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Ships of Socialism in a Sea of Capitalism

My favorite liberal economist, John Quiggin, asks whether we would be better off without corporations.  My comment...

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According to Coase, more or less, corporations are ships of socialism in a sea of capitalism.  Why, exactly, would it be better to replace this form of central planning with a different form?  What, exactly, would public ownership fix?  

Would public ownership somehow improve steering?   Is Equinor steered by more voters than Exxon?  Personally I'm pretty sure that there's more than enough evidence, such as Boaty Mcboatface, that the more voters participating the lower the common denominator.  

Make a list of 100 random books and have different groups of people use voting to rank the books.  All else being equal, the trashiest book will be highest ranked by the largest group of people.  As Youtube proves, with democracy garbage quickly floats to the top... ie PewDiePie.  In order for cream to quickly float to the top, replace voting with donating.  

All corporations should be steered by donations.  Then corporations would be ships of capitalism in a sea of capitalism.  

David Friedman vs David Brin

 A decade ago the anarcho-capitalist economist David Friedman wrote... David Brin and Adam Smith.  I commented in 2011, Brin commented in 2014, and Friedman commented a couple days ago.  Today I commented... 

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Brin's mistake was conflating wealth inequality with collusion.  Friedman is correct that Smith didn't say much, if anything, about the former but we all know his famous quote about the latter... "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."  

However, Smith also wrote this...

"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 

He wrote several similar passages. Even at least one socialist economist grasped this concept...

"The system of free competition is a rather peculiar one. Its mechanism is one of fooling entrepreneurs. It requires the pursuit of maximum profit in order to function, but it destroys profits when they are actually pursued by a larger number of people." - Oskar Lange, On the Economic Theory of Socialism: Part Two 

What's the alternative?  For the light to always remain green?  No need for yellow or red lights?  

The real issue is how we signal value.  Are Friedman's numerous blog entries equally valuable?  Of course not.  Which one is the most valuable?  We could answer this question in two ways... 1. voting 2. donating.  With voting everybody would have the same say.  It would be completely fair.  But with donating, wealthier individuals would have far more influence on the rankings.  Naturally, voting and donating would provide very different answers to the same exact question.  It would behoove us to figure out sooner rather than later which answer is more trustworthy. 

Facebook Groups

I'm in a ton of plant groups on Facebook.  Just now, in one of them, I saw this post...

What percentage of FB groups are dictatorships?  What would happen if decisions in a FB group were made by donations?  Let's find out!

Decisions By Donations

And for the sake of comparison...

Decisions By Democracy

Screenshots from plant groups that I'm in...

Am I Imagining Things?

Back in 2012 the birth of civic crowdfunding tricked me into imagining that we were on the path to pragmatarianism.  Now there's a similar innovation that has me imagining the same thing.  Once burnt twice shy?  Or am I going to be like Charlie Brown who is forever tricked by Lucy?

There are two websites, both still in beta, where users can use their money to "grade" the content... Cent and Honest Cash.  I shared some relevant thoughts in a comment that I just posted on Simon de la Rouviere's website...

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You already know that Cent is doing something similar... "seeding"... but not sure if you know that so is Honest Cash. It is like Cent, but a lot newer, and closer to Medium in design. Check out my post... The Greatest Movie Ever? People could reply to it with their nomination, unless it has already been nominated, in that case they'd spend their money on it. My main point was that it would be very useful to be able to sort the replies/nominations by value.

For both Cent and Honest Cash it's possible for participants to spend money on ideas, but neither startup currently allows demand to drive their development. Well, neither website has a page that displays all the feature requests sorted by value... yet.

I think the following quote does a good job of summarizing the startup status quo...

"We are biased toward the democratic/republican side of the spectrum. That’s what we’re used to from civics classes. But the truth is that startups and founders lean toward the dictatorial side because that structure works better for startups. It is more tyrant than mob because it should be. In some sense, startups can’t be democracies because none are. None are because it doesn’t work. If you try to submit everything to voting processes when you’re trying to do something new, you end up with bad, lowest common denominator type results. ”— Peter Thiel, Girard in Silicon Valley

What's remarkable is that he doesn't even consider the possibility of a startup being steered by a market. He doesn't say that having a market at the helm would be good, or bad, or horrible, he just doesn't even mention it. Like, the thought didn't even cross his libertarian mind.

And now I'm a user on two startups where we can spend our money on any and all proposals for the startup. For example, the demand for autosaving drafts on Cent is $.75 cents. What's the demand for this feature on Youtube? I don't know. Nobody knows. Youtube might know how many users want this feature, but this would only reveal its popularity... not its value.

Basically this boils down to whether or not it's truly beneficial to see and know the demand for things. If it is, then... there goes the status quo. There goes democracy, dictatorships and committees. Right? If so, this is big. Really big. Impossibly big! And so far it seems like I'm the only one that sees this possibility, so I might just be crazy. What do you think?

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Now I'm thinking about Murray Rothbard fantasizing about a button that he could push to destroy the state.  He really hated the state.  Personally, I think the state is merely a symptom of economic ignorance.  If either or both websites cure the disease, then the state will be fixed. 

Is it sad that Rothbard won't be around to see the state fixed?  I'd like to travel back in time... "Hi Mr. Rothbard, I'm from the future and... uh, where are you going?"  It would be convenient if I could show him my cell phone or something. 

Seldon, a godlike AI in the future, will resurrect Rothbard by reverse engineering his mind using everything that he wrote, which is quite a bit.  Rothbard will be reborn full of hatred for the state?  Heh.  I'm guessing that Seldon will fill in a few blanks. 

On Robin Hanson's blog I had a debate with Nitronaut about uploading your mind.  He kept bringing up the point about consciousness not carrying over and I kept trying to explain that the only thing that mattered was the continuation of the mind. 

Anyways, hopefully Simon de la Rouviere will reply to my comment and share his perspective.  Two heads are better than one. 

Markets Should Be At The Helm

Citizinvestor bit the dust... Learning From the Civic Tech Graveyard.  I found that article because I subscribe to Google alerts for "civic crowdfunding".

Here's the feedback that I shared with the website...

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Hi,

I just finished reading your interesting article "LEARNING FROM THE CIVIC TECH GRAVEYARD" and wanted to share my thoughts. 

Here's a relevant quote from Peter Thiel...

"We are biased toward the democratic/republican side of the spectrum. That’s what we’re used to from civics classes. But the truth is that startups and founders lean toward the dictatorial side because that structure works better for startups. It is more tyrant than mob because it should be. In some sense, startups can’t be democracies because none are. None are because it doesn’t work. If you try to submit everything to voting processes when you’re trying to do something new, you end up with bad, lowest common denominator type results."

From his perspective, a dictator rather than a mob should be at the helm of a company.   But then what's the issue with a dictator being at the helm of an entire country?  It's not like any given individual is wiser when they are in charge of a company.   The difference is that it's easier for people to leave a company than it is to leave a country.   Abandoning a sinking company is easier than abandoning a sinking country. 

I agree with Thiel that democracy is worse than dictatorships for companies.   Yet... our country uses democracy to choose who should be at our country's helm.   The result is lowest common denominator leadership.   Basically, we end up with idiots at the helm. 

So Thiel considers dictatorships to be better than democracy for companies.... but there's one alternative that he didn't even consider... the market. 

After reading your article I was disappointed that there wasn't a comment section.   I like the topic so I enjoyed reading your thoughts on it, and would have also enjoyed reading other people's thoughts on the topic.  Obviously I would have also enjoyed the opportunity to publicly share my own thoughts with other people interested in the topic. 

With your organization's current system a dictator decides whether to facilitate comments.   Obviously your dictator has decided against comments.  What are the chances though that this is the best decision?  If the chances were good, then it wouldn't be an issue for countries to have dictators.   It stands to reason that an even poorer decision would be made by allowing everybody to vote for or against comments.   My best guess is that the best decision would be made by donations.   Whichever option received the most donations would be implemented. 

Every significant decision could, and should be, a fundraiser for your organization.   The market would steer your organization in the most valuable direction.   If not, then we shouldn't allow the market to steer the entire private sector. 

Feedback For FEE.org

Reply to reply on The Good Intentions Fallacy Is Driving Support for Democratic Socialism by Barry Brownstein

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If FEE was doing a good job disseminating information/knowledge, then you would thoroughly understand and love Hayek's argument (against command economies) that knowledge is decentralized/dispersed. As a group, FEE's readers have FAR more knowledge, including economics knowledge, than FEE itself (leadership + staff) has. As a group, FEE's readers have read FAR more books, including economics books, than FEE itself has. As a group, FEE's readers have done FAR more jobs, lived in FAR more countries and had FAR more life experiences than FEE itself. As a group, FEE's readers have FAR more eyeballs, ears and most importantly... brains.... than FEE itself. Thanks to consumer choice, market economies utilize/harness FAR more collective intelligence and information than command economies do. This is why markets succeed while socialism fails. It's a fact that right now FEE is not a market system... it is a socialist system. Therefore, FEE is failing to do a good job educating everybody about economics.

If you need additional proof that FEE is failing to do a good job, then here it is... you don't appreciate the difference between cheap signals (ie voting) and costly signals (ie spending). The fact that lots of people voted for prohibition, for example, informs us that it was popular, but it does not at all even remotely reveal the demand for prohibition. Demand can only be revealed by each and every consumer reaching into their own pocket and putting their own money where their mouth is. What was the demand for prohibition? We don't know. Consumers were not given the opportunity to spend their own money on prohibition.

On Netflix... what is the demand for nature show? Netflix does not know. It knows how many votes nature shows receive, it knows how many hours people spend watching them, but it doesn't actually know the demand for them.

Think about a "free" lunch. Just because lots of people will vote for a "free" lunch doesn't reveal the demand for the meal. Just because lots of people will line up and eat a "free" lunch doesn't reveal the demand for the meal.

Here's what a liberal wrote...

Hoover, in Hawley’s words, allowed for the New Deal to emerge because of his “reluctance to recognize that the private sector was inherently incapable of meeting the demand for social services on its own.” - Mike Konczal, The Voluntarism Fantasy

How could he possibly know what the demand is for welfare? Voting for welfare doesn't reveal the demand for it and neither does using it. The demand for welfare can only be known by giving Konczal, and all the other liberals, the opportunity to put their own money where their mouths/hearts are. When liberals are given the opportunity to decide how they divide their own dollars between welfare, public education and public healthcare then, and only then, will the demand for welfare truly be known.

When FEE's readers are given the opportunity to decide how they divide their donated dollars between articles about the Invisible Hand and articles about other topics then, and only then, will the demand for articles about the Invisible Hand truly be known.

1. As a group FEE's readers have FAR more intelligence/information than FEE itself does. It's a basic fact that two heads are better than one.

2. In order to fully harness/utilize the collective intelligence/information of its readers, FEE needs to give each and every reader the opportunity to put their money where their mouth is. It's a basic fact that actions speak louder than words.