Markets: The Freedom To Reallocate Your Brainpower

Reply to reply: MMT = Moronic Monetary Theory

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So what????? we might not have enough defense to defend ourselves and we'd get killed! Do you understand that living is important? - James972

Of course I understand that living is important. You understand this as well. But what you don't understand is that our standard of living depends on how well our country utilizes all its brainpower.

Right now you think it's a good idea to prevent taxpayers from having the option to choose where their taxes go. This means that you think it's a good idea to prevent nearly all of our country's brainpower from being applied to public goods. You don't understand that blocking nearly all of our country's brainpower from the public sector is just as detrimental as it would be to block nearly all of our country's brainpower from the private sector.

Imagine that everybody on this forum was stranded on an island. Let's say that somehow you had the power to enslave all of us. If you did so, would your standard of living be better or worse? Of course it would be worse! Because by enslaving all of us you would essentially be wasting all of our brainpower. All of our significant activities would only reflect your brainpower. Our island society would only fully utilize one person's brain... your own. Maybe you would be fully utilizing our labor... but our brainpower, which is infinitely more valuable, would be entirely wasted. Our standard of living would reflect this.

Of course you object to slavery. But you object to it for moral reasons rather than for economic reasons. If you actually understood why slavery is economically stupid then you would understand why it's also economically stupid to prevent people from having the option to directly allocate their taxes.

I'm guessing that you support democracy. But are you seriously under the impression that voting fully utilizes everybody's brainpower? Do you think it takes just as much brainpower for you to decide who to vote for as it would take for you to decide how to spend your tax dollars?

To be clear... you can't utilize more than 100% of your brainpower. If you had the option to directly allocate your taxes... obviously you wouldn't be required to use 200% of your brainpower. You would simply have the option to decide how you wanted to allocate your brainpower between the private sector and the public sector. If you didn't want to allocate any of your brainpower to the public sector... then you would simply continue to allow congress to spend 100% of your taxes for you. If nobody chose the option to directly allocate any of their taxes... then the public sector wouldn't gain any brainpower.

Perhaps the closest real world situation occurred in 1978. This is when Deng Xiaoping began to gradually give foreigners the option to shop in China. Prior to 1978... nobody, not even the Chinese, had the option to shop in China. Right now, thanks to Deng Xiaoping, you have the option to shop in China's private sector. Right now you have the freedom to decide how you want to allocate your brainpower between our private sector and their private sector. We all have this same freedom. Do you think we benefit from having this freedom? I sure think so. Even though I don't allocate much, if any, of my own brainpower to shopping in China... my standard of living has definitely improved as a result of all the people who have allocated significant amounts of their brainpower to shopping in China.

Here we are allocating our brainpower to this forum. Are we better off as a result of having this option to do so? I sure think so.

The thing is... this website...

1. doesn't have a market
2. isn't a market

This website doesn't have a market because you don't have the option to spend your money on the threads and posts that you value. In other words, this website doesn't have a market because it doesn't facilitate micropayments. Should this website facilitate micropayments? Yes? No? Right now you don't have the option to spend your money on your preferred answer. Therefore, this website is not a market.

This website would be infinitely better if it had a market and it was a market. Why? Because it would be infinitely better at utilizing all our brainpower. But it's not entirely problematic that this website doesn't have a market and it isn't a market. Because, as soon as somebody does create a website that has a market and/or is a market... then we are entirely free to leave this website and participate on the website that does a better job of utilizing the brainpower of all its members.

The fact that this website is in a market means that we are entirely free to reallocate our brainpower as soon as we deem it beneficial to do so.   If you understand the benefit of people being free to reallocate their brainpower... then you should be able to understand the benefit of giving people the option to reallocate their brainpower to the public sector.

Workers: Beggars or Choosers?

My comment on John Cochrane's blog entry: Summers and the nature of policy advice

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I remember way back in the day... when I was in the army infantry... my buddies and I would sit around discussing how easy it was for ugly army chicks to hook up with good looking army dudes. It wasn't because the ugly chicks were particularly charming... nope... it was simply because of supply and demand. I have no idea what the actual ratio was... but it sure seemed like there was at least 100 guys for every girl. Guys were a dime a dozen. And, as the saying goes, beggars can't be choosers. Ladies had the upper hand... they could quickly and easily replace guys on the slightest whim.

Can you imagine if Larry Summers had been there? "Hey!  I have an idea!  The army should make it harder for women to join!"  Even the dumbest guy in the entire army would have instantly recognized just how massively moronic Summers' idea was.

Maybe the problem is formalism?  Summers didn't join the army infantry right after high school. Instead, he went to some university... got a PhD... and now he uses so much technical jargon that regular folks aren't able to instantly recognize just how massively moronic his ideas are. I wouldn't be surprised if he was related to Paul Samuelson.

Eh, Samuelson did get the free-rider problem right. And it's not like we can get rid of technical jargon... "that one problem where people have an incentive to lie about how much they value things like national defense and it results in the wrong amount of defense being supplied."  Well... since I'm here... if you get a chance I'd appreciate a second opinion on my argument that the free-rider problem is equally applicable to democracy.

Getting back on topic... Scott Sumner recently wrote this paragraph about employers having the upper hand...

Regardless of how you feel about monetary policy, it's clear that if employers feel they have a "captive audience" of workers, who are terrified of losing their jobs, it would be easier for the employer to crack the whip and drive the employees to work extremely hard. One advantage of a healthy job market is that workers have more power to negotiate pleasant working conditions.

To reinforce my comparison...

[Justice Anthony Kennedy] ignores the fact that polygamy imposes real costs, by reducing the number of marriageable women. Suppose a society contains 100 men and 100 women, but the five wealthiest men have a total of 50 wives. That leaves 95 men to compete for only 50 marriageable women. - Richard Posner, Supreme Court Breakfast Table

Heh... half the ladies be gold diggers?  Posner's been listening to too much Kanye West. Anyways, if we did legalize polygamy... and Posner's estimate turned out to be correct... then Summers' bright idea would be to make it harder for American guys to marry foreign ladies.  "Hey!  Let's send all the foreign ladies to Mars!"

You say that Summers is a smart guy... but he wants to help workers by building up, rather than tearing down, barriers to entry. He wants there to be more workers and less employers.  He prefers barrierism over builderism.  How is that smart? Not only is it bad for workers... but it's also bad for consumers. It also increases instability/volatility. The economy has more eggs in fewer baskets.


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Out of curiosity... I searched Google for the title that I chose for this entry... Workers: Beggars or Choosers?   Here's a snippet from one of the results...

Labour advocates say there are no publicly traded manufacturers in China that get this yet. Some will eventually figure it out. Until they do, companies like Yum! Brands Inc, which invests in employee development at its KFC and Pizza Hut fast-food restaurants, offer a better alternative. - Alexandra Harney, China's migrant workers: from beggars to choosers

This made me chuckle when I read it.  Isn't it funny that labor advocates are the most qualified to run businesses... yet they rarely do so... which is why we need labor advocates!


See also:

• Minimum Wage Vicious Cycle
• Knowing The Real Disparities In Profitability
• The Inefficient Allocation of Labor
• Maximizing Opportunities By Clarifying Demand Diversity
• Maximizing Demand For Labor By Minimizing Barriers To Entry
• Consumers Are The Conductors Of Commerce
• Minimum Wages vs Minimum Employees
• Is there a shortage of unskilled labor?
• A Surplus Of One-Armed Workers
• Liberals Hate Mexicans More Than Donald Trump Does

Debugging Scott Alexander And Paul Krugman

Alt Title1:  Make Money vs Kill Humans
Alt Title2:  Faulty Analysis by Intelligent People
Alt Title3:  Debugging Two Intellectuals With One Entry

Scott Alexander - No Physical Substrate, No Problem
Paul Krugman - The Fiscal Future I: The Hyperbolic Case for Bigger Government

Alexander fears that AIs will become too powerful while Krugman hopes that the government will become more powerful.

Alexander argues that an AI will decide to get rich and then decide to kill us.  Krugman argues that we need a bigger government because people make poor decisions.

The bug in their analysis is that they don't really grasp the simple concept of garbage in, garbage out.  Every entity, whether it's a human, a robot, a company or a government... makes decisions based on information.  If the information is garbage, then the decisions will be garbage.

When a businessman makes a business error…a bad mistake, you'll look back and say, gee, what did I do wrong.  I made a bad decision.  I made a wrong decision. What do you mean by that? Do you mean that you made a mistake in arithmetic?  You mean your computer kicked out the wrong answer?  No, that's not what you mean. You mean you fed the wrong data into the computer.  That's what you mean.  You figured wrong.  You opened a hardware store in a place where nobody buys hardware. You went to law school in a country where nobody litigates (not this country).  That's where you make a mistake. You made a mistake where you assess the future wrongly.  You got a wrong picture of what you were choosing between.  That's a business mistake. 

And what's a correct decision.  A correct decision is one where you saw correctly.  You saw right.  You saw what the future held...more or less. Nobody's got a PhD in prophecy.  You can peer ahead and have a hunch for the future and act and if you act right...and if you're an entrepreneur... that means you see things right more of the time than you don't. - Israel M. Kirzner, Competition and Entrepreneurship

Krugman supports a minimum wage.  A minimum wage feeds the wrong data into society's allocation computer.  Here's an illustration from my entry... Jeff Madrick vs The Invisible Hand

Krugman: The world economy is a system -- a complex web of feedback relationships -- not a simple chain of one-way effects
Krugman: Wages, prices, trade, and investment flows are outcomes, not givens
Krugman: Wages are a market price--determined by supply and demand
Krugman: Money still talks — indeed, thanks in part to the Roberts court, it talks louder than ever
Krugman: Raise minimum wages by a substantial amount
Krugman: The price of labor--unlike that of gasoline, or Manhattan apartments--can be set based on considerations of justice, not supply and demand, without unpleasant side effects
Krugman: Your decision to stay in school or go out and work will shape your lifetime career
Krugman: Now, the fact is that people make decisions like these badly
Krugman: Bad choices in education are the norm where choice is free
Krugman: He and his unwary readers imagine that his conclusions simply emerge from the facts, unaware that they are driven by implicit assumptions that could not survive the light of day

Think about driving somewhere.  You want to change lanes... so you use your blinker to communicate your desire.  Somebody cuts you off... so you communicate your displeasure by honking at them and/or giving them the middle finger.  You see break lights on the cars in front of you.  What does this communicate to you?  It communicates that you need to stop.  Same thing when you see a stop sign or a red light.  A green light, on the other hand, communicates that you need to go.  When you see the sign for a street that you need to take... you take it.  You hear a siren behind you and see the flashing lights in the review mirror... what do you do?  If it's an ambulance then you get out of the way.  If it's a police car then you start hoping that you're not the target.

Safely arriving at your destination depends on a considerable amount of communication.  Would clearer communication make it easier or harder for you to get to your destination?

One doesn't need to be Thomas Gradgrind to be interested in the rules underlying the English language, or to believe that good communication and understanding depend on clarity.  Grammar is not just about learning sentence construction: it's about speaking clearly and plainly and cutting through obfustication. But even aside from that, and most importantly of all, good grammar will help you get laid. - Hadley Freeman, Humanity's future depends upon good grammar

When Paul Krugman advocates for minimum wages... he's advocating for more, rather than less, obfuscation.  A minimum wage really doesn't clarify the demand for labor... it obscures the demand for labor.

We can either clarify demand... or we can obscure it.  We can either make it easier to understand and respond to each other's demands/concerns... or we can make it harder.

Here's an illustration from my entry... Scott Alexander vs Adam Smith, J.S. Mill, Alex Tabarrok, Don Boudreaux, David Friedman, Murray Rothbard, Jason Brennan, Elizabeth Warren, Geoffrey Brennan, Loren Lomasky

If gays are going to foot vote... then what information do they need to make a correct decision?  They need to know what the demand is for gays here, there and everywhere.  When gays make poor foot voting decisions... then it's because their information was garbage.

Same thing when libertarians attack the wrong targets.  Here's the illustration from my entry... S Is Never Going To Shrug...at this rate...

In this illustration vulgar libertarians are tilting at windmills.  They are wrongly attacking taxes, public goods, welfare and fiat money.  Why are they barking up the wrong tree?  It's because their information is garbage.  If their information wasn't garbage, then they would be attacking the assumption of omniscience.

Right now we can't choose where our taxes go.  The monetary expert Scott Sumner can't use his tax dollars to communicate his concerns.  Here's the illustration from my entry... Scott Sumner vs The Fed

With our current system, no matter how bad the Fed's policies are... it would never be rational for Scott Sumner to encourage people to boycott the Fed.  This is because people can't choose where their taxes go.  Scott Sumner can't encourage us to boycott the Fed... but he can encourage us to boycott Disneyland.  We can't use our money to communicate with the DoD.... but we can use our money to communicate with McDonald's.  As if it's more important to clearly communicate with Ronald McDonald than it is to clearly communicate with Barack Obama.

With our current system... a bigger government increases demand opacity.  This means that more people will make even worse decisions.  With more garbage in, we get more garbage out.

The immense Soviet efforts to mobilize economic resources were hardly news. Stalinist planners had moved millions of workers from farms to cities, pushed millions of women into the labor force and millions of men into longer hours, pursued massive programs of education, and above all plowed an ever-growing proportion of the country's industrial output back into the construction of new factories. - Paul Krugman, The Myth of Asia's Miracle

There's nothing inherently wrong with society's limited resources being massively mobilized.  The issue is whether the allocation decisions are based on actual demand.  If the allocation decisions are based on accurate information... then the consequences will be beneficial.  If, on the other hand, the allocation decisions are not based on accurate information... then the consequences will be detrimental.  Garbage in, garbage out.

If Scott Alexander wants to paint plausible scenarios of robots making really bad decisions... then he really needs to show some basic understanding of the garbage in, garbage out concept.  If he truly understands this concept then he'll explain where the robots got their bad information from.  Alexander will clearly communicate to us exactly what information led robots to the decision to make money... and exactly how that information changed so that the robots then decided to kill humans.  But if Alexander can truly understand the garbage in, garbage out concept... and how it relates to demand... then he's going to adjust his intelligence allocation by addressing the clear and present danger of governments preventing millions and millions of people from using their tax dollars to clearly communicate their concerns/demand.

The economist Don Boudreaux recently wrote about truth vs lies...

Market-determined prices – those that are neither set nor constrained by government diktat – reflect underlying economic realities. Prices are the results of those realities. Prices – even those that are set or constrained by government diktat – also have consequences; prices affect and direct economic decision-making. So while prices that are set or constrained by government diktat affect and direct economic decision-making no less than do market-determined prices, only the latter does so in ways that are consistent with underlying economic realities. The reason is that only market-determined prices tell the truth about underlying economic realities; minimum-wage rates and other prices that are set or constrained by government diktat lie about underlying market realities. Such government-determined prices thus cause people to act on misinformation – on economic lies. And people who are misinformed and misled will not make decisions that improve underlying economic realities; quite the opposite.

Let's be truthful about the market though.  With this goal in mind... here are a couple illustrations from my entry... Accurately Communicating Value

In this illustration I'm buying the book Toleration from the author... Andrew Cohen.  Hopefully it's clear in this illustration that I'm lying.  I'm paying far less money than I value his book.  The amount that I'm paying isn't accurately communicating how much I value his book.  Garbage in, garbage out.

In this illustration I'm also lying.  I'm paying far more money than I value his book.  The amount that I'm paying isn't accurately communicating how much I value his book.  Garbage in, garbage out.

In the first illustration I'm getting a really great deal.  In the second illustration I'm really being ripped off.  And in both illustrations I'm lying.  I'm falsely reporting the underlying economic realities.  I'm miscommunicating my demand for books on the topic of tolerance.  I'm feeding bad information into the allocation computer.  I'm sending the wrong message to producers.  In the first illustration I'm sending the message that there's a surplus.  But the truth of the matter is that, in that scenario, I honestly believe that there's a shortage.  In the second illustration I'm sending the message that there's a shortage.  But the truth of the matter is that, in that scenario, I honestly believe that there's a surplus.  False messages adversely effect the future supply.

In both scenarios the amount of money that I'm paying for Cohen's book isn't accurately communicating the amount of value that I derive from his book.  The logical consequence is that society's limited resources will not be put to their most valuable uses.  Garbage in, garbage out.

Even though markets have plenty of room for improvement... the information that they supply is vastly superior to the information supplied by governments.   Vegetarians aren't going to order steaks like pacifists have to order war.

One of the most significant events in human history will be when the majority of people realize the value of knowing the actual demand for war.

There are multitudes with an interest in peace, but they have no lobby to match those of the 'special interests' that may on occasion have an interest in war. - Mancur Olson

The people feeling, during the continuance of the war, the complete burden of it, would soon grow weary of it, and government, in order to humour them, would not be under the necessity of carrying it on longer than it was necessary to do so. The foresight of the heavy and unavoidable burdens of war would hinder the people from wantonly calling for it when there was no real or solid interest to fight for. The seasons during which the ability of private people to accumulate was somewhat impaired would occur more rarely, and be of shorter continuance. Those, on the contrary, during which the ability was in the highest vigour would be of much longer duration than they can well be under the system of funding. - Adam Smith, Wealth of Nations

What Would Tyler Cowen Do For A Klondike Bar?

Would Tyler Cowen do this for a Klondike Bar?  Does it really matter what Cowen would do for a Klondike Bar?  Does it really matter how much Cowen values a Klondike Bar?  Does it really matter how much Cowen values dessert?  Does it really matter how much Cowen values food?  Does it really matter how much Cowen values national defense?

How could these things not matter?  Perhaps Cowen's valuation of food matters but his valuation of defense does not?  Because...he needs to be a defense expert in order for his valuation of his own safety to matter?  Just like he needs to be a food expert in order for his valuation of his own hunger to matter?

Personally, I think Cowen's valuations do matter.  Not just some of them...but all of them.  If I didn't, then I wouldn't be such a big fan of the idea of allowing everybody to directly allocate their taxes.

What's surprising and very intriguing is that neither Cowen nor his co-blogger Alex Tabarrok agree with me.  They don't believe that all their valuations matter...just some of them.  Why do they have a valuation double standard (VDS)?  How important could individual valuation really be if it's only partially applicable?

In a few blog entries I've encouraged them to defend/explain/justify their VDS...

• Prices vs Chips - 16 May 2014
• Heaven's Going To Burn Your Eyes - 20 May 2014
• Crazy Cable Confusion: Costless Content Creation - 2 June 2014
• Progress as a Function of Freedom - 1 July 2014

To his credit, Tabarrok did take the the time to respond.  Unfortunately, his response didn't really clear things up.

But a few days ago I was happy to discover that Cowen posted a blog entry that provided some tantalizing insight into his VDS...

My thoughts on quadratic voting and politics as education

The concept of quadratic voting was first brought to my attention last year in a comment on the tax choice FAQ page.  This was my reply to the comment...

Crowd Sponsored Results

There are 5 irrelevant search results for "Crowd Sponsored Results"

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The founder of Wikipedia, Jimmy Wales, was inspired by Hayek's essay..."The Use of Knowledge in Society".  The basic concept is that markets utilize information that is dispersed throughout society.  Wales used this critique of socialism (centralized allocation, top down control) to create a website that makes it easy for the crowd to share its partial knowledge.  Wikipedia works because it's based on a solid economic concept.  Not that there aren't a few glitches though.

The internet of the future will also be based on a solid economic concept.  The concept is that actions speak louder than words.  Talk is cheap so what people do should be given far more weight than what they say.  It's pretty much the opportunity cost concept.

Here are some of my recent blog entries on the topic...

• Opinions (Shouting) vs Values (Spending)
• Block vs Flow
• Shallow vs Deep Input
• Flowcilitation
• Crowd Flowcilitation    

Neither the internet nor the government reflects an understanding of this concept. This will eventually change.  My preference is for it to change sooner rather than later.  So here I am.

The primary objective of this entry is to try and facilitate this change.  If people can understand why it's necessary to clarify the demand for web pages...then they should also be able to understand why it's necessary to clarify the demand for public goods.

The secondary objective of this entry is to formally stake my claim to this intellectual property.

Crowd Flowcilitation

What's the difference between a forum post and a blog post?

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Anybody a fan of Edward Sharpe and the Magnetic Zeros (ESMZ)? I sure am...my favorite song is Desert Song but the crowd favorite is Home.

The band's frontman, Alex Ebert, is passionate about helping to encourage and facilitate civic participation. To this end he's launched The New IRS and is in the process of developing SecondGov.

In this video, Ebert discusses both projects. You can read about them here...Change agent: Edward Sharpe frontman prepares to launch SecondGov, a virtual political system with real-world aspirations.

What do you think? Are you going to sign up to be notified when SecondGov goes live? Do you predict whether or not it will have a greater impact than Americans Elect?

I'm definitely planning on becoming a member of SecondGov. It sounds like a really fascinating experiment in facilitating input.

It should be a self-evident truth that allocation systems work better when input/feedback is facilitated rather than blocked. Being able to vote for a representative is certainly better than not being able to vote for a representative. Being able to write your congressperson is certainly better than not being able to write your congressperson. Being able to e-mail your congressperson is certainly better than not being to e-mail your congressperson.

If it makes sense for it to be easy to give a representative your vote...doesn't it also make sense for it to be easy to take your vote away from a representative?

Can you imagine walking up to Elizabeth Warren and taking your vote away from her? Should people be able to do that...at any time? Why would we want to prevent people from doing so?

The trend is clearly to make it easier and easier for people to share their input. This forum is one of many examples. It seems inevitable that this trend will spill over more and more into the public sector.

Civic crowdfunding already facilitates deep input...and SecondGov will facilitate shallow input...along with perhaps BitGov (Correcting Democracy) and/or BitVote.

What's the best analogy to describe why facilitating feedback is better than blocking it? This one is pretty good...

The management of a socialist community would be in a position like that of a ship captain who had to cross the ocean with the stars shrouded by a fog and without the aid of a compass or other equipment of nautical orientation. - Ludwig von Mises, Omnipotent Government

So is this one...

Neither do men light a candle and put it under a bushel, but on a candlestick, and it giveth light unto all that are in the house. - Matthew 5:15

Blocking input is like turning off the lights. If the lights aren't on then we'll be stumbling around in the dark...

Where no counsel is, the people fall: but in the multitude of counsellors there is safety. - Proverbs 11:14

If you're not a big fan of the bible...then you can just think of it as Linus's Law...

given enough eyeballs, all bugs are shallow

And even more towards evolution...

It is sufficient if all firms are slightly different so that in the new environmental situation those who have their fixed internal conditions closer to the new, but unknown, optimum position now have a greater probability of survival and growth. They will grow relative to other firms and become the prevailing type, since survival conditions may push the observed characteristics of the set of survivors toward the unknowable optimum by either (1) repeated trials or (2) survival of more of those who happened to be near the optimum - determined ex post. If these new conditions last "very long," the dominant firms will be different ones from those which prevailed or would have prevailed under other conditions. - Armen Alchian, Uncertainty, Evolution, and Economic Theory

Life is such that we don't know what the future will hold. We don't know what future conditions will be like. Facilitating input allows us to hedge our bets against uncertainty. If an allocation system blocks input...then it's because the architects believe that they have a crystal ball. Or perhaps a perfect compass. Or night vision goggles. Or maybe omniscience.

I certainly don't have a crystal ball...which is why I greatly encourage your input!

Flowcilitation

"Flow Facilitation" - 8,210 results
"Flowcilitation" - 2 results
"Flowcilation" - 0 results

If a concept is important then you really don't want to force people to wade through a swamp of irrelevant search results (ie tax choice vs pragmatarianism).  If you want somebody to find the needle, then don't put it in a haystack.  If the needle is already in a haystack, then endeavor to remove it by giving it a unique ID.

Is flowcilitation an important concept?  Yes, very yes.  Facilitating the flow of input improves the answer to the fundamental question... how should society's limited resources be used?

But not all input is equally valuable though.  I have to warn you that the following example might blow your mind.  On Reddit (a flowcilitator), in the econ subreddit, I saw this link that ellak12 shared...

The Huffington Post interview with the economist Ha-Joon Chang had received 897 upvotes and 219 downvotes.

Here's what I found when I read the interview...

So there is no economic theory that actually says that you shouldn’t have slavery or child labour because all these are political, ethical judgments. - Ha-Joon Chang

Was your mind blown?  It really should have been.

There were 897 people who freely gave their positive input to an economist who said that there's isn't an economic theory that defends people's freedom to give input.  Yeah...this is exactly why shallow input should never trump deep input.

Just because shallow input should never trump deep input doesn't mean that we should eliminate shallow input.  Shallow input is extremely useful.  In this case it highlights a huge problem: 80% of people who are interested in economics...and even some professional economists...don't know that there are very strong economic arguments against slavery.  This problem should really scare you because the moral arguments against slavery, by comparison, are extremely weak.  If we want to avoid slavery...then it would really behoove us to ensure that each and every member of each and every society knows the strongest arguments against slavery.

First, incentives matter.  Slaves lack the incentive to maximize their productivity...

Land occupied by such tenants is properly cultivated at the expence of the proprietor as much as that occupied by slaves. There is, however, one very essential difference between them. Such tenants, being freemen, are capable of acquiring property, and having a certain proportion of the produce of the land, they have a plain interest that the whole produce should be as great as possible, in order that their own proportion may be so. A slave, on the contrary, who can acquire nothing but his maintenance, consults his own ease by making the land produce as little as possible over and above that maintenance. - Adam Smith, Wealth of Nations

But if great improvements are seldom to be expected from great proprietors, they are least of all to be expected when they employ slaves for their workmen. The experience of all ages and nations, I believe, demonstrates that the work done by slaves, though it appears to cost only their maintenance, is in the end the dearest of any. A person who can acquire no property, can have no other interest but to eat as much, and to labour as little as possible. Whatever work he does beyond what is sufficient to purchase his own maintenance can be squeezed out of him by violence only, and not by any interest of his own. In ancient Italy, how much the cultivation of corn degenerated, how unprofitable it became to the master when it fell under the management of slaves, is remarked by both Pliny and Columella. In the time of Aristotle it had not been much better in ancient Greece. Speaking of the ideal republic described in the laws of Plato, to maintain five thousand idle men (the number of warriors supposed necessary for its defence) together with their women and servants, would require, he says, a territory of boundless extent and fertility, like the plains of Babylon. - Adam Smith, Wealth of Nations

...and it follows that they lack the incentive to innovate...

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. - Adam Smith, Wealth of Nations

More marionettes means less progress.

Second, input matters.  Slaves, by definition, are blocked from sharing their input on the question of how society's limited resources should be used.  The more input that's blocked, the less correct/valuable the answer will be.

Understanding the importance of incentives and input will help you understand why there's such a significant outcome disparity between command economies and market economies.

Here are a couple relevant comments on flowcilitation.  The first is one that I shared on Daniel M. Rothschild's article...How Uber and Airbnb Resurrect ‘Dead Capital’

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It's so much easier to comment on articles than it used to be. Just like it's so much easier to have articles published than it used to be. It's easier for input to flow. Flow is facilitated.

Command economies fail because input is blocked. Markets succeed because input is not blocked. But clearly, when it comes to facilitating flow, there's always room for improvement.

Crowdfunding isn't a recent phenomenon...but crowdfunding websites are. They make it extremely easy to share your deep input on commercial and civic endeavors. Therefore, they are flow facilitators.

What about creating a market in the public sector (pragmatarianism)? How much flow would be facilitated? It would be a flood of input. Yet, it only has 60 likes on facebook. Where's the bottleneck?

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Next comment was on this article...The Market: The Only Trustworthy Pollster by Donald Boudreaux...

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Excellent article! It's fundamentally important to help people understand this concept. But I'm thinking that it's only one half of the story...

First half: Votes don't accurately reveal what people actually want.
Second half: Voting for what you don't actually want can shift resources away from the things that you truly want. The genie might grant your wishes...but you'll be worse off if he does. The logical result of granting voters' wishes is that we end up with more of the things that we don't actually want and less of the things that we truly want.

If shallow input (voting) doesn't adversely impact the allocation of resources...then there's absolutely nothing wrong with it.

The first half of the story is essential...but the second half is far more compelling. It's the punch line. Unfortunately, perhaps it's not the easiest thing to illustrate.

We all voted for a Lexus and the result is a shortage of food? The resources required to provide everybody with a "free" Lexus had to come from somewhere. And it stands to reason that they were taken from the things that we value more than a fancy ride. So we're definitely worse off when our ballot votes (shallow input) are allowed to trump our dollar votes (deep input).

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Ballot voting, Reddit votes, Facebook likes and Youtube thumbs up/down are all examples of shallow flowcilitation.  These flowcilitators give us insight into people's opinions, feelings and sentiments.  This insight is extremely superficial.  It's the tip of the iceberg.  It's the cover of a book.  Dollar voting, on the other hand, is an example of deep flowcilitation.  It gives us insight into people's values.  This insight is extremely deep.  Therefore, when it comes to answering the fundamental question of how society's limited resources should be used...shallow input should never trump deep input.

The fact that people do not have the freedom to choose where their taxes go reflects the fact that the vast majority of people are not aware of the strong economic arguments against blocking input.

Shallow vs Deep Input

But when your leaders are chosen by popularity, whether through vote or product buying or social buzz, you then have a Cathedral that is of the bazaar. The great secret — this is what the Dark Enlightenment types are morally afraid to face — is not that our elites are bad, but that our elites are bad because they were chosen by our undifferentiated majority. The herd isn't brilliant; it's stupid. Worse than stupid, it's deceptive and dishonest. The bazaar is the enemy, not the cavalry come to save us! - Brett Stevens, The Redundancy of the Dark Enlightenment 

The other day I went to a bazaar. I saw a small rug that I really liked...

...so I asked the vendor whether he accepted votes.  For some strange reason he didn't.

Isn't that weird? The guy only accepted money. He wouldn't let me buy his rug with my words (opinion/sentiment/feeling).  I even tried offering him a thumbs up...both real life and youtube...but he said no deal.  Same thing with facebook likes. He did pause at a reddit upvote though.

See guy, your mistake is lumping markets and democracy together.

In a market...in order to get the rug, I have to sacrifice something that I personally own and value...like my money (blood/sweat/tears).  Spending is deep input.

With voting, on the other hand, I'm simply talking. Talk is cheap. Voting is shallow input.

Our system fails because shallow input trumps deep input.  Words are given more weight than actions.  It wouldn't be so bad if our political leaders were omniscient....but they really aren't.  This means that resources are diverted to less valuable uses.

NRxc (anorexic...no economics on their bones) people guess that the solution is to eliminate shallow input (voice).  No, the solution is to facilitate deep input on public goods. How? By creating a market in the public sector.  Giving people the freedom to exit within the public sector would clarify the demand for public goods.

Let me tweak Stephen Crane a bit...

Democracy, thou art for suckling children,
Thou art the enlivening milk for babes;
But no meat for men is in thee.
Then-
But, alas, we all are babes.

When you're ready to grow up, pragmatarianism has the meat you'll need.

Cleaver Greene's Speech

Nuclear attack, marauding refugees, avian flu, communists in broom closets, White-tailed spiders...so many things we fear.  Scary scary women we fear.  So many things we fear...including, sometimes, the truth.  There is, is there not, ladies and gentlemen of the jury, so much we can learn about ourselves if we have the integrity, the courage, to stand up and not only tell the truth, but to listen to it.  It has a distinctive ring to it the truth. A purifying timbre that will not be silenced, even by the monotonous drone of governments and corporations.   Joshua  Floyd has reminded us that the truth exists and defines itself as a function of who we are. It may be ugly, it may be unwelcome, it may be the very last thing we wish to confront, but the only way that we can confront it, is to know it, to embrace it. The only way we can move onward, is to know that which is manifest about ourselves. - Cleaver Greene, Rake

Rake is a really wonderful show.  Recently watched it on Netflix and felt the need to give it a bit of public love.

Not exactly sure how it happened...but I ended up with a taste for Australia cinema.  Maybe it was The Man From Snowy River?  And then perhaps Crocodile Dundee sealed the deal.  I was just a kid when I watched them.  Then I remember loving Strictly Ballroom.  Genre wise...it really didn't fit with the movies I was watching at the time.  Next was Siam Sunset and now...Rake.

Why did I choose to share this speech?  It's because we don't know what the demand is for public goods.  And there doesn't seem to be much interest in clarifying the demand.  But it's absolutely imperative that we open our eyes.  To steal Greene's words...the demand for public goods may be ugly, it may be unwelcome, it may be the very last thing we wish to confront, but the only way we can confront it, is to know it, to embrace it.  The only way we can move onward, is to know that which is manifest about ourselves.

If we created a market in the public sector, then the way people spent their taxes would reveal the wide variety of things that they fear...and love.

If a woman told us that she loved flowers, and we saw that she forgot to water them, we would not believe in her "love" for flowers.  Love is the active concern for the life and the growth of that which we love.  Where this active concern is lacking, there is no love. - Erich Fromm, The Art of Loving

This right here is my active concern for Rake.  Could I truly say that I loved the show if I didn't bother telling anybody about it?  Of course not.  So here I am spending my time writing about the show and sharing it with whoever finds this blog entry.  This is my input...it's what is manifest about myself...and it's free to flow.

In the absence of our input (active concern)...how could resources possibly be put to their most valuable uses?  How could Rake and Australian cinema possibly grow and thrive if people around the world aren't free to express and communicate their active concern?  How could Platycerium superbum possibly grow and thrive without rain?

Right now we aren't free to choose which public goods we put in our shopping carts.  And that's a problem.  We might not agree with what other people put in their shopping carts...but how can we possibly know where there's the greatest need for improvement if we don't know where people's hearts truly are?

Congresspeople: Impersonal Shoppers

There are 28 mostly irrelevant search results for "Impersonal Shoppers"

Discussion on tax choice facebook page

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Xero

All of us would agree that it would be an improvement if taxpayers could allocate even just 1% of their taxes. And maybe all of us would agree that 10% would be an improvement. What about 50%?

Where should the line be drawn? Why should it be drawn there?

If we ever set up a tax choice non-profit...would we ever turn away a donation because it was too big? "No, you don't really value the cause that much!"

I've tried to flesh out the relevant concepts in terms of block (limiting input) vs flow (facilitating input)...

Block vs Flow

Cait Lamberton 

In my studies, the psychological benefits actually dissipate at high levels (50%) because skepticism is generated. Not saying that shouldn't happen from a policy standpoint, but it'd be a tough sell practically and may have some weird negative consequences...

Xero

Very interesting.  I'm guessing they're skeptical of the accuracy of their allocation decisions?  If the allocation level was 100%...does this mean that taxpayers would allocate 10% of their taxes and then just give the rest to their personal shoppers (congress)?  "You go ahead and order the main course for me...I'll just order my drink...and maybe dessert".  I think if there was any real value created by the employment of infinitely removed personal shoppers...then there would be plenty of companies in the private sector capitalizing on the demand. LOL...I said "infinitely removed personal shoppers".  I should have just said "impersonal shoppers".

This ties into the work by Joel Waldfogel...

Consumers fare better [at identifying their own preferences] than all types of givers except significant others and possibly grandparents...it seems unlikely that an alternative chooser would do better than friends, siblings, and parents, all of whom have substantial amounts of information about the ultimate consumer's preferences. - Does Consumer Irrationality Trump Consumer Sovereignty?  

We say "representative democracy"...but I think it's more accurate to say "representative economics"...or maybe "proxy economics".  It's pretty much just a command economy.

Block vs Flow

Discussion (context) on:  3 Things That Make Libertarian Heads Explode by Lynn Stuart Parramore

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Xero

Which is better?

A. moving public goods over to the private sector
B. creating a market in the public sector (pragmatarianism)

ajaxthegreat

I'd go with the second one if I had to choose, hands down. But I'm not quite sure just how pragmatic that would be in reality. And this is coming from a strong supporter of direct democracy.

Xero

How pragmatic is it for you to choose which articles you allocate your time to?

Here we are, typing and typing away. What we type gets stored in a disqus database/server. More comments require more servers. More servers require more space.

Your comments help determine how space in Timbuktu is used.

1. You derive value from discussing this topic
2. You sacrifice the less valuable uses of your time
3. Space is allocated accordingly

Basically, your input influences the output. If your input is somehow blocked...then the output will not reflect it. The supply will shift away from your preferences (demand). Shifting away from demand is the destruction of value. Shifting towards demand is the creation of value.

So it's block vs flow.

If you're an American environmentalist...and Brazil is going to vote on whether to conserve or develop its rainforest...should your vote flow accordingly...or should it be blocked? What if the Brazilian EPA (BEPA) is doing an excellent job protecting the rainforest...should your tax dollars flow accordingly...or should they be blocked?

If any taxpayer in any country could freely flow their input (tax dollars) to the BEPA...how much influence would the BEPA have over how space was used in Brazil? Can you imagine BEPA having too much influence? What would that look like? They'd buy all the commercial property and restore it to its natural state? What's wrong with that? They wouldn't be taking the property...they would be buying it. If the owner of some property sold it then we have to surmise that it was a mutually beneficial exchange. What's really important to really appreciate is that it's a mutually beneficial exchange that wouldn't have occurred if the input of taxpayers had been blocked by arbitrary borders.

Of course it's a given that sometimes people will enter the "wrong" input. But if you perceive that somebody is entering the wrong input...then it must be the case that you have some information that influences your perception. If you have pertinent information...then the responsibility is on you to share it. Because people can't be responsible for sharing information that they don't have.

Right now, here I am sharing my information with you. Persuasion is a priceless process.

Are there times when blocking is appropriate? Sure, killing people is block worthy. Why? Because killing people is the ultimate block. No input can flow from dead people. Just like no input can flow from marionettes. But every appropriate block has an optimal allocation. It clearly wouldn't be an optimal allocation for every individual in this world to have as much protection as the American president. So determining the optimal block requires free flow. People's input (tax dollars) should be able to freely flow to any police departments.

The manufacturers first supply the neighbourhood, and afterwards, as their work improves and refines, more distant markets. - Adam Smith, Wealth of Nations

When the buyer goes to the market, he wants to find it abundantly supplied. He wants the seasons to be propitious for all the crops; more and more wonderful inventions to bring a greater number of products and satisfactions within his reach; time and labor to be saved; distances to be wiped out; - Frédéric Bastiat

What would Bastiat say about today's distances? Yet, we still groan at the thought of "long" plane rides. Clearly we still have plenty of distance wiping to do.

But it's really not distance that prevents me from giving my taxes to the Brazilian EPA...it's you...ajaxthegreat! Oh wait, it's not you...it's me...Xero! I'm the one with the information... which is why I'm sharing it with you. Does my work need to be refined and improved? Of course...there's always room for improvement.

Where in the world are public goods being improved? Only in the US? The US has a monopoly on improvements? That makes as much sense as believing that elected representatives have a monopoly on identifying improvements. There's nothing pragmatic about nonsense.