Are Congresspeople Omniscient?

[Xerographica]

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)? 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.

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.

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...

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.

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.

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.

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.

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.

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. 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.

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.

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? 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.

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.

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.

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.

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.

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?

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.

*) 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?

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...

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.

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.

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?

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.

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.

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.

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...

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."

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...

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? I really don't think so. And I love the given conclusion. It's worth sacrificing for.

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?

[Xerographica]

While they may not be omniscient they have access to much more information than we do about how the resources are being directed and how much funding is absolutely required for this and that program, they also have teams of advisers and tax paying constituents like myself who can easily inform them of their budgetary concerns through correspondence.

What you're saying sounds really reasonable and logical...but find me exactly where any of what you've argued is mentioned in public finance. And if it's not mentioned anywhere in public finance...then where did you get this information from?

Are you really going to read books and papers on public finance in order to find passages that back up your arguments? No, you're not. And if I show you any passages from public finance then you're simply going to assume that they've been extremely cherry picked. It's not a bad assumption to make.

Soooo...what do you want me to do? How about I just copy and paste the argument from my OP which you haven't addressed...

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.

You think that congresspeople have information about public education that I don't have? That's true. Just like dairy farmers have information about milk that I don't have. Therefore?

If being able to purchase something requires that I have to know more about it than I don't know...then honestly I wouldn't even be able to purchase the three things that I'm really knowledgeable about.

I wouldn't be able to buy a book on public finance because heck if I know anything about everything that went into producing that one book...whether it's a real book or an ebook.

So if you want to argue that a congressperson should be able to spend my tax dollars because I know so little...then your argument really can't only be limited to public goods.

The part you're missing about economics is that the efficient allocation of resources absolutely depends on the one thing that I know that nobody else can possibly know: whether any given good/service is worth more than the alternative uses of my money. I'm the only one who has this information. And the only way that I can share it with others is by spending my money.

Therefore? If we want resources to be efficiently allocated then taxpayers should be allowed to shop for themselves in the public sector.

And if you're struggling to doubt the current system...then don't worry...you're not alone...

It is easy to believe; doubting is more difficult. Experience and knowledge and thinking are necessary before we can doubt and question intelligently. Tell a child that Santa Claus comes down the chimney or a savage that thunder is the anger of the gods and the child and the savage will accept your statements until they acquire sufficient knowledge to cause them to demur. Millions in India passionately believe that the waters of the Ganges are holy, that snakes are deities in disguise, that it is as wrong to kill a cow as it is to kill a person - and, as for eating roast beef…that is no more to be thought of than cannibalism. They accept these absurdities, not because they have been proved, but because the suggestion has been deeply embedded in their minds, and they have not the intelligence, the knowledge, the experience, necessary to question them.
We smile…the poor benighted creatures! Yet you and I, if we examine the facts closely, will discover that the majority of our opinions, our most cherished beliefs, our creeds, the principles of conduct on which many of us base our very lives, are the result of suggestion, not reasoning…
Prejudiced, biased, and reiterated assertions, not logic, have formulated our beliefs. - Dale Carnegie

[Xerographica]

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...

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...

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...

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. 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.

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...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.

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. 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, 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.

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? 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.

Yes, but If I support the NRA and PETA

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

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.

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.

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.

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.

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.

[Xerographica]

As a shareholder of several large businesses, I should have a choice regarding how my share of the gross income is spent. The small elected boards of directors cannot possibly know the preferences of the millions of shareholders that elect them. The business's needs would be much better served if each shareholder could dictate how his portion of the gross income is spent.

1. The public sector is HALF the economy. But do you see it as one giant corporation with numerous subsidiaries? Or do you see it as an entire sector...with numerous independent corporations?

2. You need to familiarize yourself with the concept of "exit"...Exit, Voice and Loyalty. Doing so will help you appreciate this statement by Alex Tabarrok..."It’s the threat of exit that makes people listen."

Milton Friedman pretty aptly described difference between corporations and government...

The government should not help to save Chrysler, of course not. This is a private enterprise system. It's often described as a profit system but that's a misleading label. It's a profit and loss system. And the loss part is even more important than the profit because it's what gets rid of badly managed, poorly operated companies. When Chrysler loses money...it's got to do something. When Amtrak loses money it goes to congress and gets a bigger appropriation. [...] It's the stockholders of Exxon who ultimately are buying it. If they don't like what Exxon is doing with their money, they have a perfectly good alternative...they can sell the stock. And as the stock went down, if the stockholders didn't like it, they would pay somebody to change the policy which Exxon is following. We have a far greater degree of control over what Exxon does than we have over what a lot of our government corporations do. - Milton Friedman, What is Greed?

Here are some additional passages on the topic of "exit"...

Capitalism is the best. It's free enterprise. Barter. Gimbels, if I get really rank with the clerk, 'Well I don't like this', how I can resolve it? If it really gets ridiculous, I go, 'Frig it, man, I walk.' What can this guy do at Gimbels, even if he was the president of Gimbels? He can always reject me from that store, but I can always go to Macy's. He can't really hurt me. Communism is like one big phone company. Government control, man. And if I get too rank with that phone company, where can I go? I'll end up like a schmuck with a dixie cup on a thread. - Lenny Bruce

Voluntarism need not characterize a pure public good, inasmuch as such goods may harm some recipients who cannot avoid the good’s spillovers at a reasonable cost. Examples include defense provision received by a pacifist, or sound carried from an open-air concert to a surrounding neighborhood. In the Samuelsonian sum of marginal rate of substitution (MRS) condition, some MRSs can be negative for a pure public good. The same is not the case for privately provided club goods, because the right of costless exit is always available. - Todd Sandler, John Tschirhart, Club theory: Thirty years later

But this is not a necessary consequence of hypothecation. Even if people do not get any immediate personal benefit from a service, they may be prepared to continue paying for it, either because they have altruistic concerns for the actual beneficiaries of the service or because they perceive themselves as possibly needing the service themselves in the future. And those who do get an immediate personal benefit may not necessarily think they will get a better deal outside. In Germany, where wealthy individuals are offered a choice of remaining in the statutory health insurance sector or opting out and taking private insurance, a large majority stay with the public sector—largely because they think it is better (Thomson, Busse, and Mossialos 2002). In general, the danger that people might opt out can provide a useful competitive pressure on the public service, helping to lever up the quantity and quality of the service provided. - Julian Le Grand Motivation, Agency, and Public Policy: Of Knights and Knaves, Pawns and Queens

What do we want with a Socialist then, who, under pretence of organizing for us, comes despotically to break up our voluntary arrangements, to check the division of labour, to substitute isolated efforts for combined ones, and to send civilization back? Is association, as I describe it here, in itself less association, because every one enters and leaves it freely, chooses his place in it, judges and bargains for himself on his own responsibility, and brings with him the spring and warrant of personal interest? That it may deserve this name, is it necessary that a pretended reformer should come and impose upon us his plan and his will, and as it were, to concentrate mankind in himself? - Frédéric Bastiat

But in the case of PGs they may not have an avenue for criticism nor a feasible exit opportunity. They may be compelled to consume a particular good. Therefore, it is important to ascertain whether a good’s publicness in form goes hand in hand with publicness in substance – actual enjoyment of the good by all. - Inge Kaul Public Goods: Taking the Concept to the 21st Century

Did I adequately address your point? If not, then you can either "voice" your concerns or "exit" this thread. Lots of people have exited this thread because they did not find sufficient value here. So they spend their time in other threads that do provide them with sufficient value. The result is that we all derive the maximum value from this forum. This is how/why markets work.

Right now we don't have easy "exit" in half our economy. Sure, you can voice your concerns...but few people are going to move to another country in protest. This doesn't mean that their concerns aren't valid...it simply means that the opportunity cost is too great. So in order to effectively capture their preferences as easily as we do in the private sector, taxpayers should have the freedom to choose where their taxes go. If you don't like what the DoD is doing with your tax dollars...then give your money to the DoE instead. Even some liberals appreciate the value of "exit"...Velazquez: Funding war should be taxpayers’ choice.

Nothing is going to make the government more responsive than having taxpayers in charge of funding. Maybe you don't want the government to be that responsive? Why not? You sure wanted me to be responsive. We should always have the opportunity to support the organizations that use society's limited resources for our benefit...and boycott those that don't. Costless exit is the only effective fail safe device to prevent massive amounts of society's resources from being wasted on things that society truly does not value.

[Xerographica]

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. Again, the preference revelation problem is to figure out how to discern people's preferences for goods in the public sector.

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.

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.

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. 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).

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?

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? 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.

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

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.

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?

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?

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?

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?

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?

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.

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.

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.

[Xerographica]

@Infactnum

I like your example with the 70% funding to DOD, but we can make it even simpler:

TO make it even less abstract, a real world example.
My favourite Indian cuisine is butter chicken followed by lamb rogan josh. My girlfriend's favourite is also butter chicken. So when we go to an Indian restaurant, we pick out two dishes and agree that we'll share them equally, and we must pick two different dishes. My first choice on the menu is rogan josh. She predictably picks butter chicken. My benefit is maximised by pretending I like rogan josh more.
Crazy, huh? *

You tricked your girlfriend because she doesn't know your favorite Indian dish? Therefore, you can maximize the amount of benefit you derive from her by hiding all of your favorite things from her? hehehe. I don't think so.

One of my gf's favorite dishes is KyoChon Chicken. She was ecstatic when one opened up in Glendale. But then shortly afterwards they closed down. She was depressed. I told her that it was her fault for not eating there enough.

Imagine that we implemented pragmatarianism...and enough people voted for KyoChon Chicken to be a public good. If one opened up in Glendale, then my gf could simply go to their website and check out their fundraising progress bar. This would allow her to know exactly how much money they needed to stay open.

So would she play chicken with all the other KyoChon Chicken fans? Well...obviously she wouldn't be playing chicken with all the Zankou Chicken fans. The Zankou Chicken fans could care less if KyoChon Chicken closed down. I think the Zankou Chicken fans would realize that if they want Zankou Chicken in their neighborhood...it would behoove them to chip clip in.

But if the KyoChon Chicken fans all went for their second best option, then KyoChon Chicken would close down. So then they'd all play chicken again and spend their taxes on their third best option. As a result, their second best option would close down. And this continues until there's only one, extremely well funded but least liked option left in the public sector?

Why don't people play chicken in the non-profit sector? Is it because it's entirely voluntary? If we forced people to spend 10% of their income in the non-profit sector...then after a while there would only be one, extremely well funded but least liked non-profit left standing?

[Xerographica]

Regardless if they were, it's not like they would actually care about us.

If you could choose where your taxes go, would you go around trying to trick people into spending their tax dollars on your favorite public goods?

[Xerographica]

Markets assume informed consumers.

How can markets assume anything? It's people who make assumptions. So who, exactly, assumes informed consumers?

O.K., now I know for a fact that you have absolutely no background whatsoever in economics — because no one with any formal training in economics would ever misunderstand what an economist means when he or she says "markets assume informed consumers".

And this, in turn, explains why you fail.

Without understanding how and why markets behave as they do, you cannot reasonably attempt what you doing (i.e., to replace the appropriations process with some kind of market-driven alternative); any attempt to do so will end in your embarrassment in the eyes of everyone who actually understands markets — precisely as you are embarrassing yourself here. Worse, your fundamental ignorance will magnify your embarrassment, in so far as — like a blind man walking around with his fly open — you don't have the ability to grasp why everyone is laughing at you.

So let me take the extra effort to express the problem to you in terms that someone who has never cracked a single economics textbook can understand.

When an economist says "markets assume informed consumers", what they really mean in layman's terms is this: The theory that free markets represent the most efficient means by which to allocate economic resources (IOW, "markets") presupposes (IOW, "assumes") that all economic decision-makers have complete and perfect understanding, not only of their possible purchasing options, but also of both the direct and indirect consequences o the purchasing decisions they make (IOW, "informed consumers").

I'll repeat that (inset, bolded, highlighted, and without parentheses) in order to make certain that what I'm saying sinks in before continuing:

The theory that free markets represent the most efficient means by which to allocate economic resources presupposes that all economic decision-makers have complete and perfect understanding, not only of their possible purchasing options, but also of both the direct and indirect consequences o the purchasing decisions they make.

Now, before I take you to the cleaners, I'm going to give you an opportunity to digest the consequences of this premise. In truth, I have little hope that you'll see the light — but fundamental fairness dictates that I give you at least a chance of seeing where you made your mistake before I take you apart.

Maybe you didn't understand my question. I'm asking for specific names. I want to know the names of the economists who assume perfect information. Do you know their names?

Oh, and returning to this little gem of idiocy:

Find me a passage that states that the optimal provision of public goods does not depend on people's preferences. Until then, you're simply shoveling ignorant crap at me. You're pulling shit out of your ass to try and cover the fact that you don't have a clue what you're talking about. And you're going to continue to do so because it's easier than actually making the effort to learn something about public finance. In case you missed it, public finance is the topic of this thread.

You're attempting to apply an economic theory to public finance, so you can't shut out arguments against you based on economic theory and economic theory alone. Consequently, I don't have to "find you a passage" in any of your cited works — or any other cited work within the realm of public finance — because I'm going to annihilate you concept primarily on the grounds of economic theory, with a dose of political science and political philosophy served up at the end as dessert.

Nor can you cry that such an approach isn't cricket. No, you opened the door to it when you elected to try and apply free market theory — an economic theory — to appropriations (and, since the power to appropriate is also the oldest political power of legislative bodies within the English-speaking world, you also opened the door to arguments based on political science and political philosophy as well; those, too, you cannot ignore).

I asked you for passages from public finance which support your arguments. I can provide and I have been providing passages from public finance which support my argument. All you can do is pull crap out of your ass. Again, it's mildly entertaining so feel free to continue doing so. But I'm really not going to take you seriously until you make the effort to learn something about public finance.

Finally, while you contemplate your doom, I'm going to reiterate another question for you to ponder — and one that you have yet to answer properly:

Even if we were going to attempt to establish a market-based appropriations system, how would it be even remotely proper to identify taxpayers as the actual consumers of government services under such a system? How can you even begin to assert that only taxpayers use government services, and if you don't identify the users of government services as the consumers of those services, how can you possibly make any market-driven system work?

If you have a question about pragmatarianism, it helps to see if you can't answer your question by considering how the non-profit sector works. If you donate to the Red Cross...it doesn't mean that you expect them to immediately send you a big box of disaster relief. And sometimes the people who do receive disaster relief have never made a donation to the Red Cross. But clearly this system works in the sense that people do not donate to non-profits which do not match their preferences. People aren't going to continue donating to the Red Cross if they suspect that the Red Cross is giving disaster relief to people who don't at all need disaster relief.

For all intents and purposes, taxpayers are donors in the public sector. Except they can't choose which non-profits in the public sector they give their donations to. It's a ludicrous system. If any experts genuinely believed that it was vaguely effective then we wouldn't allow donors in the non-profit sector to choose where their donations go. We'd force them to vote for 300 representatives who would decide how to divvy up the pool of donations. But we all kinda know that it would be an intensely stupid thing to do. The total amount of donations voluntarily given would shrink down to barely anything. Which would then necessitate forcing people to donate. The challenge is showing people that it's equally stupid for us to have this system in the public sector.

Why do so many people equate shopping to running an organization? Pragmatarianism doesn't put Bill Gates in charge of the DoD. It simply means that he can decide exactly how much of his taxes he gives to the DoD. Will he do his homework? What do you think?

You're not just giving money to the DoD. You're deciding how many aircraft carriers, jet fighters, and nuclear missiles it can buy and maintain; you're completely replacing the appropriations process with a system of taxpayer choice, so everything Congress now decides with regards to our Nation's defense is now decided by taxpayers.

<pause>

What, were you thinking the Defense appropriations bill consists of nothing but a final dollar amount?

Pragmatarianism is all about ceteris paribus. If taxpayers are happy with the current allocation of public funding, then they wouldn't have to do anything different. But if they wanted to shop for themselves, then at anytime throughout the year they would be able to go directly to a government organization's website and submit a tax payment. The GO would give them a receipt and they'd submit all their receipts to the IRS by April 15.

If your tax obligation is $10,000...and you decided to shop for yourself...then you could just give that $10,000 to the DoD. This means that you wouldn't give that $10,000 to the IRS...which means that congress would have $10,000 less in their available pool of money to divvy up among the various GOs.

So the more taxpayers that opted to shop for themselves, the smaller the pool of money that congress would have to divvy up.

Regarding specificity...that would be determined by each GO. If the DoD wants to give up control in order to increase the granularity of your allocations...then that would be up to them. Clearly the DoD's goal would be to maximize revenue and your goal would be to maximize your utility. Could the DoD increase its revenue by allowing taxpayers to choose which branches of the military they give their taxes to? Would it harm the DoD's effectiveness to give up that much control? It would be entirely up to the DoD to decide whether more revenue was worth less control.

[Xerographica]

No. I'm giving a very specific, very easy to understand example of when lying about your true preferences for a public good can maximise your benefit. Your central tenet is that people expressing their preferences will maximise benefit: this is a disproof by example.

You didn't lie enough to disprove my example. Obviously Indian food matches your preferences. Maybe the dishes don't perfectly match your preferences but at least they are in the ballpark. Obviously having a gf matches your preferences. Maybe she doesn't perfectly match your preferences but at least she is in the ballpark.

What I'm critiquing is a system where people are forced to fund things that really don't match their preferences. For example, pacifists are forced to fund war. It's the complete opposite of what they would choose to fund. War isn't even in the ballpark because pacifists believe that it's a a vicious cycle. War begets war. Conservatives are forced to fund welfare programs. It's the complete opposite of what they would choose to fund. Welfare programs aren't even in the ballpark because conservatives believe that they are a vicious cycle. Dependency begets dependency.

You're welcome to debate whether pacifists and conservatives are wrong...just like your friends are welcome to debate whether your gf truly matches your preferences. But at the end of the day the market works because it's up to each individual to decide for themselves whether or not something adequately matches their preferences. If they decide that something is not even in the ballpark, then they have the freedom to say "no thanks".

The market works because if pragmatarianism is not even in your ballpark, then you have the freedom to say "no thanks". In other words, if the freedom to say "no thanks" is not even in your ballpark, then you have the freedom to say "no thanks". Eh? Are you really using your freedom to say "no thanks" to say "no thanks" to your freedom to say "no thanks"?

There has been significant interest in the past by economists about different types of goods and why the markets for some behave differently than the markets for others. Veblen Goods, Inferior & Giffen Goods, Network Goods... Common & Club goods... all behave differently than an Ordinary good. Is it so hard to accept that Public goods may have a different behaviour which is not the same as that for bread or take-away chicken or other private goods?

Is it hard for me to accept that public goods are dissimilar from private goods? Obviously not...given that I'm a pragmatarian rather than an anarcho-capitalist. But public goods aren't dissimilar in the sense that your preferences for them can be assumed/disregarded/ignored. This is why public finance economists largely accept that the preference revelation problem is a real problem. Is it hard for you to accept that the preference revelation problem is a real problem?

[Xerographica]

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.

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?

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."

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?

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?

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.

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?

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.

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.

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.

[Xerographica]

Markets assume informed consumers.

Maybe you didn't understand my question. I'm asking for specific names. I want to know the names of the economists who assume perfect information. Do you know their names?

And this is an incredibly stupid request.

Market failure occurs when the market does not give allocatively efficient or equitable outcomes. When assessing the definition and description of the characteristics of market failure, a selection will be made from:

[*] externalities
[*] merit/demerit goods
[*] public goods
[*] imperfect information
[*] inequitable income distribution.

That's secondary (aka high) school economics for you. It's really not some great big secret nor, indeed, anything controversial. If it was controversial it wouldn't be taught in schools, would it?

Are you arguing that Phillip Jellyman assumes that consumers have perfect information?

[Xerographica]

There's absolutely no way that letting people decide where their taxes go could go wrong.

Would it be a good idea to elect 300 people to decide how donations were distributed in the nonprofit sector?

[Xerographica]

He's telling you that perfect information is one of the basic assumptions underlying market theory. It's not just the mentioned author (Jellyman); it's been one of the assumptions underlying market theory since market theory was first developed back in the 18th Century.

When you "assume" something you take it to be true. It's so stupidly blatantly obvious that Jellyman does not assume perfect information. He's critiquing markets because he's assuming imperfect information.

I asked for the names of economists who assume perfect information and Forsher densely replied with the name of an economist who assumes the opposite.

But at least Forsher tried.

Let me summarize our positions. You want to prevent people from shopping in the public sector because of what they don't know...while I want to allow them to shop in the public sector because of what they do know. What do people know?

Buchanan insisted on the same conclusion in an article published a few months after the conference in October 1959 in the Journal of Law and Economics. “Positive Economics, Welfare Economics, and Political Economy” opposed the positive political economy approach of welfare economics -- in which the role of the economist consists in discovering “what people want” (1959, p. 137) and “what is the structure of individual values” (1959, p. 130) -- to the normative new welfare economics -- in which the economist, seeing himself as an external and omniscient observer, is capable of “reading” the individual preferences of the individuals and accordingly of determining the best possible outcome for the collectivity - Alain Marciano, Why markets do not fail

At this point, a question naturally arises: how can we justify the fact that the central government is less capable (because of less information) of satisfying citizens' preferences (Oates 2005)? - Brian Dollery, Lorenzo Robotti, The Theory and Practice of Local Government Reform

Jay Lund's chapter explores the informational problems implied in finding the best way to allocate water resources. In this respect, the main advantage of water trading is that its effectiveness does not require having in advance detailed information on the value of water on any place and for any alternative use. Engaging in trade is a voluntary decision, thus the market is itself a preference revelation mechanism. No particular prior information on people's preferences is then required in advance for trading to find mutually beneficial deals. By definition, when a transaction takes place, the maximum willingess to pay of those buying water is higher than the minimum compensation required by the sellers of water property rights and the deal improves the welfare of those engaged in it. Allowing for water trading thus reduces the information burden of water authorities as they do not need detailed information beyond that required to reach a decision on the overall constraints on the water use in the entire economy. - Carlos Mario Gomez, Incentives and prices in water trading

Our discontent with the original Samuelson rule stems from its failure to account for tax payers’ response to public expenditure and taxation. The rule was derived for an omnipotent, omniscient and benevolent government, a government which, by definition, need not consider people’s responses to its actions. Drop that assumption, restrict government to the choice of tax rates and public expenditures, and the response to its actions must be taken into account. - Dan Usher, Should the Samuelson Rule Be Modified to Account for the Marginal Cost of Public Funds?

The instruments of intervention became the tools with which to apply government knowledge. Resources were directed and allocated by the state, by political and bureaucratic decision making, rather than by the elemental forces of supply and demand - forces shaped by the knowledge of those in the marketplace. - Daniel Yergin, Joseph Stanislaw, The Commanding Heights

One of the strongest arguments in favor of letting people interact freely in a market under property rights institutions is that it is the best known way to utilize the decentralized knowledge of the society— including the knowledge that each individual has about his own values. - David Friedman, The Machinery of Freedom

Individuals express preferences about changes in the state of the world virtually every moment of the day. The medium through which they do this is the market place. A vote for something is revealed by the decision to purchase a good or service. A vote against, or an expression of indifference, is revealed by the absence of a decision to purchase. Thus the market place provides a very powerful indicator of preferences. - David Pearce, Dominic Moran, Dan Biller, Handbook of Biodiversity Valuation A Guide for Policy Makers

Individuals’ actions necessarily rest on imperfect knowledge, and people often appear to act without sufficient information. However, intractable problems of knowledge and incentives impede government officials’ attempts to improve on market-generated knowledge. Knowledge, consisting of information plus judgment, is highly subjective. Therefore, the optimal amount of information varies from person to person, depending on the expected costs and benefits. It should not be surprising that government attempts to improve consumer knowledge frequently are disappointing. Hayek labels as the fatal conceit the idea that human beings can determine what is best for society and use the political process to shape the world according to their wishes. - E.C. Pasour, Consumer Information and the Calculation Debate

Hayek stressed that the knowledge needed to achieve a rational economic order consists of dispersed bits of knowledge held by individuals. This knowledge is highly specialized: only individuals involved in deciding resource use know the relative importance of the various ends or purposes for which resources might be used. Thus, the crucial problem confronting society is how to use the specialized knowledge of different people in the production of goods and services to satisfy consumers. - E.C. Pasour, Consumer Information and the Calculation Debate

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

Governments, like private firms, do not necessarily have ‘the necessary information’ about people’s demand functions to provide public goods at efficient levels. Without non-exclusion there does not seem to be a compelling role for government provision, that is, there is no 'public' in 'public goods'. The general consensus seems to be that it is better to restrict public goods, and hence the a priori case for government intervention, to goods that are both non-rival and non-excludable. - Frances Woolley, Why public goods are a pedagogical bad

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

To the naïve mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions, and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account. This is the main reason for rejecting the requirements of constructivist rationalism. - Friedrich A. Hayek, The Fatal Conceit

It may be admitted that, so far as scientific knowledge is concerned, a body of suitably chosen experts may be in the best position to command all the best knowledge available...[Yet] scientific knowledge is not the sum of all knowledge...[A] little reflection will show that there is . . . the knowledge of the particular circumstances of time and place. It is with respect to this that practically every individual has some advantage over all others in that he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation. - Friedrich A. Hayek

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 A. Hayek, The Use of Knowledge in Society

It is the extensive cooperation among highly specialized workers that enables advanced economies to utilize a vast amount of knowledge. This is why Hayek's emphasis on the role of prices and markets in combining efficiently the specialized knowledge of different workers is so important in appreciating the performance of rich and complex economies. - Gary S. Becker

A free society is one in which individuals are free to discover for themselves the available range of alternatives. In his masterly critiques of the theory of central planning, Hayek directed attention to the circumstance that the information available in an economy is always scattered among countless individuals, never concentrated in the mind of a single central planner. Hayek pointed to the need for a social institutional structure capable of organizing the scattered scraps of available information so they can be used for the efficient allocation of society’s resources. The competitive market, Hayek showed us, is a discovery process, one in which society discovers what options are feasible and how important they are. - Israel Kirzner, Perception, Opportunity, and Profit

An individual is fully sensible of the value of the article he is consuming; it has probably cost him a world of labour, perseverance, and economy; he can easily balance the satisfaction he derives from its consumption against the loss it will involve. But a government is not so immediately interested in regularity and economy, nor does it so soon feel the ill consequences of the opposite qualities. Besides, private persons have a further motive than even self-interest; their feelings are concerned; their economy may be a benefit to the objects of their affection; whereas, the economy of a ruler accrues to the benefit of those he knows very little of; and perhaps he is but husbanding for an extravagant and rival successor. - J.B. Say, A Treatise on Political Economy

It must be remembered, besides, that even if a government were superior in intelligence and knowledge to any single individual in the nation, it must be inferior to all the individuals of the nation taken together. It can neither possess in itself, nor enlist in its service, more than a portion of the acquirements and capacities which the country contains, applicable to any given purpose. - J.S. Mill, Principles of Political Economy with some of their Applications to Social Philosophy

The fact that such a tax institution always exists conceptually does not, of course, imply that it can be determined independently of the revealed choices of individuals themselves. If an omniscient observer should be present, and if he were asked to "read" all individual preference maps, he could then describe the "optimal" structure of tax prices. Failing this, there is no means of ascertaining with any degree of accuracy the "efficient" tax structure or institution. - James M. Buchanan, Public Finance in Democratic Process

Individuals are not, of course, omniscient, even those who think themselves to be. The securing of information about the predicted effects of alternatives is a costly process, even in a world with reasonable certainty. Recognizing this, individual utility-maximizing behavior remains “rational” when choices are made on the basis of less-than-perfect information. There is some “optimal” investment in fact-finding and analysis for the deciding individual at each stage of his deliberation. - James M. Buchanan

Markets, for instance, are usually prima facie diverse because they are made up of people with different attitudes toward risk, different time horizons, different investing styles, and different information. On teams or in organizations, by contrast, cognitive diversity needs to be actively selected, and it's important to do so because in small groups it's easy for a few biased individuals to exert undue influence and skew the group's collective decision. - James Surowiecki

Pareto-optimal provision clearly also requires full knowledge of individual preference functions by the central planning agency. The preference-revelation problems involved in practice are a familiar theme in the modern public goods literature. - John G. Head, Public Goods and Multi-Level Government

If the knowledge problem identified by Mises and Hayek make rational central planning impossible for something as simple as a quart of milk, what chance do central planners have to make rational, effective plans for something as complex and difficult as educating the children of a diverse nation of more than 300 million? - Kevin D. Williamson, The Politically Incorrect Guide to Socialism

As we've seen, socialism cannot serve citizens' interests because central planners have no way of knowing what those interests are. In the absence of the information conveyed through marketplace activity - particularly through prices - economic planners are left with highly defective sources of information: opinion polling, surveys, stated preferences (which normally differ dramatically from real or revealed preferences), and the like. - Kevin D. Williamson, The Politically Incorrect Guide to Socialism

This process of redistribution of wealth is not prompted by a concatenation of hazards. Those who participate in it are not playing a game of chance, but a game of skill. This process, like all real dynamic processes, reflects the transmission of knowledge from mind to mind. It is possible only because some people have knowledge that others have not yet acquired, because knowledge of change and its implications spread gradually and unevenly throughout society. - Ludwig M. Lachmann, The Market Economy and the Distribution of Wealth

If well-meaning policymakers possess all the relevant information about individuals' true preferences, their cognitive biases, and the choice contexts in which they manifest themselves, then policymakers could potentially implement paternalist policies that improve the welfare of individuals by their own standards. But lacking such information, we cannot conclude that actual paternalism will make their decisions better; under a wide range of circumstances, it will even make them worse. New paternalists have not taken the knowledge problems that are evident from the underlying behavioral and economic research seriously enough. - Mario J. Rizzo, Douglas Glen Whitman, The Knowledge Problem of New Paternalism

Deprived of this guidance, and without the incentive of personal interest, accounts and statistics, however complete, would be of very little use, and unless they were the mundane representatives of an omniscient providence, the directors of production would be quite unable to avoid occasional excess or deficiency of supply, which would cause terrible disorder and confusion, with effects infinitely more serious than mistakes made by private enterprise, which, as a whole, is never actuated by precisely similar motives; thus its errors correct each other, and being uninfluenced by prejudice, or amour proper, it shows a marvellous quickness of adoption; mistakes committed by the state would be not only far more serious, but far more difficult to remedy. - Paul Leroy Beaulieu, Collectivism

Each individual is unique, not fully duplicated anywhere else. Therefore, each individual possesses considerable knowledge that is not and cannot be fully known by anyone else - by government or by any group of people. Each individual has preferences - needs and wants - of which only he can be cognizant at any point in time; he also has a unique capacity to envision new wants when old ones have been partially or fully satisfied. The individual knows, within limits, what gives him gain and causes him pain; and he knows this before any of his actions are revealed to others. He can understand the subjective basis for his actions before he acts; others can only observe his actions after the fact and guess at his motivation by reflecting on their own, different preferences. - Richard B. McKenzie, Bound to Be Free

True, consumers do demand a given product, say, a certain model automobile. But how, outside the market process, can the government know what consumers want? Can the government simply ask consumers what they want? - Richard B. McKenzie, Bound to Be Free

The very division of knowledge increases the necessary ignorance of the individual of this knowledge. The division of knowledge increases the need for a decentralized decision-making system - the market. - Richard B. McKenzie, Bound to Be Free

Expositions of welfare economics typically assume that the analyst possesses knowledge that is in no one’s capacity to possess. A well-intentioned administrator of a corrective state would face a vexing problem because the knowledge he would need to act responsibly and effectively does not exist in any one place, but rather is divided and dispersed among market participants. Such an administrator would seek to achieve patterns of resource utilization that would reflect trades that people would have made had they been able to do so, but by assumption were prevented from making because transaction costs were too high in various ways. A corrective state that would be guided by the principles and formulations of welfare economics would be a state whose duties would exceed its cognitive capacities. - Richard E. Wagner

We can never possess tomorrow’s knowledge today. We can never know what innovations, creative ideas, and useful improvements will be generated in the minds of free men in the years to come. That is why we must leave men and their minds free. The man of system, the social engineer, who sees only the apparent problems from these global changes, wants to plan America’s place in the new, emerging global economy. But to do so, he must confine and straitjacket all of us to what his mind sees as the possible, profitable, and desirable from his own narrow perspective with the knowledge he possesses in the present. - Richard M. Ebeling, Free Markets, the Rule of Law, and Classical Liberalism

There is no need to prove that each individual is the only competent judge of this most advantageous use of his lands and of his labor. He alone has the particular knowledge without which the most enlightened man could only argue blindly. He alone has an experience which is all the more reliable since it is limited to a single object. He learns by repeated trials, by his successes, by his losses, and he acquires a feeling for it which is much more ingenious than the theoretical knowledge of the indifferent observer because it is stimulated by want. - Turgot

We know that the essence of markets is that individual cost and value information is private and dispersed, and that command and control economies inevitable must fail to deliver the goods because the appropriate information is not, and cannot be, given to any one mind. - Vernon L. Smith, Commonwealth North Forum

Nevertheless, even without perfect knowledge, the government must decide whether or not to provide the public good. It also must decide how much of the public good it should provide. Finally, the government must decide, all without guaranteed information, on a tax schema. Under such circumstances, it is not possible for the government to reach an optimal solution and a Pareto distribution of taxes for the public good. - Wilfried Eecke, Ethical Dimensions of the Economy

Development happens thanks to problem-solving systems. To vastly oversimplify for illustrative purposes, the market is a decentralized (private) problem solving system with rich feedback and accountability. Democracy, civil liberties, free speech, protection of rights of dissidents and activists is a decentralized (public) problem solving system with (imperfect) feedback and accountability. Individual liberty in general fosters systems that allow many different individuals to use their particular local knowledge and expertise to attempt many different independent trials at solutions. When you have a large number of independent trials, the probability of solutions goes way up. - William Easterly, The Answer Is 42!

People know external things (circumstances) and internal things (values). They know how many potholes they run over and how much cancer research they'd be willing to forego to fix them. They know how many times they've been mugged and how much education they'd be willing to forego for more police. They know how many nights they've lost sleep because of the threat of terror and how much space exploration they'd be willing to forego for more peace of mind.

All this information would be integrated in the public sector if people were free to shop for themselves. But you don't want people to shop in the public sector because you foolishly believe one of the following...

A. the political process allows this information to be adequately conveyed to congresspeople
B. resources can be put to their most valuable uses without all this information
C. congresspeople are omniscient

Which one do you believe?

[Xerographica]

Markets are allocatively efficient when perfect information is present.

When in the world is perfect information ever present? People are omniscient...sometimes? ASB is the one who tried to attack my argument by invoking the absurdity of "perfect information". He seriously believed that my argument depends on consumers being omniscient. In other words, he's seriously clueless about information and markets.

All of the passages that I just shared support my argument...and not a single one of them assumes perfect information. They all take it as a given that everybody only has partial knowledge. Decentralization integrates everybody's partial knowledge which is why the results it produces are infinitely more accurate than the results produced by centralization.

Clearly my argument is not based on the assumption of perfect information...so why in the world is anybody using it to try and attack my argument?

The current system is based on the assumption that congresspeople are omniscient...which is why there's no need for taxpayers to shop for themselves in the public sector (half the economy). Drop the absurd assumption that congresspeople are omniscient...and it becomes imperative to implement pragmatarianism.

[Xerographica]

So, Xero, consider that the information consumers possess with regards to products they use and buy for themselves is far better than the information they possess with regards to the needs of their fellow citizens, or with regards to the technical implementation of matters of public policy.

Whenever you buy something, you're communicating your needs to your fellow citizens. For example, when you buy a loaf of bread you're communicating that you value bread more than you value the alternative uses of your money. But chances are really good that you don't walk outside the bakery, turn around, walk back into the bakery and buy another loaf of bread. This is because your circumstances have changed. Before you didn't have bread, but now you do.

What happened though when you purchased the bread? You gave the baker (assuming he's the owner of the bakery)...your money. You gave him positive feedback on how well he is using society's limited resources. You vouched for the baker as a producer. You gave him your stamp of approval. You supplied him with a mandate to serve/represent/protect your interest in consuming bread. So he takes your money and spends a portion of it on all the inputs he needs to continue to provide you with the bread that you value.

Each person who gives the baker their money in exchange for bread, marginally increases the baker's influence over how society's limited resources are used. The more money he receives, the more flour he'll be able to purchase...and the less flour there will be available for other uses. Because it really wouldn't make any sense to allow bakers who've received less positive feedback (money) to have more influence than bakers who've received more positive feedback (money).

Therefore, your influence over how society's limited resources are used can never exceed the amount of value you create for society. This prevents massive amounts of resources from being wasted on things that society truly does not value.

Except, this is how you perceive it...

Consider that the interests of taxpayers (who are mostly drawn from the upper strata of society) are not the same as those of the general population (and how "tax choice" weights the voices of the very rich to a disproportionate degree, allowing the uppermost 1% of our population to essentially dictate public policy to the other 99%), state of affairs that invokes the principal-agent problem.

What you're saying absolutely does not follow from the extremely straightforward process I just described. Therefore, if you disagree with the process as I've described it, then please describe the process as you see it.

In order to make bread, the baker doesn't only depend on inputs from the private sector, he also depends on inputs from the public sector...

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

So clearly there are private inputs (flour) and public inputs (roads).

Now, let's think of some stupid things.

1. It would be stupid to think that rye bread requires the exact same combination of private inputs as carrot cake.
2. It would be equally stupid to think that a bakery requires the exact same combination of public inputs as a laundromat.
3. It would be stupid for liberal congresswoman Elizabeth Warren to determine the exact combination of private/public inputs that go into each and every organization.
4. It would be stupid to believe that Elizabeth Warren is more interested than the baker in the success of the bakery.
5. It would be stupid to believe that Elizabeth Warren has just as much at stake as the baker does.

Therefore, just like we allow the owner of a bakery to decide on and purchase the exact combination of private inputs he needs to successfully operate his business, we should also allow him to decide on and purchase the exact combination of public inputs he needs to successfully operate his business. If he's good at determining the optimal balance of private inputs, then he will be equally good at determining the optimal balance of public inputs. The baker has far more to lose than Elizabeth Warren if his business does not succeed. If the economy fails then Elizabeth Warren can blame the Republicans.

Consider that the proposed vendors of public goods would be uncompetitive monopolies, not even subject to basic Congressional oversight any more (you've said, after all, that under your scheme people could simply give money directly to entities like the DoD, and that it would be up to the DoD [and not Congress] to decide how that money is spent).

Again, you're assuming that all the democrats who voted for Elizabeth Warren wouldn't trust her to spend their money. Or maybe they wouldn't trust the Republicans to have a say in how their money is spent? Fine, so allow taxpayers to give their taxes to individual congresspeople. Then we can see exactly how many of Warren's supporters trust her with their money.

Regarding monopolies...

In buying the resources needed to produce any one good, an entrepreneur has succeeded in competing away these resources from other possible uses. When a producer, not enjoying protection against competitive entry, finds himself as sole producer he still has to worry about
the activities of competing entrepreneurs. They are channeling their energies and their alertness into producing other products, which are competing for consumers' attention also. Inter-product competition will not guarantee horizontal demand curves facing each producer. But it offers assurance that errors made in the identification of the most urgently needed consumer products (and/or of the most easily accessible resources) will tend rapidly to be noticed and exploited by alert, competing entrepreneurs. - Israel M. Kirzner, How Markets Work

Consider all of the other reasons I cited for market failure under your "tax choice" scheme...

Market failures are often associated with time-inconsistent preferences

People fail to give up momentary pleasure for future benefit? In other words, people make mistakes? When Baker1 spends more time with his family while Baker2 spends more time improving his recipes...which baker is making a mistake? Markets work because it's up to consumers to decide whether an allocation decision was a mistake or not. If Baker1 one made a mistake, then he'll receive less revenue and have less influence over how society's resources are used.

information asymmetries,

Again, people make mistakes. People fail to do their homework. But not all the time...and some more than others. If you think it's worth it to share your information with others, then you'll do exactly what I'm doing and sacrifice the alternative uses of your time in order to do so.

non-competitive markets,

See Kirzner above.

principal–agent problems,

We'll solve the principal agent problems when Elizabeth Warren's supporters can choose to give her as many of their tax dollars as they trust her with.

externalities,

Your neighbor blares music that you hate. This is a negative externality. The amount of resources you allocate to solving this externality will indicate exactly how much this spillover harms you. It would be same thing when taxpayers are allowed to choose where their taxes go. The amount of their tax dollars they allocate to government solutions will indicate how much the spillover harms them. Plus, it will also reflect how effective they perceive the solution (and the government's implementation) to be. We can't get the balance right if we simply guess how much harm a negative externality causes. You think we can. Why? Because you generalize away the complexity of reality.

or public goods.

Did you miss the part where pragmatarianism is not the same thing as anarcho-capitalism?

That said, I believe that the current system (of elections, polls, and lobbying) does, in fact, allow for sufficient information to pass between citizens and legislators to permit intelligent decision-making on the part of the latter, such that our system still basically works, even if only sub-optimally.

In that sense, my answer would be "A", with the understanding that my definition of "adequate" might not be the same as yours, in the sense that you read "adequate" to mean "perfect", while I read "adequate" to mean "good enough to get by".

So prove it. Here's a hint...research contingent valuation techniques. Except, again, let me guess, you're simply going to continue to pull crap out of your ass rather than track down and share passages that support your beliefs.

Personally, I know you're wrong because I've already done my homework....dollar voting versus ballot voting. So even if you were willing to make the effort to substantiate your claims, you wouldn't be able to because your claims are bogus.

[Xerographica]

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.

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.

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 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? 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? 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.

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. Instead, you'd shop for yourself...just like you do in the private sector.

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.

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.

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.

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.

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.

[Xerographica]

Sure it can. I know you've heard of negative externalities.
Or, you just trick someone in to how much 'value' you are creating for them, by having a monopoly (or information asymmetry, or any of the other causes of market failure). See the 'department of life' idea below.
The real crux is that value and price are seldom linked so closely as you would say, and indeed value provided should have very little relation to price except 'greater than' in an efficient market.

Man, you really cannot see the forest for the trees. In a market your influence is a function of consumer choice. In a planned/command economy it is not. What's the fail safe device in a planned/command economy? People voted for Obama...therefore they could have unvoted for him in order to indicate that they wouldn't have benefited from an attack on Syria? Maybe they could have just not voted for him next time? Again, you really cannot see the forest for the trees.

So you are essentially trying to say that monopolies can never exist? Because that is... yeah. Wrong. Empirically.

Are you asking me to explain to you what Kirzner wrote?

The efficiency of a market comes from attempting to maximize profits by minimizing costs. EVEN IF you assume that each department is competing with each other (they're not) and so are not a monopoly (they are), they still won't become efficient because they have no incentive to minimize costs.
Why? Because you're asking people to 'vote' how much they value an item. This is in actuality the maximum they would be willing to pay. An efficient market will drop costs then prices down to the marginal cost of a good, which is necessarily less than what people value it for.

In the private sector, the voluntary sector of the economy, we know that something is "well worth the money" if people are willing to spend their own money on it. In government, politicians work to separate the payment of taxes from the receipt of specific services. We're not asked "will you pay $100 right now for farm subsidies and $4000 for Medicaid and $1600 for the wars in Iraq and Afghanistan and $130 for a new presidential helicopter and … ?" If we did get such a question, we might well decide that lots of government programs were not "well worth the money" to the people who would be paying the money. - David Boaz, Well Worth the Money

Can you see how ridiculous that is?

Yes, your example was ridiculous. I'm pretty sure that you haven't once mentioned opportunity cost. Is this correct?

[Xerographica]

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

I'll wait.

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

Meanwhile, regarding government reactivity: depending on how administered tax choice would either make the government so unresponsive it would basically be impotent, or so reactive it would be useless as no response could be measured.

How would this be administered?

It might help to read the pragmatarianism FAQ.

[Xerographica]

So, in addition to everything else, you're gutting both executive (i.e. Presidential), judicial, and Congressional oversight of the bureaucracy.

There are things that I strongly hope will be gutted (the war on drugs) and things that I strongly hope will not be gutted (EPA). But if I could truly predict the preferences of 300 million diverse and unique individuals...if I could accurately divine what their priorities and biggest concerns are...then I would be a billionaire and your only contact with me would be through the slickest, smoothest and most effective tax choice advertisements on TV.

If we implemented pragmatarianism and it turns out that the EPA ends up "gutted"...then the responsibility is on me to share with you, and anybody else who will listen, whatever information I have that leads me to place such a high priority on protecting the environment.

If people who want us to change our priorities can only rely on persuasion, then this forces them to share their information with us. This is the process by which we become more informed as citizens. It's really not unreasonable to expect somebody who wants your money to effectively persuade you of the benefit that you'll derive by giving it to them. It's not unreasonable because you exchanged your life for your money.

Tell me, how would you handle a situation in which a Federal judge, applying Federal law, requires a government agency to spend money meeting a particular legal requirement, and taxpayers fail to appropriate tax money enabling them can do so?

If it was a law that I believed caused more harm than good, then I would be happy that it was gutted. But if I believed that the law is more beneficial than the alternative uses of my limited resources, then I would allocate my resources to informing others of its benefit. I'd start a blog...or go door to door. I wouldn't have a petition for people to sign...I wouldn't be telling them to vote for a candidate who may or may not get elected and may or may not follow through with his campaign promises. Instead, if I managed to persuade them of the law's benefit, then right after they closed the door they could go to their computer and give some of their tax dollars to the relevant agency. They could actually effect change. This increases their locus of control and improves their self-efficacy. No more alienation from the political process. The government truly becomes for the people and by the people.

But I take it as truth that every single government organization could do far more with significantly less resources. And putting the power of the purse in the hands of the people who actually earned the money is the one thing that will force government organizations to be as resourceful as possible. In other words, I see government organizations as sloppily obese...they could all stand to skip at least a few meals. And I know that taxpayers are going to be the least forgiving personal trainers.

[Xerographica]

Just as you can't dictate to the Fed how it spends your money, as it is one entity with a single board of directors and one chief executive officer. It is therefore one single organization.

Sure, you can see it as one single organization. And if the thought of having one single organization in charge of half our economy doesn't bother you...then why not put one single organization in charge of the other half our economy? You'd give half your money to the public congress and the other half to the private congress. Does that sound like a good idea? We'd have a total of 600 people determining how $14 trillion dollars was spent.

Heck, while we're simplifying things...is there really that much difference between 600 people and 500 people? Why not just make it 100 people? We'll elect 50 people to be private congresspeople and 50 people to be public congresspeople. So 100 people will decide how $14 trillion dollars is spent.

I was asking your opinion on how you would like it administered, not some random blogger's interpretation.

Who you calling a random blogger?

Also, you forgot a key part of my post. I will assume, giving the benefit of the doubt, that this was an innocent oversight.

Please respond:

Like I just argued, it's beyond absurd to allow one organization to control half the economy. Therefore, we break the organization up into separate organizations and allow taxpayers to shop for themselves.

1. The public sector is HALF the economy. But do you see it as one giant corporation with numerous subsidiaries? Or do you see it as an entire sector...with numerous independent corporations?

Well, there are two methods to determine common existence.

Ownership is method #1. Under this method, any organization or group of organizations that are owned by a common person or entity are considered one entity. The Fed owns itself. It owns the FDA, FBI, etc etc etc. All federal organizations are under common ownership, and they are one entity by this method.

The other method is "control". Under this method, all organizations under complete or near common control are treated as one. All federal agencies are answerable to a common board of directors (Congress), and administered under a common chief executive officer (the president). Under this method, all federal organizations are one.

[Xerographica]

http://www.cracked.com/article_19899_5-popular-forms-charity-that-arent-helping_p2.html

Therefore? Let's vote for 300 people to choose how donations are allocated? Yeah! You'll get a far more efficient allocation as a result! No more overspending on "sexy" things. Only one minor detail. The "outpouring" of money will be reduced to a trickle...not just for sexy things...but for everything. Because that's exactly what happens when you spend people's money on things that they really don't value.

And nonprofits realize this which is why some of them do allow donors to earmark. Clearly they think it's worth it to sacrifice some control for greater revenue. They are receiving money that people wouldn't have chosen to donate if they hadn't been presented with the opportunity to be more specific.

But to argue that the "solution" is to elect 300 people to choose how donations are spent in the nonprofit sector...is the epitome of throwing the baby out with the bath water. You'll go from $300 billion in donations to $25 billion. Way to solve the "problem".

If you truly want "unsexy" endeavors to receive more funding...then figure out how to make them sexier...



Do you find Edward Weston's photo of a bedpan as sexy as I do? No? Well I guess sexy is in the pants of the beholder. And for some twisted freaks out there, practical will always be sexier than flashy.

Until you start a blog and put your time where your mouth is, I'm calling bullshit on your belief that electing 300 people to spend everybody's money is a good solution. You know its a crappy solution but you just aren't willing to accept that allowing taxpayers to shop for themselves is a better solution. So you're stuck in this weird limbo where you know it would be the epitome of stupid to prevent donors from shopping for themselves in the nonprofit sector, but you refuse to accept that it would be the epitome of brilliant to undo the epitome of stupid by allowing taxpayers to shop for themselves in the public sector.

[Xerographica]

Thanks. I do. Just as i dont see Purina as seperate from Land'o'Lakes, as one is a wholly owned subsidiary of the other, the FDA is not different from the fed. Just as I see Wal-Mart of Delaware Inc as part of Walmart Worldwide Inc, the CDC is part of the Fed.

Great, so give up your choice whether or not you shop at Walmart. Because the horizontal/vertical integration of an organization is of absolutely no economic impact.

Let me stop you right there. Its not 1/2. Its 1/3 of the economy according to wiki

Right now the government is nearly 45% of the GDP. Based on the current rise over run, how many years do you estimate before it's at 50%?

Because its not needed to maintain our standard of living and remain a first world country, mostly.

So it's needed in the public sector but not needed in the private sector. But when I asked you to explain why you simply reiterated that it's not needed. If we're better off determining the allocation of resources by vertically/horizontally integrating all organizations into one organization...then why would this be true of the public sector but not the private sector? You don't know enough about economics to answer the question.

Because mixed economies generally give us the absolute best outcomes. Command economies tend to fail. Laissez-Faire capitalist economies either outright fail or give us sociologically unacceptable outcomes.

An "outcome" is simply one possible allocation of resources. You're arguing that allowing 300 people to allocate half the economy leads to more efficient (valuable) allocations of resources than allowing consumers to allocate the other half of the economy. Is this correct? If it is, then why wouldn't you want "optimal" outcomes for both halves of the economy? Why don't we just give congresspeople all our money?

Edit: late to the party I guess... since when does congress only have 300 people in it?

When it comes to the efficient allocation of half the economy...please explain exactly what difference a couple hundred personal shoppers make. It's not like each personal shopper can allocate their own share according to their own preferences. If that was the case then I would agree that it was a significant difference. But they all have to agree on an allocation. Therefore, a couple hundred people give or take doesn't make a difference.

This is flat out irrelevant. Congress size has nothing to do with this horrific idea.

Great, you know exactly how many people are in congress...but you can't explain exactly why it would be a horrific idea. Here's a hint: figure out what it means for resources to be efficiently allocated.

The blogger.

And who's the blogger?

So instead of having a common board of directors (Congress), we should elect a board of directors for each branch of the government, all 11 pages of them, and a president for each?

And if the FDA and USDA decide, administratively, or passed by their respective congresses, on contradictory rules, how do you choose which ones to follow? The one people are funding more and will have more agents to bust you for complying with the other agency's rules?

Seriously guy? Congress would still be there. Obviously we still need laws. Congress would still write the laws and other government organizations would enforce them.

The EPA and congress would still work together to come up with laws...and the EPA would be in charge of enforcing them. The only difference is that we, the people, would be in charge of determining how much funding the EPA received. If people valued the laws...and how the EPA was enforcing them...then they'd give their positive feedback (tax dollars) to the EPA. If they didn't, then they wouldn't.

[Xerographica]

While I mostly agree with the outcome, I think it might be a bit more difficult than that. Xerographica's idea seems to be that anyone can allocate money at any time, which means optimum strategies rely on your knowledge of where money is already allocated or is likely to be allocated. (Although your utility functions may have taken that in to account, its too early for me to do logarithms). But yes, it is obvious that the richer people will benefit more from this.

Xerographica acknowledges and is OK with this idea. His belief is something along the lines of: if people are rich that is because we value their contributions to society more, therefore it is imminently sensible that we let them allocate more of societies goods. The act of giving money people is an indication that you value their opinions more than your own.

(Neglecting the idea that, just because I like to buy my cars off you does not mean I agree with you on any subject other than cars)

Which is why multiple people in Xerographica's threads have rightfully called 'pragmatarianism' a form of 'direct plutocracy'.
This is why it is also a sure fire way to a revolution... if you can pick any arbitrary number and mathematically prove that everyone earning below that number is going to be less satisfied with the government than the people above... That is a lot of unhappy people.

Ok, let's review...

~ 300 years ago Adam Smith argued that people pursuing their own interests results in the greater good...

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

We refer to this as the "invisible hand".

~100 years ago Wicksell argued that the amount of money that people pay for public goods should reflect how much benefit they derive from them. He was aware of one obvious problem with the benefit principle though...that if you asked people how much benefit they derive from a public good, they would have an incentive to understate their benefit in order to decrease their tax obligation. This wasn't only a critique of the benefit principle though, it was also a critique of contingent valuation techniques (surveys, polls, voting, etc). It's basically acknowledging that everybody wants a free lunch (aka utility maximization).

~50 years ago the Nobel Prize winning liberal economist, Paul Samuelson, writes The Pure Theory of Public Expenditure. It's been cited over 5000 times and is by far the best defense of the current system. But his argument is simply a reiteration of Wicksell's critique of the benefit principle...which is now commonly referred to as the free-rider problem. The optimal provision of public goods depends on each person's true preferences for public goods...which we can't determine simply by asking them.

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

Basically, with private goods we benefit when people pursue their self interests, but with public goods we are harmed.

Samuelson wasn't too worried about this though because he simply took people's preferences for public goods as a given. He assumed away the problem of preference revelation. No surprise, it's a given that many economists have no problem taking so many things as given in their pretty little models.

What most people assume regarding our system is that our political process is sufficiently adequate at conveying people's preferences for public policies. It's funny because if contingent valuation techniques were really as accurate as people assume them to be, then there wouldn't be a need for the government in the first place. We could simply rely on people to honestly tell us exactly how much they valued the public goods that they wanted.

Many public finance economists do not assume the preference revelation problem away...and there's quite an extensive amount of literature on the subject of determining the actual demand for public goods.

The trick is making self-interest work for public goods as effectively as it works for private goods. And this could simply be accomplished by allowing taxpayers to choose where their taxes go.

Clearly, it's in Mr. Car's interest to make the effort to produce cars. If he successfully exploits the demand for cars, then he will gain wealth. Obviously he has a financial incentive to use society's limited resources for the benefit of others. So he does his homework, sacrifices time with his friends and family, sacrifices other interests he would also wish to pursue...in order to determine what is the combination of inputs he needs to produce the car that will match consumer's preference better than his competitors' cars. He selects what he believes to be the optimal combination of inputs and if consumers agree, they'll give him money for his cars. If Mr. Car earns more revenue (positive feedback) than his competitors, then he'll have more influence over how society's limited resources are used than they will.

What would change though if Mr. Car could choose where his taxes go? Is it still in his self interest to spend his tax dollars on the optimal combination of public inputs just like it's in his self interest to spend his dollars on the optimal combination of private inputs?

Well...let's again read what the liberal congresswoman Elizabeth Warren has to say about the general subject...

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 liberal theory is that you can't get rich without public inputs. It's really not a bad theory. And obviously I love it because it sure works for my theory as well.

Let me copy and paste some stupid things to think...

1. It would be stupid to think that a motorcycle requires the exact same combination of private inputs as a car.
2. It would be equally stupid to think that a car factory requires the exact same combination of public inputs as a bakery.
3. It would be stupid for liberal congresswoman Elizabeth Warren to determine the exact combination of private/public inputs that are required for each and every organization.
4. It would be stupid to think that 500 or 1000 or even 10,000 congresspeople could understand and know the input requirements for every good/service better than the people who've made it their career to know the inputs requirements for the good/service that their livelihood depends on.
5. It would be stupid to believe that Elizabeth Warren is more interested than Mr. Car is in the success of his factory.
6. It would be stupid to believe that Elizabeth Warren has just as much at stake as Mr. Car does.

It seems painfully obvious that Mr. Car has just as much incentive to get the combination of public inputs right as he does the combination of private inputs.

If he's going to sacrifice his personal interests for his financial gain...then it would behoove him to ensure that his sacrifice was not in vain. Therefore, he would have more incentive than anybody to spend his taxes on the public inputs he needs to guarantee his success. Why would he squander his sacrifices by spending his taxes on public inputs which are not essential to the success of his operation? It would be in his self interest not to...and we're right back to Adam Smith's Invisible Hand...

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

What about wealth inequality though? It's only something that appears harmful to people who can't think things through. Maqo, myself and 1000s of other people give a lot of our money to Mr. Car and then we complain when he has more money than other people? Yeah, duh, it's because we gave it to him. We all happened to agree that he provides us with more value than his competitors do. Nobody forced us to select him as the winner. As consumers we have an interest in having cars and Mr. Car is the most effective at protecting/serving/representing our interests. So we give him a mandate to use society's limited resources to produce something we value...cars. It's the epitome of stupid to believe that this mandate cannot or should not be extended to the public sector. We've clearly vouched for his effectiveness at using society's limited resources...so why would we want to shoot ourselves in the feet by hamstringing the very person we've decided is the best in his field at using society's limited resources for our benefit?

@Galloism.
Xerographica is the person who writes the pragmatarianism blog. He's also probably the author of any wikipedia page he links you to on 'tax choice'. It should be pretty apparent that there is only one person in the world who is advocating this idea...

Hah, yeah, not really...but that's how it works sometimes...

Our creed is that the science of government is an experimental science, and that, like all other experimental sciences, it is generally in a state of progression. No man is so obstinate an admirer of the old times as to deny that medicine, surgery, botany, chemistry, engineering, navigation, are better understood now than in any former age. We conceive that it is the same with political science. Like those physical sciences which we have mentioned, it has always been working itself clearer and clearer, and depositing impurity after impurity. There was a time when the most powerful of human intellects were deluded by the gibberish of the astrologer and the alchemist; and just so there was a time when the most enlightened and virtuous statesman thought it the first duty of a government to persecute heretics, to found monasteries, to make war on Saracens. But time advances; facts accumulate; doubts arise. Faint glimpses of truth begin to appear, and shine more and more unto the perfect day. The highest intellects, like the tops of mountains, are the first to catch and reflect the dawn. They are bright, while the level below is still in darkness. But soon the light, which at first illuminated only the loftiest eminences, descends on the plain and penetrates to the deepest valley. First come hints, then fragments of systems, then defective systems, then complete and harmonious systems. The sound opinion, held for a time by one bold speculator, becomes the opinion of a small minority, of a strong minority, of a majority of mankind. Thus the great progress goes on, till schoolboys laugh at the jargon which imposed on Bacon, till country rectors condemn the illiberality and intolerance of Sir Thomas More. - Thomas Macaulay

[Xerographica]

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.

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.

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'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?

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?

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.

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. 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.

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?

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.

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.

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.

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.

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?

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...

[Xerographica]

What? Why?
If you think I'm good at producing cars... why the hell would you want me to produce your education system?

Uh, I'm happy with you producing cars, so obviously I wouldn't want you to also produce education. But I would want you to decide exactly how educated you need your employees to be.

Simple thought experiment. We could spend $100,000,000/child on education. What would be the problem with this? Obviously it would be a waste of money (opportunity cost) to try and teach physics to Forest Gump. Education does have diminishing returns. Therefore, there's some optimal amount of education that will maximize the amount of value we derive from society's limited resources. This can only be determined by allowing each and every employer to "order" exactly how much education they need.

This will help you take the concept to heart. If your friend received a public education, whenever he says something blatantly painfully obviously stupid, tell him that you want a refund on your taxes that were spent on public education. He should laugh because it's a joke and because there's more than a kernel of truth to it.

If employers can't withhold their positive feedback (tax dollars) from the education system, then it's a given that quantity/quality of educated workers will reflect this. Guaranteed funding is not the recipe for success.

If most of your employees were produced by the private education system, then we really need your tax allocation decisions to reflect this.

Or your bread? or anything else that I haven't proven myself able to do?
You actually have no idea about how I've used societies resources to produce the car - only that I'm selling you a car and that I'm currently still in business.

To use your own analogy... would you go down to the car dealer and ask him to be your 'personal shopper' for bread and milk because you value how he makes cars? Of course not. So why are you trying to give him that influence with pragmatarianism?

Man, this one keeps cropping up. You, as an employer, do not need to prove that you can educate somebody in order to decide exactly how much (or little) positive feedback you give to the public education system. Just like Mr. Baker does not need to know how to produce flour in order to decide exactly how much flour he orders. All he needs to know is exactly how much flour he needs...and which supplier is going to give him the most bang for his buck.

You, as Mr. Car, need your employees to be x amount of healthy. Do you need all of them to be Ironman triathletes? Maybe not. But you should be able to decide exactly how much of your taxes you give to public healthcare. Just like you are able to decide whether it's worth it build a gym facility for your employees. You should also be able to decide how much of your taxes to give to the police. Just like you are able to decide how many security guards you need to hire to protect your company from break ins.

When you give a business owner a mandate to produce a product/service that you value...you're simply harming your own interests by limiting his ability to serve/protect/represent your interests to the best of his ability. If he doesn't think that he can improve on the allocation decisions of congress, then he'll have absolutely no incentive to shop for himself in the public sector. But he should definitely have the option to make that decision for himself. It would really really behoove us to learn how many business owners would choose the option to shop for themselves in the public sector.

So each and every time you purchase a product/service...seriously consider the fact that you are giving the business owner a mandate to protect a specific interest of yours. Do you want him to decide which inputs he needs to do so? Or do you want Elizabeth Warren to decide?