Friday, August 7, 2015

Tax Choice For Neighborhoods?

Reply to reply on: "senseless human greed"


Let's try and simplify this.

You and I are neighbors. Each property owner in our neighborhood has to pay $100 per year for various public goods... but they can choose where their neighborhood taxes (n-taxes) go.

There are three main public goods... litter removal, graffiti removal and a neighborhood watch.

Here's my allocation...

Litter removal: $25
Graffiti removal: $25
Neighborhood watch: $50

Here's your allocation...

Litter removal: $25
Graffiti removal: $50
Neighborhood watch: $25

What happens if I decide to stop funding litter removal? It's not like I can put the $25 dollars back into my pocket and spend it on a steak. Therefore, if I stop funding litter removal... it's because I think that some other public good has become a bigger concern.

Let's say that I've seen some suspicious looking characters lurking about on several occasions. This has me more concerned with my safety and property than I was in the past. So I'm willing to sacrifice x (more litter removal) for y (more neighborhood watch).

Conditions aren't static... they are dynamic. Markets allow each and every individual to re-prioritize their spending decisions when conditions change. We are free to react as soon as we encounter some new information. This makes it beneficial to seek out and acquire new information.

According to your argument... litter is no longer going to be picked up as a result of me switching my $25 from litter-removal to the neighborhood watch. This can only be true if I was the only one allocating money to litter removal. But clearly I'm not. You also allocate money to litter removal. And so do many other neighbors. So nearly all the litter is still going to be picked up.

What happens if you perceive that there's marginally more litter than their used to be? You'll have to decide whether it's worth it to sacrifice some amount of the two other public goods in order to solve the litter problem.

Maybe you'll go to the neighborhood website where you'll see that I shifted $25 from litter removal to the neighborhood watch. When you ask me about my reallocation I'll tell you about the suspicious characters that I saw. Perhaps this information will also concern you enough to reallocate your $25 dollars from litter to the neighborhood watch. Or maybe you'll inform me that the suspicious characters were actually Mormon missionaries. Then I'd reallocate the $25 back to litter removal. Or maybe I'd reallocate my $25 for graffiti removal over to neighborhood watch! Just kidding. I like Mormons.

Compared to a centralized system, this decentralized system is going to result in way more information being found, shared, processed, acted on and debated. This is a large part of the reason why market economies succeed and command economies fail.

In summary....

If somebody doesn't spend their taxes on clean air/water... then they are going to spend their taxes on other public goods instead. And chances are extremely good that they aren't going to randomly make this decision. People who consistently fail to do their homework/research generally don't have to pay a lot of taxes. So if a taxpayer decides to spend their taxes on x rather than y, then it's nearly certain that this decision will be based on a considerable amount of information. Will this information be accurate? Not always. But how can we know whether its accurate or not if we never process it for ourselves?

Centralization, by blocking 150,000,000 people's tax allocation decisions, suppresses a lot of information. As a result, we can't benefit from the accurate information and we can't correct the inaccurate information.

For sure the democratic process does help get some information out there... but voting isn't as frequent or inclusive as spending. Therefore, the information that democracy does manage to extract is vanishingly small in comparison to the information that pragmatarianism would extract.

It's also a given that no two areas are going to have the same exact demands for public goods. Some cities/states/countries are going to have a greater demand for clean/air water than other cities/states/countries. People can move themselves accordingly and we'll have some great debates trying to discern correlation from causation. If an area is thriving... is it because of, or despite the fact that it also has a very high demand for clean air/water? Perhaps both the thriving and the clean air/water are the result of a high demand for public education.

The more experiments we have running.... the more truth we'll discover in less time.

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