantee”
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Three years ago on Medium the liberal economist James Kwak also made the case that Friedrich Hayek supported basic income. I responded to his story with more or less your same point... that he was neglecting the context.
Now, three years later, for me the real issue is that Kwak doesn't understand what markets are good for. Markets are incredibly useful because correctly guessing demand is incredibly difficult. The crazy thing is that this critique of Kwak's understanding is also applicable to even the staunchest market defenders such as yourself. This is easy enough to prove.
Here you supplied a story about basic income. But what would you guess is truly the demand for this topic? Again, if correctly guessing demand was so easy, then markets wouldn't be so useful. Your blog is not a market... therefore it's clear that you don't truly understand what markets are good for.
Turning your blog into a market would be really easy. Readers could simply "donation vote" (DV) for their favorite stories. DV is most commonly associated with people using donations to decide who will kiss a pig, or get a pie in the face, or get dunked into a water tank. Sometimes zoos use it to name a baby animal. But DV is also used to rank/sort/order/prioritize all the non-profits in the world. The Red Cross, for example, receives very many donation votes which is why it can use a very large portion of the world's limited resources.
Right now FEE is searching for a new president. How are the candidates going to be ranked? They definitely aren't going to be ranked by DV. Therefore, FEE doesn't truly understand what markets are good for.
Last year, much to my very pleasant surprise, the libertarian party (LP) used DV to choose its convention theme. Unfortunately, the LP didn't also use DV to choose the convention location, date and speakers. So just because an organization uses DV doesn't guarantee that it knows why the market is so useful.
The market is an incredibly useful tool. On a daily basis we use this tool to help each other prioritize. Yet, the LP has only once used this tool to improve its own priorities. FEE has never used this tool to improve its priorities. As a pro-market blogger you're in the same boat. Strange as it might seem, right now I'm the only person preaching the benefits of DV. Does this mean that I'm the only person in the world who truly understands what markets are good for? I guess. I'm the only person in this boat. Either I'm in the wrong boat, or everybody else is. I'd really hate to be in the wrong boat so please, if you think that I am, then I'm all ears. Make the case that some producers, such as pro-market bloggers, should be exempt from receiving specific and substantial feedback from consumers. Or make the case that cheap signals are just as credible as costly signals.
Showing posts with label libertarianism. Show all posts
Showing posts with label libertarianism. Show all posts
Monday, June 18, 2018
Thursday, July 27, 2017
The Relationship Between Importance And Validity
Here's my reply to Adam Gurri's comment on my previous entry.
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Thanks for taking the time to read the entry and comment on it.
For me the originality (or lack thereof) of Rothbard's work isn't the main issue. The impression that you gave was that all of his work was merely "rights" arguments. I wanted to help you appreciate that this is really not the case.
From my perspective, the value of Rothbard's results arguments is that he correctly diagnosed the fundamental problem with government. He understood and argued that the government is no more capable of getting the supply of defense right than it is capable of getting the supply of food right. The same really can't be said for any minimal government libertarian (ie Milton Friedman, Hayek, Mises).
For Rothbard the "therefore" was anarcho-capitalism. I disagree with his remedy but agree with his diagnosis. From my perspective, Buchanan's "therefore" was much better: taxpayers are given the option to earmark their taxes. The supply of defense would more accurately reflect the true demand for defense.
You don't believe that the supply of defense should be determined by demand. Instead, you believe that it should be determined by "defending the best *reasons* for and against doing so". You make it sound like the debate over defense and the demand for defense are mutually exclusive. But they really aren't.
We can imagine that Samantha is a hard-core vegetarian. Everyone else in her family loves to eat meat. Quite frequently they have fierce debates over vegetarianism. When they do so they exchange copious amounts of information on the topic. For example, Samantha endeavors to introduce them to progressively better meat substitutes. The copious amounts of information exchanged among the members results in both sides being far more informed on the topic. At the end of the day it's still entirely up to each family member to decide for themselves how much meat to purchase. The spending decisions are made by, rather than for, the family members.
The same thing would occur if...
1. Unlike her family, Samantha was a hard-core pacifist
2. People could earmark their tax dollars
The defense spending decisions would be made by them. Right now the defense spending decisions are made for them.
The passages that I shared by Rothbard, Buchanan and Ostrom all made the case, more or less, that people should make their own defense spending decisions. These thinkers were all against, more or less, defense spending decisions being made for the people.
Unlike these thinkers, you haven't made your position on the issue exactly clear. It's not like there's a lot of options. Spending decisions are either made by the people, or for the people.
"do you *really* think the validity of an argument is dependent upon how much other people are willing to pay to read it?"
Lots of people were willing to pay to read Thomas Piketty's book. Does this make the arguments in his book more valid/correct/true? No. It makes them more important (worthy of attention). But it's necessary to appreciate that not everybody who purchased his book agreed with his arguments. The same can certainly be said for MacLean's book.
So let's remove the "purchase" aspect. People simply and solely use their money to help determine and reveal the importance of Piketty's book. Well... it doesn't work so well when there's only one book involved. Let's include the Wealth of Nations. People can decide how they divide their dollars between the two books. They aren't buying the two books, they are grading/judging the relevance/importance of the books with their own money. How would you divide your dollars between the two books? Does it matter? Would it be equally or more effective if you could just vote for one of the books instead?
Let's consider the issue of voting by looking at another example. I regularly go to plant shows. They are usually judged by a small group of experts. I strongly disagree with this system. It would be far better if everyone could divide their donations among all the entries.
Let's say that plant shows and dog shows were both judged using my preferred system. Would I spend more money at plant shows or at dog shows? I wouldn't even attend the dog shows. So I wouldn't spend any money at them. This is because I'm far more informed about plants. How I divided my dollars between dog shows and plant shows would reflect how my information was divided between dogs and plants.
What if Samantha manages to rope me into going to a dog show? Like I said, I certainly wouldn't spend any of my money to judge the dogs. But would I vote for the best dog? Sure. Why not? It wouldn't cost me anything to do so. Most of the people at the show would be in the same boat as me. The majority is always less informed than the minority on every conceivable topic. So with voting/surveys it's tyranny of the ignorant. With spending it's tyranny of the informed. With traditional judging it's tyranny of a small handful of experts without any skin in the game.
A while back I started a small informal plant society. In September we're planning to have a small show at a member's home. Each participant will bring one of their favorite plants. Then we'll each use our dollars to judge the relevance/importance of each other's plants. The money that everybody earmarks to their favorite plants will be used to promote a webpage that displays the entries sorted by their importance (as determined by spending).
If Samantha ropes you into attending this show, how much money would you spend on your favorite plants? I'm guessing that you wouldn't spend much, which would reflect your low level of plant information/interest. And because you wouldn't spend much, your low level of plant information wouldn't have much influence on the results/rankings. But let’s pretend that you’re super rich. Then, despite having low information, you could easily exert considerable influence on the results/rankings. This is why smaller markets are always worse judges of importance than larger markets.
Is my thinking original? That's not the right question. The right question is... am I barking up the right tree? Rothbard barked up a few different trees. Some trees were really wrong ("rights" arguments, anarcho-capitalism)... but one tree was really right (the fundamental problem with government). I have to recognize and commend him for barking up a very right tree. Of course it's possible that I'm wrong about the rightness of the tree. But it's not like Piketty or MacLean have come even close to disproving that it's the right tree. They don't even seem to be aware of Rothbard's best arguments, which are the same as the best arguments of Buchanan and the Ostroms. You certainly weren't aware of Rothbard's best arguments. But now you are. However, you really haven't clarified/defended your position on whether tax spending decisions should be made by, or for, the people. Well... you don't seem to think they should be made by the people. But you really haven't fleshed out a case that they should be made for the people. You should do so, if you want to avoid barking up the wrong tree.
I should probably spell out the relationship between importance and validity. Right now we don’t know just how important Rothbard’s two papers are to society. We don’t know the social importance of his two papers. I know how important they are to me, but I don’t know how important they are to Peter Boettke, Alex Tabarrok or anybody else. It’s certainly possible to see how many times Rothbard’s two papers have been cited. But if citations/votes were a good measure of social importance, then spending/shopping/markets would be a waste of immense amounts of time, energy and brainpower.
Because Rothbard’s two papers are important to me, I have taken the time and made the effort to bring them to your attention. So you now know that they are important to me, but you don’t know how important they are to me compared to Buchanan’s papers or the Ostrom’s papers. So you can't easily discern how I would want you to divide your limited time and attention between all their papers.
By bringing Rothbard’s two papers to your attention, I’ve given you the opportunity to scrutinize them. In computer lingo, you have the chance to try and debug them. Given enough eyeballs, all bugs are shallow (Linus’s Law). The more important Rothbard’s two papers are to society, the more attention that they should receive, the more rigorous, relentless and ruthless the inspection of their validity.
This is the relationship between importance and validity. Because we don’t currently know the true social importance of Rothbard’s two papers, their validity isn’t being optimally checked. The same is true of national defense. Because we don’t know the true social importance of national defense, its validity isn’t being optimally checked.
In all cases society’s attention/brainpower has to be divided somehow among a gazillion different things. How do we divide society’s limited resources? By voting? By spending? Or do we allow the division to be determined by a small handful of experts who don’t have any skin in the game?
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Thanks for taking the time to read the entry and comment on it.
For me the originality (or lack thereof) of Rothbard's work isn't the main issue. The impression that you gave was that all of his work was merely "rights" arguments. I wanted to help you appreciate that this is really not the case.
From my perspective, the value of Rothbard's results arguments is that he correctly diagnosed the fundamental problem with government. He understood and argued that the government is no more capable of getting the supply of defense right than it is capable of getting the supply of food right. The same really can't be said for any minimal government libertarian (ie Milton Friedman, Hayek, Mises).
For Rothbard the "therefore" was anarcho-capitalism. I disagree with his remedy but agree with his diagnosis. From my perspective, Buchanan's "therefore" was much better: taxpayers are given the option to earmark their taxes. The supply of defense would more accurately reflect the true demand for defense.
You don't believe that the supply of defense should be determined by demand. Instead, you believe that it should be determined by "defending the best *reasons* for and against doing so". You make it sound like the debate over defense and the demand for defense are mutually exclusive. But they really aren't.
We can imagine that Samantha is a hard-core vegetarian. Everyone else in her family loves to eat meat. Quite frequently they have fierce debates over vegetarianism. When they do so they exchange copious amounts of information on the topic. For example, Samantha endeavors to introduce them to progressively better meat substitutes. The copious amounts of information exchanged among the members results in both sides being far more informed on the topic. At the end of the day it's still entirely up to each family member to decide for themselves how much meat to purchase. The spending decisions are made by, rather than for, the family members.
The same thing would occur if...
1. Unlike her family, Samantha was a hard-core pacifist
2. People could earmark their tax dollars
The defense spending decisions would be made by them. Right now the defense spending decisions are made for them.
The passages that I shared by Rothbard, Buchanan and Ostrom all made the case, more or less, that people should make their own defense spending decisions. These thinkers were all against, more or less, defense spending decisions being made for the people.
Unlike these thinkers, you haven't made your position on the issue exactly clear. It's not like there's a lot of options. Spending decisions are either made by the people, or for the people.
"do you *really* think the validity of an argument is dependent upon how much other people are willing to pay to read it?"
Lots of people were willing to pay to read Thomas Piketty's book. Does this make the arguments in his book more valid/correct/true? No. It makes them more important (worthy of attention). But it's necessary to appreciate that not everybody who purchased his book agreed with his arguments. The same can certainly be said for MacLean's book.
So let's remove the "purchase" aspect. People simply and solely use their money to help determine and reveal the importance of Piketty's book. Well... it doesn't work so well when there's only one book involved. Let's include the Wealth of Nations. People can decide how they divide their dollars between the two books. They aren't buying the two books, they are grading/judging the relevance/importance of the books with their own money. How would you divide your dollars between the two books? Does it matter? Would it be equally or more effective if you could just vote for one of the books instead?
Let's consider the issue of voting by looking at another example. I regularly go to plant shows. They are usually judged by a small group of experts. I strongly disagree with this system. It would be far better if everyone could divide their donations among all the entries.
Let's say that plant shows and dog shows were both judged using my preferred system. Would I spend more money at plant shows or at dog shows? I wouldn't even attend the dog shows. So I wouldn't spend any money at them. This is because I'm far more informed about plants. How I divided my dollars between dog shows and plant shows would reflect how my information was divided between dogs and plants.
What if Samantha manages to rope me into going to a dog show? Like I said, I certainly wouldn't spend any of my money to judge the dogs. But would I vote for the best dog? Sure. Why not? It wouldn't cost me anything to do so. Most of the people at the show would be in the same boat as me. The majority is always less informed than the minority on every conceivable topic. So with voting/surveys it's tyranny of the ignorant. With spending it's tyranny of the informed. With traditional judging it's tyranny of a small handful of experts without any skin in the game.
A while back I started a small informal plant society. In September we're planning to have a small show at a member's home. Each participant will bring one of their favorite plants. Then we'll each use our dollars to judge the relevance/importance of each other's plants. The money that everybody earmarks to their favorite plants will be used to promote a webpage that displays the entries sorted by their importance (as determined by spending).
If Samantha ropes you into attending this show, how much money would you spend on your favorite plants? I'm guessing that you wouldn't spend much, which would reflect your low level of plant information/interest. And because you wouldn't spend much, your low level of plant information wouldn't have much influence on the results/rankings. But let’s pretend that you’re super rich. Then, despite having low information, you could easily exert considerable influence on the results/rankings. This is why smaller markets are always worse judges of importance than larger markets.
Is my thinking original? That's not the right question. The right question is... am I barking up the right tree? Rothbard barked up a few different trees. Some trees were really wrong ("rights" arguments, anarcho-capitalism)... but one tree was really right (the fundamental problem with government). I have to recognize and commend him for barking up a very right tree. Of course it's possible that I'm wrong about the rightness of the tree. But it's not like Piketty or MacLean have come even close to disproving that it's the right tree. They don't even seem to be aware of Rothbard's best arguments, which are the same as the best arguments of Buchanan and the Ostroms. You certainly weren't aware of Rothbard's best arguments. But now you are. However, you really haven't clarified/defended your position on whether tax spending decisions should be made by, or for, the people. Well... you don't seem to think they should be made by the people. But you really haven't fleshed out a case that they should be made for the people. You should do so, if you want to avoid barking up the wrong tree.
I should probably spell out the relationship between importance and validity. Right now we don’t know just how important Rothbard’s two papers are to society. We don’t know the social importance of his two papers. I know how important they are to me, but I don’t know how important they are to Peter Boettke, Alex Tabarrok or anybody else. It’s certainly possible to see how many times Rothbard’s two papers have been cited. But if citations/votes were a good measure of social importance, then spending/shopping/markets would be a waste of immense amounts of time, energy and brainpower.
Because Rothbard’s two papers are important to me, I have taken the time and made the effort to bring them to your attention. So you now know that they are important to me, but you don’t know how important they are to me compared to Buchanan’s papers or the Ostrom’s papers. So you can't easily discern how I would want you to divide your limited time and attention between all their papers.
By bringing Rothbard’s two papers to your attention, I’ve given you the opportunity to scrutinize them. In computer lingo, you have the chance to try and debug them. Given enough eyeballs, all bugs are shallow (Linus’s Law). The more important Rothbard’s two papers are to society, the more attention that they should receive, the more rigorous, relentless and ruthless the inspection of their validity.
This is the relationship between importance and validity. Because we don’t currently know the true social importance of Rothbard’s two papers, their validity isn’t being optimally checked. The same is true of national defense. Because we don’t know the true social importance of national defense, its validity isn’t being optimally checked.
In all cases society’s attention/brainpower has to be divided somehow among a gazillion different things. How do we divide society’s limited resources? By voting? By spending? Or do we allow the division to be determined by a small handful of experts who don’t have any skin in the game?
Saturday, March 18, 2017
A Scrap Of Pragmatarian History
Inspired by David Friedman's post... A Scrap of Libertarian History... I decided to share a scrap of anarcho-capitalist, libertarian and pragmatarian history.
Seven years ago I was still pretty much a libertarian. When I happened to check out the Wikipedia page for Libertarianism... I was really not happy with what I saw. Here's what I wrote on the Talk page...
What did I know about anarcho-capitalism? Not much! But I was sure that anarcho-anything really did not sit well with me and I endeavored to try and fix the page on libertarianism. Of course the an-caps weren't really happy with my efforts to kick them off the page.
One of the an-caps went to my talk page and tried to school me...
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Libertarianism is based on the simple concept that the freedom to swing your fist ends where somebody else's nose begins. If you punch somebody in the nose...then what? If you can get away with it then you have anarchism but if you're punished then you have libertarianism. Obviously you need some form of government in order to enforce that rule.
'Obviously'? Have you studied the issue? For a thousand years, then, ancient Celtic Ireland had no State or anything like it. As the leading authority on ancient Irish law has written: “There was no legislature, no bailiffs, no police, no public enforcement of justice.... There was no trace of State-administered justice.”[Joseph R. Pedea] For a New Liberty: A Libertarian Manifesto, Rothbard
For reference...see http://www.DownsizingGovernment.org/ Notice the website name? It's not called AbolishingGovernment.org
There are many billion websites on the internet. For example, http://www.abolishgovernment.com/
Wow. I just looked through some of the discussion on this page...you should be nominated for sainthood. Are you an elementary school teacher? Or do you work with the mentally challenged?
Is this civilized discussion?
...if we were any good at collective action the anarchists wouldn't be peeing all over our page.
'Peeing'? And what is 'our' page? You say you used 'your' because you call yourself a Libertarian. How do you know that others (your 'antagonists') don't? And wouldn't this 'bias' the page?
Anarchism...murder, mayham, rape, pillage, plunder, etc.
Have you studied the issue? How can you claim this? Common Sense may mislead! I suggest, and hope, that you will read more about Anarchism, specially why the proponents say it will work. In particular, if individuals have right to defend themselves, all that you name will (probably) not happen. Check this: http://flag.blackened.net/ Concerning Libertarianism, [Don B.] Kates makes another intriguing point: that a society where peaceful citizens are armed is far more likely to be one where Good Samaritans who voluntarily go to the aid of victims of crime will flourish. But take away people’s guns, and the public—disastrously for the victims—will tend to leave the matter to the police. Before New York State outlawed handguns, Good Samaritan instances were far more widespread than now. And, in a recent survey of Good Samaritan cases no less than 81% of the Samaritans were owners of guns. If we wish to encourage a society where citizens come to the aid of neighbors in distress, we must not strip them of the actual power to do something about crime. Surely, it is the height of absurdity to disarm the peaceful public and then, as is quite common, to denounce them for “apathy” for failing to rush to the rescue of victims of criminal assault. (from the Rothbard's book named earlier)
Wait...I thought our secret plan was to copy ...
This in not 'your' page.
Do us all a favor and focus your energies on editing the page on Anarchism.
Talk only for yourself, not us all.
You are an Anarchist vandalizing a page on modern Libertarianism.
The use of 'vandalizing' is bad. At least she is civil, while you are raging with some holy anger. Besides, see the next comment (here).
You and others have been completely reasonable with her for a really really long time but the line has to be drawn somewhere.
Are you trying to frighten her? And a logical error: if the behavior is 'reasonable', how is it wrong?
I suggest two things here (which you are free to not accept): form an opinion only after studying the issues, and be civilized in talking.
—Preceding unsigned comment added by N6n (talk • contribs) 05:04, 23 July 2010 (UTC)
Hello, I suppose guns were not restricted when the US gained independence. Anyway, the outlaws heed no gun-control laws, so, in effect, only the law-abiding people are deprived of guns. Do you know that 80% of the murders committed on the street go unpunished? [1] Perhaps lesser stranger-crimes will happen if the would-be criminal would expect a potential victim to be armed. (And I've heard that the 'Western' is a myth, the real life was not like what the Hollywood portraits.)
Anyway, gun-control is just one issue. What about the ever-expanding bureaucracy (for example, the IRS), wars half-way around the world, unchecked printing of paper-money, huge public debt, government spying, etc. If it looks possible to live without a government, we ought to look into it. N6n (talk) 12:34, 24 July 2010 (UTC)
Libertarianism is of course against gun control...so you're preaching to the choir. However, I lived in Afghanistan for a year and tribalism is the natural consequence of Rothbard's idea of completely getting rid of the state. Tribal warfare is inevitable because the grass is always greener on the other side. A state has to exist with enough power to enforce laws and protect people from the largest and strongest organizations and countries. So at a very minimum you need an army, police, courts and prisons. --97.93.109.174 (talk) 21:56, 25 July 2010 (UTC)
I agree with all your points about Afghanistan. But what is true for A. is not necessarily true for the US. Karl Popper's Open Society v. tribalism distinction is useful here. People in A. are loyal and subservient to their tribe, as far as my understanding goes. This is no basic for a republic, let alone anarchy. Change in consciousness does not happen overnight, the West has had 500 years of Enlightenment, give A. a couple of centuries too!
Rothbard's society will (probably) not be a return to tribalism. The powerful will not seize power, for there will be no power to seize. If you are concerned about couple of powerful people uniting and then forcing everyone else to serve their will, consider that (i)this will be very difficult (as free people will not agree to become subservient overnight), and that (ii)what stops the oligarchs in democracy(nothing, in my opinion).
And an earlier point: you said that Rothbard "holds an extreme point of view" and thus should not be given weight. Is being an "extremist" wrong per se? Quoting William Lloyd Garrison “Gradualism in theory is perpetuity in practice.” And allow me to point once again that you have not studied how such a society is supposed to work.
The United States is composed of an incredibly diverse group of people. We have different races, different levels of education and wealth, different religions, different political views...we all coexist in relative stability not in spite of the state...but because of the state. Take away the state and people will reorganize themselves into tribes...or communities...that will invariably disagree over resources/ideology and conflict will ensue. Then what? Will one community pay for conflict resolution or will they pay for additional mercenaries to attack the other community? If a court consisting of volunteers finds one side in violation of the non-aggression axiom will a posse of volunteers saddle up to administer justice?
That Rothbard was willing to push the theoretical button that would have instantly eliminated the state is a testament to how fanatical he was. Is being "extremist" wrong? Well...that's not really the question. The question is whether his fanaticism has any relevance to modern Libertarianism...and the answer to that is a resounding no. He was an anarcho-capitalist who trusted that incentives exist for the private sector to provide every single public good. --97.93.109.174 (talk) 11:40, 26 July 2010 (UTC)
The critical idea here is that aligning yourself in such groups is “bad for business”. Businessmen are known to “betray” their countries by doing illegal business with their “enemies”, even during wars. (a notorious example: Rothschilds funding both British and French governments during the Napoleonic wars.) Besides, why what you envision does not play out on the inter-national level? Business! Rothbard says on a similar problem:
For a 'vision' of how things will proceed if the State collapses without preparation (the hypothetical button), check a novel by J. Neil Schulman-- Alongside Night. http://www.alongsidenight.net/ —Preceding unsigned comment added by N6n (talk • contribs) 13:26, 26 July 2010 (UTC)
How can you honestly support a model where everybody's behavior is determined by whether something was bad for business? Yes, if that were the case then maybe a stateless society might work. In our current society though, people are like kids that recognize the need for adult supervision. We elect representatives to look out for our best interests. The fundamental flaw in Rothbard's vision was he that totally assumed that just because he views the state as coercive...so must everybody else. They don't...they see it as a division of labor that allows them to worry about other things. They see it as the product of 500 years of "Enlightenment". For them taxes are not robbery...taxes are payment for the public goods and services that they use on a daily basis. Taking away the state would be tantamount to tyranny of the very very very small minority.
Before you can contemplate alternative structures to society...it's essential that you have a firm grasp on how and why our current structure works. A good starting place is the book Democracy in America by Alexis de Tocqueville. --97.93.109.174 (talk) 21:22, 26 July 2010 (UTC)
(i) Everything determined by "business": I don't say that everything will be kosher with a stateless society, but we only have to worry whether it will be better. Please read the third and fourth paragraph here: [2] (summary of Karl Popper's views on Open Society v. tribalism)
(ii) people are like kids that recognize the need for adult supervision: This description will fit most people I know too. But my primary responsibility is to myself.
(iii) they see it as a division of labor that allows them to worry about other things: Why stop here, clothes and shoes are also essential. Why should government not manufacture them? (if it can be shown that the market can take care of law and order) Imagine the argument a couple of centuries back (everywhere), or even now in fully tribal societies. Who would believe that clothes can be taken care of by the market, or that the market can supply a rich (and abundant) variety of goods. Wouldn't competing merchants cause chaos? Some rich merchant would buy all bales of cotton/milk produced, and nobody will have clothes in the winter!
(iv) For them taxes are not robbery...taxes are payment for the public goods and services that they use on a daily basis: This is wrong. All this a monarch would also claim. Besides, Rothbard [Ethics of Liberty]:
(v) tyranny of the very very very small minority: Stateless society is the end of the road for decreasing State power. Voluntary exchange directly between people, the market, now manages to take care of much of societal needs. I think that a Stateless society, if possible, will be good. But, even if it isn't possible, it is well to keep that as an ideal. Read Thoreau's essay Civil Disobedience if you wish.
(vi) I will read the de Tocqueville book. N6n (talk) 04:14, 27 July 2010 (UTC)
When Rothbard claims that the state is a robber...how come so few people agree? Robbery is a pretty straightforward concept. How come there hasn't been a second American Revolution? The answer is simply that now we have representation. We elect representatives to decide how much taxes we should pay and what our taxes should be spent on...so it's absurd to claim that we are robbing ourselves.
Every society needs leaders. In Rothbard's society some people would want to log Yellowstone while others would want to turn it into a national park. Each group would have their own leaders so how would the dispute be settled? The Libertarian law wouldn't be relevant because it's entirely based on the non-aggression axiom.
Did you read the Open Society vs Tribalism document in its entirety? This passage by Burke was included. It's pretty decent as long as you notice the "not"s.
Pure individualism or self-interest might result in Yellowstone being logged and/or developed...but part of the value of a government is in its ability to make decisions that won't screw over future generations. So rather than trying to get rid of the state...the goal should be improving the "partnership" aspect of the state. --97.93.109.174 (talk) 12:05, 27 July 2010 (UTC)
On what basis does the government decide what is best for future generations? It doesn't have a code external to the society itself--its values are the societal values. (Pure) Capitalism advocates would claim that if not for government restrictions(which facilitates monopoly, btw), the market would be fluid enough to make sure that societal wishes are followed. So, e.g., if the people of US do not want Yellowstone to be logged, they will show this by making decisions on the market which will affect the parties involved. (e.g., increase in entry cost to the National Park) The owner of Yellowstone would base his/her decision simply on whether using it as a recreational ground/ecological sanctuary is more profitable than logging it. This profit includes the owner's intangible but quantifiable moral values. (e.g., people paying more for green products.) Ludwig von Mises argues all this convincingly. I will post relevant quotes here when I next come across them. But right now, I have access to one from Rothbard:
Who decides how much Oil to produce? Why hasn't Oil been exhausted till now? Those supporting laissez faire claim that all that is good is due to autonomous-agents, and all that is bad is due to government's interference.
how come so few people agree: This is not at all difficult to explain. How about Noam Chomsky's Manufacturing Consent. Rothbard [FaNL] has something relevant:
Just to clarify, I won't press the hypothetical button. I first need to be sure that a Stateless society would be better (which I am not).
N6n (talk) 13:36, 27 July 2010 (UTC)
Pure individualism or self-interest might result in Yellowstone being logged and/or developed...but part of the value of a government is in its ability to make decisions that won't screw over future generations. (However) From Human Action, von Mises:
You seem to be confusing anarchy with lawlessness and violence. Common, but wrong.
ANY society - democratic, communist, fascist, anarchy, religious dicatorship, monarchy, feudal, dictatorship, whatever, has to have the vast majority of its citizens respect the rights of others. Tian has pointed out that the vast majority of us do not bomb federal buildings out of fear of beign caught - we refrain from doing so just because we recognize that killing others and destroying property is wrong and we don't do so. Fear of getting caught is a very minor secondary concern if we even consider it at all.
Any society - ANY SOCIETY - that loses this is gone. It can't survive. This includes a society with no government. Most likely there will be a period of chaos followed by a dictatorship. Something like this happened when the Nazis took over Weimar Germany.
If we went into a period of no government - aka anarchy - with the vast majority of citizens respecting the lives and property of others, it would work. Mechanisms would be developed to deal with the few who needed dealing with.
If we did not have this and a significant portion of the population killed, stole and destroyed just because they thought they could get away with it, anarchy would not work. Neither would any other system.
http://dwrighsr.tripod.com/heinlein/RatAnarch/Quotes_AFH.html N6n (talk) 07:09, 5 August 2010 (UTC)
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That was my first interaction with an ancap. It was fairly substantial. I remember thinking that if I genuinely wanted to defeat his arguments... then I had better do some homework.
I read quite a bit of Rothbard's work and certainly was not at all impressed with his moral "taxation is theft" argument. However, in other parts there was more than a hint of the Invisible Hand.
It was only later on when I read these two papers that Rothbard had written...
Toward a Reconstruction of Utility and Welfare Economics
The Myth of Neutral Taxation
... that I really appreciated that he had correctly diagnosed the fundamental problem with government... the massive scarcity of individual (earner) valuation. It's just a shame that most of his devout followers focus more on his moral arguments than on his economic arguments.
David Friedman is also an anarcho-capitalist. He's great because all his arguments are entirely economic in nature.
See also: Concentrated Benefits and Dispersed Costs, House of Cards And Wikipedia
Seven years ago I was still pretty much a libertarian. When I happened to check out the Wikipedia page for Libertarianism... I was really not happy with what I saw. Here's what I wrote on the Talk page...
Strongly agree! "others striving for complete abolition of the state" Holy crap! Don't say "others" say..."one guy who wrote a book". It's completely ignorant to even mention it at all, especially in the first paragraph. Libertarianism is based on the simple concept that the freedom to swing your fist ends where somebody else's nose begins. If you punch somebody in the nose...then what? If you can get away with it then you have anarchism but if you're punished then you have libertarianism. Obviously you need some form of government in order to enforce that rule. The first paragraph was so completely off base and misleading that I replaced it with a quick substitute in the meantime. 97.93.109.174 (talk) —Preceding undated comment added 22:46, 15 July 2010 (UTC).
What did I know about anarcho-capitalism? Not much! But I was sure that anarcho-anything really did not sit well with me and I endeavored to try and fix the page on libertarianism. Of course the an-caps weren't really happy with my efforts to kick them off the page.
One of the an-caps went to my talk page and tried to school me...
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Libertarianism is based on the simple concept that the freedom to swing your fist ends where somebody else's nose begins. If you punch somebody in the nose...then what? If you can get away with it then you have anarchism but if you're punished then you have libertarianism. Obviously you need some form of government in order to enforce that rule.
'Obviously'? Have you studied the issue? For a thousand years, then, ancient Celtic Ireland had no State or anything like it. As the leading authority on ancient Irish law has written: “There was no legislature, no bailiffs, no police, no public enforcement of justice.... There was no trace of State-administered justice.”[Joseph R. Pedea] For a New Liberty: A Libertarian Manifesto, Rothbard
For reference...see http://www.DownsizingGovernment.org/ Notice the website name? It's not called AbolishingGovernment.org
There are many billion websites on the internet. For example, http://www.abolishgovernment.com/
Wow. I just looked through some of the discussion on this page...you should be nominated for sainthood. Are you an elementary school teacher? Or do you work with the mentally challenged?
Is this civilized discussion?
...if we were any good at collective action the anarchists wouldn't be peeing all over our page.
'Peeing'? And what is 'our' page? You say you used 'your' because you call yourself a Libertarian. How do you know that others (your 'antagonists') don't? And wouldn't this 'bias' the page?
Anarchism...murder, mayham, rape, pillage, plunder, etc.
Have you studied the issue? How can you claim this? Common Sense may mislead! I suggest, and hope, that you will read more about Anarchism, specially why the proponents say it will work. In particular, if individuals have right to defend themselves, all that you name will (probably) not happen. Check this: http://flag.blackened.net/ Concerning Libertarianism, [Don B.] Kates makes another intriguing point: that a society where peaceful citizens are armed is far more likely to be one where Good Samaritans who voluntarily go to the aid of victims of crime will flourish. But take away people’s guns, and the public—disastrously for the victims—will tend to leave the matter to the police. Before New York State outlawed handguns, Good Samaritan instances were far more widespread than now. And, in a recent survey of Good Samaritan cases no less than 81% of the Samaritans were owners of guns. If we wish to encourage a society where citizens come to the aid of neighbors in distress, we must not strip them of the actual power to do something about crime. Surely, it is the height of absurdity to disarm the peaceful public and then, as is quite common, to denounce them for “apathy” for failing to rush to the rescue of victims of criminal assault. (from the Rothbard's book named earlier)
Wait...I thought our secret plan was to copy ...
This in not 'your' page.
Do us all a favor and focus your energies on editing the page on Anarchism.
Talk only for yourself, not us all.
You are an Anarchist vandalizing a page on modern Libertarianism.
The use of 'vandalizing' is bad. At least she is civil, while you are raging with some holy anger. Besides, see the next comment (here).
You and others have been completely reasonable with her for a really really long time but the line has to be drawn somewhere.
Are you trying to frighten her? And a logical error: if the behavior is 'reasonable', how is it wrong?
I suggest two things here (which you are free to not accept): form an opinion only after studying the issues, and be civilized in talking.
—Preceding unsigned comment added by N6n (talk • contribs) 05:04, 23 July 2010 (UTC)
- Celtic Ireland? Talk about regressive. Give everybody guns and we'll be living in a spaghetti western where justice is administered by a posse. In the Army I carried big guns around all the time and it's not nearly as fun as it sounds. Self-actualization should not be dependent on how well you shoot.
- Rothbard holds an extreme point of view that should not be given any weight on the page on Libertarianism.
- Yes, there are a billion websites on the internet and the problem with you and CarolMooreDC is that both of you would give equal weight to both of those websites. However, only one of those websites is run by the fifth most influential think tank in the world.
- No, I wasn't trying to frighten her. And the logical error was yours for not realizing whose behavior I was calling "reasonable".
- I understand both sides of the issue and have shared my thoughts in a civilized manner in this section... Talk:Libertarianism#Common_Ground
- --97.93.109.174 (talk) 21:39, 23 July 2010 (UTC)
Hello, I suppose guns were not restricted when the US gained independence. Anyway, the outlaws heed no gun-control laws, so, in effect, only the law-abiding people are deprived of guns. Do you know that 80% of the murders committed on the street go unpunished? [1] Perhaps lesser stranger-crimes will happen if the would-be criminal would expect a potential victim to be armed. (And I've heard that the 'Western' is a myth, the real life was not like what the Hollywood portraits.)
Anyway, gun-control is just one issue. What about the ever-expanding bureaucracy (for example, the IRS), wars half-way around the world, unchecked printing of paper-money, huge public debt, government spying, etc. If it looks possible to live without a government, we ought to look into it. N6n (talk) 12:34, 24 July 2010 (UTC)
Libertarianism is of course against gun control...so you're preaching to the choir. However, I lived in Afghanistan for a year and tribalism is the natural consequence of Rothbard's idea of completely getting rid of the state. Tribal warfare is inevitable because the grass is always greener on the other side. A state has to exist with enough power to enforce laws and protect people from the largest and strongest organizations and countries. So at a very minimum you need an army, police, courts and prisons. --97.93.109.174 (talk) 21:56, 25 July 2010 (UTC)
I agree with all your points about Afghanistan. But what is true for A. is not necessarily true for the US. Karl Popper's Open Society v. tribalism distinction is useful here. People in A. are loyal and subservient to their tribe, as far as my understanding goes. This is no basic for a republic, let alone anarchy. Change in consciousness does not happen overnight, the West has had 500 years of Enlightenment, give A. a couple of centuries too!
Rothbard's society will (probably) not be a return to tribalism. The powerful will not seize power, for there will be no power to seize. If you are concerned about couple of powerful people uniting and then forcing everyone else to serve their will, consider that (i)this will be very difficult (as free people will not agree to become subservient overnight), and that (ii)what stops the oligarchs in democracy(nothing, in my opinion).
And an earlier point: you said that Rothbard "holds an extreme point of view" and thus should not be given weight. Is being an "extremist" wrong per se? Quoting William Lloyd Garrison “Gradualism in theory is perpetuity in practice.” And allow me to point once again that you have not studied how such a society is supposed to work.
Are such stable and consistent law codes possible, with only competing judges to develop and apply them, and without government or legislature? Not only are they possible, but over the years the best and most successful parts of our legal system were developed precisely in this manner. Legislatures, as well as kings, have been capricious, invasive, and inconsistent. They have only introduced anomalies and despotism into the legal system. In fact, the government is no more qualified to develop and apply law than it is to provide any other service; and just as religion has been separated from the State, and the economy can be separated from the State, so can every other State function, including police, courts, and the law itself!
As indicated above, for example, the entire law merchant was developed, not by the State or in State courts, but by private merchant courts. It was only much later that government took over mercantile law from its development in merchants’ courts. The same occurred with admiralty law, the entire structure of the law of the sea, shipping, salvages, etc. Here again, the State was not interested, and its jurisdiction did not apply to the high seas; so the shippers themselves took on the task of not only applying, but working out the whole structure of admiralty law in their own private courts. Again, it was only later that the government appropriated admiralty law into its own courts.
Finally, the major body of Anglo-Saxon law, the justly celebrated common law, was developed over the centuries by competing judges applying time-honored principles rather than the shifting decrees of the State. These principles were not decided upon arbitrarily by any king or legislature; they grew up over centuries by applying rational—and very often libertarian—principles to the cases before them. The idea of following precedent was developed, not as a blind service to the past, but because all the judges of the past had made their decisions in applying the generally accepted common law principles to specific cases and problems. For it was universally held that the judge did not make law (as he often does today); the judge’s task, his expertise, was in finding the law in accepted common law principles, and then applying that law to specific cases or to new technological or institutional conditions. The glory of the centuries-long development of the common law is testimony to their success. [Rothbard, For a New Liberty: A Libertarian Manifesto]N6n (talk) 03:37, 26 July 2010 (UTC)
The United States is composed of an incredibly diverse group of people. We have different races, different levels of education and wealth, different religions, different political views...we all coexist in relative stability not in spite of the state...but because of the state. Take away the state and people will reorganize themselves into tribes...or communities...that will invariably disagree over resources/ideology and conflict will ensue. Then what? Will one community pay for conflict resolution or will they pay for additional mercenaries to attack the other community? If a court consisting of volunteers finds one side in violation of the non-aggression axiom will a posse of volunteers saddle up to administer justice?
That Rothbard was willing to push the theoretical button that would have instantly eliminated the state is a testament to how fanatical he was. Is being "extremist" wrong? Well...that's not really the question. The question is whether his fanaticism has any relevance to modern Libertarianism...and the answer to that is a resounding no. He was an anarcho-capitalist who trusted that incentives exist for the private sector to provide every single public good. --97.93.109.174 (talk) 11:40, 26 July 2010 (UTC)
The critical idea here is that aligning yourself in such groups is “bad for business”. Businessmen are known to “betray” their countries by doing illegal business with their “enemies”, even during wars. (a notorious example: Rothschilds funding both British and French governments during the Napoleonic wars.) Besides, why what you envision does not play out on the inter-national level? Business! Rothbard says on a similar problem:
But what of personal, rather than strictly economic, “discrimination” by the landlord? Suppose, for example, that the landlord is a great admirer of six-foot Swedish-Americans, and decides to rent his apartments only to families of such a group. In the free society it would be fully in his right to do so, but he would clearly suffer a large monetary loss as a result. For this means that he would have to turn away tenant after tenant in an endless quest for very tall Swedish-Americans. While this may he considered an extreme example, the effect is exactly the same, though differing in degree, for any sort of personal discrimination in the marketplace. If, for example, the landlord dislikes redheads and determines not to rent his apartments to them, he will suffer losses, although not as severely as in the first example. In any case, anytime anyone practices such “discrimination” in the free market, he must bear the costs, either of losing profits or of losing services as a consumer. If a consumer decides to boycott goods sold by people he does not like, whether the dislike is justified or not, he then will go without goods or services which he otherwise would have purchased.[For a New Liberty]This would need that people care more for their profits than for building utopian societies. But that is so, and is it not what capitalism is most denounced about? It is businessmen (i.e., people as businessmen) that keep the rulers madness into check.
For a 'vision' of how things will proceed if the State collapses without preparation (the hypothetical button), check a novel by J. Neil Schulman-- Alongside Night. http://www.alongsidenight.net/ —Preceding unsigned comment added by N6n (talk • contribs) 13:26, 26 July 2010 (UTC)
How can you honestly support a model where everybody's behavior is determined by whether something was bad for business? Yes, if that were the case then maybe a stateless society might work. In our current society though, people are like kids that recognize the need for adult supervision. We elect representatives to look out for our best interests. The fundamental flaw in Rothbard's vision was he that totally assumed that just because he views the state as coercive...so must everybody else. They don't...they see it as a division of labor that allows them to worry about other things. They see it as the product of 500 years of "Enlightenment". For them taxes are not robbery...taxes are payment for the public goods and services that they use on a daily basis. Taking away the state would be tantamount to tyranny of the very very very small minority.
Before you can contemplate alternative structures to society...it's essential that you have a firm grasp on how and why our current structure works. A good starting place is the book Democracy in America by Alexis de Tocqueville. --97.93.109.174 (talk) 21:22, 26 July 2010 (UTC)
(i) Everything determined by "business": I don't say that everything will be kosher with a stateless society, but we only have to worry whether it will be better. Please read the third and fourth paragraph here: [2] (summary of Karl Popper's views on Open Society v. tribalism)
(ii) people are like kids that recognize the need for adult supervision: This description will fit most people I know too. But my primary responsibility is to myself.
(iii) they see it as a division of labor that allows them to worry about other things: Why stop here, clothes and shoes are also essential. Why should government not manufacture them? (if it can be shown that the market can take care of law and order) Imagine the argument a couple of centuries back (everywhere), or even now in fully tribal societies. Who would believe that clothes can be taken care of by the market, or that the market can supply a rich (and abundant) variety of goods. Wouldn't competing merchants cause chaos? Some rich merchant would buy all bales of cotton/milk produced, and nobody will have clothes in the winter!
(iv) For them taxes are not robbery...taxes are payment for the public goods and services that they use on a daily basis: This is wrong. All this a monarch would also claim. Besides, Rothbard [Ethics of Liberty]:
It would be an instructive exercise for the skeptical reader to try to frame a definition of taxation which does not also include theft. Like the robber, the State demands money at the equivalent of gunpoint; if the taxpayer refuses to pay his assets are seized by force, and if he should resist such depredation, he will be arrested or shot if he should continue to resist. It is true that State apologists maintain that taxation is "really" voluntary; one simple but instructive refutation of this claim is to ponder what would happen if the government were to abolish taxation, and to confine itself to simple requests for voluntary contributions.Does anyone really believe that anything comparable to the current vast revenues of the State would continue to pour into its coffers? It is likely that even those theorists who claim that punishment never deters action would balk at such a claim.
(v) tyranny of the very very very small minority: Stateless society is the end of the road for decreasing State power. Voluntary exchange directly between people, the market, now manages to take care of much of societal needs. I think that a Stateless society, if possible, will be good. But, even if it isn't possible, it is well to keep that as an ideal. Read Thoreau's essay Civil Disobedience if you wish.
(vi) I will read the de Tocqueville book. N6n (talk) 04:14, 27 July 2010 (UTC)
When Rothbard claims that the state is a robber...how come so few people agree? Robbery is a pretty straightforward concept. How come there hasn't been a second American Revolution? The answer is simply that now we have representation. We elect representatives to decide how much taxes we should pay and what our taxes should be spent on...so it's absurd to claim that we are robbing ourselves.
Every society needs leaders. In Rothbard's society some people would want to log Yellowstone while others would want to turn it into a national park. Each group would have their own leaders so how would the dispute be settled? The Libertarian law wouldn't be relevant because it's entirely based on the non-aggression axiom.
Did you read the Open Society vs Tribalism document in its entirety? This passage by Burke was included. It's pretty decent as long as you notice the "not"s.
Society is indeed a contract. Subordinate contracts for objects of mere occasional interest may be dissolved at pleasure---but the state ought not to be considered as nothing better than a partnership agreement in a trade of pepper and coffee, calico or tobacco, or some other such low concern, to be taken up for a little temporary interest, and to be dissolved by the fancy of the parties. It is to be looked on with other reverence; because it is not a partnership in things subservient only to the gross animal existence of a temporary and perishable nature. It is a partnership in all science; a partnership in all art; a partnership in every virtue, and in all perfection. As the ends of such a partnership cannot be obtained in many generations, it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born
Pure individualism or self-interest might result in Yellowstone being logged and/or developed...but part of the value of a government is in its ability to make decisions that won't screw over future generations. So rather than trying to get rid of the state...the goal should be improving the "partnership" aspect of the state. --97.93.109.174 (talk) 12:05, 27 July 2010 (UTC)
On what basis does the government decide what is best for future generations? It doesn't have a code external to the society itself--its values are the societal values. (Pure) Capitalism advocates would claim that if not for government restrictions(which facilitates monopoly, btw), the market would be fluid enough to make sure that societal wishes are followed. So, e.g., if the people of US do not want Yellowstone to be logged, they will show this by making decisions on the market which will affect the parties involved. (e.g., increase in entry cost to the National Park) The owner of Yellowstone would base his/her decision simply on whether using it as a recreational ground/ecological sanctuary is more profitable than logging it. This profit includes the owner's intangible but quantifiable moral values. (e.g., people paying more for green products.) Ludwig von Mises argues all this convincingly. I will post relevant quotes here when I next come across them. But right now, I have access to one from Rothbard:
This sort of argumentation reflects a general double standard of morality that is always applied to State rulers but not to anyone else. No one, for example, is surprised or horrified to learn that businessmen are seeking higher profits. No one is horrified if workers leave lower-paying for higher-paying jobs. All this is considered proper and normal behavior. ... What gives the gentlemen of the State apparatus their superior moral patina? [For a New Liberty]
Who decides how much Oil to produce? Why hasn't Oil been exhausted till now? Those supporting laissez faire claim that all that is good is due to autonomous-agents, and all that is bad is due to government's interference.
how come so few people agree: This is not at all difficult to explain. How about Noam Chomsky's Manufacturing Consent. Rothbard [FaNL] has something relevant:
On the one hand, the stations, since they receive the licenses gratis, do not have to pay for the use of the scarce airwaves, as they would on the free market. And so these stations receive a huge subsidy, which they are eager to maintain. But on the other hand, the federal government, as the licensor of the airwaves, asserts the right and the power to regulate the stations minutely and continuously. Thus, over the head of each station is the club of the threat of nonrenewal, or even suspension, of its license. In consequence, the idea of freedom of speech in radio and television is no more than a mockery. Every station is grievously restricted, and forced to fashion its programming to the dictates of the Federal Communications Commission. So every station must have “balanced” programming, broadcast a certain amount of “public service” announcements, grant equal time to every political candidate for the same office and to expressions of political opinion, censor “controversial” lyrics in the records it plays, etc. For many years, no station was allowed to broadcast any editorial opinion at all; now, every opinion must be balanced by “responsible” editorial rebuttals.
Just to clarify, I won't press the hypothetical button. I first need to be sure that a Stateless society would be better (which I am not).
N6n (talk) 13:36, 27 July 2010 (UTC)
Pure individualism or self-interest might result in Yellowstone being logged and/or developed...but part of the value of a government is in its ability to make decisions that won't screw over future generations. (However) From Human Action, von Mises:
Carried through consistently, the right of property would entitle the proprietor to claim all the advantages which the good’s employment may generate on the one hand and would burden him with all the disadvantages resulting from its employment on the other hand. Then the proprietor alone would be fully responsible for the outcome. In dealing with his property he would take into account all the expected results of his action, those considered favorable as well as those considered unfavorable. But if some of the consequences of his action are outside of the sphere of the benefits he is entitled to reap and of the drawbacks that are put to his debit, he will not bother in his planning about all the effects of his action. He will disregard those benefits which do not increase his own satisfaction and those costs which do not burden him. His conduct will deviate from the line which it would have followed if the laws were better adjusted to the economic objectives of private ownership. He will embark upon certain projects only because the laws release him from responsibility for some of the costs incurred. He will abstain from other projects merely because the laws prevent him from harvesting all the advantages derivable. ...
The extreme instance is provided by the case of no-man’s property referred to above.[9] If land is not owned by anybody, although legal formalism may call it public property, it is utilized without any regard to the disadvantages resulting. Those who are in a position to appropriate to themselves the returns—lumber and game of the forests, fish of the water areas, and mineral deposits of the subsoil—do not bother about the later effects of their mode of exploitation. For them the erosion of the soil, the depletion of the exhaustible resources and other impairments of the future utilization are external costs not entering into their calculation of input and output. They cut down the trees without any regard for fresh shoots or reforestation. In hunting and fishing they do not shrink from methods preventing the repopulation of the hunting and fishing grounds. In the early days of human civilization, when soil of a quality not inferior to that of the utilized pieces was still abundant, people did not find any fault with such predatory methods. When their effects appeared in a decrease in the net returns, the ploughman abandoned his farm and moved to another place. It was only when a country was more densely settled and unoccupied first class land was no longer available for appropriation, that people began to consider such predatory methods wasteful. At that time they consolidated the institution of private property in land. They started with arable land and then, step by step, included pastures, forests, and fisheries. The newly settled colonial countries overseas, especially the vast spaces of the United States, whose marvelous agricultural potentialities were almost untouched when the first colonists from Europe arrived, passed through the same stages. Until the last decades of the nineteenth century there was always a geographic zone open to newcomers—the frontier. Neither the existence of the frontier nor its passing was peculiar to America. What characterizes American conditions is the fact that at the time the frontier disappeared ideological and institutional factors impeded the adjustment of the methods of land utilization to the change in the data.
In the central and western areas of continental Europe, where the institution of private property and been rigidly established for many centuries, things were different. There was no question of soil erosion of formerly cultivated land. There was no problem of forest devastation in spite of the fact that the domestic forests had been for ages the only source of lumber for construction and mining and of fuel for heating and for the foundries and furnaces, the potteries and the glass factories. The owners of the forests were impelled to conservation by their own selfish interests. In the most densely inhabited and industrialized areas up to a few years ago between a fifth and a third of the surface was still covered by first-class forests managed according to the methods of scientific forestry. [10]
Footnote [10]: Late in the eighteenth century European governments began to enact laws aiming at forest conservation. However, it would be a serious blunder to ascribe to these laws any role in the conservation of the forests. Before the middle of the nineteenth century there was no administrative apparatus available for their enforcement. Besides the governments of Austria and Prussia, to say nothing of those of the smaller German states, virtually lacked the power to enforce to such laws against the aristocratic lords. No civil servant before 1914 would have been bold enough to rouse the anger of a Bohemian or Silesian magnate or a German mediatized standesheer. These princes and counts were spontaneously committed to forest conservation because they felt perfectly safe in the possession of their property and were eager to preserve unabated the source of their revenues and the market price of their estates.N6n (talk) 15:32, 27 July 2010 (UTC)
You seem to be confusing anarchy with lawlessness and violence. Common, but wrong.
ANY society - democratic, communist, fascist, anarchy, religious dicatorship, monarchy, feudal, dictatorship, whatever, has to have the vast majority of its citizens respect the rights of others. Tian has pointed out that the vast majority of us do not bomb federal buildings out of fear of beign caught - we refrain from doing so just because we recognize that killing others and destroying property is wrong and we don't do so. Fear of getting caught is a very minor secondary concern if we even consider it at all.
Any society - ANY SOCIETY - that loses this is gone. It can't survive. This includes a society with no government. Most likely there will be a period of chaos followed by a dictatorship. Something like this happened when the Nazis took over Weimar Germany.
If we went into a period of no government - aka anarchy - with the vast majority of citizens respecting the lives and property of others, it would work. Mechanisms would be developed to deal with the few who needed dealing with.
If we did not have this and a significant portion of the population killed, stole and destroyed just because they thought they could get away with it, anarchy would not work. Neither would any other system.
http://dwrighsr.tripod.com/heinlein/RatAnarch/Quotes_AFH.html N6n (talk) 07:09, 5 August 2010 (UTC)
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That was my first interaction with an ancap. It was fairly substantial. I remember thinking that if I genuinely wanted to defeat his arguments... then I had better do some homework.
I read quite a bit of Rothbard's work and certainly was not at all impressed with his moral "taxation is theft" argument. However, in other parts there was more than a hint of the Invisible Hand.
It was only later on when I read these two papers that Rothbard had written...
Toward a Reconstruction of Utility and Welfare Economics
The Myth of Neutral Taxation
... that I really appreciated that he had correctly diagnosed the fundamental problem with government... the massive scarcity of individual (earner) valuation. It's just a shame that most of his devout followers focus more on his moral arguments than on his economic arguments.
David Friedman is also an anarcho-capitalist. He's great because all his arguments are entirely economic in nature.
See also: Concentrated Benefits and Dispersed Costs, House of Cards And Wikipedia
Tuesday, March 14, 2017
Pestering David Friedman
My comment on David Friedman's blog entry... A Scrap of Libertarian History
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Rothbard sure did commit a few errors. But he and Buchanan were some of the precious few people who truly appreciated that the fundamental problem with government is the massive scarcity of individual valuation. However, unlike Buchanan, for some reason Rothbard never publicly considered the possibility of taxpayers simply directly allocating their taxes. I know there were quite a few rather fruitless exchanges between Buchanan and Samuelson... but I haven't run across any exchanges between Buchanan and Rothbard. Did you have any exchanges with Buchanan?
Ayn Rand simply refused to examine the anarcho-capitalist position? Hah. Ain't that the worst!? I know of one awesome and prominent anarcho-capitalist, not going to mention any names (because it's a really short list), who simply refuses to allocate more than three sentences to the pragmatarian position! So I can certainly empathize. :D But to his immense credit, so far he's been super tolerant of my occasional pestering. :)
Have you seen this fundraising page on the LP website? There's a list of possible themes for the 2018 convention. Donors can "dollar vote" for their favorite themes. Now we can all see that the demand for "Taxation Is Theft" is relatively insignificant. Oh man, if only Rothbard was alive to see that! Last time I checked the most valuable theme is, "I'm That Libertarian". I had no idea what it meant. Given that it was the most valuable theme I decided to google for it. I found a Youtube video of some guy giving a pretty impassioned libertarian speech. It was a little awkward, as is usually the case with libertarians, but I gotta admit that it was somewhat inspiring.
What's super cool, and loads ironic, about the Libertarian Party's fundraising system... is that it's a pragmatarian system! Well... to give credit where it's due... it's Buchanan's system. Since donors are giving their money to the LP anyways, they have absolutely no incentive to conceal their true preference for the themes. Sure, the donations are voluntary rather than compulsory... so in this regard there is still the free-rider problem. Perhaps if all libertarians were required to make a minimum donation to their preferred theme, we'd super ironically discover that the "Taxation Is Theft" theme is far more relatively valuable. Nevertheless the LP's fundraiser quite nicely demonstrates the idea of using a payment to reveal/communicate the intensity of more specific preferences.
Last night I e-mailed Wes Benedict and asked if he was interested in being BFFs. In my e-mail I told him that it would be ultra awesome if he did the same thing with books! Which pro-market/freedom book is the most valuable?! Oh God I'd love to know! I'd love to be able to see the true value of things! Dear God in heaven please cure my blindness!!!
Oh, wow, Benedict seriously just replied to my e-mail. I'm honestly very pleasantly surprised that he did so! Hmmm... he didn't accept or reject my BFF offer. Seems like he's playing it safe. :)
**************************************
Rothbard sure did commit a few errors. But he and Buchanan were some of the precious few people who truly appreciated that the fundamental problem with government is the massive scarcity of individual valuation. However, unlike Buchanan, for some reason Rothbard never publicly considered the possibility of taxpayers simply directly allocating their taxes. I know there were quite a few rather fruitless exchanges between Buchanan and Samuelson... but I haven't run across any exchanges between Buchanan and Rothbard. Did you have any exchanges with Buchanan?
Ayn Rand simply refused to examine the anarcho-capitalist position? Hah. Ain't that the worst!? I know of one awesome and prominent anarcho-capitalist, not going to mention any names (because it's a really short list), who simply refuses to allocate more than three sentences to the pragmatarian position! So I can certainly empathize. :D But to his immense credit, so far he's been super tolerant of my occasional pestering. :)
Have you seen this fundraising page on the LP website? There's a list of possible themes for the 2018 convention. Donors can "dollar vote" for their favorite themes. Now we can all see that the demand for "Taxation Is Theft" is relatively insignificant. Oh man, if only Rothbard was alive to see that! Last time I checked the most valuable theme is, "I'm That Libertarian". I had no idea what it meant. Given that it was the most valuable theme I decided to google for it. I found a Youtube video of some guy giving a pretty impassioned libertarian speech. It was a little awkward, as is usually the case with libertarians, but I gotta admit that it was somewhat inspiring.
What's super cool, and loads ironic, about the Libertarian Party's fundraising system... is that it's a pragmatarian system! Well... to give credit where it's due... it's Buchanan's system. Since donors are giving their money to the LP anyways, they have absolutely no incentive to conceal their true preference for the themes. Sure, the donations are voluntary rather than compulsory... so in this regard there is still the free-rider problem. Perhaps if all libertarians were required to make a minimum donation to their preferred theme, we'd super ironically discover that the "Taxation Is Theft" theme is far more relatively valuable. Nevertheless the LP's fundraiser quite nicely demonstrates the idea of using a payment to reveal/communicate the intensity of more specific preferences.
Last night I e-mailed Wes Benedict and asked if he was interested in being BFFs. In my e-mail I told him that it would be ultra awesome if he did the same thing with books! Which pro-market/freedom book is the most valuable?! Oh God I'd love to know! I'd love to be able to see the true value of things! Dear God in heaven please cure my blindness!!!
Oh, wow, Benedict seriously just replied to my e-mail. I'm honestly very pleasantly surprised that he did so! Hmmm... he didn't accept or reject my BFF offer. Seems like he's playing it safe. :)
Sunday, October 30, 2016
Coherent Economics VS Will Wilkinson
Over a year ago, Will Wilkinson wrote this blog entry... Libertarianism and the Politics of Everything. Here's the comment that I wrote on his entry...
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Coffee tastes like politics? Yuck! No wonder I don't drink the stuff!
You spend your money on coffee... I do not spend my money on coffee. We spend our money differently because we have different preferences. Human diversity is the basis of consumer choice. Consumer choice is economics. Economics is the opposite of politics. Economics is the opportunity cost of politics.
If coffee was in the realm of politics... then one of us would have to get screwed. Either my money would be spent on coffee... despite the fact that I can't stand the stuff... or your money wouldn't be spent on coffee... despite the fact that you love the stuff. Would you really want coffee to be in the realm of politics? No? Then why in the world would you want anything to be in the realm of politics?
Politics only exists because people don't understand economics. If people understood economics then they would clearly see the absolute absurdity of allowing a small group of elected officials to spend everybody's taxes.
The next time that you drink coffee... don't think about politics. Think about how you're pretty happy with your coffee despite the fact that I'm entirely free not to spend any of my money on coffee.
To be clear... the free-rider problem is a real problem... so we need the public sector... but we really don't need it to be a political realm. Libertarianism is the belief that we need to kick most public goods out of the public sector. Pragmatarianism is the belief that we need to kick politics out of the public sector.
*******************************
This morning in my twitter feed I found this...
And this...
Let's start here...
Definitely! Yes! True! But what, exactly, does government effectiveness depend on? Does Wilkinson know the answer to this question?
*******************************
When those most likely to benefit from social spending have a political voice, they demand more of it. - Will Wilkinson, What If We Can't Make Government Smaller?
When people get richer, they seem to want more government. In particular, they want more welfare spending. It’s mainly the positive relationship between rising demand for welfare services/transfers and rising GDP per capita that drives Wagner’s Law. - Will Wilkinson, What If We Can't Make Government Smaller?
Bill Niskanen said that “the longer-term challenge for those of us who favor limited constitutional government is to try to convince voters to reduce their demand for the services financed by federal spending.” However, the fact of the matter is that our well-funded and well-organized attempts “to convince voters to reduce their demand for the services financed by federal spending” so far have all failed. - Will Wilkinson, What If We Can't Make Government Smaller?
If we look at the world, what we see is that when people get richer, they want more welfare state. Maybe there’s nothing much we can do about that. - Will Wilkinson, What If We Can't Make Government Smaller?
Folks on the right need to consider the possibility that we’ve been wrong to see demand for government as the sort of dependent variable that can be manipulated through education or propaganda or political organizing or too-clever-by-half fiscal policy gymnastics or far-fetched constitutional amendments. The only variable the level of government spending clearly and reliably responds to over the long run is GDP per capita, and the relationship goes the wrong way. When people get richer, they want more welfare state. - Will Wilkinson, What If We Can't Make Government Smaller?
*******************************
Imagine that Wilkinson is at the grocery store. He finds an employee and says, "I want coffee". The employee replies, "Aisle 8". Wilkinson goes to aisle 8 and finds a wide variety of coffee to choose from. Why is there a wide variety to choose from? Maybe it has something to do with the fact that he's free to choose which variety he believes will provide him with the most bang for his buck. When he chooses a variety he then has to decide the quantity. Will he fill up his entire shopping cart with coffee? Maybe he'd consider the opportunity cost.
When he's finished putting items in his shopping cart... he goes to find a cashier. He tells her, "I demand coffee". And she says, "Yeah, great, I can see that!" She just takes his word for it and he walks out the store? Of course not. If he truly wants/demands coffee, then he's going to have to take out his wallet and prove it.
This is so fundamentally basic. Wants are unlimited, resources are not. Willingness to pay (WTP) is how we ensure that limited resources are put to their most valuable uses. Therefore, effective/efficient government depends on WTP. Does Wilkinson understand this?
See that? He said "political demand". Which implies that he grasps that there are other types of demand. But he doesn't really feel any need to point out or mention or highlight or discuss the important difference between political "demand" and economic demand. Yet...
Wilkinson knows that if he truly wants coffee, then he's going to have to pay for it. He's going to have to actually demonstrate that he's truly willing to sacrifice the alternative uses of his money. But why doesn't he apply this fundamentally basic economic concept to government?
Libertarians half believe this*. So, as a result, their attempts at economic education have always been half-assed. Libertarians, by definition, are economically incoherent. They say that determining true demand is necessary for coffee... but it's not necessary for defense. Because, evidently, congresspeople are partially omnisicent. Or, resources are unlimited in the public sector.
Well... to be clear... anarcho-capitalists are not libertarians. Murray Rothbard, to his incredible credit, grasped that knowing the demand for defense is just as important as knowing the demand for coffee...
*******************************
One of the most absurd procedures based on a constancy assumption has been the attempt to arrive at a consumer’s preference scale . . . Through quizzing him by questionnaires. In vacuo, a few consumers are questioned at length on which abstract bundle of hypothetical commodities they would prefer to another abstract bundle, etc. Not only does this suffer from the constancy error, no assurance can be attached to the mere questioning of people. Not only will a person’s valuations differ when talking about them than when he is actually choosing, but there is also no guarantee that he is telling the truth. - Murray Rothbard
Individual valuation is the keystone of economic theory. - Murray Rothbard
The concept of demonstrated preference is simply this: that actual choice reveals, or demonstrates, a man’s preferences; that is, that his preferences are deducible from what he has chosen in action. Thus, if a man chooses to spend an hour at a concert rather than a movie, we deduce that the former was preferred, or ranked higher on his value scale. Similarly, if a man spends five dollars on a shirt we deduce that he preferred purchasing the shirt to any other uses he could have found for the money. This concept of preference, rooted in real choices, forms the keystone of the logical structure of economic analysis, and particularly of utility and welfare analysis. - Murray Rothbard
The crucial point is that when consumers spend, they benefit, because the expenditures are voluntary. The consumers buy product X because they decide that, for whatever reason, it would benefit them to buy that product rather than use the money on some other product or save or add to their cash balances. They give up money for product X because they expect to prefer that product to whatever they could have done with the money elsewhere; their preference reflects a judgment of relative benefit from that, as compared to another, purchase. In my own terms, spending choices by consumers demonstrate their preference for one, as compared to another, way of using their money. - Murray Rothbard
Since "benefits" are subjective, we cannot measure anyone's benefit on the market either, but we can conclude, from a person's voluntary purchase, that his (expected) benefit was greater than the value to him of the money given up in exchange. If I buy a newspaper for 25 cents, we can conclude that my expected benefit is greater than a quarter. But since taxes are compulsory and not voluntary, we can conclude nothing about the alleged benefits that are paid for with them. Suppose, in analogy, that I am forced at gunpoint to contribute 25 cents for a newspaper and that that newspaper is then forcibly hurled at my door. We would be able to conclude nothing about my alleged benefit from the newspaper. Not only might I be willing to pay no more than 5 cents for the paper, or even nothing on some days, I might positively detest the newspaper and would demand payment to accept it. From the fact of coercion there is no way of telling. Except that we can conclude that many people are not getting 25 cents' worth from the paper or indeed are positively suffering from this coerced "exchange." Otherwise, why the need to exercise coercion? Which is all that we can conclude about the "benefits" of taxation. - Murray Rothbard
We have no idea how much the taxpayers would value these services, if indeed they valued them at all. For example, suppose that the government levies a tax of X dollars on A, B, C, and so on, for police protection—for protection, that is, against irregular, competing looters and not against itself. The fact that A is forced to pay $1,000 is no indication that $1,000 in any sense gauges the value to A of police protection. It is possible that he values it very little, and would value it less if he could turn to competing defense agencies. Moreover, A may be a pacifist; so he may consider the State's police protection a net harm rather than a benefit. But one thing we do know: If these payments to government were voluntary, we can be sure that they would be substantially less than present total tax revenue. - Murray Rothbard
In the first place, how much of the deficient good should be supplied? What criterion can the State have for deciding the optimal amount and for gauging by how much the market provision of the service falls short? Even if free riders benefit from collective service X, in short, taxing them to pay for producing more will deprive them of unspecified amounts of private goods Y, Z, and so on. We know from their actions that these private consumers wish to continue to purchase private goods Y, Z, and so on, in various amounts. But where is their analogous demonstrated preference for the various collective goods? We know that a tax will deprive the free riders of various amounts of their cherished private goods, but we have no idea how much benefit they will acquire from the increased provision of the collective good; and so we have no warrant whatever for believing that the benefits will be greater than the imposed costs. The presumption should be quite the reverse. And what of those individuals who dislike the collective goods, pacifists who are morally outraged at defensive violence, environmentalists who worry over a dam destroying snail darters, and so on? In short, what of those persons who find other people’s good their “bad?” Far from being free riders receiving external benefits, they are yoked to absorbing psychic harm from the supply of these goods. Taxing them to subsidize more defense, for example, will impose a further twofold injury on these hapless persons: once by taxing them, and second by supplying more of a hated service. — Murray Rothbard
*******************************
Unfortunately, Rothbard's excellent attempt at economic education was almost entirely eclipsed by his solution (abolishing/annihilating/destroying the government). Rothbard never realized that the demand for defense could easily be determined by allowing each and every taxpayer to decide for themselves whether additional defense was worth more than the alternative uses of their own tax dollars.
Noah Smith wants Wilkinson to write a book. Well...
How intellectually deficient would Wilkinson's book be if it didn't address Rothbard's economic criticism of government? Would it be more or less intellectually deficient than his article?
With all of this in mind, Wilkinson's perspective on basic income shouldn't be a surprise...
*******************************
Coffee tastes like politics? Yuck! No wonder I don't drink the stuff!
You spend your money on coffee... I do not spend my money on coffee. We spend our money differently because we have different preferences. Human diversity is the basis of consumer choice. Consumer choice is economics. Economics is the opposite of politics. Economics is the opportunity cost of politics.
If coffee was in the realm of politics... then one of us would have to get screwed. Either my money would be spent on coffee... despite the fact that I can't stand the stuff... or your money wouldn't be spent on coffee... despite the fact that you love the stuff. Would you really want coffee to be in the realm of politics? No? Then why in the world would you want anything to be in the realm of politics?
Politics only exists because people don't understand economics. If people understood economics then they would clearly see the absolute absurdity of allowing a small group of elected officials to spend everybody's taxes.
The next time that you drink coffee... don't think about politics. Think about how you're pretty happy with your coffee despite the fact that I'm entirely free not to spend any of my money on coffee.
To be clear... the free-rider problem is a real problem... so we need the public sector... but we really don't need it to be a political realm. Libertarianism is the belief that we need to kick most public goods out of the public sector. Pragmatarianism is the belief that we need to kick politics out of the public sector.
*******************************
This morning in my twitter feed I found this...
Must-read from @willwilkinson What If We Can't Make Government Smaller? https://t.co/QXpxM3KuYt via @NiskanenCenter— JohnQuiggin (@JohnQuiggin) October 30, 2016
And this...
If @willwilkinson doesn't turn this article into a book, there's something wrong with the world: https://t.co/Ro9j0UQJeL— Noah Smith (@Noahpinion) October 29, 2016
Let's start here...
You start to accept that spending cuts are ultimately more about optimizing the composition and effectiveness of spending than about the overall level of spending or its rate of growth. - Will Wilkinson, What If We Can't Make Government Smaller?
Definitely! Yes! True! But what, exactly, does government effectiveness depend on? Does Wilkinson know the answer to this question?
*******************************
When those most likely to benefit from social spending have a political voice, they demand more of it. - Will Wilkinson, What If We Can't Make Government Smaller?
When people get richer, they seem to want more government. In particular, they want more welfare spending. It’s mainly the positive relationship between rising demand for welfare services/transfers and rising GDP per capita that drives Wagner’s Law. - Will Wilkinson, What If We Can't Make Government Smaller?
Bill Niskanen said that “the longer-term challenge for those of us who favor limited constitutional government is to try to convince voters to reduce their demand for the services financed by federal spending.” However, the fact of the matter is that our well-funded and well-organized attempts “to convince voters to reduce their demand for the services financed by federal spending” so far have all failed. - Will Wilkinson, What If We Can't Make Government Smaller?
If we look at the world, what we see is that when people get richer, they want more welfare state. Maybe there’s nothing much we can do about that. - Will Wilkinson, What If We Can't Make Government Smaller?
Folks on the right need to consider the possibility that we’ve been wrong to see demand for government as the sort of dependent variable that can be manipulated through education or propaganda or political organizing or too-clever-by-half fiscal policy gymnastics or far-fetched constitutional amendments. The only variable the level of government spending clearly and reliably responds to over the long run is GDP per capita, and the relationship goes the wrong way. When people get richer, they want more welfare state. - Will Wilkinson, What If We Can't Make Government Smaller?
*******************************
Imagine that Wilkinson is at the grocery store. He finds an employee and says, "I want coffee". The employee replies, "Aisle 8". Wilkinson goes to aisle 8 and finds a wide variety of coffee to choose from. Why is there a wide variety to choose from? Maybe it has something to do with the fact that he's free to choose which variety he believes will provide him with the most bang for his buck. When he chooses a variety he then has to decide the quantity. Will he fill up his entire shopping cart with coffee? Maybe he'd consider the opportunity cost.
When he's finished putting items in his shopping cart... he goes to find a cashier. He tells her, "I demand coffee". And she says, "Yeah, great, I can see that!" She just takes his word for it and he walks out the store? Of course not. If he truly wants/demands coffee, then he's going to have to take out his wallet and prove it.
This is so fundamentally basic. Wants are unlimited, resources are not. Willingness to pay (WTP) is how we ensure that limited resources are put to their most valuable uses. Therefore, effective/efficient government depends on WTP. Does Wilkinson understand this?
There’s an abiding faith on the right that there must be policy levers that can be pulled to reduce political demand for government spending. - Will Wilkinson, What If We Can't Make Government Smaller?
See that? He said "political demand". Which implies that he grasps that there are other types of demand. But he doesn't really feel any need to point out or mention or highlight or discuss the important difference between political "demand" and economic demand. Yet...
But if you’ve been following the proposals of this year’s presidential contenders, or glanced at the unrelenting spending trendlines, it’s hard say attempts at economic and political education have had any effect at all. - Will Wilkinson, What If We Can't Make Government Smaller?
Wilkinson knows that if he truly wants coffee, then he's going to have to pay for it. He's going to have to actually demonstrate that he's truly willing to sacrifice the alternative uses of his money. But why doesn't he apply this fundamentally basic economic concept to government?
Political "demand" really isn't the same as economic demand, and economic demand is the only way that we can know what people truly want. Knowing what people truly want is the only way that the government is going to be truly effective/efficient.
Libertarians half believe this*. So, as a result, their attempts at economic education have always been half-assed. Libertarians, by definition, are economically incoherent. They say that determining true demand is necessary for coffee... but it's not necessary for defense. Because, evidently, congresspeople are partially omnisicent. Or, resources are unlimited in the public sector.
Well... to be clear... anarcho-capitalists are not libertarians. Murray Rothbard, to his incredible credit, grasped that knowing the demand for defense is just as important as knowing the demand for coffee...
*******************************
One of the most absurd procedures based on a constancy assumption has been the attempt to arrive at a consumer’s preference scale . . . Through quizzing him by questionnaires. In vacuo, a few consumers are questioned at length on which abstract bundle of hypothetical commodities they would prefer to another abstract bundle, etc. Not only does this suffer from the constancy error, no assurance can be attached to the mere questioning of people. Not only will a person’s valuations differ when talking about them than when he is actually choosing, but there is also no guarantee that he is telling the truth. - Murray Rothbard
Individual valuation is the keystone of economic theory. - Murray Rothbard
The concept of demonstrated preference is simply this: that actual choice reveals, or demonstrates, a man’s preferences; that is, that his preferences are deducible from what he has chosen in action. Thus, if a man chooses to spend an hour at a concert rather than a movie, we deduce that the former was preferred, or ranked higher on his value scale. Similarly, if a man spends five dollars on a shirt we deduce that he preferred purchasing the shirt to any other uses he could have found for the money. This concept of preference, rooted in real choices, forms the keystone of the logical structure of economic analysis, and particularly of utility and welfare analysis. - Murray Rothbard
The crucial point is that when consumers spend, they benefit, because the expenditures are voluntary. The consumers buy product X because they decide that, for whatever reason, it would benefit them to buy that product rather than use the money on some other product or save or add to their cash balances. They give up money for product X because they expect to prefer that product to whatever they could have done with the money elsewhere; their preference reflects a judgment of relative benefit from that, as compared to another, purchase. In my own terms, spending choices by consumers demonstrate their preference for one, as compared to another, way of using their money. - Murray Rothbard
Since "benefits" are subjective, we cannot measure anyone's benefit on the market either, but we can conclude, from a person's voluntary purchase, that his (expected) benefit was greater than the value to him of the money given up in exchange. If I buy a newspaper for 25 cents, we can conclude that my expected benefit is greater than a quarter. But since taxes are compulsory and not voluntary, we can conclude nothing about the alleged benefits that are paid for with them. Suppose, in analogy, that I am forced at gunpoint to contribute 25 cents for a newspaper and that that newspaper is then forcibly hurled at my door. We would be able to conclude nothing about my alleged benefit from the newspaper. Not only might I be willing to pay no more than 5 cents for the paper, or even nothing on some days, I might positively detest the newspaper and would demand payment to accept it. From the fact of coercion there is no way of telling. Except that we can conclude that many people are not getting 25 cents' worth from the paper or indeed are positively suffering from this coerced "exchange." Otherwise, why the need to exercise coercion? Which is all that we can conclude about the "benefits" of taxation. - Murray Rothbard
We have no idea how much the taxpayers would value these services, if indeed they valued them at all. For example, suppose that the government levies a tax of X dollars on A, B, C, and so on, for police protection—for protection, that is, against irregular, competing looters and not against itself. The fact that A is forced to pay $1,000 is no indication that $1,000 in any sense gauges the value to A of police protection. It is possible that he values it very little, and would value it less if he could turn to competing defense agencies. Moreover, A may be a pacifist; so he may consider the State's police protection a net harm rather than a benefit. But one thing we do know: If these payments to government were voluntary, we can be sure that they would be substantially less than present total tax revenue. - Murray Rothbard
In the first place, how much of the deficient good should be supplied? What criterion can the State have for deciding the optimal amount and for gauging by how much the market provision of the service falls short? Even if free riders benefit from collective service X, in short, taxing them to pay for producing more will deprive them of unspecified amounts of private goods Y, Z, and so on. We know from their actions that these private consumers wish to continue to purchase private goods Y, Z, and so on, in various amounts. But where is their analogous demonstrated preference for the various collective goods? We know that a tax will deprive the free riders of various amounts of their cherished private goods, but we have no idea how much benefit they will acquire from the increased provision of the collective good; and so we have no warrant whatever for believing that the benefits will be greater than the imposed costs. The presumption should be quite the reverse. And what of those individuals who dislike the collective goods, pacifists who are morally outraged at defensive violence, environmentalists who worry over a dam destroying snail darters, and so on? In short, what of those persons who find other people’s good their “bad?” Far from being free riders receiving external benefits, they are yoked to absorbing psychic harm from the supply of these goods. Taxing them to subsidize more defense, for example, will impose a further twofold injury on these hapless persons: once by taxing them, and second by supplying more of a hated service. — Murray Rothbard
*******************************
Unfortunately, Rothbard's excellent attempt at economic education was almost entirely eclipsed by his solution (abolishing/annihilating/destroying the government). Rothbard never realized that the demand for defense could easily be determined by allowing each and every taxpayer to decide for themselves whether additional defense was worth more than the alternative uses of their own tax dollars.
Noah Smith wants Wilkinson to write a book. Well...
@artcarden @mungowitz have you ever used multitude's WTP to choose topic for your next article? Invisible hand weeds but rarely plants.— Pragmatarian (@Pragmatarian) September 21, 2016
How intellectually deficient would Wilkinson's book be if it didn't address Rothbard's economic criticism of government? Would it be more or less intellectually deficient than his article?
With all of this in mind, Wilkinson's perspective on basic income shouldn't be a surprise...
I blogged ... Tyler Cowen on Universal Basic Income https://t.co/CTUDWdr8XI via @NiskanenCenter— Will Wilkinson (@willwilkinson) October 29, 2016
Friday, September 16, 2016
Edward Glaeser VS John Quiggin
Who doesn't love a good juxtapose?
Edward Glaeser: If You Build It...
John Quiggin: Face the facts:
I'm pretty sure that Glaeser wins this round.
Am I biased? Well yeah. I'm biased towards markets... but I'm also biased towards Quiggin. He's my favorite liberal economist. So my biases cancel each other out. Yup. I love markets just as much as I love Quiggin. Errrr... well...
Does public provision really work?
In case you missed it...
Which sounds very similar to this...
Which sounds a lot like this...
And...
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A second common feature of pro-war analysis is a failure to take account of the opportunity cost of the resources used in war. The $300 billion used in the Iraq war would have been enough to finance several years of the Millennium Development project aimed at ending extreme poverty in the world, and could have saved millions of lives. But even assuming this is politically unrealistic, the money could surely have been spent on improved health care, road safety and so on in the US itself. At a typical marginal cost of $5 million per live saved, 60 000 American lives could have been saved. This is morally relevant, but is commonly ignored. - John Quiggin, War and its consequences
Given the performance of the Bush Administration so far, it is tempting to agree with Harry that any money saved from the Iraq war would have been wasted elsewhere. But I think this is incorrect, in part because there’s no sign that the Bushies recognise a budget constraint. For them, the war is free: it isn’t even included in the regular Budget which is, in any case, massively in deficit with extra items regularly added to the slate. The bills will have to be paid in the end, but there’s no easy way to predict who will pay or in what form. - John Quiggin, Opportunity costs redux
Even at the cost of lining up with Friedman, I’d be pleased if the idea that war is a mostly futile waste of lives and money became conventional wisdom. Switching to utopian mode, wouldn’t it be amazing if the urge to “do something” could be channeled into, say, ending hunger in the world or universal literacy (both cheaper than even one Iraq-sized war)? - John Quiggin, War and waste
*****************************
See the part about "switching to utopian mode"?
I certainly can't blame Quiggin for switching to utopian mode. Utopian mode is super essential. I spend lots of time in utopian mode. It's why I favor government expansion. But do I imagine a State different from the one possible in the physical world?
Hey Munger... would it be possible in the physical world to have a State where people can choose where their taxes go? Would it be more or less possible in the physical world to have a libertarian government?
However we spin it, a libertarian government would still be a command economy. It's certainly true though that a smaller command economy is better than a larger command economy. But is it possible in the physical world to have a smaller command economy that stays small? If you're going to trust politicians to determine how much money should be spent on war.... then where, when, why and how do you draw the funding line?
Does a limited government sound like an oxymoron? If not.... then what about a limited command economy?
Let's say that we created a market in the public sector by allowing people to choose where their taxes go. Then we'd have a market in the public sector and a market in the private sector. Wouldn't the issue be, in the end, one of public versus private?
What's the difference between public services and private services?
*****************************
Thus, considered in themselves, in their own nature, in their normal state, and apart from all abuses, public services are, like private services, purely and simply acts of exchange. - Frédéric Bastiat, Private and Public Services
Public services are never better performed than when their reward comes only in consequence of their being performed, and is proportioned to the diligence employed in performing them. - Adam Smith, Wealth of Nations
The extent and range of public services are determined by the collective willingness of individuals to purchase them. Services will be extended as long as the aggregate benefits are held to exceed the costs. For the total of all public services, aggregate benefits should approximately equal total costs in terms of sacrificed alternatives. Ideally, the fiscal process represents a quid pro quo transaction between the government and all individuals collectively considered. The benefit principle must be applied in this sense. - James Buchanan, Fiscal Theory and Political Economy
It is these needs which are essentially deficits in the organism, empty holes, so to speak, which must be filled up for health’s sake, and furthermore must be filled from without by human beings other than the subject, that I shall call deficits or deficiency needs for purposes of this exposition and to set them in contrast to another and very different kind of motivation. - Abraham Maslow, Toward a Psychology of Being
This means that the terraces of the Champ-de-Mars are ordered first to be built up and then to be torn down. The great Napoleon, it is said, thought he was doing philanthropic work when he had ditches dug and then filled in. He also said: "What difference does the result make? All we need is to see wealth spread among the laboring classes. - Frédéric Bastiat, What Is Seen and What Is Not Seen
*****************************
Public services and private services both fill holes. There are lots of public and private holes that genuinely need to be filled. Because society's resources are limited, it's a really good idea to prevent the government from filling the wrong holes.
According to Quiggin's Implied Rule of Economics (QIRE)... society's limited resources should be put to more, rather than less, valuable uses. How do we prevent QIRE from being regularly and massively violated?
A. willing to pay to use infrastructure
B. willing to pay for infrastructure
Sure we can charge people for the social costs of their choices... but what are the chances that the charges will accurately reflect the costs? Super slim. This is because one price really does not fit all. A cost, like a benefit, is entirely in the eye/mind/heart of the consumer.
************************
Simply considered, cost is the obstacle or barrier to choice, that which must be got over before choice is made. Cost is the underside of the coin, so to speak, cost is the displaced alternative, the rejected opportunity. Cost is that which the decision-maker sacrifices or gives up when he selects one alternative rather than another. Cost consists therefore in his own evaluation of the enjoyment or utility that he anticipates having to forgo as a result of choice itself. There are specific implications to be drawn from this choice-bound definition of opportunity cost:
1. Cost must be born exclusively by the person who makes decisions; it is not possible for this cost to be shifted to or imposed on others.
2. Cost is subjective; it exists only in the mind of the decision maker or chooser.
3. Cost is based on anticipations; it is necessarily a forward looking or ex ante concept.
4. Cost can never be realized because of the fact that choice is made; the alternative which is rejected can never itself by enjoyed.
5. Cost cannot be measured by someone other than the chooser since there is no way that subjective mental experiences can be directly observed.
- James Buchanan, Introduction: L.S.E Cost Theory in Retrospect
************************
Everybody perceives that they see society. But this perception is wrong. We don't actually see society. What we actually see is a reflection of society. All we can ever see is a reflection of society. This is because all we can ever know about what's really inside people depends entirely on what they choose to reveal. People's projections create society's reflection.
The accuracy of society's reflection is critical. Command economies fail because the reflection is terribly inaccurate. Market economies succeed because the reflection is far more accurate. If we can truly understand why, exactly, there's such a huge disparity in the accuracy of the reflections... then it should be really easy to understand how to improve market economies.
If we have a market in the private sector and a market in the public sector... then we will be able to see two different reflections of society. Will both reflections be equally accurate? Of course not.
In the public sector, people would not have any incentive to conceal their true preferences. This means that people's public projections would be more honest than their private projections. As a result, the reflection in the public sector would be more accurate than the reflection in the private sector. This is why I favor the expansion of government. To be clear, I favor the expansion of a pragmatarian government. I definitely don't favor the expansion of the current government.
Let's take a closer look at one-price-fits-all (OPFA). If we did charge for roads, what could we say about the people who were willing to pay the price? We could say that their payment (allocation) was equal to, or less than, their perception of relative scarcity (valuation)...
allocation <= valuation
What are the chances though that a user's allocation would be equal to their valuation? The chances would be super slim. In most cases the user's allocation would be greater than their valuation.
valuation - allocation = consumer surplus
But what if, rather than charging people to use the road... we gave people the freedom to allocate their taxes to the road and all the other goods in the public sector? Then people would no longer have an incentive to conceal their true preference for the road.
allocation = valuation
valuation - allocation = $0.00
Would tax choice truly eliminate all the consumer surplus in the public sector? Let's imagine a two good public sector with tax choice...
1. Roads
2. Education
The tax rate is essentially the amount of money charged for these two goods. With tax choice, taxpayers would have the freedom to decide how they divvied up their payment between these two goods. If the tax rate was too low then it would mean that most taxpayers would perceive that at least one of these goods was relatively scarce.
Let's say that Frank has a tax obligation of $3,000 dollars. He allocates $2,500 to education and $500 to roads. Does his allocation equal his valuation? Not if he perceives both goods to be in short supply. If he perceives both goods to be in short supply then his allocation will be less than his valuation...
allocation < valuation
valuation - allocation = consumer surplus
Perhaps a diagram would help...
In this diagram we can see that, with user fees, Frank pays a lot more for roads than he pays for education. Which intuitively seems a bit off. Logically it seems pretty intuitive that the user fee for roads should be a lot lower than the user fee for education. Right? But what is the basis for this intuition? Education is more costly than roads? Or, education is more valuable than roads? Or, the demand for education is greater than the demand for roads? Perhaps the intuition looks like this...
education > roads
Education is greater than roads. Ok, sure. But how much, exactly, is it greater?
Thanks to the diagram we can clearly see that Frank's valuation of education is greater than his valuation of roads. We know that Frank is willing to pay more for education than for roads. But user fees can never be custom tailored to Frank. So the user fees he pays for roads and education will never communicate exactly how much he perceives education to be greater than roads. The same is true of all the other users. As a result, with user fees, the proportion of funding for roads and education will never ever be optimal. The balance will always be suboptimal.
With user fees the proportions can only ever be roughly correct. But with tax choice, the proportions will always be 100% correct.
And I suppose that if I was as good at math as Paul Samuelson was then I'd be able to prove this with a beautiful model. Unfortunately, I'm not as good at math as Samuelson was. However, I'm far better at economics than he was. In the grand scheme of things, being good at economics is far better than being good at math. Maybe, in fact, there's something about being good at math that prevents a person from being good at economics. Have any of the seriously good economists been seriously good at math? Nope. I don't think so. So if an economist is good at math then don't trust their economics.
But perhaps I'm seriously overestimating my own econ skills. It's entirely possible. But until I'm proven wrong I'm going to continue believing that I'm right.
A. willing to pay to use infrastructure
B. willing to pay for infrastructure
The difference might seem subtle... but it's fundamentally important.
Glaeser is correct that willingness to pay is the only way to accurately measure the social cost/benefit of public services... but Quiggin is correct that public services shouldn't only be available to those able and willing to pay for them.
How cool is that? They both win! But Glaeser wins bigger because his article contains a fundamentally important economic truth that Quiggin, in another place and time, acknowledged, or recognized, at least to some extent...
When it comes to war, we especially want people to make the wisest choices possible. So it's imperative that we determine people's willingness to pay for war.
Last year Jeremy Corbyn made the wonderful argument that British taxpayers should be free to boycott the military...
Willingness to pay is the only way to prevent QIRE from being violated. So if some people are not willing to pay for war... then they shouldn't be forced to. Conversely, if other people are very much willing to pay for war.... then they should be free to.
What's so incredibly funny (not "haha" funny) is that liberals and conservatives largely oppose this idea. How could they both oppose it?! Ok, it's kinda "haha" funny as well. Right? This paradox is super easy to resolve...
Politicians have no clue which side would "win" and which side would "lose".
With the market we really don't think of "sides" winning or losing. This is simply because there aren't any "sides".
From the economic perspective, is there any benefit to having "sides"? Do we really need "sides" in the public sector? Why can't there simply be organizations in the public sector that have the strongest possible incentive to effectively and efficiently serve people?
Public services are not exempt from basic economic truths. It's a basic economic truth that incentives matter. It's a basic economic truth that every allocation has an opportunity cost. It's a basic economic truth that society's limited resources should be put to more, rather than less, valuable uses (QIRE). It's a basic economic truth that people's willingness to pay the opportunity cost is the only way to prevent QIRE from being regularly and massively violated. It's a basic economic truth that the pragmatarian model is the best way to reveal people's willingness to pay. It's a basic economic truth that people's allocations should reflect their valuations.
Ideally, economists should do a really good job of informing everybody of these basic economic truths. Ideally, the public sector should be based on these basic economic truths. When it finally is, then society's reflection will be far more accurate and everybody's decisions will be far more beneficial.
Like I said in the beginning, John Quiggin is my favorite liberal economist. He's my favorite liberal economist because, out of all the liberal economists, he does the best job of acknowledging/addressing basic economic truths...
But does Quiggin really need to be a liberal economist? Do we really need "sides" in economics? I really don't want to say that Quiggin is my favorite liberal economist. I would really prefer to say that he's my favorite living economist. But I'll only be able to honestly do so when his economic story is more coherent than Tabarrok's economic story.
It's pretty easy to test the coherence of an economist. First have them explain to you why the free-rider problem is a problem. And then have them explain to you why consumer surplus is not a problem.
Here's what will happen if they aren't coherent. First they'll say that a big disparity between allocation and valuation is a bad thing and then they'll say that it's a good thing!
For example...
I think that if economists made the effort to get their story straight then there would be far more interest in tax choice. In any case, there would be far more concern with the elephant in the room (a command economy in the public sector).
Edward Glaeser: If You Build It...
John Quiggin: Face the facts:
I'm pretty sure that Glaeser wins this round.
Am I biased? Well yeah. I'm biased towards markets... but I'm also biased towards Quiggin. He's my favorite liberal economist. So my biases cancel each other out. Yup. I love markets just as much as I love Quiggin. Errrr... well...
Sooner or later the advocates of reform will have to answer the Edison-Blair question: “What works?” And what works is traditional public provision. Through all of these failed experiments, the public sector, much-maligned and chronically underfunded, has carried on with the hard work of educating young people, treating the sick and providing the vast range of services needed in a modern society, on a the basis of an ethic of service to the entire community, and not merely those who can pay for premium service. - John Quiggin, Face the facts:
Does public provision really work?
As I’ve argued previously, a serious consequentialist analysis suggests that war usually has more bad consequences than good. In particular, anyone who takes consequentialism seriously must reckon with the fact that war is a negative sum game. This means either that at least one side in a war has miscalculated or that the costs of war are being borne by people who don’t have a say in the matter. In addition, it’s necessary to take account of rule-based concerns about the effect of decisions to go to war in particular cases weakening generally desirable rules to the contrary. - John Quiggin, War and its consequences
In case you missed it...
This means either that at least one side in a war has miscalculated or that the costs of war are being borne by people who don’t have a say in the matter. - John Quiggin, War and its consequences
Which sounds very similar to this...
The people feeling, during the continuance of the war, the complete burden of it, would soon grow weary of it, and government, in order to humour them, would not be under the necessity of carrying it on longer than it was necessary to do so. The foresight of the heavy and unavoidable burdens of war would hinder the people from wantonly calling for it when there was no real or solid interest to fight for. - Adam Smith, Wealth of Nations
Which sounds a lot like this...
Economics teaches two basic truths: people make wise choices when they are forced to weigh benefits against costs; and competition produces good results. Large-scale federal involvement in transportation means that the people who benefit aren’t the people who pay the costs. The result is too many white-elephant projects and too little innovation and maintenance. - Edward Glaeser, If You Build It…
And...
*****************************
A second common feature of pro-war analysis is a failure to take account of the opportunity cost of the resources used in war. The $300 billion used in the Iraq war would have been enough to finance several years of the Millennium Development project aimed at ending extreme poverty in the world, and could have saved millions of lives. But even assuming this is politically unrealistic, the money could surely have been spent on improved health care, road safety and so on in the US itself. At a typical marginal cost of $5 million per live saved, 60 000 American lives could have been saved. This is morally relevant, but is commonly ignored. - John Quiggin, War and its consequences
Given the performance of the Bush Administration so far, it is tempting to agree with Harry that any money saved from the Iraq war would have been wasted elsewhere. But I think this is incorrect, in part because there’s no sign that the Bushies recognise a budget constraint. For them, the war is free: it isn’t even included in the regular Budget which is, in any case, massively in deficit with extra items regularly added to the slate. The bills will have to be paid in the end, but there’s no easy way to predict who will pay or in what form. - John Quiggin, Opportunity costs redux
Even at the cost of lining up with Friedman, I’d be pleased if the idea that war is a mostly futile waste of lives and money became conventional wisdom. Switching to utopian mode, wouldn’t it be amazing if the urge to “do something” could be channeled into, say, ending hunger in the world or universal literacy (both cheaper than even one Iraq-sized war)? - John Quiggin, War and waste
*****************************
See the part about "switching to utopian mode"?
Then I realized that they want a kind of unicorn, a State that has the properties, motivations, knowledge, and abilities that they can imagine for it. When I finally realized that we were talking past each other, I felt kind of dumb. Because essentially this very realization—that people who favor expansion of government imagine a State different from the one possible in the physical world—has been a core part of the argument made by classical liberals for at least 300 years. - Michael Munger, Unicorn Governance
I certainly can't blame Quiggin for switching to utopian mode. Utopian mode is super essential. I spend lots of time in utopian mode. It's why I favor government expansion. But do I imagine a State different from the one possible in the physical world?
Hey Munger... would it be possible in the physical world to have a State where people can choose where their taxes go? Would it be more or less possible in the physical world to have a libertarian government?
However we spin it, a libertarian government would still be a command economy. It's certainly true though that a smaller command economy is better than a larger command economy. But is it possible in the physical world to have a smaller command economy that stays small? If you're going to trust politicians to determine how much money should be spent on war.... then where, when, why and how do you draw the funding line?
Wartime spending needs are such that the threshold of decision can be crossed with newly imposed taxes or with substantial increases in rate levels of existing taxes. The additional real costs, in opportunity-cost terms, of the expanded spending program are accepted in the emergency setting. Once these needs disappear, however, the bias is shifted in favor of a continued high level of public activity, as opposed to a return to some pre-emergency balance between the public and the private sector. Not having to undergo the apparent sacrifice of real resources generated by new-tax financing, the individual is more willing, in post-emergency periods, to approve spending on the provision of services than he should have been in the pre-emergency fiscal setting. A corollary hypothesis is, of course, that the longer the emergency, the more pronounced this effect will be; that is to say, the older the tax, the more routine the institution, the greater the likelihood that it will be continued in existence. - James Buchanan, Public Finance in Democratic Process
Does a limited government sound like an oxymoron? If not.... then what about a limited command economy?
The issue is not, in the end, one of public versus private. Rather it is the fact that market competition and the profit motive inevitably associated with it is antithetical to the professional and service orientation that is central to human services of all kinds. - John Quiggin, Face the facts:
Let's say that we created a market in the public sector by allowing people to choose where their taxes go. Then we'd have a market in the public sector and a market in the private sector. Wouldn't the issue be, in the end, one of public versus private?
What's the difference between public services and private services?
*****************************
Thus, considered in themselves, in their own nature, in their normal state, and apart from all abuses, public services are, like private services, purely and simply acts of exchange. - Frédéric Bastiat, Private and Public Services
Public services are never better performed than when their reward comes only in consequence of their being performed, and is proportioned to the diligence employed in performing them. - Adam Smith, Wealth of Nations
The extent and range of public services are determined by the collective willingness of individuals to purchase them. Services will be extended as long as the aggregate benefits are held to exceed the costs. For the total of all public services, aggregate benefits should approximately equal total costs in terms of sacrificed alternatives. Ideally, the fiscal process represents a quid pro quo transaction between the government and all individuals collectively considered. The benefit principle must be applied in this sense. - James Buchanan, Fiscal Theory and Political Economy
It is these needs which are essentially deficits in the organism, empty holes, so to speak, which must be filled up for health’s sake, and furthermore must be filled from without by human beings other than the subject, that I shall call deficits or deficiency needs for purposes of this exposition and to set them in contrast to another and very different kind of motivation. - Abraham Maslow, Toward a Psychology of Being
This means that the terraces of the Champ-de-Mars are ordered first to be built up and then to be torn down. The great Napoleon, it is said, thought he was doing philanthropic work when he had ditches dug and then filled in. He also said: "What difference does the result make? All we need is to see wealth spread among the laboring classes. - Frédéric Bastiat, What Is Seen and What Is Not Seen
*****************************
Public services and private services both fill holes. There are lots of public and private holes that genuinely need to be filled. Because society's resources are limited, it's a really good idea to prevent the government from filling the wrong holes.
According to Quiggin's Implied Rule of Economics (QIRE)... society's limited resources should be put to more, rather than less, valuable uses. How do we prevent QIRE from being regularly and massively violated?
If people are willing to pay to use infrastructure, we can assume that that infrastructure provides social value. - Edward Glaeser, If You Build It…
A. willing to pay to use infrastructure
B. willing to pay for infrastructure
The correct fix for crowded roads is to charge people for the social costs of their choices. Singapore instituted congestion pricing in 1975, and now operates state-of-the-art electronic road pricing, with tolls that vary by usage and time of day. London has now had congestion pricing for a decade. Both cities have eased traffic as a result. Yet America still acts as if charging drivers is a crime. - Edward Glaeser, If You Build It…
Sure we can charge people for the social costs of their choices... but what are the chances that the charges will accurately reflect the costs? Super slim. This is because one price really does not fit all. A cost, like a benefit, is entirely in the eye/mind/heart of the consumer.
************************
Simply considered, cost is the obstacle or barrier to choice, that which must be got over before choice is made. Cost is the underside of the coin, so to speak, cost is the displaced alternative, the rejected opportunity. Cost is that which the decision-maker sacrifices or gives up when he selects one alternative rather than another. Cost consists therefore in his own evaluation of the enjoyment or utility that he anticipates having to forgo as a result of choice itself. There are specific implications to be drawn from this choice-bound definition of opportunity cost:
1. Cost must be born exclusively by the person who makes decisions; it is not possible for this cost to be shifted to or imposed on others.
2. Cost is subjective; it exists only in the mind of the decision maker or chooser.
3. Cost is based on anticipations; it is necessarily a forward looking or ex ante concept.
4. Cost can never be realized because of the fact that choice is made; the alternative which is rejected can never itself by enjoyed.
5. Cost cannot be measured by someone other than the chooser since there is no way that subjective mental experiences can be directly observed.
- James Buchanan, Introduction: L.S.E Cost Theory in Retrospect
************************
Everybody perceives that they see society. But this perception is wrong. We don't actually see society. What we actually see is a reflection of society. All we can ever see is a reflection of society. This is because all we can ever know about what's really inside people depends entirely on what they choose to reveal. People's projections create society's reflection.
The accuracy of society's reflection is critical. Command economies fail because the reflection is terribly inaccurate. Market economies succeed because the reflection is far more accurate. If we can truly understand why, exactly, there's such a huge disparity in the accuracy of the reflections... then it should be really easy to understand how to improve market economies.
If we have a market in the private sector and a market in the public sector... then we will be able to see two different reflections of society. Will both reflections be equally accurate? Of course not.
Under most real-world taxing institutions, the tax price per unit at which collective goods are made available to the individual will depend, at least to some degree, on his own behavior. This element is not, however, important under the major tax institutions such as the personal income tax, the general sales tax, or the real property tax. With such structures, the individual may, by changing his private behavior, modify the tax base (and thus the tax price per unit of collective goods he utilizes), but he need not have any incentive to conceal his "true" preferences for public goods. - James M. Buchanan, The Economics of Earmarked Taxes
In the public sector, people would not have any incentive to conceal their true preferences. This means that people's public projections would be more honest than their private projections. As a result, the reflection in the public sector would be more accurate than the reflection in the private sector. This is why I favor the expansion of government. To be clear, I favor the expansion of a pragmatarian government. I definitely don't favor the expansion of the current government.
Let's take a closer look at one-price-fits-all (OPFA). If we did charge for roads, what could we say about the people who were willing to pay the price? We could say that their payment (allocation) was equal to, or less than, their perception of relative scarcity (valuation)...
allocation <= valuation
What are the chances though that a user's allocation would be equal to their valuation? The chances would be super slim. In most cases the user's allocation would be greater than their valuation.
valuation - allocation = consumer surplus
But what if, rather than charging people to use the road... we gave people the freedom to allocate their taxes to the road and all the other goods in the public sector? Then people would no longer have an incentive to conceal their true preference for the road.
allocation = valuation
valuation - allocation = $0.00
Would tax choice truly eliminate all the consumer surplus in the public sector? Let's imagine a two good public sector with tax choice...
1. Roads
2. Education
The tax rate is essentially the amount of money charged for these two goods. With tax choice, taxpayers would have the freedom to decide how they divvied up their payment between these two goods. If the tax rate was too low then it would mean that most taxpayers would perceive that at least one of these goods was relatively scarce.
Let's say that Frank has a tax obligation of $3,000 dollars. He allocates $2,500 to education and $500 to roads. Does his allocation equal his valuation? Not if he perceives both goods to be in short supply. If he perceives both goods to be in short supply then his allocation will be less than his valuation...
allocation < valuation
valuation - allocation = consumer surplus
Perhaps a diagram would help...
In this diagram we can see that, with user fees, Frank pays a lot more for roads than he pays for education. Which intuitively seems a bit off. Logically it seems pretty intuitive that the user fee for roads should be a lot lower than the user fee for education. Right? But what is the basis for this intuition? Education is more costly than roads? Or, education is more valuable than roads? Or, the demand for education is greater than the demand for roads? Perhaps the intuition looks like this...
education > roads
Education is greater than roads. Ok, sure. But how much, exactly, is it greater?
Thanks to the diagram we can clearly see that Frank's valuation of education is greater than his valuation of roads. We know that Frank is willing to pay more for education than for roads. But user fees can never be custom tailored to Frank. So the user fees he pays for roads and education will never communicate exactly how much he perceives education to be greater than roads. The same is true of all the other users. As a result, with user fees, the proportion of funding for roads and education will never ever be optimal. The balance will always be suboptimal.
With user fees the proportions can only ever be roughly correct. But with tax choice, the proportions will always be 100% correct.
And I suppose that if I was as good at math as Paul Samuelson was then I'd be able to prove this with a beautiful model. Unfortunately, I'm not as good at math as Samuelson was. However, I'm far better at economics than he was. In the grand scheme of things, being good at economics is far better than being good at math. Maybe, in fact, there's something about being good at math that prevents a person from being good at economics. Have any of the seriously good economists been seriously good at math? Nope. I don't think so. So if an economist is good at math then don't trust their economics.
But perhaps I'm seriously overestimating my own econ skills. It's entirely possible. But until I'm proven wrong I'm going to continue believing that I'm right.
A. willing to pay to use infrastructure
B. willing to pay for infrastructure
The difference might seem subtle... but it's fundamentally important.
Glaeser is correct that willingness to pay is the only way to accurately measure the social cost/benefit of public services... but Quiggin is correct that public services shouldn't only be available to those able and willing to pay for them.
How cool is that? They both win! But Glaeser wins bigger because his article contains a fundamentally important economic truth that Quiggin, in another place and time, acknowledged, or recognized, at least to some extent...
This means either that at least one side in a war has miscalculated or that the costs of war are being borne by people who don’t have a say in the matter. - John Quiggin, War and its consequences
Economics teaches two basic truths: people make wise choices when they are forced to weigh benefits against costs; and competition produces good results. - Edward Glaeser, If You Build It…
Until people are made to bear the full costs of their decisions, those decisions are unlikely to be socially sound, in this as in other areas of public policy. - Richard Bird, Charging for Public Services: A New Look at an Old Idea
When it comes to war, we especially want people to make the wisest choices possible. So it's imperative that we determine people's willingness to pay for war.
Last year Jeremy Corbyn made the wonderful argument that British taxpayers should be free to boycott the military...
Could the Minister consider whether it would be right to introduce such a measure? The Italian Parliament has draft legislation before it that would allow Italian taxpayers to divert a proportion of their tax from the armed services to peace building, and there are three relevant petitions before this House. Given the huge rebuilding costs that will fall to this country and others in Kosovo and elsewhere where there has been conflict, perhaps we should have a peace-building fund that could invest in conflict resolution, reconstruction and trying to prevent terrible wars and civilian conflicts.
British taxpayers have a right of conscience not to participate in the armed forces in time of conscription and should have a similar right in time of peace to ensure that part of their tax goes to peace, not war. - Jeremy Corbyn, Taxpayers (Conscience)
Willingness to pay is the only way to prevent QIRE from being violated. So if some people are not willing to pay for war... then they shouldn't be forced to. Conversely, if other people are very much willing to pay for war.... then they should be free to.
What's so incredibly funny (not "haha" funny) is that liberals and conservatives largely oppose this idea. How could they both oppose it?! Ok, it's kinda "haha" funny as well. Right? This paradox is super easy to resolve...
It is impossible for anyone, even if he be a statesman of genius, to weigh the whole community's utility and sacrifice against each other. - Knut Wicksell, A New Principle of Just Taxation
Politicians have no clue which side would "win" and which side would "lose".
With the market we really don't think of "sides" winning or losing. This is simply because there aren't any "sides".
From the economic perspective, is there any benefit to having "sides"? Do we really need "sides" in the public sector? Why can't there simply be organizations in the public sector that have the strongest possible incentive to effectively and efficiently serve people?
Public services are not exempt from basic economic truths. It's a basic economic truth that incentives matter. It's a basic economic truth that every allocation has an opportunity cost. It's a basic economic truth that society's limited resources should be put to more, rather than less, valuable uses (QIRE). It's a basic economic truth that people's willingness to pay the opportunity cost is the only way to prevent QIRE from being regularly and massively violated. It's a basic economic truth that the pragmatarian model is the best way to reveal people's willingness to pay. It's a basic economic truth that people's allocations should reflect their valuations.
Ideally, economists should do a really good job of informing everybody of these basic economic truths. Ideally, the public sector should be based on these basic economic truths. When it finally is, then society's reflection will be far more accurate and everybody's decisions will be far more beneficial.
Like I said in the beginning, John Quiggin is my favorite liberal economist. He's my favorite liberal economist because, out of all the liberal economists, he does the best job of acknowledging/addressing basic economic truths...
.@bretsikkink Keep a lookout for my book in progress, Economics in Two Lessons, a response to Hazlitt (and so, to Bastiat also).— JohnQuiggin (@JohnQuiggin) September 12, 2016
But does Quiggin really need to be a liberal economist? Do we really need "sides" in economics? I really don't want to say that Quiggin is my favorite liberal economist. I would really prefer to say that he's my favorite living economist. But I'll only be able to honestly do so when his economic story is more coherent than Tabarrok's economic story.
It's pretty easy to test the coherence of an economist. First have them explain to you why the free-rider problem is a problem. And then have them explain to you why consumer surplus is not a problem.
Here's what will happen if they aren't coherent. First they'll say that a big disparity between allocation and valuation is a bad thing and then they'll say that it's a good thing!
For example...
Nice piece by @mslaurabliss on Uber/"consumer surplus" https://t.co/g3IutnF3OJ addressing this Cohen, etc NBER piece https://t.co/PcSVog1qKm— Michael Munger (@mungowitz) September 15, 2016
I think that if economists made the effort to get their story straight then there would be far more interest in tax choice. In any case, there would be far more concern with the elephant in the room (a command economy in the public sector).
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