Are Congresspeople Omniscient?

[Genivaria]

Why the hell is this thread still going?

If we knew how freedom would be used, the case for it would largely disappear. - Friedrich A. Hayek

Oh that's why, the OP keeps spamming nonsense.

[Genivaria]

Oh that's why, the OP keeps spamming nonsense.

Do you ever buy anything nonsensical?

I try not to. My cousin bought me a copy of 5000 Year Leap and mailed it to me.
Never picked that shit book up more then once I can tell you that.

[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.

[Greater Tezdrian]

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.

Taxation is not positive feedback; it is what pays for the fucking schools and roads. It is a necessary evil.

/thread

[Greater Tezdrian]

I'm out. If all you're going to do is consistently whore out some economist than I have little reason to engage in debate.

[Indira]

STRAWMANNNNNNNN!

[Infactum]

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

False. Our (USA, I assume) current system is designed to produce the most wealth with limited resources, which can be done despite congresses non-omniscience. In the ideal case of course. I wouldn't go so far to claim that the house and senate are the utilitarian solution to governance, but it's at least a shot. See below.

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.

That doesn't follow at all. Determination of the allocation of a resource is highly dependent on the nature of the resource. I daresay that it would be easier to predict how much milk a given population would need than it would be to predict how much money should be spent on public education and where it should be spent.

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.

The amount of foresight is irrelevant (and somewhat debatable depending on the congress critter, but I'll stipulate that for now), congress can choose "cooperative" options that self interested players cannot. Cooperative options (in many cases) can have such large payoff that they still produce more wealth despite being otherwise inefficient.

I believe I presented a version of this the last time we talked, but I have refined it some here. Consider the following prisoner's dilemma (with toy numbers, though the relative amounts are completely plausible):

There are 3 public programs A, B, and C and you and I each have to fund 1 of them with our $1 in tax money.

• Program A provides a benefit of $2 in tax funded programs to me and none to you
• Program B provides a benefit of $2 in tax funded programs to you and none to me
• Program C, if given $1 in funding, provides $1 to each of us. If given $2 in funding, is provides $2.50 to each of us

Now, questions:
-Which program should we each pick to fund if we were choosing independently? Clearly I should fund A and you B for a total benefit of $4
-What would an actor who controlled both our choices pick to maximize total value created? Our "Congress" would clearly give both our contributions to C for a total benefit of $5

The result is that congress can, in some cases, produce more value than independent actors. I can think of several situations where this model is reasonable - it is dependent on value created not being linearly dependent on cost, which is in many cases true.

But wait, you say, congress cannot efficiently apportion that value. This is correct, but as long as congress is more than 80% as good as the free market at apportioning value, it's a net benefit (this number can go much lower with more players and different numbers; I'm fairly certain I can construct a scenario that makes it true for any non-zero relative efficiency). We can quibble over whether or not the current implementation of the public budget is working in a utilitarian fashion, but you cannot say that a central authority governing the public budget is necessarily going to be worse than tax payers deciding.

[Infactum]

False. Our (USA, I assume) current system is designed to produce the most wealth with limited resources, which can be done despite congresses non-omniscience. In the ideal case of course. I wouldn't go so far to claim that the house and senate are the utilitarian solution to governance, but it's at least a shot. See below.

Because our current system is based on the assumption that congresspeople are omniscient.

No, it's not. I went through some effort to demonstrate to you that, assuming we are pursuing a utilitarian system, our congress people need not be omniscient. I would like you to explain to me why the math in my scenario is incorrect or how it cannot apply to the real world. If you cannot do one of these things, then you must accept that allowing congress control of some public funds maximizes value. This fact is independent of any other arguments you make or quote, so please address it (I would really love to know if my understanding of game theory is wrong - I'm pretty sure I'm right, but it's always possible).

That doesn't follow at all. Determination of the allocation of a resource is highly dependent on the nature of the resource. I daresay that it would be easier to predict how much milk a given population would need than it would be to predict how much money should be spent on public education and where it should be spent.

Either congress knows more accurately than society does how much benefit/value/utility society derives from any given good/service...or it does not. If congresspeople can reach inside your head and pull out values that you can't access...then this is true for any given good/service...public or private.

Yes, but your contention relied on the assertion that congress knows better than the market in all cases or in none. That is not, a priori, a true statement and so your conclusion does not follow.

The amount of foresight is irrelevant (and somewhat debatable depending on the congress critter, but I'll stipulate that for now), congress can choose "cooperative" options that self interested players cannot. Cooperative options (in many cases) can have such large payoff that they still produce more wealth despite being otherwise inefficient.

Congresspeople can't know how much value that you'd derive from any option...cooperative or otherwise. When it comes to values, the only place that accurate answers can be found is within people themselves.

On a societal level, this is manifestly incorrect. Congress peoples' ability to determine optimal allocation may not be as good as the free markets' (again, I'll stipulate this, though I am not convinced it is true for all goods), but that doesn't mean that they can't be somewhat as good (say, 80+% as good...). Consider a congress who had to send 100 tons of food stuffs to two cities each with 10k people in them. Congress would likely send half and half. One of the cities would finish before the other, certainly, but certainly not more than 95% as fast (calories consumption spread of the human body isn't that big, and statistics are cool). This estimate would get better next time around with new data. The options are not "Market Level Allocation Efficiency" and "Uniformly Random."

Congresspeople can't know how much value that you'd derive from any option...cooperative or otherwise. When it comes to values, the only place that accurate answers can be found is within people themselves. How much do you value public education? Well, I'm pretty sure that the answer is under this rock. Nope, maybe it's in this alley over here. Nope, maybe it's in some book. Nope, maybe it's written on a cloud. Nope, maybe its in these chicken bones. Nope Nope Nope Nope.

How much you value public education can only be revealed by how much you're personally willing to sacrifice for public education. If you're not given the freedom to choose exactly how much you'll actually sacrifice for public education...then the answer cannot be revealed. If you think otherwise, then you're making the assumption, like Samuelson, that congresspeople are omniscient. Congresspeople will know exactly how much you'll sacrifice for public education even before you're given the freedom to do so. Therefore, there's no need for you to have the freedom to choose how your money is spent.

There's no need for taxpayers to demonstrate their preferences for public goods because people's preferences are "given". They are assumed.

Economic planning in a socialist system must necessarily founder on the rocks of ignorance. First, the data necessary to find out the pattern of production that best fits consumer preferences are never given, as often assumed by planning proponents. Second, and even more important, the central planner cannot obtain the necessary data. Much of the data on available resources, production alternatives, and consumer demand constantly changes as economic conditions change. Thus, decentralization is the only means of coordinating economic activity through which the specialized knowledge of individuals can be taken into account and used promptly. - E.C. Pasour, Consumer Information and the Calculation Debate

How, then, are demand functions revealed? It would be disingenuous, to say the least, in an exercise whose object is to discover how demand is revealed, to assume that, ex ante, centers of power know the preferences of consuming households. We must then begin our analysis of the forces that motivate citizens to reveal their preferences by focusing on a fundamental information problem. I therefore assume that as a consequence of imperfect information concerning the preferences of citizens, centers of power will provide, except by accident, goods and services in quantities that will be either larger or smaller than the quantities desired by consuming households at the taxprices they confront, and I show that these departures from optimality inflict utility loses on these households. - Albert Breton, Competitive Governments: An Economic Theory of Politics and Public Finance

Again we slip back to the notion that all endeavors are zero sum in value and goods (and that Congress people have zero knowledge of how much value a good would provide a person). Which is odd for someone arguing for some sort of the free market - that tends to presuppose that value can be created (A supposition I agree with). The whole point is that we can create more limited resources by cooperative action than we can by independent action. Even if these resources are managed less well than the market would manage them, they will still outperform the market in terms of absolute value, as the market wouldn't have as many goods to manage in the first place.

[Infactum]

No, it's not. I went through some effort to demonstrate to you that, assuming we are pursuing a utilitarian system, our congress people need not be omniscient. I would like you to explain to me why the math in my scenario is incorrect or how it cannot apply to the real world. If you cannot do one of these things, then you must accept that allowing congress control of some public funds maximizes value. This fact is independent of any other arguments you make or quote, so please address it (I would really love to know if my understanding of game theory is wrong - I'm pretty sure I'm right, but it's always possible).

How can congress possibly know the maximum value (optimal provision) in the absence of everybody's opportunity cost decisions? I know that McDonald's is successful because so many consumers are willing to sacrifice the alternative uses of their money for a Big Mac. You know that the DoD is successful because...? Because they produce x amount of bullets, y amount of tanks and z amount of aircraft carriers? Because they attack 5 countries per decade?

(bolding mine)

On the first question: They don't have to. Our goal (I assume) is to maximize value, not efficiency of allocation. You have yet to find an error in my logic (indeed, I think the task impossible or I would not present it as "logic", but I could be wrong). Please let me know if you do.

I think I see the problem though. You have equated the two bold terms. Maximum value and optimal provision are only the same assuming the amount of things there are to provision is invariant. This is not true. We do not derive value from dollars, but goods and services, and the total amount of good and services available in a tax choice system is less than those available to a cooperative entity (for some goods and services).

The government can successfully supply bullets...and I can successfully supply boogers. In the absence of people's opportunity cost decisions...one is equally as valuable/valueless as the other. We can both scream at each other that the value of one far exceeds the other. But the only way to determine the truth would be to allow consumers to decide for themselves. If they give the DoD more money than they give me, then clearly they value the government's bullets more than they value my boogers. Oh well, you were right about that. But are you right that consumers value bullets more than they value books for students?

A second point of broad consensus among critics stresses that publicness in consumption must not necessarily mean that all persons value a good’s utility equally, Mendez (1999), for example, illustrates this point by examining peace as a PG. Some policy-makers might opt for increased defense spending in order to safeguard peace. However, this decision could siphon off scarce resources from programmes in the areas of health and education. Other policy-makers might object to such a consequence and prefer to foster peace through just the opposite measure -- improved health and education for all. Especially under conditions of extreme disparity and inequity, the first strategy could indeed provoke even more conflict and unrest, securing national borders by unsettling people’s lives. - Inge Kaul, Public Goods: Taking the Concept to the 21st Century

We all value things differently. Therefore, math can't reveal values...only sacrifice can. You can show me all the math in the world...but it's not going to accurately predict what a parent is willing to sacrifice for the well being of their children. Without that information, there is no "maximum value" or "optimal provision". There's simply a waste of resources that could have been put to more valuable uses.

Once again, even if we stipulate that the market is the best way to apportion things for ALL goods and services, this does not mean it is the ONLY way that has any usefulness at all. I can tell you with fair certainty that spending government resources growing apples is better than spending those same resources paying people to systematically break every chair on capitol hill. Are you willing to argue that the market is the ONLY way to determine which one of those endeavors will produce more value?

[Infactum]

Once again, even if we stipulate that the market is the best way to apportion things for ALL goods and services, this does not mean it is the ONLY way that has any usefulness at all. I can tell you with fair certainty that spending government resources growing apples is better than spending those same resources paying people to systematically break every chair on capitol hill. Are you willing to argue that the market is the ONLY way to determine which one of those endeavors will produce more value?

Yes, the market is the ONLY way to definitively determine which one of those endeavors will produce more value. Entrepreneurs make guesses. One entrepreneur guessed that selling rocks as pets would produce value. Another entrepreneur guessed that selling pooping dog toys would produce value. That's all we can do is make guesses...with various degrees of insight/foresight. Whether or not we guessed correctly...can only be determined by the opportunity cost decisions of consumers. Are consumers truly willing to give up the alternative uses of their $10 for a pet rock? I would have guessed no. Most people would have guessed no. Everybody with half a brain would have doubted the business model.

People are weird strange crazy bizarre absurd irrational and unfathomable. And we aren't exceptions. Therefore, we live and let live and allow people to decide for themselves what is worth their sacrifice. And for heaven's sake we drop the assumption that congresspeople are superior enough to skip this essential vetting process.

But the point is that it doesn't have to be definitive. You have ignored the relevant portion of my post where I show that more goods and services are available to a congress (or any cooperative entity) than to a set of independent actors. Congress people don't have to be superior for this to be useful. Indeed, this can be more useful than the efficiency gains of the market for many goods.

[Infactum]

You still haven't responded to my initial situation (or, to my eyes, even attempted to refute it). So I have to ask, are you debating to seek truth and help others find truth, or are you debating to promote tax choice/pragmatarianism? I realize you likely believe these two things to be equivalent, but if I could prove to you that they weren't, which would you choose?

Also, just to confirm, you advocate utilitarian solutions? That is, the best policies are those that create the greatest good for the greatest number (for some suitable summing of goods/value)?

But the point is that it doesn't have to be definitive. You have ignored the relevant portion of my post where I show that more goods and services are available to a congress (or any cooperative entity) than to a set of independent actors. Congress people don't have to be superior for this to be useful. Indeed, this can be more useful than the efficiency gains of the market for many goods.

If it isn't definitive then it's merely conjecture.

Nothing is definitive. Including the market. It is merely the best way we have of allocating resources in many cases. If the market were definitive, you would not see crashes. The market isn't even very good. At least 50% of people cannot identify their preference in at least some situations (http://en.wikipedia.org/wiki/Framing_effect_(psychology) - see stats below table 1).

To test this definitive/conjecture dichotomy, would you say that the statements: "The Earth is Flat" and "The Earth is a Sphere" are equally wrong? Both are conjecture based on evidence, both are proven false, and neither is definitive.

If you can't answer yes to that question, then you must accept that their are varying levels of approximation. If you would like to call the Earth a sphere, you must accept that some levels of approximation are indeed very good.

For the record, I tend to think that the market is to "The Earth is an Oblate Spheriod" as Congress is to "The Earth is a Sphere" when we are talking allocation (not production!) of public goods. Both are pretty close, and the first is a little better. You'll note that both of these statements are false though.

We'd be better off by attacking Syria. Maybe...yes...no? You make a guess and allocate your own resources accordingly. But please don't be so full of yourself that you're willing to gamble my own resources on your conjecture. Feel free to shoot yourself in the foot but I kindly ask that you abstain from shooting me in the foot.

The military is an excellent example of how nonlinear return messes with market pricing. Lets say I could prove with relatively simple logic that the US pouring 70% of it's tax budget into attacking Syria would lead to 1000+ years of peace and prosperity for not only for the world, but for the US especially. Spending less than that would provide no effect other than dead civilians. Military operations usually need a minimum funding level, so while these numbers are extreme, the shape of the curve is not unreasonable.

It is almost a certainty that more than 30% of people would not fund it. We, apparently, cannot be convinced by simple logic (what should be the most convincing argument). You and I have both put some thought into this issue and have what we believe to be relatively straightforward/logical arguments, yet at least 50% of us are being irrational. This is a problem because how big of a gamble something is depends on how many people take that gamble; this is why I keep bringing up game theory and pointing back to my original situation. Public goods don't function like normal consumables, so applying standard economic heuristics to them is a bad idea.

If people are certain that a train is eventually going to crash, don't let your giant fatal conceit block them from getting off at the next station. Step aside and let them off. If the train crashes well...at least some people survived to make it to another destination. If the train doesn't crash...at least some people made it to the desired destination.

The only way around the essential value of hedging our bets is omniscience. And nobody's omniscient. Therefore, we're welcome to try and persuade the heck out of each other...but at the end of the day, if we can't convince people that our way is superior...then we have to let people go their own way.

Why? Why, in all cases, do we have to let people go there own way? If a person believes that burning down my house is best for everybody, then should I let them? Conversely, if putting one (otherwise innocent) person in jail for 1 day would save 90% of the population from painful deaths, should we let them walk free if they want to? If your answer to this is "property rights," then why are those for sure the best way to allocate resources, and why shouldn't violence be a perfectly valid negotiation tactic?

[Infactum]

You still haven't responded to my initial situation (or, to my eyes, even attempted to refute it). So I have to ask, are you debating to seek truth and help others find truth, or are you debating to promote tax choice/pragmatarianism? I realize you likely believe these two things to be equivalent, but if I could prove to you that they weren't, which would you choose?

I would certainly choose truth over pragmatarianism. Your initial situation fails to take into account that values are subjective. Beauty is in the eye of the beholder. One person's trash is another person's treasure.

Values are dependent on the valuer, certainly, but surely you agree that each person has a utility function? I was proposing a set of utility functions that, even if they were known to the market actors, would still not be optimized by your tax choice system. If you cannot prove that a set of such functions does not exist, then you cannot prove that tax choice is optimal (and, indeed would be in some cases suboptimal).

Also, just to confirm, you advocate utilitarian solutions? That is, the best policies are those that create the greatest good for the greatest number (for some suitable summing of goods/value)?

Yup.

Excellent, so you would agree that a society that inefficiently (say at 75%) allocates a $10 value of goods and services is preferable to one that perfectly allocates $5 worth of goods and services?

Nothing is definitive. Including the market. It is merely the best way we have of allocating resources in many cases. If the market were definitive, you would not see crashes.

1. our current system is based on the assumption that congresspeople are omniscient (no need for taxpayers to choose where their taxes go)
2. 300 congresspeople allocate half our nation's resources
3. when a crash occurs you want to blame the market

1) No it's not. It need not be to be utilitarian, as I have shown.
2) Ok, now we must show that this has negatives and no positives. Unless we have some credible evidence of the orders of magnitudes of these effects.
3) Do you deny that crashes would occur in the absence of state participation in the market (see: bitcoins)?

Allowing 300 people to allocate half a country's resources is a recipe for disaster. It take infinitely more insight/foresight than they have as a group to successfully allocate all those resources. The market works because it's the epitome of a group effort. You want to keep millions and millions of people from adding their insight/foresight to the public sector...and then you want to blame the market when failures occur.

The market is not the epitome of a group effort. If it were, then there would be no incentive to lie, and negotiations would consist of honest, accurate accountings of how the total resources of both parties could best be split. The market is merely the only way we have to enforce any amount of cooperation for many goods. Again, do you deny that failures would occur absent government intervention? If you cannot say yes to this question, then you must accept that the market is not perfect (which is what I assume you mean by definitive).

Please go to the mall, watch people for a long time, talk with them, ask them why they are buying one thing instead of another, and tell me exactly how much information goes into people's spending decisions. You want to keep all that information out of the public sector and then you want to say that markets are the cause of extremely inefficient allocations of resources (depressions/recessions). It's logically impossible.

You think all that information that shoppers have is wrong and superfluous...and we're better off without it. You want to disregard everything that people know and value and then you want to say that extremely inefficient allocations have nothing to do with the assumption that people's unique circumstances are irrelevant.

Drop the assumption that congresspeople are omniscient, allow taxpayers to shop for themselves in the public sector...and we'll hedge our bets against failure.

First off I have explicitly and repeatedly not assumed that congress people are omniscient, and I would appreciate you refraining from characterizing my argument as such.

It's not that this information is wholly worthless (though, it's I don't think it's worth as much as I suspect you imagine it is). Rather, it's that a group of independent actors choosing where to put there money aren't going to pick the option with the most total good. Even if they know that that collective choice is optimal. Are you denying that people will try to maximize their own value?

A collective entity with full control of the purse strings would (assuming pure motivations) pick the options that bring the most value everywhere. Even if that failed to pick what an omniscient actor would pick, the gains from collective action could easily outweigh their small misteps.

An example: It might have been optimal if I-64 were built exactly 15ft to the north of where it is. The difference in value between that and it's current location, however, is probably much smaller than the difference between it's current location and many small intermittently maintained roads instead of the highway across the country.

The military is an excellent example of how nonlinear return messes with market pricing. Lets say I could prove with relatively simple logic that the US pouring 70% of it's tax budget into attacking Syria would lead to 1000+ years of peace and prosperity for not only for the world, but for the US especially.

It is almost a certainty that more than 30% of people would not fund it. We, apparently, cannot be convinced by simple logic (what should be the most convincing argument).

Taxpayers wouldn't fund the DoD...and this is a recipe for 1000 years of war? American taxpayers would be the only ones who would decide that they had more valuable ways to invest their tax dollars?

I'm saying that even if I could prove beyond any sane doubt that it was a recipe for 1000 years of war (i.e. would be the most valuable possible option), the DoD would not be funded sufficiently. Upon further consideration, I'm not even sure it would be rational for any individual to do so. If I' m part of the 30%, I can fund my favorite program while still reaping the benefits of the DoD being funded.

Let's say you were convinced of that this was the case on Syria, but you also had the option to give money to "The Xero relief fund." Which would you choose?

Why? Why, in all cases, do we have to let people go there own way? If a person believes that burning down my house is best for everybody, then should I let them? Conversely, if putting one (otherwise innocent) person in jail for 1 day would save 90% of the population from painful deaths, should we let them walk free if they want to? If your answer to this is "property rights," then why are those for sure the best way to allocate resources, and why shouldn't violence be a perfectly valid negotiation tactic?

The rate of progress depends on...

1. how much difference there is between people's perspectives
2. how much freedom people have to apply their perspectives to their own resources

If you need more explanation then check out my rule.

Your own page with a few quotes is not really a source. And your rule is based on the assumption that you are infallible. Considering that you have yet to reduce your logic to an axiomatic system whose logic can be check devoid of context, I consider this assumption suspect.

I know that the "logic" of basic economics is seductive, but it is based on a large variety of (not universally valid) assumptions.

[Infactum]

I'll be snipping some of the quotes to try and keep this post length manageable. I'll try not to remove salient points that haven't been made elsewhere.

Edit: Wow, that got really long. If you are pressed for time/space, I believe your responses to the direct questions I posed along with the final bit about assumptions would be most productive to the discussion.

Individuals do not act so as to maximize utilities described in independently existing functions. They confront genuine choices, and the sequence of decisions taken may be conceptualized, ex post (after the choices), in terms of "as if" functions that are maximized. But these "as if" functions are, themselves, generated in the choosing process, not separately from such process. - James M. Buchanan, Order Defined in the Process of its Emergence

I don't think this quote applies here. Note the bolded. It appears that he is merely presenting a mathematical approximation to try and get some handle on economics. You could take the political/philosophical step and assert that these approximations are reality, but I do not think that is valid. For a utilitarian, I would think it is self evident that utility functions exist independently of making choices (Though they are, in principle, a function of the entire state of the universe). This fact is true whether or not we can understand them at all. Do you agree the utility functions exist independent of choices and our ability to understand them?

That first statement is a problem, as it directly contradicts the notion of a self interested actor, which is required for the market to be a worthwhile way of maximizing value in most places we assume it can. How can an actor be self interested if they do not have interests?

Like I said, if your utility function was fixed, constant, static...under a rock somewhere...and it could be found and known along with everybody else's utility functions, then sure, great, Samuelson was right on. No need to allow people to shop for themselves anywhere at anytime...because planners have them covered.

But in real life, your choices are so complex that it's not even funny. All that complexity is lost and wasted when we allow 300 personal shoppers to shop for an entire country. The consequences are going to be infinitely negative...but this will only be known and understood and grasped by those who can sense the alternate reality where all that complexity is integrated.

They do not have to be known. Actors in the market itself do not know their own utility function (see framing effect wiki). They can be approximated relatively well in many cases. As an extreme example I can guess the relative value that a starving person places on food versus, say headphones. Even if we assert that a person who hasn't eaten for 10+ days and still will sacrifice food for headphones isn't mentally ill, we can be pretty sure that 99+% of such people won't.

Also, the idea of this complexity is not hard to grasp. I understand what you are saying, I believe. I merely think that you are generalizing some concepts inappropriately.

It really should't be that difficult though to pin down the cause of the allocation disparity between China under Mao Zedong and China under Deng Xiaoping.

I will certainly agree that for goods that are non public, non essential (highly elastic), and a have a few other properties required for efficiency, that utility seems to be maximized by the market. I suspect that china benefited markedly from this sector of the market, and that it is an oversimplification to attribute an entire ~30-40 year history of one of the most populous countries on Earth to one sector of public policy.

Excellent, so you would agree that a society that inefficiently (say at 75%) allocates a $10 value of goods and services is preferable to one that perfectly allocates $5 worth of goods and services?

Eh, the size of the pie absolutely depends on the efficiency of the allocation. Right now our pie is still bigger than China's (not for much longer though). So China with pragmatarianism is infinitely better than the US with socialism.

The size of the pie also absolutely depends on concentration of decision making. A person with $1 Billion dollars to spend has more economic and real power than 10,000 people with $100,000 dollars each have total. Do you agree with this statement? I believe I can prove it if not.

And it's the power that matters because it's the power that provides utility.

1) No it's not. It need not be to be utilitarian, as I have shown.

You can't know people's utility functions.

2) Ok, now we must show that this has negatives and no positives. Unless we have some credible evidence of the orders of magnitudes of these effects.

There can't be any positives to limiting input. You just perceive positives because you're failing to see the alternate reality where input is not limited.

3) Do you deny that crashes would occur in the absence of state participation in the market (see: bitcoins)?

Again, markets facilitate heterogeneous activity. The more centralized the economy...the more homogeneous the activity...the greater the frequency and magnitude of the crashes. You're putting far too many eggs in one basket. You're gambling way too much on way too few ideas. The consequence are a given. You're going to have massive failures WITHOUT even moderate successes to balance them out.

1) Yes, but you can certainly approximate them. In many cases very accurately.
2) I see the benefits of gaining input. I also see the downsides of decentralizing power. I think these things balance differently on a case by case basis.
I could say something similar of you: You just perceive positives of gaining input because you fail to see how concentrating power can gain total benefit.
3) The market has it's own inefficiency problems that I believe can be eliminated by government intervention. Natural monopolies/barriers to entry, inefficiencies in the low wage labor market, and enforced information asymmetry come to mind. It doesn't change the fact that crashes imply that the market failed to properly value things (whether it is the "best" way we have to value things or be prosperous is another story).

The market is not the epitome of a group effort. If it were, then there would be no incentive to lie, and negotiations would consist of honest, accurate accountings of how the total resources of both parties could best be split. The market is merely the only way we have to enforce any amount of cooperation for many goods. Again, do you deny that failures would occur absent government intervention? If you cannot say yes to this question, then you must accept that the market is not perfect (which is what I assume you mean by definitive).

It's a group effort in the sense that the most people can give feedback on how well other people are using society's limited resources. People just don't give positive feedback to uses of society's limited resources that don't make sense to them. Therefore, we minimize nonsensical uses of society's limited resources.

Again, the market is a vetting process. Resources cannot be efficiently allocated without people's freedom of entry and exit. Forcing people to board trains and preventing them from exiting assumes that some people are omniscient. But contrary to popular belief nobody can do enough homework to guarantee the success of any endeavor. And if they are guaranteed funding then it's a given that they won't do even the smallest fraction of the homework that an entrepreneur will do whose funding depends on how well he can persuade others of the potential value of his idea.

Oh I agree it's a group effort, it's just far from the epitome of one.

First off I have explicitly and repeatedly not assumed that congress people are omniscient, and I would appreciate you refraining from characterizing my argument as such.

How can I not characterize your argument as such? If you're willing to skip the part where you persuade people to invest in your idea...then clearly that degree of certainty implies omniscience. And omniscience is the most charitable characterization for this type of behavior/mindset.

No, my repeated assertion is that centralized spending decisions give more power than decentralized actors and that, in some cases, this makes up for the inefficiency in allocation of the power created. The whole point is that you don't need to be as informed as the market to have a net benefit.

It's not that this information is wholly worthless (though, it's I don't think it's worth as much as I suspect you imagine it is). Rather, it's that a group of independent actors choosing where to put there money aren't going to pick the option with the most total good. Even if they know that that collective choice is optimal. Are you denying that people will try to maximize their own value?

It's a given that people will try and maximize their own value...and this is the only way to determine which option provides the most good/value. I don't know how, in the absence of everybody's spending decisions, you can feel mildly comfortable saying that an option provides the most good. Again, the only way you could be that confident is if you assumed that congresspeople are omniscient. Because you can never never never do enough homework to be that certain.

You can't be certain that the market centered on the best case either. There are plenty of sets of plausible utility functions (i have provided several now) for which it will certainly not (except by random chance or through misinformation). Lack of complete certainty is not a scathing indictment of a system for no system is certain. Understanding uncertainty and expectation is required for comparing systems.

So we give people the freedom to shop for themselves. Just like in the private sector, they'll give their money to whichever organizations provide them with the most value at that point in time. The government organizations that provide more value will gain funding...while the government organizations that provide less value will lose funding...and we'll derive far more value from the public sector.

But by forcing people's interest's to compete, you lose the cooperative benefits. In some cases it seems plausible that this out weighs efficiency gains.

<snip>

A candy maker could never "know" beforehand which candy would produce the most value. This is because nobody is omniscient. Yet through our entire exchange you've held on to the idea that it's reasonable to assume that congresspeople can "know" beforehand which public good will produce the most value. If you drop that assumption then taxpayer sovereignty is the logical conclusion. You really don't want taxpayer sovereignty to be the logical conclusion so you cling to your assumption with all your life.

I've addressed the notion of approximation above, so I'll focus on the latter accusation.
? If you could convince me that tax choice would lead to a better world, I would certainly support it whole heartedly. I would also be glad to be certain of something in economics - rarely does one encounter a field with such complexity and political muddling of the messages.

A collective entity with full control of the purse strings would (assuming pure motivations) pick the options that bring the most value everywhere. Even if that failed to pick what an omniscient actor would pick, the gains from collective action could easily outweigh their small misteps.

Given that we're talking about the public sector...every action should be collective in nature. Therefore, in order to maximize the gains from collective action, we have to allow taxpayers to choose whichever collective action provides them with the greatest gains.

But they still have to ACT collectively. My $100 to the highway system does not provide the same amount of value as the next $100 to the system and there is no way to know how much it will be funded.

An example: It might have been optimal if I-64 were built exactly 15ft to the north of where it is. The difference in value between that and it's current location, however, is probably much smaller than the difference between it's current location and many small intermittently maintained roads instead of the highway across the country.

If taxpayers were willing to forego the I-64...then it's a given that they had more valuable collective actions to spend their limited tax dollars on. There's a difference in value between a new highway and additional funding for cancer research. Is it possible to compare the potential gains from the two different uses of society's limited resources? Of course, and it's absolutely essential to give people the freedom to do so if we are going to maximize the value we derive from society's limited resources.

But it is my assertion that market actors would not build I-64 despite it being globally better (and demonstrably so) than a patchwork of locally maintained roads. It is the continued problem of local rationality not producing global rationality.

I'm saying that even if I could prove beyond any sane doubt that it was a recipe for 1000 years of war (i.e. would be the most valuable possible option), the DoD would not be funded sufficiently. Upon further consideration, I'm not even sure it would be rational for any individual to do so. If I' m part of the 30%, I can fund my favorite program while still reaping the benefits of the DoD being funded.

<snip>
So you prioritize your spending decisions to address your biggest concerns...and everybody else does the same...and we minimize concern and maximize prosperity. And this is exactly what happens in the private sector.

I could value a highway system 100X more than anything else, but if I know it's going to be funded, I should dump my cash into the next best thing. It is terribly irrational to prioritize you spending decisions based on what you value most. Do you agree with the last sentence?

Let's say you were convinced of that this was the case on Syria, but you also had the option to give money to "The Xero relief fund." Which would you choose?

Obviously I'd choose the Xero relief fund. You know why? Because in order for that to be an option enough voters would have wanted me to be on the menu. Clearly they derive collective action value from whatever it is that I'm doing with society's limited resources.

Poor choice on my end. I did neglect the collective veto you include in your tax choice system. Lets say, instead, that you value the Department of Education, but not as much as you value a millennium of peace and prosperity. Also assume that as long as at least 70% of the budget goes to the military, these 1000 years will be wonderful, but nothing will be different from 71-100%. The Department of Education has a positive return on every dollar you give it (but is still not as valuable as having at least 70% go to the military).

Which would you choose to fund?

Your own page with a few quotes is not really a source. And your rule is based on the assumption that you are infallible. Considering that you have yet to reduce your logic to an axiomatic system whose logic can be check devoid of context, I consider this assumption suspect.

I know that the "logic" of basic economics is seductive, but it is based on a large variety of (not universally valid) assumptions.

The rate of progress has to have an explanation. I'm as certain as I'll ever be that my explanation is correct. If you have a better explanation then I'm all ears.

I suspect strongly that progress is much more related to the exponential rate of technology (especially in the farming and communication sector). We could argue in a whole 'nother thread about how much the market incentived that innovation.

Did you know that you provide me with more value than any other participant in this thread? If I could only pick one person to exchange with...it would be you. But this can't be known beforehand. And there's no guarantee that another member won't come along and provide me with more value. The point is that it's the Truth that we maximize value when we give people the freedom to choose who they exchange with. Given that it's the Truth it's relevant whether we're talking about this forum or the public sector. Limiting who people trade with limits value. Right now we prevent people from trading in the public sector. If we eliminate this barrier to trade, the result will be infinitely valuable.

Well, thank you for the compliment .

I think you've explicitly stated your invalid assumption here, however. Let's take the following as a given (I think it's a decent approximation, but I definitely wouldn't call it the capital Truth - that is reserved for theorems and properly qualified physical laws):

"We maximize value when we give people the freedom to choose who they exchange with."

This statement does not follow:

"Given that it's the Truth it's relevant whether we're talking about this forum or the public sector."

You are conflating dissimilar goods and markets with no reason to assume that these things behave in exactly the same way. It is my contention that you cannot by any means prove that they do (indeed, I believe that they do not), and the examples and situations I have proposed exist to show that this conclusion is incorrect.

[Infactum]

Ok, I will have to ellide some of my response to your massive wall of quotes, but I will attempt to make my argument as clearly as possible through a series of questions:

1) Do you agree that goods have varying degrees of publicness? That is, under a tax choice system, there would be some goods which are more dispersed in their benefits than other goods despite both being offered on the "menu".

"We maximize value when we give people the freedom to choose who they exchange with."

This statement does not follow:

"Given that it's the Truth it's relevant whether we're talking about this forum or the public sector."

You are conflating dissimilar goods and markets with no reason to assume that these things behave in exactly the same way. It is my contention that you cannot by any means prove that they do (indeed, I believe that they do not), and the examples and situations I have proposed exist to show that this conclusion is incorrect.

Goods can't behave at all. People behave. And you either value their behavior or you do not. A market is a bunch of people going around deciding how much they value other people's behavior.

Public goods are dissimilar though in the sense that people can benefit from them without having to contribute to them. For example, let's say that Bob values my efforts to share basic economics with others. But he strongly suspects that I'm going to continue to do so whether or not he gives me some positive feedback (money). So he doesn't chip in...and because of a lack of positive feedback...I discontinue my efforts and Bob is worse off (by his own standards) as a result. But if Bob was forced to set aside $40 a month for "public goods"...then why wouldn't he give me some money if he valued my efforts more than he valued the alternative uses of these "tax dollars"?

No, Bob wouldn't. He strongly suspects that you will continue regardless, so he'll chip into other public goods (classing your efforts as a "public good" is suspect from my perspective, but I'll go with it) that he also values. Unless, of course, Bob is behaving irrationally and is not consistent with the assumptions of a market actor.

Also, while I contend that talking about goods behaving is perfectly clear economic parlance, I will explicitly state that I mean "how actors in the market for those goods behave."

However no decentralized pricing system can serve to determine optimally these levels of collective consumption. Other kinds of "voting" or "signalling" would have to be tried. But, and this is the point sensed by Wicksell but perhaps not fully appreciated by Lindahl, now it is in the selfish interest of each person to give false signals, to pretend to have less interest in a given collective consumption activity than he really has, etc. I must emphasize this: taxing according to a benefit theory of taxation can not at all solve the computational problem in the decentralized manner possible for the first category of "private" goods to which the ordinary market pricing applies and which do not have the "external effects" basic to the very notion of collective consumption goods. - Paul A. Samuelson, The Pure Theory of Public Expenditure

False signals. Sure, people are utility maximizers. Everybody wants the most bang for their buck. If taxes were voluntary...and people understood that their tax obligation depended on the answers they gave...then obviously they would have an incentive to lie about how much benefit they derived from any particular public good...in order to pay less taxes. They would have a monetary incentive to lie. (1)

But what happens if their tax obligation was a given? If they have to pay $10,000 in taxes no matter what, then what incentive could they possibly have to give false signals? (2) If the $10,000 is a foregone conclusion, given that people are utility maximizers, they'll have an incentive to shop around and try and get the most bang for their buck.

Millions of taxpayers shopping around trying to get the most bang for their buck will incentive producers to give taxpayers the most public goods for their tax dollars.

So yes...public goods are dissimilar to private goods. But once we incentive people to give true signals, then in both situations we simply have people going around deciding how much they value other people's behavior.

See bolded numbers in spoiler.
1) As long as there is a spread in the publicness of goods available, there is still incentive to lie.
2) If I can get you to pay for the highway, I can dump more money into the DoE. Both are public, but the DoE benefits me more than you (and we both benefit from the highway). The DoE also benefits me less than the highway does*. The best way to get you to fund the highway is to convince you that I am completely uninterested in the Highway and believe it to be useless, despite knowing it is useful. I may even try and convince you that I am irrational and cannot be convinced to fund it. It's an interesting new take on Highway Chicken. You would probably do the same to try and fund your favorite slightly less public agency. And we can see that there are all kinds of benefits to sending false signals.

*Note, my behavior is not predicated on my absolute knowledge of my own utility function, merely my belief (which is reasonable IMO).

Also, I'll admit to not having read the Samuelson paper because the conclusion is reasonable, I am short on time, and your arguement is invalid independent of Samuelson's correctness. He appears to be making approximately the same argument I am, however.

Thus, considered in themselves, in their own nature, in their normal state, and apart from all abuses, public services are, like private services, purely and simply acts of exchange. - Frédéric Bastiat, Private and Public Services

You exchange $5 for a haircut because you value the haircut more than you value the alternative uses of those $5 dollars. You exchange $300 for environmental protection because you value the environment more than you value the alternative uses of those $300 dollars. Opportunity cost is relevant and essential no matter whether we're talking about private goods, club goods or public goods.

Once a tax obligation is a foregone conclusion, then heck, you might as well get the most bang for your buck...

I agree completely, which is why a set of rational actors will tend towards the least public goods on the menu, which, in turn, often causes them to choose the least total good.

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 (1), The Economics of Earmarked Taxes

We cannot provide efficient levels of public goods without knowing people's true preferences for public goods. Samuelson's theoretical model assumes that people's preferences are given...but most public finance economists understand the necessity of determining people's true preferences.

This is the best "nutshell" description...

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

"Given the other possible uses of their money"...opportunity cost. If we create a market in the public sector and allow taxpayers to shop for themselves, then it's a given that they will evaluate the alternative uses of their tax dollars. The result will be the optimal provision of public goods.

I won't pretend to speak for Samuelson, but you DO NOT need to precisely know a utility function to provision public goods in a good way. If you can approximate one at all you can have real utility gains. That is, over providing a Highway is probably better than optimally providing local roads. It is certainly possible, and that possibility is all you need to make tax choice not provably a better system.

More boldedness
1) Buchanan, if I am parsing this quote correctly, seems to be saying that there is not incentive to lie under the current system. That is debatable, but not obviously false. Unless he is talking about transitioning the current collection system to choice on the back end. It is not clear from the quote.

Poor choice on my end. I did neglect the collective veto you include in your tax choice system. Lets say, instead, that you value the Department of Education, but not as much as you value a millennium of peace and prosperity. Also assume that as long as at least 70% of the budget goes to the military, these 1000 years will be wonderful, but nothing will be different from 71-100%. The Department of Education has a positive return on every dollar you give it (but is still not as valuable as having at least 70% go to the military).

Which would you choose to fund?

Why am I assuming that defense, rather than education, will be the key to future peace and prosperity? If I could truly know that then yeah, you should really want me to be a dictator. But I can't know that so we infinitely increase our chances of success by allowing people to invest in different solutions to the same problem...

You don't have to know, you just have to believe. Lets say 85+% of the tax base believed that 70% level. Furthermore, they all believed that 85+% believed that. This, according to you, would be the absolute best prediction of the the future.

As a member of that tax base, would you fund the DoD or the Department of Education? This answer is important.

A second point of broad consensus among critics stresses that publicness in consumption must not necessarily mean that all persons value a good’s utility equally, Mendez (1999), for example, illustrates this point by examining peace as a PG. Some policy-makers might opt for increased defense spending in order to safeguard peace. However, this decision could siphon off scarce resources from programmes in the areas of health and education. Other policy-makers might object to such a consequence and prefer to foster peace through just the opposite measure -- improved health and education for all. Especially under conditions of extreme disparity and inequity, the first strategy could indeed provoke even more conflict and unrest, securing national borders by unsettling people’s lives. - Inge Kaul, Public Goods: Taking the Concept to the 21st Century

I could value a highway system 100X more than anything else, but if I know it's going to be funded, I should dump my cash into the next best thing. It is terribly irrational to prioritize you spending decisions based on what you value most. Do you agree with the last sentence?

If what I value most isn't at all feasible then maybe I should focus on investing in plausible endeavors. But nothing ventured nothing gained. If people could choose where their taxes go...then there are going to be as many different investment strategies as there are people.

The point is that a highway is entirely very feasible. For Congress. Getting independent actors to act in concert is somewhere between much harder and impossible (depending on rationality and information).

But it is my assertion that market actors would not build I-64 despite it being globally better (and demonstrably so) than a patchwork of locally maintained roads. It is the continued problem of local rationality not producing global rationality.

In a pragmatarian system, I don't think it would be unreasonable for taxpayers to have the option to give their taxes to foreign governments...A Global Free-trade Agreement for Public Goods. That's infinitely more global than our current system.

My apologies, I slipped into math jargon mode. By local I mean independent rationality, and by global I meant the the best collective set of choices for the actors.

I've addressed the notion of approximation above, so I'll focus on the latter accusation.
? If you could convince me that tax choice would lead to a better world, I would certainly support it whole heartedly. I would also be glad to be certain of something in economics - rarely does one encounter a field with such complexity and political muddling of the messages.

Scarcity means that you can either choose x or y...

It is through the gaze of my extinguished self that I realize the limitations that make scarcity necessary. Through this gaze into my own limitedness - a limit always established by the impending cessation of space and time for me - through this gift of death, I discover in nature the best way to be efficient. Thanks to death I must choose x rather than y. This has become a feature of 'nature' - a demystified 'nature' that bears no possibility of participation in the eternal. This is consistent with capitalism. - D. Stephen Long

Yeah...no participation in the eternal...but definitely participation in building a better world.

Basically you have an idea of...heaven...but on earth. So you choose whichever option (x or y) will result in the shortest distance between you and your utopia. Should you give your tax dollars to the EPA...or the DoD...which decision will bring you closer to a better world? (1)

Each taxpayer could be contributing to a community which would become more reflective of the kind of world in which he or she would like to live. Gaudeat Emptor! - Daniel J. Brown, The Case For Tax-Target Plans

But by forcing people's interest's to compete, you lose the cooperative benefits. In some cases it seems plausible that this out weighs efficiency gains.

Given scarcity...people's interests are always competing... (2)

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, The Gift of Death

God I love that passage. Here's the same thing in economic terms... (3)

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

Yes, I understand opportunity cost and scarcity. These are not complex, and people waxing poetic on them is not actual argument.

1) That depends heavily on wherever everyone else chooses to put their funds. This dependence makes it a global game, which independent actors are bad at. Contrast things in the private sector: my utility/$ from buying diet coke does not go markedly down because enough money has been spent on diet coke by other people.
And its a better world for me. If everyone behaved as a utilitarian, tax choice wouldn't be bad.
2) Yes, and?
3) If reading a passage that agrees with you brings so much pleasure, I ask that you consider that confirmation bias might be clouding your judgement.

No, my repeated assertion is that centralized spending decisions give more power than decentralized actors and that, in some cases, this makes up for the inefficiency in allocation of the power created. The whole point is that you don't need to be as informed as the market to have a net benefit.

The size of the pie also absolutely depends on concentration of decision making. A person with $1 Billion dollars to spend has more economic and real power than 10,000 people with $100,000 dollars each have total. Do you agree with this statement? I believe I can prove it if not.

And it's the power that matters because it's the power that provides utility.

Let's say that I find you the absolutely cheapest ticket to Timbuktu. Therefore, you should buy the ticket regardless of your preferences?

The public sector fails because because preferences are assumed. As a result, it's a given that we end up with quantities of public goods that do not match the preferences of taxpayers...but it's ok because the public goods were produced in the least costly manner. Taxpayers would have preferred more education...but instead they received more war. But no worries...the bullets were bought in bulk. I didn't need to have a heart transplant...but at least I got a great deal. My preference is to date women, but at least the guy I'm dating is low maintenance. I like to look on the bright side. (1)

Economies of scale are only valuable when whatever is being produced truly matches consumers' preferences. Otherwise, you're simply destroying value. You're shifting resources away from more valuable uses. (2)

1) And we're back to assuming the government know nothing about what people want. This is demonstrably false. Even if you assume all humans are special snowflakes with wildly diverging interests (we're demonstrably not), the government can easily gather data on mass trends. You can claim that this data may not be as good as a market system, as I have been stipulating for the sake of argument, but you would be hard pressed to show that this data is really bad.

2) It's not just an economy of scale. It's the difference between entire projects being feasible or unfeasible.

[Infactum]

1) Do you agree that goods have varying degrees of publicness? That is, under a tax choice system, there would be some goods which are more dispersed in their benefits than other goods despite both being offered on the "menu".

Unlike 100% of the other houses in my neighborhood here in Southern California..my front yard does not have a lawn. Instead, it has a collection of some of the most interesting and unusual tropical dry forest succulents and drought tolerant plants from around the world. My city actually gave me an award for it. Basically my front yard is a small slice of what people have to pay to see at local botanical gardens. Of course, nobody has to pay to see my yard. It's "free" for anybody who happens to be in the area. Does this mean though that everybody values my yard equally? Nope, my next door neighbor who frequently tells me how much she enjoys my yard told me that that the neighbor across the street said my yard was too full of "branches".

How dispersed are the benefits of my front yard? How many degrees of publicness does my front yard have? Just because the benefits are dispersed...does not mean that everybody values my front yard equally. The current system forces people to pay for things that they don't derive any benefit from. It's the equivalent of forcing my neighbor across the street to pay me for the maintenance of my yard despite the fact that my yard provides her with negative utility.

1. Is the forced rider problem a real problem?
2. Is the preference revelation problem a real problem?
3. Is it a problem that our current system concentrates benefits and disperses costs?

I'll be honest, I can't tell if an answer to my question is in there, unless you are declaring it unanswerable. Is this the case? I would think the obvious answer to the question is yes, but I would like to hear that from you.

1) The forced rider problem seems ill defined (do pacifists REALLY not benefit from the DoD?), but I could see how it has a negative contribution to the efficiency of a plan. I guess that makes it a "real" problem.
2) Understanding people's preferences better will certainly has a positive contribution to the efficiency of any plan. I guess that makes it a "real" problem as well.
3) Sort of. As it stands, what it means to "concentrate benefits" is ill defined. Lots of people may pay taxes to fund fewer people on welfare, but we all benefit from an efficient labor market. It would be a much much worse problem in a tax choice system where these concentrated benefits would exist as "defector" options.

No, Bob wouldn't. He strongly suspects that you will continue regardless, so he'll chip into other public goods (classing your efforts as a "public good" is suspect from my perspective, but I'll go with it) that he also values. Unless, of course, Bob is behaving irrationally and is not consistent with the assumptions of a market actor.

If Bob doesn't chip in, and has never chipped in...then how can you can jump to the conclusion that Bob values my efforts? What evidence do you have that he's straying from his true preferences?

For example, let's say that Bob values my efforts to share basic economics with others. But he strongly suspects that I'm going to continue to do so whether or not he gives me some positive feedback (money).

You defined it as part of bob's situation. Unless you are saying he does not know his own preferences until he spends money.

1) As long as there is a spread in the publicness of goods available, there is still incentive to lie.

So pacifists would have an incentive to pay for war? Because that would certainly be a lie. My neighbor across the street would have an incentive to pay for my front yard? That would also be a lie. Environmentalists would have an incentive to pay for a massive public works project that would destroy the habitat of extremely endangered plants and animals? That would also be a lie.

Honestly it's not a "lie" if somebody doesn't pay for something they think is adequately funded. Neither is it a lie if they are willing to forego funding something that they truly believe is underfunded...in order to avoid an even greater sacrifice.

The EPA is usually an environmentalist's priority...except when Canada is threatening to invade and kill everybody that the environmentalist knows and loves. How are you going to say that he's lying if he funds the DoD rather than the EPA? You're going to tell him that he's giving a false signal because he's not willing to sacrifice his family for snail darters?

The whole point is that there are ways to lie other than by spending money. You can just talk and lie about your priorities. Every lie you tell muddles the state of the universe for everyone else, which makes it harder for them to maximize their priorities. Considering that where I put my money depends so heavily on where you put yours, this is an issue. Unless you are willing to contend that spending is the only form of communication AND that tax choice contributions should be public.

2) If I can get you to pay for the highway, I can dump more money into the DoE. Both are public, but the DoE benefits me more than you (and we both benefit from the highway). The DoE also benefits me less than the highway does*. The best way to get you to fund the highway is to convince you that I am completely uninterested in the Highway and believe it to be useless, despite knowing it is useful. I may even try and convince you that I am irrational and cannot be convinced to fund it. It's an interesting new take on Highway Chicken. You would probably do the same to try and fund your favorite slightly less public agency. And we can see that there are all kinds of benefits to sending false signals.

It's a false signal to try and persuade you to fund something that I value? It's a false signal to try and persuade you to buy me lunch?

If the environmentalist can get out of paying the EPA simply by persuading you to pay the EPA instead...then good for him. But what the chances that your contribution is going to make up the difference? Are you that wealthy? Clearly the environmentalist isn't going to waste his time/energy trying to persuade you to pay for something that he feels is adequately funded. Therefore, from his perspective, the EPA is inadequately funded...which is why he's trying to persuade you to make a contribution to the EPA. If you think he's trying to pull a fast one on you...then why not just ask to see his receipt? If he already spent all his taxes on the EPA...then he could prove it simply by showing you his receipt.

There's not going to be anything "false" about neighbors trying to persuade each other that one shortage is more dire than another.

But that's not what's going no here. No one is trying to persuade anyone that one shortage is more dire than another. I value the highway system. Truly, I do. Let's say you do too. However, one of the best ways for me to get to spend my money elsewhere (and reap the benefit of the highway AND that) is to tell you that I do not value the highway system at all. I could try all different ways to do this. I could just be a really good lier. I could pretend to be selectively irrational. All of these are false signals.

If we do the whole pay as you go thing, I could spend my money in a globally suboptimal fashion and "defect" ASAP. Then show you the receipt and force you to choose the Highway system or your favorite slightly less public good. You, of course, would have the same option and idea. If we were both too fast, the highway would not get funded despite both of us preferring that to our pet project. Can you see how this would occur?

According to you, this sends the signal that I value the pet program more than the highway, but this is false. I would class that as a false signal.

Also, I'll admit to not having read the Samuelson paper because the conclusion is reasonable, I am short on time, and your arguement is invalid independent of Samuelson's correctness. He appears to be making approximately the same argument I am, however.

You really seem to be genuinely interested in the topic, but you're not willing to sacrifice the alternative uses of your time to read one of the most important (and shortest) papers on the topic? Are you giving me false signals? I'm just giving you a hard time. Clearly I appreciate the necessity of respecting people's freedom to prioritize.

Ok, it was shorter than I thought. He, as I understand it, makes (much more rigorously*) a similar point I have been making about public goods and lying, though he is using less game theory terminology.

*grumble, grumble, economists and their abuse of differential notation.

I'm just being whiny of course - it is my solemn duty as a scientist to complain about other fields' use of notation.

I agree completely, which is why a set of rational actors will tend towards the least public goods on the menu, which, in turn, often causes them to choose the least total good.

Regardless of their preferences? Regardless how underfunded a valued government organization is? All the people who voluntarily contribute to non-profits are going to lie about their priorities simply because they can choose where their taxes go? Environmentalists are going to forego funding the EPA in order to fund the least public good on the menu? (1)

If something lacks that much publicness...if the benefits are so narrow...if the interests are so special...then why in the world hasn't it been removed from the menu? What percentage of citizens would have to spend their taxes on a war in order for you to agree that the war constituted a genuine public good? For example, if only one person gave their tax dollars to the DoD in order to help fund a strike against Syria...would you say that the military strike was a public good? Would you say that it should be on the menu? (2)

What would be the threshold for a public good to be credible? What is the minimum percentage of the population that would have to fund a public good in order for it to be on the menu? Would you say that farm subsidies should be on the menu if only .001% of the population was willing to pay for them? (3)

1) Absolutely, if they are rational actors. Lying about your priorities is one of the best ways to get other people to fund them.
Some goods are not completely public, yet still more useful than money being spent on private goods. As a rule, these have less total benefit than fully public projects, but are still good uses of public funds once the fully public projects have been funded.
(2-3) I wouldn't set a threshold, because I don't think the general public is qualified to judge whether or not such things are goods. Preventing global warming is undeniably a good, yet people are far too shortsighted to have done anything about it. Regardless, I have been stipulating for the sake of argument that the public can accurately decide how much of a good something is. I feel no need to defend the notion therefore.

I won't pretend to speak for Samuelson, but you DO NOT need to precisely know a utility function to provision public goods in a good way. If you can approximate one at all you can have real utility gains. That is, over providing a Highway is probably better than optimally providing local roads. It is certainly possible, and that possibility is all you need to make tax choice not provably a better system.

Over providing a highway is never better than optimally providing local roads...given that optimally providing local roads frees up resources for more valuable uses. Why would I overspend on clothing when doing so would sacrifice money that could be spent on more valuable things?

Allow me to be more precise. Overproviding a highway and overproviding local roads is almost assuredly better than underproviding a highway and perfectly providing local roads. The lost highway does make up the few percent gain in efficiency on local roads.

Indeed, presuming that individuals need and will choose to buy, regardless of price, a given level of safety is a grossly simplistic and paternalistic view of human behavior. Consumers are often willing to forgo safety, because of the cost, in deference to other things. Some are even willing to forgo health and years of life in order to have other things now. People smoke even though they know that smoking is harmful. Poor people buy cheap, less-than-reliable electric appliances because by doing so, they can have more of other things. - Richard B. McKenzie, Bound to Be Free

(1)
If people forego the best/biggest highway possible...in order to give more money to cancer research...it would't be the "wrong" answer. It would be the allocation that provides the most value. It might not provide the most value to you...but clearly it provides the most value to society as a whole. It would be the most good for the most people.

Sacrifice reveals value. If people are willing to sacrifice the war on drugs...then it's because there are other public goods that they value more.

But the point is that they don't want to underprovide the highway, they just want everyone else to do it for them and let them fund their pet projects. They aren't choosing to sacrifice the highway, as whether the highway is sacrificed is not really up to them.

1) By the way, that quote is something I disagree with. It presupposes that people values are defined by the choices they make, which seems to get the causality wrong. I could launch into a diatribe about what makes a self and an actor and such, but that would be for another thread. I just wanted to lodge my objection to the notion "Person smokes => person values nicotine more than health."

1) Buchanan, if I am parsing this quote correctly, seems to be saying that there is not incentive to lie under the current system. That is debatable, but not obviously false. Unless he is talking about transitioning the current collection system to choice on the back end. It is not clear from the quote.

He's talking about people "earmarking" their taxes...designating exactly where their taxes go. He's saying that if the cost is a foregone conclusion, then people have an incentive to reveal their true preferences.

To my knowledge, Samuelson never once critiqued a decentralized system where the tax obligation was a foregone conclusion. Therefore, Samuelson, at least in his paper, definitely was not agreeing with your critique of false signals in a pragmatarian system. That I know of, there aren't any Nobel Prize economists that have critiqued a market in the public sector.

If you are correct, then Buchanan is provably wrong and seems to completely misunderstand game theory. Or he doesn't assume his economic actors are rational in the standard sense. He can be forgiven for this because the paper you quote from come less than a decade after vigorous investigation game theory started to pick up (according to my quick scan of wiki).

Samuelson claims that "No decentralized pricing system can serve to determine optimally these levels of collective consumption" in his 1954 paper. I would imagine this includes your compulsory contribution system (His logic above that certainly extends to your system in my analysis).

You don't have to know, you just have to believe. Lets say 85+% of the tax base believed that 70% level. Furthermore, they all believed that 85+% believed that. This, according to you, would be the absolute best prediction of the the future.

As a member of that tax base, would you fund the DoD or the Department of Education? This answer is important.

Either I believe that the DoD is worth my sacrifice...or I do not. If I fund it then clearly I believed that doing so would be worth the sacrifice. If I continue to fund it then clearly I confirmed that it was worth the sacrifice. (1)

Either you believe that it's worth it to sacrifice your time for me...or you don't. If you sacrifice your time for me...then clearly you're guessing that it will be worth the sacrifice. If you continue to sacrifice your time for me then clearly you confirmed that it was worth the sacrifice.

Every investment is a guess. If it turned out that the investment was profitable...then we continue to make the investment until a possibly more profitable opportunity presents itself.

Honestly I'm struggling with your question...so if the answer is important then you're going to have to rephrase it.

(1) Wrong. Either you believe that your contribution to the DoD is worth your sacrifice or you do not. This depends heavily on what other people choose. Which is the point here.

I'll be honest; I am unsure how to make the question any clearer. I have provided a situation that a member of your tax choice system could end up in and I want to know how you think that member would react. What additional information would you need (that you think our theoretical member could reasonably access)?

I am asking you, as a rational actor given a (fairly complete) set of preferences and beliefs about the world, to make a funding decision. If markets have any use at all, you should be able to do this. Please answer the question; it really is quite important.

The point is that a highway is entirely very feasible. For Congress. Getting independent actors to act in concert is somewhere between much harder and impossible (depending on rationality and information).

Yeah, and world wars are entirely very feasible as well. But just because something is feasible in no way shape or form means it's more valuable than the opportunity cost.

Yes, but by making the total set of feasible options larger, you can certainly increase the absolute maximum. x^2 hits a max at 16 on the interval [0,4], but it maxes at 25 on the interval [0,5]. More feasible options means higher maxes. It also can mean higher numbers that aren't maxes. 4.5^2 > 4^2 despite the fact that 5^2>4.5^2.

Choosing 4.5 over 5 has an opportunity cost of 4.75, while choosing 4^2 on the first interval has no oppurtunity cost. We're still better off choosing 4.5^2.

My apologies, I slipped into math jargon mode. By local I mean independent rationality, and by global I meant the the best collective set of choices for the actors.

Errr, the best collective choice for actors...within the US? Because those are the only individuals we care about? A more valuable answer can't possibly be found by eliminating barriers to trade? An individual is not collective enough...a global collective is too collective...so a national collective is just right? If environmentalists around the world want to give their taxes to the Brazilian EPA in order to conserve the Brazilian rain forest...then that's not the best collective choice for them?

Well, yes, ideally maximizing utility for all humans is the best. I just wanted to clarify how I am using the terms local and global. Global could truly mean the whole Earth if we could set up a one world government of something.

Yes, I understand opportunity cost and scarcity. These are not complex, and people waxing poetic on them is not actual argument.

Derrida wasn't just waxing poetic, he was giving a personal insight into the myriad of trade-offs and sacrifices that he has to make on a daily basis. It's the epitome of complexity.

The ideas of oppurtunity cost and scarcity, however, are not complex. The can be precisely defined in a few lines. Unpacking how they interact with every facet of economics becomes harder, but for any individual facet, it's not too bad.

1) That depends heavily on wherever everyone else chooses to put their funds. This dependence makes it a global game, which independent actors are bad at. Contrast things in the private sector: my utility/$ from buying diet coke does not go markedly down because enough money has been spent on diet coke by other people.

The goods/services available in the private sector does not heavily depend on where everyone else chooses to put their funds? Artichokes are an option solely because I choose to purchase them? If I stop purchasing them then they'll cease to be an option? Actually artichokes are an option because enough people are willing to pay for them to be an option. (1) If enough people are not willing to pay for them to be an option...then they really shouldn't be an option. Resources shouldn't be taken away from more valuable uses.

If I have enough artichokes...then there's no reason for me to buy more. If the EPA is adequately funded...then there's no reason for me to give them my tax dollars.

You have this concern that in a pragmatarian system people are going to fundamentally stray from their preferences. Yet, somehow you have absolutely no concern with how far the current system forces people to stray from their preferences. (2)

1) But artichokes don't have less return for you because enough people bought them (in fact they may have more if demand drive innovation). Similarly, diet coke doesn't become less useful for me after $1million dollars worth of money has been spent on it. Buying 120% as much diet coke as is optimal for the day may not make me 20% happier, but it will probably make me 15-18% happier. Or I can save it and save money tomorrow. The threshold amount spent is also, as a rule, smaller for private goods

In contrast, public goods tend to top out. Funding a highway at 120% of what it needs will probably give you a highway around 102% as good. The util/dollar function (which is what you want to maximize as a tax chooser) is generally highest near the threshold for a project.

2) I am certainly concerned with how the current system could better represent peoples' preferences. I don't think the pragmatarian system will make it much, if any better, and I certainly don't think it's worth the other negatives I would expect.

3) If reading a passage that agrees with you brings so much pleasure, I ask that you consider that confirmation bias might be clouding your judgement.

Passages bring me pleasure because other people have easily said what I struggle to say. Therefore, they bring me pleasure because they facilitate communication. Sometimes I struggle trying to understand what you're trying to say. So it might help you hedge your bets if you shared passages that convey your point using different words.

Fair enough. I tend to approach things scientifically, and so I have an instinctual distrust for that feeling. As far as other passages, I try to be quite precise with both the connotative and denotative load of my statements, and I find that others' words tend to misrepresent one or the other of these. I will see if I can find something, however.

1) And we're back to assuming the government know nothing about what people want. This is demonstrably false. Even if you assume all humans are special snowflakes with wildly diverging interests (we're demonstrably not), the government can easily gather data on mass trends. You can claim that this data may not be as good as a market system, as I have been stipulating for the sake of argument, but you would be hard pressed to show that this data is really bad.

I know you need food, clothing and entertainment...therefore just give me all the money that you'd spend on food, clothing and entertainment and I'll be your huckleberry? Close enough counts for horseshoes, hand grenades...and personal shoppers. C'mon, it will be a fun experiment. You'll be able to give me as many "hints" as you give your congressperson. How often do you personally talk to your congressperson anyways? Once a never? So it will be the same frequency with me. (1)

I'm actually not at all hard pressed to show that the data is bad...Does Consumer Irrationality Trump Consumer Sovereignty? If the data is really bad for somebody who knows you spending their own money on you...then the data has to be far worse for somebody you've never even met spending other people's money on you. Close enough counts for horseshoes and hand grenades...not personal shoppers. (2)

1) If you could by food and clothes for 1/10th the cost that I could and I could hold you to some degree of accountability, I would seriously consider it. Say by giving you 20% of what I would spend and letting you guess by buying twice as much as I might need and picking from it. Especially if it was your sole (theoretical) job to understand what spread of food and clothing people like. This, IMO, is the correct analogy to congress and public goods.

2) But it does. Performing 80% as good as a market in allocation, but 150% as good in production is a net win. Close is all you need because you can leverage collectivized action.

[Infactum]

I already explained that pragmatarianism is based on two concepts...

1. the free rider problem (Nobel Prize winning liberal economist Paul Samuelson)
2. the knowledge problem (Nobel Prize winning market economist Friedrich Hayek)

Now read this essay...The Use of Knowledge in Society...and share one passage that you disagree with the most and explain exactly why you disagree with it. Or just continue on with your irrelevance.

That's not actually explaining the relevance of that essay. You're just saying, "Yeah, well, I've got these two ideas and one of them is in that says me." It assumes that a) there aren't other things that we can attack (which we have) and b) is clearly an attempt to stop us talking about such criticisms. To show relevance of that essay you must explain why what it says is more fundamental to your ideas than what I rebutted here. Re-stating what you've already said just makes you look like a parrot and/or a broken record.

It also ignores as I have already pointed out specifically a section saying that your idea of "tax choice" creates the Free-rider problem, while it's difficult to see how it exists currently (i.e. a world where everyone contributes to everything the govt. does; provided they pay taxes).

Additionally, I suggest that you provide a framework that I could attach any theoretical response to Hayek to. What, for instance, are you taking out of that? What, in your words, is the meaning... Hayek's conclusion? Do tell us, Xero, what special part of Hayek's work is relevant to yours? Attempt to explain where Hayek's essay actually attaches to your idea.

I'll just edit in a request to Infactum. He seems to be much more sympathetic to your ideas than I am and, perhaps, I need a fresh perspective. Infactum, would you care to look over this post and its contents? No expectation of the sort of reply that you've just given Xero, of course.

I ran away from the spammer last night, but I'm back this morning for a bit.

I wouldn't characterize myself as sympathetic to Xero's ideas; indeed, I think he is wrong, provably so, and I think I know where the error in his logic is. I merely believe that he is arguing his position honestly, and I am interested to see if either one of us can convince the other (not likely on the internet, I know). I am almost certain he is honest, as the amount of prep work he has put in might put him in the hall of fame for most prepared troll ever if not.

I agree that Xero's position is not so simply derived from the 2 papers as he presents it, and the his error comes in the combination. So, it is reasonable for you to ask how he applies one to the other (though, from what he has said, I suspect I could hazard a fairly accurate guess to this question). Generally I think your criticisms are reasonable, though the tone can get a bit combative. I'm not certain why he isn't responding to you precisely.

I'll be back this evening to respond to you Xero. I have new examples that involve roommates and dogs . Those posts take much longer though, and I have to do Saturday things.

[Infactum]

I'll be honest, I can't tell if an answer to my question is in there, unless you are declaring it unanswerable. Is this the case? I would think the obvious answer to the question is yes, but I would like to hear that from you.

My implied answer was that it's irrelevant . If you think "publicness" is relevant then please explain its relevance using my front yard as an example.

You can't trust me for just a bit of extended logic? Lets say your front yard allows n=500 people to enjoy it (I am guessing at how many people are around you). Let further say that it provides each of them with an average $5 of entertainment even though it only costs you $500 a year to maintain it. I realize these numbers are wrong - you likely value you time much more than that. All that matters is the relative size of the numbers.

Contrast a highway. It serves, say n = 10 million people, providing them each with $10 a year in value at a cost of $1 million dollars. The highway is more public because it serves more people - its benefit is more dispersed.

Therefore, everyone will try and pay there own versions of Xero's front yards and the highway won't get funded, which is a net overall loss.

I've been through the math several times showing why this happens in similar situation, and you have yet to really respond to that, so I am not going to do so again here. I think I have a much more poignant example that doesn't require game theory.

1) The forced rider problem seems ill defined (do pacifists REALLY not benefit from the DoD?), but I could see how it has a negative contribution to the efficiency of a plan. I guess that makes it a "real" problem.

Ill defined? This doesn't seem fairly straightforward? (1)

Every set of institutions and policies tends, of course, to have both functional and dysfunctional effects. While regimes based upon free revelation or upon golden-rule revelation may be subject to some underallocation of resources due to free-riding, the apparatus of collective compulsion entails unintended detrimental side effects on its own. Most notably it results in "forced-riding" by individuals who are coerced into expressing nonexistent "demands" for collective goods. Or worse a "good" in fact may be a bad, in some views, from which it is economically not feasible for the individual to exclude himself, and for which compensation may be appropriate. - Earl Brubaker, Free Ride, Free Revelation, or Golden Rule?

2) Understanding people's preferences better will certainly has a positive contribution to the efficiency of any plan. I guess that makes it a "real" problem as well.

But tax choice wouldn't solve this problem because people would still have an incentive to "lie"? (2)

3) Sort of. As it stands, what it means to "concentrate benefits" is ill defined. Lots of people may pay taxes to fund fewer people on welfare, but we all benefit from an efficient labor market. It would be a much much worse problem in a tax choice system where these concentrated benefits would exist as "defector" options.

Another ill definition? Many people pay for farm subsidies (diffused costs)...while only a few people benefit (farmers). How could this problem be worse in a tax choice system? Nobody is going to pay for anything that they don't benefit from. (1)

1) Yes, both of these are ill defined, as the definition of what benefits someone is ill-defined. Pacifists may not believe that they benefit from the DoD, but they aren't dead/enslaved, so violence or the threat of violence has benefited them some way (assuming they don't want to be dead or enslaved). Does that mean they are forced riders or not?

Farm subsidies are an even better example. They began (partially - there were other reasons) to prevent a specific type of market problem known as the Dust Bowl (by paying farmers for land they did not farm). They seem to have succeeded and everyone benefits from there not being a(nother) Dust Bowl. Nowadays, I think that large farms would self regulate and that farm subsidies are less useful. Both the early days and the current day superficially resemble "disperse cost/concentrated benefits," but this was not the case in actuality. It is hard, however, to point to a specific time where the problem was no longer needful of government intervention. Reasonable people may argue that it is still necessary. Since it is hard to decide exactly how concentrated benefits are, it is perhaps more accurate to say that this problem is hard to define.

2) Yes, see below.

Also, what's with the scare quotes around the lie? If I want a highway built (or if even just believe I want a highway built), and I tell you I don't, then that's a lie.

The whole point is that there are ways to lie other than by spending money. You can just talk and lie about your priorities. Every lie you tell muddles the state of the universe for everyone else, which makes it harder for them to maximize their priorities. Considering that where I put my money depends so heavily on where you put yours, this is an issue. Unless you are willing to contend that spending is the only form of communication AND that tax choice contributions should be public.

I wouldn't be surprised if there were fundraising progress bars on government organization's websites. (1)

If we do the whole pay as you go thing, I could spend my money in a globally suboptimal fashion and "defect" ASAP. Then show you the receipt and force you to choose the Highway system or your favorite slightly less public good. You, of course, would have the same option and idea. If we were both too fast, the highway would not get funded despite both of us preferring that to our pet project. Can you see how this would occur?

When something is a priority, it means that you take care of it first. Why? Because you've decided that you derive the most value by doing so. So whatever somebody takes care of first, is by definition, their priority. (2)

1) Irrelevant. If I am trying to force my fellow tax payers to fund the more public goods, I will donate ASAP. If I am waiting to maximize my own value, then the more I know about how people have allocated their money, the better. That means I will behave better for every second I wait. Therefore I will wait till the last second. One of these strategies is optimal (likely the first one), and both prevent use of that information. Unless, of course, you would like to argue that people will behave suboptimally.

2) That's a terrible way to define priority and could only possibly be a rule in single player games. Multiplayer games are more complex. See below.

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

You say that you "love" the highway system, but you "forgot" to "water" it. It just doesn't follow. (1)

Maybe you made a mistake? Like I said, every endeavor is a gamble. There are no guarantees. Taxpayers, by virtue of having taxes to pay, are the people who make the least mistakes. They are also the people who learn from their mistakes. (2)

But it's doubtful that everybody would make the same mistake. So the Dept. of Transportation would receive some funding. And absolutely nothing would stop you from paying more than your fair share. Plus, nothing would stop you from holding a fundraiser. If enough funds weren't raised this year...then there's always next year. Rome wasn't built in a day. (3)

But you're critiquing pragmatarianism because some people's 1st best option wasn't funded...but their second best option was funded. How does that compare to our system? In 2007 a liberal congresswomen proposed a bill that would have allowed taxpayers to opt out of funding the Iraq war. They could have chosen to have their taxes go to education instead. Do you think she proposed the bill because the Iraq war was her 2nd best option? Was it her 3rd best option? Maybe her 10th best option? (4)

1) You, again, have gone back to a single player game. If there were two people who shared the responsibility of watering, even if both love it, it becomes more complex. See below again

2) I'm saying that despite the fact that I value the highway most highly, funding it is a mistake. I know this seems paradoxical to you, but your definition of "rational actors" and your defining peoples' utility functions from there choices actually leads to a contradiction. I'm going to link the game of chicken and the prisoner's dilemma later in this post - perhaps that will give you a better intuition on how this works.

3) You are present pragamatarianism as the unassailable utilitarian solution. Leaving that much money on the table relative to other systems undercuts this massively.

4) It's not their second best. I am reducing to two options to simplify the game theory, but most people, if given full control of the purse strings, would not choose to fund the less public good second, or third, or anywhere near the top, even though they fund it first with their differential contribution. Again, I know this seems paradoxical given your definitions, but your definitions contain a contradiction.

1) Absolutely, if they are rational actors. Lying about your priorities is one of the best ways to get other people to fund them.

Honestly this made me LOL. I want you to spend your time/money on pragmatarianism. Therefore, I should tell you that pragmatarianism is not my priority? What? (*)

So here is the situation I have been alluding to with "see below:"

Aerith and Bob are roommates. Each own a dog that they train for 60 min a day when they are home. Their apartment gets hot in the morning and one of them has to go open a window to cool off (it is closed the night before to keep warm at night). They train their dogs from 8:45-9:45am. The following behavior is observed:

(A) When home alone, both Aerith and Bob will take a 1 min break from their dog training at 9am to open the window.
(B) When together, at 9am, neither says a thing. Both are hoping that the other person is hot enough to go open the window. Finally, some large amount of time later (say, 9:30) something happens. One of them finally feels the need to speak up. Assume Aerith (clearly sweating and uncomfortable), says to the Bob, "Isn't it hot in here." Bob (Also clearly sweating and uncomfortable) says "I'm fine, but you can open the window if you want." Aerith either opens the window or says "Nahh, I'm not that hot" until it repeats.

Full analogy Spoiler:

Assume Aerith and Bob have agreed that each will spend 60min each day they are home improving the apartment in any way they choose. Since each knows the value of a well trained dog to the whole home, they have decided that either dog training or window opening are "apartment goods." Each, however, values training their dog more than training the other dog.

Questions:
1) Do you believe that this situation is reasonable? That is, do you believe that a set of roommates would behave like this? If not, Have you ever had a roommate before?
2) If your answer to first question above the above is yes, then we conclude from evidence (A) that both Aerith and Bob value and open window more than a minute of dog training at 9am. Do you agree with this?
3) According to your logic, evidence (B) means that Bob being in the room causes Aerith to suddenly stop caring about being comfortable relative to how much she values a trained dog. Do you agree that this is an accurate characterization of how you have been defining priorities?

And there is the problem. If you're not willing to suppose that the trained dog made Bob more happy than the heat made him sad because Aerith entered the room (I'm certainly not), then you must accept that people will not always act on their priorities when they have a chance to get others to provide them instead. This means that the definition of utility you have been using is wrong.

*) Yes, If you suspect that I want at least 1 person on NSG to promote pragmatarianism, then yes, you should. Let's say you were correct (you wouldn't be of course). If you can convince me that you don't care enough to promote your tax choice system, I will have to take up the reigns and make periodic threads promoting it. This saves you time while still having your ideology promoted. It seems lying about your priorities was an excellent choice for you.

I think I see the problem. You seem to refuse to assume that "rational actors" will behave like jerks when both work and benefit are shared. I think this speaks well of your character.

Some goods are not completely public, yet still more useful than money being spent on private goods. As a rule, these have less total benefit than fully public projects, but are still good uses of public funds once the fully public projects have been funded.

The war on drugs is a public good...therefore it provides more benefit than computers do? You can't determine how much benefit a good provides just by looking at how public or private it is.

(2-3) I wouldn't set a threshold, because I don't think the general public is qualified to judge whether or not such things are goods. Preventing global warming is undeniably a good, yet people are far too shortsighted to have done anything about it.

How do you know that taxpayers, if they'd been given the opportunity, wouldn't have given far more funding to the EPA than it currently receives? You agreed that the preference revelation problem is a real problem...which means that we don't currently know the preferences of taxpayers. You can't agree that the preference revelation problem is a real problem and then turn around and say that people have their hearts in the wrong place...or are shortsighted. If you think you know the true preferences of 300,000,000 people then clearly you don't believe that the preference revelation problem is a real problem.

These are merely my heuristics and I would really rather not derail the thread trying to convince you that the market can systematically fail. That requires protracted bits of logic and Psychological and Economic evidence. Reasonable people disagree on where these lines are. If you want to talk about that start another thread (or send me a TG).

As I said in the part you snipped, however, I have been assuming I'm wrong about that in my analysis and instead assuming humans are perfect little rational economic computers whose choice reflect an attempt to maximize their own utility. Even within those confines, the market is still imperfect at setting prices and would still swing.

Allow me to be more precise. Overproviding a highway and overproviding local roads is almost assuredly better than underproviding a highway and perfectly providing local roads. The lost highway does make up the few percent gain in efficiency on local roads.

Because I'm not advocating that the tax rate be decreased...funding is a zero sum game. If a highway receives less funding than it currently does...then the difference in funding doesn't just disappear...it's gets allocated to more valuable public goods. As a result we'd derive the maximum value from the levels of funding. (1)

But the point is that they don't want to underprovide the highway, they just want everyone else to do it for them and let them fund their pet projects. They aren't choosing to sacrifice the highway, as whether the highway is sacrificed is not really up to them.

By choosing to fund other projects, they are choosing to sacrifice the highway. Nobody forced them to choose their priorities. (2)

1) By the way, that quote is something I disagree with. It presupposes that people values are defined by the choices they make, which seems to get the causality wrong. I could launch into a diatribe about what makes a self and an actor and such, but that would be for another thread. I just wanted to lodge my objection to the notion "Person smokes => person values nicotine more than health."

Actions speak louder than words. The only real thing I can know about your values comes from observing what you're willing to sacrifice. Right now the only true thing I know about your values is that you're willing to sacrifice a decent amount of time to discuss economics. (3)

1) Not necessarily. Funding is a zero sum game, but public goods aren't. See the apartment or the situation on the DoD for why people might choose differently when in a "game" with others. Or do you believe that people will allocate their taxes independently of how they expect other people to allocate their's?
2) Wrong. They make up such a small percentage of the tax base, that their contribution would not really affect whether the threshold amount of spend was reached or not.
3) I probably shouldn't have said anything to keep the thread from exploding and because we continue to analyze homo economicus. Suffice it to say that I have a diatribe on why addiction influenced behavior is difficult to take seriously as a proxy for values. That, too is an issue for another thread though.

If you are correct, then Buchanan is provably wrong and seems to completely misunderstand game theory. Or he doesn't assume his economic actors are rational in the standard sense. He can be forgiven for this because the paper you quote from come less than a decade after vigorous investigation game theory started to pick up (according to my quick scan of wiki).

What specific game theory concept did Buchanan not understand?

The game of Chicken: http://en.wikipedia.org/wiki/Chicken_(game). Or one of a closely related family of games. Also, possibly the Prisoner's dilemma: http://en.wikipedia.org/wiki/Prisoner's ... lized_form. Depending on exactly how various actors approximate each others' game matrices.

Pay special attention to the section on Pre-commitment:
"One tactic in the game is for one party to signal their intentions convincingly before the game begins. For example, if one party were to ostentatiously disable their steering wheel just before the match, the other party would be compelled to swerve." from Kahn (1965), cited in Rapoport and Chammah (1966) - wiki's citation.

This is precisely analogous to me spending my money on the less public goods before you have a chance to choose between your own and the highway. Or to lie and say I will.

Samuelson claims that "No decentralized pricing system can serve to determine optimally these levels of collective consumption" in his 1954 paper. I would imagine this includes your compulsory contribution system (His logic above that certainly extends to your system in my analysis).

He said no decentralized system would work for public goods because people could reduce their tax obligation by lying. Here it is in somebody else's words...

Belief in the inevitability of the free-rider problem has gained wide acceptance among economists. The essence of this problem is that; for a Pareto-optimal solution to be reached, individuals must reveal their preferences for public goods. But since each individual consumes the total quantity of public good supplied, it is in any individual’s interest to understate the satisfaction he gains from consuming the public good, thereby only slightly reducing the quantity of public good supplied but significantly reducing his own tax burden. Everyone reasons in this way and the public good will be under-supplied. Thus arises a paradox: individually rational action leads to an outcome which is collectively irrational. - John McMillan, The Free-Rider Problem: A Survey

"but significantly reducing his own tax burden".

Can you point me to the place in the paper where Samuelson himself says that? I really can't find it.

In a pragmatarian system you can't reduce your tax burden by lying about how much benefit you derive from public goods. The tax burden is a given, so you might as well spend your taxes on the public goods which most closely match your preferences...in order to try and get your money's worth. (1)

(1) Wrong. Either you believe that your contribution to the DoD is worth your sacrifice or you do not. This depends heavily on what other people choose. Which is the point here.

But I can simply go to the DoD website and see if enough other people have funded it. It's doubtful that a government organization would benefit at all by hiding the amount of money they've received from taxpayers. (2)

1) When you're in a game against other players, how you "optimize" you value is somewhat non intuitive and may lead away from an overall optimum.
2) Maybe, but tax payers wouldn't benefit from committing before they had the most information unless they commit suboptimally immediately as discussed above. The bars would be useless if our population were rational.

I'll be honest; I am unsure how to make the question any clearer. I have provided a situation that a member of your tax choice system could end up in and I want to know how you think that member would react. What additional information would you need (that you think our theoretical member could reasonably access)?

I am asking you, as a rational actor given a (fairly complete) set of preferences and beliefs about the world, to make a funding decision. If markets have any use at all, you should be able to do this. Please answer the question; it really is quite important.

If I'm unclear on the question...then I'm unsure how to help you make it clearer to me. I'll have a webpage that will display the fundraising progress bars for my top 10 government organizations ordered by importance. The fundraising progress bars will be updated real time. I won't value each of the 10 public goods equally...and they won't all be equally funded. I'll be able to pay taxes at anytime throughout the year. How/when should I allocate my $10,000 in order to maximize my utility? What's my investment strategy going to be? Should I try and second guess the allocation decisions of 300 million other people? If I could do so successfully then I'd I'd be a billionaire. Instead, I'll allocate my taxes to the best of my ability...and then encourage others to contribute to my biggest priorities that have the biggest funding shortfalls. (*)

Well then I'll try and rephrase it.

You have the following well justified beliefs:
(A) If the DoD receives 70% of the overall budget, then they will create 1000+ years of unprecedented prosperity. There is no additional benefit for them being funded more than 70% and if they are not funded by at least 70%, then all of that money is wasted.
(B) Other government agencies benefits from every dollar given to them.
(C) 85+% of the tax base believes (A), and values that prosperity more than any amount of any other organization. They also have a favorite "pet" organization that they would prefer get the remaining 30%

You have the following preferences:
(X) Seeing the DoD funded is worth more than anything else you could pick.
(Y) You would prefer as much of the remaining 30% as possible is spent on the DoE. If the DoD is not sufficiently funded, you would prefer all 100% of the budget go to the DoE.**

How, and when, would you (as a homo economicus) split your funding in this situation? Please tell me if you need any more information. If you cannot answer this question, then you cannot begin to make predictions about how any given political system would interact with a market.

**replace the DoE with whatever normal spread of public programs you prefer.

1) If you could by food and clothes for 1/10th the cost that I could and I could hold you to some degree of accountability, I would seriously consider it. Say by giving you 20% of what I would spend and letting you guess by buying twice as much as I might need and picking from it. Especially if it was your sole (theoretical) job to understand what spread of food and clothing people like. This, IMO, is the correct analogy to congress and public goods.

Why 1/10th the cost? Where you getting that from? Do you think congress buys you public goods at 1/10th the cost? Is the EPA going to charge you 10 times more for environmental protection than they'd charge congress?

1/10 is about the return I expect happens on a typical public good. If I wanted to regulate a company, it would probably cost me about 10X what the EPA pays for the fraction of itself that regulates that company. Admittedly the number is something of a guess, but collective action is a very highly leveraged way of producing goods. It's the splitting the goods that is the issue.

[Infactum]

You can't trust me for just a bit of extended logic? Lets say your front yard allows n=500 people to enjoy it (I am guessing at how many people are around you). Let further say that it provides each of them with an average $5 of entertainment even though it only costs you $500 a year to maintain it. I realize these numbers are wrong - you likely value you time much more than that. All that matters is the relative size of the numbers.

Contrast a highway. It serves, say n = 10 million people, providing them each with $10 a year in value at a cost of $1 million dollars. The highway is more public because it serves more people - its benefit is more dispersed.

Therefore, everyone will try and pay there own versions of Xero's front yards and the highway won't get funded, which is a net overall loss.

I've been through the math several times showing why this happens in similar situation, and you have yet to really respond to that, so I am not going to do so again here. I think I have a much more poignant example that doesn't require game theory.

A net overall loss? How could you assume that everybody's pet projects (ie local parks) would provide them with less utility than nobody's pet projects (ie highways)? (1)Just because a project serves more people does not at all mean that it also provides each person with more benefit than a project that serves less people. Again, a world war would serve everybody...but it would provide nearly everybody with negative utility. (2)

Like most people you're putting the cart before the horse. You start with a preexisting idea regarding how many people each public good serves and how much benefit they each derive from it. Then you argue that the allocation of funding in a tax choice system wouldn't conform to your preexisting idea. Yes, there's absolutely no need to implement pragmatarianism if you think your guess is good enough regarding how much benefit people derive from each and every good in the public sector...which is half our economy. (3)

You start at the current supply of public goods, derive people's preferences from it, and then argue that a pragmatarian supply of goods would deviate from the current supply...and hence deviate from people's preferences.

Like I said, this is what most people do...

Like I said, I'm not doing the math again.
1) It doesn't always have to be true. It just has to be true in some cases that could be predicted with some reasonable accuray. Then, in those sectors of the market, Congress would outperform the Market.
2) I know, it sounds contradictory, doesn't it. It's almost as contradictory as the prisoner's dilemma where ratting your partner out serves you but provides everyone with negative utility.
3) Again, I don't have to show that it is in all cases true. I merely have to show that there are goods accessible to a central actor that are inaccessible to a large set of market actors (we'll get to the rational actor later). If this true, then the central actors can produce more goods than a Market.

And you seem to have missed the point. There is a continuous distribution of public versus private goods. In a very real sense, your yard is "more private" than a highway. This, despite the fact that we might still consider your yard a public good and want it to be funded. Do you disagree with this?

At the far "private" end of the spectrum we have your own dollar (completely rivalrous and completely excludable).

The way you argument looks to me is that when you make taxes optional, people will take the most private good available (keep their $). When you make them an obligation, they will no longer take the most private good available.

How, then, are demand functions revealed? It would be disingenuous, to say the least, in an exercise whose object is to discover how demand is revealed, to assume that, ex ante, centers of power know the preferences of consuming households. - Albert Breton, Competitive Governments: An Economic Theory of Politics and Public Finance

Planned/command economies are based on non-sequitur economics. The conclusion (how society's limited resources are used) does not follow from the premise (people's preferences). Why doesn't it? Because people's preferences are assumed. You're assuming people's preferences (a highway) and working backwards to show why pragmatarianism would lead to less utility.

It would also be disingenuous, to say the least, that centers of power know nothing about demand preferences.

Another aspect you've entirely ignored is the idea that public goods are essential inputs...

I hear all this, you know, “Well, this is class warfare, this is whatever.”—No! There is nobody in this country who got rich on his own. Nobody. You built a factory out there—good for you! But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that maurauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. - Elizabeth Warren

The argument here is that you can't get rich without public goods. Is it true? It's not unreasonable. What is unreasonable though is to argue that it is true, but millionaires would rather lose their millions than spend their taxes on the public goods that their millions depend on. (1)

You don't see public goods as inputs because again, you're starting from your preexisting notion and working backwards. Are public goods essential inputs for the outputs that we depend on? Will people be able to see the correlation between lost revenue and underfunded inputs? Will they have an incentive to increase the funding of inputs in order to increase their revenue?

As I said before, people are taxpayers because they make the least amount of mistakes...and they learn from their mistakes. A "mistake" is getting the balance of inputs wrong. A baker makes a mistake when he puts too much salt in a recipe. Does he learn from the mistake? A baker makes a mistake when he orders too much salt...which deprives him of room he needs for other essential ingredients. Does he learn from the mistake? Competition means that the baker always has an incentive to come up with a better balance of inputs. Therefore, people are taxpayers because they come up with better balances of inputs. If this is true in the private sector, then it will be true in the public sector as well. (2)

1) Not when they can get other millionaires to do so instead. That's how they became millionaires.
2) Incorrect and wildly irresponsible generalization. The behavior of people in these markets is wildly different.

1) Yes, both of these are ill defined, as the definition of what benefits someone is ill-defined. Pacifists may not believe that they benefit from the DoD, but they aren't dead/enslaved, so violence or the threat of violence has benefited them some way (assuming they don't want to be dead or enslaved). Does that mean they are forced riders or not?

Again, sure, they aren't forced riders as long as you assume that they benefit from something. Next time somebody pulls a knife on you in a dark alley don't forget to assume that responding to violence with violence will always be in your benefit. (0)

Farm subsidies are an even better example. They began (partially - there were other reasons) to prevent a specific type of market problem known as the Dust Bowl (by paying farmers for land they did not farm). They seem to have succeeded and everyone benefits from there not being a(nother) Dust Bowl. Nowadays, I think that large farms would self regulate and that farm subsidies are less useful. Both the early days and the current day superficially resemble "disperse cost/concentrated benefits," but this was not the case in actuality. It is hard, however, to point to a specific time where the problem was no longer needful of government intervention. Reasonable people may argue that it is still necessary. Since it is hard to decide exactly how concentrated benefits are, it is perhaps more accurate to say that this problem is hard to define.

Sure, if you assume a solution is the best then there's no point in looking for alternatives. I can't ever "win" when you assume solutions and benefits...because my entire argument is based on unknown solutions and benefits. (1)

The problem with concentrated benefits and diffuse costs is that when costs are widely dispersed it's impossible to know whether the benefits exceed the opportunity costs. There is no rational calculation...because rational calculation is only possible when you yourself have to bear the cost. (2) This system is "convenient" for those who receive and disperse the concentrated benefits.

The linking of marginal benefits and costs is essential for a sound fiscal regime. Under the existing congressional budget process, however, the two sides of the federal budget largely are divorced. Together with strong political incentives to hide the cost of government (either by deficit financing or moving items "off-budget") and to concentrate benefits, the separation of spending and taxing decisions invariably lead toward excessive federal spending and, hence, eventually to excessive taxation. - James a. Dorn, The Principles and Politics of Tax Reform

A tax choice system would solve this problem because costs would be concentrated. A bridge would be built between cost and benefit. This is known as fiscal equivalence. Without this bridge there's just fiscal illusion. (3)

0) You realize , of course, that the DoD provides some benefit non-zero, yes? Or do you refuse to assume that?
1) Yes, more precisely: Your entire argument is based on the assumption that it is impossible to know anything about anyone's preferences (individually or in aggregate) without the market. I think this assumption is false. I think further that your insistence that choices are the only source of information about preferences blinds you to other ways we can get this information.
2) If you really believe that humans are incapable of empathy, then perhaps we won't be able to convince each other.
3) Or accurate, if not precise, approximation.

Also, what's with the scare quotes around the lie? If I want a highway built (or if even just believe I want a highway built), and I tell you I don't, then that's a lie.

If you don't spend your taxes on a highway...and you tell me that you don't want to spend your taxes on a highway...then I should assume you're lying? So when your words align with your actions then I should believe the opposite? No, I think I'll stick with the idea that actions speak louder than words.

If you are that easily decie... whoops... I mean you sound very honest and forthright. You should immediately invest your net worth in a startup. You'll be a great negotiator. "You can't con an honest man," after all. I'll help you get started. I'll... I mean we'll make a mint. I hear the welfare lin... I mean mansions are very nice nowadays.

Seriously though, it's like you are incapable of imagining people lying to and manipulating each other for personal gain.

1) Irrelevant. If I am trying to force my fellow tax payers to fund the more public goods, I will donate ASAP. If I am waiting to maximize my own value, then the more I know about how people have allocated their money, the better. That means I will behave better for every second I wait. Therefore I will wait till the last second. One of these strategies is optimal (likely the first one), and both prevent use of that information. Unless, of course, you would like to argue that people will behave suboptimally.

Likely the first one? Which one is it? (1) There's no point in telling me that game theory will destroy the system if you can't tell me with certainty that there's a best strategy. Right now you'll have me believe that everybody will either pay their taxes really early...or really late. Everybody's rushing to pay their taxes on Jan 1st. Jan 2nd it's too late. So nobody pays any more taxes until April 15. All through the year people are going to get mugged, hit potholes, get sick...but they aren't going to do anything about it because they either already spent their taxes or they'll have to wait until April 15. (2)

From my perspective...it doesn't at all sound like you believe that there's any demand for public goods. If nobody feels absolutely any need to go shopping in the public sector for 364 days out of the year...then I honestly don't think we need a government. It's good we figured this out rather than continue to waste half our country's resources supplying things that there's absolutely no demand for.(3)

1) There is an answer, but it depends on a lot of factors (what's on the menu, last years funding report, etc). One of those two is optimal, however, and the populous would probably be split somehow between them.
2) Oh, I can certainly see people being irrational. It's your system that assumes they aren't. But you see, homo economicus is the price you pay for your market meaning anything at all.
3) Only by your definition of demand. People generally value things at more than they are willing to pay for them, you realize? The reason they aren't willing to pay often comes from competition. Other actors influencing what people are willing to pay.

2) That's a terrible way to define priority and could only possibly be a rule in single player games. Multiplayer games are more complex. See below.

What is this thread? Replying to you is my priority...therefore I should reply to you last? Priorities always reflect what people know about their circumstances. As circumstances change...as new information becomes available...people's priorities often change. It would be ridiculous for them not to.

In some games, how you act on your priorities is different than in other games. I really don't see why this is so hard to understand.

1) You, again, have gone back to a single player game. If there were two people who shared the responsibility of watering, even if both love it, it becomes more complex. See below again

Why have two people water rather than simply figure out the optimal division of labor? I'll take care of the outside you take care of the inside. You take care of highways and I'll take care of the EPA. This allows us to focus on learning one thing really well...rather than learning numerous things rather poorly.

I agree completely with this. We can mandate we don't lie about these things by contract or law. And then we can pay a smaller amount of people to learn things really well and make recommendations. Say, perhaps, 535 people would suffice. Each with access to experts and a legal obligation to choose the best option. It may be open to a little corruption and wouldn't be able to capture how everyone valued everything exactly, but the benefit of the focus and continuous seeking of information would outweigh the cost. What do you say?

2) I'm saying that despite the fact that I value the highway most highly, funding it is a mistake. I know this seems paradoxical to you, but your definition of "rational actors" and your defining peoples' utility functions from there choices actually leads to a contradiction. I'm going to link the game of chicken and the prisoner's dilemma later in this post - perhaps that will give you a better intuition on how this works.

I never make arguments in terms of rationality. Instead, I argue that people make mistakes and there are negative consequences. If you make a mistake and bet on the wrong horse, then you'll diminish your influence over how society's limited resources are used.

So, are you saying that people don't act to maximize their preferences (to the best of their knowledge). Because that's the rationality I've been talking about. You need that assumption to make market economics work.

3) You are present pragamatarianism as the unassailable utilitarian solution. Leaving that much money on the table relative to other systems undercuts this massively.

It's not on the table, it's been allocated to the Dept of Transportation. They'll simply start the project when they reach their funding goal. If they don't reach their funding goal after a designated period of time, then they'll use the money for other projects. If taxpayers aren't happy about this then they'll learn from their mistake.

4) It's not their second best. I am reducing to two options to simplify the game theory, but most people, if given full control of the purse strings, would not choose to fund the less public good second, or third, or anywhere near the top, even though they fund it first with their differential contribution. Again, I know this seems paradoxical given your definitions, but your definitions contain a contradiction.

Our current system is the equivalent of NRA supporters having to contribute to PETA and vice versa. Is that near the top, middle or bottom?

Yes, but If I support the NRA and PETA, but PETA more*. Then I would prefer that say, 70/30 of the taxes go to PETA/NRA**. In order to ensure this, I would dump all my money on PETA to make other NRA supporters support it.

*just to ensure that I am assuming that I am least like myself
**taxes going to lobbying groups directly... the market can even optimize the circle of life.

Aerith and Bob are roommates.

I've had plenty of roommates. In Spain I had a German roommate who one time started to masturbate as soon as the light was turned off. I yelled at him to wait at least until I fell asleep. He just giggled in German.

Your scenario is unrealistic because when Aerith and Bob are alone they both open the window at exactly the same time. What are they...clones? I've never had a roommate...or gf...where we've exactly agreed on the temperature. Same thing with cleaning...and everything else.

If people's utility functions align so perfectly then there's absolutely no reason to give them the freedom to shop for themselves in the public sector. If that's been your experience in life then...well...I don't know how I can possibly argue against proxy shopping.

You realize, of course, that the situation would have been unchanged if Bob had prefered decorative quilting (and hanging then) and opening the window at 8:59, while Aerith trained her dog and opened it at 9:03. This concept even got it's own dilbert comic: http://dilbert.com/strips/comic/2006-12-24/. If you can really not imagine any similar situation, then you have have some remarkably well adjusted people you roomed with (your German friend notwithstanding).

*) Yes, If you suspect that I want at least 1 person on NSG to promote pragmatarianism, then yes, you should. Let's say you were correct (you wouldn't be of course). If you can convince me that you don't care enough to promote your tax choice system, I will have to take up the reigns and make periodic threads promoting it. This saves you time while still having your ideology promoted. It seems lying about your priorities was an excellent choice for you.

Uh, what? So I can "sell" you pragmatarianism by feigning indifference? I'm going print a 1000 flyers, knock on a 1000 doors, hand the fliers to 1000 people and each time I'll shrug and say "eh, this is, whatever." What are the fliers going to say?

You've completely ignored the bolded. You get me to make the fliers.

I think I see the problem. You seem to refuse to assume that "rational actors" will behave like jerks when both work and benefit are shared. I think this speaks well of your character.

No. People are selfishly gaining even when they are being selfless... (1)

Sacrifice will always be distinguished from the pure gift (if there is any). The sacrifice proposes an offering but only in the form of a destruction against which it exchanges, hopes for, or counts on a benefit, namely, a surplus-value or at least an amortization, a protection, and a security. - Jacques Derrida, Given Time: Counterfeit Money

The problem is that if one is acting to secure what is most noble for oneself, considering that most choiceworthy, one cannot truly be said to be sacrificing one's good, as one understands it. It will not do to say that one makes a true sacrifice but somehow still comes out ahead. Exchanging a lesser good for a great good is not a sacrifice but a gain. Nor will it do to say the hero cares only about the good of others and really gives up his happiness for them, and that nobility comes to him incidentally as a kind of consolation prize. Nobility is, Aristotle stresses, the very goal that the heroic soul keeps its sights fixed upon. - ?

In China the waiters and waitresses were jerks. Why? Because Chinese people aren't as nice as Americans? No, because tipping isn't a thing in China. People need incentives. Markets are simply a system where we can choose who we want to incentivize to continue to use society's limited resources for our benefit.

1) What? Your entire point is that rich people will maximize there own interests and that public goods are in their interest. That is not selfless. I think I see what your getting at (maybe with the quote), but I think it's an abuse of definitions at best.

These are merely my heuristics and I would really rather not derail the thread trying to convince you that the market can systematically fail. That requires protracted bits of logic and Psychological and Economic evidence. Reasonable people disagree on where these lines are. If you want to talk about that start another thread (or send me a TG).

I prefer public discussions...and I wouldn't at all mind starting another thread...except for the part where I'm sure that, unlike myself, you wouldn't get any slack for doing so. Therefore, you start the thread if you don't want to discuss it here.

I have no problem with the idea that markets fail...but my conclusion is obviously completely different from your own. Every successful new service/product is a solution to a market failure. An entrepreneur identified/discovered a deficiency (failure), made a guess how to solve it, and put their solution on the market. If the market never failed then it would be perfect...and there wouldn't be any room for improvement.

So markets fail...and succeed. Governments fail...but they can never succeed. The only way they could succeed would be to give consumers the opportunity to use their tax dollars to indicate where the government is succeeding. If we can truly identify success outside of markets...then there really wouldn't be a need for markets at all.

It requires delving into what makes a "person." Or "actor." - that applies to the addiction thread, my apologies.

It is slightly speculative, in that the best illustrations come from the real world violating market assumptions. For all of recorded history, the state has influenced the market, so the (IMO very compelling) speculation is how the market would behave in the absence of a state. I think it's very convincing. You refuse to allow speculation that a person who hasn't eaten for 10 days would choose a meal over a piece of gravel (before the market says so). I imagine, therefore, that it would be a long, involved, unproductive side discussion, and I'd rather stay on topic.

1) Not necessarily. Funding is a zero sum game, but public goods aren't. See the apartment or the situation on the DoD for why people might choose differently when in a "game" with others. Or do you believe that people will allocate their taxes independently of how they expect other people to allocate their's?

How could people possibly allocate their taxes independently of their expectations? If I know that you can't handle the heat as well as I can, then how can my decision whether or not to open the window not reflect my expectation of your behavior? If you know that I'm not at all bothered by the heat...then how could that not factor into your decision? (1)

You're trying to simplify the situation in order to prove a point...but you're eliminating the factors that necessitate pragmatarianism. Of course pragmatarianism isn't going to be needed or relevant if you assume away the very point of pragmatarianism. (2)

1) It's like you've almost got the point. These factors are what lead a set of rational actors to behave in a globally irrational fashion.
2) And then there's this. I don't have to assume this is every situation. But if there is ever a situation where the payoff matrices look like this AND the people have a reasonable approximation of what the payoff matrices look like, then this will happen and pragmatarianism is suboptimal. There are lots of situations with such matrices. And people aren't as wholly incompetent as you believe them to be.

3) I probably shouldn't have said anything to keep the thread from exploding and because we continue to analyze homo economicus. Suffice it to say that I have a diatribe on why addiction influenced behavior is difficult to take seriously as a proxy for values. That, too is an issue for another thread though.

Another thread that I should start? Are we playing chicken? Just like with rationality...homo economicus is of no value even as a heuristic. All that matters is mistakes.

I don't use homo economicus as a heuristic... I must be significantly less clear than I think I'm being. I thought I made it clear that I don't even like it as a concept, but grudgingly accept the empirical backing of the model in some cases (certain private goods).

Learning from mistakes is an aspect of homo economicus. You assume people want to and will reasonably competently act to maximize their own preferences. That is homo economicus.

The game of Chicken: http://en.wikipedia.org/wiki/Chicken_(game). Or one of a closely related family of games. Also, possibly the Prisoner's dilemma: http://en.wikipedia.org/wiki/Prisoner's ... lized_form. Depending on exactly how various actors approximate each others' game matrices.

I was curious whether you might be able to pull up something that I don't already know about game theory.

If you understand this, then you understand the incentive to lie. Your quoting of Buchanan suggests otherwise.

Can you point me to the place in the paper where Samuelson himself says that? I really can't find it.

Dang. Sometimes it feels so hopeless. It's really not a small hill of information that you have to climb to see the truth. Not that it's Mt. Everest...but for most people it might as well be.

by departing from his indoctrinated rules, any one person can hope to snatch some selfish benefit in a way not possible under the self-policing competitive pricing of private goods;

Out of context it doesn't really say exactly the same thing. But in context, it says exactly the same thing to anybody who knows exactly what Samuelson was referring to when he said...

I must emphasize this: taxing according to a benefit theory of taxation can not at all solve the computational problem in the decentralized manner possible for...

So, you have to read up on the benefit principle. It's probably not the top of the mountain though. Most people fall out before they even make it to the base of the mountain. Take Forsher for example. Clearly he struggles to even read one essay. Either the topic doesn't interest him enough...or...

Does it bother you that people who climb your "Mountain of truth" come to wildly divergent conclusions? It should. Even if we restrict to people with a PhD in econ, there are a large variety of policy recommendations from different schools (though most don't doubt that validity of each others' underlying theories - just the soundness).

You know exactly what Samuelson meant? Impressive. To me that just means people will snatch the least public of the public goods on the menu and that this is suboptimal. His statement was very general, and I think it applies.

Forsher could also be uninterested in signalling to you that he will dance when you say dance. If I recall correctly Forsher is, was, or wants to be an Econ undergrad - the former two are claims to formal training. ASB also claims very large amount of formal training if I recall correctly (I don't want to misrepresent someone else, but I thought he either had a graduate degree in Econ, a job related to economic policy, or both). I am inclined to believe both of them. I would be careful how quickly you dismiss their criticism.

I, in contrast, was a Math and Physics Major, and am now in graduate school for Physics. Game theory and thinking through economic policy is more of a hobby.

You have the following well justified beliefs:
(A) If the DoD receives 70% of the overall budget, then they will create 1000+ years of unprecedented prosperity. There is no additional benefit for them being funded more than 70% and if they are not funded by at least 70%, then all of that money is wasted.

Blind faith in the efficacy of the DoD...or radical uncertainty...

It is a world of change in which we live, and a world of uncertainty. We live only by knowing something about the future; while the problems of life, or of conduct at least, arise from the fact that we know so little. This is as true of business as of other spheres of activity. The essence of the situation is action according to opinion, of greater or less foundation and value, neither entire ignorance nor complete and perfect information, but partial knowledge. - Frank H Knight, Risk, Uncertainty, and Profit

It probably really doesn't help that I've worked for the DoD in tactical, operational and strategic capacities. Let me just say that they could do infinitely more with significantly less. And they're never going to have the incentive to do so unless taxpayers can choose where their taxes go. Continue climbing by reading up on Exit, Voice and Loyalty...it will help you appreciate it when Alex Tabarrok said, "It’s the threat of exit that makes people listen."(0)

How, and when, would you (as a homo economicus) split your funding in this situation? Please tell me if you need any more information. If you cannot answer this question, then you cannot begin to make predictions about how any given political system would interact with a market.

There are predictions that I can't make... (1)

If we knew how freedom would be used, the case for it would largely disappear. - Friedrich A. Hayek

...and predictions that I can make. Like, people hate being ripped off. People hate being ripped off...therefore? Therefore what? Do you doubt this premise? I've offered to sell numerous people my belly lint collection for $1000...and so far nobody has taken me up on it. So can you reach any conclusions based on the fact that everybody hates being ripped off?

For me the conclusion is obvious. People hate being ripped off...therefore, people who offer the least value are constantly being weeded out of the market. If we create a market in the public sector...then suddenly people are going to love being ripped off? (2)I really don't think so. And I love the given conclusion. It's worth sacrificing for.

0) It's a pet peeve of mine, I'm sorry, but could you quit with the "infinitely" stuff? It's clearly false (available good is finite), and only serves to muddle the issue.
1) Sure you can. You may doubt the reasonableness of the situation, but this is a game of Chicken (or our actor has well justified beliefs that it is so). You've given the ability to precommmit, so homo economicus precommit to the DoE ASAP.
2) Nope, but they're going to do everything in their power to rip each other off. As they do in the private sector. This is especially bad given the nature of the goods, as I have been arguing.

1/10 is about the return I expect happens on a typical public good. If I wanted to regulate a company, it would probably cost me about 10X what the EPA pays for the fraction of itself that regulates that company. Admittedly the number is something of a guess, but collective action is a very highly leveraged way of producing goods. It's the splitting the goods that is the issue.

Are you arguing that the EPA would receive less funding in a pragmatarian system than it does with our current system?

I'm not sure it would receive any. This despite the fact that most tax payers would choose to apportion the whole budget such that the EPA get some. Regardless, the least public goods will be funded. They tend to have a lower rate of return than the more public goods, and when this is the case, pragmatarianism loses that lever.

edit: grammar and a few changes where I had the flow wrong

[Infactum]

First off, thank you for bringing together some of the arguments, it did seem we were talking about the same things multiple times. Something seems to have gotten lost in the collection though, and I thought it might convince you.

Do you agree, from my previous post, that there are varying degrees of "publicness" of goods that we might want to fund through taxes?

If so, why do you expect people to choose the most private good available (cash) when taxes are optional, but to fail to do so when they are mandatory?

0) It's a pet peeve of mine, I'm sorry, but could you quit with the "infinitely" stuff? It's clearly false (available good is finite), and only serves to muddle the issue.

The Great Leap Forward resulted in 30 million people starving to death... (1)

Apart from their other characteristics, the outstanding thing about China's 600 million people is that they are "poor and blank". This may seem a bad thing, but in reality it is a good thing. Poverty gives rise to the desire for changes the desire for action and the desire for revolution. On a blank sheet of paper free from any mark, the freshest and most beautiful characters can be written; the freshest and most beautiful pictures can be painted. - Mao Zedong

Over 60 million people were killed in WWII... (2)

However well balanced the general pattern of a nation's life ought to be, there must at particular times be certain disturbances of the balance at the expense of other less vital tasks. If we do not succeed in bringing the German army as rapidly as possible to the rank of premier army in the world...then Germany will be lost! - Adolf Hitler

Stalin killed millions... (3)

Joseph Stalin decided how much food was needed by the inhabitants of the Ukraine. What they did not 'need' was seized by the Soviet government and shipped elsewhere. During the years 1932 and 1933, some millions of Ukrainians died of starvation. During each of those years, according to Soviet figures, the Soviet Union exported about 1.8 million tons of grain. If we accept a high figure for the number who starved—say, eight million—that grain would have provided about two thousand calories a day to each of them. - David Friedman, The Machinery of Freedom

These were all centralized systems...and it all boils down to what Smith and Hayek referred to as "conceit"...

The Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive. - Paul A. Samuelson

It would also be disingenuous, to say the least, that centers of power know nothing about demand preferences.

[...]

3) Again, I don't have to show that it is in all cases true. I merely have to show that there are goods accessible to a central actor that are inaccessible to a large set of market actors (we'll get to the rational actor later). If this true, then the central actors can produce more goods than a Market.

[...]

2) And then there's this. I don't have to assume this is every situation. But if there is ever a situation where the payoff matrices look like this AND the people have a reasonable approximation of what the payoff matrices look like, then this will happen and pragmatarianism is suboptimal. There are lots of situations with such matrices. And people aren't as wholly incompetent as you believe them to be.

[...]

I agree completely with this. We can mandate we don't lie about these things by contract or law. And then we can pay a smaller amount of people to learn things really well and make recommendations. Say, perhaps, 535 people would suffice. Each with access to experts and a legal obligation to choose the best option. It may be open to a little corruption and wouldn't be able to capture how everyone valued everything exactly, but the benefit of the focus and continuous seeking of information would outweigh the cost. What do you say?

[...]

1) Yes, more precisely: Your entire argument is based on the assumption that it is impossible to know anything about anyone's preferences (individually or in aggregate) without the market. I think this assumption is false. I think further that your insistence that choices are the only source of information about preferences blinds you to other ways we can get this information.

[...]

0) You realize , of course, that the DoD provides some benefit non-zero, yes? Or do you refuse to assume that?

[...]

I'm not sure it would receive any. This despite the fact that most tax payers would choose to apportion the whole budget such that the EPA get some. Regardless, the least public goods will be funded. They tend to have a lower rate of return than the more public goods, and when this is the case, pragmatarianism loses that lever.

Contrary to what you know and Samuelson knew, the outcomes of decentralized systems are infinitely better than the outcomes of centralized systems. (4)I'm sorry that you think I'm not using the word correctly, but I can't think of a better word to emphasize the incredible difference between millions being killed and millions thriving.

1) Yes, they tried to centrally plan private goods. IMO, I attribute this more to the fact that humans are corruptible than to the fact that they were unable to predict how much food people would need. Failure of preference revelation may have been a factor, but it certainly wasn't the only one. This is far different than centrally planning public goods while also having public accountability.
2) And if the allies' publics had failed to sufficiently fund* a standing army because they didn't believe it was necessary, how many more would have died? Attributing these deaths to an individual economic/taxation system is failing to look at the whole picture.
3) Yep, Stalin was a tyrant of the type naturally produced when people have too much power and too little accountability. They tend to kill people. It is artificial to blame this on an economic/taxation system.
4) Always? You have yet to prove this generalizes. Even if you can attribute all 100million+ deaths to lack of pragmatarianism (which would be incredibly narrow minded), That isn't enough to use the word infinitely. Try "Many orders of magnitude." I think that is a mischaracterization as well, but it at least doesn't harm my math sensibilities so much.

*ASB has brought up the fact that Congress also allocates specifically what things are for, but I am allowing for the possibility that you want to turn government agencies into their own little "corporations," presumably with boards of directors. I can think of issues with this, but we'll elide them for now.

Hayek understood why there was such a disparity between the outcomes...

The problem is thus in no way solved if we can show that all the facts, if they were known to a single mind (as we hypothetically assume them to be given to the observing economist), would uniquely determine the solution; instead we must show how a solution is produced by the interactions of people each of whom possesses only partial knowledge. To assume all the knowledge to be given to a single mind in the same manner in which we assume it to be given to us as the explaining economists is to assume the problem away and to disregard everything that is important and significant in the real world. - Friedrich Hayek, The Use of Knowledge in Society

He saw the necessity of having nearly all the goods/services be supplied by the private sector...but didn't think it was viable for defense, courts and police. So he left one of the most potentially dangerous goods under the control of conceited centralized planners.

The importance of not assuming people's preferences is equally applicable to all goods (1)...which is why we should create a market in the public sector. The optimal balance of public goods would be achieved by giving taxpayers the freedom to try and use their tax dollars to correct any imbalance that they perceive.

1) You keep saying this, but you have yet to prove it. It should be easy, according to you. State your assumptions and derive this fact. Are you at all familiar with formal proof? It would truly help me understand your logic better.

So, are you saying that people don't act to maximize their preferences (to the best of their knowledge). Because that's the rationality I've been talking about. You need that assumption to make market economics work.

[...]

I don't use homo economicus as a heuristic... I must be significantly less clear than I think I'm being. I thought I made it clear that I don't even like it as a concept, but grudgingly accept the empirical backing of the model in some cases (certain private goods).

[...]

2) Oh, I can certainly see people being irrational. It's your system that assumes they aren't. But you see, homo economicus is the price you pay for your market meaning anything at all.

[...]

Learning from mistakes is an aspect of homo economicus. You assume people want to and will reasonably competently act to maximize their own preferences. That is homo economicus.

[...]

If you understand this, then you understand the incentive to lie. Your quoting of Buchanan suggests otherwise.

[...]

1) Sure you can. You may doubt the reasonableness of the situation, but this is a game of Chicken (or our actor has well justified beliefs that it is so). You've given the ability to precommmit, so homo economicus precommit to the not DoD ASAP.

[...]

2) Nope, but they're going to do everything in their power to rip each other off. As they do in the private sector. This is especially bad given the nature of the goods, as I have been arguing.

Again, I don't assume rationality or homo economicus (1). People aren't always going to make the right decisions even by their own standards. In other words, I assume fallibilism. I assume that people are going to make mistakes. But because preferences are so diverse and varied(2), it's doubtful that we're all going to make the same exact mistakes. People aren't all going to mistakenly believe that the same task is the most vital. For the most part, even trying to get a small group of people to agree on a restaurant...or a movie is just like herding cats. This is terrible for people who suffer from conceit/certainty...but it's great for people who realize that all our perspectives are extremely limited.

1) If you don't assume homo economicus, then you agree that we have no evidence that markets reveal peoples' preferences, correct? Because homo economicus is an input to that conclusion from economics. I'm not even requiring that this actor be perfectly informed or perfectly competent, just close enough that the approximations make the proof accurate.
Rationality is merely the theory that people act on their preferences. Do you agree that people will act to try and maximize their preferences?
2) You keep saying this, but I have yet to really see it play out. Most of the variations are about eeking out slight preference improvements, not wild changes. We may have trouble deciding where to eat (maybe even for the reasons you think), but we are unified that we want to go eat and go eat together, and there's usually less that a 10-20% difference with how happy I'll be at any of the top few options.

You realize, of course, that the situation would have been unchanged if Bob had prefered decorative quilting (and hanging then) and opening the window at 8:59, while Aerith trained her dog and opened it at 9:03. This concept even got it's own dilbert comic: http://dilbert.com/strips/comic/2006-12-24/. If you can really not imagine any similar situation, then you have have some remarkably well adjusted people you roomed with (your German friend notwithstanding).

1) It's like you've almost got the point. These factors are what lead a set of rational actors to behave in a globally irrational fashion.

Are you arguing that I fail to grasp the point that people can be conniving, duplicitous and deceitful?(1) Do you fail to grasp the point that a fool and his money are soon parted? Go find a millionaire and trick him into giving you a million dollars. Let me know how it goes.

1) Well, you seem to ignore these well understood game theory strategies, so, yes.

Here's an interesting question: do conmen make better use of societies limited resources when they successfully deceive people? That is, in your description of the world, are conmen market actors?

Honestly, if you used the force of law to make a millionaire play chicken or a related game with me, I suspect I could lie well enough to come out ahead. It's harder to be sure of lies than most people think. Usually, therefore, we refuse to deal with people at the first sign of suspicion. Can't do so if the feds are gonna come knocking if you don't play the game.

I'm a pretty good liar, though. Should we ensure that the best liars get the most out of taxation dollars?

Yes, but If I support the NRA and PETA

Do you honestly (real life) give donations to both non-profits?

Neither, I find the behavior of both relatively reprehensible. They were just stand in examples.

You've completely ignored the bolded. You get me to make the fliers.

You're smart enough...and I'm smart enough...to realize that it would be a waste of both our time for me to try and trick you into doing so. It would be far more effective to persuade you of the value of doing so. Simply paying you would technically work but it wouldn't be nearly as effective given that you wouldn't be able to adequately address people's concerns.

Well, it wouldn't work now, you've overplayed your hand (external blogs AND wiki editing, conceal your motivations already...). It might have worked better if you had come on the board and neutrally brought up the issue to see if anyone on your side was effective at arguing for it. Then, try to draw this person out every 3-6 months or so with weak criticism of the idea of tax choice and give them the chance to proselytize. If you're lucky, the issue will catch on on that forum and things will get argued on their own. Much less work for you.

Alternately, if I did agree with you, and I wanted to ensure pragmatarianism is argued, then I could have just kept lurking. I am sending the signal that I don't care if it's argued, despite the fact that I do, and you do the work for both of us. Sending false signals sure worked out well for me.

Trust me when I say that you don't become a pragmatarian by quickly dismissing criticisms. In order to grasp the value of pragmatarianism you have to understand and accept both a liberal criticism (the free-rider problem) and a libertarian criticism (the knowledge problem). ASB and Forsher aren't sufficiently interested in the topic to actually research it. You show considerably more genuine interest than they do...which is why I make more of an effort with you.

What if the criticism is neither "liberal," nor "libertarian," but purely objects to the logic you've put fourth. That is certainly the problem I have been attacking. I have other criticisms, but I think this one is the clearest and doesn't require me to convince you that money is not directly proportional to worth. Note, I have been assuming that money is directly proportional to worth so "proving" that to me will not weaken the major criticisms I have.

His paper has been cited over 5000 times. Do you want to trust me when I say that there's little divergence in people's interpretation of his criticism of the benefit principle? Or, do you need me to share x amount of passages with you? It's absolutely no work to share the passages with you. It only takes a quick second to filter my database using the relevant keywords/tags. Of course you're welcome to search through all the citing papers yourself.

Please, no, I'll trust you. No more quotes, I beg. I'm kidding with you of course. I actually went looking for summaries of the topic to try and see if you were right and I was sent to a wiki loop. In my quick search I cam upon a fascinating preference revealing auction mechanism, though I can't quite ken how it applies to public goods; it was more complicated than the middle of the night permits. http://en.wikipedia.org/wiki/Vickrey%E2 ... es_auction

I came upon something else interesting, however. Wiki claim'th that no preference revelation mechanism has been shown to cause individuals to pay for public goods according to their derived marginal utility. Which means no system has been shown to get people to pay according to their preferences. http://en.wikipedia.org/wiki/Lindahl_tax - under the problems section. I'm inclined to believe wiki on technical matters. Then, if you truly have solved the preference revelation problem, you ought to publish. Getting accepted by an economics journal should be a huge boon to convincing others of pragmatarianism. Why haven't you done this?

[Infactum]

Do you agree, from my previous post, that there are varying degrees of "publicness" of goods that we might want to fund through taxes?

Yes, publicness is a continuum...but it has absolutely no bearing on how much benefit people derive from a good. Because of this...the publicness of a good has absolutely no relevance to the preference revelation problem...which is the entire basis of pragmatarianism (1). Again, the preference revelation problem is to figure out how to discern people's preferences for goods in the public sector.

The publicness does, however, relate to the societal benefit. Since you are billing Pragmatarianism as utilitarian, that's important. If you were billing it as some variety of deontilogical (used here in the broadest terms) ethics, I would have other objections.

Imagine that we implemented pragmatarianism, and, for whatever reason, enough voters wanted there to be a dept of bicycles. Clearly bicycles are a classic private good. Except, now they are also a public good simply by virtue of them now being in the public sector as well. Just because bicycles, which you would classify as a private good, are now in the public sector, does this automatically mean that this will be the first best option for taxpayers? Obviously not, you wouldn't give your taxes to the DoB and expect them to give you a bike anymore than you'd give a donation to the Red Cross and expect them to give you a box of disaster relief. Both organizations would distribute their products to the people who needed them most. If you value how an organization is using society's limited resources then you would give them your positive feedback (money).

What I'm getting at is...in order to understand your issue of publicness and what you believe to be its relevance to pragmatarianism...it might help to think outside the box by thinking pragmatarianism through from multiple different angles. What happens to the tax rate? Does it increase or decrease? How/why? Congress would still be there...what percentage of taxpayers would opt out of shopping for themselves? You've been specific about government organizations (GOs) that would be "underfunded" in a pragmatarian system...DoD, EPA, Dept of Transportation...but, as far as I can remember, you have yet to specify exactly which GOs would be getting all the funds that the more "public" GOs were not getting. If you're going to ignore the preference revelation problem in terms of losers...then you shouldn't have any problem doing the same thing in terms of winners.

I guess I have not been clear. Those organizations I have chosen are general standins for more public versus less public goods. I did this because you failed to respond to every one of my situations which used arbitrary variables. They were there as reasonable guess of the "most public" things the government funds. As for guesses of where the money would go, I suspect it would be to the grant granting organizations (DoE, a variety of scholarship orgs, etc). That's assuming people are halfway competent at maximizing their preferences.

For a real world prediction, I suspect it would mostly go to the DoD, Medicare, and other "popular" organizations with things like the EPA and other regulatory and safety bodies taking the largest hit (until the next food poisoning outbreak, then money would swing to an organization which now needs to rapidly expand to use it's budget). I suspect the SEC would be one of the most woefully underfunded, as we have handed the reigns of the country to the people who benefit most from lax enforcement of fair trade laws, and it's not a terribly well known organization to those who don't have to deal with it.

Once you've made your divination...then see how "unique" you are by keyword searching this blog entry...Unglamorous but Important Things...to see if any other minds were equally great enough to think the same thing as you. Afterwards read up on pragma-socialism...and then let me know if prices are necessary to efficiently allocate resources.

Shifting your perspective a bit might help you see your publicness concern more clearly.

1) Yes, they tried to centrally plan private goods. IMO, I attribute this more to the fact that humans are corruptible than to the fact that they were unable to predict how much food people would need. Failure of preference revelation may have been a factor, but it certainly wasn't the only one. This is far different than centrally planning public goods while also having public accountability.

Disregarding/ignoring people's preferences may have been a factor in millions starving to death? So the fact that millions of people are not now starving in China may have absolutely nothing to do with the fact that people are free to demonstrate their preference for food? I think it would behoove everybody in the future if you could figure out whether or not it was a factor.

Disregarding peoples' preference that they not starve to death has everything to do with why they starved to death. Not knowing they preferred have food had nothing to do with it (almost assuredly at least 1 party member knew that people had to eat to not die). Preference revelation would have told us that people didn't want to starve to death, which we pretty much knew.

2) And if the allies' publics had failed to sufficiently fund* a standing army because they didn't believe it was necessary, how many more would have died? Attributing these deaths to an individual economic/taxation system is failing to look at the whole picture.

How many more would have died? Wouldn't it have been better to prevent any deaths in the first place? I really don't think that you're looking at the whole picture if you're not seeing the value of an ounce of prevention...

As was noted in Chapter 3, expressions of malice and/or envy no less than expressions of altruism are cheaper in the voting booth than in the market. A German voter who in 1933 cast a ballot for Hitler was able to indulge his antisemitic sentiments at much less cost than she would have borne by organizing a pogrom. - Geoffrey Brennan, Loren Lomasky, Democracy and Decision

This is your "public accountability". It's people's opinions...not their values. You think that ballot voting, compared to dollar voting, is sufficiently good at revealing people's preferences...but nothing could be further from the truth. Words do not speak as loud as actions. Words are cheap...action is costly. Therefore, actions reveal preferences.

If German taxpayers had been free to directly allocate their taxes, WWII never would have occurred. German taxpayers wouldn't have deemed it profitable to finance the premier army in the world anymore than a baker would have deemed it profitable to spend all his revenue on salt. You don't become a taxpayer by getting the balance of inputs really wrong.(1) You don't become a taxpayer by tilting at windmills. The opportunity cost is too high. Too much of one input inherently means not enough of other essential (vital) inputs (tasks).

You think tax choice could have prevented Hitler's rise to power. You do know he was elected on a wave of popular support and convinced people to heavily support the military. He used this power to keep the rest in line. Do you think he couldn't muster enough taxes to fund his military and use that power to seize the rest? I don't think tax choice would be stable against Hitler (for lack of better phrasing).

1) I just want to note that this is an example of you assuming that market actors are good at fulfilling their own preferences.

3) Yep, Stalin was a tyrant of the type naturally produced when people have too much power and too little accountability. They tend to kill people. It is artificial to blame this on an economic/taxation system.

It's artificial to blame it on centralization? It's artificial to blame it on too much power in the hands of too few people?

Yes. No. In that order. Stalin bad != Opposite of Stalin Good.

It follows, then, that a less centralized society has the advantage of a greater diversification of its performance across a larger number of preceptors. This is because diversification here dilutes the impact of the ability, or the lack thereof, of each preceptor on the aggregate societal performance. - Raaj K. Sah, Fallibility in Human Organizations and Political Systems

The main point about which there can be little doubt is that Smith’s chief concern was not so much with what man might occasionally achieve when he was at his best but that he should have as little opportunity as possible to do harm when he was at his worst. It would scarcely be too much to claim that the main merit of the individualism which he and his contemporaries advocated is that it is a system under which bad men can do least harm. It is a social system which does not depend for its functioning on our finding good men for running it, or on all men becoming better than they now are, but which makes use of men in all their given variety and complexity, sometimes good and sometimes bad, sometimes intelligent and more often stupid. - Friedrich A. Hayek

4) Always? You have yet to prove this generalizes. Even if you can attribute all 100million+ deaths to lack of pragmatarianism (which would be incredibly narrow minded), That isn't enough to use the word infinitely. Try "Many orders of magnitude." I think that is a mischaracterization as well, but it at least doesn't harm my math sensibilities so much.

Yes, always. I shared the logic. Makes plenty of sense to me. Why doesn't it make sense to you that centralization will always have inferior consequences? (1)You can't maximize value by disregarding people's values...and values can only be determined by people's willingness to pay for the things that they say they want. You want a war on drugs? The only way I know you don't just want a free lunch is if you're willing to put your money where your mouth is. You want a war on terror? The only way I know you don't just want a free lunch is if you're willing to put your money where your mouth is. You want a war on poverty? The only way I know you don't just want a free lunch is if you're willing to put your money where your mouth is. If you're not willing to put your money where your mouth is, then clearly you derive more value from the alternative uses of your money (opportunity cost).

The consequences of decentralization are superior to those of centralization by many order of magnitude. Compared to centralization, the consequences of decentralization are superior by many orders of magnitude. The consequences of decentralization are many orders of magnitude superior to the consequences of decentralization. I still prefer infinitely superior. It's like putting a candle right next to the sun. The sun isn't just "many orders of magnitude" brighter, it's infinitely brighter...just like decentralization is infinitely superior. Compared to an ant, Albert Einstein was infinitely smarter...not just 100..or 1000...or 10,000...or 1,000,000 orders of magnitude smarter.

When everybody can choose where their money goes...we highlight the best and silence the rest.

1) Because centralization does more than just exclude inputs. It allows cooperation. Therefore, it has both positive and negative effects on societal utility. Therefore we cannot tell, without knowing the character of the good we're centralizing and the nature of the market we are centralizing it in, whether centralizing it will have a positive or negative effect.

For the record, the sun puts out ~ 7*10^26 more light than a candle. That's less than 27 orders of magnitude.

The importance of not assuming people's preferences is equally applicable to all goods (1)

1) You keep saying this, but you have yet to prove it. It should be easy, according to you. State your assumptions and derive this fact. Are you at all familiar with formal proof? It would truly help me understand your logic better.

How do I prove that the optimal provision of public goods is a function of people's true preferences? Well, I compiled numerous passages on what the subject matter experts have to say about the preference revelation problem. If you disagree with those experts then you counter with your own bevvy of experts who say that the preference revelation problem is not a real problem.

This is the broad "proof" though...

1. Every resource has a multitude of different uses
2. Some uses of a resource are more valuable than other uses
3. Values are subjective
4. The goal is to derive the maximum value from our resources
5. Therefore, people have to be free to put their resources to their most valuable uses

I know the outline, I was hoping for the formal version where I could see each logical step exactly and understand or attack it. The reasoning from 4 & 5 to tax choice is what I would have liked to have seen expanded formally. I presumed you had this given your certainty and willingness to use the term "theorem."

I'll admit, I am expecting to find an error in any such logic you present because I believe I have provided a counter example for the conclusion. Always open to being proven wrong, however.

1) If you don't assume homo economicus, then you agree that we have no evidence that markets reveal peoples' preferences, correct? Because homo economicus is an input to that conclusion from economics. I'm not even requiring that this actor be perfectly informed or perfectly competent, just close enough that the approximations make the proof accurate.
Rationality is merely the theory that people act on their preferences. Do you agree that people will act to try and maximize their preferences?

You're not requiring homo economics to be perfectly informed, competent, rational? Then why even invoke the guy? We don't need him. He's nobody. We're all fallible...we all make mistakes...some more than others. But for the most part we do strive to get the most out of our limited resources.

You make the statement that having money is an indicator that society values how a person uses societies limited resources. This is dependent on the claim that the market actors are a good approximation of homo economicus. Over the domain of goods they made their money on, of course.

2) You keep saying this, but I have yet to really see it play out. Most of the variations are about eeking out slight preference improvements, not wild changes. We may have trouble deciding where to eat (maybe even for the reasons you think), but we are unified that we want to go eat and go eat together, and there's usually less that a 10-20% difference with how happy I'll be at any of the top few options.

What's the ratio of private to public goods?

I'm not sure what you're asking. The cost right now is close to 1:1. Given that I value my life and the lives of my loved ones much more than any private goods I can ever imagine owning, I would say that public goods are "many orders of magnitude" more important than private goods (I would almost be ok with "infinite" here, given that they are truly incomparable).

1) Well, you seem to ignore these well understood game theory strategies, so, yes.

Of course I ignore things that aren't relevant. You're really going to play chicken with 300 million other people? Haha...you tricked 300 million other people into funding your first best option? Me too! I just tricked 300 million people into liking tax choice on facebook! How many people do you think you're going to go around tricking?

Yep, you don't understand. You don't make then like things they don't like. You make them willing to pay more for things you both like because they think you aren't interested.

Here's an interesting question: do conmen make better use of societies limited resources when they successfully deceive people? That is, in your description of the world, are conmen market actors?

It's not interesting because it boils down to two things...
1. whether or not you want a law (voting/words)
2. how much you're willing to pay for a law that you want (spending/actions)

If you think fraudulent activity is harmful to society, then you vote for it to be outlawed. If enough other people agree, then it's time for you to put your money where your mouth is (opportunity cost).

Honestly, if you used the force of law to make a millionaire play chicken or a related game with me, I suspect I could lie well enough to come out ahead. It's harder to be sure of lies than most people think. Usually, therefore, we refuse to deal with people at the first sign of suspicion. Can't do so if the feds are gonna come knocking if you don't play the game.

This doesn't make any sense. If we implemented pragmatarianism, then you're going to trick Bill Gates into funding something that doesn't match his preferences?

Nope, but I could probably trick him into funding more than his "fair share" of said preferences.

I'm a pretty good liar, though. Should we ensure that the best liars get the most out of taxation dollars?

Honestly, I'd like to see this in action. If you think people are that easy to trick, then it should be really easy for you to trick 1000 people into liking tax choice on facebook. But if it's easy to trick 1000 people, then it shouldn't be much more difficult to trick 10,000 people. How much time do you need to demonstrate your mad trickery skills?

Did you miss the bit where you are proposing using the threat of force to make them play with me?

Neither, I find the behavior of both relatively reprehensible. They were just stand in examples.

So if you were forced to spend 10% of your income in the non-profit sector...would you give either organization your money? Does it matter how "public" the goods are?

If I'm giving goods to a nonprofit, I'm giving charity, which means I derive value from helping others. Therefore I want to maximize my contribution to others' happiness, and I find it likely that this will tend towards more public goods.

If I am forced to spend my money, I wouldn't give it to either. I would probably do so without explicit dependence on publicness.

Well, it wouldn't work now, you've overplayed your hand (external blogs AND wiki editing, conceal your motivations already...). It might have worked better if you had come on the board and neutrally brought up the issue to see if anyone on your side was effective at arguing for it. Then, try to draw this person out every 3-6 months or so with weak criticism of the idea of tax choice and give them the chance to proselytize. If you're lucky, the issue will catch on on that forum and things will get argued on their own. Much less work for you.

I'd draw them out every 3-6 months by starting a thread critiquing tax choice? Assuming the existence of an effective proponent, I would have gotten more bang for my buck by playing the devil's advocate? You said that you're a good liar...how do I know that you're not playing the devil's advocate?

Alternately, if I did agree with you, and I wanted to ensure pragmatarianism is argued, then I could have just kept lurking. I am sending the signal that I don't care if it's argued, despite the fact that I do, and you do the work for both of us. Sending false signals sure worked out well for me.

This is starting to feel like the Princess Bride.

The wonderful world of lying. Mafia is one of my favorite games.

You can be fairly certain I'm not lying because if I were, my arguments would be weaker and my posts shorter.

What if the criticism is neither "liberal," nor "libertarian," but purely objects to the logic you've put fourth. That is certainly the problem I have been attacking. I have other criticisms, but I think this one is the clearest and doesn't require me to convince you that money is not directly proportional to worth. Note, I have been assuming that money is directly proportional to worth so "proving" that to me will not weaken the major criticisms I have.

A criticism is either of centralization or decentralization. Clearly you're arguing against creating a market in the public sector...which means that you're attacking the libertarian argument rather than the liberal argument. Libertarians do the opposite.

You also lay claim to proof, which means the validity and the soundness of your ideas are open to attack. You can arbitrarily classify them, I suppose, but assigning political labels to them seems a bit inaccurate.

Please, no, I'll trust you. No more quotes, I beg. I'm kidding with you of course. I actually went looking for summaries of the topic to try and see if you were right and I was sent to a wiki loop. In my quick search I cam upon a fascinating preference revealing auction mechanism, though I can't quite ken how it applies to public goods; it was more complicated than the middle of the night permits. http://en.wikipedia.org/wiki/Vickrey%E2 ... es_auction

Yeah, if you keep digging you'll find that quite a bit of effort has been put into developing mechanisms that would ensure that people honestly reveal their preferences for public goods. This means that subject matter experts understand that you can't optimally supply public goods without people's preferences.

I came upon something else interesting, however. Wiki claim'th that no preference revelation mechanism has been shown to cause individuals to pay for public goods according to their derived marginal utility. Which means no system has been shown to get people to pay according to their preferences. http://en.wikipedia.org/wiki/Lindahl_tax - under the problems section. I'm inclined to believe wiki on technical matters. Then, if you truly have solved the preference revelation problem, you ought to publish. Getting accepted by an economics journal should be a huge boon to convincing others of pragmatarianism. Why haven't you done this?

It's already been published. Look over the papers on the Wikipedia tax choice article.

I did. I'm sorry again, I'm stuck in academic mode. By publish, I mean submit to and be accepted by a peer reviewed economics journal. According to wiki, no one has demonstrated that your idea solves preference revelation AND cost allocation of public goods. If it truly works, then it will be a central piece of the field, all the more revered for it's elegance.

I'll admit, I don't expect it to work because I suspect that a majority of economics Ph.D.'s have at one time or another thought of your idea. It is not terribly complex, and "I wanna choose where my taxes go" is a common enough refrain in the public mind. The fact that it isn't in any journals means either they or the review board found it wanting.

I found one properly cited journal article in your list. The abstract makes no claim to have shown what you claim (it seems to discuss tax choice in the context of education). The rest appear to be oped pieces and excerpts from politically motivated books. I haven't vetted each one individually, but there is a distinct lack of anything else peer reviewed.

[Infactum]

I found one properly cited journal article in your list. The abstract makes no claim to have shown what you claim (it seems to discuss tax choice in the context of education). The rest appear to be oped pieces and excerpts from politically motivated books. I haven't vetted each one individually, but there is a distinct lack of anything else peer reviewed.

Hmmm...either you were channeling Forsher when you were looking over the list...or we have different definitions of peer reviewed.

First off, I assume you are meaning to insult Forsher when you say that. Please don't. Not only does Forsher not deserve that by any measure, but it would also be rude even if he did. If you want to insult other people, say it to them (or better yet, don't).

Second off, time for a source trawl. Cited, numbered sources in order:

1) Actual peer reviewed journal. Does not make claim that pragmatarianism maximizes utility.
2) Actual peer reviewed journal. Improperly cited. Explicitly claims that "economists do not agree on effects of earmarked taxes." Speculates
3) Random blog post/political website article (I will not distinguish these from here on out - we'll call them "oped").
4) Experimental paper, apparently not peer reviewed. Interesting topic on giving to public versus private. Does not make your claim.
5) Experimental paper. Shows that people like to feel they have control of taxes in at least some cases. Does not make your claim.
6) Actual peer reviewed journal. Talks about tax choice in the context of public education. Does not make your claim in the abstract.
7) Book by a pope. Does not make your claim.
Apparently a textbook. Presents multiple solutions without apparent judgement. Does not make your claim.
9) Proceedings of a workshop? Does not make your claim.
10) oped
11) bill
12) bill
13) bill
14) oped

I admit I was wrong about how many peer reviewed sources you had (4-5 + the textbook?). The "further reading" section seems to have a few more, but it is littered with opeds and apparently unvetted essays, and many of the sources you have numbered are improperly cited.

Still, none of the peer reviewed ones make your claim. Perhaps you can give me the citation of the paper that proves pragmatarianism maximizes utility. If that paper doesn't exist, I maintain that you ought to submit your idea - it will truly be groundbreaking if accepted.

I'm not sure what you're asking. The cost right now is close to 1:1. Given that I value my life and the lives of my loved ones much more than any private goods I can ever imagine owning, I would say that public goods are "many orders of magnitude" more important than private goods (I would almost be ok with "infinite" here, given that they are truly incomparable).

I was asking how many private goods there are for every public good. Are there 10 private goods for ever 1 public good? Is the ratio 100:1?

Ummm, I dunno. There are, in principle, an infinite possible number of both private and public goods. You know I don't use that term lightly. How should I draw the dividing lines? Is food by itself 1 private good, or is each different breed of apple a separate private good?

Did you miss the bit where you are proposing using the threat of force to make them play with me?

In a pragmatarian system, people would have to pay taxes...therefore I'd be forcing 300 million people to play with you? Can you explain the logistics of this? Are you going to call each one of them up and tell them that you just gave $500 to Medicare (your second best option)? This will trick each and every one of them into spending $500 on your first best option?

"Hi, my name is Infactum and I just gave $500 to Medicare. Whatever you do, don't give $500 to the EPA."

You force them to by forcing them to allocate. I trick them by never giving money to the highway despite valuing it (i.e. if I controlled the whole budget, I would allocate a portion to the highway). Either the naive person or the last person to allocate ends up funding the highway. Even if they don't value the highway as much as me, not having the highway is worse for them (Maybe, or maybe we all defect and end at the individually rational/collectively irrational option). Instead I give money to the NSF, DoE, DoD, etc (people who fund or might fund my research). I get my highway and my favorite organization. In particular, I have avoided paying my "fair share" for the highway. I did not fund it in proportion to my preferences (or value derived). If we all defect, value is horribly far from maximum.

For a real world prediction, I suspect it would mostly go to the DoD, Medicare, and other "popular" organizations with things like the EPA and other regulatory and safety bodies taking the largest hit (until the next food poisoning outbreak, then money would swing to an organization which now needs to rapidly expand to use it's budget). I suspect the SEC would be one of the most woefully underfunded, as we have handed the reigns of the country to the people who benefit most from lax enforcement of fair trade laws, and it's not a terribly well known organization to those who don't have to deal with it.

Why would the DoD be a winner when it is by far the most "public" good?

Because people aren't even halfway competent at maximizing their preferences when it comes to things like this. This is not an indictment of people as stupid, just an observation of the natural limits of a person to comprehend and process information. It is certainly not the case that every person can learn the ins and outs of every organization to properly maximize his or here preferences. We couldn't even come close. Remember, at least 50% of people cannot even identify their own preferences in at least some cases (or the concept of "preferences" is an inaccurate description of humans).

I have been granting you the absurd notion that wealth correlates to societal worth, but the "real world" modifier was supposed to signal that this was the world of very imperfect information and other natural inefficiencies. Of course, once you get rid of the assumption that peoples choices are a reliable indicator of their preferences, the whole notion of tax choice as a preference revelation mechanism starts to fall apart. I've been going with it because I think your system falls apart even granting the market as the universal optimizer in the private sector. Also, I really don't want to get into an argument about the definition of preferences.

Disregarding peoples' preference that they not starve to death has everything to do with why they starved to death. Not knowing they preferred have food had nothing to do with it (almost assuredly at least 1 party member knew that people had to eat to not die). Preference revelation would have told us that people didn't want to starve to death, which we pretty much knew.

So disregarding people's preferences is bad for private goods but ok for public goods?

Depends on which goods, which preferences, how strong they are.... Things are complex. A single solution is not always the answer no matter how much you want it to be. Unrevealed preferences were not the problem here, however. Do you think the peasants starving to death would have payed enough into the system to stave off their own starvation? If this happened under tax choice, would you say that society valued these people more dead than alive?

You think tax choice could have prevented Hitler's rise to power. You do know he was elected on a wave of popular support and convinced people to heavily support the military. He used this power to keep the rest in line. Do you think he couldn't muster enough taxes to fund his military and use that power to seize the rest? I don't think tax choice would be stable against Hitler (for lack of better phrasing).

People elected Obama, therefore, taxpayers would be willing to give all their taxes to the EPA? You're deriving society's values from society's opinions. People vote for drugs to be illegal therefore they'd all give all their money to the DEA. You say that people are duplicitous...yet you really give quite a bit of weight to their words. It might help to read up on contingent valuation techniques.

Yep, you think Tax choice could have prevented Hitler's rise to power. Which I should have guessed. That is a question no one can resolve for obvious reasons. But I see plenty of ways he could have seized power within your system.

People can be duplicitous. There's no reason to be at the polls, however. Failing to vote for my candidate doesn't do anything but harm my chances of my candidate winning.

1) Because centralization does more than just exclude inputs. It allows cooperation. Therefore, it has both positive and negative effects on societal utility. Therefore we cannot tell, without knowing the character of the good we're centralizing and the nature of the market we are centralizing it in, whether centralizing it will have a positive or negative effect.

How does centralization allow cooperation when it limits participation?

Easily. A central actor (controlling both people) in the prisoner's dilemma would have both people cooperate. Independent actors would have both defect. Central actor "allows" cooperation.

Similarly, a central actor in Chicken can have both swerve (cooperate) to maintain equality, or can trade off who swerves and who doesn't to maximize return. Individual actors will be doing their darndest to appear crazy.

1. Every resource has a multitude of different uses
2. Some uses of a resource are more valuable than other uses
3. Values are subjective
4. The goal is to derive the maximum value from our resources
5. Therefore, people have to be free to put their resources to their most valuable uses

I know the outline, I was hoping for the formal version where I could see each logical step exactly and understand or attack it. The reasoning from 4 & 5 to tax choice is what I would have liked to have seen expanded formally. I presumed you had this given your certainty and willingness to use the term "theorem."

I don't know how it could be further expanded. (1)

Some uses of a resources are more valuable than other uses. Values are subjective. Therefore, in order to maximize value, people have to be free to choose which uses of their resources provide them with the most value. (2)

Some uses of your time are more valuable than other uses. Values are subjective. Therefore, in order to maximize value, you have to be free to choose which uses of your time provide you with the most value.

If one person's treasure was always another person's treasure...then values would be objective. We would all concur that Hot Chip is the best band and there would be no need for people to shop for themselves.

I'll admit, I am expecting to find an error in any such logic you present because I believe I have provided a counter example for the conclusion. Always open to being proven wrong, however.

I'm always open to being proven wrong also...which is why I'm no longer a libertarian.

1) I'm going to ask you a question I think I know the answer to (based on your interactions with me and the other people in this thread). Do you have any formal training in economics? Any degree or credit hours? I ask because this is woefully inadequate as a "proof," and that should be clear to you if you have. If you can't see how this can be further expanded, then I think you need to more precisely define what your statement is you are trying to prove and what assumptions you are using to prove it. Are you familiar with modus ponens? In principle I (or you) ought to be able to reduce your proof to it's propositional calculus roots and check it's validity without knowing the context of what you are proving.

For the statement you are trying to prove, I have been inferring it was something like: "A pragmatarian system will maximize total social utility." Is this correct? Because you use the market as a jumping off point and seem to assume it is relatively ideal, you main assumption seems to be "A government market including public goods will behave exactly like an ideal private market." It is the assumption I disagree with (even if I stipulate that the private market is at all ideal).

2) This statement and the others like it in your riff are what do not follow. You error in logic here seems to be conflating the notion "Not all of these are...." and "All of these are not..." based on your use of "proof by example".

[Infactum]

First off, I assume you are meaning to insult Forsher when you say that. Please don't. Not only does Forsher not deserve that by any measure, but it would also be rude even if he did. If you want to insult other people, say it to them (or better yet, don't).

Sloppiness, laziness and lack of genuine interest always deserves an F. You wasted my time by shoddily looking over the sources. And if somebody deserves an F then I'll give them an F. F...for Forsher. And if you and Forsher don't like it, then measure twice and cut once. Or else feel free to take advantage of costless exit...the very thing you don't want people to have in the public sector.

You missed the point. If you really feel the need to insult me, do so. It may or may not be warranted. Please do not, however, take school yard swipes at other people while talking to me. That's incredibly uncalled for.

Still, none of the peer reviewed ones make your claim. Perhaps you can give me the citation of the paper that proves pragmatarianism maximizes utility. If that paper doesn't exist, I maintain that you ought to submit your idea - it will truly be groundbreaking if accepted.

What's my claim?

1. opportunity cost ensures the efficient allocation of resources
2. taxpayers would consider the opportunity costs if they could shop in the public sector

Which one do you need sources on? If you need sources for 2 then you need sources for 1...which isn't even my claim.

Speaking of wasting each others' time... I have clicked on something like 20-25 of your links and found no (peer reviewed) paper purporting to demonstrate your claim. I ask again for the reference.

Do you understand what I mean by "claim?" I mean it in the academic sense: a single statement that you intend to show. Your claim, as I understand it, is "Pragmatarianism maximizes social utility." Is this correct?

You are so certain of this, you have based a "theorem" on it and otherwise act as if it is proven. Your own source from 1971 (http://www.jstor.org/discover/10.2307/1 ... 2655860517) Claims that economists "do not agree on the effects of earmarking". The Lindahl tax wiki page makes a similar claim. If you can prove that you know the effects of earmarked taxes, you have solved an unsolved problem in economics. This is true even if you are just synthesizing other papers in a rigorous way. If you can do so in such a simple way, then you will be hailed for your elegant solution and granted notoriety and credibility within the community. This can do nothing but advance your agenda. So I ask again: Why have you not published or attempted to publish?

Ummm, I dunno. There are, in principle, an infinite possible number of both private and public goods. You know I don't use that term lightly. How should I draw the dividing lines? Is food by itself 1 private good, or is each different breed of apple a separate private good?

Draw what you feel is a reasonable line and I'll let you know if I think otherwise.

You know, in physics they train us to do wild order of magnitude guesses. I've gotten pretty good at those. I have very little idea how to approach this one, it is perhaps the worst defined question I've happened on. I would suppose if we are talking about public goods provided by either the government or market (likewise for private goods), I'd probably go with 100:1. You can vary that by at least a factor of ten for the uncertainty. I'm interested to see where this goes.

You force them to by forcing them to allocate. I trick them by never giving money to the highway despite valuing it (i.e. if I controlled the whole budget, I would allocate a portion to the highway). Either the naive person or the last person to allocate ends up funding the highway. Even if they don't value the highway as much as me, not having the highway is worse for them (Maybe, or maybe we all defect and end at the individually rational/collectively irrational option). Instead I give money to the NSF, DoE, DoD, etc (people who fund or might fund my research). I get my highway and my favorite organization. In particular, I have avoided paying my "fair share" for the highway. I did not fund it in proportion to my preferences (or value derived). If we all defect, value is horribly far from maximum.

You trick 300 million people by giving money to the NSF rather than to the highway? Not once do you consider the possibility that somebody might inadvertently cancel out your trickery by making the opposite allocation? (1)You're an ant, an elephant is bearing down on you...so you play chicken with it. At the last second the elephant swerves...and you think you won. It doesn't enter into your mind that the elephant saw a Cussonia spicata and changed course to enjoy one of his favorite foods. We're talking about half the economy here. A billionaire decides to give all his taxes and then some to the NSF. Is is because you gave $100 to the DoE? You're going to claim all the credit for the billionaire's decision? (2) You got him on video chat and he blinked first? Your mad chicken skills are going to make you the conductor of this orchestra? If so, then I don't know why you're so opposed to it.

You're the one who classes allocation as communication of preferences. I give to the NSF and, by your logic, claim I value the NSF more than anything else.

1) I want them to make the opposite allocation. Then the highway is built and I don't have to pay my fair share for it.
2) Of course not. For one thing: you've moved to less public organizations again. For another, me and the other 95% of the tax base seized all the less public goods before the billionaire got around to it. The billionaire now knows that their fortune will crumble without the economic boon of the highway and funds the whole thing. People did not pay for the highway in proportion to their value derived from it.

In the more likely scenario, this billionaire (and the small fraction of the tax base that has de facto veto power over the entire country), seized less public goods for themselves first and left the rest of us to cooperate as best we can or lose the highway. If everyone was rational preference maximizers, no one would fund the highway despite virtually everyone valuing it more than the thing they did fund. And we have collective irrationality emerging from rationality.

Frankly, I don't like the term "trick," and prefer the term "defect," both for the analogy with game theory and the fact that the act of allocation isn't really something you do to another person. You may class that as my semantic whining, but now you seem to have a completely wrong idea of what is meant by deception in this case.

Because people aren't even halfway competent at maximizing their preferences when it comes to things like this. This is not an indictment of people as stupid, just an observation of the natural limits of a person to comprehend and process information. It is certainly not the case that every person can learn the ins and outs of every organization to properly maximize his or here preferences. We couldn't even come close. Remember, at least 50% of people cannot even identify their own preferences in at least some cases (or the concept of "preferences" is an inaccurate description of humans).

Elizabeth Warren is more competent than Bill Gates? If you don't think that taxpayers are competent, then stop giving them your money. This will signal to me that you honestly believe that taxpayers are incompetent. I know that you're not going to do this though. But perhaps you can explain to me why you, the expert on competence, voluntarily give your money to people you believe to be incompetent, but if pragmatarianism was implemented, then you wouldn't give your money to congress, the people you do believe to be competent.

Does that make sense? In a pragmatarian system you wouldn't have to shop for yourself. Congress would still be there...you could still give them all your taxes. Except, you've never made the argument that you would give your taxes to the people you say are competent enough to spend them. (1) Instead, you'd shop for yourself...just like you do in the private sector.

If I give money to a shoe maker, I believe the shoe maker is competent at making shoes. I do not believe that the shoemaker can accurately weigh the cost of a more prestigious school for her daughter versus the benefit of the name and connections. Competence is highly dependent on the skill we're talking about. I would argue that the notion of competence itself is meaningless without reference to a specific skill.

Most people are pretty bad at predicting the long term effects of their actions. Including me. Including you. Predicting the future is hard.

Remember, though, I am stipulating throughout the rest of my post that people can know what is best to do to maximize their preferences when it comes to private goods.

1) Congress having full control of the budget is not just about them being competent to spend it*. It is about the projects they can fund that a collection of self interested actors would not. Then they do, indeed, just have to be competent enough.

*Though there are many cases where they are much better qualified than the public to do so - top secret operations spring to mind as an obvious and clear example.

I have been granting you the absurd notion that wealth correlates to societal worth, but the "real world" modifier was supposed to signal that this was the world of very imperfect information and other natural inefficiencies. Of course, once you get rid of the assumption that peoples choices are a reliable indicator of their preferences, the whole notion of tax choice as a preference revelation mechanism starts to fall apart. I've been going with it because I think your system falls apart even granting the market as the universal optimizer in the private sector. Also, I really don't want to get into an argument about the definition of preferences.

If your sacrifices aren't a reliable indicator of your values...then what are the alternatives? Oh wait, we've already seen the alternatives...but obviously you haven't learned from them. Until you do it's a given that history will repeat itself.

Remember, I sacrifice less than I value something. That is how wealth is created. Lets say I go to buy a used car. "Trusty" Patches, the dealer bought it for $300. I would derive $500 from the car. There is $200 of wealth to be made in this transaction. The wealth would not exist without either of our contributions, so how do we fairly divide it up? The market answers this question in a fairly utilitarian fashion when it is efficient. In relatively efficient markets, people behave close to homo economicus. In inefficient markets (natural monopolies, information asymmetries, systematically irrational actors, etc.), we have no way of knowing what price is utilitarian or fair. Since not all of our markets are efficient, net worth means little if anything regarding societal worth.

Also, attributing all of histories ills to lack of your political ideology seems a bit over the top.

Depends on which goods, which preferences, how strong they are.... Things are complex. A single solution is not always the answer no matter how much you want it to be. Unrevealed preferences were not the problem here, however. Do you think the peasants starving to death would have payed enough into the system to stave off their own starvation? If this happened under tax choice, would you say that society valued these people more dead than alive?

Do you think the peasants who already starved to death would have paid enough into the system to stave off their own death? Seriously? Before and after Mao Zedong there was an adequate supply of food because farmers had an incentive meet the demand. Centralize the system and you replace the true demand with a pseudo-demand. The negative consequences are inevitable.

Peasants -starving- to death, as in still alive. All you've shown is that central systems, especially with regards to private goods, may be vulnerable to corruption. This is far from proof of your claim.

I'll ask again, if 30 million people starved to death under pragmatarianism, would you claim that the market valued them more dead than alive? I honestly see no other conclusion from what you are saying.

Yep, you think Tax choice could have prevented Hitler's rise to power. Which I should have guessed. That is a question no one can resolve for obvious reasons. But I see plenty of ways he could have seized power within your system.

Again, replace the true demand for national defense with a pseudo-demand for national defense...and the negative consequences are inevitable. Of course, you won't agree with this if you believe in the efficacy of contingent valuation techniques.

You don't get it. Hitler didn't need to raise a "true" demand for all the "national defense" he wanted. He just needed enough to get in power and then use the army he did have to force everyone else in line. Pragmatarianism is gone when someone points a gun at your loved ones.

Easily. A central actor (controlling both people) in the prisoner's dilemma would have both people cooperate. Independent actors would have both defect. Central actor "allows" cooperation.

Controlling people equals cooperation? Ok, I'll prevent you from defecting from this thread. Your cooperation will be appreciated.

Central actors can choose cooperative action (or they can choose any other action). Groups of independent actors will not. How many times have we been over this?

1) I'm going to ask you a question I think I know the answer to (based on your interactions with me and the other people in this thread). Do you have any formal training in economics? Any degree or credit hours? I ask because this is woefully inadequate as a "proof," and that should be clear to you if you have. If you can't see how this can be further expanded, then I think you need to more precisely define what your statement is you are trying to prove and what assumptions you are using to prove it. Are you familiar with modus ponens? In principle I (or you) ought to be able to reduce your proof to it's propositional calculus roots and check it's validity without knowing the context of what you are proving.

1. values are subjective

There's no need for me to prove this. We value things differently. There's no need for me to reduce this further. Because if I have to reduce it further then I'm pretty sure that it's not going to make a difference anyways.

If you accept that we value things differently, then where can you go? We value things differently...therefore, I'll decide when you exit this thread? Values are subjective...therefore, I know exactly how much value you derive from this particular use of your time?

If you want me to write this mathematically for you in order for you to understand it...then I might as well write it Sumerian so that most people can't understand it. Except my goal really isn't to make pragmatarianism less accessible. If you'd like to then be my guest, knock yourself out.

Yep, values are subjective. I agree, that's an assumption and a reasonable one. We'll call it "P"

Now all we need is a proof that pragmatarianism maximizes social utility. Let's call that "Q." This transition in logic (P=>Q) is the one I need broken down. Everything else you've presented so far has been "proof by example" and some words that I can't be certain contain the meaning you claim they do.

I wouldn't discount math (here standing in for propositional calculus) so quickly. If you succeed, it will deepen your understanding of your own argument and allow other technically inclined people to understand you more clearly. This, in turn, will massively reduce and blunt the criticism you get when trying to promote your ideology. If you fail, then you will have a better understanding of where your argument might fall short and what other assumptions you need.

The reason I want you to try to write it mathematically is that I don't think you can. I certainly can't see a way to do it, and I regularly practice breaking down verbal arguments to their core as part of my studies.

[Infactum]

You missed the point. If you really feel the need to insult me, do so. It may or may not be warranted. Please do not, however, take school yard swipes at other people while talking to me. That's incredibly uncalled for.

I simultaneously gave both you and Forsher feedback on the quality of your work. If you want to take it as an insult then that's your prerogative.

Speaking of wasting each others' time... I have clicked on something like 20-25 of your links and found no (peer reviewed) paper purporting to demonstrate your claim. I ask again for the reference.

And again, here's "my" claim...

1. opportunity cost ensures the efficient allocation of resources
2. taxpayers would consider the opportunity costs if they could shop in the public sector

Which one do you need sources on? Again, if you need sources on 2 then you really need sources on 1 because clearly you don't understand the meaning/significance/relevance of the opportunity cost concept.

You can't have your cake and eat it too...therefore? Therefore what? Therefore nothing? It's one of the most important economic concepts and all it tells us is that you can't have your cake and eat it too? If that's your understanding then let me know.

Do you understand what I mean by "claim?" I mean it in the academic sense: a single statement that you intend to show. Your claim, as I understand it, is "Pragmatarianism maximizes social utility." Is this correct?

I just explained that my claim is that pragmatarianism would allow taxpayers to consider the opportunity costs. If you need me to explain to you the "therefore"...then clearly you're not at all familiar with the concept of opportunity cost. Initially you said that you understood the concept, and I think it's quite apparent that I made a mistake in believing you.

Fine, If you refuse to answer my yes or no question, I'll state this is another way. Present me with a peer reviewed paper that shows Part 1 of your claim is true for all markets (and irrational humans). That would be an equally ground breaking economic discovery and you should publish it if you can prove it.

Have you even considered that your understanding of opportunity cost might be wrong? If you believe 1 is universally true, then I would argue that it is.

You are so certain of this, you have based a "theorem" on it and otherwise act as if it is proven. Your own source from 1971 (http://www.jstor.org/discover/10.2307/1 ... 2655860517) Claims that economists "do not agree on the effects of earmarking".

Again, if that's all you pulled from that source then I'm going to have to give you an F...for Forsher. Am I insulting both you and Forsher? That's your call.

That's a statement about economics from a peer reviewed paper that contradicts your claim to have proven anything. It was the thing that seemed most relevant to this discussion.

Your insistence on doing things that you know annoy me is, however, revealing with regards to noble intent on your part.

You know, in physics they train us to do wild order of magnitude guesses. I've gotten pretty good at those. I have very little idea how to approach this one, it is perhaps the worst defined question I've happened on. I would suppose if we are talking about public goods provided by either the government or market (likewise for private goods), I'd probably go with 100:1. You can vary that by at least a factor of ten for the uncertainty. I'm interested to see where this goes.

Your guess is that there are 100 private goods for every public good? How many different bands do you think there are? How many different albums are currently available on the market? How many different books and movies are there on Amazon?

You asked me to guess. I told you it was ill-defined. Every unique post on every public internet site could also be considered a separate public good as well.

I decided to attempt to try to roughly divide up both sectors into competing but not overlapping goods. So all movies/bands/etc in a specific subgenre is one good in my estimation. I obviously can't be very accurate. Regardless, pick as big of a number as you want to make your point. I suspect I know what it is, and I suspect the ratio isn't the only parameter.

You're the one who classes allocation as communication of preferences. I give to the NSF and, by your logic, claim I value the NSF more than anything else.

So the opportunity cost concept is bogus. That's your claim?

Concept: no. Idea that it is the only relevant concept in economics and that it is the only defining feature of the efficiency of a market: yes.

1) I want them to make the opposite allocation. Then the highway is built and I don't have to pay my fair share for it.

What if it isn't built? Oh well...too bad so sad? There's nothing you can do? You say you truly value the highway, yet it doesn't receive enough funding for it to be built...but you do absolutely nothing about it. My premise is that your actions speak louder than your words. That's my claim. The more you sacrifice to make your highway a reality, the more I'll believe your claim that it's your priority.

2) Of course not. For one thing: you've moved to less public organizations again. For another, me and the other 95% of the tax base seized all the less public goods before the billionaire got around to it. The billionaire now knows that their fortune will crumble without the economic boon of the highway and funds the whole thing. People did not pay for the highway in proportion to their value derived from it.

Why would they have to pay for the highway if the billionaire funds the entire thing?

Why would the billionaire pay if she can get them to fund the entire thing? If she allocated first, our fictional tax payers would fund the rest. It's a paradox under your definitions, but not under mine. Sacrifice is generally a poor measure of value in multiplayer games.

Frankly, I don't like the term "trick," and prefer the term "defect," both for the analogy with game theory and the fact that the act of allocation isn't really something you do to another person. You may class that as my semantic whining, but now you seem to have a completely wrong idea of what is meant by deception in this case.

And again, you're not going to defect in a pragmatarianism system as much as the current system forces you to defect. As a result, the allocation would be infinitely more efficient in a pragmatarian system.

The current system doesn't permit me to defect. Some fraction of my taxes fund roads regardless of how I could allocate in pragmatarianism. And the polls have no incentive to defect - I can't get someone to over-commit their vote because they believe I'll under-commit mine.

If I give money to a shoe maker, I believe the shoe maker is competent at making shoes. I do not believe that the shoemaker can accurately weigh the cost of a more prestigious school for her daughter versus the benefit of the name and connections. Competence is highly dependent on the skill we're talking about. I would argue that the notion of competence itself is meaningless without reference to a specific skill.

What does making shoes entail? Can you name all the private inputs that are required? What about all the public inputs? When you give your money to Mr. Shoemaker, you're giving him a mandate to use society's limited resources to make shoes. Why are you shooting yourself in the foot by hamstringing him? If he's competent enough to select the private inputs he needs to make your shoes, then he's also competent enough to select the public inputs he needs to make your shoes. (1)Nobody is more competent and qualified than he is to know which public inputs he needs to make your shoes. This is because an input is an input whether it's from China or Mexico or the private sector or the public sector. It's either needed to make a shoe or it isn't.

1) This does not follow. I know you want it to, but it doesn't. Most private inputs for private concerns are purchased and consumed within <5yrs. Many public goods (Military, Highways, Police) have their value realized over decades or more. Sometimes more than a human lifespan. Being good at selecting one doesn't make someone good at selecting the other (even if it's just in the limited domain of shoes).

Most people are pretty bad at predicting the long term effects of their actions. Including me. Including you. Predicting the future is hard.

Did you miss the part where you rewarded Mr. Shoemaker for predicting that you would need shoes?

Nope, did you miss the part where the shoe maker's ability to predict that somebody, at some point, would need shoes is not a ringing endorsement of his ability to determine the optimal US military readiness?

1) Congress having full control of the budget is not just about them being competent to spend it*. It is about the projects they can fund that a collection of self interested actors would not. Then they do, indeed, just have to be competent enough.

But you've given absolutely no assurance that the reason a collection of self interested actors would not fund a public good is because the opportunity cost is too great. Again, you say that you understand the opportunity cost concept but then none of your examples show any evidence of this.

I understand opportunity cost, but I also understand that other things inform decisions. Especially where other actors are involved. If you and I are playing a game of prisoners dilemma, my opportunity cost for defecting is completely dependent on your choice (and vice versa).

Remember, I sacrifice less than I value something. That is how wealth is created. Lets say I go to buy a used car. "Trusty" Patches, the dealer bought it for $300. I would derive $500 from the car. There is $200 of wealth to be made in this transaction. The wealth would not exist without either of our contributions, so how do we fairly divide it up? The market answers this question in a fairly utilitarian fashion when it is efficient. In relatively efficient markets, people behave close to homo economicus. In inefficient markets (natural monopolies, information asymmetries, systematically irrational actors, etc.), we have no way of knowing what price is utilitarian or fair. Since not all of our markets are efficient, net worth means little if anything regarding societal worth.

Really? No way of knowing whether a price is utilitarian or fair? As if I needed more evidence that you truly don't understand the significance/relevance/importance of the opportunity cost concept.

I'm willing to sacrifice $500 for that car. I will not, however, pay $500 for that car (unless I am a bad negotiator). I have every incentive to tell "trusty" that I only value the car at $325 and make him feel like he's picking my pocket at $350. If I tell him I value it at $500 (i.e. tell the truth), I will end up spending considerably more on it. If I bought it at a "market set" price of $350, did I value it at $350 or $500?

Also, attributing all of histories ills to lack of your political ideology seems a bit over the top.

All the man made ills throughout history were major misallocations of resources. And major misallocations are only possible when you remove the fail safe device of people having costless exit.

I would like to see proof of this. Even if I accept the first sentence, which requires a misleadingly broad definition of "major misallocations," I am uncertain if the second follows. It is certainly not obvious.

Peasants -starving- to death, as in still alive. All you've shown is that central systems, especially with regards to private goods, may be vulnerable to corruption. This is far from proof of your claim.

Corruption is simply a misallocation of resources. You can't majorly misallocate resources in decentralized systems. Major misallocations are only possible when too many eggs are forced into one basket.

I'll ask again, if 30 million people starved to death under pragmatarianism, would you claim that the market valued them more dead than alive? I honestly see no other conclusion from what you are saying.

30 million people wouldn't starve to death in a pragmatarian system. Why? Because their preferences would not be ignored/assumed/disregarded.

Sure they can, and Sure they would be. As a rule people on SNAP (the new food stamps) pay less into taxes than they receive in benefits (just based on a quick internet scan). If the people who paid enough taxes refused to fund SNAP (as it provides them no obvious benefit), there is an excellent chance that many people (especially children) would starve to death. Or die of exposure if they bought food instead of shelter. Would you call that a major misallocation of resources?

You're the one that says it's hard to predict how tax choice would turn out. Why are you so sure it wouldn't turn out this way?

You don't get it. Hitler didn't need to raise a "true" demand for all the "national defense" he wanted. He just needed enough to get in power and then use the army he did have to force everyone else in line. Pragmatarianism is gone when someone points a gun at your loved ones.

Pragmatarianism wouldn't be "gone". You know why? Because in a pragmatarian system consumers are allowed to determine exactly how big the gun is and where it's pointing. Why would anybody voluntarily pay for defense if they even have the slightest hint that the gun is going to be turned on their loved ones? That's ludicrous.

You suspect Mr. Shoemaker is going to throw shoes at your wife and kids. Therefore, that's where you take your family to shop? LOL. Are you familiar with the concept of consumer sovereignty?

Why would anyone vote for someone if they have the slightest hint it's going to turn into a tyranny? It's because predicting the future is hard. If Hitler could have convinced 20-30% of the tax base to fund him, he could take the guns and seize control before the rest could react.

Yep, values are subjective. I agree, that's an assumption and a reasonable one. We'll call it "P"

Now all we need is a proof that pragmatarianism maximizes social utility. Let's call that "Q." This transition in logic (P=>Q) is the one I need broken down. Everything else you've presented so far has been "proof by example" and some words that I can't be certain contain the meaning you claim they do.

I'm pretty sure that "P" leads to pragmatarianism. Can you arrive at another destination?

Lots of natural rights anarcho-capitalists fail to see the value of pragmatarianism. They don't have enough economics under their belt to grasp the value of having the invisible hand in the public sector... (1)

Sure. Values are subjective, therefore we need to structure society to benefit from cooperation where values agree, and use competition to sort out where values compete.
P does not lead to pragmatarianism, you have yet to show that either rigorously or though an academic citation.

1) You do know why this annoys people don't you? You seem to lack training in economics or any vaguely related field, yet you insist on kicking down the door and informing most all of the economists that they are doing it wrong. You are claiming to know better that tens of thousands (more?) of people who have studied this subject for decades a piece. You can't show me that they have agreed with you, so I am left with 3 options:

A) No economist thus far has thought of this idea, despite it's apparent simplicity and elegance.
B) Every time this idea has been had by an economist, it has been found wanting by them or their colleagues.
C) Xero, and only Xero, has thought of this idea and can prove it where everyone else has failed.

You'll forgive me for picking option B lacking additional evidence.

[Infactum]

Fine, If you refuse to answer my yes or no question, I'll state this is another way. Present me with a peer reviewed paper that shows Part 1 of your claim is true for all markets (and irrational humans). That would be an equally ground breaking economic discovery and you should publish it if you can prove it.

That's a statement about economics from a peer reviewed paper that contradicts your claim to have proven anything. It was the thing that seemed most relevant to this discussion.

That's the very first sentence in a peer reviewed paper. Do you think Buchanan's entire point of his paper is that some economists disagree about the effects of earmarking? Really? His paper is really nothing more than a review of what economists know about the topic?

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

opportunity cost ensures the efficient allocation of resources

If opportunity cost were proven to ensure efficient allocation of resources (regardless of market), then economists would agree on the effects of earmarking. Do you agree?

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.

The reason I largely don't bother with Forsher is because he doesn't even make it to the first sentence. But I'm hardly going to want to make much of an effort to bother with you either if you're incapable of making it past the first sentence to understand the actual point of a peer reviewed paper.

Demonstrate that you're capable of making the effort to understand Buchanan's actual argument...and then we can move on to other peer reviewed papers...of which there are many.

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.

Have you even considered that your understanding of opportunity cost might be wrong? If you believe 1 is universally true, then I would argue that it is.

So present your argument. In doing so you will for the very first time articulate your understanding of the the concept's significance, meaning and relevance.

Your insistence on doing things that you know annoy me is, however, revealing with regards to noble intent on your part.

Nobility? Share a peer reviewed paper that substantiates your claim and I'll actually read the entire thing. Is that nobility? If not, then what is it? Basic courtesy perhaps? An honest and genuine effort to understand your point of view?

Opportunity cost is the difference in value derived from one choice versus the best of the choices not picked. In theory, if everyone is rational (i.e. makes no "mistakes"), then they will pick the option with the least opportunity cost. 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.

I believe I have been making the claim that you are wrong and that you are applying certain principles outside their domain of validity. I have tried to demonstrate this through counter examples that show even perfect (zero "mistake") actors will behave systematically sub-optimally in your system. You have rejected or ignored those examples for reasons I believe inadequate. It is not obvious to me how to persuade you that these reasons are inadequate, so I have tried to take a different approach, therefore, and attack the soundness of the argument rather than the consistency of the conclusion.

Do you want me to provide you a paper that claims your claim has not been proven? That is coming dangerously close to asking me to prove a negative. In principle, I could look through every extant economics paper and cite them all as not containing your claim. I'm not going to do that for obvious reasons.

Your claim ought to be present (and proven) in some paper, could you please just provide me with the citation? If not, I maintain that you should publish your proof.

You asked me to guess. I told you it was ill-defined. Every unique post on every public internet site could also be considered a separate public good as well.

I decided to attempt to try to roughly divide up both sectors into competing but not overlapping goods. So all movies/bands/etc in a specific subgenre is one good in my estimation. I obviously can't be very accurate. Regardless, pick as big of a number as you want to make your point. I suspect I know what it is, and I suspect the ratio isn't the only parameter.

If you're going to throw out that you suspect my point, then, by all means, don't let me stop you from proving to me how intuitive your are. What's my point?

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?

Sacrifice is generally a poor measure of value in multiplayer games.

This is a multi-player game. You're not willing to sacrifice the alternative uses of your time to read more than the first sentence of a peer reviewed paper. It's a pretty darn good measure of how much you value actually learning about the subject. In fact, sacrifice is the only real measure of value...no matter how many people are "playing". (1)

For the record, I read the page that was available to me without making an account. The content of the paper was relatively clear from the intro (despite his aversion to abstracts). Reading it did put it's precise scope into focus, however.

1) I disagree strongly with this. Remember you stated it for the car example below, however.

If you're not willing to sacrifice anything to help ensure that your most valued public good is adequately funded, then clearly you don't value it at all. (1)

Real economics is all about sacrifice and sacrifice is the opportunity cost concept. What you're willing to give up/exchange/trade/forego/sacrifice/pay reveals how much you value something...

For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life. - John 3:16

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?

The current system doesn't permit me to defect. Some fraction of my taxes fund roads regardless of how I could allocate in pragmatarianism.

Right, some fraction of your taxes fund roads regardless of how much you would truly be willing to sacrifice for them. In other words, regardless of reality. Misallocations are allocations which have absolutely no relevance to the reality of people's true preferences.

You realize that defecting is also misallocating, correct? In as much as misallocating means paying out of proportion to value derived.

And the polls have no incentive to defect - I can't get someone to over-commit their vote because they believe I'll under-commit mine.

This is your claim, so find me a peer review paper that substantiates it. In case you missed it, Samuelson's paper argued that we can't trust contingent valuation techniques. If we could, then there would be absolutely no need to force people to pay taxes...we could simply ask them to state their preferences for public goods.

Upon consideration, I wish to weaken that claim to assert that there is no reason to lie at the polls when choosing between 2 options. I was thinking of the US system (usually 2 options) and forgot issues such as http://en.wikipedia.org/wiki/Arrow's_im ... ty_theorem. When there are only 2 options, you can only weaken your chances of getting your preference by not voting or voting for the one you don't prefer. Do want a source for that claim as well?

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.

1) This does not follow. I know you want it to, but it doesn't. Most private inputs for private concerns are purchased and consumed within <5yrs. Many public goods (Military, Highways, Police) have their value realized over decades or more. Sometimes more than a human lifespan. Being good at selecting one doesn't make someone good at selecting the other (even if it's just in the limited domain of shoes).

So somehow, only the people who work in the public sector are capable of making long term investments? LOL. That's funny. Firms never engage in long term planning...how could they? The public sector stole everybody with any degree of foresight.

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"

Nope, did you miss the part where the shoe maker's ability to predict that somebody, at some point, would need shoes is not a ringing endorsement of his ability to determine the optimal US military readiness?

Right, because it's that easy to predict future demand for any given good/service. Businesses never fail. Government organizations never fail. Oh wait, they can't fail because their allocations are so superior that there's absolutely no need for them to be vetted by consumers. This must be because the government stole everybody who has any degree of foresight.

Maybe it's easier to predict demands than global politics (I think it is, but that's irrelevant). Even global politics require, in principal, less work, shoe makers are going to be worse at that than they are at making shoes (in general).

I understand opportunity cost, but I also understand that other things inform decisions. Especially where other actors are involved. If you and I are playing a game of prisoners dilemma, my opportunity cost for defecting is completely dependent on your choice (and vice versa).

You don't understand it or else you would have integrated it into your arguments...even if only to disprove the universality of the concept.

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?

I'm willing to sacrifice $500 for that car. I will not, however, pay $500 for that car (unless I am a bad negotiator). I have every incentive to tell "trusty" that I only value the car at $325 and make him feel like he's picking my pocket at $350. If I tell him I value it at $500 (i.e. tell the truth), I will end up spending considerably more on it. If I bought it at a "market set" price of $350, did I value it at $350 or $500?

See...proof that you don't understand the opportunity cost concept. If you bought it at $350, then, unless you made a mistake, you obviously valued it more than all the alternative uses of that $350. That's all that matters. That's all we need in order for resources to be put to their most valuable uses.

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?

All the man made ills throughout history were major misallocations of resources. And major misallocations are only possible when you remove the fail safe device of people having costless exit.

I would like to see proof of this. Even if I accept the first sentence, which requires a misleadingly broad definition of "major misallocations," I am uncertain if the second follows. It is certainly not obvious.

Look at you, doubting the sanity of pragmatarianism, telling me that the value of costless exit is certainly not obvious.

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.

Maybe videos are easier for you than peer reviewed papers on economics? Here's a relatively short video of Milton Friedman discussing the proper scope of government. In one part of the video the interviewer starts to ask Friedman a hypothetical "if you were king for a day" question and Friedman's reaction is priceless. Even before the interviewer can finish asking the question Friedman interrupts him and says with great emphasis, "If we can't persuade the public that it's desirable to do these things, then we have no right to impose them even if we had the power to do it."

Friedman and I both know something...that you don't. What is it? Why, even if I had the power to do so, would I not force pragmatarianism to be implemented? Here's the long answer...Milton Friedman on Fallibilism.

Sure they can, and Sure they would be. As a rule people on SNAP (the new food stamps) pay less into taxes than they receive in benefits (just based on a quick internet scan). If the people who paid enough taxes refused to fund SNAP (as it provides them no obvious benefit), there is an excellent chance that many people (especially children) would starve to death. Or die of exposure if they bought food instead of shelter. Would you call that a major misallocation of resources?

You see abundance all around you and have no idea why it exists. What causes there to be an abundance or shortage of food? Obviously it depends on how resources are used. And the market is how consumers indicate which producers are doing the best things with society's limited resources. The more benefit that a producer creates with society's limited resources, the more positive feedback (money) he'll receive...and the more influence he'll have over how society's limited resources are used. And then you go and take 50% of the influence away from the people we have to thank for an abundance of food...and give it to congresspeople. What do you think the consequences are? None? There are no negative consequences? If so, then abundance has absolutely nothing to do with how well somebody uses society's limited resources. That's really your theory? That's what you want to argue?

You really can't see a middle ground between "abundance has only to do with how well somebody uses society's limited resources" and "abundance has nothing to do with how well somebody uses society's limited resources?"

This is similar to the middle ground you seem to ignore between "Net worth/income is an exact predictor of how well someone uses society's limited resources" and "Net worth/income has nothing to do with how well someone uses society's limited resources."

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?

Why would anyone vote for someone if they have the slightest hint it's going to turn into a tyranny? It's because predicting the future is hard. If Hitler could have convinced 20-30% of the tax base to fund him, he could take the guns and seize control before the rest could react.

How do you seize control when power is decentralized? Right now we know exactly where you'd have to go to seize control...Washington DC. Why? Because that's where the power of the purse is. But where would the power of the purse be in a pragmatarian system? It would be dispersed all over the country. If you want to seize control then you'll have to do what every business owner has to do...advertise. You'd have to persuade people to give you their control, which, because of costless exit, they could easily take back from you whenever they suspected that there were more valuable things to do with their money.

Hitler was only possible because voters did not have to put their money where their mouths were...

As was noted in Chapter 3, expressions of malice and/or envy no less than expressions of altruism are cheaper in the voting booth than in the market. A German voter who in 1933 cast a ballot for Hitler was able to indulge his antisemitic sentiments at much less cost than she would have borne by organizing a pogrom.

[...]

The market choice has been the object of extensive study by economists and needs little analysis here. It is to be emphasized, however, that in the market setting the chooser is decisive: The opportunity cost of choosing a is b forgone. It is this latter fact that enables the observer to conclude that the chooser prefers a or b and, equivalently, that allows the economist to speak of the individual's choice as "revealing" her preference.

[...]

There are, however, several other considerations that are sometimes mentioned in the context of revealed preference that do suggest a systematic and predictable bias in the divergence between actions and words (and by extrapolation between market and electoral preference), and these considerations are of more interest in the current setting. - Geoffrey Brennan, Loren Lomasky, Democracy and Decision

It's painfully obvious that the only way to immunize ourselves against future Hitlers is to create a system where people have no choice but to put their money where their mouths are.

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.

Sure. Values are subjective, therefore we need to structure society to benefit from cooperation where values agree, and use competition to sort out where values compete.
P does not lead to pragmatarianism, you have yet to show that either rigorously or though an academic citation.

I asked you where exactly P leads to. If you have absolutely no idea where it leads to, then how can you be certain that it doesn't lead to pragmatarianism? Show me a more logical destination. Values are subjective therefore...therefore what?

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.

[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?