The Pope Endorses Tax Choice

[Mike the Progressive]

The Holy Father is wrong on this one. While people may be smart enough to give mandates to their governments to create programs for universal healthcare, pork projects, etc., they are too stupid to see how their tax money should be spent.

[Infactum]

In this case the useful information would be "how much the roads need" and "what percent of everyone else's taxes are going to roads." The second one cannot be decided until all taxes are collected and therefore is a piece of information that only a central dispersal agency could have.

We don't exist for the roads...the roads exist for us. The "optimal" funding for roads can only be determined by exactly how much each and every one of us values roads. Read up on preference revelation.

But how much I am willing to pay for roads is not necessarily how much I "value" them, nor is it independent of how much everyone else is willing to pay. Lets look at an example:

Say we can build a 4 lane highway for $10 million or a main off road $5 million. Lets further say that a functioning highway will produce an average economic increase of $16 million for the city and the main off road will provide $8mil. Lets further say that this wealth will be distributed evenly over the residents of the city (for simplicity I am assuming a relatively small amount of income inequality). Finally, allow for a set of "special interest" tax choices which basically just give the money back to the spenders (Say on local parks or specific subsidies). Then we have person A and person B in the city, each of whom owes 10 million dollars in taxes (again, simplified). They then have the option to fully fund, half fund, or not fund the highway (with the balance going to their special interest case). Fully fund is clearly wrong, if they do that, then the other person will fund their own special interest and the funder will be $2 mil poorer. Thus they are in a game like this:

• Both half funding results in $13 mil for each
• 1 half funding results in the funder making $9 mil with the non funder making $14 mil
• Neither funding results in both making $10 mil.

And we are in a prisoner's dilemma. No matter what person A does, it is better for person B to not fund. Then B comes out with more money no matter what. A is in the same situation. If these actors are rational, neither will fund the road, and the total wealth of the two will be $20 Million. If a central entity were dispersing the funds, it could choose to cooperate with itself and fund the highway and special interests equally. This results in a total wealth of $26 mil for the system (and both A and B would be richer than if they chose independently). These are not crazy numbers. Roads only need -up to- a certain amount and don't benefit from going over that. People, however, need roads to have a large economic output - they make things much more efficient for everyone.

But wait, you say, they could see who's paying what if they did it throughout the year. This doesn't work, as it would be rational to wait and see if the other would fund more of the road before you commit funds, and you'd just wait until basically the last second. It seems that our actors could cooperate and agree, but only sort of (there are no real penalties for betrayal), and that only really has a chance of working with a small number of actors (getting 100's of thousands of people in on it would be hard to say the least).

I personally do not believe that humans behave rationally in an strict sense, which is what your whole premise is built on, but even if they did, I don't think tax choice would maximize value.

All the money that unemployment received would reflect some information. It would reveal exactly how much society values that particular safety net. Right now there IS an exact amount that society values unemployment. How many people are worried about losing their jobs? How many people have been unemployed...and now are employed and are extremely grateful for the benefits they received while unemployed? Why wouldn't we want to find out what the actual demand is for unemployment benefits?

Logistically speaking, at anytime throughout the year you could go directly to the EPA website and make a tax payment. They'd give you a receipt and you'd submit all your receipts to the IRS by April 15.

And here is another problem. The people who value public education are precisely those less able to contribute to it.

If the public education system is neither producing taxpayers nor producing the people that taxpayers hire...then it could hardly be considered a "public" good.

Aye, but that's not the issue. If I run a tech company, a defunded primary education system won't be felt in my set of highers for decades. We are notoriously bad at preparing for the future. Again, recessions happen. If people and economies were capable of "seeing" even 5 years into the future, the costs of a recession would be amortized in long before it ever happened, and the economy would not swing nearly as much. As such, expecting business owners to plan taxes decades in the future versus a smaller, but more visible, benefit now is expecting them to behave inhumanly.

Here you are assuming that the effect is, for lack of a better term, linear, when it is not. We value Bill Gates in as much as he is able to create and distribute a standardized operating system. This, however, says nothing of his ability to allocate public goods in a way that maximizes value - perhaps he isn't so great at that.

A public good, like a private good, is simply an input. Microsoft depends on an optimal quantity of X private goods and Y public goods in order to maximize productivity. Who, better than Bill Gates, knows what goods his company needs to maximize productivity? Do you think congress knows better than he does where the bottlenecks are in his operations?

But that's not exactly what we are offering Bill Gates. We are offering him the opportunity to maximize his profits using public goods. Maximizing his profits will not necessarily maximize the overall good (as demonstrated above), nor will it even maximized the good derived from the product. A more efficient development of windows will not lead to a cheaper OS. He has all but a monopoly on the market, and the OS is not the driving cost of a computer by a long shot. What this means is that decreasing his production cost will not translate to a reduced price of windows. We would merely be allowing him more money. Further, lets say his process is 98% efficient and spending all his taxes would bring it to 99% (resulting in, say, an economic benefit of $1mil overall). He would have no incentive to provide goods which help, say, Biotech startups, even if his taxes would gain them a boost from 70% to 95% efficiency and gain the economy $10mil. Assuming that how much someone makes is proportional to how much a dollar will help their output is just wrong, but it seems to be a necessary assumption for tax choice to maximize public good.

Even stipulating all of that: How long would it take each person to compute this? Remember, they have to compute the probability that they will need each government service in the next year (there are at least 10^3 and I suspect its greater that 10^4). They have to integrate everything that might happen to them and how that interacts with the myriad possible services available. Even if they could, it would certainly take months (I suspect it would take more than a year, but I'm not sure). There is no way around this. If you propose a firm that advises people, then you have centralized the decision making process again (like a government, but without the purpose of making life better for people and with less accountability).

Like I said, taxpayers would be able to directly allocate their taxes at anytime throughout the year. So what I'm advocating is the creation of a market in the public sector. Taxpayers' demand (preferences) for public goods would shape the supply of public goods.

Yes, I know what you are advocating. In order for me to behave rationally, I have to compute how much I value each service. Let divorce this from the above problem and say that I will pay into a service proportional to how much I value it. In order to do this, I must decide how much I value each service. There are many, many services, and their values are not really independent (do I meed less medicaid if I put in more welfare?). This computation is straightforward theoretically: Compute chances of every relevant occurrence, and then minimize pain of these occurrences on my contributions to thousands of systems. But my contibutions have nonlinear effect. That is a very hard problem. It is most likely not possible for me to behave rationally.


Edit: numbers in prisoner's dilemma added wrong, setup should be fixed.

[Xerographica]

Obviously that would be a stupid idea...which is why that's not what I'm proposing. The problem is that you see the government as one business that producers multiple products. It's not ONE business...it's multiple businesses.

No, its not. It has a single hierarchical structure with various departments and a single annual budget governing the entire entity. There is one chief executive uniting the entire structure. It bears no relation to mutliple businesses other than within your own mind because you just realised that if you applied the same principles you advocate here to a private business it would be an utterly stupid idea.

Here's an idea. Let's take Microsoft and Whole Foods and the Red Cross and PETA and bundle them all together under one single corporation...let's call it the Umbrella Corporation. Then we'll give half of our money (the other half is for the Government Corporation) to 500+ people that we elect to determine the budget of the Umbrella Corporation.

So in essence, our entire country would only have TWO corporations...the Government Corp and the Umbrella Corp. Is this a totally brilliant idea? What do you think?

People wouldn't have to worry about shopping at all. Think about how much time that would save. Plus, we wouldn't have to worry about uninformed people purchasing too many stupid things and not enough important things. We wouldn't have to worry about having too much Brittney Spears and not enough food.

If you weren't happy with the selection/quality/quantity of the products/services being produced by the Umbrella Corporation then you could simply vote the bums out.

[Trotskylvania]

Jesus Fuckmothering Christ, do you play any other fucking tune?

[Xerographica]

If a central entity were dispersing the funds, it could choose to cooperate with itself and fund the highway and special interests equally.

But why would we want the supply of any goods...public OR private...to be less than optimal? If you're saying that a centralized system produces a more optimal supply of public goods...then why wouldn't you advocate for a centralized system in the private sector?

If we don't want too much national defense and not enough public healthcare...then why would we want too much Brittney Spears and not enough food?

But wait, you say, they could see who's paying what if they did it throughout the year. This doesn't work, as it would be rational to wait and see if the other would fund more of the road before you commit funds, and you'd just wait until basically the last second.

If environmentalists would have absolutely no problem waiting until the last minute to fund environmental protection...then how could they possibly claim that dealing with global warming is an urgent priority?

I personally do not believe that humans behave rationally in an strict sense, which is what your whole premise is built on, but even if they did, I don't think tax choice would maximize value.

If somehow, I managed to coerce you to donate $500 to a non-profit of your choice...then why wouldn't you try and maximize your value by contributing to a cause that most closely matches your preferences? Preference matching IS value creation.

Aye, but that's not the issue. If I run a tech company, a defunded primary education system won't be felt in my set of highers for decades. We are notoriously bad at preparing for the future. Again, recessions happen. If people and economies were capable of "seeing" even 5 years into the future, the costs of a recession would be amortized in long before it ever happened, and the economy would not swing nearly as much. As such, expecting business owners to plan taxes decades in the future versus a smaller, but more visible, benefit now is expecting them to behave inhumanly.

You keep talking about things being "underfunded"...yet I'm not at all advocating that we decrease the tax rate. Markets allow resources to flow to where they create the most value. In the absurd scenario where substantial funds aren't directed to public education...then logically...they have to flow somewhere else. Do you know what the true preferences are of 300+ million people? How well do other people know your preferences? How many gifts have people purchased for you that didn't even come close to matching your preferences?

Does it match your preference to purchase and read Scroogenomics? Who can answer that question FOR you? Can congress?

But that's not exactly what we are offering Bill Gates. We are offering him the opportunity to maximize his profits using public goods. Maximizing his profits will not necessarily maximize the overall good (as demonstrated above), nor will it even maximized the good derived from the product. A more efficient development of windows will not lead to a cheaper OS. He has all but a monopoly on the market, and the OS is not the driving cost of a computer by a long shot. What this means is that decreasing his production cost will not translate to a reduced price of windows. We would merely be allowing him more money. Further, lets say his process is 98% efficient and spending all his taxes would bring it to 99% (resulting in, say, an economic benefit of $1mil overall). He would have no incentive to provide goods which help, say, Biotech startups, even if his taxes would gain them a boost from 70% to 95% efficiency and gain the economy $10mil. Assuming that how much someone makes is proportional to how much a dollar will help their output is just wrong, but it seems to be a necessary assumption for tax choice to maximize public good.

If I can't guess whether it matches your preference to purchase Scroogenomics then how the hell can you guess what would match Gates' preferences in the public sector?

Yes, I know what you are advocating. In order for me to behave rationally, I have to compute how much I value each service. Let divorce this from the above problem and say that I will pay into a service proportional to how much I value it. In order to do this, I must decide how much I value each service. There are many, many services, and their values are not really independent (do I meed less medicaid if I put in more welfare?). This computation is straightforward theoretically: Compute chances of every relevant occurrence, and then minimize pain of these occurrences on my contributions to thousands of systems. But my contibutions have nonlinear effect. That is a very hard problem. It is most likely not possible for me to behave rationally.

Talking about "rationality" or the lack thereof is beyond useless. It's far more useful to talk about mistakes. What's a mistake? A mistake is simply a misallocation of your money. What happens when you gamble on the wrong horse? You lose your money. What happens when you pick the wrong degree? You earn less money. What happens when you gamble on the wrong business idea? You lose your house.

The more mistakes you make...the less of society's limited resources you'll be able to use. How absurd would it be if was the other way around? How absurd would it be to want it the other way around?

The market works because it's up to you to decide whether I'm making a mistake by spending my limited resources on the tax choice cause. If you think I'm crazy then you have the option not to give me any of your money. If you think I'm on the right track...then you can give your own time/money to the tax choice movement.

The market is a group endeavor. It's the epitome of collaboration. We all have the freedom to give each other accurate feedback. Bill Gates has received a lot of positive feedback from a lot of people. Why? Because WE, THE PEOPLE, value how he using society's limited resources. In other words...he has created value for us. The question is...which government organizations create value for the people who create value for us? Again, you can guess...just like I can guess that Scroogenomics would create value for you...but at the end of the day...the market works because it's up to you to decide whether or not something truly creates value for you. Preference matching IS value creation.

[Xerographica]

Jesus Fuckmothering Christ, do you play any other fucking tune?

If I said that pragmatarianism was my priority...but then I spent my time playing other tunes...then how could I truly say that pragmatarianism is my priority? Do I have other tunes that I'd also value playing? Of course...who doesn't? But I'm willing to sacrifice my other preferences FOR pragmatarianism. In other words...pragmatarianism creates more value for me than my other priorities.

This is known as the opportunity cost concept. It's how we ensure that society's limited resources create the most value for society.

By preferring my work, simply by giving it my time, my attention, by preferring my activity as a citizen or as a professional philosopher, writing and speaking here in a public language, French in my case, I am perhaps fulfilling my duty. But I am sacrificing and betraying at every moment all my other obligations: my obligation to the other others whom I know or don’t know, the billions of my fellows (without mentioning the animals that are even more other others than my fellows), my fellows who are dying of starvation or sickness. I betray my fidelity or my obligations to other citizens, to those who don't speak my language and to whom I neither speak or respond, to each of those who listen or read, and to whom I neither respond nor address myself in the proper manner, that is, in a singular manner (this is for the so-called public space to which I sacrifice my so-called private space), thus also to those I love in private, my own, my family, my son, each of whom is the only son I sacrifice to the other, every one being sacrificed to every one else in this land of Moriah that is our habitat every second of every day. - Jacques Derrida

[Sociobiology]

what better argument against tax choice could you ask for.

[Mkuki]

The Pope also hates birth control, so...

Is the Pope supposed to be celibate?

[Infactum]

If a central entity were dispersing the funds, it could choose to cooperate with itself and fund the highway and special interests equally.

But why would we want the supply of any goods...public OR private...to be less than optimal? If you're saying that a centralized system produces a more optimal supply of public goods...then why wouldn't you advocate for a centralized system in the private sector?

If we don't want too much national defense and not enough public healthcare...then why would we want too much Brittney Spears and not enough food?

The reason for the difference in use between the public sector and the private sector is that the public sector tends to contribute goods that help everyone regardless of whether or not they contributed. In the private sector this is not the case. My car really only helps me, so it is reasonable or me to consider how much I value in a car versus how much I value a computer and spend accordingly. The road I drive it on will help me whether I paid for it or not, so I should always buy the computer. That is the central issue, and the reason for the difference in allocation of separate goods. Its this dispersal in value that means public goods end up creating a "prisoner's dilemma"/"tragedy of the commons"/"free rider" situation (these are all pretty much equivalent mathematically). Some public goods help a whole lot of people a little bit, while others help a few people a lot. It is always more rational for any individual to fund the second set even if everyone funding the first would mean more value for everyone.

The highway in that example had a 60% return on them. That is HUGE, and yet it is irrational (or, to use your terminology, would be a mistake) for any person to choose to fund them. I would like to hear your response to my example above. Do you think the numbers/setup are crazy? Or can you show me where either party failed to maximize their own value? If the answer to both of these questions is no, then you must accept that tax choice will fail to produce the best situation in at least some cases where centrally allocated taxes would. Indeed, in my opinion, it would be many of the important public goods that would have that problem.

But wait, you say, they could see who's paying what if they did it throughout the year. This doesn't work, as it would be rational to wait and see if the other would fund more of the road before you commit funds, and you'd just wait until basically the last second.

If environmentalists would have absolutely no problem waiting until the last minute to fund environmental protection...then how could they possibly claim that dealing with global warming is an urgent priority?

I personally do not believe that humans behave rationally in an strict sense, which is what your whole premise is built on, but even if they did, I don't think tax choice would maximize value.

If somehow, I managed to coerce you to donate $500 to a non-profit of your choice...then why wouldn't you try and maximize your value by contributing to a cause that most closely matches your preferences? Preference matching IS value creation.

That would depend, if I knew that other people were going to fund the roads and police near me, I would probably donate it to the NSF or equivalent, as that sort of organization is my source of livelihood (I'm a grad student). That is, if I'm acting in my own self interest; perhaps I would pick a charity that I like most. Researching an appropriate one would take at about 5hrs of work. That's ~$100 a person, or a 20% overhead you've introduced by decentralizing decision making.

Out of curiosity, can you define "non profit" in an economic sense for me? How precisely are they not making money, and who in the organization is not making money? I assume "the Infactum relief fund" would not qualify.

Environmentalists probably wouldn't wait, but that is because their pet project is not seen really as a public good. The market does not price environmental devastation (another clear example of its failure as a predictor of many things), so there is little to no reason to try and get "other people to fund the EPA. The EPA would therefore fall in the special interest side of things. Things like roads, police, fire protection... not so much. These things have a well known and tangible benefit that is none the less dispersed.

Moreover, it is not about how much people value things, but how much they are willing to pay. A rational person never pays more than they value for an item and almost always pays less (else they wouldn't make the trade). In an efficient competitive market this tends to produce a reasonable distribution of the wealth gain from specialization. Public goods do NOT exist in such a market. There aren't people with competing ideas for highways (not good ones anyway), and there are great reasons to try and get your fellow purchasers to buy the more public of the public goods while focusing on your own interests. This is why someone waiting to fund something does not mean they don't value it or that it's not important.

Aye, but that's not the issue. If I run a tech company, a defunded primary education system won't be felt in my set of highers for decades. We are notoriously bad at preparing for the future. Again, recessions happen. If people and economies were capable of "seeing" even 5 years into the future, the costs of a recession would be amortized in long before it ever happened, and the economy would not swing nearly as much. As such, expecting business owners to plan taxes decades in the future versus a smaller, but more visible, benefit now is expecting them to behave inhumanly.

You keep talking about things being "underfunded"...yet I'm not at all advocating that we decrease the tax rate. Markets allow resources to flow to where they create the most value. In the absurd scenario where substantial funds aren't directed to public education...then logically...they have to flow somewhere else. Do you know what the true preferences are of 300+ million people? How well do other people know your preferences? How many gifts have people purchased for you that didn't even come close to matching your preferences?

Does it match your preference to purchase and read Scroogenomics? Who can answer that question FOR you? Can congress?

Here highlights another problem. Half the money going to a public good does not result in half the benefit (the reverse is also true). It is often substantially less. Underfunded just means below the critical level of funding to function reasonably. A government does not need to know the preferences of a all of its people to benefit them economically by picking the cooperative options. In the above example, even if the government was only 80% as good as the people themselves, it would still beat independent actors by 10-15%. And 80% isn't a crazy number either, most peoples "goods" are relatively simple - security, food, shelter, and money/places to use it. You can guess pretty well what the basic needs of people are going to be, and for the higher ones, well, that's why the government doesn't make consumer electronics.

But that's not exactly what we are offering Bill Gates. We are offering him the opportunity to maximize his profits using public goods. Maximizing his profits will not necessarily maximize the overall good (as demonstrated above), nor will it even maximized the good derived from the product. A more efficient development of windows will not lead to a cheaper OS. He has all but a monopoly on the market, and the OS is not the driving cost of a computer by a long shot. What this means is that decreasing his production cost will not translate to a reduced price of windows. We would merely be allowing him more money. Further, lets say his process is 98% efficient and spending all his taxes would bring it to 99% (resulting in, say, an economic benefit of $1mil overall). He would have no incentive to provide goods which help, say, Biotech startups, even if his taxes would gain them a boost from 70% to 95% efficiency and gain the economy $10mil. Assuming that how much someone makes is proportional to how much a dollar will help their output is just wrong, but it seems to be a necessary assumption for tax choice to maximize public good.

If I can't guess whether it matches your preference to purchase Scroogenomics then how the hell can you guess what would match Gates' preferences in the public sector?

I am guessing that he wants to maximize his own profit. This makes his choice of public goods rather simple to guess at. To suppose otherwise would then mean that the value of your system depended on the benevolence of those with the most money. Gates is something of an exception as mentioned before, but, as a rule, it is difficult to make a whole lot of money while having an excess of benevolence (I do not mean this judgmentally, by the way, it is just the nature of exponential growth that those who give away some money will have a lot less than those who give away little to none).

It is also not crazy to suppose that good benefiting Gates would have less of a total impact than the same price of goods elsewhere - Microsoft is likely highly optimized as a business at this point.

Yes, I know what you are advocating. In order for me to behave rationally, I have to compute how much I value each service. Let divorce this from the above problem and say that I will pay into a service proportional to how much I value it. In order to do this, I must decide how much I value each service. There are many, many services, and their values are not really independent (do I meed less medicaid if I put in more welfare?). This computation is straightforward theoretically: Compute chances of every relevant occurrence, and then minimize pain of these occurrences on my contributions to thousands of systems. But my contibutions have nonlinear effect. That is a very hard problem. It is most likely not possible for me to behave rationally.

Talking about "rationality" or the lack thereof is beyond useless. It's far more useful to talk about mistakes. What's a mistake? A mistake is simply a misallocation of your money. What happens when you gamble on the wrong horse? You lose your money. What happens when you pick the wrong degree? You earn less money. What happens when you gamble on the wrong business idea? You lose your house.

The more mistakes you make...the less of society's limited resources you'll be able to use. How absurd would it be if was the other way around? How absurd would it be to want it the other way around?

The market works because it's up to you to decide whether I'm making a mistake by spending my limited resources on the tax choice cause. If you think I'm crazy then you have the option not to give me any of your money. If you think I'm on the right track...then you can give your own time/money to the tax choice movement.

Or I can argue on the internet - I derive value from that .

The actors have to be and behave rationally, else the market does not behave as you predict, which means that its allocation of resources does not maximize value. In fact, there is a good chance that it results in snowballing irrational decisions. Therefore, talking about rationality is precisely what you need to do when trying to decide how a given system will work and is the opposite of useless.

Now, onto your terminology. Your definition of mistake is contingent on your definition of misallocation. I can only presume that you mean irrational decision (decision that does not maximize expected value)*. The idea of allocating societies limited resources based on whose best able to determine what they want is ethically specious at best, but lets role with it, as competitive markets have a halfway decent utilitarian basis in many cases. In order for me to make a mistake, I have to have a preference for how my money will be spent. The problem is, again, that this is not independent of how other people spend their money, so the definition of "mistake" is either not clear, or it is a mistake for people to make choices that would, given cooperation, maximize their own value (again, see example). The issue at play is that it is not a zero sum game, so we are using a somewhat loose definition of "limited" resources.


*I will note that your examples do not quite fit this. It is always a losing venture to buy a lottery ticket, so even if you win, it was still a "mistake" at the time, though it does not seem that you class it so.

The market is a group endeavor. It's the epitome of collaboration. We all have the freedom to give each other accurate feedback. Bill Gates has received a lot of positive feedback from a lot of people. Why? Because WE, THE PEOPLE, value how he using society's limited resources. In other words...he has created value for us. The question is...which government organizations create value for the people who create value for us? Again, you can guess...just like I can guess that Scroogenomics would create value for you...but at the end of the day...the market works because it's up to you to decide whether or not something truly creates value for you. Preference matching IS value creation.

A market pretty much the exact opposite of collaboration. We have every reason to lie about our preferences and prevent those who might provide similar services from participating. The reason this works so well is that its tends to put everyone on the same footing and pits human greed against itself. It also provides incentive that would be wholly unnecessary if we could exist as a collaborative society, despite the fact that this incentive has many negatives associated with it. Fear of bankruptcy is one of the main reasons the job market is so inefficient, but is also what drive innovation. You may have guessed I am not a communist.

In general, in an efficient market with sufficient (read: complete) information, a set of rational actors acting independently is indeed the best way to maximize value overall. Unfortunately that is nothing like the real world and even less like the market you are proposing. Rational is an important key word here. A set of irrational actors can easily have runaway degenerate behavior resulting in non optimal allocation of resources (A small total value than otherwise would be possible). Efficient and complete information are the other two places the real world fails to live up to econ 101 as a side note. Bill Gate's fortune, however, does not mean that society wishes him to have a larger say in which public goods are created, even stipulating that his fortune is a "fair" return for the value he created, that doesn't mean control of the public sector is too.

The goal of government* and public goods however, is to enable and enforce cooperation, which solves the still extant free rider problem. Tax choice fails to solve this problem because public goods have different scopes and returns, so is is still possible to be a free rider (or "fail to cooperate") while being forced to pay taxes.

P.S. I realize that this got really long, I'm sorry. If you read nothing else, look at the second paragraph, and the one just above this.

*economic goal. I am presuming here that we are both arguing from a utilitarian standpoint; your arguments have that flavor. From a utilitarian standpoint, a government's purpose is (generally) to set up a society with the greatest good, which is does by taking advantage of cooperative gains that the market probably would have failed to center on.

[Trotskylvania]

Jesus Fuckmothering Christ, do you play any other fucking tune?

If I said that pragmatarianism was my priority...but then I spent my time playing other tunes...then how could I truly say that pragmatarianism is my priority? Do I have other tunes that I'd also value playing? Of course...who doesn't? But I'm willing to sacrifice my other preferences FOR pragmatarianism. In other words...pragmatarianism creates more value for me than my other priorities.

This is known as the opportunity cost concept. It's how we ensure that society's limited resources create the most value for society.

By preferring my work, simply by giving it my time, my attention, by preferring my activity as a citizen or as a professional philosopher, writing and speaking here in a public language, French in my case, I am perhaps fulfilling my duty. But I am sacrificing and betraying at every moment all my other obligations: my obligation to the other others whom I know or don’t know, the billions of my fellows (without mentioning the animals that are even more other others than my fellows), my fellows who are dying of starvation or sickness. I betray my fidelity or my obligations to other citizens, to those who don't speak my language and to whom I neither speak or respond, to each of those who listen or read, and to whom I neither respond nor address myself in the proper manner, that is, in a singular manner (this is for the so-called public space to which I sacrifice my so-called private space), thus also to those I love in private, my own, my family, my son, each of whom is the only son I sacrifice to the other, every one being sacrificed to every one else in this land of Moriah that is our habitat every second of every day. - Jacques Derrida

Single mindedness is usually indicative of someone who cannot rationally prioritize their efforts. Which suddenly makes your boner for cherry picking anything that vaguely choice related to support your little religious crusade for an idea that fails basic public policy, sociological, economic, and psychological standards make a bit of sense.

[Xerographica]

Some public goods help a whole lot of people a little bit, while others help a few people a lot. It is always more rational for any individual to fund the second set even if everyone funding the first would mean more value for everyone.

So environmentalists would fund environmental protection rather than fund roads or national defense or public healthcare or public education. And people who've lost a family member to cancer would choose to fund cancer research instead of all the general public goods. This is the opportunity cost concept. This is how we would provide the optimal levels of public goods. It's how we'd ensure that what is supplied truly matches the actual preferences and priorities of an entire nation.

The highway in that example had a 60% return on them. That is HUGE, and yet it is irrational (or, to use your terminology, would be a mistake) for any person to choose to fund them. I would like to hear your response to my example above. Do you think the numbers/setup are crazy? Or can you show me where either party failed to maximize their own value? If the answer to both of these questions is no, then you must accept that tax choice will fail to produce the best situation in at least some cases where centrally allocated taxes would. Indeed, in my opinion, it would be many of the important public goods that would have that problem.

You think that you can get pretty close to figuring out the actual public good priorities of an entire nation...and that's the problem. But you have NO idea what I've given up to promote pragmatarianism. And I have absolutely no idea how much national defense you'd give up for more public education. Again, it's our valuations of the alternatives...it's our consideration of the opportunity costs...that ensure that society's limited resources produce the maximum value.

That would depend, if I knew that other people were going to fund the roads and police near me, I would probably donate it to the NSF or equivalent, as that sort of organization is my source of livelihood (I'm a grad student). That is, if I'm acting in my own self interest; perhaps I would pick a charity that I like most. Researching an appropriate one would take at about 5hrs of work. That's ~$100 a person, or a 20% overhead you've introduced by decentralizing decision making.

I've introduced? Oh no. I'm not getting rid of congress. Your "personal shoppers" would still be there so you'd be more than welcome to save your 5hrs of work and just give all your taxes to congress. Again with opportunity cost.

Out of curiosity, can you define "non profit" in an economic sense for me? How precisely are they not making money, and who in the organization is not making money? I assume "the Infactum relief fund" would not qualify.

Whether or not an organization would qualify to receive tax payments would be up to the public to decide. They'd decide what's on the "menu" and taxpayers would choose which dishes they ordered.

Environmentalists probably wouldn't wait, but that is because their pet project is not seen really as a public good. The market does not price environmental devastation (another clear example of its failure as a predictor of many things), so there is little to no reason to try and get "other people to fund the EPA. The EPA would therefore fall in the special interest side of things. Things like roads, police, fire protection... not so much. These things have a well known and tangible benefit that is none the less dispersed.

Again, the public "goodness" of environmental protection would be determined by voters.

Moreover, it is not about how much people value things, but how much they are willing to pay. A rational person never pays more than they value for an item and almost always pays less (else they wouldn't make the trade). In an efficient competitive market this tends to produce a reasonable distribution of the wealth gain from specialization. Public goods do NOT exist in such a market. There aren't people with competing ideas for highways (not good ones anyway), and there are great reasons to try and get your fellow purchasers to buy the more public of the public goods while focusing on your own interests. This is why someone waiting to fund something does not mean they don't value it or that it's not important.

Everybody wants money. The market works because we have to solely rely on persuasion to convince other people to give us their hard-earned money. If the military wanted more money...then they would have to persuade the American public that there was a shortage of national defense. Then the American public would have to consider the opportunity costs...and that's how we'd ensure an optimal supply of public goods.

Here highlights another problem. Half the money going to a public good does not result in half the benefit (the reverse is also true). It is often substantially less. Underfunded just means below the critical level of funding to function reasonably. A government does not need to know the preferences of a all of its people to benefit them economically by picking the cooperative options. In the above example, even if the government was only 80% as good as the people themselves, it would still beat independent actors by 10-15%. And 80% isn't a crazy number either, most peoples "goods" are relatively simple - security, food, shelter, and money/places to use it. You can guess pretty well what the basic needs of people are going to be, and for the higher ones, well, that's why the government doesn't make consumer electronics.

You're using a heuristic...like "democrats" or "republicans"...to try and represent something that is incomprehensibly complex. You're saying that the government can get close enough...as in horseshoes, hand grenades and public goods. Go out and ask people, as I've done for the past few years, what their thoughts are on tax choice. Then perhaps you can get the barest glimpse of the diversity AND the overlap of perspectives.

I am guessing that he wants to maximize his own profit. This makes his choice of public goods rather simple to guess at. To suppose otherwise would then mean that the value of your system depended on the benevolence of those with the most money. Gates is something of an exception as mentioned before, but, as a rule, it is difficult to make a whole lot of money while having an excess of benevolence (I do not mean this judgmentally, by the way, it is just the nature of exponential growth that those who give away some money will have a lot less than those who give away little to none).

Conceit. It's the bane of our existence. If people's choices truly are simple for you to accurately guess...then you would be filthy rich. You're really not grasping the complexity of the competing demands placed on 300+ million citizens. You might grasp the definition of opportunity cost...but you don't grasp its significance.

Or I can argue on the internet - I derive value from that .

The actors have to be and behave rationally, else the market does not behave as you predict, which means that its allocation of resources does not maximize value. In fact, there is a good chance that it results in snowballing irrational decisions. Therefore, talking about rationality is precisely what you need to do when trying to decide how a given system will work and is the opposite of useless.

You derive value from arguing on the internet. Would it be irrational for you to give up your day job (if you weren't a grad student) to spend all your time arguing on the internet? Yes? Then guess what? Unless people would pay you to argue on the internet...then you're not going to make that much money...and you're not going to pay a lot of taxes...so you're NOT going to be relevant to pragmatarianism. Therefore, rationality is useless to consider.

The goal of government* and public goods however, is to enable and enforce cooperation, which solves the still extant free rider problem. Tax choice fails to solve this problem because public goods have different scopes and returns, so is is still possible to be a free rider (or "fail to cooperate") while being forced to pay taxes.

You've got the free-rider problem under your belt. Now thoroughly research the preference revelation problem so that our discussion can actually be relevant to reality.

[Big Jim P]

The Pope also endorses the worship of mythological beings. That should give you an idea of the value of his endorsement.

[Cosmopoles]

Here's an idea. Let's take Microsoft and Whole Foods and the Red Cross and PETA and bundle them all together under one single corporation...let's call it the Umbrella Corporation. Then we'll give half of our money (the other half is for the Government Corporation) to 500+ people that we elect to determine the budget of the Umbrella Corporation.

So in essence, our entire country would only have TWO corporations...the Government Corp and the Umbrella Corp. Is this a totally brilliant idea? What do you think?

People wouldn't have to worry about shopping at all. Think about how much time that would save. Plus, we wouldn't have to worry about uninformed people purchasing too many stupid things and not enough important things. We wouldn't have to worry about having too much Brittney Spears and not enough food.

If you weren't happy with the selection/quality/quantity of the products/services being produced by the Umbrella Corporation then you could simply vote the bums out.

You could if you like. I mean, you'd have to justify the rather serious violation of the property rights of all those shareholders and trustees that you just appropriated from. And then you'd have to justify why those particular organisations are more suitably funded through taxation rather than their commercial activities or through private donation.

I'm not really sure how this refutes my point that the government is one large organisation.

[Infactum]

Some public goods help a whole lot of people a little bit, while others help a few people a lot. It is always more rational for any individual to fund the second set even if everyone funding the first would mean more value for everyone.

So environmentalists would fund environmental protection rather than fund roads or national defense or public healthcare or public education. And people who've lost a family member to cancer would choose to fund cancer research instead of all the general public goods. This is the opportunity cost concept. This is how we would provide the optimal levels of public goods. It's how we'd ensure that what is supplied truly matches the actual preferences and priorities of an entire nation.

I think we disagree on the notion of optimal level of public goods. I take it to mean that people are deriving the most value given the contraints of the system. What do you mean by it? See my example for why everyone funding their pet project is suboptimal, even though it is to no one's benefit to switch individually.

The highway in that example had a 60% return on them. That is HUGE, and yet it is irrational (or, to use your terminology, would be a mistake) for any person to choose to fund them. I would like to hear your response to my example above. Do you think the numbers/setup are crazy? Or can you show me where either party failed to maximize their own value? If the answer to both of these questions is no, then you must accept that tax choice will fail to produce the best situation in at least some cases where centrally allocated taxes would. Indeed, in my opinion, it would be many of the important public goods that would have that problem.

You think that you can get pretty close to figuring out the actual public good priorities of an entire nation...and that's the problem. But you have NO idea what I've given up to promote pragmatarianism. And I have absolutely no idea how much national defense you'd give up for more public education. Again, it's our valuations of the alternatives...it's our consideration of the opportunity costs...that ensure that society's limited resources produce the maximum value.

But here's the thing. Government/personal shopper's/whatever don't have to be as good. By being a centralized agency, they can ensure that there are more resources to distribute, which means they can still produce more value even if there resource/value ratio is lower than each individual would have acting independently.

You still have yet to refute my scenario. It is even more general than I said up there. All you need is:

• At least two classes of public goods:
  
  • One with a high rate of return but disperse benefits
  • One with a lower rate of return and concentrated benefits
• People to believe that these options exist.
• People trying to maximize there own value.

If these conditions are met, then you end up in a prisoner's dilemma where independent actors will choose the "non cooperative" option. This results in a smaller total value for everyone. This is what I define as a sub optimal circumstance.

If you cannot show me where this argument is unfounded or invalid, then you must accept that your system fails to solve the free rider problem. If this is the case then the determination of preferences is not necessarily as important, as we can still get more value by solving the free rider problem

That would depend, if I knew that other people were going to fund the roads and police near me, I would probably donate it to the NSF or equivalent, as that sort of organization is my source of livelihood (I'm a grad student). That is, if I'm acting in my own self interest; perhaps I would pick a charity that I like most. Researching an appropriate one would take at about 5hrs of work. That's ~$100 a person, or a 20% overhead you've introduced by decentralizing decision making.

I've introduced? Oh no. I'm not getting rid of congress. Your "personal shoppers" would still be there so you'd be more than welcome to save your 5hrs of work and just give all your taxes to congress. Again with opportunity cost.

Out of curiosity, can you define "non profit" in an economic sense for me? How precisely are they not making money, and who in the organization is not making money? I assume "the Infactum relief fund" would not qualify.

Whether or not an organization would qualify to receive tax payments would be up to the public to decide. They'd decide what's on the "menu" and taxpayers would choose which dishes they ordered.

Environmentalists probably wouldn't wait, but that is because their pet project is not seen really as a public good. The market does not price environmental devastation (another clear example of its failure as a predictor of many things), so there is little to no reason to try and get "other people to fund the EPA. The EPA would therefore fall in the special interest side of things. Things like roads, police, fire protection... not so much. These things have a well known and tangible benefit that is none the less dispersed.

Again, the public "goodness" of environmental protection would be determined by voters.

But now some fraction of people won't send it to congress and there relative value goes down. Perhaps this isn't a problem for you, but I see it as a lot of waste for little to no return.

So would we still vote on what's on the menu? An idea has to be popular and have rich backers to be implemented? Or would there be some other way? Also, how do we define tax levels? Shouldn't that be set by some sort of market as well? I ask because that these are important concerns of how this would be implemented, which is neccesary to determine it's effect. Since we are trying to maximize value, its effect is all that matters

Moreover, it is not about how much people value things, but how much they are willing to pay. A rational person never pays more than they value for an item and almost always pays less (else they wouldn't make the trade). In an efficient competitive market this tends to produce a reasonable distribution of the wealth gain from specialization. Public goods do NOT exist in such a market. There aren't people with competing ideas for highways (not good ones anyway), and there are great reasons to try and get your fellow purchasers to buy the more public of the public goods while focusing on your own interests. This is why someone waiting to fund something does not mean they don't value it or that it's not important.

Everybody wants money. The market works because we have to solely rely on persuasion to convince other people to give us their hard-earned money. If the military wanted more money...then they would have to persuade the American public that there was a shortage of national defense. Then the American public would have to consider the opportunity costs...and that's how we'd ensure an optimal supply of public goods.

They wouldn't just have to persuade the public that they are worthwhile. They military would have to persuade them that it is worthwhile AND that no one else is going to provide enough funding for it to be functional. If I know that the military is going to be funded enough for me to feel safe, then I am not going to contribute to it even though I place a high value on my safety.

Here highlights another problem. Half the money going to a public good does not result in half the benefit (the reverse is also true). It is often substantially less. Underfunded just means below the critical level of funding to function reasonably. A government does not need to know the preferences of a all of its people to benefit them economically by picking the cooperative options. In the above example, even if the government was only 80% as good as the people themselves, it would still beat independent actors by 10-15%. And 80% isn't a crazy number either, most peoples "goods" are relatively simple - security, food, shelter, and money/places to use it. You can guess pretty well what the basic needs of people are going to be, and for the higher ones, well, that's why the government doesn't make consumer electronics.

You're using a heuristic...like "democrats" or "republicans"...to try and represent something that is incomprehensibly complex. You're saying that the government can get close enough...as in horseshoes, hand grenades and public goods. Go out and ask people, as I've done for the past few years, what their thoughts are on tax choice. Then perhaps you can get the barest glimpse of the diversity AND the overlap of perspectives.

Yes, I am using a heuristic. Heuristics are pretty good. But a government has another advantage. It can choose the cooperative option. This means that it can have more resources to distribute. Even if it does it less efficiently, it still produces more total good.

Lets say I am 100% efficient as allocating my resources (in $) to my value (in $). So if I have $10, I will reap $10 in benefit. The government would only provide me with $8 in benefit from the same $10. The government, however, through the magic of cooperative action, actually has $15 dollars to distribute, so it brings me $12 in benefit. Thus it provides me more benefit than I provide myself acting independently.

I am guessing that he wants to maximize his own profit. This makes his choice of public goods rather simple to guess at. To suppose otherwise would then mean that the value of your system depended on the benevolence of those with the most money. Gates is something of an exception as mentioned before, but, as a rule, it is difficult to make a whole lot of money while having an excess of benevolence (I do not mean this judgmentally, by the way, it is just the nature of exponential growth that those who give away some money will have a lot less than those who give away little to none).

Conceit. It's the bane of our existence. If people's choices truly are simple for you to accurately guess...then you would be filthy rich. You're really not grasping the complexity of the competing demands placed on 300+ million citizens. You might grasp the definition of opportunity cost...but you don't grasp its significance.

I admit I was somewhat unclear here. I am not guess what Bill Gates will do, but rather what effect it will have. We can suppose that he will try to maximize his own value or we can suppose he won't. These are the only two options there. We reject the latter based on a wide variety of reasons. If you disagree with that, we can get into it. In trying to maximize his own profit, he either spends his public contribution optimally (that is, maximizes value on the total population) or he doesn't. The second option is far more likely, as he has no incentive, other than benevolence and generosity, to help the public. For your system to work, each person's individual preference must also be the optimal set of social spending. I have several times presented you with a scenario in which this is unlikely at best.

And, in order to be filthy rich, I would have to guess exactly what he would do, not just the general shape and effect of it. Also, if Bill gates is truly unpredictable, then he clearly does not have preferences to reveal.

Or I can argue on the internet - I derive value from that .

The actors have to be and behave rationally, else the market does not behave as you predict, which means that its allocation of resources does not maximize value. In fact, there is a good chance that it results in snowballing irrational decisions. Therefore, talking about rationality is precisely what you need to do when trying to decide how a given system will work and is the opposite of useless.

You derive value from arguing on the internet. Would it be irrational for you to give up your day job (if you weren't a grad student) to spend all your time arguing on the internet? Yes? Then guess what? Unless people would pay you to argue on the internet...then you're not going to make that much money...and you're not going to pay a lot of taxes...so you're NOT going to be relevant to pragmatarianism. Therefore, rationality is useless to consider.

I think you misunderstand. I do not claim to be a rational actor in the economic sense (I can think of no one that is). But preferences are only truly revealed if the actors chose options that maximize there own value. This is the definition I have been using. You can make the case that humans are not rational actors in the strict economic sense (and I would agree with you), but then you would have a hard time showing that how they allocate their taxes has a reasonable bearing on their true preferences, and you would still have a preference revelation problem.

And, once again, what I prefer that the government provide is not necessarily where I prefer that they spend the monies I control. That second is dependent on the distribution of how other people spend their money.

The goal of government* and public goods however, is to enable and enforce cooperation, which solves the still extant free rider problem. Tax choice fails to solve this problem because public goods have different scopes and returns, so is is still possible to be a free rider (or "fail to cooperate") while being forced to pay taxes.

You've got the free-rider problem under your belt. Now thoroughly research the preference revelation problem so that our discussion can actually be relevant to reality.

So you admit that your system does not solve the free rider problem, despite your previous assertions that it did? Or am I misunderstanding you here? More accurately, it introduced a new free rider problem. Once again, please try to show that my game presents an invalid model of reality. I have shown several places it applies, and, using it, I have shown that people who are acting to maximize there own value would fail to maximize total societal value.

I'll ask explicitly: Are we arguing from a utilitarian standpoint? If not, we should be discussing ethics.

[Xerographica]

I think we disagree on the notion of optimal level of public goods. I take it to mean that people are deriving the most value given the contraints of the system. What do you mean by it? See my example for why everyone funding their pet project is suboptimal, even though it is to no one's benefit to switch individually.

For your system to work, each person's individual preference must also be the optimal set of social spending. I have several times presented you with a scenario in which this is unlikely at best.

Each person's public preference IS the optimal set of social spending. It's the epitome of conceit to think that, when it comes to determining how society's limited resources should be used, the aggregated preferences of 500+ congresspeople are superior to the aggregated preferences of 300+ million citizens.

Clearly you didn't thoroughly research the preference revelation problem. If you had...then there wouldn't be any disagreement regarding the meaning of the optimal provision of public goods.

So, if you won't do your own research...then I guess you'll have to rely on my own. Here's by far the best summary of the problem...

Nevertheless, the classic solution to the problem of underprovision of public goods has been government funding - through compulsory taxation - and government production of the good or service in question. Although this may substantially alleviate the problem of numerous free-riders that refuse to pay for the benefits they receive, it should be noted that the policy process does not provide any very plausible method for determining what the optimal or best level of provision of a public good actually is. When it is impossible to observe what individuals are willing to give up in order to get the public good, how can policymakers access how urgently they really want more or less of it, given the other possible uses of their money? There is a whole economic literature dealing with the willingness-to-pay methods and contingent valuation techniques to try and divine such preference in the absence of a market price doing so, but even the most optimistic proponents of such devices tend to concede that public goods will still most likely be underprovided or overprovided under government stewardship. - Patricia Kennett, Governance, globalization and public policy

What is this?

When it is impossible to observe what individuals are willing to give up in order to get the public good, how can policymakers access how urgently they really want more or less of it, given the other possible uses of their money?

That's the opportunity cost concept. That's what we need to ensure the efficient allocation...aka optimal provision...of public goods. Here's what happens without each and every taxpayer evaluating the opportunity costs of their decisions:

public goods will still most likely be underprovided or overprovided under government stewardship

The current system produces an inefficient allocation of public goods. We end up with too much national defense and not enough public healthcare. Why do we end up with a suboptimal provision of public goods? Because 500+ government planners are merely guessing the true preferences of 300+ million people. The result/output is a complete and total non-sequitur. It's like buying a meat lover's pizza for a vegetarian. Value is destroyed.

Creating a market in the public sector would give taxpayers the freedom to demonstrate their true preferences.

The motivation for individuals to engage in trade, the source of the propensity, is surely that of "efficiency," defined in the personal sense of moving from less preferred to more preferred positions, and doing so under mutually acceptable terms. - James Buchanan

"Preference" is another word for "demand"...so moving from "less preferred to more preferred positions"...is simply moving from "less demanded to more demanded positions"...is simply moving from "lesser priority to greater priority positions"...is simply moving from "less valued to more valued positions". This is simply the opportunity cost concept. It's exactly why markets allow resources to flow to where they create the most value.

I've compiled numerous high quality passages on the subject of preference revelation and opportunity cost. Like I said, if our discussion is going to reflect reality...then you have to thoroughly research and understand these concepts.

But here's the thing. Government/personal shopper's/whatever don't have to be as good. By being a centralized agency, they can ensure that there are more resources to distribute, which means they can still produce more value even if there resource/value ratio is lower than each individual would have acting independently.

"More" resources to distribute? How can there possibly be more resources to distribute? Innovation and ingenuity lead to abundance simply because they free-up resources for more valuable uses. That's why economics is all about trade-offs, sacrifices...and again and again...opportunity costs.

You still have yet to refute my scenario. It is even more general than I said up there. All you need is:

• At least two classes of public goods:
  
  • One with a high rate of return but disperse benefits
  • One with a lower rate of return and concentrated benefits
• People to believe that these options exist.
• People trying to maximize there own value.

If these conditions are met, then you end up in a prisoner's dilemma where independent actors will choose the "non cooperative" option. This results in a smaller total value for everyone. This is what I define as a sub optimal circumstance.

Please thoroughly research and understand concentrated benefits and dispersed costs.

So would we still vote on what's on the menu? An idea has to be popular and have rich backers to be implemented? Or would there be some other way?

Who else, besides the public, should determine whether or not a good should be public? A rich person IS a public good...as determined by the PUBLIC...you, me and everybody else. So yes, if enough people disagreed regarding the public "goodness" of environmental protection...then we'd put it to the vote.

Also, how do we define tax levels? Shouldn't that be set by some sort of market as well? I ask because that these are important concerns of how this would be implemented, which is neccesary to determine it's effect. Since we are trying to maximize value, its effect is all that matters

Congress would determine the tax rate. If the tax rate created value...then taxpayers would give more money to congress. Again, the market allows us to give our hard-earned dollars..aka accurate feedback...to the people whose actions benefit us. Rich people are simply people whose actions have received positive feedback from a multitude of other people. Saying "here's my money in exchange for your product/good/service" is simply saying "here's my feedback on how you are using society's limited resources."

They wouldn't just have to persuade the public that they are worthwhile. They military would have to persuade them that it is worthwhile AND that no one else is going to provide enough funding for it to be functional. If I know that the military is going to be funded enough for me to feel safe, then I am not going to contribute to it even though I place a high value on my safety.

Again and again, optimal depends on your freedom to decide exactly how much national defense you'd be willing to sacrifice in exchange for more public healthcare. When we are all given the same freedom to make that same decision...then, and only then, do we arrive at the efficient allocation of public goods. What gives you greater anxiety? A shortage of healthcare or a shortage of national defense? Which one is more of a bottleneck...for YOU? Which one is the weakest link...for YOU? When each individual in a nation is given the freedom to answer that question for themselves...we minimize anxiety/unease and maximize value.

Lets say I am 100% efficient as allocating my resources (in $) to my value (in $). So if I have $10, I will reap $10 in benefit. The government would only provide me with $8 in benefit from the same $10. The government, however, through the magic of cooperative action, actually has $15 dollars to distribute, so it brings me $12 in benefit. Thus it provides me more benefit than I provide myself acting independently.

This is completely nonsensical and demonstrates a basic lack of understanding of exactly what it means for resources to be efficiently allocated.

But preferences are only truly revealed if the actors chose options that maximize there own value.

Again and again, you've got it completely backwards. You don't start off with some predetermined value maximizing option...and then observe whether or not I choose that option. That's beyond absurd. You can't decide that oranges maximize my value and then argue that I'm being irrational if I choose watermelons. How does that even make sense? All you can possibly know about what I value is revealed only AFTER I make my choice. It's only AFTER I sacrifice an orange for a watermelon...it's only AFTER I make my evaluation of the opportunity cost...can you say that I value a watermelon more than an orange. But does that mean that I'll always prefer watermelons to oranges? Who knows? Our priorities are constantly shifting in response to our evaluations of gazillions and gazillions pieces of information.

A month ago did you have any idea that you were going to spend hours of your time...and sacrifice who knows how many other lesser priorities...in order to debate tax choice? How could I possibly know what alternative uses of your time you've given up in order to debate this topic? Again, it's the epitome of conceit to believe that 500+ government planners can represent this completely decentralized, incomprehensibly complex process with any degree of accuracy.

Read up on demonstrated preference.

So you admit that your system does not solve the free rider problem, despite your previous assertions that it did? Or am I misunderstanding you here?

Yeah, you misunderstood me. By saying that you've got the free-rider problem under your belt I meant that you grasp a basic concept and now it's time for you to move on to more advanced concepts...the preference revelation problem and opportunity cost.

I'll ask explicitly: Are we arguing from a utilitarian standpoint? If not, we should be discussing ethics.

You can call it utility...joy...happiness...value...benefit...whatever...it's all about having the freedom to give other people accurate feedback on how they are using society's limited resources. Markets give us that freedom...and the alternative...non sequitur economics...does not. Therefore, markets create value and non sequitur economics destroy value.

[Meridiani Planum]

Tax choice is a ridiculous concept. It would ensure that programs that nobody has ever heard of get defunded.

I'm sold!

[Xerographica]

Tax choice is a ridiculous concept. It would ensure that programs that nobody has ever heard of get defunded.

I'm sold!

Heh...nice! I just created a crappy Wikipedia entry for government waste. For the longest time I just assumed that the entry already existed...but when I recently looked for it...it didn't exist! So I created it. And now you know the background story on the Wikipedia entry on government waste.

[Infactum]

I think we disagree on the notion of optimal level of public goods. I take it to mean that people are deriving the most value given the contraints of the system. What do you mean by it? See my example for why everyone funding their pet project is suboptimal, even though it is to no one's benefit to switch individually.

For your system to work, each person's individual preference must also be the optimal set of social spending. I have several times presented you with a scenario in which this is unlikely at best.

Each person's public preference IS the optimal set of social spending. It's the epitome of conceit to think that, when it comes to determining how society's limited resources should be used, the aggregated preferences of 500+ congresspeople are superior to the aggregated preferences of 300+ million citizens.

And, finally, we have our fundamental disagreement (what you said in the bold). I have presented a model that you have yet to refute of this clearly being false. See below.

And, once again, it is not 10^2 peoples preferences versus 10^8 peoples preferences, but an entity with the ability to choose the cooperative option versus a market. A market cannot solve the prisoner's dilemma. Market's are built on the prisoner's dilemma. It is why they work. They depend on humans (and rational actors) failing to cooperate. If all of the food companies on earth decided to cooperate, they could buy up all of the arable land and sell us food for just under our yearly salary. We could choose to pay the price or die*. The only reason they don't do this is that one of them might "defect"/"fail to cooperate" and sell the food cheaper. Thus, it is rational for all of them to sell the food cheaper. This ends up balancing the "prisoner's dilemma" (making it no long worthy of the name), which is why we say the market sets a price for things. Why do you expect markets to cooperate for public goods when they fail to cooperate in every other case in the private sector?

*Incidentally, this is why I see a need for monopoly regulation - markets are only fair if they are competitive, and monopolies aren't, but that is just a side note.

Clearly you didn't thoroughly research the preference revelation problem. If you had...then there wouldn't be any disagreement regarding the meaning of the optimal provision of public goods.

So, if you won't do your own research...then I guess you'll have to rely on my own. Here's by far the best summary of the problem...

Nevertheless, the classic solution to the problem of underprovision of public goods has been government funding - through compulsory taxation - and government production of the good or service in question. Although this may substantially alleviate the problem of numerous free-riders that refuse to pay for the benefits they receive, it should be noted that the policy process does not provide any very plausible method for determining what the optimal or best level of provision of a public good actually is. When it is impossible to observe what individuals are willing to give up in order to get the public good, how can policymakers access how urgently they really want more or less of it, given the other possible uses of their money? There is a whole economic literature dealing with the willingness-to-pay methods and contingent valuation techniques to try and divine such preference in the absence of a market price doing so, but even the most optimistic proponents of such devices tend to concede that public goods will still most likely be underprovided or overprovided under government stewardship. - Patricia Kennett, Governance, globalization and public policy

What is this?

When it is impossible to observe what individuals are willing to give up in order to get the public good, how can policymakers access how urgently they really want more or less of it, given the other possible uses of their money?

That's the opportunity cost concept. That's what we need to ensure the efficient allocation...aka optimal provision...of public goods. Here's what happens without each and every taxpayer evaluating the opportunity costs of their decisions:

public goods will still most likely be underprovided or overprovided under government stewardship

The current system produces an inefficient allocation of public goods. We end up with too much national defense and not enough public healthcare. Why do we end up with a suboptimal provision of public goods? Because 500+ government planners are merely guessing the true preferences of 300+ million people. The result/output is a complete and total non-sequitur. It's like buying a meat lover's pizza for a vegetarian. Value is destroyed.

It is not that I don't understand you, I just don't agree with you. You are using the term optimal performance in two ways. One way, you define it merely as people being allowed to choose. Another way, you define it as total happiness. I have demonstrated that these two things are not equivalent. I am not saying that the government will produce an optimal provision of public goods, but I am saying the tax choice won't either. Your claim is that tax choice will. If we want to debate which is more worthwhile overall, that's a different discussion (and would require more empirical evidence), but I still say central dispersal is more worthwhile.

Creating a market in the public sector would give taxpayers the freedom to demonstrate their true preferences.

Preferences for what? How the government spends its budget, or how the government spends my contribution to the budget? These are different things with different distributions

Let's the government has $100 to spend, with $20 going to each of roads, police, and fire with the balance going to special interest. Lets say further that I have been coerced into spending $10 on the government. I derive $50 from each of roads, fire, and police that have at least $20 spent on them, and I derive $5 worth of value from each $4 spent on special interest. How should I spend my $10? If you can't answer 2/2/2/4, then your system means that a market will not center on the optimal distribution of funds, as every contributor will reason the same way.

The motivation for individuals to engage in trade, the source of the propensity, is surely that of "efficiency," defined in the personal sense of moving from less preferred to more preferred positions, and doing so under mutually acceptable terms. - James Buchanan

"Preference" is another word for "demand"...so moving from "less preferred to more preferred positions"...is simply moving from "less demanded to more demanded positions"...is simply moving from "lesser priority to greater priority positions"...is simply moving from "less valued to more valued positions". This is simply the opportunity cost concept. It's exactly why markets allow resources to flow to where they create the most value.

I've compiled numerous high quality passages on the subject of preference revelation and opportunity cost. Like I said, if our discussion is going to reflect reality...then you have to thoroughly research and understand these concepts.

Preference revelation and opportunity cost are not as complicated as you seem to think they are. Once again, I don't think its that I don't understand you, I really do believe we have a disagreement.

But here's the thing. Government/personal shopper's/whatever don't have to be as good. By being a centralized agency, they can ensure that there are more resources to distribute, which means they can still produce more value even if there resource/value ratio is lower than each individual would have acting independently.

"More" resources to distribute? How can there possibly be more resources to distribute? Innovation and ingenuity lead to abundance simply because they free-up resources for more valuable uses. That's why economics is all about trade-offs, sacrifices...and again and again...opportunity costs.

Creating public goods creates wealth. This is how there are more to distribute. A city with roads produces more wealth and good than a city without roads (or with bad roads). This is precisely because it makes markets more efficient. But because it does this by making the market more efficient, its benefit is widely distributed, which means that if you can get other people to pay for it, then you are better off.

You still have yet to refute my scenario. It is even more general than I said up there. All you need is:

• At least two classes of public goods:
  
  • One with a high rate of return but disperse benefits
  • One with a lower rate of return and concentrated benefits
• People to believe that these options exist.
• People trying to maximize there own value.

If these conditions are met, then you end up in a prisoner's dilemma where independent actors will choose the "non cooperative" option. This results in a smaller total value for everyone. This is what I define as a sub optimal circumstance.

Please thoroughly research and understand concentrated benefits and dispersed costs.

As far as I can tell, that's a list of quotes agreeing that the non cooperative option (special interest) is bad for the total public good. Do I mischaracterize your wiki page? Do you suggest that these programs would not exist under your system? How, precisely, do you suggest we do away with them? Otherwise, All I can tell from that is that they agree that the independent actor solution to that game would be bad.

I will note that your wiki page does not provide a refutation. I have made 3 assumptions and 1 deduction. One of the assumptions is your own (people act to maximize their own value). The deduction is a well know result from game theory. I can only presume that you disagree with one of the first two. I assume it is the first (multiple classes of public goods), but for the life of me I cannot figure out why. Your own source seems to imply that they exist (else the quoted people wouldn't be maligning them).

If you cannot pick out which of the 3 assumptions you disagree with (or the deduction), then you must accept that tax choice would fail to optimize social value. This is a proof. If you agree to the assumptions and the reasoning, then you must agree with the conclusion.

So would we still vote on what's on the menu? An idea has to be popular and have rich backers to be implemented? Or would there be some other way?

Who else, besides the public, should determine whether or not a good should be public? A rich person IS a public good...as determined by the PUBLIC...you, me and everybody else. So yes, if enough people disagreed regarding the public "goodness" of environmental protection...then we'd put it to the vote.

And here we disagree again. A rich person is rich because they have been most able to grab the extra wealth created by specialization. Often this is because they have contributed to that specialization, but not always.

On environmental protection, I bring it up because it is a clear case of market failure on public goods. Would you allow the country to lose cities on the eastern seaboard in the name of pragmatarianism?* Would you seriously argue that this must have been the optimal outcome because the market of public goods chose it?

*I am taking the high end of global warming predictions here, but a 1% chance of a submerged New York is still really really high.

Also, how do we define tax levels? Shouldn't that be set by some sort of market as well? I ask because that these are important concerns of how this would be implemented, which is neccesary to determine it's effect. Since we are trying to maximize value, its effect is all that matters

Congress would determine the tax rate. If the tax rate created value...then taxpayers would give more money to congress. Again, the market allows us to give our hard-earned dollars..aka accurate feedback...to the people whose actions benefit us. Rich people are simply people whose actions have received positive feedback from a multitude of other people. Saying "here's my money in exchange for your product/good/service" is simply saying "here's my feedback on how you are using society's limited resources."

Not necessarily. Giving money to congress is essentially choosing the cooperative option, which I have demonstrated will not occur. I think you somewhat conflate money and feedback. Another example:
I just paid $6 for a meal at subway. It provided me with ~$8 in value (and if I had waited until I was hungrier, it would have been more). It probable cost them about ~2$ to make the sub. So together, we gained $14 in value for ~$8 in cost. That trade created wealth, but it is not, really, me saying that I value subway at $6. If they had charged me $7, the net wealth created would have been the same, but they would have taken a larger chunk of it, same if they had charged me $5. So, you tell me, how much do I value subway? Is it $6, or $8. If a Quiznos opens up nearby and will sell me an equivalent meal for $5, does that change how much I valued Subway?

So the two are not really the same. In a competitive market, the processes settle on a balanced game, and we call it fair. I like the game from an ethical standpoint because it does tend towards more wealth. The thing is, though, public goods are not in a competitive market, so even if they were the same and it was valid to say we valued Bill Gates at however many billions he was worth, his preferences for public goods would not tend to maximize wealth.

They wouldn't just have to persuade the public that they are worthwhile. They military would have to persuade them that it is worthwhile AND that no one else is going to provide enough funding for it to be functional. If I know that the military is going to be funded enough for me to feel safe, then I am not going to contribute to it even though I place a high value on my safety.

Again and again, optimal depends on your freedom to decide exactly how much national defense you'd be willing to sacrifice in exchange for more public healthcare. When we are all given the same freedom to make that same decision...then, and only then, do we arrive at the efficient allocation of public goods. What gives you greater anxiety? A shortage of healthcare or a shortage of national defense? Which one is more of a bottleneck...for YOU? Which one is the weakest link...for YOU? When each individual in a nation is given the freedom to answer that question for themselves...we minimize anxiety/unease and maximize value.

But, as I have demonstrated, we don't. Let's say national defense may be 50% of the value I derive from the government, but it will not be where I spend 50% of my taxes (If I am trying to maximize my own value). The problem is, everyone makes the same choice, and we end up with no national defense. This does not minimize unease, as we are neglecting 50% of the possible value. Even if it only cost 20% of the budget, but provided that same 50% to everyone, no actor working to maximize their own benefit would choose to fund it

Lets say I am 100% efficient as allocating my resources (in $) to my value (in $). So if I have $10, I will reap $10 in benefit. The government would only provide me with $8 in benefit from the same $10. The government, however, through the magic of cooperative action, actually has $15 dollars to distribute, so it brings me $12 in benefit. Thus it provides me more benefit than I provide myself acting independently.

This is completely nonsensical and demonstrates a basic lack of understanding of exactly what it means for resources to be efficiently allocated.

It does? I admit I elided where the 20% goes, some version of waste and inefficiency perhaps. But it does not change the fact that cooperative options create more wealth. Unless you want to seriously argue that roads do not create a large but dispersed benefit.

But preferences are only truly revealed if the actors chose options that maximize there own value.

Again and again, you've got it completely backwards. You don't start off with some predetermined value maximizing option...and then observe whether or not I choose that option. That's beyond absurd. You can't decide that oranges maximize my value and then argue that I'm being irrational if I choose watermelons. How does that even make sense? All you can possibly know about what I value is revealed only AFTER I make my choice. It's only AFTER I sacrifice an orange for a watermelon...it's only AFTER I make my evaluation of the opportunity cost...can you say that I value a watermelon more than an orange. But does that mean that I'll always prefer watermelons to oranges? Who knows? Our priorities are constantly shifting in response to our evaluations of gazillions and gazillions pieces of information.

A month ago did you have any idea that you were going to spend hours of your time...and sacrifice who knows how many other lesser priorities...in order to debate tax choice? How could I possibly know what alternative uses of your time you've given up in order to debate this topic? Again, it's the epitome of conceit to believe that 500+ government planners can represent this completely decentralized, incomprehensibly complex process with any degree of accuracy.

Read up on demonstrated preference.

My claim is not that I have to know this function exactly, but rather that the function exists. There is a distribution of public monies that provides the most total value to the people of the nation. This is just a mathematical fact. I do not claim to know what this distribution is exactly . I do not claim that government centers on this distribution. I do claim that tax choice does not hit this distribution, and I claim (slightly more weakly) that it is worse than government at it.

I also claim that there are obvious inclusions in this distribution (roads and police, for instance) that will demonstrably not be allocated money under tax choice.

So you admit that your system does not solve the free rider problem, despite your previous assertions that it did? Or am I misunderstanding you here?

Yeah, you misunderstood me. By saying that you've got the free-rider problem under your belt I meant that you grasp a basic concept and now it's time for you to move on to more advanced concepts...the preference revelation problem and opportunity cost.

Like I said before, these are not all that complex, and a collection of quotes from people on a wiki page does not make them more complex. I could suggest you read up on the prisoner's dilemma, but I presume that you already understand it.

I will also note that the quotes from Autrian economists are generally suspect at best, as that is a school that pretty explicitly rejects empirical evaluation of their theories. This gives lie to the "science" part of the "dismal science." http://en.wikipedia.org/wiki/Austrian_School. In addition, I restate my assertion for the record that we cannot deduce what was best for people from how they spent there money, but that is a psychological point which is again, perhaps not relevant (I have been arguing, as you have, as if they can).

I'll ask explicitly: Are we arguing from a utilitarian standpoint? If not, we should be discussing ethics.

You can call it utility...joy...happiness...value...benefit...whatever...it's all about having the freedom to give other people accurate feedback on how they are using society's limited resources. Markets give us that freedom...and the alternative...non sequitur economics...does not. Therefore, markets create value and non sequitur economics destroy value.

And it appears we are not arguing about what makes people most happy, but rather what market has the least restrictions on it. You think these two things are the same. I have demonstrated they are not.

edit: some grammar. I'm sure there's more I missed, my apologies.

[Malgrave]

Oh look! Another reason to ignore whatever the pope says.