Why Does Youtube Replay Skipped Ads?

There I am, listening to my playlist...Phenomenology...and skipping the same ads over and over.  It's great that I can skip ads...but it's rampantly ridiculous that Google doesn't remember my preferences.  

"Yes Google...for the millionth time...I'm still not even vaguely interested in an Xbox...or a PlayStation...or a..."    

Google amnesia makes me crazy...well...at least according to Einstein's definition of insanity...doing the same thing over and over but expecting different results...  

"Maybe Google will remember my preferences this time?"  *Skip*  "Maybe Google will remember my preferences this time?"  *Skip*  "Maybe Google will remember my preferences this time?"  *Skip*

If the same salesman knocked on your door every 15 minutes...even if it wasn't difficult to shoo him away...you'd probably still call the cops.  Because that's some strange and suspicious behavior for sure.  

So who benefits from Google amnesia?  I sure don't...it's a waste of my time.  Does PlayStation benefit?  Nope, I'm skipping their ads.  Does Google benefit?  I really don't think that they get paid for an ad that gets skipped.  Playing an ad that I will skip costs them the opportunity to play an ad that I won't skip.  

So what happens if Google starts to remember people's ad preferences?  There will be no Armageddon.  There will be more awesome ads.  We will all add ads to our playlists.

Everybody's seen at least a few ads that they wouldn't kick out of their playlists.  I thought it would be fun to track down and share some of my favorites.  Uh, it turns out that there were more than I remembered.  Splendad gets quite a bit of credit for jogging my memory.  Having found nearly 20 ads, I decided to create a playlist consisting entirely of commercials which are both visually and audibly appealing....

Charmercials (Charming + Commercials)

K To Be Crucified

Reply to thread...Is "wasteful" government spending really harmful?

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Here is my problem with your reasoning here:  we're talking about economics.  There is very little that can be nailed down for sure, and we all know this. - JohnfrmClevelan

So what can be nailed down?  Let's see...

You are a limited resource.  I think we can nail this down...can't we?  Or do you want to argue that you are an unlimited resource?  Perhaps you can be in two places at the exact same time?

If you happen to agree that we can, indeed, nail down the fact that you are a limited resource...then what else can we nail down?  Can we nail you down?  If not, then why not?  My guess is that perhaps...maybe...you perceive that it would be a waste of you, a limited resource, to be nailed to...say...a cross.

But...but...we'd have to employ somebody to nail you to a cross.  That's a good thing right?   And, before you could be nailed to a cross, we'd have to have a cross in the first place.  This means that we'd need to hire somebody to cut down a tree, and then we'd have to hire somebody else to build the cross.  Plus...I think we'd need a hole to stick the cross into...so we'd also have to hire somebody to dig the hole.  How many people is that?  At least four?  This is quite a labor intensive endeavor!  Nailing you to a cross would, therefore, stimulate the economy.

Hmmm...do we really need to nail you to the cross though?  Maybe we could nail a frog to the cross instead?  We'd still have to hire at least four people.  Except, I don't think we'd be able to charge as much for admission.  Unless the frog was a prince.  A tiny prince frog nailed to a giant cross.

Not sure if people would believe us though that the frog was a prince.  But do we really care whether people are willing to pay to see a tiny frog nailed to a giant cross?  Not really right?  The economy isn't about using resources to create value for consumers.  The economy is about using resources to stimulate the economy.

It really doesn't matter how resources are used...what matters is that we use them.  This is why it doesn't really matter whether we nail you or a frog to a cross.  You and a frog are perfect substitutes.  You and a cross are perfect substitutes.  We can nail the frog to you...and vice versa.

Actually, you and Napoleon are perfect substitutes...

This means that the terraces of the Champ-de-Mars are ordered first to be built up and then to be torn down. The great Napoleon, it is said, thought he was doing philanthropic work when he had ditches dug and then filled in. He also said: "What difference does the result make? All we need is to see wealth spread among the laboring classes." - Frédéric Bastiat, What Is Seen and What Is Not Seen

Maybe some illustrations would help?

Maybe learning about opportunity cost would help?

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How many different people might be offended by the above illustrations?

1. Christians
2. Liberals
3. Animal rights activists
4. French people?

I'm not trying to be offensive.  Then again, neither am I trying not to be offensive.  I'm just trying really hard to effectively illustrate the absurdity of liberal economics.

When I was creating the illustrations, out of curiosity I googled "Would crucifying liberals stimulate the economy?"  The first result was a blog entry written by the liberal economist Miles Kimball... Quartz #17—>How Italy and the UK Can Stimulate Their Economies Without Further Damaging Their Credit Ratings.

Of course I clicked on the link.  And then I chuckled trying to imagine what would run through Kimball's mind if he checked his blog's traffic sources and saw "Would crucifying liberals stimulate the economy?" listed under "Search Keywords".  He'd have to be at least a little surprised..right?  And then perhaps a bit concerned?  Or would he be more curious than concerned?  Or maybe he would just be offended?

A while back I left a comment on one of his blog entries...maybe this one... No Tax Increase Without Recompense.  He either removed it...or never approved it.  As if my comment was a nail that I had pounded into his coffee table...

Calvin and Hobbes is second only to Charlie Brown and Snoopy.  I read both of them religiously when I was a kid.  So of course the above strip popped into my mind when I was writing my reply to JohnfrmClevelan.  There Calvin is...*WAP WAP WAP*... pounding nails into his mother's coffee table.  His mother freaks out when she discovers what he's doing.  Clearly she's clueless about the immense benefits of liberal economics.  Calvin is obviously crucifying invisible frogs...

Which will obviously stimulate the economy...

Adding them together you get...

Yup.

So how long is going to take before liberals understand that resources should be put to their most valuable uses?

I refuse to believe that it's an impossible mission.  Liberals will laugh at you if you tell them that Kings have divine authority.  Just like they'll laugh at you if you tell them that the earth is flat.  Someday they'll laugh at anybody who tells them that we need impersonal shoppers.

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The song K To Be Last by Sister Vanilla started playing while I was trying to think of a title for this blog entry.  It's a mesmerizing song...but what in the world is she saying?  *Googles for lyrics*  Nobody knows!  I sing along anyways.

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Mr's Critique of Pragmatarianism

"Mr." is some guy who derives utility from commenting on my blog.  But he's definitely not a fan of pragmatarianism.  On a recent post, The Ingenious Gentleman George Monbiot, Mr. posted yet another attack on the idea of allowing people to choose where their taxes go.  This time though...his comment consisted of a list of 10 points.  Who can resist such a nicely organized attack?  Not me.  It's certainly worth a blog entry.  Here's his list...

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1. Your tax choice scheme is completely unworkable, and just a vague fantasy with no practical application.

2. Your imaginary scheme is nothing like a market - it is just a Frankenstein's monster of a thing which attempts to vaguely ape market-like behaviour.

3. Individual government departments or agencies do not act like businesses in your imaginary scheme, but they are forced to vaguely ape certain aspects of businesses' behaviour. It is a completely fake construct which is logically incoherent.

4. Your imaginary scheme is based on a fundamental confusion about who legally owns tax revenue.

5. Your imaginary scheme demonstrates a basic ignorance of how government expenditure actually works.

6. Your imaginary scheme demonstrates a basic ignorance of how monetary systems work. The government creates the money you use to pay taxes.

7. Your unworkable non-market system does not "correctly determine the actual demand for public goods". All it does is express your particular political ideology.

8. Your imaginary scheme is fundamentally undemocratic. If it wasn't completely unworkable and just a vague fantasy, it would require a complete transformation of existing political and legal structures.

9. Your imaginary scheme gives far more power and control over public resources to the wealthiest individuals and corporations. This reflects your personal political ideology, but that ideology is not shared by most people.

10. You don't even believe yourself that supposed "tax choice" results in the correct allocation of resources. Your imaginary scheme only allows people to allocate taxes on certain things which are deemed to be 'public goods'. So you contradict yourself.

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Hey Mr, again, you should really start a blog.  Why not?  What's your hesitation?

Ok, on to your points...

1. Your tax choice scheme is completely unworkable, and just a vague fantasy with no practical application. 

The logistics are really straightforward.  Given your complete lack of specifics...it seems like you must have missed them.  Here they are... Tax Choice FAQ.

2. Your imaginary scheme is nothing like a market - it is just a Frankenstein's monster of a thing which attempts to vaguely ape market-like behaviour.

When you spend your time commenting on my blog...is your behavior vaguely market-like?  From my perspective...there's nothing vague about your behavior.  You perceive a threat...and you allocate your limited resources accordingly.  I love your behavior...if I didn't...then why would I want to extend your behavior over to the public sector?  I really don't want your candle to be hidden under a bushel.

3. Individual government departments or agencies do not act like businesses in your imaginary scheme, but they are forced to vaguely ape certain aspects of businesses' behaviour. It is a completely fake construct which is logically incoherent.

You're welcome to compare government organizations (GOs) in a pragmatarian system to non-profit organizations instead.  In the private sector...non-profits lose funding when they make mistakes.  Do GOs ever make mistakes?  That should be up to taxpayers to decide.

4. Your imaginary scheme is based on a fundamental confusion about who legally owns tax revenue. 

Isn't this argument more relevant to anarcho-capitalism?  In a pragmatarian system...if there was a 50% tax rate...then half the dollars in your wallet would be marked "public" and the other half would be marked "private".  And if there was a 100% tax rate...then all the dollars in your wallet would be marked "public".

5. Your imaginary scheme demonstrates a basic ignorance of how government expenditure actually works. 

Government expenditure can not possibly work if consumer valuations are not part of the equation.  And if you truly believe that the expenditure of limited resources can maximize value in the absence of consumer valuations...then please dedicate a blog to your belief.  Because how great can your belief truly be if it's not worthy of a blog?

6. Your imaginary scheme demonstrates a basic ignorance of how monetary systems work. The government creates the money you use to pay taxes. 

No no no, I create the money that I use to pay taxes.  See...I have my own printing press.  And I also have a tree that money grows on.  Sheesh.  Of course the government creates money...but so what?  Money is simply a tool that we use to give people feedback on how well they are using society's limited resources.  Maybe it works better than having to organize a wife-swapping party every time you need to buy a blanket.

7. Your unworkable non-market system does not "correctly determine the actual demand for public goods". All it does is express your particular political ideology.

It would only express my particular political ideology...because...I would be the only taxpayer?  What do you think would happen to political parties in a pragmatarian system?

8. Your imaginary scheme is fundamentally undemocratic. If it wasn't completely unworkable and just a vague fantasy, it would require a complete transformation of existing political and legal structures.

Pragmatarianism is all about ceteris paribus.  The only thing that would change is that taxpayers would have the option of directly allocating their taxes.  If you want to argue that most taxpayers would choose this option...then you're arguing that most taxpayers don't trust their impersonal shoppers.  If you want to argue that few taxpayers would choose this option...then why bother opposing it?  

9. Your imaginary scheme gives far more power and control over public resources to the wealthiest individuals and corporations. This reflects your personal political ideology, but that ideology is not shared by most people.

Most people don't want to be ripped off.  Unfortunately, most people don't appreciate that consumer choice has logical and extremely beneficial consequences.  This is why it's so important to help people understand where better options come from.

10. You don't even believe yourself that supposed "tax choice" results in the correct allocation of resources. Your imaginary scheme only allows people to allocate taxes on certain things which are deemed to be 'public goods'. So you contradict yourself.

If taxation was voluntary...then the allocation of resources would be Pareto optimal.  Except, it wouldn't be socially optimal because it wouldn't take the preference revelation problem into account.  Tax choice does take the preference revelation problem into account...which is why the allocation would be socially optimal.

Did I miss anything?  Oh yeah, it's kinda...weird...for you to critique an "imaginary" scheme.  Would you like to criticize my imaginary friend while you're at it?

Xero: Hey Mr, let me introduce you to my imaginary friend!
Mr: No way, your imaginary friend sucks!
Xero: You're wrong!  My imaginary friend is super cool!
Mr: Here are 10 reasons why your imaginary friend is super lame...
1. He doesn't exist
2. He farts all the time
3. He has the worst fashion sense
4. He has terrible taste in music
5. His laugh is obnoxious
6. His political views are absurd
7. He's always late
8. He chews too loud
9. He's always bumming cigarettes
10. He drives slow in the fast lane
Xero: WTF?!  He drives slow in the fast lane?  That's the worst.  I'm going to kick his imaginary ass to the curb.  

Pragmatarianism doesn't drive slow in the fast lane.  And it's a real ideology.  Here you are criticizing it.

Crazy Cable Confusion: Costless Content Creation

Bottom line up front:  Creating content that consumers are not willing to pay for shrinks the pool of resources available for the creation of content that consumers are willing to pay for.

Too many economists and other educated people assume that just because providing content has zero marginal cost...that creating content must have zero opportunity cost.  Somehow cable content exists in an alternate reality where it's beneficial to disregard the fundamental law of economics.  In this exceedingly fictitious realm...there's an unlimited supply of resources...such as...uh...*checks credits on a random Netflix show*...

• Supervising producers
• Co-executive producers
• Executive producers
• Creators
• Writers
• Directors
• Associate producers
• Executive story editors
• Photography directors
• Production designers
• Editors
• Music composers 
• Production managers
• Assistant directors
• Casting directors
• Costume designers
• Set decorators
• Property masters

Where's Power Child when I need him?  He's my resource listin' cuz.  As you can see...I only managed to list some of the human resources needed to create cable content.

In the real world...the fact of the matter is that resources are not unlimited.  Time, money and other resources spent on shows that consumers are not willing to pay for can't also be spent on shows that consumers are willing to pay for.   Hmmm...there's gotta be a more efficient way of saying this.

• Linvoid0 = content that consumers are not willing to pay for
• Linvoid1 = content that consumers are willing to pay for    

Linvoid0 is created at the cost of linvoid1.  Linvoid0 diverts resources away from linvoid1.  More linvoid0 means less linvoid1.

The only reason that linvoid0 is created is because it's bundled together with linvoid1.  Therefore, unbundling cable would shift resources from linvoid0 to linvoid1.  In other words...unbundling cable would free up resources for more valuable uses.

Wow, why do I have to explain this?  Ughhh...these ages are so dark...*shudder*.  Every once in a while I'm struck full force with the primitiveness of the time that I was born into...*heebie jeebies*.  How much better would it have been to be born during a period of time when everybody completely understands the significance of this fundamental principle of economics?

"Aren't you glad we don't live in those times?"  My gf sometimes asks me this question when we're watching some depiction of the past.  My usual reply is, "we do live in those times".

For sure the present could be so much worse...but it could also be so much better.  Please stop stumbling around in the dark trying to find the light switch...it's right here...*points*... let there be light...

You will recall the wonderful image at the beginning of the seventh book of Plato's Republic: those enchained cavemen whose faces are turned toward the stone wall before them. Behind them lies the source of the light which they cannot see. They are concerned only with the shadowy images that this light throws upon the wall, and they seek to fathom their interrelations. Finally one of them succeeds in shattering his fetters, turns around, and sees the sun. Blinded, he gropes about and stammers of what he saw. The others say he is raving. But gradually he learns to behold the light, and then his task is to descend to the cavemen and to lead them to the light. He is the philosopher; the sun, however, is the truth of science, which alone seizes not upon illusions and shadows but upon the true being. - Max Weber, Science as a Vocation  

How can I lead you to the light?  Please try and follow my logic...

The creation of content is never costless.  Every single one of the resources used to create some content could have been used to create some other content.  This means that the use of any resource requires the sacrifice of the alternative uses.  And given that values are super subjective...if we want to maximize value then consumers must be free to valuate the alternative uses.  If we don't know which uses consumers are least willing to sacrifice...then resources can't be put to their most valuable uses.  So the more valuation that bundling blocks...the more value that is destroyed.

Willingness to sacrifice and willingness to pay are the same thing.  Our society is so very primitive because it's widely believed that it's beneficial to create content regardless of whether or not people are truly willing to sacrifice for it.  Limited resources are used to create linvoid0...which is shoveled onto our plates.

The creation of cable linvoid0 is a small fish to fry compared to the creation of government linvoid0.  The large bulk of the linvoid0 on our plates has been created by the government.  People eat it...completely oblivious to the fact that they should be eating linvoid1 instead.  Linvoid1 is better by their own standards.  It's content that they would truly be willing to sacrifice for.  Yet, they unknowingly end up with far less linvoid1 on their plates because massive amounts of limited resources are used to create linvoid0.

Even though unbundling government is a much bigger fish to fry...it really isn't the subject of much debate.  But we are debating whether we should unbundle cable.  On the one hand, it's great because the economic argument is exactly the same.  On the other hand, unfortunately, and unsurprisingly, there are precious few arguments against bundling that are based on the fundamental economic principle that content creation isn't costless.  Will this post of mine change that?  Is this post worth the sacrifice of my time?  Here I am...so clearly I think it's worth the risk.

All this discussion of sacrifice has me thinking me about the bible.  Now I'm pretty much an atheist...but when I was a little kid I had no choice but to regularly read the bible.  Did you have to regularly read the bible when you were growing up?  If not...then perhaps you're not so familiar with the story of Cain and Abel.  From Genesis 4...

1 And Adam knew Eve his wife; and she conceived, and bare Cain, and said, I have gotten a man from the Lord.
2 And she again bare his brother Abel. And Abel was a keeper of sheep, but Cain was a tiller of the ground.
3 And in process of time it came to pass, that Cain brought of the fruit of the ground an offering unto the Lord.
4 And Abel, he also brought of the firstlings of his flock and of the fat thereof. And the Lord had respect unto Abel and to his offering:
5 But unto Cain and to his offering he had not respect. And Cain was very wroth, and his countenance fell.

When I was a little kid...it wasn't quite clear to me why God rejected Cain's sacrifice.  Why would anybody reject an offering of fruits and vegetables?  If you offered some surplus fruits and veggies from your garden to your friend...wouldn't you be surprised if they rejected your offering?  The difference is...Cain and Abel weren't giving a gift to God...they were expressing their gratitude for the gift that he had given them.  As we can see from the first verse...Cain himself was a gift from God.  So Cain owed his life to God.  And if Cain himself was a gift from God...then it stands to reason that Cain's entire harvest was also a gift from God.   Clearly Cain was hugely in debt to God.  But Cain's willingness to sacrifice/pay did not accurately reflect his enormous obligation...which is exactly why God rejected Cain's offering.  We can easily imagine God saying to Cain..."After all that I've done for you...this is how you repay me?  You really should have done a better job of counting your blessings."

So what's the moral of the story?

A. The larger the gift, the greater the obligation
B. Preference revelation is essential
C. Valuations can be incorrect
D. Correct valuations can get you killed
E. People should be free to exit from unprofitable relationships

D isn't the correct answer.  The correct answer is that it truly matters how much people are willing to sacrifice for something.

If you're still interested in reading more about sacrifice...check out this entry... Can Economics Explain Human Sacrifice?

The Ingenious Gentleman George Monbiot

In case you missed the reference...I'm saying that George Monbiot is Don Quixote.  This guy is really tilting at windmills...The Impossibility of Growth.  The same article was also published by the Guardian... It's simple. If we can't change our economic system, our number's up.

Quixote perceives that the giant problem that we should all attack is "carbon-fuelled expansion"...

On Friday, a few days after scientists announced that the collapse of the West Antarctic ice sheet is now inevitable(4), the Ecuadorean government decided that oil drilling would go ahead in the heart of the Yasuni national park(5). It had made an offer to other governments: if they gave it half the value of the oil in that part of the park, it would leave the stuff in the ground. You could see this as blackmail or you could see it as fair trade. Ecuador is poor, its oil deposits are rich: why, the government argued, should it leave them untouched without compensation when everyone else is drilling down to the inner circle of hell? It asked for $3.6bn and received $13m. The result is that Petroamazonas, a company with a colourful record of destruction and spills(6), will now enter one of the most biodiverse places on the planet, in which a hectare of rainforest is said to contain more species than exist in the entire continent of North America(7).

Of course Quixote is very mistaken.  The real giant problem is the fact that the $13 million that Ecuador received does not come even remotely close to accurately reflecting how much the world values its park.  Monbiot would know this if he had studied public finance.  Despite his glaring ignorance...Monbiot had no problem charging into the field of public finance anyways...which is exactly why he's Don Quixote.  

The world has a huge surplus of Quixotes just like him...which means that there's a massive shortage of classes on public finance.  Let me try and remedy this problem...  

In order to put limited resources to their most valuable uses...it's necessary to correctly determine how much society values the various possible uses.  The park in Ecuador is a perfect example of a limited resource.  Should it be developed...or should it be conserved?  Which use of the land does the world value most?  We already know how much the world values its development...$7.2 billion...so the challenge is to correctly determine how much the world values its conservation.

One way to find out would be to conduct a survey (contingent valuation).  We could go around and ask 7 billion people how much they value the park in Ecuador.  The problem with this technique is that people wouldn't have an incentive to accurately report their valuations.  If payment wasn't required...then they would have an incentive to over report their valuations.  If payment was required...then they would have an incentive to under report their valuations.

Our current system completely side-steps the preference revelation problem.  Citizens are simply coerced into contributing to the collective.  Elected representatives (impersonal shoppers) then determine the value of public goods for us.  The problem with this method is that public representatives can't possibly come even close to accurately gauging the true demand for public goods.  This is because people don't all demand the same things equally.  In other words...values are radically subjective...our diverse and varied preferences aren't all the same intensity.

Wake up!!  No snoozing in class!  This lesson is extremely important.  In order to increase the chances that you'll thoroughly understand this lesson...I'm going to hedge my bets and share other people's words on the topic.  If you don't want to be Don Quixote barking up the wrong tree...then it would behoove you to carefully read these passages.

First up is Cowen and Tabarrok...

Voting and other democratic procedures can help to produce information about the demand for public goods, but these processes are unlikely to work as well at providing the optimal amounts of public goods as do markets at providing the optimal amounts of private goods.  Thus, we have more confidence that the optimal amount of toothpaste is purchased every year ($2.3 billion worth in recent years) than the optimal amount of defense spending ($549 billion) or the optimal amount of asteroid deflection (close to $0).  In some cases, we could get too much of the public good with many people being forced riders and in other cases we could get too little of the public good. - Tyler Cowen, Alex Tabarrok, Modern Principles of Economics  

The supply of a good is considered optimal when it perfectly matches the demand for the good.  In our case...in order for the supply of conservation to be optimal...it has to perfectly match the demand for conservation.  But because governments do not know what the actual demand is for conservation...it's extremely unlikely that the supply of conservation will be even close to optimal.  

Rothbard does a very good job of fleshing out the details...

In the first place, how much of the deficient good should be supplied? What criterion can the State have for deciding the optimal amount and for gauging by how much the market provision of the service falls short? Even if free riders benefit from collective service X, in short, taxing them to pay for producing more will deprive them of unspecified amounts of private goods Y, Z, and so on. We know from their actions that these private consumers wish to continue to purchase private goods Y, Z, and so on, in various amounts. But where is their analogous demonstrated preference for the various collective goods? We know that a tax will deprive the free riders of various amounts of their cherished private goods, but we have no idea how much benefit they will acquire from the increased provision of the collective good; and so we have no warrant whatever for believing that the benefits will be greater than the imposed costs. The presumption should be quite the reverse. And what of those individuals who dislike the collective goods, pacifists who are morally outraged at defensive violence, environmentalists who worry over a dam destroying snail darters, and so on? In short, what of those persons who find other people's good their "bad?" Far from being free riders receiving external benefits, they are yoked to absorbing psychic harm from the supply of these goods. Taxing them to subsidize more defense, for example, will impose a further twofold injury on these hapless persons: once by taxing them, and second by supplying more of a hated service. - Murray Rothbard, The Myth of Neutral Taxation

This passage is especially relevant because Rothbard mentions the specific example of the snail darters.  You can read about the controversy on Wikipedia.  Do you think that the government chose the most valuable course of action?

Here's Rothbard's mentor, Mises, also on the topic of determining the value of conservation...

It can never obtain as a measure for the calculation of those value determining elements which stand outside the domain of exchange transactions. If, for example, a man were to calculate the profitability of erecting a waterworks, he would not be able to include in his calculation the beauty of the waterfall which the scheme might impair, except that he may pay attention to the diminution of tourist traffic or similar changes, which may be valued in terms of money. - Ludwig von Mises, The Nature of Economic Calculation

The problem, which should hopefully be very clear by now, is correctly determining the value of goods which "stand outside the domain of exchange transactions".  The solution is extremely simple...we just need to expand the "domain of exchange transactions"...

The economic approach stresses the fact that any expenditure always has an opportunity cost, i.e. a benefit that is sacrificed because money is used in a particular way.  For example, since biodiversity is threatened by many factors, but chiefly by changes in land use, measures of value denominated in monetary terms can be used to demonstrate the importance of biodiversity conservation relative to alternative uses of land.  In this way, a better balance between 'developmental' needs and conservation can be illustrated.  To date, that balance has tended to favour the conversion of land to industrial, residential and infrastructure use because biodiversity is not seen as having a significant market value.  Economic approaches to valuation can help to identify that potential market value, whilst a further stage in the process of conservation is to 'create markets' where currently none exist. - David Pearce, Dominic Moran, Dan Biller, Handbook of Biodiversity Valuation A Guide for Policy Makers

Currently, conservation is not correctly valued because its value is determined outside the market (consumers aren't free to valuate opportunity costs).  If we want conservation to be correctly valued...then it's imperative that we create a market in the public sector.  People would still have to pay the same amount of taxes...but they could spend their taxes on any country's public goods.  Taxpayers would be free to to choose whether they wanted to spend their own tax dollars on A. fighting the war on drugs or on B. conserving Ecuadorian biodiversity or on C. improving public healthcare or on D. some other public good.

Because no country has this essential information...they are all Quixotes.  Ecuador is charging ahead with the development of a biodiversity rich park despite the fact that the world might have derived far more value from its conservation.  If people don't have accurate information...then it's a given that they will end up wasting limited resources tilting at windmills.  This is exactly what happened to George Monbiot.  Because he's never studied public finance...he's wasting his resources attacking the really wrong target.  The problem definitely isn't "carbon-fuelled expansion"...it's the simple fact that we don't have the information that we need in order to correctly determine whether limited resources should be developed or conserved.

Monbiot has no idea that he himself has information that Ecuador must have in order for it to choose the most valuable course of action.  This essential information is Monbiot's own valuation.  How much of his own tax dollars would Monbiot actually allocate to the conservation of biodiversity in Ecuador?  If we want Ecuador to have this essential information, then we must upgrade our system of government so that Monbiot has the freedom to put his own taxes where his heart is.

With the current system, it's irrelevant how much Monbiot values biodiversity.  That's extremely absurd.  This degree of absurdity should blow your mind.  It should keep you up at night.  Nothing should scare you more.

Think about it...what if we had a system where it would be irrelevant how much Monbiot values food?  Do you think that this system would function properly?  Do you think that the optimal amount of land, labor and other limited resources would be used for the production of food despite the fact that the demand for food was unknown?   Would you predict that the system would result in a great leap forward?

Consider this passage by Krugman...

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

Why didn't the Soviet planners realize just how mind-blowingly absurd it was for them to shift massive amounts of resources in a valuation vacuum?  It was because they didn't read Adam Smith...

It is unjust that the whole society should contribute towards an expence of which the benefit is confined to a part of the society. - Adam Smith, Wealth of Nations

Does Monbiot truly benefit from the allocation of additional resources to the conservation of Ecuadorian biodiversity?  It's easy enough to find out.  All we have to do is give him the freedom to choose where his taxes go.  Maybe, when confronted with the alternative uses of his own tax dollars, he will decide that there are bigger fish to fry.  But maybe not.  It's entirely possible that he will be more than happy to put his own taxes where his mouth is.

As my faithful readers (all 11 of them) would know...this really isn't the first time that I've taught this class.  Here's a section from an entry...Visualizing And Evaluating The Public Goodness Threshold...that I posted back in February...

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For example, let's consider the Brazilian EPA's effort to conserve the Amazon rainforest.  Here's what the demand chart might look like if only Brazilians were free to give their taxes to their EPA...

What would happen to the demand chart if American citizens were also given the freedom to give their taxes to the Brazilian EPA?  It stands to reason that the demand would increase...

As each additional country gives its citizens the freedom to give their taxes to the Brazilian EPA, the accuracy of the demand chart increases...

If we look at the disparity in demand...then it's clear that massive amounts of value would be destroyed if we prevented taxpayers from shopping in the public sectors of other countries.  The Brazilian EPA would receive the wrong amount of funding...and as a result, rainforest that should have been conserved would be destroyed instead.

The amount of resources directed to the conservation of the Amazon rainforest should be determined by the amount of value the world derives from the Amazon rainforest.  And the only way we can know how much value the world truly derives from the Amazon rainforest would be to allow taxpayers to spend their taxes on any country's public goods.

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It's really sad to say that my prediction has come true regarding the destruction of rainforest that should have been conserved.  The very unfortunate fact of the matter is that my predictions will continue to come true unless people thoroughly understand why it's essential that we correctly determine the actual demand for public goods.  

For additional entries on the topic...

• A Global Free-trade Agreement for Public Goods
• Block vs Flow

Heaven's Going To Burn Your Eyes

Alex Tabarrok responded to my previous post!  It's pretty wonderful that he took the time to do so.

My impression is that the large bulk of his response was allocated to highlighting the extent and the legitimacy of the non-price realm.  He concluded his entry by saying...

Economists often focus on the virtues of the price system but that should not blind us to the many virtues and many margins on which a free society operates.

Given that the main thrust of his response was to highlight the non-price realm...it seems likely that, by arguing for pricing individual cable channels, I gave the impression of being among the economists who focus too much on prices at the cost of failing to see/appreciate/understand the non-price realm.

It's a really funny dynamic though because my entire blog is dedicated to exploring and explaining how resources are efficiently allocated in the non-price realm.  It's my very favorite topic!  All of my 200+ blog entries have to do with tax choice...which would create a non-price (chip) market in the public sector.  Here are some of my blog entries where I even consider whether or not prices can be eliminated entirely...

• Pragma-socialism
• Prices and the Efficient Allocation of Resources
• A World Without Prices or Profit
• Prices vs Chips

But because I am arguing that it would be better if individual channels had prices...it's entirely understandable for Tabarrok to perceive that I'm just another free-market economist who is fixated on prices.  In reality though, as my blog attests, I find the non-price realm to be extremely fascinating.  So I strongly agree with Tabarrok's conclusion and would really love it if he could flesh out his thoughts on the topic.

He did mention the fact that firms are centrally planned...but I'm really not quite sure what relevance this has to the topic of whether cable should be unbundled.  Yes, firms make educated guesses regarding how to allocate the resources that they have...but markets work because consumers are the ultimate judges of how accurate the guesses of the "islands" are.  If an island is wasting too many of its resources...then consumers will stop dollar voting for it.  As a result, the island will sink into the ocean.  Because...dollar votes are the only thing keeping the island afloat.  Hmmm...maybe it's better as a metaphor than as an analogy.  What's a better analogy?

Capitalism and socialism both have firms making educated guesses...the difference is that with capitalism consumers are free to give their positive feedback (money) to the producers who have made the best guesses.  Consumer choice is a fail safe device.  It prevents too many resources from ending up in the wrong hands. We can think of the market as a 3V network...vet/validate/vouch.  Everybody can give everybody else feedback on how well they are using society's limited resources.  

With this in mind...let's take a look at Tabarrok's Sopranos scenario...

In 2002 should HBO have individually priced episodes of the Sopranos and sold them through AOL?  Individual pricing generates value but it also has costs. Tradeoffs are everywhere. And, to the crux of the issue, if a law had been passed in 2002 requiring HBO to sell The Sopranos on an episode by episode basis would that have resulted in better and more programming at lower prices?

In retrospect...with perfect hindsight...we know that the Sopranos was a huge hit.  But when the first episode aired...it was simply HBO's educated guess.  Like every single allocation, it was a gamble.  There was absolutely no guarantee that the show was going to be great or even good.  Uncertainty is the very reason why we need markets.  If somebody has a crystal ball...or they are omniscient...then markets are very undesirable.  If we can know for certain beforehand which endeavors are going to be winners...then it's a massive waste of scarce resources to hedge them on multiple bets.  But the reality is that nobody has a crystal ball...nobody is all-knowing.  Therefore, it's absolutely imperative that consumers have the ultimate say on how well producers are using society's limited resources.

If episodes of the Sopranos had been sold individually...then what would have happened after the first few brave souls purchased the first episode?  With our perfect hindsight...it's reasonable to guess that the 3V network would have kicked in.  More and more consumers would have vetted/vouched/validated how HBO was using society's limited resources.  Cowen would have said, "Hey Tabarrok!  It's really worth it to buy the first episode of the Sopranos!  You really won't regret your decision!"  As more and more people purchased the first episode...HBO would have earned more and more money which would have given it more and more control over how society's limited resources were used.    

Would tightly tying results and rewards together have led to "better and more programming at lower prices"?  Tabarrok thinks that it wouldn't have.  But regarding the "better" part...it seems logical that HBO would want more, rather than less, money per episode.  So given that "better" would mean "more money"...HBO would have the strongest possible incentive to try and make each episode better than the last.  Regarding the "lower prices" part...this largely depends on the amount of competition.  High profits, all things being equal, will result in greater competition.  The higher the price of gold...the more prospectors there will be.  As the supply of successful shows increased...prices would have decreased.  My post on value signals covered this concept in more depth.

Let me hedge my bets by sharing what others have said on the topic...

The increase of demand, besides, though in the beginning it may sometimes raise the price of goods, never fails to lower it in the run. It encourages production, and thereby increases the competition of the producers, who, in order to undersell one another, have recourse to new divisions of labour and new improvements of art which might never otherwise have been thought of. The miserable effects of which the company complained were the cheapness of consumption and the encouragement given to production, precisely the two effects which it is the great business of political œconomy to promote. - Adam Smith, Wealth of Nations

Loss of personal wealth is a powerful dissuader, while profits are a powerful persuader to pay heed to other people’s preference. - Armen A. Alchian, Private Property and the Relative Cost of Tenure

The effectiveness of this trial-and-error method is analogous to the theory of biological evolution by natural selection, where economic actors are guided by profit-loss signals and “survival” is determined through market selection. Entrepreneurs who satisfy consumers’ demands at the lowest cost and highest quality earn positive profits, which signal socially desirable actions that allocate resources to their highest-valued uses. Entrepreneurs who do not do so, on the other hand, suffer monetary losses and are eventually eliminated via market selection (Alchian 1950). - Peter J. Boettke and Kyle W. O’Donnell, The Failed Appropriation of F. A. Hayek by Formalist Economics

Second, where residual claimancy and control rights are closely aligned, market competition provides a decentralized and relatively incorruptible disciplining mechanism that punishes the inept and rewards high performers.  Markets are a way of increasing what biologists call selective pressure: they have the effect of reducing the variance of performance and hence (under suitable conditions) increasing average performance. - Samuel Bowles, Microeconomics: Behavior, Institutions, and Evolution

The producer whose product turns out to have the combination of features that are closest to what the consumers really want may be no wiser than his competitors.  Yet he can grow rich while his competitors who guessed wrong go bankrupt.  But the larger result is that society as a whole gets more benefit from its limited resources by having them directed toward where those resources produce the kind of output that millions of people want, instead of producing things that they don't want. - Thomas Sowell, Basic Economics 4th Ed: A Common Sense Guide to the Economy

Unbundling cable would subject channels/shows to far greater selective pressure.  Given that carrot-wielding consumers would be the source of the selective pressure...how is it possible for unbundling cable not to greatly improve welfare?  Production mistakes...errors...inaccurate guesses would be identified sooner rather than later.  To steal Boettke's analogy...the market is really great at pulling weeds.  But if cable bundles 100s of channels together...and each channel is a bundle of shows...and each show is a bundle of episodes...then how can we ensure that the weeds are quickly pulled and the wonderful is well watered?  

When I cut the cord...I didn't just get rid of the weeds...I got rid of the entire garden.  Dendrobiums and dandelions alike were trashed.  It's really not a very precise feedback mechanism when there's no choice but to throw the baby out with the bath water.

This analogy 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

If cable fails to go in the right direction...then consumers should certainly have the option to abandon ship.  But what if a channel or a show fails to go in the right direction?  If it improves welfare to prevent consumers from exiting from channels and shows...then why doesn't it also improve welfare to prevent consumers from exiting from cable?

It kinda gives the impression that there's some concern that consumers are going to exit from something because it's too wonderful.  This probably is going to count as one of those instances where discretion is the greater part of valor...but a few months ago I started reading 50 Shades of Grey on my gf's Kindle.  Half way through I had to stop reading it.  Why?  Because it was too good.   It was so good that I had to put it down.

Should Kindle users be charged per page read?  Doing so would really cut into Thomas Piketty's profits.  Facilitating exit really isn't in the interests of producers.  I suppose that's the bottom line.  

But I am liking this whole "tai hao, shou bu liao" idea...something is just so wonderful that you just can't stand it.

Bob is in hell when he spots his old friend Dave.  Bob says to him, "woah, never thought I'd see you here!"  Dave replies, "Yeah, I couldn't take heaven anymore...it was just too wonderful."

If Tabarrok doesn't reply to this blog entry then whatever shall I think?  Of course I'm going to think that he exited from our debate because my words were so wonderful that they were burning his eyes...

Prices vs Chips

Alternative titles...

"The Tabarrok Paradox"

"In Which Our Hero Tabarrok Throws Opportunity Cost Out The Window"

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In the economics subreddit I saw a link to this NY Times article... Why Unbundling Cable Would Not Save You Money.  When I took a look at the comments on Reddit, I noticed that one of the comments included a link to this video on bundling by the economist Alex Tabarrok.

In the video Tabarrok explains, using diagrams and logic, why bundling cable is a good thing.  His logic doesn't jive though.  I planned on sharing my perspective in a comment, but my best laid plans were foiled...  "Comments on this entry are closed".

And that's the story of how I ended up here.  Pretty exciting stuff...huh?

Let's get down to business.

The flaw in Tabarrok's logic is that it completely ignores the necessity of determining what the actual demand is for the individual components in the bundle.  For example, when I subscribed to cable...Charter had no idea how much I valued the Discovery Channel.  Neither did the Discovery Channel.  But is my valuation relevant?  According to Tabarrok...it really isn't.  Uh, what?

How could the Discovery Channel and Charter and Tabarrok not care what the actual demand is for the Discovery Channel?  In the absence of consumer valuation...how could society's limited resources be put to their most valuable uses?

Tabarrok is basically arguing that we don't need accurate information in order to efficiently allocate resources.  Except, does he really believe that?  Let me consult my magic database...

The most valuable public goods are constantly changing, just as the most valuable private goods are constantly changing.  The signal provided by prices and mobility is therefore of great importance. - Alexander Tabarrok, Market Challenges and Government Failure

Huh.  Hmmm.  Is the Discovery Channel a private good?  Yes.  Is its value constantly changing?  Yes.  So...according to Tabarrok...it's of great importance that the Discovery Channel should have its own price.  But this sure wasn't what he said in his video.  Maybe I should shake my magic database again.  *shake shake*

Of course just because everyone can be made better off by taxation does not mean that everyone will be made better off. Some people want more national defense, some people want less, pacifists want none. So, taxation means that some people will be turned into forced riders, people who must contribute to the public good even though their benefits from the public good are low or even negative. Tyler Cowen, Alex Tabarrok Modern Principles of Economics 

Some people want more Discovery Channel, some people want less, rednecks want none.  I don't know if that last part is exactly true...but bundling cable certainly creates many forced riders.  If consumers aren't given the opportunity to opt out of individual channels...then how can we possibly know what the actual demand is for the Discovery Channel?

Perhaps I can settle things with another *shake* of my magic database...

Voting and other democratic procedures can help to produce information about the demand for public goods, but these processes are unlikely to work as well at providing the optimal amounts of public goods as do markets at providing the optimal amounts of private goods.  Thus, we have more confidence that the optimal amount of toothpaste is purchased every year ($2.3 billion worth in recent years) than the optimal amount of defense spending ($549 billion) or the optimal amount of asteroid deflection (close to $0).  In some cases, we could get too much of the public good with many people being forced riders and in other cases we could get too little of the public good. - Tyler Cowen, Alex Tabarrok, Modern Principles of Economics

Let's try a bit of substitution...

Voting and other democratic procedures can help to produce information about the demand for channels, but these processes are unlikely to work as well at providing the optimal amounts of channels as do markets at providing the optimal amounts of channels.  Thus, we have more confidence that the optimal amount of the Discovery Channel is purchased every year ($2.3 billion worth in recent years) than the optimal amount of Home Shopping Network ($549 billion) or the optimal amount of Epiphyte Channel (close to $0).  In some cases, we could get too much of the channel with many people being forced riders and in other cases we could get too little of the channel. 

Errr...well...that didn't work perfectly...but it worked pretty well.  Just in case though...let's go over it again...

The optimal amount of the Discovery Channel depends on the demand for the Discovery Channel.  If we don't know what the demand is for the Discovery Channel...then how can the supply possibly be optimal?

Basically, we can't say "hey man nice shot" if we don't know where the target is.  Demand is the target by which we measure the accuracy (efficiency/value) of the supply (how resources are used).  We can only say that there's too much or too little of the Discovery Channel if we know what the demand is.

It should be clear that determining demand is fundamentally essential.  So how do we go about doing this?  There are basically three methods.  Consumers can vote or they can spend or they can have their minds read by omniscient government planners.  As Tabarrok indirectly acknowledged in the passage above...the demand information provided by voting (democracy) is not nearly as accurate as the demand information provided by spending (market).  This is because actions (spending) speak louder than words (voting).   Spending is sacrifice...so it reveals values.  Talk, on the other hand, is cheap...so it only reveals opinions.  *shake shake*

Overall, I am for betting because I am against bullshit. Bullshit is polluting our discourse and drowning the facts. A bet costs the bullshitter more than the non-bullshitter so the willingness to bet signals honest belief. A bet is a tax on bullshit; and it is a just tax, tribute paid by the bullshitters to those with genuine knowledge. -  Alex Tabarrok, A Bet is a Tax on Bullshit 

If we use people's opinions to determine demand...then the target will be wrong and resources will be diverted away from far more valuable uses.  This is why spending (deep input), rather than opinions, should be used to create value signals...

If we unbundled cable...then people would be able to share their deep input on the Discovery Channel.  Flowcilitating deep input would create a signal that would communicate to the world the amount of value that society assigns to... *looks at the Discovery Channel website*...shows like #BikerLive.  Remember what I said about rednecks and the Discovery Channel?  I take it back.

If it makes good economic sense to clarify the demand for individual channels...doesn't it also make good economic sense to clarify the demand for individual shows?  Of course.  The information would be even more accurate...which would result in even greater allocative efficiency.

Personally, I finally kicked cable to the curb.  I cut the cord!  Yes!  Now I subscribe to Netflix.  But even though Netflix is far superior in most regards...it's pretty much just like cable in the sense that there's no mechanism for me to communicate how much I value individual movies and shows.  Well...I did give Rake 5 stars.  Man oh man did that clarify demand.  I said that super sarcastically.

Of course I could buy the Rake DVD...that would certainly help clarify the demand.  But shouldn't Netflix give me the opportunity to put my subscription fees where my 5 stars are?  Each month I could take my $9 and divvy it up among the movies/shows that I truly value.  Netflix could then transfer the money (minus their cut) to the producers of those shows.  Why not?

Let's review...

1. We want resources to be more efficiently allocated
2. Allocative efficiency depends on accurate information
3. Flowcilitating deep input provides more accurate information

Flowcilitating deep input?  For example...

1. Allowing Netflix subscribers to dollar vote for the shows/movies that they value most
2. Allowing cable subscribers to dollar vote for the channels/shows that they value most
3. Crowd sponsored results

Let's dig a little deeper.  Here's a comment that I posted on Peter Boettke's blog entry... Quiz for the Austrian Economists Among Us...

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Using a specific example...let's say that the show Firefly was prematurely canceled. Resources were diverted away from the show even though there was sufficient demand. The problem was that the demand was "latent". It was only revealed after the show was canceled. Many people bought the DVD and campaigned on behalf of the show.

As I've argued before...(Hey Mungerfesto, Prices OR Consumer Sovereignty?)...price theory is too narrow. There are certainly situations where we can correctly determine Hayek's "solution" without using prices. The producers of Firefly could have clarified the demand by creating a crowdfunding campaign. This would have allowed each and every fan of the show to decide for themselves exactly how much they were personally willing to contribute/sacrifice in order to keep the show alive. There wouldn't have been one price...there would have been a continuum of "prices". People would have been paying vastly different amounts for the same exact product. It's the same thing with the non-profit sector.

Price theory, as it stands, is not a great prophylactic because it's got a giant hole in it. It doesn't account for the vast majority of situations where we sacrifice in order to try and keep something alive. A better theory would be something like "input theory"...or "positive feedback theory"...or some other better name. Maybe "flowcilitation theory"?

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If cable was unbundled...then individual channels would have their own prices.  But if Netflix was "unbundled"...then there wouldn't be any "prices".  The show Rake wouldn't have a set price.  Each and every Netflix subscriber could spend as much, or as little, as they wanted on the show.  We can call these customized contributions "chips".

If you think about it, this is really fascinating.  It's momentous that here we are at the beginning of the great "Prices vs Chips" debate.

As Tabarrok's bundling video so nicely illustrated...consumers can value the same product differently.  Let's take the Rake Season 1 DVD for example.  On Amazon, the price is $24.28.  Some people would be willing to pay more...while many others would be willing to pay less.  It's a given that far more consumers would buy the DVD if it only cost $1.  Because of this, the revenue generated by this DVD does not accurately reflect its value.  It doesn't show us the value to the right or to the left of the price.  Here's how I've "wonderfully" illustrated this...

As you can see...prices clearly do not convey the large bulk of a product's value to society.  So if prices stand in the way of more accurate information (which we need for allocative efficiency) ...then why don't we eliminate them?

We should all instinctively appreciate that if Amazon allowed consumers to pay whatever they wanted for the Rake DVD...then sales would skyrocket but revenue would plummet.  This is the preference revelation problem.  Given the opportunity, it's logical for consumers to pay far less than their true valuation of the DVD.  Why is their behavior logical?  Because consumers are utility maximizers.  Paying less than they valued the DVD would free up their money to spend on other things.  While this would increase their individual utility...the foreseeable side effect is that the DVD would be undersupplied...which would represent a net loss of total utility.  So it would seem that we are stuck with prices.  Unless...?

Unless...?  Unless the cost is a foregone conclusion.  With Netflix, subscribers are already paying $9 a month...so if they were given the opportunity to allocate their $9, then they wouldn't be able to save any money by undervaluing Rake.  This means that their chips would accurately reflect their valuations.  We wouldn't just see a slice of the demand curve...we would see the entire thing.  Therefore, chips would convey far more accurate information than prices would.

The public sector is just like Netflix.  Taxes, like subscription fees, are a foregone conclusion.  So if taxpayers could choose where their taxes go...then they would have every incentive to honestly convey their values.

Hmmm...I guess the great "Prices vs Chips" debate probably isn't going to be that great.  There's really not much to debate.  As long as the cost is a foregone conclusion, chips will provide far more accurate information than prices can.  This means that chips will result in far greater allocative efficiency.

Here's the grand overview...

1. Socialism fails because consumers aren't given the opportunity to tell any truth.
2. Capitalism succeeds because consumers are given the opportunity to tell some truth.
3. Pragmatarianism would be even more successful because consumers would be incentivized to tell the whole truth.

What do you think?  

What's going on with Tabarrok?  He's sending mixed messages right?  Is it because he's confused by the fact that the marginal cost of channels is zero?  The marginal cost of providing the Discovery Channel is zero...therefore there's no need to determine its priority?  Opportunity cost goes out the window?

The concept of opportunity cost (or alternative cost) expresses the basic relationship between scarcity and choice. If no object or activity that is valued by anyone is scarce, all demands for all persons and in all periods can be satisfied. There is no need to choose among separately valued options; there is no need for social coordination processes that will effectively determine which demands have priority. In this fantasized setting without scarcity, there are no opportunities or alternatives that are missed, forgone, or sacrificed. - James M. Buchanan

Should the Discovery Channel be able to use more or less of society's scarce resources?  How can the answer possibly be correct if consumers aren't given the opportunity to spend their money on this channel?  Yes, they can go to the online store and purchase a bunch of products.  Doing so will increase the channel's influence over how society's limited resources are used.  But no matter how many alternative sources of deep input the Discovery Channel has...the fact of the matter is that its cable revenue doesn't reflect the valuations of cable subscribers.

Just because the marginal cost of providing the Discovery Channel is zero...doesn't mean that the opportunity cost of the Discovery Channel organization is zero.

I want to know how much society values what the Discovery Channel organization is doing with society's limited resources.  It's hard for me to imagine that Tabarrok perceives this information to be inconsequential.  Yet, he doesn't think it's necessary to unbundle cable.  This is the Tabarrok Paradox.  *shake shake*

This, of course, is just the diamond-water “paradox”–why are diamonds, mere baubles, so expensive while water, a necessity of life, is so cheap?–the paradox was solved over a hundred years ago by…wait for it…can you guess?….the marginal revolution. Water is cheap and its value low because the supply of water is so large that the marginal value of water is driven down close to zero. Diamonds are expensive because the limited market supply keeps the price and marginal value high. Not much of a paradox. Note that, contra Graeber, there is nothing special about labor in this regard or “our society.” 

Moreover, it’s good that prices are determined on the margin. We would be very much the poorer, if all useful goods were expensive and only useless goods were cheap. - Alex Tabarrok, BS Jobs and BS Economics

Yeah, I'm pretty sure he doesn't perceive any benefit to unbundling cable because he's too distracted by the fact that the marginal cost of providing the Discovery Channel is zero.  I definitely appreciate that the marginal cost of the channel is zero...but the fact remains that we still need to figure out how much influence the Discovery Channel, as an organization, should have over how society's limited resources are used.  This means that consumers must be able to decide whether or not it's worth it to pay for the Discovery Channel.  In order for this to happen...cable has to be unbundled.