The public sector is the forbidden fruit

And the Lord God commanded the man, saying, Of every tree of the garden thou mayest freely eat: 

But of the tree of the knowledge of good and evil, thou shalt not eat of it: for in the day that thou eatest thereof thou shalt surely die. -  Genesis 2: 16-17

My version...

And the Government commanded the taxpayer, saying, Of every place in the world thou mayest freely shop: 

But in the public sector thou shalt not shop: for in the day that thou shoppeth therein thou shalt surely die.

I guess that would make me the serpent?  

Now Xero was more subtil than any human which the Government had encountered.

And he said unto the taxpayer, Yea, hath the Government said, Ye shall not shop in the public sector?

And the taxpayer said unto Xero, We may shop anywhere in the world:

But in the public sector, the Government hath said, Ye shall not shop in it, or consider doing so, lest ye die. 

And Xero said unto the taxpayer, Ye shall not surely die: 

For the Government doth know that in the day ye shop therein, then your eyes shall be opened, and ye shall be as the Government, knowing necessary and unnecessary.   

And when the taxpayer saw that the public sector was good for shopping, and that there was much to buy, and a place to be desired to make one wise, he told everyone to shop with him in the public sector. 

And the eyes of everyone were opened, and they knew that they weren't adequately covered; and they shopped to better protect themselves.  

Inspired by my reply to a reply: The Demand For Defense?

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But here's exactly what you say to your farmer... "Hey farmer Frank! Please grow some more of these awesome artichokes.... but please don't shop for yourself in the public sector!"

It's like the public sector is the forbidden fruit in the garden of Eden. You give farmer Frank the freedom to shop for himself anywhere in the world... except for the public sector. You give Frank the farmer the freedom to buy tractors from Germany, fertilizer from Brazil and artichoke seeds from Israel. You give Frank the farmer the freedom to shop in Home Depot, Walmart, Best Buy and Target. You trust farmer Frank to correctly gauge the necessity of every single good in the world... except for the goods in the public sector. You trust farmer Frank to correctly gauge that silkworms, horses, clowns, hot-air balloons, jet skis and hula hoops aren't necessary for growing artichokes... but you're concerned that he'll incorrectly gauge whether roads, bridges, healthcare, education and defense are necessary for growing artichokes.

The fact of the matter is that you don't need to worry about Frank the farmer incorrectly gauging the necessity of any goods because he's the one who has the most to lose if he does so. If Frank the farmer incorrectly gauges the necessity of roads... then consumers will buy less of his artichokes and more of Bob the farmer's artichokes. Bob lives in a different county or state or country... and he correctly gauged the necessity of roads. This results in big profits for Bob and huge losses for Frank. Therefore, Frank has the most to lose by incorrectly gauging the necessity of things just like Bob has the most to gain by correctly gauging the necessity of things.

Incentives really matter if you want the necessity of things to be correctly gauged. Compared to congresspeople... taxpayers have far more incentive and ability to correctly gauge the necessity of things. Therefore, we should give taxpayers the option to shop for themselves in the public sector.

Are you confident in congress's competence?

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Imagine if you needed brain surgery.  Would you ever seriously consider conducting the surgery yourself?  I think that most of us would choose to leave brain surgery to the brain surgeons.  There's little doubt that brain surgeons are uniquely and supremely qualified to conduct brain surgery.  Therefore, we put our brains in their hands.

Now imagine that you had the option to spend your taxes yourself (pragmatarianism FAQ).  Would you ever seriously consider choosing where your taxes go?  Or, would you choose to leave tax allocation to your elected representatives?  Do you think that congresspeople are uniquely and supremely qualified to spend your taxes?  Would you choose to put your taxes in their hands?

Nobody, that I know of, debates whether people should have the option to conduct brain surgery on themselves.  But ask somebody whether people should have the option to spend their taxes themselves and you might end up in a pretty big debate.  Why is that?

How many people would choose to shop for themselves in the public sector?  What percentage of the purse would they control?  Maybe 50%?  Taxpayers would spend half of the public funds themselves and congress would spend the other half?  Would people who wanted to shop for themselves in the public sector be more conservative?  Or liberal?  Rich... or poor?  Educated... or uneducated?  Would professionals shop for themselves or have congress shop for them?  Would brain surgeons choose to put their taxes into the hands of congress like congress chooses to put their brains into the hands of brain surgeons?

If you're worried about giving people the option to directly allocate their taxes... then you're worried about whether people are competent enough to recognize competence.  Except, the very premise of voting is that people are competent enough to recognize competence.  So if you trust voters to discern which candidates are the most supremely and uniquely qualified to spend their taxes... then it requires a bit of uh... flexibility... to twist around and argue that you don't trust taxpayers to discern whether or not congress is supremely and uniquely qualified to spend their taxes.

In a pragmatarian system there would be two main ways for the people to indicate that a politician is supremely and uniquely qualified to spend their taxes...

1. People could give the politician their vote
2. People could give the politician their taxes

If you trust the first way, then how could you possibly distrust the second way?

And if you don't trust the first way, then you should really want to have the option to directly allocate your taxes.  It would be the only way to keep your hard-earned taxes out of incompetent hands.

Nobody wants to put their brain into incompetent hands.  Why would it be any different with taxes?  It seems pretty straightforward that giving taxpayers the option to directly allocate their taxes would be the best way to minimize the amount of taxes that end up in incompetent hands.


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Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority. — Frédéric Bastiat, The Law 

Consumption Tax vs Income Tax

Scott Sumner's recent blog entry begins with... "It's difficult to think of a more bizarre and foolish policy than the practice of taxing capital"...  and ends with...

A simpler and fairer solution would be to abolish all taxes on capital, and start over. Think about what the tax system is trying to achieve, and implement a tax system that achieves those goals in the fairest and most efficient way possible. In my view that would be a progressive consumption tax.

Taxing capital is more bizarre and foolish than allowing congresspeople to spend everybody's taxes?

Let's say that Sumner believes that congresspeople are omniscient.  This belief of his would explain why he has no problem with congresspeople spending his taxes.  Congress would know Sumner's preferences/circumstances and spend his taxes accordingly.  He would benefit from their spending decisions.  Of course he would have to assume that congress is actually interested in his benefit.

Let's say that Sumner does not believe that congresspeople are omniscient.  Then he either believes 1. that congress can adequately discern his preferences/circumstances or 2. that his preferences/circumstances are irrelevant.

I'm pretty sure that Sumner doesn't believe that his preferences/circumstances are irrelevant.  Therefore, he must believe that congress can adequately discern his preferences/circumstances.  Why does his believe this?  Because he can vote?

Sumner votes for Elizabeth Warren and she somehow knows his preferences/circumstances.  Not because she's omniscient... but because she has a drone follow Sumner around everywhere.  If Sumner is mugged then Warren decides how much of his taxes to give to the police.  Not exactly sure why the drone didn't just electrocute the mugger.

I can't figure out Sumner's beliefs.  Can you?  Why should we have to guess?  Is it really that difficult for him to share his beliefs on the topic of preference revelation?  Maybe he's embarrassed of his beliefs?

In the X-Files... Mulder isn't embarrassed to share his beliefs.  This often embarrasses his partner.  For some reason I derive quite a bit of utility from her embarrassment.  Probably because it reminds me of Linus sharing his belief in the Great Pumpkin.  I'd probably be embarrassed if I had a friend that believed in the Great Pumpkin.

Maybe Sumner's friends encourage him not to publicly share his beliefs in the efficacy of congress spending everybody's taxes?

Yesterday I spent $18 dollars for an orchid.  The orchid is a drought tolerant epiphyte.  My decision to purchase the orchid communicates something about my preferences/circumstances.  Sumner believes that this exchange should be taxed.  And I suppose we could pretend real hard that congress looks at everybody's purchases and aligns expenditures accordingly.  The supply of orchids depends on certain public goods.  So the supply of orchids can be improved by improving the supply of the relevant public goods.  But if congress can adequately improve the supply of the relevant public goods... then why can't they adequately improve the supply of the relevant private goods?

From my perspective... we should eliminate every tax but the income tax.  With a pragmatarian system, the income tax would simply indicate that people are legally obligated to spend a certain percentage of their income in the public sector.  I'm pretty sure that everybody's preferences/circumstances are just as relevant for public goods as they are for private goods.  And spending is better than voting at communicating preferences/circumstances.

How much better is spending at communicating preferences/circumstances?

Limit Socialism To California

Reply to: You assume that political equality means one person, one vote.

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How, exactly, does a “Constitutional Republic with a limited government” negate the problems with giving unequally rational people equal influence over choosing our representatives? Our representatives are in charge of the constitution. So you’re essentially giving unequally rational people equal influence over the constitution.

I’ve read Ayn Rand… but I’ll admit that I haven’t thoroughly read her work. So it’s entirely possible that I’m missing something. That being said, I sincerely doubt that what I haven’t read will cancel out what I have read….

The proper functions of a government fall into three broad categories, all of them involving the issues of physical force and the protection of men’s rights: the police, to protect men from criminals — the armed services, to protect men from foreign invaders — the law courts, to settle disputes among men according to objective laws. — Ayn Rand, The Nature of Government

However you spin it… this is socialism. True… it’s limited socialism… but that doesn’t make it any less socialism. Elected representatives say, “We’re going to allocate more resources to defense and less resources to police and courts because doing so will better protect life, liberty and the pursuit of happiness”.

You argue that the visible hand should control X, Y and Z… but you also argue that the visible hand shouldn’t control A through W.

It’s like arguing that we should limit socialism to California. As if socialism somehow works in California but it doesn’t work in all the other states. As if the rules of economics are somehow different in California. Just like the rules of physics are somehow different in New York.

You and I both want the market to allocate A through W. But that’s not going to happen as long as you continue to argue that the market shouldn’t allocate X, Y and Z.

And if you believe that the market shouldn’t allocate X, Y and Z… then this means that you really don’t have a solid grasp on why the market should allocate A through W.

The benefit of consumer choice is that everybody wants the most bang for their buck. Consumers don’t choose to put their money into Friday’s hands. Why not? Because he can’t give them any pumpkins in return. Why not? Because he roasted and ate all his pumpkin seeds rather than save any to sow. Friday completely failed to consider other people’s interests… so of course consumers are not going to want him to have more influence over how society’s limited resources are used.

As a result of consumers striving to ensure that their hard-earned money isn’t wasted… society’s limited resources are placed in the most rational hands. And because people are unequally rational… the logical result of markets is that people are unequally influential. Some people have more influence than other people because some people earn more income than other people.

Earned influence is just as important in the public sector as it is in the private sector. Placing guns in the most rational hands is just as important as placing seeds in the most rational hands. Which is exactly why a market in the public sector is just as important as a market in the private sector.

You can benefit from this story of mine without paying for it. This is what makes it a public good. The question is… are you truly benefiting from this story? I don’t know. Why don’t I know? Because I’m not omniscient.

The fundamental and extremely unappreciated fact that people are not omniscient is just as relevant for public goods as it is for private goods. Believing otherwise is what makes libertarianism/objectivism logically absurd.

Look…

This is what Medium might look like if people truly appreciated the fact that nobody is omniscient.

If you benefited from a story… then you could communicate the size of your benefit to everybody simply by clicking on one of the *heart* buttons. Clicking on the 5 cent *heart* would instantly transfer 5 cents from your digital wallet to the creator’s digital wallet. Then, when people searched for stories and sorted the results by value, the creator’s story would show up 5 cents closer to the top of the results.

My girlfriend just told me that she’s upset that her organization’s directors want to fire the new Chief Operating Officer. Evidently my gf is a fan of the new COO. How many other employees are in the same boat? What would her organization look like if people truly appreciated the fact that nobody is omniscient?

The other day my gf was upset because a show that she enjoys on Netflix was canceled. What would Netflix look like if people truly appreciated the fact that nobody is omniscient?

Socialism is the idea that adequately good allocation decisions can be made without knowing the true demand.

Should Women Be Allowed To Shop?

Reply to: 2.1 How to fix capitalism: part one

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You made the effort to explain that prices help guide society’s limited resources to their most valuable uses. But then you didn’t even mention the fact that prices are absent from the public sector.

If we truly do need prices to efficiently allocate resources… then wouldn’t it be a problem that the public sector doesn’t have them? If, on the other hand, prices truly prevent resources from being efficiently allocated…. then wouldn’t it be a problem that the private sector has them?

In the private sector… consumers shop/spend to communicate what the greater good truly is. In the public sector…consumers do not shop/spend to communicate what the greater good truly is. So which method more accurately communicates what the greater good truly is… shopping/spending… or not shopping/spending?

Here I am right now allocating my limited time to replying to your story. Even though this is the private sector… there aren’t any prices involved. Does this mean that it’s impossible for me to efficiently allocate my resources to your story? Nope… because what makes efficient (valuable) allocation possible is 1. my valuation of the alternative uses of my limited resource and 2. my sacrifice of the less valuable uses. This is how society’s limited resources are put to their most valuable uses. This is how society’s limited resources are efficiently allocated. This is how we ensure that the distribution of society’s limited resources creates the most benefit for society. 

Prices aren’t truly needed… and to focus on them distracts from what is truly needed: personal valuation/sacrifice. Society, if it’s to maximize the value it derives from its limited resources, needs you to have the freedom to accurately communicate what’s most important to you. Market communication is far more accurate than not-market communication because in a market you’re sacrificing the less valuable uses of your own limited resources. Your communication becomes incredibly less accurate when you sacrifice resources that you haven’t earned the right to sacrifice. 

The fact of the matter is that no two people are equally effective at earning the right to decide how society’s limited resources should be used. We’re all different so it should be a given that some people are better than other people at using resources. No two people are equally resourceful just like no two people are equally wasteful. Society maximizes its benefit by putting its limited resources into the best hands. Because hands aren’t all equally effective… the logical result is that some people will have a lot more influence than other people. 

The public sector doesn’t have personal valuation/sacrifice (communication) so it’s a given that far too many of society’s limited resources will end up in less effective hands. 

This doesn’t mean, however, that we need to eliminate the government. When it comes to public goods… personal communication isn’t as accurate as it is for private goods. Because… why by the cow when you can get the milk for free? It’s pretty reasonable for people not to spend their money if they don’t have to. Except for the part where spending money is the only way that people can accurately communicate what’s truly important to them. 

Producers can’t put society’s limited resources to their most valuable uses if they don’t know which uses are the most valuable. Producers aren’t omniscient. They can’t magically pull our true valuations out of a hat. Producers can only know our valuations when we communicate our valuations by spending our own money. In a world where everybody truly was omniscient… communication would be a waste of everybody’s time and energy. 

So, because of the free-rider problem, coercing people to contribute to public goods (taxation) is beneficial… but, because producers aren’t omniscient, preventing people from choosing for themselves which public goods they spend their taxes on is detrimental. 

Imagine if we prevented women from shopping for themselves in the private sector. Would the supply of private goods increase or decrease in value? Consider these two possible approaches…

Approach A: Women could give their money to any man who was willing to be their personal shopper. For example… if a woman wanted an iPhone…. she could simply give her money to her brother and he would buy the iPhone for her. Assuming of course that he had nothing better to do with his time than be her personal shopper. 

Approach B: Women would put all their money into a pool and elect 500 or even 1000 representatives (impersonal shoppers) to decide how to spend all the money. Representatives would decide, as a group, which phones are the best… they’d spend a portion of the money accordingly… and the purchased phones would be delivered directly to each and every woman who needed a new one. If women weren’t happy with their phones… then they could simply vote for different impersonal shoppers. 

The “drawback” of Approach A is that the women would still have to decide for themselves between an iPhone and all the other types of phones. And it’s really hard to figure out which phone is best! The “benefit” of Approach B is that elected representatives would do all the homework for all the women. 

Approach A would save women some time, effort and energy… but Approach B would save them a lot more time, effort and energy. Women would be able to spend all this freed-up up time, effort and energy on enjoying life! Guys would be super envious. 

In terms of creating value… how would you rank the different approaches? Maybe like this?

1. Approach B
2. Approach A
3. Approach C (Current approach)

Yet, for some reason, I’ve never once a heard any woman advocate replacing Approach C with either Approach B or Approach A. 

The reality is that Approach B would destroy immensely more value than Approach A would. Approach A is a moronic idea… Approach B is an incredibly moronic idea. It should be painfully obvious that the consequences of Approach B would be extremely detrimental. Eliminating women’s direct and personal choices as consumers would result in a gigantic decrease in the variety, quality, quantity and affordability of private goods that are important to women. How absurd would it be to blame these detrimental consequences on the invisible hand? 

Right now women can’t shop for themselves in the public sector. And neither can men. We all have to rely on Approach B when it comes to public goods. 

Yet, here you are largely blaming society’s biggest problems on the presence of the invisible hand. But in fact, all these problems are the direct consequence of the invisible hand being absent from the public sector. Blocking the invisible hand from the public sector guarantees that public funds are going to be inefficiently allocated. And of course there are going to be problems when public funds are inefficiently allocated! We could easily eliminate these problems simply by giving people the freedom to shop for themselves in the public sector (pragmatarianism). 

If Adam Smith had been able to stand on his own shoulders then he would have realized this. But it really wasn’t his job to stand on his shoulders… it’s our job. Standing on his shoulders allows us to clearly see that, whether we’re talking about private goods or public goods, what’s truly important to individuals truly matters. 

Unfortunately… you’re not standing on Smith’s shoulders. You’re sitting on his shoulders. Sitting on his shoulders is certainly better than clinging to his back though. So I’m going to recommend your story. But I sincerely hope that you make the effort to try and appreciate how the invisible hand is just as necessary for public goods as it is for private goods. 

It’s entirely possible that I’m wrong! Am I? Well…I’ve searched long and hard for a reasonable explanation of how public funds can be efficiently allocated without the invisible hand. And I have yet to find one. 

The key concept here is understanding that a good explanation for why not-markets can put tax dollars to their most valuable uses will also be a good explanation for why not-markets can put all dollars to their most valuable uses.  

Markets vs Not-markets

Reply to: A limited government will benefit Generation Y

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Encouraging the youth to engage in legal plunder probably isn’t the best way to eliminate legal plunder. In some cases it does make sense to fight fire with fire… but I’m pretty sure that this isn’t one of them. 

With politics… taxpayers put their money into one big pot and voters elect a small group of planners to decide how to spend it. Why would you want to encourage people to participate in this process? Why would you want to legitimize it? The goal should be to help people thoroughly understand just how absurd and harmful this method of allocating society’s limited resources truly is. 

Right now we have a mixed economy. This means that we have a market economy in the private sector and a not-market economy in the public sector. The fact that we have a mixed economy implies that a not-market economy creates just as much value as a market economy does. If this implication is correct though… then shouldn’t we also want a non-market economy in the private sector? 

If we replaced the market in the private sector with a not-market… then think about just how much time, effort and energy this would save consumers! For example, here’s a story on Medium that I stumbled across a few days ago…

So, there I was. Planted firmly in front of the beer fridge at the local Whole Foods, confronted with more options than I could process. I was paralyzed by choice. — Stephen Weiss, Musings in the beer aisle

Poor Stephen Weiss was paralyzed by choice! He was overwhelmed with the variety and selection of beers! Don’t you feel sorry for the guy? He was having to exert so much mental energy and effort trying to decide which beers would create the most value for Kate and himself. 

Each year Weiss spends an incredible amount of time and energy trying to decide how to spend his own hard-earned money. Multiply this time and energy by the 300 billion consumers in America and you end up with a sun’s worth of time and energy. This epic quantity of time and energy that consumers spend in one year could be saved simply by replacing the market with a not-market. 

Weiss and all the other consumers would put their private money into one big pot and voters would elect a small group of planners to decide how to spend it. Voila! A sun’s worth of time and energy would be freed-up for more valuable uses! Weiss could spend all his new-found time and energy with Kate and all the other people that he cares about. He would never have to worry about shopping again. The stress and strain of having to decide what to put into his shopping cart would quickly be replaced with the joy and happiness of outsourcing all his spending decisions to superior individuals. 

The economy would no longer be mixed. We’d have a not-market in the public sector and a not-market in the private sector. But would we really need two not-markets though?. Why would you want superior individuals spending your public dollars and less superior individuals spending your private dollars? It would make a lot more sense to have the most superior individuals spending all your dollars. 

I’m sure that you have at least a few arguments against allowing the most superior individuals to spend all your dollars. But they can’t be very good arguments. Because if they were… then they would be equally applicable against allowing superior individuals to spend your public dollars (taxes). Clearly your arguments aren’t so great though because here you are endorsing not-markets. 

Replacing the market in the private sector with a not-market would destroy value. It would destroy an immense amount of value. This is because consumer choice is the only way that we can help ensure that the maximum amount of value is created. We all greatly benefit when everybody is free to decide for themselves which items they put in their shopping carts. Yes, it does require effort and energy to decide which items will create the most value… but this is the only way to ensure that the most value is created. 

If replacing the market in the private sector with a not-market would destroy massive amounts of value… then replacing the not-market in the public sector with a market would create massive amounts of value. This value-creating replacement could easily be accomplished by giving taxpayers the freedom to choose where their taxes go (pragmatarianism).

Would giving Stephen Weiss the freedom to shop in the public sector use up even more of his limited time/energy/effort? That would be entirely up to him. Just like nobody forces him to shop at Whole Foods… nobody would force him to shop in the public sector. Congress would still be there…. so if Weiss was entirely happy with how they were spending his hard-earned money… then he wouldn’t have any to reason to stress and strain his brain trying to choose the most valuable method of protecting the environment.

Furthermore, we don’t live in a utopia where all of a sudden a new type, party or form of Government will provide an equal batch of policies that benefit old and young alike (although many seem to think this fairy tale land exists).

Not sure if you would consider pragmatarianism to be Utopian. But… you are arguing for a limited government. And a limited government means that the not-market will allocate less resources and the market will allocate more resources. So in order for your argument to be effective… you need to effectively explain why you want the market to allocate more resources. In other words, you need to effectively explain what’s so great about consumer choice. You need to help people understand what the benefit is of Stephen Weiss being free to strain his brain trying to decide which beers he puts into his shopping cart. You need to help brightly illuminate how Weiss’s beer choices positively impact the variety, quantity, quality and affordability of beer.

It’d be great if I could claim that I effectively explain the value of consumer choice… but unfortunately… my explanations fall well short of effective. Two heads are better than one though! Since we both want markets to allocate more resources… hopefully you can improve on my explanations! 

Centralized vs Decentralized Government

Reply to replies: "senseless human greed"

So it sounds like Xerox's limited understanding of economics is based on the "rational choice" model. No wonder his posts are such bollocks. - Strange

If this is your perception then you're not familiar with either model. The rational choice model is based on the idea that people usually make rational economic choices.

The rational consequence model, on the other hand, doesn't say anything about "usually". Instead, it's based on the idea that irrational choices have rational consequences. If Bob, who inherits $50,000, spends that money irrationally, then this will logically decrease his influence (over how society's limited resources are used). If, on the other hand, he spends that money rationally, then this will increase his influence.

Because irrational choices have rational consequences... there's no point in debating whether or not people are Homo economicus. Anybody who consistently makes irrational choices will have decreasingly smaller amounts of resources to irrationally allocate.

Therefore, the market doesn't need everybody to always make rational choices in order for it to maximize benefit. It just needs to punish irrational choices and reward rational choices... and that's exactly what it does. Taxpayers have more income/influence as a consequence of rational choices that they've made in the past. Arbitrarily decreasing their influence in the public sector places massive amounts of resources in less rational hands.

What i see as the major problem with this idea is how the hell is anyone of the agencies supposed to do any sort of budgeting? The constant flux of funds with no predictability would make it impossible and shut most of them down in rapid order. - Paleoichneum

Countless for-profit and non-profit organizations in the private sector manage to budget themselves despite the fact that they are fully subjected to the vagaries of demand. What's the alternative?

Should your favorite restaurant get paid to serve people who aren't there? Should you pay some kid to shovel snow during summer? Should people continue giving Apple the same amount of money regardless of what Apple does with it?

People don't exist to ensure that McDonald's is optimally funded. McDonald's exists to ensure that people's hunger is optimally satisfied. The more effectively McDonald's does its job... the more money it will receive.

Severing the direct connection between performance and reward will have logically detrimental consequences.

We don't exist for the government... the government exists for us. What the government does with our limited resources should provide us with the maximum benefit. And this can only occur when people are given the freedom to use their tax dollars to accurately communicate which government organizations (GOs) are providing them with the most benefit. Less beneficial GOs will have less resources to allocate and more beneficial resources will have more resources to allocate. Influence will be correctly proportioned to benefit provided.

What tool does evolution use for managing a species that, due to the error we call "mutation", ceases to be the most fit for its niche? Extinction. To avoid that outcome, we wield our governmental power differently than we wield our private purchasing power. - billvon

Centralization decreases the risk of extinction? So having humans all on one planet decreases the risk of extinction? You've got it really backwards. Decentralization is how we decrease the risk of extinction. - Xero

Nope, never claimed that. That is a strawman you have created.
It is difficult to have a serious discussion with someone who resorts to such childish tactics. - billvon

You said that we need the government as it currently is (centralized) in order to decrease the risk of extinction. Because I'm pretty sure that you didn't say that we need a decentralized government (pragmatarianism) in order to decrease the risk of extinction. And those are pretty much your only two options.

Pragmatarianism is better than the current system for two main reasons...

1. Maximizing benefit
2. Maximizing progress

These two things are closely related but they are definitely different. If you love a steak, and you're really in the mood for steak, then ordering, receiving and eating a great steak will maximize your benefit/enjoyment/utility/value. Your benefit will not be maximized if, instead of receiving a steak, you receive a big bowl of quinoa. Just like how Jacob's benefit was not maximized when, after working so many years to earn the right to marry Rachel, he was tricked into marrying her sister instead...

21 And Jacob said unto Laban, Give me my wife, for my days are fulfilled, that I may go in unto her.
22 And Laban gathered together all the men of the place, and made a feast.
23 And it came to pass in the evening, that he took Leah his daughter, and brought her to him; and he went in unto her.
24 And Laban gave unto his daughter Leah Zilpah his maid for an handmaid.
25 And it came to pass, that in the morning, behold, it was Leah: and he said to Laban, What is this thou hast done unto me? did not I serve with thee for Rachel? wherefore then hast thou beguiled me? - Genesis 29.

Hey Lynx_Fox... since you know so much about the reliability of Bible stories... what do you say about this one? Real or fake? Whether it's fact or fiction, it still makes me laugh whenever I read it.

Getting what we order maximizes benefit.

But...there's always room for improvement. Even great steaks have room for improvement. It's entirely possible that we could use laboratories, science and technology to "grow" steaks that are way more delicious than even the best "real" steaks. This would free-up millions and millions of acres currently used for cattle. We could free-up even more acres by doing the same thing with chicken and pigs. It would certainly make vegetarians really happy if we stopped slaughtering so many animals. And of course it would be entirely nonsensical to continue allocating the same amount of resources to raising and slaughtering animals once the need for doing so has been eliminated. Fortunately for us, markets largely ensure that irrational choices have rational consequences.

Just because there's always room for improvement though doesn't necessarily mean that it will always be easy to find and make improvements. The problem with a centralized system is that it severely limits the number of places that people look for improvements. Not only does it place too many eggs in too few baskets... but it also severely limits the incentive to look for improvements. Therefore, because of these two things, centralization results in less progress being made and... by extension... increases the risk of causing (or failing to prevent) very large failures... including extinction. Humans, because we are all different, naturally engage in diverse economic activities. Centralization decreases the variety of human activity and as such, stifles the very source of our progress and subjects us all to much greater risk.

To summarize... centralization decreases both benefit and progress. More often than not there's a disparity between what we order and what we receive. This disparity decreases the benefit that we derive from society's limited resources. Long-term benefit is also decreased because the items on the menu are less frequently improved in terms of their variety and benefit.

The problems of centralization could easily be eliminated simply by allowing people to choose where their taxes go. People would receive what they ordered and government organizations would have the maximum incentive to find and make improvements.

I think there's at least some concern that allowing people to choose where their taxes go would mean a lot more work for everybody. Who wants more work!?

This concern is really unfounded. It's like saying that everybody has to work more just because we're free (more or less) to shop in Africa. Nobody is forcing you to shop in both America and Africa. If you don't see any benefit of shopping in Africa then you're free not to shop in Africa. But just because you don't see the benefit doesn't mean that other people won't see the benefit.

Same thing with Home Depot and Bed Bath and Beyond. Just because you have the option to shop in these places doesn't mean that you are forced to do so. Clearly many people do choose to shop in these places... so it's a given that society increases its benefit by giving people the option to do so.

With pragmatarianism, because of the free-rider problem... paying taxes won't be optional. However, anybody that doesn't want to shop in the public sector will have the option to give their taxes to their impersonal shoppers (congress). How many people will choose this option? In other words, what's the demand for impersonal shoppers? We don't know. It would behoove us to find out given that congresspeople are currently spending several trillion dollars a year.

If most taxpayers choose to give their taxes to congress... then no harm, no foul. Evidently congress is doing an adequate job of divining the demand for public goods. But if, on the other hand, many taxpayers choose to spend their taxes themselves... then they'll only make this effort because they perceive a benefit to doing so. Their efforts to correct the disparities between supply and demand will greatly increase society's total benefit. What if most taxpayers choose to spend their taxes themselves? Then evidently congress is doing a terrible job of divining demand.

Choosing Wrongly

Reply to: Going with your example of Bob and his bakery, I do trust him to know best what decisions he makes…

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Why would Bob choose to spend his tax dollars on medical research? How can infrastructure funds possibly be put to their most valuable uses without Bob’s valuation?

Your concern is that Bob is going to spend his tax dollars on the wrong things. How many tax dollars do you imagine Bob spending in the public sector? Maybe $1,000 dollars? Or $10,000 dollars? Or $100,000 dollars? Or $1,000,000 dollars? The smaller his tax obligation… the less harmful the misallocation… the weaker your argument. The more tax dollars that Bob is able to wield in the public sector… the greater the potential damage… and the stronger your argument. Except for one minor detail…

If Bob is likely to make such terrible allocation decisions… then how did he earn so much money? Absolutely nothing is preventing baker Bob from randomly spending all his revenue on medical research. He has the freedom to do so. He has the freedom to spend his revenue on a gazillion other equally irrelevant things. So why doesn’t he? My guess is that it’s because he strongly prefers making, rather than losing, money.

I’m pretty sure that you’re not going to find Bob at Home Depot filling up his shopping cart with a bunch of expensive items which he has absolutely no need for. At least not regularly. Just like I’m pretty sure that you’re not going to find items at Home Depot that few people are putting into their shopping carts.

If you trust that Bob isn’t going to put a dozen unnecessary lawnmowers in his shopping cart… then why do suspect that he’s going to be inclined to put a bridge to nowhere in his shopping cart?

Thanks for the book recommendations. Not familiar with Fukuyama’s work but I’ve read a few things on behavioral economics. Just recently I think that Cass Sunstein might have somehow choice architectured me into writing a blog entry about the privatization of marriage.

It’s interesting digging into the psychology of human error… but it’s “funny” that the takeaway is usually more top down control. It’s as if human error doesn’t apply to voters and to the people they elect to prevent us from making the wrong decisions.

Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority. — Frédéric Bastiat, The Law

People are fallible…except for public servants? People are fallible… therefore… we should put more eggs into one basket?

For me fallibilism means tolerance. It means giving people the freedom to choose where their taxes go… even when I strongly suspect that they are choosing wrongly.

Nobody’s written a book about pragmatarianism yet. Perhaps the closest books on the topic have been written by Julian Le Grand.

Minimizing Economic Wackiness

Reply to: Thank you for the thorough and thoughtful response.

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A year ago I created a group on reddit for participatory budgeting (PB). Not too long afterwards I ended up getting shadowbanned. Stupid reddit.

Apart from the banishment… I like the idea of reddit. It’s interesting and useful to know the relative popularity of ideas. 

The issue is when resources are allocated according to popularity. Take prohibition for example. The idea was popular enough for enough people to vote for it. And in order for the law to be enforced… massive amounts of resources were diverted away from numerous alternative uses. 

Allocating society’s limited resources to prohibition created X amount of value for society. If all these resources hadn’t been allocated to prohibition… then they would have created Y amount of value for society. 

If X > Y… then why bother with markets? Why should we want any consumer choice when voter choice and/or representative choice provides society with more value? 

With pragmatarianism… directly allocating taxes would be optional. Nobody would force you to choose where your taxes go. If you didn’t want to shop for yourself in the public sector…you could just give your tax dollars to congress. They would be more than happy to allocate your taxes for you. What percentage of the population do you predict would choose to have congress allocate their taxes for them? 

If you want to argue that representative choice creates more value for society than consumer choice does… then, in theory, you should predict that most people would choose to have congress spend their taxes for them. You would be the first to do so! For some reason, nobody ever predicts that most people will want congress to spend their taxes for them. Why doesn’t anybody predict that there’s a large demand for impersonal shoppers? Some possibilities…

1. It’s perceived that taxpayers don’t want more value
2. It’s perceived that few taxpayers recognize more value
3. It’s perceived that representatives don’t truly create more value

I’m pretty sure that we can cross out the first one. Because… who doesn’t want more value? Every living organism wants the most bang for its buck. If the second one is true… then we can’t have any confidence that voters (re)elect representatives who truly create more value. Which leaves us with the third explanation.

Would Obama allocate his taxes himself… or would he have congress allocate his taxes for him? Would smart people allocate their taxes themselves… or would they have congress allocate their taxes for them? If the answer isn’t readily apparent… then I think the jury’s still out regarding the efficacy of impersonal shoppers. 

Pragmatarianism, as you describe it, is one way of using the benefits of markets to shape public policy. But relying on departments (such as the EPA in your example) to adequately inform the public, and then relying on the public to magnanimously make decisions about somewhat abstract, long-term issues, seems impossible. As you mention about the free-rider problem with public goods, people are always pulled toward self-interest, and *short-term* self interest at that. I don’t see any way such a full degree of direct public control could lead to anything planful, let alone thriving.

If the EPA is going to improve at a faster rate without consumer choice… then why would this only be true of government organizations? If the government… either through PB or representatives… is going to allocate the optimal amount of funding to the EPA… then why would this only be true of government organizations? 

When it comes to allocation methods… it’s not economically consistent to simultaneously support markets and not-markets. With markets… people’s say is earned. Not-markets reduce people’s earned say. PB eliminates everybody’s earned say and gives them all an equal say. According to PB… people’s value judgements are equally good. People should all have the same power/control/influence over society’s limited resources… regardless of how resourceful or wasteful they’ve been. However, according to representation… people’s value judgements are not equally good. Some people’s values judgements are better… and we can effectively identify these people and give them more say by using a system where everybody has an equal say (voting). The additional say that is given to representatives has to come from somewhere though… and that somewhere is people’s earned say. 

Utilizing all three allocation methods results in a very contradictory, confusing and counterproductive system…

There’s a long line of people waiting to get into Bob’s Bakery. Evidently they really love his baked goods! So they are willing to wait in line for the opportunity to put their money into his pocket. After they purchase Bob’s delicious baked goods… they head over to the townhall where they engage in some PB. This entails reaching back into Bob’s pocket… taking out some of the money that they just put in there… and voting on how it gets spent. Uh… what? They already decided how it should be spent! They decided that it should be spent on Bob’s baked goods. Do they, or do they not, want more of Bob’s baked goods? 

If we make the crazy assumption that Bob’s customers are actually going to vote for spending their/his money on the public goods that Bob needs in order to improve his business… then we also need to make the crazy assumption that his customers somehow know better than he does which public goods these are. Without these two crazy assumptions… the logical result is that people are going to be made worse off. Why? Because they are veering significant resources away from something that, according to their own spending decisions, makes them better off (more of Bob’s baked goods).

This same economically wacky process gets repeated, more or less, when Bob’s customers vote for Elizabeth Warren…

There is nobody in this country who got rich on his own. Nobody. You built a factory out there — good for you! But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. — Elizabeth Warren

With PB… one of the the crazy assumptions was that Bob’s customers know better than he does which public goods he needs more of. With representation… the crazy assumption is that Bob’s customers know that Elizabeth Warren knows better than Bob does which public goods he needs more of. Uh… what? So Warren knows best? 

The fact of the matter is that nobody has more incentive than Bob does to try and ensure that the line outside his bakery is as long as possible. So we can be confident that, if Warren truly does know better than Bob does which public goods that he needs more of in order to get richer… then he’ll be more than happy to put his taxes in her pocket. 

Personally though… I’m skeptical that 500 representatives can know better than millions and millions of business owners which public goods that they need more of in order to successfully operate their diverse businesses. In other words, I’m skeptical of command economies. In other words, I’m skeptical of socialism. Socialism doesn’t become any less sketchy just because it’s in our public sector. Overriding society’s dispersed knowledge and individual incentive is just as defective for public goods as it is for private goods.

In order to minimize economic wackiness… the basic rule should be that, once you voluntarily and intentionally and willingly put your money into somebody else’s pocket… then you shouldn’t be allowed to remove any portion of it. If you do happen to feel that Bob didn’t give you the most bread for your buck… then learn your lesson and buy your bread somewhere else next time. Consumer choice, driven by self-interest (the desire to maximize benefit) is how we truly maximize the rate of improvement. 

Regarding short-term self interest… what is it anyways? Partying when you should be studying? Playing when you should be working? Consuming when you should be producing? Taxpayers, by definition, are the people who give up momentary pleasure for future benefit.

Socialism wouldn’t be such a disaster if well-planned steps were usually in the right directions. But no amount of planning can guarantee that a step will be in the right direction. This doesn’t mean that we should eliminate planning… it means that we should never be so confident of our plans that we force people to go along with them. Solely relying on persuasion maximizes the flow of information. Like so! 

Decentralized planning helps society hedge its bets against a future that’s always uncertain. Which is why pragmatarianism is the world’s best plan. But as good as it is… I can never be 100% certain that it doesn’t have fundamentally fatal flaws. Therefore, I would never force anybody to invest any amount of their limited time/energy/money in it. 

Anyways, I appreciate your thoughts as well! 

Would You Prefer Being Allocated By Congress Or By Taxpayers?

Reply to: Thinking About The Holocaust Differently

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kmiller1610, we're in the economics section. In economics they have this thing called supply and demand. After 911... what was the demand for war?

It's a trick question. Nobody knows what the demand was. Does that make sense? Demand isn't people shouting for war. Demand isn't people voting for war. Demand isn't voting for people who want to go to war. Demand isn't people marching for war. Demand isn't giving war a thumbs up. Demand isn't liking war on facebook. Demand isn't voting war up on reddit. Demand isn't people signing a petition to start a war.

All those things reflect opinion and popular sentiment. But just try and pay for your groceries with your opinion/sentiment. It's probably not going to work.

Demand isn't cheap talk. Demand is when people put their own money where their mouths are.

After 911... taxpayers weren't given the opportunity to put their own tax dollars where their mouths were. This is exactly why we have no idea what the demand for war truly was. Yet, despite this "minor" detail I was allocated to Afghanistan anyways.

Not sure if you noticed from the OP... but I want taxpayers to choose where their taxes go. This means that if I had to choose between being allocated by congress or by taxpayers... then I'd choose to be allocated by taxpayers. If I had to choose whether I put my life in the hands of taxpayers... or in the hands of congress... then I'd put my life in the hands of taxpayers.

Why would I prefer to put my life in the hands of taxpayers and not in the hands of congress? It's because I'd really prefer it if my life wasn't wasted.

Who's more likely to build a bridge to nowhere? Taxpayers or congress?

If congress builds a bridge... then they do so with other people's money. If taxpayers build a bridge... then they would do so with their own money. Does this make a difference?

Taxpayers had to exchange something for their money. What they exchanged was their labor. All the time that they spent working was time that they couldn't spend with their family. They essentially sacrificed time with their loved ones in order to earn the money that they needed to provide for their loved ones.

This means that taxpayers are far less likely to build a bridge to nowhere. It means that they are far less likely to tilt at windmills.

Taxpayers have far more incentive to do their homework. They have a lot more to gain and a lot more to lose.

Skin in the game? Taxpayers? Yes. Congress? Nope.

Maybe you think that there's some really good evidence that we're safer in the hands of congress? Just like there's really good evidence that God exists? I haven't seen any kind of evidence for either belief. This doesn't mean that the evidence doesn't exist. It just means that taxpayers should have the option of directly allocating their taxes. If there's any kind of good evidence out there... then taxpayers will have a strong incentive to put their taxes/lives in the hands of congress.

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See also: Louder

The Assumption Of Omniscience And Benevolence

Reply to reply:  Epiphytes and Economics

It might help to read this first... Thoroughly Fondling The Elephant

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As you are the only person claiming that "omniscience" is relevant or assumed, perhaps you need to provide some evidence to support that claim. Or we can just assume that it is yet another thing you have made up. (Having a fertile imagination is no substitute for evidence.) - Strange

Heh. Samuelson's paper, the best (most widely cited) defense of government, the one I mentioned right before exchemist's quote on omniscience... is the evidence. Yet, here you are asking for evidence. Either you didn't bother reading Samuelson's paper or you tried to but you didn't understand it.

If you didn't bother reading Samuelson's paper... then are you genuinely interested in learning? If you did try to read his paper... then that's a good sign but... progress is going to be painfully slow if you're afraid to admit when you don't understand something. I'm not a mind reader!

Hopefully you grasp that Samuelson's paper has to do with the free-rider problem (FRP) and public goods (PGs)...

FRP * PGs = ?

What would that equal? Here's the answer...

FRP * PGs = Prag

Unfortunately, this really isn't Samuelson's conclusion. His paper is the best defense of our current system of government. So we know what's on the other side of the equation...

FRP * PGs = Rep

We don't choose where our taxes go... representatives do. But you can't have the same exact equation result in two very different conclusions. Therefore, something is missing from Samuelson's equation...

(FRP * PGs) + ? = Rep

In order to arrive at the conclusion that I should spend your money for you... it must follow that I have access to your preferences. Therefore, Samuelson's equation looks like this...

(FRP * PGs) + Omni = Rep

Well... just because I have access to your preferences doesn't necessarily mean that I'll care about them. So we need something like...

(FRP * PGs) + Omni + Ben = Rep

This says that... when we apply the free-rider problem to public goods and throw in omniscience and benevolence on the part of government planners... then we arrive at our current system of government.

Samuelson didn't actually include benevolence... but clearly it's necessary. And in his paper he doesn't use the word "omniscient"... he just takes people's preferences as a given. In other papers he does use the word "omniscient" so yeah, the two things are synonymous.

Ben and omni are clearly absurd... but you need them to arrive at our current system of government. When you remove these two absurd conditions... you arrive at a pragmatarian system of government.

To be fair, Samuelson was just making a pretty model for our current government. In reality he didn't actually believe that congresspeople are omniscient or benevolent. He just figured that they could do a good enough job of figuring out people's preferences. He figured the same thing with command economies...

The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive. - Paul A. Samuelson

Right now you're under the impression that the government does a good enough job of supplying public goods. Except, where's your evidence for this? Are you surrounded by it? Is the public school you went to... and the roads you drive on... and the military who defends you and the police who ticket you... are these all your evidence?

In a market system... producers are by no means omniscient. When I produced this thread... when I supplied this additional option... I couldn't truly know how many people would spend how much of their limited time consuming it. My supply was merely a guess. Evidently it wasn't a bad guess because here you and other people are!

But if we look through this forum... it should be a self-evident truth that not all guesses are equally good. But in the absence of consumer choice... then how in the world could we possibly know just how good a guess is?

If we created a market in the public sector... then if your "evidence" is really good... consumer choice will confirm this.

What's important to understand and really appreciate is.... in a pragmatarian system... directly allocating your taxes is completely optional. Congress will still be there. If you don't have the time, or interest, to bother directly allocating your taxes then you'd be free to give them to congress to allocate for you.

So if you want to predict that it's going to be a huge mess and everybody's going to allocate their taxes "wrongly"... then you're also predicting that nearly everybody is going to choose to directly allocate their taxes rather than have their congresspeople do it for them. In other words, you're also predicting that barely anybody will have adequate evidence to believe that congresspeople are benevolent/omniscient.

What I'm trying to say is that you can't have your cake and eat it too. If you want to argue that the current supply of public goods is more than adequate... then you have to predict that few people are going to see the point of directly allocating their taxes. But if, on the other hand... you want to predict that nearly everybody is going to see the point of directly allocating their taxes... then you really can't argue that the current supply of public goods is more than adequate. How can it possibly be adequate when so few people have any evidence to believe that congress knows, or cares about, their preferences?

How fundamentally absurd would it be if we are supplying the services of congress to the entire country when nobody actually demands their services? The only reason that there wouldn't be any demand for congress is because people would derive far more value from the alternative uses of their tax dollars. This would mean that supplying congress results in the wholesale destruction of value.

If you'd like more evidence of the relevance of the assumption of omniscience... The Logical Absurdity of Libertarianism - Partial Omniscience. But having a basic grasp of economics is all you need to understand that there's a problem when the supply of goods doesn't follow from the preferences of consumers. You demanded evidence regarding the relevance of the omniscience assumption and that's exactly what I supplied.

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See also: Succeeding vs Failing At Other Minds

Who Are You?

Reply to my thread... Epiphytes and Economics

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A comparison of the IP addresses of members Xerographica and Robittybob1 shows there is no evidence of Xerographica being a sockpuppet of Robittybob1. - Cogito Ergo Sum

Well that's a relief.

It would have been a real mind**** if Cogito Ergo Sum had shared conclusive evidence that I was Robittybob1's sockpuppet. I don't even know who Robittybob1 is... yet it turns out that I'm his marionette and he's my puppet master? Everything that I've done in my life was the result of unseen strings that he's pulled? *woah*

In the Matrix Neo had a choice between the red pill and the blue pill. Which pill would you choose? I would choose the red pill.

I don't want to be anybody's sockpuppet. If moderators on this forum determine which options that I'm allowed to choose... then I'm their sockpuppet. My options have been limited to options that they've approved. My work/perspective can only be applied to threads that they deem acceptable.

Right now we're all congress's sockpuppets. Regardless of your preference for the war on terror, or the war on drugs, or the war on poverty... a portion of your labor was used to support these wars. Strings attached to your fingers, arms, legs, eyes, ears, mouth and brain directed you to pay for my trip to Afghanistan.

Yes, I chose to join the Army. That's true. But this option was only available to me because congress approved it.

Does anybody want to argue that, because we choose them with our votes, congresspeople are actually our sockpuppets? If you vote for Elizabeth Warren... I think you're just saying that you want her to be your puppet master rather than some other guy.

I have absolutely no problem if you truly want to be somebody's sockpuppet. My problem stems from the fact that I question whether you do really want to be Elizabeth Warren's sockpuppet.

My hypothesis is that people don't truly want to be sockpuppets. It's easy enough to test this hypothesis. We just have to give people the option to directly allocate their taxes. If you really do want Warren to be your puppet master... then you'll give her your taxes to allocate for you rather than allocate them yourself.

On this forum in the general category there's this thread... The Theory Of Everything. Coincidentally my friend just posted this blog entry... A Scheme for Future Metaphysics. Let's say that a minimum contribution standard prevented me from replying to the thread with just the link to my friend's blog entry. Would you ague that the thread/forum is better off without my two cents? Would you argue that this blocking of my input would be beneficial? Would you argue that if I'm going to take the time to share a link that I should also take the additional time to explain why I think its relevant?

Well... what if I don't have the additional time to explain its relevance? I'm sure you've said... "I don't have the time...". Taken literally it means that your demise is imminent because nearly all the sand in your hourglass is at the bottom. Of course we all understand the real meaning... that you have more important things to do with your time.

Is it possible that somebody really is too busy to share a link's relevance/significance/value/meaning? Maybe you imagine that the only other thing that somebody could possibly do with their time is pick their nose?

Rather than saying "I don't have the time"... it's a lot better to say "the opportunity cost is too high". With the latter expression I think it might help people better appreciate that there are more valuable allocations of your time.

Wikipedia really wouldn't work better with a minimum contribution standard. You really don't maximize contributions by making the opportunity cost of contributing so high that for most people it's not worth it to do so.

So far GiantEvil has taken the time to share his two cents in two of my threads. In this thread, he shared a link to the cheese.com website. Personally, I value this contribution of his at less than two cents. However, in this other thread that I started... Nature: Supply and Demand... he shared a link/video that I value a lot more than two cents.

GiantEvil's contribution was a Ted Talk by Michael Sandel.... Why we shouldn't trust markets with our civic life. Anybody want to guess how much Sandel was paid for his talk? Actually, he wasn't paid at all. If you want to take this to mean that his time is worthless... then if Michael Sandel joined this forum then there's absolutely no problem with ensuring that he complies to the minimum contribution standard. Except, it would be rather strange if people were willing to pay several thousand dollars for the opportunity to listen to talks given by people whose time is worthless.

If Michael Sandel did actually join this forum then would GiantEvil really complain if Sandel started a thread that only consisted of a link? Would GiantEvil really argue that the opportunity cost of Sandel's time really wasn't that high? For some reason I doubt it.

I don't know who any of you are. I have no idea whether you're a bunch of Harvard professors or professional nose pickers. What I do know is that your sand is slipping from your hourglass just like mine is. So if you post a thread or comment that only consists of a link... then I'm going to really grasp that the opportunity cost of a greater contribution was too high for you. I might disagree with your valuation but who am I to override it? Your puppet master?

It was a relief to learn that Robittybob1 isn't my puppet master. It would be an even bigger relief to learn that I don't have AIDs or cancer or ebola or Alzheimers or Parkinsons.

What's going to steal the sand from your hourglass? Disease? The Taliban? Poverty? Cocaine? I'll tell you what's going to steal the sand from your hourglass. It's the fact that we, the people, can't allocate our taxes accordingly.

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Bueller's Basement

For a while now Ireland has been over-represented in my web statistics.  Maybe the Irish are especially interested in choosing where their taxes go?  It seems more likely that it's just one person in Ireland who regularly visits my blog.

Would Obama Give His Taxes To Elizabeth Warren?

My previous entry was pretty wonderful... Does Elizabeth Warren Know What Keeps You Running?  It was so wonderful that I want more!

In a pragmatarian system people would have the following three options...

1. They could allocate their taxes themselves
2. They could give their taxes to congress (impersonal shoppers)
3. They could give their taxes to specific congresspeople (ie Elizabeth Warren)

Well... I don't honestly know if the third option would be available.  What do you think?  If it turned out that there wasn't any demand for the second option... then clearly there wouldn't be any demand for the third option.  If you have absolutely no interest in having congress allocate your taxes... then chances are extremely good that you wouldn't have any interest in having Warren or any other congressperson allocate your taxes.

In order for the third option to be available... we'd have to imagine at least some demand for the second option.  But it can't be perfectly... errr... "happy" demand... it's got to be "unhappy" demand.  To get my drift just picture some liberal named Lilith who really doesn't have the time or interest to allocate her taxes herself... but she hates the thought of allowing slimy republican congresspeople to have even the tiniest amount of influence on how her taxes are allocated.  Lilith really wants the service, but she really wishes it was a lot better (a closer match to her preferences).

Woah, did you get goosebumps?  I sure did.  It's a wonderful insight into why markets lead to a far greater variety of products and services than command economies do.  And when there's a greater variety of products and services then marginal improvements are made at an incredibly faster rate than would occur in command economies.  It's modular vs monolithic.

Of course this variation isn't going to occur if Lilith is the only unhappy camper.  There have to be enough Liliths in order for Elizabeth Warren to have a really strong suspicion that she'd have a lot more money to allocate if she wasn't bundled together with people like Todd Akin.

For sure this is a two way street.  For every Lilith there would be a Conrad who really hated the thought of the likes of Elizabeth Warren spending even one cent of his hard-earned money on counterproductive social programs.

But if there were enough Liliths and Conrads... would congress just split in half?  Would there be a bundle of conservative impersonal shoppers and a bundle of liberal impersonal shoppers?

Let me throw a wrench into our analysis by pointing out that congress doesn't just allocate taxes... they also write laws.  Errr... do these two things really need to be bundled together?  Would you want the person operating on you to be a jack of all trades and a master of none?  Probably... not.

It stands to reason that congresspeople would be logically allocated.  Those with a comparative legal advantage would be split off into a separate organization dedicated to writing laws.  Those with a comparative impersonal shopping advantage would be split off into a separate organization dedicated to impersonal shopping.  

So rather than having a congress... we'd have a Department of Law (DoL) and a Department of Impersonal Shopping (DoIS).

I don't think we'd have to elect people to serve in the DoL... do you?  If the DoL produced crappy laws then they'd go bankrupt.   No organizations want to go bankrupt.  Therefore, the DoL's desire to maximize, rather than minimize, its revenue would provide them with the maximum possible incentive to produce laws that maximized society's benefit.

With the DoIS though... I think we would probably still elect the impersonal shoppers.  But what about Lilith and Conrad?  Would they be happy enough if they could give their taxes to a bundle of impersonal shoppers who roughly shared their preferences?  Or would they prefer the possibly much greater happiness of being able to give their taxes to whichever impersonal shopper was the closest match to their own unique preferences?  I'm pretty that Lilith and Conrad, as different as their preferences are, would both want more, rather than less, happiness.

Woah!  Do you see what happened there?  Impersonal shopping became a little less impersonal.  Perhaps it wouldn't be entirely unreasonable to even change the name of the DoIS.  Rather than calling it the "Department of Impersonal Shopping" we could call it the "Department of Personal Shopping" (DoPS).

Something else pretty momentous happened.  Political parties became pointless!  

Did I blow your mind?  If so, then I sincerely apologize.  It's perfectly understandable if you need a lot of time to process this.

Maybe it would help to try and predict what Obama would do...

1. He would allocate his taxes himself
2. He would give his taxes to the DoPS
3. He would give his taxes to the most personal shopper (Elizabeth Warren?)

I think he'd allocate his taxes himself.  Boy, wouldn't you like to know how he allocated his taxes?  Which public problems does he perceive to be the most pressing?  Rather than having only his words to go on... we'd be able to observe his actual actions.  No pressure Obama!

Maybe I've blown your mind even more?

Ok, I'm willing to entertain the possibility that I haven't blown your mind at all.  If I haven't blown your mind at all... then maybe your mind is pretty magnificent?  Prove it!

Take these two things...

1. People being able to choose where their taxes go
2. People wanting products/services that are better (closer to their preferences)

... and use them to make a prediction that will blow my mind.  I dare you.

Does Elizabeth Warren Know What Keeps You Running?

Context: Is Pragmatarianism (Tax Choice) Less Wrong?

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The question is, how much tax choice.

Being able to allocate 1% of your taxes to the charity you choose, makes sense. It is actually in effect in some countries.

Being able to allocate 100% of your taxes as you like would be an unmanageable mess because people on average have no idea what is needed to keep a country or an economy running.

Somewhere in-between? Where? Without exact definitions what you mean by "tax choice" every discussion would be completely pointless. - Val

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What is a country or an economy if not all the people in it?  In essence you're saying that allowing people to allocate 100% of their taxes would be an unmanageable mess because people on average have no idea what is needed to keep themselves running.

Like I said in the FAQ... congress would still be there.  If you have any evidence that leads you to believe that Elizabeth Warren knows better than you do what keeps you running... then you'd certainly have the option to give her some, or all, of your taxes.

If, in a pragmatarian system, most people do give their taxes to their impersonal shoppers... well... then you were right!  Congratulations!  We'd have solid evidence that most people do not know what keeps them running.  Your theory would be proved correct.  And no harm or foul by having it proved!

But what if your theory is incorrect?  What if most people do not give their taxes to the impersonal shoppers that they voted for?  Clearly this would mean that most people did not have enough evidence to believe that their impersonal shoppers know better than they do what keeps them running.

Can you see the problem with our current system if your theory is incorrect?  If your theory is incorrect then it means that we're currently giving an absurd amount of money (power, control, influence, responsibility) to a small group of people who really do not know what keeps us (the country/economy) running.

Is it possible that your theory is incorrect?  Clearly I'm willing to bet a lot of my time on it.  Maybe you should keep the possibility of being wrong in mind the next time you scratch your head or blame the other side when the economy/country ends up in the ditch.

Yet difficult as he [the modern politician] finds it to deal with humanity in detail, he is confident in his ability to deal with embodied humanity.  Citizens, not one-thousandth of whom he knows, not one-hundreth of whom he ever saw, and the great mass of whom belong to classes having habits and modes of thought of which he has but dim notions, he feels sure will act in ways he foresees, and fulfill ends he wishes.  Is there not a marvelous incongruity between premises and conclusion? - Herbert Spencer, The Man Versus the State

Also...

What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. - Adam Smith, The Wealth of Nations

Also...

What do we want with a Socialist then, who, under pretence of organizing for us, comes despotically to break up our voluntary arrangements, to check the division of labour, to substitute isolated efforts for combined ones, and to send civilization back? Is association, as I describe it here, in itself less association, because every one enters and leaves it freely, chooses his place in it, judges and bargains for himself on his own responsibility, and brings with him the spring and warrant of personal interest? That it may deserve this name, is it necessary that a pretended reformer should come and impose upon us his plan and his will, and as it were, to concentrate mankind in himself? - Frédéric Bastiat, What Is Seen and What Is Not Seen

And...

It is a paradox of our age that the interventionists think the public is too stupid to consult Angie’s List before hiring a lawyer, and so they need politicians to weed out the really bad ones by requiring law licenses. Yet, who determines whether a person (often a lawyer!) is qualified to become a politician? Why, the same group of citizens who were too stupid to pick their own lawyers. - Bob Murphy, Do We Need the State to License Professionals?

The Demand For Impersonal Shoppers

Reply to thread: Economic Ignorance

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It might help to read the short tax choice FAQ.

In a tax choice system, directly allocating your taxes would be optional.  If people didn't have the time or inclination to directly allocate their taxes then they could just give them to their impersonal shoppers (congresspeople).

What percentage of taxpayers would choose to give their taxes to their impersonal shoppers?  In other words, how much demand is there for impersonal shopping?

If there was any demand then wouldn't this service be available in the private sector?  Unless there's unmet demand that nobody has taken advantage of.  If you think this is the case then you should start your own impersonal shopping service.

How would it work?  Well...it would be just like the services offered by personal shoppers.  Except it wouldn't be personal...it would be impersonal.  Many different people would give you their money and you'd buy them all the same things.  If people weren't happy with the items then they could simply give their money to another impersonal shopping company.

I'm sure there has to be demand for this...right?  Because it would be fundamentally absurd to be using the public sector to supply this service to the entire country if there was absolutely no demand for it.  Wouldn't it be super crazy if it turned out that the only reason we vote for people to spend our tax dollars is because that's just the way it's always been done?

Around 1000 years ago some barons were fed up with kings spending "their" money on war after war...so they took the power of the purse from them.  And the kings only had the power of the purse in the first place because people believed that they had "divine authority".  Voila, here we are...allowing elected officials to spend our tax dollars.  And if we're not happy with their decisions then we can simply vote the bums out of office!    

It is easy to believe; doubting is more difficult. Experience and knowledge and thinking are necessary before we can doubt and question intelligently.  Tell a child that Santa Claus comes down the chimney or a savage that thunder is the anger of the gods and the child and the savage will accept your statements until they acquire sufficient knowledge to cause them to demur.  Millions in India passionately believe that the waters of the Ganges are holy, that snakes are deities in disguise, that it is as wrong to kill a cow as it is to kill a person - and, as for eating roast beef…that is no more to be thought of than cannibalism.  They accept these absurdities, not because they have been proved, but because the suggestion has been deeply embedded in their minds, and they have not the intelligence, the knowledge, the experience, necessary to question them.
We smile…the poor benighted creatures!  Yet you and I, if we examine the facts closely, will discover that the majority of our opinions, our most cherished beliefs, our creeds, the principles of conduct on which many of us base our very lives, are the result of suggestion, not reasoning…
Prejudiced, biased, and reiterated assertions, not logic, have formulated our beliefs. - Dale Carnegie, Public Speaking for Success