Sunday, November 6, 2016

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...

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

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!


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