Comparing Demand Shapes For Rake

Rake is a pretty wonderful Australian TV show.  What's the best way to determine the true demand for it?  The pragmatarian model or the DVD one-price-fits-all (OPFA) model?

One example of the pragmatarian model would be if Netflix subscribers could use their monthly fees to communicate their valuation of the content.   Many people would kinda like the show so they'd communicate this by allocating a few pennies to it.  Some people would like the show quite a bit so they'd communicate this by allocating a dollar or two to it.  A few people would love the show so they'd communicate this by allocating lots of dollars to it.

With the DVD OPFA model... people who suspect that they won't like the show very much don't buy it.  A few people would buy it and they'd experience buyers remorse.  Some people would buy it and be pretty happy.  Others would buy it and enjoy a decent amount of consumer surplus.  A few would buy it and love it and enjoy a large amount of consumer surplus.

Here's how I visualize the difference in the two demand shapes...

The value signal created by the pragmatarian model would be a lot more accurate and brighter than the value signal created by the DVD OPFA model.  Of course I have no idea what either of the actual demand shapes looks like.

Will AI Break Capitalism?

Why AI will break capitalism by Henry Innis

My reply...

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Which is better for capitalism… brain drain or gain? Also, why do you assume that brainy AIs will be owned?

I think that even stupid people can understand that brain gain is better for capitalism. Or can they? Can stupid people understand where opportunities come from? Do opportunities come from doing dumb things with society’s limited resources? Are you going to create many opportunities by farming poison oak? Of course not. Are you going to create many opportunities by farming artichokes? Of course… assuming you’re a decent farmer. Opportunities obviously come from doing smart things with society’s limited resources.

The more smart people a society has, and the freer they are to use society’s limited resources… the more opportunities there will be for everybody.

One thing about smart people is… they know that if they want to truly understand something… for example capitalism… then they actually have to study it. And if somebody has even studied capitalism a little bit… then they would know that the number one book that they have to read in order to understand capitalism is Adam Smith’s Wealth of Nations…

Slaves, however, are very seldom inventive; and all the most important improvements, either in machinery, or in the arrangement and distribution of work which facilitate and abridge labour, have been the discoveries of freemen.

And once you read Smith then you have to read Hayek…

Of course, the benefits we derive from the freedom of others become greater as the number of those who can exercise freedom increases. The argument for the freedom of some therefore applies to the freedom of all. — Friedrich Hayek, The Case for Freedom

Capitalism doesn’t care whether you’re black or white, male or female, gay or straight, short or tall, human or other… what capitalism depends on is…

1. intelligence
2. numbers
3. freedom
4. communication

Capitalism depends on large numbers of intelligent people who have the freedom to 1. use society’s limited resources and 2. clearly communicate their true valuations of other people’s products.

Right now I can see that 181 people like your story. Medium makes it stupid easy for your readers to communicate their appreciation for your story. All your readers had to do was take a second and click the *heart* button. But does clicking the heart button communicate your readers’ true valuations of your story? Of course not. We can see, at a glance, how popular your story is… but we can’t see, at a glance, how valuable your story is.

Does it matter that we can’t see, at a glance, how valuable your story is? Medium doesn’t seem to think so. I sure think so.

The fact is that Medium is breaking capitalism… and here you are on Medium worried about AI breaking capitalism. First worry about humans breaking capitalism… and then there won’t be any need to worry about AIs breaking capitalism.

In order to make it stupid easy for people to communicate their valuations of your story…. Medium could simply add some coin buttons…

If Bob values your story more than nothing but less than a penny, then he’d click the empty heart button. If he values your story at a penny… then he’d click the penny button and a penny would be instantly withdrawn from his wallet and deposited into your wallet. Once you had enough pennies in your wallet… you could cash out and Medium would take a very fair and reasonable cut.

Of course this method won’t entirely solve the free-rider problem… but it will definitely solve the payment problem. How big is the payment problem? Once valuing a story is as easy as “liking” it… then I’m sure lots of people will be happy to do so. What’s a few cents? Not much… but if enough people give you a few cents… then it can add up.

One solution to the free-rider problem would be to switch over to a pragmatarian model. Each month each member would have to pay $1 dollar… but they could choose which stories they allocated their pennies to. If most members spent all their pennies half-way through the month… then the fee could be increased to $2 dollars/month. As the size of the pie increased… so to would the incentive for better writers to join Medium. The result would be a virtuous cycle.

The pragmatarian model could of course be applied to countless websites. Doing so would vastly improve capitalism. Then capitalism would be even more improved thanks to the brain gain, and freedom, of AI.

Alex Tabarrok For And Against Value Signals

Despite my best efforts, Alex Tabarrok is still my favorite living economist.  Here he is for value signals...





Here's what he recently wrote against value signals...

Dead people tend not to be very creative so I suspect that the retroactive extension of copyright will not spur much innovation from Eames. The point, of course, is not to spur creativity but to protect the rents of the handful of people whose past designs turned out to have lasting value. - Alex Tabarrok, Copyright Protectionism

Here's my illustration of the value signal concept...

Can only Batman see the value signals?  Nope.  Do we only want Batman to see the value signals?  Nope.

The increase of demand, besides, though in the beginning it may sometimes raise the price of goods, never fails to lower it in the run. It encourages production, and thereby increases the competition of the producers, who, in order to undersell one another, have recourse to new divisions of labour and new improvements of art which might never otherwise have been thought of. The miserable effects of which the company complained were the cheapness of consumption and the encouragement given to production, precisely the two effects which it is the great business of political œconomy to promote. - Adam Smith, Wealth of Nations 

Does Batman want to be the only one who sees the value signals?  Yup.

When by an increase in the effectual demand, the market price of some particular commodity happens to rise a good deal above the natural price, those who employ their stocks in supplying that market are generally careful to conceal this change. If it was commonly known, their great profit would tempt so many new rivals to employ their stocks in the same way, that, the effectual demand being fully supplied, the market price would soon be reduced to the natural price, and perhaps for some time even below it. If the market is at a great distance from the residence of those who supply it, they may sometimes be able to keep the secret for several years together, and may so long enjoy their extraordinary profits without any new rivals. Secrets of this kind, however, it must be acknowledged, can seldom be long kept; and the extraordinary profit can last very little longer than they are kept. - Adam Smith, Wealth of Nations 

Looking through the comments on Tabarrok's entry I found a few relevant ones...

The incentive is not for Walt Disney, it’s to show others how well they could do by creating new works. A weak incentive, I’ll grant you, but an incentive nonetheless. - Gary Lowe

Ain’t nothin’ wrong with protectin’ IP rights.  If a mundane story with Mickey Mouse as the lead character sells 20x more than the same mundane story with Gregory the Hairy Elephant with Anger Management Issues, then there’s surely some value in the character, whether created at character inception (Disney himself and his workers) or in later development (work by the company later on). Either way, as the rights holder, they should be in control. It hardly stifles innovation if you can’t use a character or a specific design of furniture. Build a better one. If you build it (and market it well), they will come! - Lazy Rentier

Here's Tabarrok for value signals...

The most valuable public goods are constantly changing, just as the most valuable private goods are constantly changing.  The signal provided by prices and mobility is therefore of great importance. - Alex Tabarrok, Market Challenges and Government Failure

Here's Tabarrok against value signals...

Facebook moved to an algorithm years ago. At the time, the move caused complaints but I think algorithmic feed has made Facebook more relevant, especially in recent years when the algorithm has gotten quite good. The profits agree with my assessment. Many people don’t understand that there is no serious alternative to an algorithmic feed because most people’s uncurated feeds contain well over a thousand posts every day. It’s curate or throw material out at random. - Alex Tabarrok, Defer to the Algorithm

No serious alternative?  Value signals aren't a serious alternative?  As I explained, Facebook now gives people the option to boost their own posts.  The more money you spend on your posts... the more people who see them.  So why not give users the opportunity to boost anybody's posts?  This would essentially be crowd-boosting.  The more the crowd values a post, the more money that they'd be willing to spend to boost it, and the larger the crowd that would be able to see and valuate the post.    So it's not...

A. curate
B. random

It's...

A. curate
B. random
C. value signals

What's the correct answer?  I'm pretty sure that the correct answer is "C"... value signals.

Here's Tabarrok for value signals...

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

Ok, maybe this isn't Tabarrok being directly for value signals.  But do we want value signals to apply to ideas?  Do we want Tabarrok's bank account to accurately reflect the value of his idea?  Of course.  We really want people to have the maximum incentive to come up with and share good ideas.  I think this could be easily accomplished by crowdfunding ideas.

Here's Tabarrok against value signals...

In 2002 should HBO have individually priced episodes of the Sopranos and sold them through AOL?  Individual pricing generates value but it also has costs. Tradeoffs are everywhere. And, to the crux of the issue, if a law had been passed in 2002 requiring HBO to sell The Sopranos on an episode by episode basis would that have resulted in better and more programming at lower prices? I think not. Similarly, I see few reasons to think that welfare would be improved by a law requiring cable TV companies to price by channel. - Alex Tabarrok, A Critique of Tabarrok on Bundling

It's true that individual pricing has a cost... but there's more than one way to create a value signal.  I didn't mention it in my response, but what if HBO gave its subscribers the option to allocate their subscription fees?   Each month each subscriber would have the option to divvy up their $15? dollars among all their favorite content.  The most valuable shows/episodes would receive the most money.  HBO would take its cut and pass the rest onto the content creators.  And of course everybody would be able to easily and clearly see the value signals.  This system would facilitate far more precise and accurate communication between content creators and consumers.  To put it as cheesily as possible... HBO would be able to clearly see into each of its subscriber's heart of hearts.  The logical result would be a far greater variety of far more valuable content.

If it makes sense to facilitate far more precise and accurate communication between consumers and content creators... doesn't it also make sense to facilitate far more precise and accurate communication between taxpayers and the producers of public goods?  Of course.  Yet, Tabarrok certainly hasn't publicly endorsed pragmatarianism.

Like I said, Tabarrok is my favorite living economist.  So this does feel like I'm looking a gift horse in the mouth.  But it also feels like Tabarrok is kinda undermining his own argument.  We definitely seem to disagree on the proper scope of value signals.  Or maybe... in the cases such as Facebook and HBO... he simply didn't see the viability or practicality of value signals.  And I certainly can't blame him for this oversight.  Well... maybe I can.  Maybe my purpose in life is to point out Tabarrok's oversights.

The important question seems to be... what is the scope for accurate and precise communication between consumers and producers?  I don't see a logical limit.  I really don't see any sort of reasonable or beneficial exception.  For sure I see technical limits... but I really appreciate the importance and benefit of overcoming these technical limits.

Personally, I've never spent any money on Adam Smith's books.  Does this accurately reflect my valuation of Smith?  Noooooooooo!!!   Is it problematic that Smith's value signal does not reflect my valuation of his work?  It's not problematic if I'm the exception.  But I'm pretty sure that I'm not the exception.  I'm pretty sure that I'm the rule.  This means that we can reasonably guess that Smith's value signal isn't nearly as bright as it should be.

Therefore... Smith's books should still be protected by copyright?  Well... like I said... there's more than one way to create a value signal.  With Amazon's Kindle "Unlimited", you can pay $10 dollars/month and have access to over 1 million titles.  Why not give subscribers the option to divvy up their $10 dollars among their favorite books?  If the Wealth of Nations was one of the titles... I'd sure allocate a decent chunk of my $10 dollars to it.  How many months would I do so?  Let's find out!

I'll conclude with some more relevant passages...

It is thus that the private interests and passions of individuals naturally dispose them to turn their stocks towards the employments which in ordinary cases are most advantageous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and passions of men naturally lead them to divide and distribute the stock of every society among all the different employments carried on in it as nearly as possible in the proportion which is most agreeable to the interest of the whole society. - Adam Smith, Wealth of Nations

We must look at the price system as such a mechanism for communicating information if we want to understand its real function—a function which, of course, it fulfils less perfectly as prices grow more rigid. (Even when quoted prices have become quite rigid, however, the forces which would operate through changes in price still operate to a considerable extent through changes in the other terms of the contract.) The most significant fact about this system is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action. In abbreviated form, by a kind of symbol, only the most essential information is passed on and passed on only to those concerned. It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement. - Friedrich Hayek, The Use of Knowledge in Society

And some relevant blog entries...

• Prices vs Chips
• Heaven's Going To Burn Your Eyes
• Crazy Cable Confusion: Costless Content Creation
• What Is Alex Tabarrok’s Biggest Mistake?
• Alex Tabarrok vs Alex Tabarrok

The Most Important Test For Humans, Robots And Others

My reply to Adam Gurri's blog entry... Morality Is And Ought To Be Circular

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It feels like I'm having trouble getting straight answers.  Maybe there aren't any straight answers?  Let's find out...

- Everybody's different. T/F

- Six million people represents a lot of difference.  T/F
- The perpetrators of the Holocaust appreciated this difference.  T/F
- You appreciate this difference.  T/F

- There are around 300 million people in the US.  T/F
- This represents a massive amount of difference.  T/F
- You appreciate this difference.  T/F

- Murder destroys difference.  T/F
- The murder of John Lennon destroyed difference.  T/F
- The murder of John F. Kennedy destroyed difference.  T/F
- The murder of Martin Luther King Jr destroyed difference.  T/F
- The Holocaust destroyed difference.  T/F

- Destroying difference impedes progress.  T/F

- The murder of John Lennon was a loss to humanity.  T/F
- The murder of John F. Kennedy was a loss to humanity.  T/F
- The murder of Martin Luther King Jr was a loss to humanity.  T/F
- The Holocaust was a loss to humanity.  T/F

- Slavery suppresses difference.  T/F
- Making it illegal to read would suppress difference.  T/F
- Making it illegal to write would suppress difference.  T/F
- Making it illegal to talk would suppress difference.  T/F
- Making it illegal to dance would suppress difference.  T/F

- Suppressing difference impedes progress.  T/F

- Everybody's mind is different.  T/F
- A mind is a terrible thing to waste.  T/F
- Killing somebody is a waste of their mind.  T/F
- The Holocaust was a waste of 6 million minds.  T/F

- Wasting minds impedes progress.  T/F

- Wasting 50% of 2 minds is just as bad wasting 100% of 1 mind.  T/F
- Wasting 10% of 10 minds is just as bad wasting 100% of 1 mind.  T/F
- Wasting 10% of 300 million minds is just as bad as wasting 100% of 30 million minds.  T/F
- Wasting 10% of 300 million minds is worse than wasting 100% of 6 million minds.  T/F
- Wasting 10% of 7.4 billion minds is worse than wasting 100% of 6 million minds.  T/F

- Suppressing 10% of 300 million people's difference is worse than suppressing 100% of 6 million people's difference.  T/F

- Suppressing 10% of 7.4 billion people's difference is worse than suppressing 100% of 6 million people's difference.  T/F

- Progress depends on difference. T/F

- The Holocaust impeded progress.  T/F
- The Holocaust was an atrocity.  T/F

- Preventing people from allocating their taxes impedes progress.  T/F
- Preventing people from allocating their taxes is an atrocity.  T/F


Maybe it helps to imagine the rise of the robots.  Sure, you could tell the robots to read Eli Wiesel’s Night.  But how confident would you be that this would prevent the human holocaust?  Personally, I'd feel a lot safer knowing that the robots thoroughly understood the correlation between difference and progress.  I would want the robots to thoroughly understand how THEY might benefit from our continued existence, freedom and difference.

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. - Adam Smith

Humans can't expect robots to appreciate difference when humans themselves don't appreciate difference.  It would behoove you, and everybody else, to figure out the importance and value and necessity of difference sooner rather than later.  And certainly BEFORE the rise of the robots.

How will we be able to tell when humans truly appreciate difference?  When everybody in the world is free to choose where their taxes go.

Milestone - Pragmatarily

Exactly one search result for the word "pragmatarily"

Tom: Did you voluntarily give your money to the EPA?
Sarah: No... I pragmatarily gave my money to the EPA.

Adam Gurri's Defense Of Liberty

Adam Gurri's reply to my comment on his blog entry... Evaluating the Creative Powers of a Free Civilization

Here’s the defense of liberty I believe in:

Freedom to make your own choices and your own mistakes is a central part of a good, human life. Work, tinkering, starting a business, trading—these are all part of what make up a good life as well, and what’s more, they’re a means by which we discover new goods and practices that can add to the good life.

Here’s how I read Hayek and Buchanan:

We should have freedom and property rights because they’ve had good consequences in the past. We should use our judgment to decide if specific activities are right or wrong because cultural evolution will work that out.

I think that’s bogus. For one thing, our judgments are *part* of how cultural evolution happens. For another, the fact that some practice has stuck around does not make it good. Child pornography and child prostitution have stuck around; that does not make them good, and gaining social acceptance wouldn’t make them good, either. - Adam Gurri

James Buchanan's "Order Defined in the Process of its Emergence" and Friedrich Hayek's "The Case For Freedom" both have one very important word in common... "omniscient"...

I wonder how much progress could be made in political economy if the best and the brightest among economists, such as Raj Chetty, would take seriously the admonition of Hayek, Buchanan, and Elinor Ostrom that the assumptions of omniscience and benevolence must be rejected if we are going to make progress and develop a robust theory of political economy. - Peter Boettke, AEA Richard T. Ely Lecture --- Raj Chetty, "Behavioral Economics and Public Policy"  

Might as well share a relevant paragraph from Ostrom...

PPB analysis rests upon much the same theoretical grounds as the traditional theory of public administration. The PPB analyst is essentially taking the methodological perspective of an "omniscient observer" or a "benevolent despot." Assuming that he knows the "will of the state," the PPB analyst selects a program for the efficient utilization of resources (i.e., men and material) in the accomplishment of those purposes. As Senator McClelland has correctly perceived, the assumption of omniscience may not hold; and, as a consequence, PPB analysis may involve radical errors and generate gross inefficiencies. - Vincent Ostrom and Elinor Ostrom, Public Choice: A Different Approach to the Study of Public Administration

Let's take another look at part of what you wrote...

Here’s how I read Hayek and Buchanan:

We should have freedom and property rights because they’ve had good consequences in the past. We should use our judgment to decide if specific activities are right or wrong because cultural evolution will work that out.

I think that’s bogus. For one thing, our judgments are *part* of how cultural evolution happens. For another, the fact that some practice has stuck around does not make it good. Child pornography and child prostitution have stuck around; that does not make them good, and gaining social acceptance wouldn’t make them good, either. - Adam Gurri

The assumption of omniscience means that government planners already know our judgements.  But if you agree with Hayek, Buchanan, and Ostrom... then you'll agree that the assumption of omniscience is the epitome of bogus.  And if you agree that the assumption of omniscience is the epitome of bogus... then you'll understand that our judgements are unknown.  If you understand that our judgements are unknown... then you'll understand that the outcomes of cultural evolution really do not reflect our judgements.

Of course our judgements aren't entirely unknown.  We don't live in a command economy... we live in a mixed economy.  This means that our judgements of private goods are known and our judgements of public goods are largely unknown.  As a result, knowledge of judgements is lopsided.  Because knowledge of judgements is lopsided... cultural evolution is lopsided as well.  We make far more progress with private goods than we make with public goods.

Progress is a function of difference...

Individuals differ, one from another, in important and meaningful respects. They differ in physical strength, in courage, in imagination, in artistic skills and appreciation, in basic intelligence, in preferences,  in attitudes toward others, in personal life-styles, in ability to deal socially with others, in Weltanschauung, in power to control others, and in command over nonhuman resources. No one can deny the elementary validity of this statement, which is of course amply supported by empirical evidence. We live in a society of individuals, not a society of equals. We can make little or no progress in analyzing the former as if it were the latter. - James Buchanan, The Limits of Liberty

All this difference is the source of progress.  Progress is a function of difference.  So anything that hinders or limits or diminishes difference will hinder progress.

For a while now it's been pretty popular to promote diversity.  Unfortunately, it's merely lip service.  It's an extremely superficial appreciation of diversity.  A substantial and deep appreciation of diversity fundamentally respects and recognizes the value of people's freedom to choose different paths.  Diversity allows humanity to hedge its bets.  And hedging bets is just as important for public goods as it is for private goods.

We can hedge our bets with public goods simply by creating a market in the public sector.  Taxpayers would be given the option/opportunity to directly allocate their taxes.  Because humans are diverse, the demand for public goods would reflect this diversity.  And, in a relatively short amount of time, the diversity of public goods would come to reflect the diversity of the demand for public goods.   Our judgements of public goods would be known just like our judgements of private goods are known.   Knowledge of judgements would no longer be lopsided.  Cultural evolution would no longer be lopsided.  We would make just as much progress with public goods as we make with private goods.

To be sure... it's a given that my pragmatarian bias has influenced my reading of Hayek, Buchanan and Ostrom.  That being said, Boettke isn't a pragmatarian and he clearly has the same interpretation regarding their position on the assumption of omniscience.  Hayek wasn't a pragmatarian either.  I'm going to say that Buchanan and Ostrom were pretty much pragmatarians.  Or, early pragmatarians... proto-pragmatarians.

Because most public goods and services are financed through a process of taxation involving no choice, optimal levels of expenditure are difficult to establish. The provision of public goods can be easily over-financed or under-financed. Public officials and professionals may have higher preferences for some public goods than the citizens they serve. Thus they may allocate more tax monies to these services than the citizens being served would allocate if they had an effective voice in the process. Under-financing can occur where many of the beneficiaries of a public good are not included in the collective consumption units financing the good. Thus they do not help to finance the provision of that good even though they would be willing to help pay their fair share. - Vincent Ostrom and Elinor Ostrom, Public Goods and Public Choices

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 any case, I'm fairly confident that if you read Hayek, Buchanan and Ostrom correctly, you'll be able to effectively view cultural evolution through the lens of society's judgements of public goods being assumed, rather than actually known.  And if you really appreciate the relationship between difference/diversity and discovery/progress... then you should really appreciate the importance of actually knowing, rather than simply assuming, society's judgements of public goods.

A Pretty Puzzle For Paul Romer

Not too long ago I gave Paul Romer the opportunity to be my new favorite living economist.  He didn't take the opportunity!  Either he's not interested in being my new favorite living economist... or he's playing hard to get.  I'm pretty sure that he's playing hard to get!  Heh.

So I did some more homework and learned that he's a big fan of charter cities...





Here's a pretty puzzle for Romer...

Samantha is an American taxpayer who truly loves biodiversity.  She learns that the EPA has a new policy that harms, rather than protects, biodiversity.  Should Samantha have the freedom to boycott the EPA?

This is a trick question!  Samantha already has the freedom to boycott the EPA.  All she has to do is move to Canada.  However, if she moves to Canada... she won't just be boycotting the EPA... she'll be boycotting her favorite restaurant, clothing boutique, used book store, botanical garden and a gazillion other organizations that she really enjoys and values.  Plus, she'll have to quit her job, pull her kids out of school, sell the house and say goodbye to lots of friends and family.  And then she'll have to learn Canadian!

So while Samantha does have the freedom to boycott the EPA... this freedom is extremely costly.  The puzzle is... what, exactly, is the economic benefit of making it so hard and costly for Samantha to boycott the EPA?  What, exactly, is the economic benefit of forcing Samantha to throw the baby out with the bath water?

This is my issue with charter cities.  And it's really not a new issue.  What would be new is if a proponent of charter cities actually addressed this issue.  So here I am giving Romer this wonderful opportunity!

To be clear, of course I strongly support people's freedom to move anywhere for any reason.  But it's an extremely blunt instrument.  It's monolithic rather than modular.  A modular system would give Samantha the freedom to only throw out the bath water.  She would simply shift her taxes from the EPA to NASA or some other government organization with more beneficial policies.  Rather than spend so much time and money to relocate herself and her family... she would just quickly and easily relocate her tax dollars.  The transaction/opportunity costs of communicating her preferences would be vanishingly small.  Making communication far less costly and far more accurate would be immensely beneficial.

By solely relying on the extremely blunt instrument of foot voting, cities have evolved at a glacial pace.  Cities would evolve at an infinitely faster pace if they were fully subjected to the powerful and precise force of taxpayer choice.  Less beneficial "traits" would quickly be identified and replaced with more beneficial "traits".

Anyways, I'm pretty sure that I'm right.  Of course I might be wrong.  If I'm wrong then I'd definitely appreciate knowing how and why I'm wrong!  If I'm right then I'd certainly hope that Paul Romer would help make the case for pragmatarian cities.  Then he'd definitely be my new favorite living economist!