The Pragmatarian Model For The NY Times

Today I was on my phone checking out Twitter.  I saw this tweet...

Why last minute lane mergers are good for traffic https://t.co/xxauzx1Njx

— Timothy Sandefur (@TimothySandefur) December 22, 2016

The topic looked interesting so I clicked on the link.  A couple seconds after doing so, I was immediately redirected to a subscription page.  I scrolled up and down trying to find the escape pod.  Unfortunately there was no obvious exit sign and I ended up accidentally clicking on a chat button.

When life gives you lemons...

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Thank you for contacting The New York Times. We appreciate your business and are always happy to help.

Info at 13:39, Dec 22: You are now chatting with 'Isaac'

Isaac at 13:39, Dec 22: Hi, this is Isaac from The New York Times. How may I assist you today?

you at 13:40, Dec 22: Hi. If I subscribe can I choose which articles I spend my fees on? I don't value all your articles equally.

Isaac at 13:41, Dec 22: Don't worry about spending your fees; if you purchase a subscription, you'll have unlimited access to all of our articles.

you at 13:42, Dec 22: Sure... but how will you know my actual demand for topics?

Isaac at 13:43, Dec 22: You only have to log in with your email account, and you'll be able to read any article you want. How does that sound?

you at 13:45, Dec 22: I am not at all interested in sports and wouldn't want any of my fees paying for sports articles.

Isaac at 13:47, Dec 22: Don't worry about that, since you can choose what articles to view. However, since the price is based on a regular subscription and not in the number of articles you read, the pricing will be the same. Is that what you wanted to know?

you at 13:50, Dec 22: I want to be able to use my fees to provide you folks with positive feedback. Say I happen to really love an article. I'd like to have the freedom to spend a lot of my fees on that article. Then you would know that I truly loved the article. Aren't you folks interested in feedback from your subscribers?

Isaac at 13:53, Dec 22: Sure! The best way you can give us feedback if you really enjoy an article is to share it through your favorite social network. You can also provide us with specific feedback, if you want, by emailing executive-editor@nytimes.com. You can also send a letter to letters@nytimes.com, if you want

you at 13:56, Dec 22: Can you cite any sources to substantiate your claim that contigent valuation techniques are truly the best way to provide feedback?

Isaac at 13:59, Dec 22: You can view on http://www.nytimes.com/trending/ the most popular stories we have right now. The stories that appear there are the ones that get the most views per hour, and the best way you can help attracting views to an article is to share it with more people.

you at 14:02, Dec 22: Imagine if subscribers could spend their fees on their favorite stories. Then you would know the true value of your stories. Do you think that your most valuable stories would also be your most popular stories?

Isaac at 14:07, Dec 22: I totally agree with you. I think there should be a way for readers to provide direct feedback when they stumble upon a truly great article. However, since all of our subscriptors are provided with unlimited credit to view any article they want, the only measure we have of the quality of an article is its absolute number of views, so that's what we use as a metric for them. By only reading the articles you prefer, you're helping us find out what the best ones are. What do you think about that?

you at 14:13, Dec 22: Just because I listen to a speech by Trump really doesn't mean that I'd be willing to spend a penny on his speech. Right now you want me to spend my money on your publication. If it only cost a penny per year then no problem. But the more money you want me to spend... the greater my sacrifice. Spending money is mSo if I'm already paying your company a monthly fee... why not give me the opportunity to use it to indicate which of your articles is most worth my sacrifice?

Isaac at 14:18, Dec 22: By watching a speech by Trump you're not supporting him; you're supporting the editor that made the speech available to you. We work every day to make our articles as neutral and unbiased as possible, so instead of supporting a political idea, you're supporting the writers, editors and publishers who bring the information to you. Don't you think it's better not having to worry about reading 20, 200 or 2000 articles?

Isaac at 14:19, Dec 22: The cost of making an article is the same regardless of the number of views it gets, but the popularity of a certain group or articles can determine which articles or writers make it to the front page next time.

you at 14:23, Dec 22: I think you'll agree that it matters whether I give my money to your publication or to The Economist. Clearly it makes sense for me to give my money to whichever publication provides me with the most bang for my buck. But if my preferences for publications matter then why don't my preferences for individual articles matter?

Isaac at 14:26, Dec 22: We think you should be able to read whatever articles you prefer, and that's why we give you unlimited access to all of our digital collection; instead of limiting the number of articles you may choose.

you at 14:28, Dec 22: Do you think it would be difficult to allow me to choose which articles I allocate my fees to?

Isaac at 14:30, Dec 22: Yes, since that would require a huge change on our pricing and subscription methods. Figuratively speaking, you're not renting individual books; you're buying a ticket to enter the whole library.

you at 14:37, Dec 22: I don't mind spending $10 on a ticket to enter the library. Good analogy. But since I have $10 dollars... why not give me the opportunity to choose which books I allocate my 1000 pennies on? I wouldn't allocate a penny on 50 Shades of Grey but I would allocate many pennies to the Wealth of Nations by Adam Smith. When everyone else also allocated their fees then we'd know at a glance which book in the library was the most valuable.

Isaac at 14:45, Dec 22: I completely agree with you. I know that right now we are only using views as a metric of the quality of an article, but sometimes you don't really agree with what you read, and you think it does not deserve the money you've spent on reading it. My best suggestion as of now is to call 855-698-8544, which is our Digital Subscriptions department for mobile users. It is indeed possible to filter or otherwise categorize the articles you read; however, I am unable to do it. I'm really sorry for the inconveniences this may cause.

Isaac at 14:45, Dec 22: Is there anything else I can assist you with today?

you at 14:48, Dec 22: I ended up on this page because I was trying to read one of my 10 free articles but I kept getting redirected to the subscription gateway. How do I escape from the gateway and read the article?

Isaac at 14:49, Dec 22: There should be a "Read Full Article" button that allows you to read it for free, in the article preview

you at 14:50, Dec 22: Yes there is but a couple seconds later I'm automatically redirected to the subscription gateway.

Isaac at 14:51, Dec 22: My best suggestion is to try reading the article on a laptop or desktop computer.

you at 14:54, Dec 22: K. I'll try that. FYI I'm going to post our discussion on my blog... The Pragmatarian Model For The NY Times. Thanks for your time.

Isaac at 14:55, Dec 22: You're welcome! I'll keep that in mind. I hope I was able to help you today.


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I was honestly surprised that he chatted with me as long as he did.

Now I'm on my laptop and I was able to read the article.  Eh. My expectation was greater than the reality.  So I wouldn't have spent any pennies on the article.  It turned out that the detour was more enjoyable!

See Also:

The Pragmatarian Model For The Economist
The Pragmatarian Model For Inkl

Clarifying The Invisible Hand

My response to: The Myth of the Invisible Hand by Jonathan Kolber

I love stories about the Invisible Hand (IH). It’s plain to see that you’ve definitely done quite a bit of homework on the topic. In fact, I even learned something!

However, despite all the homework that you’ve done, you haven’t quite grasped the essence of the IH. Here’s the most relevant passage…

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 

Clearly this passage doesn’t include the term “Invisible Hand”. But that’s exactly what this passage is all about.

Accountants, for example, are certainly “advantageous to society”. So it’s profitable to become an accountant. But if too many people become accountants… then the supply of accountants will be greater than the demand for accountants… which means that it will become less profitable to become an accountant… and less people will become accountants. Instead, they will go into more profitable professions.

High profits are a green light. Low profits are a red light. The greater the disparity between profits… the greater the incentive for faulty distributions to be automatically altered.

We all subjectively perceive shortages and surpluses and we spend our money accordingly. We influence each other and are simultaneously influenced by each other. We direct each other and are simultaneously directed by each other. We encourage beneficial behavior and are simultaneously encouraged to behave beneficially.

Therefore… no need for government intervention/interference? Well… not quite. Even though Samuelson was an idiot who clearly didn’t grasp the IH… he did grasp that the free-rider problem was a problem.

Like I said, I love stories about the IH. In other words, I subjectively perceive that there’s a shortage of stories about the IH. However, I have never even once spent even a penny on any stories about the IH.

valuation = my perception of the relative scarcity of IH stories
sacrifice = the amount of money that I’ve spent on IH stories

valuation > sacrifice

I truly want there to be more stories about the IH… but, by not spending any money on stories about the IH… I fail to provide any real incentive for people to write stories about the IH. In other words, I basically shoot myself in the foot by essentially lying to producers. Producers really aren’t mind-readers.

The solution is the pragmatarian model. Each month we’d each pay $1 dollar… but we’d be free to choose which stories we spend our pennies on. For sure I’d spend my pennies on stories about the IH. The more people who did so… the greater the incentive for people to write stories about the IH. The greener the light… the brighter the value signal… the sooner there would be an abundance of stories about the IH. The feedback loop would be accurate.

And if too many people started writing stories about the IH? Well… this is definitely hard for me to imagine! But I suppose it’s theoretically possible. If it did happen though then the light for stories about the IH would turn from green to yellow to red and the faulty distribution of topics would be automatically corrected without any intervention of law.

Incentives matter just as much for public goods as they do for private goods…

Public services are never better performed than when their reward comes only in consequence of their being performed, and is proportioned to the diligence employed in performing them. — Adam Smith, Wealth of Nations

So no, the IH really isn’t a myth. Values are subjective. Nobody is a mind-reader. Incentives matter.

Please let me know if you have any questions! It’s entirely possible that my interpretation/understanding/grasp of the IH is faulty. As the saying goes… two heads are better than one…

More heads are occupied in inventing the most proper machinery for executing the work of each, and it is, therefore, more likely to be invented. — Adam Smith, Wealth of Nations

The private sector drops the ball?

My reply to: when the private sector drops the ball

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The private sector drops the ball? There you are watching that one commercial with Sarah McLachlan and the abused dogs. And then, of course, you start tearing up and going *snif* *snif*. But do you call the number on the screen in order to make a donation? Nope. You drop the ball.

No worries! That’s what the government is there for! The government reaches into your purse, takes out $100 dollars… and gives it to ASPCA. Voila!

You dropped the ball but the government picked it up. That’s teamwork!

Actually… it’s not quite so simple to figure out who, exactly, dropped the ball. It’s easy to blame the education system for not teaching you about Wicksell…

It is impossible for anyone, even if he be a statesman of genius, to weigh the whole community’s utility and sacrifice against each other. — Knut Wicksell, A New Principle of Just Taxation

But can we really blame the education system? The education system is simply the product of our system of public finance.

Eh, it’s easiest just to blame myself. I dropped the ball. Sorry about that. But here am I endeavoring to pick it up.

So… if we assume that the $100 dollars that the government took out of your purse closely corresponds with how much you genuinely care about helping abused dogs… then yeah… there’s absolutely no problem with the government picking up the ball. However, this assumption would throw markets under the bus. Not just a little under the bus… but entirely under the bus.

There would be absolutely no point in anybody shopping if we want to assume that the government knows how much we truly value things.

And then you ask… but what about voting?! Well… if voting every few years was truly effective at communicating/conveying our valuation of things then again… markets get thrown entirely under the bus.

Therefore… what?

Therefore we apply the pragmatarian model to Medium. Each month we each pay $1 dollar… but we are given the freedom to choose which stories we spend our pennies on. So if you read a story about helping abused dogs and you start going *snif* *snif*… then you might as well spend some of your pennies on the story. The more pennies that get spent on that story… the more attention that will be given to the plight of abused dogs.

And if you don’t decide to spend your pennies on the story about helping abused dogs… then it’s a given that you’re saving your pennies up for more valuable stories. But you’re definitely not going to be spending your saved pennies at Sephora! You’ll only be able to spend them on stories that you truly value. Then I’ll be able to sort your recommended stories by your valuation of them. How cool would that be? It would only take me a second to learn which story you value most.

If we’re honest with ourselves then sure, the free-rider problem is a real problem. But assuming that government officials, who we’ve never even met, somehow know how much we truly care about things? Oh man, it’s by far the most ridiculous, and harmful, assumption ever made.

To be clear… no, I’m really not a libertarian. I’m a pragmatarian. I believe that taxes are wonderful and necessary… as long as the people who pay them are given the freedom to use them to improve our country. Of course what counts as “improvement” is entirely subjective. If it wasn’t subjective… then again, shopping would be thrown under the bus.

Building Better Classrooms And Countries

Forum reply: 4th Grade Nation State

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You know I actually did something like this (in the loosest sense of the term) in sixth grade when I was 11. My teacher would give us fake money when we did things like help out other students, assist the classroom chores, and of course do well on money assignments (extra credit that we got paid for instead of points for). Afterwards we could spend the money in the store of knickknacks etc. There were other lessons associated with it such as checkbook balancing and loan management, but that wasn't the main goal. The goal was to demonstrate to the students how a simple market works, a person's place in it, and how to manage your money.

Did we create an independent economy between students? No, but that was never was the goal. Did we waste our parents money or try to cheat the system? No, there was no point in doing that. But what we did do was create a simple market where the classroom employed and paid students for doing jobs for the classroom and the students purchased things from the classroom. Would you consider that "building" something? - Lost heros 

What your teacher did was better than nothing. But would I consider it "building" something? Not so much.

Why do you perceive that the citizens of Classtopia are wasting their parents' money? You said that the students in your class purchased things "from" their classroom. But in Classtopia... the students are purchasing things "for" their classroom. Well... so far only labor has been purchased... but when the Garden Dept, for example, buys a plant... then it's going to be "for" their classroom... and/or the school. It's the difference between private goods and public goods.

Yesterday Michelle came over and picked up my collection of unused postcards and foreign currency. This week each of her 30 students will receive 22 foreign coins, around 4 foreign bills and around a dozen postcards. I put the items in 60 zip lock bags.

Of course the students are going to be given the opportunity to trade with each other. Not just trade though... but also buy, sell and share.

From my perspective, a market is obviously beneficial because the students aren't going to equally value their Christmas gifts. Some students might prefer the postcards while others might prefer the currency. Maybe most students will prefer the currency?

Michelle is going to ask the students what they can trade their gifts for. I'm hoping that one of the students will respond with "quotes". Then hopefully... while they are trading quotes for currency/postcards... they'll realize that they can trade copies of their quotes with each other.

When Michelle and I talked yesterday she guessed that perhaps the issue is that the kids have been indoctrinated against trading. Kids are known for making really bad trades... so their parents and teachers admonish them against making any trades. Sure, lots of kids don't know the real-world value of most things. When the kids are trading/buying/selling the postcards and coins... they aren't going to know their real-world value. Well... to be clear... I don't really know their real-world value. Except for the French Francs and the 100 yuan bills. Michelle told me that the Francs are obsolete but I wanted to know whether the metal itself had any value. I kinda gave up after a few searches. As far as the 100 yuan bill... I believe it's worth around $14 dollars. There were at least a couple of them in the collection.

Anybody who exchanges a 100 yuan bill for a Franc will probably be making a mistake. And I say "probably" because I can't know how much the student might value the coin itself.

Over Christmas break the students with the currency will have the project of using Google Sheets to inventory their collection. One of the columns will be for the currency's dollar value. So the students will need to do some research.

Generally it's a good idea to figure out something's market value before you decide to trade it. But I'm pretty sure that it's a good idea to allow the kids to make some bad trades in order to learn from their relatively small mistakes.

Building a better classroom means that you're making improvements that can benefit the next batch of students. If this year's Garden Dept buys a Tillandsia ionantha and attaches it to a tree in the school... then it can benefit the next batch of kids. Same thing if the Book Dept buys A Wrinkle in Time and adds it to the classroom library.

Sure... improvements can be made just by the students contributing their time... but that's certainly not how most countries work. Most countries have taxes. Of course, there aren't any countries that allow their citizens to choose where their taxes go. Nearly everybody takes our current system for granted. But I certainly do not. I've thoroughly researched our system and have found absolutely no logical/rational (ie economic) explanation for allowing a small group of people to spend everybody's taxes.

So... Classtopia. You have 30 citizens each using their pennies to say, "I've found some room for improvement and my penny is proof that the improvement should be made".

Can America learn anything from Classtopia? Imagine citizens using their dollars to say, "I've found some room for improvement and my tax dollar is proof that the improvement should be made".

Well...

A. Americans don't truly know where there's room for improvement

Or...

B. Voting is an adequate method for Americans to communicate where improvement is most needed

I'm pretty sure that neither of those is the right answer. Ideally, sooner rather than later, some of you will apply America's current system to some classrooms. The 30 students will elect one student who gets to decide how all their tax pennies are spent. And then we'll see! We'll see which system is better at improving classrooms. We'll see which system is better at building more beneficial classrooms.

Classtopia Book Valuations

Which children's books are the most valuable?  The only real way to find out is to facilitate crowd sponsored results (CSR).  When the citizens of Classtopia give their taxes to their Book Dept... they will be able to use their tax pennies to communicate their valuations of their favorite books.

Here's the list as of 6 Dec 2016...

This is a very new project so nearly all the books/valuations were submitted by Michelle and myself.  We ended up giving around $13 dollars to the Book Dept.  So far only one student, Laila, has contributed to this list.  I believe she put 20 pennies on Charlotte's Web.

How will this list evolve over time?  It will be very fascinating to find out!  I will be using this blog entry to share updates.

Efficiently Allocating Brainpower

Response to: Craigslist, Wikipedia, and the Abundance Economy by Quincy Larson

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Your grasp of programming is a LOT better than your grasp of economics! I’m the opposite. My grasp of economics is a LOT better than my grasp of programming. It’s a double coincidence of wants!

Imagine that an ant stumbles upon a giant, delicious cookie. The ant will certainly be thrilled that she made such a valuable discovery. Of course she can’t carry the entire cookie back to the colony. Instead, she willingly spends/sacrifices a considerable amount of her limited and precious calories in order to create a very strong pheromone trail all the way back to the colony. Ants at the colony will be able to easily and quickly discern that, based on the strength of her pheromone trail, it will be really worth it for them to choose her trail. Many of them will do so and the chances will be really good that they will be able to grab the cookie before a crow does.

I don’t even know if crows eat cookies.

The problem with your grasp of economics is that you see spending/sacrificing as buying.

NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO.

The point of spending/sacrificing is communicating. It’s how we communicate to others where there’s something of value. It’s how we bring valuable/important things to other people’s attention. It’s how we beneficially alter/change/modify each other’s behavior.

The gold rush was only a rush because so many people were willing to spend so much of their money on gold. Consumers’ willingness to pay such a high price for gold quickly and significantly altered the behavior of many producers.

So imagine society as a bunch of brains. What should be done with all these brains? How should they be used? How should they be allocated?

The gold rush significantly altered the allocation of society’s brains. Consumers said, “We’d truly LOVE to have more gold! We’ve proved this by our willingness to spend/sacrifice so much money!” Producers got the message loud and clear… and there was a significant change in the allocation of society’s brains. A lot more brainpower was used to try and solve the gold shortage problem.

Dr. Salk gave the polio vaccine away. That’s true. People paid barely any money for the vaccine. That’s also true. Everyone’s life is better off as a direct result of this massive free lunch? Nope. Nope. Nope.

If the amount of money that people spent on the vaccine accurately communicated their true valuation of the vaccine… then we can reasonably guess that there would have been a massive rush to cure other deadly diseases. And cancer would have been cured a long time ago.

Well… I can’t know what, exactly, would have been the result of allocating a massive amount of brainpower to curing deadly diseases.

It’s easy to see what does exist… it’s really hard to see what would have existed if people truly understood the free-rider problem (sacrifice < valuation).

I’m guessing that you aren’t aware that Wikipedia is loosely based on Friedrich Hayek’s essay? Sure, of course knowledge is dispersed… but the “minor” detail that Wales missed is the relationship between knowledge and prices. Wikipedia has a lot of brainpower. But this brainpower really isn’t being efficiently allocated because the editors really don’t know how much their edits are truly worth to other people.

The solution is simple. Let’s take Medium for example. We’d all pay a very reasonable $1/month but we’d be entirely free to choose which stories we spend our pennies on. People’s sacrifices would accurately communicate their valuations and Medium’s brainpower would be efficiently allocated.

This solution is the pragmatarian model. The Nobel economist James Buchanan deserves most of the credit for this model.

With your grasp of programming and my grasp of economics we can create something awesome. Let me know if you’re interested!

Classtopia Tax Choice

Reply to thread: 4th Grade Nation State

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This last Monday the students in Michelle's class (Classtopians) paid their taxes for the first time...

The amounts are in pennies!

Of course the taxpayers were able to choose where their taxes went.  The taxpayers gave their taxes directly to the students in charge of the departments.  When the taxpayers paid their taxes, they were given a receipt.

The point of the IRS isn't to collect taxes... it's to try and minimize cheating.

All the taxes were generated from the auction of the quotes.  So perhaps they aren't technically taxes?  *shrug*


[Updates]

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10 Feb 2016

Stephen Wolfram VS Economics

Recently on Medium I read this really interesting story by Stephen Wolfram... Quick, How Might the Alien Spacecraft Work?  It's super brainy but missing... economics.  Following a few of his links I found this blog entry and this video...





Let's juxtapose his talk with the first video that I ever narrated...





Wolfram and I sound like different species!  He's incredibly better at communicating than I am.

In the beginning of my video, which I shot in February of this year, you can see my super nice Aloe vaombe.  Here's a photo I took yesterday of the same exact Aloe...

Ughhhhh!  What happened to it?  Ants!  The ants decided to let their "cows" graze on my Aloe.  Just in case any of you don't know, ants "milk" certain types of pests such as aphids.  Not sure what the "milk" is exactly, but the ants sure seem to enjoy it.  In exchange for the "milk", the ants provide the "cows" with transportation/colonization and protection.   It's a super fascinating example of mutualism.

Unfortunately, the ants really haven't gotten the memo about "sustainability" or "tragedy of the commons".  It's a big Aloe and it really wouldn't be bothered by a few "cows" grazing on it... but right now it's infested with "cows".  So there's a terribly high chance that the "cows" will kill my Aloe.

Of course it would super suck if my Aloe was killed.  It is worth several hundred dollars.  Well... at least it used to be.  Plus, I've had it for several years and have grown quite fond of it.

Not too long ago I would have protected my Aloe with pesticides.  But then I decided, for the sake of having more nature, to go entirely natural.

Yesterday I spotted somebody on my Aloe who was happy with my decision to go natural...

Ladybugs love to eat "cows"!   However, it's unlikely that even a flock of ladybugs would make a dent in the "cow" population because ants are quite effective at protecting their herd.

So... the heart of the problem here is my inability to communicate with the ants.  For all intents and purposes, they might as well be aliens or AI.

To understand the heart of the communication problem we can consider how ants communicate with each other...

In ants, one such behaviour is the collective food search: ants initially explore at random. If they find food, they lay down pheromone trails on their way back to base which alters the behaviour of ants that subsequently set out to search for food: the trails attract ants to areas where food was previously located.  - Jo Michell, The Fable of the Ants, or Why the Representative Agent is No Such Thing

Ants don't have language like we do.  Instead, they have pheromones.  The ants use their pheromones to alter each other's behavior.  Perhaps it's easy to jump to the conclusion that their use of pheromones is the equivalent of our use of words.  I'm pretty sure that this conclusion is wrong.

The fundamental difference between pheromones and words is the amount of calories it takes to produce them.  How many calories does it cost us to say a word?  Does it cost us more or less calories than it takes to type a word?

I'm guessing that... as far as calories are concerned... it's far more costly for ants to communicate with pheromones than it is for us to communicate with words.  Producing/emitting pheromones is more "expensive" than speaking words.  In fact, it's probably more accurate to say that ants communicate by their willingness to sacrifice.

Communicating through sacrifice is more readily apparent in bees...

Today’s Mandeville is the renowned biologist Thomas D. Seeley, who was part of a team which discovered that colonies of honey bees look for new pollen sources to harvest by sending out scouts who search for the most attractive places. When the scouts return to the hive, they perform complicated dances in front of their comrades. The duration and intensity of these dances vary: bees who have found more attractive sources of pollen dance longer and more excitedly to signal the value of their location. The other bees will fly to the locations that are signified as most attractive and then return and do their own dances if they concur. Eventually a consensus is reached, and the colony concentrates on the new food source.  - Rory Sutherland and Glen Weyl, Humans are doing democracy wrong. Bees are doing it right

Calories are a precious resource.  So the more calories a bee is willing to sacrifice... the more important its information... and the greater the change in the hive's behavior.

Of course ants and bees aren't the only animals that use sacrifice to alter each other's behavior...

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 

Ants, bees and humans are all incredibly different.  We're so different that we might as well be aliens or AIs.  Yet, despite our incredible differences... we all use individual sacrifice to change/modify/alter/improve the behavior of other individuals.

The fundamentally important concept of sacrifice as communication is nearly entirely absent from Stephen Wolfram's analysis of communicating with aliens/AIs...

Over the course of the billions of years that life has existed on Earth, there’ve been a few different ways of transferring information. The most basic is genomics: passing information at the hardware level. But then there are neural systems, like brains. And these get information—like our Image Identification Project—by accumulating it from experiencing the world. This is the mechanism that organisms use to see, and to do many other “AI-ish” things. - Stephen Wolfram, How Should We Talk to AIs?

Well, if we can express laws in computable form maybe we can start telling AIs how we want them to act. Of course it might be better if we could boil everything down to simple principles, like Asimov’s Laws of Robotics, or utilitarianism or something.  But I don’t think anything like that is going to work. - Stephen Wolfram, A Short Talk on AI Ethics

But if we’re going to “communicate” about things like purpose, we’ve got to find some way to align things. In the AI case, I’ve in fact been working on creating what I call a “symbolic discourse language” that’s a way of expressing concepts that are important to us humans, and communicating them to AIs. There are short-term practical applications, like setting up smart contracts. And there are long-term goals, like defining some analog of a “constitution” for how AIs should generally behave. - Stephen Wolfram, Quick, How Might the Alien Spacecraft Work? 

Wolfram is super interested in developing a language to improve our communication with AIs, aliens and each other.  Which is an awesome goal.  Unfortunately, I'm not quite intelligent enough to wrap my head around his exact efforts.  But I am intelligent enough to understand how important sacrifice as communication is.

Language is incredibly important... here I am typing so many words!  But when it comes to the ethics of ants... even if they could understand my words... "please stop killing my Aloe... I value it very much!"... why should I expect them to be considerate of my feelings?  What's in it for them?

Let's say that there were two ant colonies in my yard.  One colony harmed my plants while the other protected them.  Which colony would I be willing to make a sacrifice for?  Obviously I'd be willing to give food to the ant colony which served my interests.  I'd be willing to give the helpful colony a lot of food!  So it would quickly grow larger and effectively defeat the harmful colony.

Last year I wrote this blog entry... Don't Give Evil Robots A Leg To Stand On!   In it I shared this silly/surreal image...

If there are two robots... and one harms my interests while the other protects them... then I'm obviously going to give my money to the robot that protects my interests.  But how is this any different from how it works with humans?

Here's the drawing from AI Safety vs Human Safety...

It's Elon Musk giving $10 million dollars to the Future of Life Institute.   Musk communicated with his sacrifice.

If I had to guess... then I'd guess that the producers of "Arrival" paid Stephen Wolfram to work on their movie.  They probably didn't pay him $10 million dollars... but they obviously paid him enough to alter his behavior.

On the one hand, it's mind-boggling that elementary economics is entirely missing from Wolfram's analysis.  On other hand, he is a lot smarter than I am!  So maybe I'm missing something.  But it's really not the case that Wolfram publicly considered sacrifice as communication and then discounted/discredited it.  Either he did so privately... or the concept didn't even cross his mind.

For sure it would be wonderful if Wolfram did publicly consider the relevance/significance/importance of sacrifice as communication.  However, I'm really not going to hold my breath that he will do so.  I have this feeling that physics/math brains have a blind spot when it comes to real economics.  None of the true economists... such as Adam Smith, Friedrich Hayek and James Buchanan... have had physics/math brains.  And as far as I know, their interactions with physics/math brains really haven't gone anywhere.  The "economist" Paul Samuelson definitely had a physics/math brain and his interaction with Buchanan proved to be entirely fruitless.

What difference will it make if the creators (broadly speaking) of robots have a blind spot when it comes to economics?  That's a really tough question.  The creators themselves obviously respond to positive incentives (getting paid).  However, they obviously have a blind spot regarding the importance of positive incentives.  Can they create truly intelligent robots that fail to respond to positive incentives?

In a recent and relatively popular show about AIs... there were two theoretically intelligent robots... one was good and the other was bad.  The humans did not at all communicate with these robots through sacrifice.  The robots were not paid.  Their behavior did not at all depend on our willingness to sacrifice/spend/pay.  However, it definitely wasn't the case that the robots didn't need anything.  Both robots needed servers... lots of them.   Lots of servers take up a lot of space and energy.  All the limited and valuable resources (servers/energy/space) that are used by a bad robot can't also be used by a good robot.  This is Buchanan's Rule.

Ironically, the show was canceled.  Evidently it wasn't popular enough.  But the popularity of the show was only a factor because its true value was not known.  The true value of the show wasn't known because none of its viewers were given the opportunity to reveal/show/communicate their willingness to pay for the show.

Personally, I'm not going to pay to watch the "Arrival" in a theater.  Instead, I'll wait for it to hopefully be added to Netflix.  Am I the rule or the exception?  If it comes out on Netflix then the only mechanism that Netflix provides for me to communicate my valuation of the movie is their star rating system.  A star rating system is a very defective way to accurately communicate my valuation of the movie.  The only effective way to accurately communicate my valuation of the movie would be through my willingness to pay.  Except, clearly I wasn't willing to pay to watch the movie in a theater.  Well yeah.  How can I accurately valuate a movie that I haven't even seen!???

The solution is to apply the pragmatarian model to Netflix.  I'd be given the opportunity to allocate my monthly fees to my favorite content.  Every penny that I gave to "Arrival" would be a penny that I couldn't give to other content.  So the more pennies that I was willing to give to "Arrival"... the greater my valuation of it.  To learn more about the pragmatarian model please see my letter to Judith Donath.

Any real concern regarding bad robots will stem entirely from humanity's own failure to truly understand and appreciate the significance/relevance/importance of determining our willingness to pay/spend/sacrifice.  What about bad aliens?  I'm pretty sure that, by the time a species figures out how to travel to other inhabited planets, chances are really good that it will also have figured out the significance/relevance/importance of communicating through willingness to pay/spend/sacrifice.  I refer to this as "Xero's Rule".

[Update: 29 Dec 2016]

Photo of the perpetrators...

Praying Mantis egg sac on Aloe Hercules trunk...

[Update: 29 Jan 2017]

Again as in the case of corporeal structure, and conformably with my theory, the instinct of each species is good for itself, but has never, as far as we can judge, been produced for the exclusive good of others. One of the strongest instances of an animal apparently performing an action for the sole good of another, with which I am acquainted, is that of aphides voluntarily yielding their sweet excretion to ants: that they do so voluntarily, the following facts show. I removed all the ants from a group of about a dozen aphides on a dock-plant, and prevented their attendance during several hours. After this interval, I felt sure that the aphides would want to excrete. I watched them for some time through a lens, but not one excreted; I then tickled and stroked them with a hair in the same manner, as well as I could, as the ants do with their antennae; but not one excreted. Afterwards I allowed an ant to visit them, and it immediately seemed, by its eager way of running about, to be well aware what a rich flock it had discovered; it then began to play with its antennae on the abdomen first of one aphis and then of another; and each aphis, as soon as it felt the antennae, immediately lifted up its abdomen and excreted a limpid drop of sweet juice, which was eagerly devoured by the ant. Even the quite young aphides behaved in this manner, showing that the action was instinctive, and not the result of experience. But as the excretion is extremely viscid, it is probably a convenience to the aphides to have it removed; and therefore probably the aphides do not instinctively excrete for the sole good of the ants. Although I do not believe that any animal in the world performs an action for the exclusive good of another of a distinct species, yet each species tries to take advantage of the instincts of others, as each takes advantage of the weaker bodily structure of others. So again, in some few cases, certain instincts cannot be considered as absolutely perfect; but as details on this and other such points are not indispensable, they may be here passed over. - Charles Darwin, The Origin of Species

Letter To Judith Donath

This morning I listened to Russ Robert's excellent discussion with Judith Donath about signals.  Here's the e-mail that I just sent her...

******************************************

Hi Judith,

I just finished listening to your talk on Econtalk.  I really enjoyed it.  It's a very fascinating subject.  Plus, you have a nice voice!  :)

I'm very interested in the relationship between signals and willingness to pay (WTP).  Let's say that Netflix gave me the opportunity to divvy up my $10/monthly fee however I wanted between all my favorite content.  This really would not be easy to do!  It's one thing to give my favorite content 5 stars... but it would be another thing to give my favorite content my fees.  This is simply because my fees are limited.  A penny that I spend on Chungking Express is a penny that I wouldn't be able to spend on The Man From Earth.  In economic terms... there would be a very high opportunity cost.

I refer to this system as the pragmatarian model.  In theory, the benefit of the pragmatarian model is that it would allow us to more honestly reveal/communicate the strength of our preferences to consumers/producers.  When we can accurately know the actual strength of each other's preferences... then it would allow society's limited attention/brainpower to be efficiently allocated.  With the current system... we don't accurately know the actual strength of each other's preferences... which means that society's limited attention/brainpower is being inefficiently allocated.

What comes to mind is the three wise men following the star.  The three wise men were following the star because it was so much brighter than the other stars.  It stands to reason that if the "wise men" (brainpower) in our society can't see how bright the "stars" (value signals) truly are... then they will follow the wrong ones.  Nobody truly benefits from the inefficient allocation of society's limited brainpower.

If it makes sense to apply the pragmatarian model to Netflix... it would also make sense to apply it to Amazon Kindle Unlimited (AKU).  AKU subscribers would spend $10/month but they could choose which titles they spent their fees on.  By far my favorite book in the world is the Wealth of Nations (WON) by Adam Smith...

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 

This is the Invisible Hand (IH).  Unfortunately, what Smith really never clarified about the IH is that the benefit of the outcome/allocation... depends entirely on the accuracy/honesty of people's payments.  

Even though the WON is by far my favorite book in the world... I've never even spent a penny on it.  Why buy the cow when I can get the milk for free?

valuation: $$$$$$$$$
allocation: $0

allocation <<<<<< valuation

The amount of money that I've spent on the WON is a LOT less than my valuation of it.  And my valuation of the book is so high because I perceive that there are no books like it.  Valuation is our perception of relative scarcity.

What's so tricky is that, in economic terms, we could say that I've derived a ton of consumer surplus from the WON.  However, deriving so much consumer surplus could also be considered theft and/or the free-rider problem.

What if the pragmatarian model was applied to AKU?   If the WON was one of the titles... then I'd have absolutely no reason for my allocation to be less than my valuation.  Each month I could spend my entire $10 fee on the WON for the rest of my life.  Each month my mountain of consumer surplus would be marginally smaller.  Smith has been long dead though... so who would get the money?  Who cares!?  I wouldn't be trying to influence/change/alter/modify/improve Smith's behavior... I would be trying to encourage more consumers to read his book and more producers to stand on his shoulders in order to create even better books.

Of course, if I'm the only subscriber of AKU who was spending so much of his fees on the WON... the change in people's behavior would probably be vanishingly small.  But the more subscribers who spent more of their fees on the WON... the brighter its value signal... and the greater the change in people's behavior.

It stands to reason that if intra-good valuation is important... then so is inter-good valuation.  Netflix would add books and/or AKU would add movies/shows.  Amazon Prime already streams movies/shows so you'd figure that Amazon would be able to get the jump on Netflix.

Each month I'd pay Amazon $20 dollars... but I'd be able to choose which books/movies/shows that I spend my fees on.  Chunking Express is my favorite movie and the WON is my favorite book.  Every penny that I spend on WON is a penny that I can't spend on Chunking Express.  OUCH OUCH OUCH!!!

I value WON more than I value Chungking Express.  This is simply because the supply of good things is subordinate to people's understanding of the importance of honest/accurate spending signals.

With the benefit of inter-good valuation in mind... it would make sense for Amazon and Netflix to also add music and software.  But why stop there?  Why not simply move all digital goods into the public sector but give people the freedom to choose where their taxes go?  For all intents and purposes... taxes are simply fees.

Then I'd be able to decide which is more important... the WON or space colonization.  When you clicked on my profile page you'd be able to see all my favorite public goods sorted by my valuation of them.  At the quickest glance you'd have the greatest grasp of what's truly important to me.  Well... at least as far as public goods are concerned.

With this system... we'd be able to freely share and read every book.  Books would be public goods.

With the current system... if you think about it... it's entirely backwards.  You buy a book before you read it.  If we think of buying as valuating... then how can you accurately valuate a book that you've never even read?  With books in a pragmatarian public sector... you'd valuate the book after you read it.  The greater your perception of the book's relative scarcity... the higher your valuation... and the greater your willingness to sacrifice the alternative uses of your tax dollars.

I've shared this concept with a few economists but they seem to balk at the idea.  In all textbooks... consumer surplus is a good thing.  Then again, in all textbooks... the free-rider problem is a bad thing.  Economists seem unwilling to confront this inherent/blatant contradiction regarding the importance/necessity of honest/accurate spending signals.

It would be wonderful if you could carefully consider the concept and share your thoughts on it.

Sincerely,
Xero

Classtopia Coasianism

Yesterday our country used voting to decide that Donald Trump should be in charge of the country.  Today a 4th grade class/country (Classtopia) used spending to decide that Isael should be in charge of their Department of Animals.  The main difference between these two systems is that in the 4th grade class... the winners compensated the losers.

Today wasn't the first time that this class has used coasianism to make a group decision.  I'll use this blog entry to consolidate the results of their spending decisions.  For additional information please see...

Standing On The Right Shoulders
4th Grade Nation State
Classtopia Tax Choice


1. Deciding which book to read (29 Sept 2016)...

2. Deciding who should be in charge of their IRS (7 Oct 2016)...

3. Deciding what the class insect should be (11 Oct 2016)...

4. Deciding who should be in charge of their Gardening Department (28 Oct 2016)...

5. Deciding who should be in charge of their Animal Department (9 Nov 2016)...

6. Deciding who should be in charge of their Book Department (17 Nov 2016)...

7. Deciding who should be in charge of their Food Department (17 Nov 2016)...

8. Deciding what the name of their class/country should be (1 Dec 2016)

9. Deciding who should be in charge of their Communications (Blog) Department (9 Dec 2016)

10. Deciding who should be in charge of their Help Department (11 Jan 2017)

11. Deciding who should be in charge of their Photography Department (10 Feb 2017)

12. Deciding who should be in charge of their Justice Department (13 Mar 2017)

Christopher's batman piggy bank...

From Real To Megareal

Reply to: Voting in a Technocracy by Sean Canton

***************************************

A few years back you left a comment on my blog entry. It’s super cool to randomly stumble on your story here on Medium! I really enjoyed it and am super happy to see that you’re still interested in the concept of people choosing where their taxes go.

Of course I recommended your story. Ideally though, Medium would make it super easy for me to spend some money on your story. The more money that people spent on your story, the more likely that other people would read it. This is because it would be logical for people who search for stories to sort the results by their value…

“Hey Medium, show me all the economic stories published in the past week and sort them by their value. Thanks!”

I get the feeling though that the free-rider problem is a real problem. So it would make sense if Medium charged us a $1/month but allowed us to choose which stories we spend our pennies on.

It’s basically the same concept of choosing where our taxes go… but applied to Medium.

This is kinda my main strategy. For sure it would be ideal if the government allowed us to choose where our taxes go. But it’s a Herculean task to persuade enough people that this is a wonderful idea! In theory, it should be incredibly easier to persuade Medium to allow us to choose where our monthly fees go. The results would speak for themselves… and other websites would implement the same model… and eventually everybody would easily grasp and appreciate the immense potential benefit of applying the same model to the government.

Unfortunately, after several very valiant attempts on my part to persuade Medium to implement the “pragmatarian” model… I’ve decided that even this task is too Herculean for me! Sheesh. Medium is too big a fish for me to fry. Same thing with The Economist. The Economist already has subscribers… so all they would have to do would be to allow their subscribers to choose which articles they allocate their fees to. But… nope.

Last year I actually created a super basic micropayments forum. But my programming skills are iffy at best.

Just recently I managed to persuade my friend Michelle to allow her 4th grade students to choose where their taxes go. Heh. So far they’ve managed to create two departments… IRS and Gardening. None of the kids have spent their taxes yet.

Initially she gave each of her students 20 pennies. They used them to make classroom decisions (ie who should be in charge of their IRS). The option that received the most pennies was selected… and the winners compensated the losers. The compensation is what’s taxed. Also, Michelle started auctioning quotes. The kids who win the quotes will be able to decide which departments they give their winning bids to.

The class doesn’t have a lot of spare time so it’s pretty much the epitome of Rome not being built in a day.

I told Michelle that there’s “real”, “unreal” and “surreal”… but no prefix for better than real. A day or two later she came up with “megareal”. Even though the students in her class will just be choosing where their tax pennies go… it will still give them the opportunity to use their pennies to paint their own picture of a megareal classroom.

Right now the class doesn’t have any animals in it. One of the kids brought up having a department for animals. The other kids were super enthusiastic about this idea. So I’m guessing that enough of them might use their taxes to help purchase a fish for their class. As a result of their tax allocation choices, their class would go from real to megareal.

What if there was a pragmatarian website for new words/meanings? Members would pay $1/month and be able to choose which new words/meanings they spend their pennies on. The new words/meanings could be sorted by their value so it would be super easy to find and learn the most valuable new words/meanings. Language would evolve far more efficiently. In other words, language would go from real to megareal in less time.

Your story is a picture of a megareal society. You used words to paint a very pretty picture. And I sure appreciated and enjoyed the picture! But I’m fairly certain that we need a working model of people using at least their pennies to paint a megareal picture.

Letter To Zhang Weiying

Here's the e-mail that I just sent to the pro-market economist Zhang Weiying...

*****************************

Subject: It doesn't matter if the cat is black or white...

Greetings from Southern California!

My name is Xero and I love economics and China very much.  Today I read this blog entry...

The Chinese Keynes vs. Hayek

Which led me to this article...

Plan v market

It's so wonderful to learn that such an important debate/discussion is happening in China!!!

Even though the debate is so important, based on my extensive studies, I think there's room for improvement.  

I love the free-market more than anyone but I have to acknowledge that Paul Samuelson is probably correct that the free-rider problem is a real problem.  Why buy the cow when you can get the milk for free?

So rather than trying to minimize the government, I think it's better to apply the Invisible Hand to the government.  This could be accomplished by allowing taxpayers to choose where their taxes go.  The modern economist who deserves the most credit for this idea is James Buchanan...

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

I call this idea "pragmatarianism" primarily because of Deng Xiaoping.  He is one of my biggest heroes.

After thinking about pragmatarianism for quite a while, I realized that taxpayers are basically "subscribers" and their taxes are essentially "fees".  The Economist also has subscribers and fees.  Would it be beneficial if The Economist allowed their subscribers to choose where their fees go?

One of the subscribers of The Economist left this comment on the article about your debate...

The Economist. Please continue following this debate. - AlecFahrin

How much of his fees would he be willing to spend on this article?  Does it matter?  How can The Economist efficiently allocate its resources if it doesn't know what its subscribers are willing to pay for specific articles?

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 

If you want to win the debate, then you have to show people the Invisible Hand.  All you have to do to show people the Invisible Hand is find a publication and persuade them to allow subscribers to choose which articles they spend their fees on.

I tried to persuade The Economist...

https://medium.com/@Amplify/adam-smith-5dc5ea5093f4#.dc59tp6od

https://medium.com/@Amplify/if-it-makes-sense-to-apply-the-invisible-hand-ih-to-your-articles-then-of-course-it-also-makes-e988377e17dd#.slflwi5ki

I also tried to persuade The Economist to use spending rather than voting to make decisions...

https://medium.com/@Amplify/my-idea-for-your-publication-is-to-apply-the-invisible-hand-ih-to-your-articles-and-comments-f6e6a2cabbbc#.we1owljsv

But The Economist is too big and I am too small so they probably aren't going to listen to me.

You are pretty big in China!  So it shouldn't be too difficult to find a publication to listen to you.  When they do so, the results will be clear to see.  And clearly seeing the results will allow people to clearly see the Invisible Hand.  And when people can clearly see the Invisible Hand... then you will win the debate.

"Results" are the best way to win a debate.  Actually, "results" are the only way to truly win a debate.

Please let me know if you have any questions!

Sincerely,
Xero
http://pragmatarianism.blogspot.com/