Are Congresspeople Omniscient?

[Infactum]

Of course not. However, that sentence directly contradicts the claim that the following is proven:

opportunity cost ensures the efficient allocation of resources

You're lumping two extremely different types of earmarking...

The standard normative "theory" of earmarking adopts the reference system of the budget-maker, the budgetary authority, who is, by presumption, divorced from the citizenry in the political community. An alternative working hypothesis of political order is the individualistic
one in which the reference system becomes that of the individual citizen. - James M. Buchanan, The Economics of Earmarked Taxes

The standard idea of earmarking is individual congresspeople allocating funds to specific programs. Buchanan discussed earmarking in terms of individual taxpayers allocating funds to specific programs. What do you think the difference is between the two types of earmarking in terms of opportunity cost?

He also states:

Earmarking is defined as the practice of designating or dedicating specific public revenues to the financing of specific public services

This would strictly include tax choice, though his clarification seems to indicate it doesn't. Given that he analyzes a simplified tax choice system, that further confuses things. It's at least ambiguous, so I suppose I'll drop the point.

Since economists do not agree, then we conclude that opportunity cost is not proven to ensure efficient allocation of resources (regardless of market). This logic only applies as of 1963, of course. It is possible that that statement was proven since then.

So find a paper that substantiates your specific claim that opportunity costs do not ensure the efficient allocation of resources.

You do want me to prove a negative.... My claim is not that opportunity costs* do not ensure efficient allocation in all cases (though I do believe this). My claim is that it is not proven that opportunity costs ensure efficient allocation in all cases. The latter is not something on which anyone is going to write a paper, anymore than I could present you with an astronomy paper showing that it is not proven that there is a teacup in the Oort cloud (indeed, I could not present you with an astronomy paper proving there is not a teacup in the Oort cloud either). It is hard or impossible to prove negatives without exhausting (often infinite) possibilities. The only way to do so is by way of counterexample, which are not always easy to construct. The burden of proof is on the positive claim for this reason.

So, since I am skeptical of your claim, give me proof.

*Note, this terminology bothers me - you claim is that systems which take advantage of maximizing peoples' ability to compare opportunity cost maximizes efficiency, not the opportunity costs themselves, correct?

Edit: Ahh well, I did find something:Tax-earmarking and separate school financingJournal of Public Economics. Volume 54, Issue 1, May 1994, Pages 51–63

Edit2: quote redacted in deference to permissions. It was, indeed, provided by my library. It claims that in some large fraction of cases, tax choice results in poor overall public utility.

That's from the abstract. I hope you can access that; I am on a university campus, and it is not always obvious which papers are public. The beginning of section 3 is the where he discusses his results on the equilibria.

I'll admit, I had only read the first page since I dislike making more internet accounts. The paper was, however, disappointing in it's narrow applicability.

His argument, in The Economics of Earmarked Taxes (1963), was, essentially, that if you make enough assumptions, then earmarking is optimal. To do prove earmarking is optimal, he explicitly rejects strategic allocation by assuming that the good provided by a public service is directly proportional to the amount of funding that service receives (p.460). He himself admits (as I would expect most any self respecting economist to do) that these are just assumptions and the real world may behave far differently from his idealization. He especially focuses on the political nature of the actor as far from his ideal actor and the "decision making cost." See section V for his cautions on the applicability of the results. Note especially where he says that the violation of these assumptions might mean that a traditional allocation system could be better. I will note that all 3 of these things have been brought up in one way or another in this thread by me or others.

You missed the point regarding bundles and preference revelation...

No, I saw it. That was (part of) how he proved earmarking was optimal given his assumptions. I even believe his proof is valid. I don't believe his proof is sound. His paper is still irrelevant to the real world without the assumptions being satisfied.

Institutionally, earmarking provides a means of compartmentalizing fiscal decisions. The individual citizen, as voter-taxpayer-beneficiary, is enabled to participate, separately, either directly or through his legislative representative, in the several public expenditure decisions that may arise. He may, through this device, "vote" independently on the funds to be devoted to schools, to sanitation, and so on, given the specified revenue sources. Only in this manner can he make "private" choices on the basis of some reasonably accurate comparison of the costs and the benefits of the specific public services, one at the time. By contrast, general-fund budgeting, or non-earmarking, allows the citizen to "vote" only on the aggregate outlay for the predetermined "bundles" of public services, as this choice is presented to him by the budgetary authorities. - James M. Buchanan, The Economics of Earmarked Taxes

Remember what I wrote in my original post? Our current system is based on the assumption that congresspeople are omniscient (True/False)...

The basic argument assumes a full range of possible baskets of public goods available at the start. But how is this spectrum of opportunities established? Two possibilities come to mind: some central authority or auctioneer could set up different local communities and clubs with different baskets of public goods and inform all potential citizens of the characteristics of each community club. There are two obvious difficulties to this resolution of the problem, however. First, assuming a central authority knows what baskets of public goods must be supplied disposes of a large portion of the preference revelation problem, which the model is supposed to solve. If the central authority knew which people had which preferences, it could simply assign individuals to the appropriate club or local polity. Second, even if it is to some extent feasible, this solution to the preference-revelation problem violates the decentralized spirit of the Buchanan and Tiebout models. - Dennis C. Mueller, Public Choice III

Scholars have examined a number of factors that are taken to be structural components of governmental systems and that are presumed to induce utility losses. Among them is the "bundling" of goods and services, that is, the provision in a single package of a number of goods and services. Yoram Barzel (1969) has shown that bundling can impose utility loses on citizens. - Albert Breton, Competitive Governments: An Economic Theory of Politics and Public Finance

Every year, 100 million homes pay for a bundle of cable channels. Like any bundle, it's hard to see exactly what they are paying for. That is somewhat the point of bundling -- to disguise the true cost of the constituent items. - Derek Thompson, The End of TV and the Death of the Cable Bundle

Bundling...

1. assumes omniscience on the part of congresspeople
2. decreases utility for citizens
3. prevents citizens from being aware of the (opportunity) costs

Your argument is largely centered around the idea that taxpayers will have an incentive to conceal their true preferences if they could choose where their taxes go. Buchanan argued against this in his paper...

Under most real-world taxing institutions, the tax price per unit at which collective goods are made available to the individual will depend, at least to some degree, on his own behavior. This element is not, however, important under the major tax institutions such as the personal income tax, the general sales tax, or the real property tax. With such structures, the individual may, by changing his private behavior, modify the tax base (and thus the tax price per unit of collective goods he utilizes), but he need not have any incentive to conceal his "true" preferences for public goods. - James M. Buchanan, The Economics of Earmarked Taxes

This substantiates my claim that taxpayers would allocate their taxes according to their preferences. If you claim otherwise, then the responsibility is on you to find any papers that substantiate your claim. Just like if you claim that opportunity costs do not ensure the efficient allocation of resources, then the responsibility is on you to find any papers that substantiate your claim.

An I agree that, in the context of his paper, he is right. He makes the following assumptions, however:

Collective goods are assumed to be produced at constant marginal costs

The "tax price per unit" made available to him is invariant over quantity.

I read this as his assumption that public goods are "linear."

If both of these were true, I could not construct prisoner's dilemmas and chicken scenarios anywhere near as easily (or possibly at all). Buchanan knows this, as he states these assumptions are to remove the "element of strategic bargaining." Both of these are not necessarily true, however. Producing twice as many highways or a highway that costs twice as much is not likely to provide twice the benefit of 1 reasonably priced highway over none. Unless you disagree with this, highway funding produces a nonlinear return.

Opportunity cost is the difference in value derived from one choice versus the best of the choices not picked.

You derive x amount of value from replying to this thread (1st best option) and y amount of value from reading your book (2nd best option). The opportunity cost of replying to this thread is not x - y...it's simply y. It's the value that you would have derived from reading your book.

In theory, if everyone is rational (i.e. makes no "mistakes"), then they will pick the option with the least opportunity cost.

People pick the most valuable option, which requires the sacrifice of the second most valuable option. The value that you would have derived from the second best option is the opportunity cost.

Fair enough, both maximize at the same point, and your definition fits with the one on wiki. I see no reason to quibble.

I honestly cannot find a discussion of this concept with relation to multiplayer games, but that is quite important, as the opportunity cost of defecting in the prisoner's dilemma is dependent on the other player's action. This prevents the analysis from extending to collectively funded public goods IMO. My claim, however isn't that strong.

[...]

1) "If you're not willing to cooperate with your coconspirator, then clearly you'd prefer to sit in jail for 3 years instead of 1." Is that a true statement in your opinion? Can you see this as a valid analogy?

[...]

Opportunity cost is not well defined in (some) multiplayer games. That was the point of the second sentence. You can't tell me my opportunity cost for defecting in the prisoner's dilemma/Chicken/etc without information on another actor. This means that, even if I were a homo economicus, I would have insufficient information to determine the magnitude of my opportunity cost. How do you expect poor little normal me to do so? If I cannot determine the magnitude of my opportunity cost, I cannot determine how much I am sacrificing. If I cannot determine how much I am sacrificing, then I cannot compare the value of different options. If I cannot compare the value of different options, I cannot choose the one I prefer. Do you disagree with anything in that logic chain?

Imagine a river right next to a soup kitchen. When you arrive at the soup kitchen to volunteer you notice that there's a group of people picking up trash along the river. How is the prisoner's dilemma relevant/applicable?

I'm not certain I see a way, do you? I could shoehorn it in if I made wild enough assumptions. There's a reason I put "(some)" in front of multiplayer.

My original guess was that you were going to claim that the private sector was more complex, and therefore people ought to have an easier time deciding what was of value to them in the public sector. After tracing the thread of conversation back a bit, it seems more likely that you intend to show that (government provided?) public goods tend to compete with each other far less, so it is much more important to choose one over the other. Was I even close?

Not really. My point was for you to explain why there's such a greater diversity/variety of goods in the private sector. What do you attribute this to?

Partially, I attribute it to the fact that public goods serve many more people than private goods (usually), so they are, by their nature, less dividable. I suspect competition and innovation are what drives the private sector, while it is hard to change the services offered by the government (though not all of these are "public goods" by the real definition).

I'll admit, I hadn't considered "voting" as asking people how much things are worth to them with the understanding that that will be how much they pay. When we vote we have the opportunity to make other people pay for things we value. I know this is a problem you have with the system, but it means that our method of voting is not exactly a contingent valuation system.

[...]

No, it's not. The reason people like Hitler become powerful is that they are able to change others' preferences. Hitler could easily have risen to head of government. If he could get any small fraction of the people to give their taxes to his military, he could seize power.

Clearly you believe that voting adequately allows people to communicate their true preferences/values. So please substantiate your claim.

I would disagree with that. I believe that the system of voting we have now would likely produce a more utilitarian society than implementing your system. I don't beleive that communicating preferences and values is the one surefire way to ensure an efficient market. Note that I am not claiming proof of this; I am not an economist, and I cannot find any economist who has analyzed anything resembling your system (aside from Buchanan, who makes assumptions he knows are inapplicable).

No, but Congress does have access to experts and (in theory) studies the issue constantly. Now you are pretty much requiring that everyone do some fraction of this if they want to allocate to the best of their ability. I believe this is what Buchanan referred to as "Decision cost." Perhaps their will be a new industry of allocation advisers spawned, if so that would cut down, but not remove this decision cost. It also wouldn't get rid of the incentive to "defect"

Keep climbing the mountain by reading up on rational ignorance...

This greater complexity of political choice is compounded by an inability to gain from any investment in knowledge. In a market setting, a person can gain by storing food during the boom periods; it is a simple task to profit directly from knowledge. In a political setting, however, even if a person has acquired knowledge about the more complex question of "why," there is no way that he can profit from his knowledge because a change in policy will take place only after a majority of people have come to the same conclusion. Consequently, it is rational to be considerably more ignorant about general policy matters than about matters of market choice. - James M. Buchanan, The Theory of Public Choice: II

We all gain as a society when we incentivize people to be at the right place at the right time. Being at the right place at the right time requires doing homework. But there's no point in doing homework if there's absolutely no benefit from being at the right place at the right time.

Consider this recent blog entry over at the Bleeding Heart Libertarian blog...

Here’s the problem. Many moral philosophers (including me) think a purely instrumental agreement is seriously deficient from a moral point of view. For one thing, instrumentally rational agreements might be subject to gross inequalities of wealth, and worse, inequalities of bargaining power. It might be instrumentally rational, for instance, for a drowning man to give up all of his money to the only person in a position to rescue him. But we think such an agreement would be unjust because the rescuer is exploiting the man who needs rescuing. The result is that instrumentalist contracts are not properly normative. They don’t give us the right reasons to comply with social and political rules. - Kevin Vallier, The Essential Relationships Between Duty and Coordination – For Boettke and Leeson

Clearly Vallier needs to read Bastiat...

In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil. - Frédéric Bastiat, What Is Seen and What Is Not Seen

It might seem morally wrong for Dave to exploit (take advantage of) Bob, who's drowning. But the fact of the matter is, nobody else was around. If we limit/restrict Dave's ability to benefit from his effort/research/luck/insight/foresight, then we decentivize people to be where we need them most. It's the equivalent of removing sirens and flashing lights from emergency vehicles. If we don't know how valuable all the different uses of society's limited resources are...then it's impossible for resources to flow to where they create the most value. Without this essential information, it's a given that resources will flow the wrong directions and we will all be worse off.

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

There are many reasons to dislike leonine contracts, but they don't create problems for the "perfect market," I'll agree. Also, do you really believe yourself to be in a position to judge the quality of work by people with Ph.D.s in econ?

So you feel secure placing our future in the hands of 300 congresspeople and their entourage of experts. But I would feel infinitely more secure if everybody could receive the benefit of their accurate estimates of future value.

I might as well, if I agreed that tax choice resulted in accurate estimates of future value.

If the socialists mean that under extraordinary circumstances, for urgent cases, the state should set aside some resources to assist certain unfortunate people, to help them adjust to changing conditions, we will, of course, agree. This is done now; we desire that it be done better. There is, however, a point on this road that must not be passed; it is the point where governmental foresight would step in to replace individual foresight and thus destroy it. - Frédéric Bastiat

given enough eyeballs, all bugs are shallow - Linus's Law

Right now in this thread there are numerous people looking for the bugs in pragmatarianism. Clearly they are finding bugs. Maybe the bugs are imagined rather than real, but they should be allowed to allocate their resources accordingly. This is exactly how the public sector should work as well. Let many people look for the bugs in public programs and allocate their taxes accordingly.

So you think people would allocate congress an emergency discretionary fund of some sort? Maybe that would help. It still suffers from being a very public good among many less public goods.

Earlier you said that how much I sacrifice is the same as how much I valued something. If this is true, then no value is created in trades, as I am sacrificing something to receive something of equal value (and so is "Trusty"). Do you believe value is created in trades?

People only sacrifice something if they suspect that what they receive in return will be more valuable than what they have to give up. Otherwise they'll simply suffer a loss. Given that nobody intentionally wants to suffer a loss, the more that somebody is willing to sacrifice, the more they value what they are trading for.

So people value the thing they sacrifice for more than the thing they sacrifice? That contradicts your definition of value as willingness to sacrifice.

The exsistence of a costless exit is not even obvious. "Cost," can only be defined relative to other things (as you assert when talking about oppurtunity cost). Therefore, the existence and placement of a zero (i.e. "costless") is at best arbitrary.

There's a difference between internal "barriers" and external barriers. Costless exit just means that I'm not preventing you in any way shape or form from leaving this discussion. With our current system, it's very costly for a pacifist not to fund the DoD. They can either avoid making enough money to pay taxes or risk going to jail or try to move to a country where they aren't forced to fund war.

Ahh, you mean "low cost," or "negligible cost" exit. Leaving the thread may save me time, but it may also leave me with a bad taste in my mouth. That isn't costless to my mind, but it is negligible cost. I'm more concerned with Bob above - he lacks a costless exit (drowning and going bankrupt are both high costs).

I tend to think abundance has to do with how well society uses societies limited resources. There is so much aping and riffing on eachothers' ideas in industry that it is basically impossible to define who is responsible for a given business practice. And make no mistake, it is technological innovations and business practices that are responsible for the abundance, as they are what allow us to multiply our labor.

And you haven't answered my question. If, say, the poorest third of the people on SNAP (5% - 15 Million people) starved to death after implementing tax choice, would you say the market valued them more dead than alive?

You agree that abundance depends on how well society's limited resources are being used. Yet, you want me to address an unrealistic scenario with millions starved to death because we implemented tax choice. It reminds me of these anarcho-capitalists who critiqued pragmatarianism using a pragmatarian system with a 100% tax rate as their example.

If you want me to address your unrealistic scenario, then please provide a detailed and credible explanation of how we arrive at your scenario.

Step 1: Implement pragmatarianism
Step 2: ?
Step 3: Millions starve to death

Certainly.

1) Note that people on SNAP*, as a rule, do not make enough money before taxes to feed themselves**. They receive more money from the government than they pay in.

2) So we implement pragmatarianism. The people eligible for SNAP will allocate most or all of their tax burden (if any) to the SNAP program for obvious reasons. After this, the program is less well funded, relative to the tax burden, than it is now (from (1)).

3) The SNAP program provides no obvious good to anyone not on it, so we hope the rest of the tax base sees the benefit of preventing people from getting desperately hungry enough to begin committing crime. If an insufficient amount of the tax base realizes this, or enough of the tax base lives far away from where any such crime would be committed (and thus have no interest in preventing it, except at maybe another level of abstraction), then the program's only hope of staying funded is altruism.

4) If none of the conditions in (3) are met, then the program will stay underfunded, which means some fraction of the people it funds will be unable to buy food. Therefore, they will starve/die of exposure/possibly turn to crime and be jailed.

I'm not sure how likely this scenario is, but I don't think it's that crazy. It certainly is not impossible. If it happened, would you say the market valued those people more dead than alive?

*I just want to note that SNAP is an excellent example of a government provided private good and is not technically a public good.
**This, the way I understand your argument, already means the market values they way they use resources less than the resource cost of food to feed them.
***This is neglecting the effects I discussed about game theory, but crime prevention is a public good and would be subject to such problems in my estimation.

I can't be certain that P doesn't lead to pragmatarianism. In principle, I could if I could show some kind of contradiction, but I would prefer things be better defined before attempting that again. It may not lead to anywhere interesting or useful on it's own. That's just the nature of logic. You still have to rigorously show it leads to pragmatarianism; logic isn't a Bayesian analysis.

You're defending the current system, and you agree that values are subjective (P). Please give me an example rigorously showing that P leads to our current system. Or acknowledge that you hold my arguments to a far higher standard than you hold your own.

You are claiming proof, I am not. I do see benefits to our current system that would not exist in pragmatarianism. I tried to show these to you and you have rejected them. I am not certain that the loss these benefits out way anythings gained from switching to pragmatarianism, but I think it likely. If you wish to call that a defense, go ahead, but it is nowhere near the level of certainty you claim.

If you were just suggesting that some sector of government provided services be transitioned to a tax choice model, I may or may not agree with you, but it would at least be reasonable. You instead are suggesting that pragmatarianism is better than every other conceivable system due to opportunity cost being the only valuable perspective for maximizing total value. Can you not see how this differs in strength from my claim?

[Dustistan]

Therefore, the invisible hand does not depend on prices. It just depends on people having the freedom to weigh the alternative uses of their limited resources. When people have this freedom, then resources will be put to their most valuable uses. In other words, the allocation of resources will be efficient.

Actually, the conditions for the invisible hand to produce an efficient allocation are quite stringent, and quite obviously unrealistic in some sectors of the economy.

Specifically, we must have competitive markets with perfect information about prices and the utility that may be derived from commodities, and a complete lack of cooperation amongst market participants beyond the making of trades - with zero transaction costs and zero externalities. There must be no monopolies, for example, zero barriers to entry or exit, zero economies of scale. Market participants must be solely focused, with complete rationality, on maximising their utility.

As soon as information is imperfect, we can't rely on the invisible hand. So, for example, you don't get efficient outcomes if you let the market dictate who gets what healthcare.

As soon as there is cooperation, we can't rely on the invisible hand. So, for example, you don't get efficient outcomes if there is an old-boys network or political lobbying.

As soon as there are monopolies, or barriers to entry and exit or economies fo scale, we can't rely on the invisible hand. So, for example, you don't get efficient outcomes in telecommunications or infrastructure.

As soon as there are transaction costs, we can't rely on the invisible hand. So, for example, you don't get efficient outcomes in the job market or the housing market.

As soon as there are transaction costs, we can't rely on the invisible hand. So, for example, you don't get efficient outcomes with respect to fossil fuel use and global warming.

As soon as market participants who don't focus solely, with complete rationality, on maximising their utility, we can't rely on the invisible hand. So, for example, you don't get efficient outcomes with respect to retirement, aged care, or unemployment insurance.

In any case, even if you did get something close to an efficient outcome, efficiency in economics just means "you can't make anybody better off without making others worse off." Efficient doesn't mean desireable, it just means pareto-optimal. If one guy has everything, and everyone else is in abject poverty, it's still "efficient", and might well be the outcome of a given perfectly efficient market.

[Yaltabaoth]

Please name me one private corporation that allows shareholder choice where I can take my money.

I'll wait.

Right, you can't dictate to the Red Cross how they spend your donation...just like how in a pragmatarian system you wouldn't be able to dictate to FEMA how they spend your tax dollars. Shopping for yourself means that you choose which organizations you give your money to...it does not mean that you can dictate how they spend your money once you give it to them.

So you'll trust the head of a Government department or agency to omnisciently know how to use tax money, just not Congress?

[Forsher]

You don't need to explain it. All you need to do is figure out the actual economic term, visit the Wikipedia page, check the edit history and you'll see me there.

Sure. So you're either a contributor or a vandal. Ok. I'm not impressed.

Should people pay for the roads they use or not? Do you want to link inputs and outputs or not?

Let's put it this way. There's a tendency for articles with heavy Xero input to have pretty much the exact same discussions we have here. So, there are stubs with talk pages about twice as long as the articles...

What in the Hell does your question ("What should the government do?") have to do with mine ("What is a public good?")?

<pause>

You have no idea what a public good actually is, do you?

He basically said, "Who gives a shit about the proper role of government? If people want it done, that shit gets done."

To which I respond, "Hitler."

He believes, somehow*, that tax choice would have prevented Hitler.

* Like all of Xero's arguments that I can remember, it's a ridiculous one. However, his justification/attempt to substantiate that point is one of the very worst examples I have ever seen of misleading quoting of a source statement.

Of course not. However, that sentence directly contradicts the claim that the following is proven:

opportunity cost ensures the efficient allocation of resources

You're lumping two extremely different types of earmarking...

The standard normative "theory" of earmarking adopts the reference system of the budget-maker, the budgetary authority, who is, by presumption, divorced from the citizenry in the political community. An alternative working hypothesis of political order is the individualistic
one in which the reference system becomes that of the individual citizen. - James M. Buchanan, The Economics of Earmarked Taxes

The standard idea of earmarking is individual congresspeople allocating funds to specific programs. Buchanan discussed earmarking in terms of individual taxpayers allocating funds to specific programs. What do you think the difference is between the two types of earmarking in terms of opportunity cost?

You should look into Buchanan's use of the bolded. This is nothing more than a thought experiment and one that has flaws. For example, Buchanan really needs to develop a proper argument for that presumption. In a sufficiently transparent and representative democracy the right balance is achieved between representation of interests and control of what goes in by the public without tyranny of the majority.

There are a number of fundamental problems to be had with your idea. Some are economic, most are political (in my view). There are a great many more problems to be had with how you try and convince people of tax choice's validity (for example, that insane Hitler argument). To a large extent, the idea is based on a fundamental misunderstanding of reality.

The two things I want to just re-stress here are:

• Car manufacturers are well aware of all the private inputs that go into making a car. If they weren't they'd be unable to function as manufacturers. Currently, they don't need to worry about public, collective and common goods but under your system this becomes a variable they would be totally unable to predict at all.
• Tax choice would not present a costless exit. The only way to part oneself from the consequences of one's government is to find a place to live in some suitably distant government.

[Alien Space Bats]

Therefore, the invisible hand does not depend on prices. It just depends on people having the freedom to weigh the alternative uses of their limited resources. When people have this freedom, then resources will be put to their most valuable uses. In other words, the allocation of resources will be efficient.

<dropped jaw>

Excuse me?

Price signalling is exactly why free markets in private goods work and command economies in private goods don't.

<pause>

Seriously, are you going for the 2013 NSG Economic Ignorance Award, or what?

Efficient doesn't mean desireable, it just means pareto-optimal. If one guy has everything, and everyone else is in abject poverty, it's still "efficient", and might well be the outcome of a given perfectly efficient market.

This, by God.

It continues to amaze me that Xero can imagine that he can apply economic concepts to public finance without understanding economics at all.

[Sociobiology]

Right, you can't dictate to the Red Cross how they spend your donation...just like how in a pragmatarian system you wouldn't be able to dictate to FEMA how they spend your tax dollars. Shopping for yourself means that you choose which organizations you give your money to...it does not mean that you can dictate how they spend your money once you give it to them.

So you'll trust the head of a Government department or agency to omnisciently know how to use tax money, just not Congress?

I trust a specialist who's job is to know how to spend it more than I would Joe Blow who does not even know what NIST or the NSF is yes.
I trust the head of the CDC to know how best to spend the CDC's money then a guy off the street that thinks memory water can cure disease.

[Sociobiology]

Therefore, the invisible hand does not depend on prices. It just depends on people having the freedom to weigh the alternative uses of their limited resources. When people have this freedom, then resources will be put to their most valuable uses. In other words, the allocation of resources will be efficient.

<dropped jaw>

Excuse me?

Price signalling is exactly why free markets in private goods work and command economies in private goods don't.

it is also why it cannot work by itself, because people think higher price equals higher quality even when there is no evidence of this. Also sellers have little incentive to pass on the benefits of higher supply due to customer loyalty. And the more difficult quality and supply is to assess instantaneously the more exploitable it is.

[New Chalcedon]

Therefore, the invisible hand does not depend on prices. It just depends on people having the freedom to weigh the alternative uses of their limited resources. When people have this freedom, then resources will be put to their most valuable uses. In other words, the allocation of resources will be efficient.

<dropped jaw>

Excuse me?

Price signalling is exactly why free markets in private goods work and command economies in private goods don't.

<pause>

Seriously, are you going for the 2013 NSG Economic Ignorance Award, or what?

Efficient doesn't mean desireable, it just means pareto-optimal. If one guy has everything, and everyone else is in abject poverty, it's still "efficient", and might well be the outcome of a given perfectly efficient market.

This, by God.

It continues to amaze me that Xero can imagine that he can apply economic concepts to public finance without understanding economics at all.

He doesn't understand public finance, he doesn't understand economics, and yet he seeks to apply one to the other in such a fashion as to support a pre-arranged position of "help the rich out!".

I wonder which Faux News pundit he is IRL?

[Alien Space Bats]

I wonder which Faux News pundit he is IRL?

Judging by his educational level, Sean Hannity.

[Yaltabaoth]

So you'll trust the head of a Government department or agency to omnisciently know how to use tax money, just not Congress?

I trust a specialist who's job is to know how to spend it more than I would Joe Blow who does not even know what NIST or the NSF is yes.
I trust the head of the CDC to know how best to spend the CDC's money then a guy off the street that thinks memory water can cure disease.

I agree.

I'm asking the OP why they appear to think Congress can't be trusted to allocate funds (due to lack of omniscience), but departments/organisations/agencies one tier down apparently can:

Right, you can't dictate to the Red Cross how they spend your donation...just like how in a pragmatarian system you wouldn't be able to dictate to FEMA how they spend your tax dollars. Shopping for yourself means that you choose which organizations you give your money to...it does not mean that you can dictate how they spend your money once you give it to them.

[United Dependencies]

SE here's a simple test: I want you, in your own words, to answer this question: What is a public good?

What should the government do? Whatever enough people are willing to pay it to do.

Can you step outside yourself? Can you set aside your own personal biases regarding the proper scope of government? Give it a try...and we'll have my good friend Herbert Spencer take us on a trip...

Alright let's pack it in.

Seriously: that was a good go, but it's over now.

[Alien Space Bats]

I trust a specialist who's job is to know how to spend it more than I would Joe Blow who does not even know what NIST or the NSF is yes.
I trust the head of the CDC to know how best to spend the CDC's money then a guy off the street that thinks memory water can cure disease.

Ah, but you're missing the gist of Xero's theory.

He's not saying that the head of the CDC is in a better position to know what society needs than the guy off the street who thinks that memory water can cure disease; he's saying that the guy who persuades the guy off the street that memory water can cure disease is the best guy to manage society's resources.

IOW, it's not the medical specialist who ought to be making decisions, or the guy in the street who buys snake oil; it's the snake oil salesman, because he's the one who can capture the imagination of the public, and it's more important to do what the public thinks should be done than what is actually best for the public.

And yet, paradoxically, this system is supposed to prevent the rise of demagogues like Hitler. Go figure.

It's a complete rejection of the Framers' notion that we as citizens can be inspired to select from among our ranks representatives to make decisions for us who are both generally aware of our desires and competent and trustworthy enough to act in accordance with those desires. Xero clearly ascribes to the theory that government doesn't work, and so is misapplying economic theory on the hope that somehow he can make it work by turning it into a market.

[The Joseon Dynasty]

IOW, it's not the medical specialist who ought to be making decisions, or the guy in the street who buys snake oil; it's the snake oil salesman, because he's the one who can capture the imagination of the public, and it's more important to do what the public thinks should be done than what is actually best for the public.

He doesn't seem to understand that those daft assumptions we make in economics that people actually have well-defined, well-formed internal utility functions - generally unrestrained by a lack of knowledge, foresight or consequence - don't really exist in any meaningful way. And even if you do assume that his assumptions exist and plug his system into basic consumer choice models, it still doesn't bring about the optimal allocation.

[Alien Space Bats]

He doesn't seem to understand that those daft assumptions we make in economics that people actually have well-defined, well-formed internal utility functions - generally unrestrained by a lack of knowledge, foresight or consequence - don't really exist in any meaningful way. And even if you do assume that his assumptions exist and plug his system into basic consumer choice models, it still doesn't bring about the optimal allocation.

Well, maybe more to the point: He doesn't seem to understand that they represent a crude first-order approximation of human behavior that we employ as scientists to form hypotheses for further study, just as Einstein's Special Theory of Relativity sought to explain motion in the absence of gravity, when in fact there's really no such thing as an environment in which gravity does not exist.

This is why I went to such lengths to question whether the assumptions inherent in our notions of perfect competition apply here: Because to the extent they do not, we are in less and less of a position to apply market theory. Real economists recognize that there are markets come relatively close to the ideal and markets that do not; we (generally) aren't ideologues who simply take it as an article of faith that markets always work and work perfectly.

In contrast, those of us who support the traditional appropriations model are not crazed adherents to some straw-man notion that Congressmen are wise and all-knowing; we simply know that the appropriations process works well enough to get by while keeping our eyes open for ways to improve it.

For instance, there is the age-old debate between general taxes and use fees (especially at the State and local level). A great many of the taxes that we assess are actually statutorily dedicated to certain purposes, and in many cases market forces actually apply to these revenues. Road and highway use fees (such as Federal, State, and local gasoline taxes, or taxes assessed against commercial carriers by weight) represent one such revenue stream, in so far as they are used to fund road and highway repair; aviation taxes and fees operate in a similar way w/re to the maintenance of our air transport infrastructure, and even Social Security and Medicare taxes can be viewed as a "use tax" (for the support of our Social Security and Medicare system, which is not so much a pension system [as everyone thinks] but a system of social insurance against unexpected dependency). Such taxes and use fees are omnipresent within our system, and to the extent that we use them, we reap benefits that can be said to flow in accordance with market forces.

There are many methods of collecting taxes and many methods of allocating them. All in all, I see no real virtue in Xero's, as it does nothing more (and nothing less) than place unwarranted political control of society in the hands of those who — by virtue of their great wealth and everything it can buy — already have more power than is probably good for society, anyway.

Workin' in the fields
till you get your back burned,
Workin' 'neath the wheel
till you get your facts learned,
Baby, I got my facts
learned real good right now,
You better get it straight darling
Poor man wanna be rich,
rich man wanna be king,
And a king ain't satisfied,
till he rules everything...

— Bruce Springsteen, "Badlands", Columbia Records (1977)

[Xerographica]

He also states:

Earmarking is defined as the practice of designating or dedicating specific public revenues to the financing of specific public services

This would strictly include tax choice, though his clarification seems to indicate it doesn't. Given that he analyzes a simplified tax choice system, that further confuses things. It's at least ambiguous, so I suppose I'll drop the point.

It really shouldn't be that ambiguous...

We may discuss this situation under two distinct models for budgetary decision-making. In the first, which we can call the planning model, we assume that decisions on the size of the budget, and hence on total tax revenues, are made by an external chooser who is able omnisciently to read individual preference functions. In the second, or public choice model, we assume that budgetary outcomes emerge from the interactions of citizens themselves, operating under some designated decision rules. - James M. Buchanan, Taxation in Fiscal Exchange

In terms of opportunity cost, what's the difference between the two models?

You do want me to prove a negative.... My claim is not that opportunity costs* do not ensure efficient allocation in all cases (though I do believe this). My claim is that it is not proven that opportunity costs ensure efficient allocation in all cases. The latter is not something on which anyone is going to write a paper, anymore than I could present you with an astronomy paper showing that it is not proven that there is a teacup in the Oort cloud (indeed, I could not present you with an astronomy paper proving there is not a teacup in the Oort cloud either). It is hard or impossible to prove negatives without exhausting (often infinite) possibilities. The only way to do so is by way of counterexample, which are not always easy to construct. The burden of proof is on the positive claim for this reason.

So, since I am skeptical of your claim, give me proof.

I've extensively studied the opportunity cost concept. As far as I know, not a single economist has limited the concept to private goods. If you claim that it is limited to private goods, then the burden is on you to substantiate your claim. Feel free to look over a very small sample of my evidence...opportunity cost passages.

*Note, this terminology bothers me - you claim is that systems which take advantage of maximizing peoples' ability to compare opportunity cost maximizes efficiency, not the opportunity costs themselves, correct?

What maximizes efficiency (value) is that individuals can select the most valuable option. If individuals can't determine the option they value most (individual valuation) then resources cannot be put to their most valuable uses. When I say "opportunity costs ensures the efficient allocation of resources"...I'm actually referring to the valuation rather than the opportunity cost. But I often just say "opportunity costs..." because individual valuation is inherent in the concept.

Edit: Ahh well, I did find something:Tax-earmarking and separate school financingJournal of Public Economics. Volume 54, Issue 1, May 1994, Pages 51–63

Edit2: quote redacted in deference to permissions. It was, indeed, provided by my library. It claims that in some large fraction of cases, tax choice results in poor overall public utility.

That's from the abstract. I hope you can access that; I am on a university campus, and it is not always obvious which papers are public. The beginning of section 3 is the where he discusses his results on the equilibria.

Did you not read the paper before you mentioned it? As far as I can tell, his criticism boils down to the prisoner's dilemma. Either the prisoner's dilemma is relevant and I'm just not seeing it...or the author just hasn't thought things through. But I did add a few passages from his paper to my database. Why did you remove the passage that you initially shared? I initially added to this reply all the passages that I had pulled from his paper...but then I removed them when I noticed that you had removed yours.

His conclusion would have been credible if, and only if, he had provided a reasonable defense/explanation of our current system's allocative efficiency. As in, "the current allocation is more efficient because congresspeople are omniscient". Or, "the current allocation is more efficient because the political process as it stands allows citizens to adequately communicate their preferences". But like yourself, he did not substantiate his claim concerning the current system's allocative efficiency.

Tax choice allocation can only be considered less efficient when compared to a system that's more efficient. But our current system is solely based on the assumption of efficiency. Congresspeople are assumed to be omniscient. It's assumed that they can reach inside our heads and pull out our preference rankings. Not all economists accept this absurd assumption which is why there's been considerable work done in the area of preference revelation.

I'm not certain I see a way, do you? I could shoehorn it in if I made wild enough assumptions. There's a reason I put "(some)" in front of multiplayer.

I don't see a way either, which is why I maintain that game theory is largely irrelevant to allowing millions of citizens to shop for themselves in both halves of the economy.

Partially, I attribute it to the fact that public goods serve many more people than private goods (usually), so they are, by their nature, less dividable. I suspect competition and innovation are what drives the private sector, while it is hard to change the services offered by the government (though not all of these are "public goods" by the real definition).

There's far less diversity of goods in the public sector because public goods are less dividable? Then how do you explain a lack of diversity of private goods in planned/command economies?

The lack of diversity of goods in the public sector has absolutely nothing to do with public goods being less dividable. Instead, it has everything to do with a lack of easy exit. For example, if taxpayers could choose where their taxes go...then it's reasonable to assume that a good portion of liberals would withdraw their taxes from the DoD if they perceive that a war is being fought largely for the financial benefit of Halliburton et all. Yet, not sure if you noticed this, but oftentimes liberals are vocal proponents of military intervention when it comes to preventing/stopping genocide / ethnic cleansing (ie Darfur). In other words, they'd be willing to pay for some types of intervention but not other types. As a result, if the unmet demand is substantial enough, a humanitarian branch of the DoD could be split off into a new government organization. In other words, defense is easily dividable. It can be divided to reflect people's diverse perspectives on when military intervention is worth the opportunity cost. Of course I'm not saying that the DoD should be divided, I'm just saying that costless exit is the reason why there's far more goods in the private sector.

In 1978 when Deng Xiaoping started helping China transition from a planned/command economy to a mixed economy...they only had the tiniest fraction of private goods available that they do today. If we implemented pragmatarianism tomorrow, then in 30 years we'd have a far greater diversity/variety of public goods available than we do today. This means that the demand for public goods will be far more adequately met than it is today. Just like the demand for private goods in China is more adequately met today than it was 30 years ago.

I would disagree with that. I believe that the system of voting we have now would likely produce a more utilitarian society than implementing your system.

So substantiate any claim you have regarding the allocative efficiency of our current system. Why wouldn't you want to determine whether or not your beliefs are based on anything of substance?

I might as well, if I agreed that tax choice resulted in accurate estimates of future value.

Markets incentivize people to accurately estimate future value. Pragmatarianism would create a market in the public sector. As a result, taxpayers would be incentivized to accurately estimate future value. More incentive/motivation/effort/interest...would result in far more accurate estimates of future value. If you prevent taxpayers from shopping in the public sector, then the logical result is rational ignorance. Take away the carrot...and the mule won't have a good reason to budge.

So you think people would allocate congress an emergency discretionary fund of some sort? Maybe that would help. It still suffers from being a very public good among many less public goods.

People wouldn't have to shop for themselves in the public sector if they didn't want to. Congress would still be there and taxpayers would be welcome to give them as much (or as little) money as they wanted. Just like with every organization, the amount of money that people gave to congress would reflect what congress was doing with the money. If taxpayers perceived that congress was wasting their money (inaccurate estimates of future value), then this would decrease the amount of money that congress received.

Think it about it like this. Right now Elizabeth Warren has far more of a say how taxes are allocated than I do. Is it fair? Sure, she received more votes than I did. If we implemented pragmatarianism, would it be fair for Michael Moore to have far more of a say how taxes are allocated than I would? Sure, he receives far more dollar votes than I do. Clearly more people value his estimate of future value. But do they value his estimate of future value more than they value Elizabeth Warren's estimate of future value? It would behoove us to find out.

Congress, in terms of personal shopping, is easily dividable. Taxpayers should have the freedom to give their taxes to whichever congressperson most closely matches their preferences.

So people value the thing they sacrifice for more than the thing they sacrifice? That contradicts your definition of value as willingness to sacrifice.

If you value x more than you value y, then you don't sacrifice x for y. If you value reading your book more than replying to this thread, then you won't sacrifice your opportunity to read your book.

Ahh, you mean "low cost," or "negligible cost" exit. Leaving the thread may save me time, but it may also leave me with a bad taste in my mouth. That isn't costless to my mind, but it is negligible cost. I'm more concerned with Bob above - he lacks a costless exit (drowning and going bankrupt are both high costs).

But if you do decide that it's worth it to leave this thread, then nobody will prevent you from doing so. That's costless/easy exit. If liberals decide that it isn't worth it to sacrifice our nation's future for Halliburton's financial gain, then nobody should prevent them from allocating their taxes to other government organizations.

1) Note that people on SNAP*, as a rule, do not make enough money before taxes to feed themselves**. They receive more money from the government than they pay in.

2) So we implement pragmatarianism. The people eligible for SNAP will allocate most or all of their tax burden (if any) to the SNAP program for obvious reasons. After this, the program is less well funded, relative to the tax burden, than it is now (from (1)).

3) The SNAP program provides no obvious good to anyone not on it, so we hope the rest of the tax base sees the benefit of preventing people from getting desperately hungry enough to begin committing crime. If an insufficient amount of the tax base realizes this, or enough of the tax base lives far away from where any such crime would be committed (and thus have no interest in preventing it, except at maybe another level of abstraction), then the program's only hope of staying funded is altruism.

4) If none of the conditions in (3) are met, then the program will stay underfunded, which means some fraction of the people it funds will be unable to buy food. Therefore, they will starve/die of exposure/possibly turn to crime and be jailed.

I'm not sure how likely this scenario is, but I don't think it's that crazy. It certainly is not impossible. If it happened, would you say the market valued those people more dead than alive?

It's a crazy scenario. There's a demand for eliminating poverty/hunger. If we create a market in the public sector, then this demand will be far better met than it currently is. This is because markets incentivize entrepreneurs to come up with better solutions. So implementing pragmatarianism would reduce poverty at a far greater rate than our current system does.

In the real world, demand revelation meets with the same problem that has long confounded students of democracy. As Anthony Downs and others have shown, rational voters have little or no incentive to spend their time or effort gathering or providing information about their preferences. And even if the information were available, what is the incentive for a bureaucratic (monopolistic) supplier of a public good to give voters the greatest amount of value at the minimum of cost? - Edward H. Clarke

Even if the real demand for the elimination of poverty is significantly less than the pseudo-demand...the taxpayers who are willing to pay for the elimination of poverty are going to be motivated to do their homework in order to give their money to whichever organization is feeding/clothing/sheltering the most people at the minimum cost. This will incentivize producers to come up with more innovative/resourceful/economical/better ways of eliminating poverty.

You are claiming proof, I am not. I do see benefits to our current system that would not exist in pragmatarianism. I tried to show these to you and you have rejected them. I am not certain that the loss these benefits out way anythings gained from switching to pragmatarianism, but I think it likely. If you wish to call that a defense, go ahead, but it is nowhere near the level of certainty you claim.

If you were just suggesting that some sector of government provided services be transitioned to a tax choice model, I may or may not agree with you, but it would at least be reasonable. You instead are suggesting that pragmatarianism is better than every other conceivable system due to opportunity cost being the only valuable perspective for maximizing total value. Can you not see how this differs in strength from my claim?

You're claiming that I'm on the wrong path and you're on the right path. So substantiate your claim. Find papers that argue that the opportunity cost concept is limited in scope. Find papers that argue that our current political mechanisms adequately allow citizens to communicate their preferences. Or find papers that argue that our preferences are not needed to determine the optimal provision of public goods. Why wouldn't you want to do these things anyways? If half of your money is going to be spent in the public sector...then isn't your life too short not to discern the efficacy of the current system?

If you're going to throw half of your possessions into a volcano, then wouldn't it be reasonable to make the effort to try and understand the logic of doing so? If you're going to sacrifice your children to the gods of war, then wouldn't it behoove you to take a closer look at the rationale?

You're at a university for goodness sake. How hard is it to walk to the economics department and ask if anybody there is familiar with public finance?

Personally, I've sacrificed the alternative uses of my limited time in order to track down and understand the best of the best arguments that defend our current system. As a result, I'm pretty certain that the people in the not-too-distant future will laugh at the absurdity of allowing 300 people to allocate half our nation's resources. Just like we laugh at the absurdity of allowing a king to control the power of the purse.

Right now too many economists love their models, all politicians love their power and too many voters think they are getting a free lunch. We need more people to take a critical look at the assumptions that our current system is based on. After we drop the ridiculous assumptions, pragmatarianism will become imperative.

[God Kefka]

Our current system is based on the assumption that congresspeople are omniscient. (True/False)

If congresspeople can know, better than society itself, exactly how much benefit society derives from public education...then it has to be true that congresspeople can know, better than society itself, exactly how much benefit society derives from milk. So if we're better off allowing congresspeople to determine how much public education should be supplied, then we're also better off allowing congresspeople to determine how much milk should be supplied.

The fact of the matter is...as a group, millions and millions of taxpayers have infinitely more insight/foresight than 300 congresspeople do. That's why we'd be infinitely better off by allowing taxpayers to decide for themselves exactly how much positive feedback (tax dollars) they give to government organizations.

Congresspeople are not ''omniscient'' in the sense that they have perfect knowledge about everything.

However, they (at least in theory) have access to more information than we do because of their fact-finding committees, proximity to bureaucracies with lots of data, and connections to large numbers of advisers and experts at relatively high levels. Also, in THEORY they spend more time thinking through the issues because they are elected to do so... it is their job so to speak and they can develop a specialized advantage in decision-making.

This is the premise of representative democracy. That we choose leaders who are better positioned to make decisions and represent us...

HOWEVER...

In reality, while Congresspeople have these theoretical benefits (more time to think about problems... access to more facts about the problems)... they tend to be, at least in my view, on the whole a bunch of bickering, mud-slinging, manipulative, self-righteous, lawyering, competitive, self-interested, pretentious, throat-cutting careerist hacks who claim to represent us and our interests but in fact only care about their personal glory, prestige, networking, profits, and electoral records.

Congresspeople represent the highest-level of the worst kind of humans...

You can think of them as a bunch of Tyrells and Lannisters... and the President as a sort of Emperor Palpatine.

[Sociobiology]

I trust a specialist who's job is to know how to spend it more than I would Joe Blow who does not even know what NIST or the NSF is yes.
I trust the head of the CDC to know how best to spend the CDC's money then a guy off the street that thinks memory water can cure disease.

Ah, but you're missing the gist of Xero's theory.

He's not saying that the head of the CDC is in a better position to know what society needs than the guy off the street who thinks that memory water can cure disease; he's saying that the guy who persuades the guy off the street that memory water can cure disease is the best guy to manage society's resources.

IOW, it's not the medical specialist who ought to be making decisions, or the guy in the street who buys snake oil; it's the snake oil salesman, because he's the one who can capture the imagination of the public, and it's more important to do what the public thinks should be done than what is actually best for the public.

you mean like modern politicians do, which is causing lots of the problems voting according to polls instead of leading? It seams to me you are bitching that when given the choice people pick shitty leaders and the solution is to give those people even more power to make more far reaching shitty decisions.
The people are supposed to tell their leaders what they want, and then the leaders are supposed to figure out how best to achieve those things, and if they don't you are not supposed to reelect them.
for your analogy, doctors are supposed to manage your health but you are supposed to be deciding who is the best doctor.

And yet, paradoxically, this system is supposed to prevent the rise of demagogues like Hitler. Go figure.

no it is just supposed to make it harder, and make it harder for them to consolidate power which it does in spades.

It's a complete rejection of the Framers' notion that we as citizens can be inspired to select from among our ranks representatives to make decisions for us who are both generally aware of our desires and competent and trustworthy enough to act in accordance with those desires.

you do realize the framers put things in place to give the citizens LESS say in who their leaders were. See the electoral college. The framers did not trust the average citizen to know what was good for them.

[Forsher]

It really shouldn't be that ambiguous...

I would have limited your selections to proving its unambiguity to the text that's actually under discussion. If you need another text, it's ambiguous.

I've extensively studied the opportunity cost concept. As far as I know, not a single economist has limited the concept to private goods. If you claim that it is limited to private goods, then the burden is on you to substantiate your claim. Feel free to look over a very small sample of my evidence...opportunity cost passages.

And I maintain you've reached the wrong conclusion.

Public Goods have opportunity costs in some respects. It's all about finding where the decision is and then looking at the choices. Planners can choose roads over schools or the other way around. It could be tax deductions with an opportunity cost of fewer services. The possibilities are out there. Opportunity Cost is not at all limited to any kind of good. It's the cost of the opportunity of doing any particular thing and is the next best alternative foregone.

What maximizes efficiency (value) is that individuals can select the most valuable option. If individuals can't determine the option they value most (individual valuation) then resources cannot be put to their most valuable uses. When I say "opportunity costs ensures the efficient allocation of resources"...I'm actually referring to the valuation rather than the opportunity cost. But I often just say "opportunity costs..." because individual valuation is inherent in the concept.

Except when it doesn't. This is where MSB and MSC differ from MB and MC.

It's also more about utility and prices anyway.His conclusion would have been credible if, and only if, he had provided a reasonable defense/explanation of our current system's allocative efficiency. As in, "the current allocation is more efficient because congresspeople are omniscient". Or, "the current allocation is more efficient because the political process as it stands allows citizens to adequately communicate their preferences". But like yourself, he did not substantiate his claim concerning the current system's allocative efficiency.

Tax choice allocation can only be considered less efficient when compared to a system that's more efficient. But our current system is solely based on the assumption of efficiency. Congresspeople are assumed to be omniscient. It's assumed that they can reach inside our heads and pull out our preference rankings. Not all economists accept this absurd assumption which is why there's been considerable work done in the area of preference revelation.

No-one makes that absurd assumption. Well, except you, which is what makes it a strawman. Look at the ideas that actually underpin the assumptions. Also, be aware that there are considerably more people involved in the decisions to allocate funding than however many people in Congress.

The lack of diversity of goods in the public sector has absolutely nothing to do with public goods being less dividable. Instead, it has everything to do with a lack of easy exit. For example, if taxpayers could choose where their taxes go...then it's reasonable to assume that a good portion of liberals would withdraw their taxes from the DoD if they perceive that a war is being fought largely for the financial benefit of Halliburton et all. Yet, not sure if you noticed this, but oftentimes liberals are vocal proponents of military intervention when it comes to preventing/stopping genocide / ethnic cleansing (ie Darfur). In other words, they'd be willing to pay for some types of intervention but not other types. As a result, if the unmet demand is substantial enough, a humanitarian branch of the DoD could be split off into a new government organization. In other words, defense is easily dividable. It can be divided to reflect people's diverse perspectives on when military intervention is worth the opportunity cost. Of course I'm not saying that the DoD should be divided, I'm just saying that costless exit is the reason why there's far more goods in the private sector.

No, it's because there are only so many different sorts of things that can actually have free riders and stuff. That is to say, there is less variety of public goods compared to private goods because the latter can be excludable and depletable/rivalrous... by definition they're different things and the differences in nature is what results in the supposed lack of diversity.

In 1978 when Deng Xiaoping started helping China transition from a planned/command economy to a mixed economy...they only had the tiniest fraction of private goods available that they do today. If we implemented pragmatarianism tomorrow, then in 30 years we'd have a far greater diversity/variety of public goods available than we do today. This means that the demand for public goods will be far more adequately met than it is today. Just like the demand for private goods in China is more adequately met today than it was 30 years ago.

False premise results in a flase conclusion. You'd be right, if you weren't enormously far off the mark to start with. Take an economics test. They tend to start with a graph and move on from there. Cock up the graph and you're done for. Same thing applies here.

But if you do decide that it's worth it to leave this thread, then nobody will prevent you from doing so. That's costless/easy exit. If liberals decide that it isn't worth it to sacrifice our nation's future for Halliburton's financial gain, then nobody should prevent them from allocating their taxes to other government organizations.

The thing is trhey haven't actually extracted themselves from this. The only way they can solve the problem is by fundamentally changing the system. They could, of course, exit and leave the problem intact (which is probably not desirable) but this would involve leaving the country.

It's a crazy scenario. There's a demand for eliminating poverty/hunger. If we create a market in the public sector, then this demand will be far better met than it currently is. This is because markets incentivize entrepreneurs to come up with better solutions. So implementing pragmatarianism would reduce poverty at a far greater rate than our current system does.

Try and support that. Your starting point will be addressing a major criticism of this idea, namely that all the people who will have any influence under a tax choice system have completely different concerns, interests and perspectives to those who have next to no (or no) voice at all. Your understanding of history in this thread appears to be at least as flawed as your understanding of economics, so I suggest that you take a history course somewhere. At the very least you'd learn about the importance of perspective.

Personally, I've sacrificed the alternative uses of my limited time in order to track down and understand the best of the best arguments that defend our current system. As a result, I'm pretty certain that the people in the not-too-distant future will laugh at the absurdity of allowing 300 people to allocate half our nation's resources. Just like we laugh at the absurdity of allowing a king to control the power of the purse.

I'm sceptical. I really am. If you had done this, the thread that we're posting in would not exist for you'd understand the absurdity of the question posed.

You'd also be aware (as is being pointed out for the umpteenth time) that there are great many more people (many of whom are not elected, public servants the civil service that sort of thing) who advise and way in on things.

Right now too many economists love their models, all politicians love their power and too many voters think they are getting a free lunch. We need more people to take a critical look at the assumptions that our current system is based on. After we drop the ridiculous assumptions, pragmatarianism will become imperative.

What you mean is, "When we adopt the ridiculous assumptions". Step outside yourself and put aside your personal biases and actually read the criticisms. You're very very far from defeating even a single point I have raised, let alone anything else in this thread. In fact, I'd thought you'd finally jumped ship having realised that you'd failed to assemble anything like an actual argument for tax choice, rather than a dartboard.

[Forsher]

Ah, but you're missing the gist of Xero's theory.

He's not saying that the head of the CDC is in a better position to know what society needs than the guy off the street who thinks that memory water can cure disease; he's saying that the guy who persuades the guy off the street that memory water can cure disease is the best guy to manage society's resources.

IOW, it's not the medical specialist who ought to be making decisions, or the guy in the street who buys snake oil; it's the snake oil salesman, because he's the one who can capture the imagination of the public, and it's more important to do what the public thinks should be done than what is actually best for the public.

you mean like modern politicians do, which is causing lots of the problems voting according to polls instead of leading? It seams to me you are bitching that when given the choice people pick shitty leaders and the solution is to give those people even more power to make more far reaching shitty decisions.
The people are supposed to tell their leaders what they want, and then the leaders are supposed to figure out how best to achieve those things, and if they don't you are not supposed to reelect them.
for your analogy, doctors are supposed to manage your health but you are supposed to be deciding who is the best doctor.

And yet, paradoxically, this system is supposed to prevent the rise of demagogues like Hitler. Go figure.

no it is just supposed to make it harder, and make it harder for them to consolidate power which it does in spades.

It's a complete rejection of the Framers' notion that we as citizens can be inspired to select from among our ranks representatives to make decisions for us who are both generally aware of our desires and competent and trustworthy enough to act in accordance with those desires.

you do realize the framers put things in place to give the citizens LESS say in who their leaders were. See the electoral college. The framers did not trust the average citizen to know what was good for them.

The US does have a flawed system; much better ones already exist. (Ones that are less inclined to worship/venerate the past because national pride.) However, the US has a system that is vastly preferable to the one proposed by Xero. For one thing, there's still a US.

To an extent, Xero's proposition is electoral reform. It's an incredibly bad one with some interesting apparent contradictions (Xero likes the govt. but acknowledges that his system would, in practical application, be little different to no govt. at all), but that's what it basically is.

[Alien Space Bats]

In 1978 when Deng Xiaoping started helping China transition from a planned/command economy to a mixed economy...they only had the tiniest fraction of private goods available that they do today.

Source please.

And understand what it is you're saying, so you can understand what it is you have to prove: Private goods are not goods that are produced by private enterprise. Private goods are goods that are excludable or rivalrous.

Food is rivalrous. If I eat a bowl of rice, then you can't eat that same bowl of rice.

Clothing is rivalrous. If I put on a coat, you cannot simultaneously wear that same coat.

Electricity is rivalrous. If I use a kilowatt-hour of electricity, you cannot use that same kilowatt-hour of electricity.

So when you say that China had only the tiniest fraction of private goods available that they have today, you're saying that they had almost not food, clothing, fuel, electricity, bicycles, brooms, housing, etc. That is literally what you are claiming here.

So prove it. Using the CORRECT definition of private goods, not your own bullshit definition, which is absolutely worthless.

[Xerographica]

I trust a specialist who's job is to know how to spend it more than I would Joe Blow who does not even know what NIST or the NSF is yes.
I trust the head of the CDC to know how best to spend the CDC's money then a guy off the street that thinks memory water can cure disease.

I agree.

I'm asking the OP why they appear to think Congress can't be trusted to allocate funds (due to lack of omniscience), but departments/organisations/agencies one tier down apparently can:

Right, you can't dictate to the Red Cross how they spend your donation...just like how in a pragmatarian system you wouldn't be able to dictate to FEMA how they spend your tax dollars. Shopping for yourself means that you choose which organizations you give your money to...it does not mean that you can dictate how they spend your money once you give it to them.

Subway isn't omniscient, which is why consumers have to have the freedom to communicate their preferences to Subway. Consumers communicate their preferences by deciding whether or not it's worth it to spend $5 for a Subway sandwich.

FEMA, just like congress, just like Subway, is not omniscient. This is why taxpayers have to have the freedom to communicate their preferences to FEMA. Taxpayers must have the freedom to decide how many of their tax dollars they are willing to give to FEMA. The amount of money that FEMA receives will reflect 1. the demand for disaster relief and 2. how adequately FEMA is meeting the demand. Just because a demand exists in no way shape or form automatically means that FEMA is doing a good job supplying disaster relief.

[Xerographica]

So when you say that China had only the tiniest fraction of private goods available that they have today, you're saying that they had almost not food, clothing, fuel, electricity, bicycles, brooms, housing, etc. That is literally what you are claiming here.

So prove it. Using the CORRECT definition of private goods, not your own bullshit definition, which is absolutely worthless.

Even though it's true, In my post I didn't say a single thing about the quantity of private products available in China when Deng Xiaoping took over in 1978. My argument was that today there's an infinitely greater/wider diversity/variety of private products available in China than there was in 1978.

In terms of variety of available products...the difference between China today and China 1978 is far greater than the difference between America today and America 1978.

China 2013 - China 1978 > America 2013 - America 1978.

We had a decent variety of products available in 1978...and now we have an even greater variety of products available. China had barely any variety in their products in 1978...and now they have an infinitely wider variety of products available. They still don't have as much variety as we do though.

When I lived in China several years ago there were actually quite a few fat people. This is in stark contrast to the 30 million people who died of starvation because of Mao Zedong's collectivist efforts. So yeah, not only is there a wider variety of food now available in China...but there's also a greater quantity of food available. That being said, the variety/quantity of gyms there is nothing compared to over here. So they still haven't caught up to us in terms of variety/quantity of private products, but they are pretty darn close. They are infinitely closer than they were in 1978.

The point is, if we created a market in the public sector, then it's a given that in 30 years from now, not only would the quantity of public goods increase, but so would the variety. This is because markets incentivize producers to identify and satisfy any unmet demands.

Right now there's far more room for improvement in the public sector than there is in the private sector. If China is smart then they'll beat us at our own game by creating a market in their public sector. Given that the public sector is half the economy, not only would China catch up to us, they'd leave us in their dust.

[Galloism]

I'm still waiting on any reason that the Fed should not be seen as a single common organization, given the principles of ownership and control. This is especially true as you previously opposed breaking up the control and ownership of these agencies.

I fail see how the Accounts Receivable/Billing (IRS) division of Wal-Mart (the Fed) should be seen as a completely separate organization as the Corporate Security (Homeland Security) division of Wal-Mart (the Fed), and customers (taxpayers) of Wal-Mart Worldwide (the Fed) should be able to scattergun their gross receipt at Wal-Mart (the Fed) to the division (agency) they choose and forcibly create funding gaps that the Board of Directors (Congress) at Wal-Mart (the Fed) could do nothing about.

You have ignored this Xero, as its inconvenient to your argument.

If China is smart then they'll beat us at our own game by creating a market in their public sector.

No matter what propaganda you may have heard, the Chinese are not so stupid that they would allow essential services to collapse by allowing a "tax choice" concept.

Given that the public sector is half the economy, not only would China catch up to us, they'd leave us in their dust.

Did you already forget my graph showing it hovers around 40% and is expected to shrink over the next several years?

Of course you did. When you say "half" it sounds so much more grandiose than "2/5 sinking to slightly over 1/3".


Also, ignoring points inconvenient to your argument doesn't make them go away. It just makes it look like you do not understand what the hell you're talking about.


So, does anyone else besides Xero, since he hasn't taken up the torch, anyone at all, see the loophole inherent big enough that Congress could sail the entire pacific fleet through?

Oops. Just thought of a second way to loophole it.

[Alien Space Bats]

Xero, you are still desperately trying to avoid admitting that you don't understand the difference between public goods and private goods, because you don't accept or understand the standard economic definitions of these things.

You can't use concepts from economics in total ignorance of the field and expect us to accept your arguments. There are too many of us here who do understand economics (having been schooled in it) for that kind of bull shit to fly on NSG.

[Alien Space Bats]

So, does anyone else besides Xero, since he hasn't taken up the torch, anyone at all, see the loophole inherent big enough that Congress could sail the entire pacific fleet through?

Oops. Just thought of a second way to loophole it.

You mean other than simply ordering Federal agencies to transfer funds and responsibilities back and forth among themselves?