Clarifying The Popularity Of Three Economic Rules

[Galloism]

No, but he hasn't said the crazy shit you have said.

At least, not that I'm aware of anyway.

In that quote of his that I just shared, Krugman said that consumers can't see the price tags on public goods.

EDIT: Upon-rereading that, I read it wrong just like you. Corrected now.

Actually, he said consumers DON'T see price tags on public goods, not that they can't. Fixed.

Which is funny because the federal budget is published annually. People just don't read it.

You just said that, when consumers can't see the price tags on private goods, they should be able to sue the perpetrators.

No, I said when a company violates consumer protection laws via deceptive pricing, they should be able to be sued for violating the law.

Do keep up, Xero.

[Nerotysia]

So the first rule is opportunity cost, the second rule is kindergarten logic, and the third rule is a cutesy, meaningless catchphrase.

Stay classy, Xero.

Edit Note: I just need to say, I actually can't believe he took opportunity cost and called it "Buchanan's Rule," like it was some little-known, obscure truth of the universe. And he even named it after the lamest President ever as if Buchanan was some sort of genius. How amazingly apropos.

[Xerographica]

So the first rule is opportunity cost

Buchanan's Rule: Using a resource one way means sacrificing the other ways that it could also be used
Opportunity cost: What was sacrificed

Example...

Buchanan's Rule: The time that you spend mowing your lawn can't also be spent swimming
Opportunity cost: Swimming

the second rule is kindergarten logic

Quiggin's Rule: Society's limited resources should be put to more, rather than less, valuable uses

How is this kindergarten logic?

and the third rule is a cutesy, meaningless catchphrase.

Tabarrok's Rule: Actions speak louder than words

How is this truism meaningless? Clearly it has a meaning. You're welcome to disagree with its meaning... but your disagreement wouldn't make the meaning of this truism magically vanish.

Edit Note: I just need to say, I actually can't believe he took opportunity cost and called it "Buchanan's Rule," like it was some little-known, obscure truth of the universe. And he even named it after the lamest President ever as if Buchanan was some sort of genius. How amazingly apropos.

I can't tell which is worse... your reading comprehension or your grasp of economics.

[Xerographica]

EDIT: Upon-rereading that, I read it wrong just like you. Corrected now.

Actually, he said consumers DON'T see price tags on public goods, not that they can't. Fixed.

Which is funny because the federal budget is published annually. People just don't read it.

The point of price tags on private goods is to help consumers make informed spending decisions. Now here you are arguing that, when it comes to public goods, consumers can make informed spending decisions... all they have to do is look at the federal budget.

Let's say that Bill wants a big wall to be built in order to keep all the immigrants out. According to you... all Bill needs to do in order to make an informed voting decision is to look at the federal budget. Because... the federal budget will show him the opportunity cost of building a big wall?

The cost of getting the wrong thing is actually a bit worse, as is illustrated by a memorable television commercial for V8 vegetable juice drink. After buying and sipping some other drink - not V8 - the actor smacked himself on the head and exclaimed, "I could have had a V8." Head slaps are always funny, so this commercial nicely illustrates the true cost of the choice, what economists term "opportunity cost."

Lemonade and V8 each cost $1. Bill likes V8 so much that, if necessary, he would be willing to pay $2 for a V8 but only $1.50 for lemonade. But - perhaps because of an earlier head injury from smacking himself - Bill sometimes forgets that he prefers V8. What is the cost of his mistaken choice of lemonade? It's $0.50, the difference between the value of the satisfaction he could have bought with V8 and what he did buy with lemonade. Even though Bill gets $1.50 worth of satisfaction from his $1 lemonade, his mistaken choice causes him to miss out on $0.50 in additional satisfaction at the same price. In short, Bill's choice of lemonade destroys $0.50 in value.

Let's return to our government programs to see these ideas in action. These programs create jobs. How can they be bad? They can be bad in the sense that the spending to excecute them could have been used to purchase something more valuable to the citizenry. Suppose we need a new school more than we need a new bridge. If each costs $50 million, but the benefit of the school is $75 million while the benefit of the bridge is $25 million, then building the bridge would impose a $50 million loss on society. - Joel Waldfogel, Scroogenomics

Bill looks at the menu and sees two drinks...

Lemonade... $1 dollar
V8... $1 dollar

The lemonade will provide him with $1.50 worth of value. Does he buy it? Nope. Why not? Because the V8 will provide him with $2 dollars worth of value. Even though the lemonade would provide him with some value... he's willing to sacrifice the opportunity to drink the lemonade because he perceives that he will derive more value from drinking a V8.

With public goods though.... what's the opportunity cost of building a big wall around the country? Is there an opportunity cost? Of course there is. There's always an opportunity cost. Big walls don't just magically appear out of thin air. Big walls require lots of resources that could be used for other purposes.

Even though a big wall around the country is guaranteed to have an opportunity cost... it's not up to Bill to decide what the opportunity cost is. Bill can certainly vote for Trump. And maybe Trump can pull some strings to build a big wall around the country. But it's not up to Bill to decide what the opportunity cost is. It's not up to Bill to decide where the funding is taken from. For all Bill knows all the funding might be taken from something that he values even more than a big wall... national defense. If this is the case then Bill essentially shot himself in the foot. He got something that he valued but sacrificed something that he valued even more.

With private goods... the opportunity cost is entirely up to Bill. As a result... Bill chooses the option with the lowest opportunity cost. This is how Quiggin's Rule is not broken. But with public goods... the opportunity cost is not up to Bill. Bill can't choose the option with the lowest opportunity cost. This is how Quiggin's Rule is broken.

[Ad Nihilo]

Buchanan's Rule: Using a resource one way means sacrificing the other ways that it could also be used

A nation cannot survive with political institutions that do not face up squarely to the essential fact of scarcity: It is simply impossible to promise more to one person without reducing that which is promised to others. And it is not possible to increase consumption today, at least without an increase in saving, without having less consumption tomorrow. Scarcity is indeed a fact of life, and political institutions that do not confront this fact threaten the existence of a prosperous and free society. - James Buchanan, Richard Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes

That is just incorrect.

Opportunity cost is a "ceteris paribus" thing - i.e. if all other things are assumed to be equal. For the most part, if you compare choices at a fixed time, then yes, the "rule holds". But increased consumption today does not necessarily mean decreased consumption tomorrow. That is only the case if your consumption can only happen from the same finite set both today and tomorrow. So if you have three walnuts. If you eat two today, you can only have one tomorrow.

But over time, there are such things as economic growth, resources development, technological innovation and so on. What this means is that if you consume enough cars (for example) today, and tomorrow and so on, in 20 years' time there won't be fewer cars. Your consumption today enabled the continuation and growth of an industry which will give you even more cars in 20 years' time.

When it comes to government spending, this is usually very much the case. There is plenty of government spending that is a dead end, but much more of it is technically investment - which means the more it spends today (e.g. on fundamental science), the more it increases its ability to spend in the future. Spending on science, on education, on infrastructure, on energy and so on does NOT decrease the government's ability to spend tomorrow. Not at all. Borrowing to spend on these things also does not decrease the government's ability to spend tomorrow, provided the borrowing costs are below the rate of return of these investments. These are things that "fiscal conservatives" seem to have difficulty getting into their skulls.

Eisenhower probably put it best...

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people. This is, I repeat, the best way of life to be found on the road the world has been taking. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron...Is there no other way the world may live? - Dwight D. Eisenhower

Much as I hate war, the investment the United States put into the military industrial complex and the space race in the three decades after WW2 is exactly what gave us the technologies which enable you and me to have this conversation, and the technologies which have contributed the most significant marginal addition to global economy growth in the last couple of decades. And the will continue to keep on giving. So the point, alas, does not stand when you are talking about choices over time.

Quiggin's Rule: Society's limited resources should be put to more, rather than less, valuable uses

Even at the cost of lining up with [Tom] Friedman, I’d be pleased if the idea that war is a mostly futile waste of lives and money became conventional wisdom. Switching to utopian mode, wouldn’t it be amazing if the urge to “do something” could be channeled into, say, ending hunger in the world or universal literacy (both cheaper than even one Iraq-sized war)? - John Quiggin, War and waste

Okay, fine. Let's do that.

Tabarrok's Rule: Actions speak louder than words

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

IF and ONLY if, the monetary representation of the bet is the only standard of value AND everyone values the same amount of money equally.

Neither of those preconditions are true.

You can value money, other specific objects, other humans, some of your relationships with other humans, your sense of dignity and self worth, or your bullheaded pride, whatever.

Take for example Donald Trump and his insanely fragile ego. Donald Trump values proving you wrong about something trivial that would cost the equivalent of $5 that he would spend $1,000,000 on it just to "put his money where his mouth is".

That's an extreme example, but all of us, at times and inconsistently so, will value different things differently for reasons to do with our own emotions, social status and so on.

If we didn't, the following would not have existed:

https://en.wikipedia.org/wiki/I_Am_Rich

http://www.telegraph.co.uk/news/worldne ... anada.html

[Galloism]

EDIT: Upon-rereading that, I read it wrong just like you. Corrected now.

Actually, he said consumers DON'T see price tags on public goods, not that they can't. Fixed.

Which is funny because the federal budget is published annually. People just don't read it.

The point of price tags on private goods is to help consumers make informed spending decisions. Now here you are arguing that, when it comes to public goods, consumers can make informed spending decisions... all they have to do is look at the federal budget.

Let's say that Bill wants a big wall to be built in order to keep all the immigrants out. According to you... all Bill needs to do in order to make an informed voting decision is to look at the federal budget. Because... the federal budget will show him the opportunity cost of building a big wall?

Well, modestly. There are also private people who make it their business to show people what things cost.

John Oliver did a nice bit if you're curious.

The cost of getting the wrong thing is actually a bit worse, as is illustrated by a memorable television commercial for V8 vegetable juice drink. After buying and sipping some other drink - not V8 - the actor smacked himself on the head and exclaimed, "I could have had a V8." Head slaps are always funny, so this commercial nicely illustrates the true cost of the choice, what economists term "opportunity cost."

Lemonade and V8 each cost $1. Bill likes V8 so much that, if necessary, he would be willing to pay $2 for a V8 but only $1.50 for lemonade. But - perhaps because of an earlier head injury from smacking himself - Bill sometimes forgets that he prefers V8. What is the cost of his mistaken choice of lemonade? It's $0.50, the difference between the value of the satisfaction he could have bought with V8 and what he did buy with lemonade. Even though Bill gets $1.50 worth of satisfaction from his $1 lemonade, his mistaken choice causes him to miss out on $0.50 in additional satisfaction at the same price. In short, Bill's choice of lemonade destroys $0.50 in value.

Let's return to our government programs to see these ideas in action. These programs create jobs. How can they be bad? They can be bad in the sense that the spending to excecute them could have been used to purchase something more valuable to the citizenry. Suppose we need a new school more than we need a new bridge. If each costs $50 million, but the benefit of the school is $75 million while the benefit of the bridge is $25 million, then building the bridge would impose a $50 million loss on society. - Joel Waldfogel, Scroogenomics

Bill looks at the menu and sees two drinks...

Lemonade... $1 dollar
V8... $1 dollar

The lemonade will provide him with $1.50 worth of value. Does he buy it? Nope. Why not? Because the V8 will provide him with $2 dollars worth of value. Even though the lemonade would provide him with some value... he's willing to sacrifice the opportunity to drink the lemonade because he perceives that he will derive more value from drinking a V8.

With public goods though.... what's the opportunity cost of building a big wall around the country? Is there an opportunity cost? Of course there is. There's always an opportunity cost. Big walls don't just magically appear out of thin air. Big walls require lots of resources that could be used for other purposes.

Even though a big wall around the country is guaranteed to have an opportunity cost... it's not up to Bill to decide what the opportunity cost is. Bill can certainly vote for Trump. And maybe Trump can pull some strings to build a big wall around the country. But it's not up to Bill to decide what the opportunity cost is. It's not up to Bill to decide where the funding is taken from. For all Bill knows all the funding might be taken from something that he values even more than a big wall... national defense. If this is the case then Bill essentially shot himself in the foot. He got something that he valued but sacrificed something that he valued even more.

With private goods... the opportunity cost is entirely up to Bill. As a result... Bill chooses the option with the lowest opportunity cost. This is how Quiggin's Rule is not broken. But with public goods... the opportunity cost is not up to Bill. Bill can't choose the option with the lowest opportunity cost. This is how Quiggin's Rule is broken.

Once again, you're confusing entity structures.

Choosing Trump or Clinton (or whoever) is not akin to choosing a V-8 or a lemonade. It's akin to choosing Bob's Crab Shack of Joe's Crab Shack. What Bob's Crab Shack or Joe's Crab Shack does with the $1 you purchase your V-8 for is completely not in any fucking way up to you. You may not even know what they use it for. Bob's Crab Shack may use it to raise the wages of his employees, while Joe's Crab Shack funds ISIS. You don't know. If you go to Joe's Crab Shack, you're sacrificing funding employees salaries for funding ISIS, but you can't know that. Ergo, you have sacrificed the opportunity of funding employees (which goes back into the local economies) and instead funded ISIS.

In this way, government spending is actually more transparent than private sector spending. You will know how the government spends your money (at least by broad categories) if you're interested. You don't know how Joe's Crab Shack will spend your money.

[Nerotysia]

Jesus Christ, why am I engaging with Xero again.

Buchanan's Rule: Using a resource one way means sacrificing the other ways that it could also be used
Opportunity cost: What was sacrificed

Newton's Law: All things are attracted to each other by a natural force.
Gravity: The natural force

You see how that's silly?

Quiggin's Rule: Society's limited resources should be put to more, rather than less, valuable uses

How is this kindergarten logic?

I can't even.

Absolutely no one on this planet is going to think "Gee, we really need to put our resources to less valuable uses." Except perhaps a child who hasn't yet entered kindergarten.

Tabarrok's Rule: Actions speak louder than words

How is this truism meaningless? Clearly it has a meaning. You're welcome to disagree with its meaning... but your disagreement wouldn't make the meaning of this truism magically vanish.

Because speaking and writing words are in and of themselves actions. Also, what actions am I supposed to take? Violent revolution? How else do you accomplish change in a civilized society besides convincing people of your correctness with words.

Also, it has nothing to do with economics.

[Xerographica]

When it comes to government spending, this is usually very much the case. There is plenty of government spending that is a dead end, but much more of it is technically investment - which means the more it spends today (e.g. on fundamental science), the more it increases its ability to spend in the future. Spending on science, on education, on infrastructure, on energy and so on does NOT decrease the government's ability to spend tomorrow. Not at all. Borrowing to spend on these things also does not decrease the government's ability to spend tomorrow, provided the borrowing costs are below the rate of return of these investments. These are things that "fiscal conservatives" seem to have difficulty getting into their skulls.

In order to appreciate the economics it sometimes helps to remove the politics. Let's take Netflix for example.

With Netflix you pay a monthly fee and get a very large bundle of content. At first glance it's a really good deal. But it stands to reason that you don't equally value all the content. You don't equally value everything on Netflix.

Imagine a venn diagram with two circles. The circle on the left represents all the Netflix content that you consume. The circle on the right represents all the Netflix content that you'd be happy to pay for after you consumed it. How big is each circle? How much do these two circles overlap?

If you thoroughly grasp Buchanan's Rule... then you will thoroughly grasp that creating content that consumers are not willing to pay for shrinks the pool of resources available for the creation of content that consumers are willing to pay for.

In order to prevent Quiggin's Rule from being broken... we would have to apply Tabarrok's Rule to Netflix. Users would be able to earmark their fees to the content that they value the most. Creators who create content that's more valuable would be able to compete resources away from creators who create content that's less valuable. As a result, there would be a great abundance of more valuable content.

Much as I hate war, the investment the United States put into the military industrial complex and the space race in the three decades after WW2 is exactly what gave us the technologies which enable you and me to have this conversation, and the technologies which have contributed the most significant marginal addition to global economy growth in the last couple of decades. And the will continue to keep on giving. So the point, alas, does not stand when you are talking about choices over time.

The more money the DoD receives, the more "Einsteins" it can compete away from other fields. According to your argument, if the DoD had not competed these Einsteins away from other fields... then these Einsteins would have produced less valuable/important/useful innovations.... and we would all be worse off.

So... then... in order to prevent Quiggin's Rule from being broken... we should give the DoD as much money as it takes to compete all the Einsteins away from all the other fields? But why stop with the full Einsteins? Why not give the DoD enough money so that it can also compete the almost Einsteins away from all the other fields? Why not give the DoD so much money that nobody in the other fields has an IQ above 80?

You perceive that the public sector has some mechanism that does a good job of ensuring that the DoD receives an optimal amount of funding. What is this mechanism? How does it compare to the private sector's mechanism? Here's the private sector's mechanism...

It is thus that the private interests and passions of individuals naturally dispose them to turn their stocks towards the employments which in ordinary cases are most advantageous to the society. But if from this natural preference they should turn too much of it towards those employments, the fall of profit in them and the rise of it in all others immediately dispose them to alter this faulty distribution. Without any intervention of law, therefore, the private interests and passions of men naturally lead them to divide and distribute the stock of every society among all the different employments carried on in it as nearly as possible in the proportion which is most agreeable to the interest of the whole society. - Adam Smith, Wealth of Nations

1. The public sector's mechanism is ________ the private sector's mechanism.

A. better than
B. just as good as
C. worse than

If the public mechanism is better than the private mechanism... then clearly we should eliminate the private sector. Except... this has already been tried... but socialism doesn't work so well. So it should seem pretty obvious that the correct answer is "C".

Does this mean that we should eliminate the public sector? Not necessarily. While I can certainly appreciate the argument for shrinking the heck out of the public sector... a far better solution would simply be to use the private mechanism in the public sector. We could easily create a market in the public sector by allowing people to choose where their taxes go (pragmatarianism FAQ). Each and every taxpayer would decide for themselves whether the DoD truly needs more Einsteins.

Quiggin's Rule: Society's limited resources should be put to more, rather than less, valuable uses

Okay, fine. Let's do that.

It's great that we agree on something! The rest is really a "minor" detail! Right?

Tabarrok's Rule: Actions speak louder than words

IF and ONLY if, the monetary representation of the bet is the only standard of value AND everyone values the same amount of money equally.

Neither of those preconditions are true.

You can value money, other specific objects, other humans, some of your relationships with other humans, your sense of dignity and self worth, or your bullheaded pride, whatever.

Take for example Donald Trump and his insanely fragile ego. Donald Trump values proving you wrong about something trivial that would cost the equivalent of $5 that he would spend $1,000,000 on it just to "put his money where his mouth is".

That's an extreme example, but all of us, at times and inconsistently so, will value different things differently for reasons to do with our own emotions, social status and so on.

If we didn't, the following would not have existed:

https://en.wikipedia.org/wiki/I_Am_Rich

http://www.telegraph.co.uk/news/worldne ... anada.html

If we created a market in Netflix... then, given that users all pay the same fees, they would all have the same amount of influence. But if we created a market in the public sector.... then, given that some citizens pay a lot more taxes than other citizens, they would have very unequal influence.

Ok, we both agree with Quiggin's Rule... society's limited resources should be put to more, rather than less, valuable uses. But it seems like we disagree over Tabarrok's Rule. From my perspective... because of Buchanan's Rule... Tabarrok's Rule is the only that we can avoid breaking Quiggin's Rule.

Right now I'm hungry. My stomach is empty and growling. So if you ask me whether I'm hungry I will certainly say, "yes!" If you ask me whether I want to eat then I will also certainly say, "yes!" But... instead of eating anything, here I am replying to you. Sure, I could stop writing this reply in order to go and get some food. Since I haven't done so... it should be readily apparent that getting food isn't the most valuable use of my time.

Let's say that you're responsible for allocating my time... but you can't observe my actions. You ask me whether I'm hungry and I reply "yes!". Based on my words... you allocate my time to getting food. Would this break Quiggin's Rule? Of course it would. Even though my reply was 100% true... it failed to correctly communicate my valuation of the alternative uses of my time. So I inadvertently and indirectly shot myself in the foot.

Tabarrok's Rule is the only way that we can prevent people from inadvertently and indirectly shooting their own feet.

[Ad Nihilo]

Hmm... I think I will take a leaf out of your "Tabarrok Rule":

1) The argument has sprawled over about 4 or 5 issues that I would take objection to. Each would require at least three paragraphs. That is effort.
2) It is 1am where I live. There are things I'd rather be doing. Mostly sleep.

I will therefore go and do that.

I will return to this in more detail, on one condition. Everything you have said, once again, applies only under the assumption of "ceteris paribus". You have completely sidestepped my point that your assumptions do not hold over time. Because the time dimension messes with the finitude of options/resources that underpins your argument from scarcity.

The time dimension also completely fucks with another thing you assume for the Tabarrok rule: that people know the value of their choices. For a choice in frozen time in an artificially stipulated example, that may be true. For a choice about future returns of investment choices... we simply have no idea what kind of investment in "blu-skies" science will yield what benefits.

Market choice theory requires optimal knowledge. When it comes to the sort of investments that governments make into science and technology, you can have no such knowledge. That is why the private sector systemically under-invests in this sort of thing, and why the overwhelming majority of all these scientific and technological advances that make up the greatest proportion of our economy (and civilisation) have funded by the state. This sort of thing comes with risks that the private sector will simply not assume. Read more: http://www.amazon.co.uk/The-Entrepreneu ... 0857282522

Also, fun fact - the private sector is in fact marginally better at allocating resources and investments than the private sector: http://www.amazon.co.uk/The-Truth-About ... 0140296727 . The thing is that, as per above, such investments are inevitably risky. Some are downright uncertain. The difference between the market and the state is that when a company fucks up and misallocates resources (e.g. RIM) it's no biggie. Everyone knows this happens, other players move in, and this only impacts a limited number of people. When a state fucks up, even though this actually happens less frequently, everyone is affected by it, and because of the larger-scale nature of the thing that states do, the damage is usually larger too. There is also an asymmetry in how we hold these different entities accountable. We hold states VERY, VERY accountable for EVERYTHING! Companies? Not so much, a fine here, a fine there, a bit of PR and whitewashing, and all evils are forgotten.

[Alvecia]

...

Quick point. It may help to reduce your reliance on analogies. If someone brings up a real world example, work within that example, don't create your own. That way there is no risk that you make points not relevant to the ones they are trying to make.

[Xerographica]

I will return to this in more detail, on one condition. Everything you have said, once again, applies only under the assumption of "ceteris paribus". You have completely sidestepped my point that your assumptions do not hold over time. Because the time dimension messes with the finitude of options/resources that underpins your argument from scarcity.

We can't allocate resources that we will have in the future. All we can do is allocate the resources that we have now. If we allocate our current resources in such a way that breaks Quiggin's Rule... then we will have less resources to allocate in the future.

The time dimension also completely fucks with another thing you assume for the Tabarrok rule: that people know the value of their choices. For a choice in frozen time in an artificially stipulated example, that may be true. For a choice about future returns of investment choices... we simply have no idea what kind of investment in "blu-skies" science will yield what benefits.

Nobody has a crystal ball... therefore centralization? Nobody can predict the future... therefore let's put all our eggs in one basket? Therefore... let's prevent people from shopping for themselves in the public sector? Let's block the full range of human diversity from the public sector?

Market choice theory requires optimal knowledge. When it comes to the sort of investments that governments make into science and technology, you can have no such knowledge.

You just argued that "we simply have no idea what kind of investment in "blu-skies" science will yield what benefits". Now you're arguing that the government is an exception to this rule? Because... the government does have a crystal ball? But it only works for public goods?

That is why the private sector systemically under-invests in this sort of thing, and why the overwhelming majority of all these scientific and technological advances that make up the greatest proportion of our economy (and civilisation) have funded by the state. This sort of thing comes with risks that the private sector will simply not assume. Read more: http://www.amazon.co.uk/The-Entrepreneu ... 0857282522

Mariana Mazzucato is a chanidget and so is Steven Johnson ...

[Silicon Valley] is both an apex of modern capitalism and one of the most politically progressive sectors in the country; that it celebrates entrepreneurial energy but also has a passion for radically different economic models; that it rewards both garage startups and open source-style projects like Wikipedia; and that its long history of building on government-funded innovations makes it much more appreciative of the role of the state in driving progress than most business sectors. - Steven Johnson, Maximum Wage

Even though Johnson is a chanidget... he grasps Buchanan's Rule and value signals...

There is a finite pie of human intellectual talent available to us at any given moment — the pie is growing, but it’s finite nonetheless — and how that attention and passion gets directed has a dramatic impact on the slope of the progress curve. Every market sends out signals encouraging certain kinds of problem-solving, certain kinds of skills. Nine years ago, the loudest signal was telling college students to become experts in credit default swaps and collateralized debt obligations. I think we can all agree on how that worked out. When markets send out signals this conspicuous, attention and interest are like a giant field of sunflowers; they shift, slowly but inexorably, toward the brightest light. Through that shift, other, fainter stars lose their followings. That is zero-sum gameplay, too.

This is pretty much the same argument that I made about the DoD and Einsteins. The more money the DoD has... the more Einsteins it can compete away from other fields.

Here's where Johnson shoots himself in the foot...

Right now the tech market, even with its admirable pay ratios, is signaling to the world that inventing a new app for teenagers to flirt and banter can be thousands of times more valuable than becoming a high-school principal in a troubled district.

Can you see the massive incoherence? Maybe it will help if I more closely juxtapose where Johnson outed himself as a chanidget...

[Silicon Valley's] long history of building on government-funded innovations makes it much more appreciative of the role of the state in driving progress than most business sectors.

The government spends the right amount of money on R&D... but spends the wrong amount of money on public education? The government is good at picking winners... the government is bad at picking winners...? However you spin it... the government is a command economy. In other words... it's socialism. Socialism is great at mobilizing massive amounts of resources but it's really terrible at getting the balance right. Our country doesn't prosper because of socialism... it prospers despite socialism. You can't truly appreciate this until you really compare the private sector's mechanism with the public sector's mechanism.

Also, fun fact - the private sector is in fact marginally better at allocating resources and investments than the private sector: http://www.amazon.co.uk/The-Truth-About ... 0140296727 . The thing is that, as per above, such investments are inevitably risky. Some are downright uncertain. The difference between the market and the state is that when a company fucks up and misallocates resources (e.g. RIM) it's no biggie. Everyone knows this happens, other players move in, and this only impacts a limited number of people. When a state fucks up, even though this actually happens less frequently, everyone is affected by it, and because of the larger-scale nature of the thing that states do, the damage is usually larger too. There is also an asymmetry in how we hold these different entities accountable. We hold states VERY, VERY accountable for EVERYTHING! Companies? Not so much, a fine here, a fine there, a bit of PR and whitewashing, and all evils are forgotten.

Why do you link me to books for sale on Amazon? Do you think that I'm going to buy them... in order to... better understand your argument? On the one hand... it's really refreshing that you've actually done some reading on the topic. On the other hand... it's strange that, with the massive amount of material freely available on the internet... you only link me to material that I have to pay to read. Especially since I linked you to that freely available article by the chanidget Steven Johnson.

Consumer choice is how we hold companies accountable. How do "we" hold states "very" accountable? Voting?

[Ad Nihilo]

Chanidgets and socialism? Now you've devolved into ideological bullshit.

It's like this:

1) Humans are social apes: what sets humanity apart from other animals is that it can pool its cognitive resources and efforts through language and culture so that not every brain is imprisoned in only the conception of the world it can form in its own skull. If you figure out a mathematical equation, for example, I don't need to also figure it out from scratch. A third person learns the equation and comes up with the idea to apply it to building something - say a bridge. Many people can now use the bridge and in the time they've saved crossing the water every day, they have time to learn your mathematical equation and apply to other stuff. And so, and so forth.

2) Humans maximise their creative and productive output to the extent to which they coordinate their efforts. So if you come up with the equation, and then I also come up with the equation in parallel, my effort is wasted. Instead, what we should have done is to agree that you should work on the equation and I should go fish so both of us can eat.

3) Humans coordinate their efforts through cultural institutions. Cultural institutions are routine ways of doing things. A market is a cultural institution. It is a set of culturally shared, culturally debated, and culturally evolved assumptions about how we ought to go about exchanging object and services with one another. The state is also a cultural institution. It is a set of culturally routines of how we administer certain aspects of our shared social life.

Your spiel is that the market always produces maximising allocations of resources and option optimisation. That is an empirical question. And your supposition is just false. The links to amazon books I have quoted were not there so that "you'd have to buy them to get my argument". They were put there because they contain extensive and serious empirical evidence that your suppositions about the magical powers of the market are simply untrue. They have never been true and nobody ever believed they were true except people who read classical and neo-liberal economic textbooks and do not understand the very first paragraph in these textbooks: "Guys, these are idealised abstract models of how things should work. They are not taken to represent how things actually work."

The John Kay book in particular has lengthy annexes with large scale quantitative analysis of who gets better returns on investment. It is the state. But his point is not that this is a necessary feature of the state. Whether an institution makes good investment decisions does not have much anything to do whether it is public or private. It is usually a function of how much diligence (how much research it does on the issue, how well it motivates people to do what needs to be done, etc) goes into a project. In advanced democracies, we hold states much more accountable, so they put much more diligence in. In a world of highly liquid investment where you can become a majority shareholder in a company in the morning and sell your whole stake in the afternoon, we do not hold companies to account nearly as much. Investors can make money just as well from companies fucking up projects, as they do from companies making excellent investment decisions.

I'll leave you with another fun fact: if you survey the history of economic anthropology, there is no evidence of there being a market economy anywhere in the world at any time in history where there was not also a state or equivalent external monopoly on violence over a designated territory. The "free market" is a retarded thing to do when you can crack someone's skull open and take all their shit without having to give him anything in return. Market exchange only makes sense when you know for a fact that if you crack someone's skull open, the big chief will crack yours open right back; AND when you know for a fact that if the other guy will die if he fucks you over. Both the trust necessary for trade, and the necessary incentives for exchange to make productive sense to both of us can only happen when neither of us has the option of violence. So yeah... Chanidgets ...

(at the risk of causing further offence, if you would like to consider the evidence from economic anthropology between the state and markets, you can find a lot of it in this book: http://www.amazon.co.uk/Debt-The-First- ... 1612191290 ; Please note that the author is a self-described anarchist, and hates the state)

[Ad Nihilo]

And lastly a point about paid resources and making you buy things. The reasons I linked you to books is because published academic books undergo a much more robust vetting process, they get peer reviewed, and they are far more serious and larger scale attempts at systematising evidence. There is an implicit level of quality control with these things that there isn't in a 2,500 word essay on the internet.

Also, no need to buy them. A quick Google and you can find them to download for free. The only significant cost this will impose on you is the time cost it will take to actually read shit and get properly informed. But then wouldn't you rather argue things in ignorance on the internets with people who are even more ignorant than you? The latter is certainly much more entertaining

[Xerographica]

Ad Nihilo,

1. You're not addressing my main argument. Either you know that you can't hit the target... or... you're not seeing the target. Just in case it's the latter...

I value X and Y but I value X more than Y...

X > Y

A. I vote for Y
B. Y happens to be implemented
C. Y uses resources
D. The resources that Y uses could have been used for X
E. Quiggin's Rule is broken
F. You agree that Quiggin's Rule should not be broken

2. A large chunk of your argument is relevant to anarcho-capitalism. I am not an anarcho-capitalist. I am a pragmatarian. Of course you're welcome to attack anarcho-capitalism in this thread! But please don't be under the impression that you're actually attacking my own view.

3. Yes, we pool our cognitive resources. I strongly agree with this concept. In fact, here's a slice of what I recently wrote in another thread...

Today I watched this excellent video on Youtube... Human Cognitive Evolution: How the Modern Mind Came into Being - Merlin Donald. He argues that humans form a distributed network. Our brains aren't literally linked together though. So in order for the network to process information... we each need to share our individual information. If we share inaccurate information, then the output will be inaccurate. This is the basic concept of garbage in, garbage out (GIGO).

Everybody would benefit from a network that's...

1. larger
2. more accurate
3. more efficient

"Homing in on the right solution" is inefficient and it's also inaccurate. It takes too long to access information that most likely doesn't come very close to people's valuations. Democracy is certainly efficient... but it's far less accurate than homing. Representation is a small, inefficient and inaccurate network. Removing any amount of brains from the network is extremely stupid. This is why slavery is also stupid. Unfortunately, this is not why we oppose slavery. We oppose slavery for moral reasons. In other words, we oppose slavery for the wrong reasons.

You're bored with the scenario of people selling shit to each other. You're more interested in the scenario of replacing voting with spending. From my perspective your interest is incoherent. This is because, from my perspective, both scenarios address the issue of improving the efficiency and accuracy of communication.

So I think that your incoherence stems from your failure to perceive commerce as communication. What we consume depends entirely on how and what we communicate to each other. Your analysis will become far more coherent if you manage to focus on the communication aspect.

I'm sure that you agree that slavery is stupid. But why, exactly, do you think it's stupid? As I explained, I think it's stupid because it removes brains from the network. The more brains that are removed from the network, the less powerful it is. By this same notion... the less fully a network utilizes the brains it contains, the less powerful it is.

As you pointed out... our society has different institutions. Here are three very different institutions...

A. democracy
B. representation
C. markets

These three institutions are very different. As such, they can not be equally good at...

1. including brains
2. utilizing brains

Democracy: good at including brains, bad at using them. In that same other thread I wrote...

One clear drawback of this method is that it's far more time consuming than simply voting. Even if there was an app for it then it still wouldn't be as fast as people simply raising their hands. Not only is it more time consuming... but it requires more mental effort. Unless you're Buridan's ass... it shouldn't be too difficult to decide that you prefer to eat at The Dumpling Palace. It requires more brainpower to decide exactly how much you prefer to eat at The Dumpling Palace. It's one thing to determine your preference. It's another thing to determine the intensity of your preference.

Representation: incredibly terrible at including brains, bad at using them. Elizabeth Warren doesn't get to decide for herself how she spends her portion of the budget. Which means that her brainpower isn't fully utilized.

Markets: good at including brains, good at using them. On a daily basis, each and every individual makes difficult decisions about how to allocate their limited resources. These difficult decisions fully utilize their brainpower. These difficult decisions utilize all the information that's stored in their memories. These difficult decisions utilize all their hindsight, insight and foresight. These difficult decisions utilize all their processing power.

As a pragmatarian.... I have absolutely no desire to eliminate the public sector. My desire is for human brainpower to be fully applied to public goods like it's fully applied to private goods. This could be accomplished by creating a market in the public sector. People would simply choose where their taxes go.

However, the public sector is hardly the only space that's missing a market. Right now I'd definitely be willing to pay you a penny for your thoughts! But I definitely wouldn't be willing to pay you a million dollars for your thoughts! Narrowing it down to an exact amount would require brainpower.

You can certainly argue that we are better off not knowing how much I truly value your time and thoughts. But then you'd be arguing that we're better off when networks do not fully utilize their brains.

Companies also fail to fully utilize brainpower...

Russ Roberts: Let's talk about your 1937 paper, "The Nature of the Firm." You were trying to answer a question--an interesting question, remains a good question; it was a good question in 1937, it's still a good question, which is: If capitalism and markets and prices, the Hayekian system of communicating information via price signals, if it works so well, why do firms exist? Because firms are almost by definition top down rather than bottom up. They use command and control rather than purchases within the firm, although there are exceptions to that. Some firms do use price signals for their decision-making inside the firm. But many firms do not. Their decisions are made not by prices but by fiat, by decisions on the top. Now, you wrote that paper when you were very, very young, the first part of it, correct?
Ronald Coase: That's right. I wrote it while I was an undergraduate. It seems obvious to me. If you go into a firm and you say to someone: Why did you do this? He'd say: Because I was told to do it. He doesn't talk about pricing at all. Almost of all the things you do within a firm are not controlled directly by prices at all. Your boss tells you what to do and you do it.
Russ Roberts: How did you come to write that paper as an undergraduate.
Ronald Coase: Oh, I was interested in how firms actually operate, and if you start studying how firms actually operate you find that they are not concerned with prices directly at all. A person who is working in a firm does what he's told. That's the way it operates.
Russ Roberts: So, a firm is an island of socialism in a capitalist world.

Also...

We are biased toward the democratic/republican side of the spectrum. That’s what we’re used to from civics classes. But the truth is that startups and founders lean toward the dictatorial side because that structure works better for startups. It is more tyrant than mob because it should be. In some sense, startups can’t be democracies because none are. None are because it doesn’t work. If you try to submit everything to voting processes when you’re trying to do something new, you end up with bad, lowest common denominator type results. — Peter Thiel, Girard in Silicon Valley

A firm is a network of brains. It makes sense that firms can't be democracies. As I pointed out, democracies are good at including brains, but bad at using them. Firms can clearly be dictatorships. But even the wisest and most benevolent dictatorships can't fully utilize the brains they contain. If we accept the assumption that it's desirable for brains to be fully utilized... then the logical conclusion is that firms should be markets. A firm is a boat that should be steered by the spending decisions of the people in the boat.

4. I am familiar with David Graeber's work. Just like I'm already familiar with Mariana Mazzucato's work. Unfortunately, I don't have a link to prove that I am familiar with her work. But if you look on my blog you'll see that I link to the Crooked Timber blog. I consistently take the time and make the effort to learn and understand my opponents' arguments.

The only significant cost this will impose on you is the time cost it will take to actually read shit and get properly informed. But then wouldn't you rather argue things in ignorance on the internets with people who are even more ignorant than you? The latter is certainly much more entertaining

In the OP of this thread, I said that Quiggin's Rule was named after the economist John Quiggin. Quiggin is a liberal economist. He's certainly properly informed so I would definitely prefer to argue with him. So here's what I wrote to him... The Inadequacy Of The Opportunity Cost Concept. And here's the extent of his response. It's... underwhelming. To say the least.

You are extremely informed. Well... at least compared to other members of Nation States. And unlike Quiggin, your response is definitely not underwhelming. That being said, your response is nowhere near the target. You sure made a lot of shots... but none of them were even in the right direction. None of them came close to addressing my actual argument.

I'm pretty sure that Quiggin is informed enough to clearly see my target. But... I'm guessing he's also informed enough to know that he can't hit it. Therefore... he decided to simply share my target rather than attempt to hit it. Which is entirely understandable.

If you make the effort, I'm sure that you could see my target. But, to be completely honest, I'd be surprised if you could actually hit it given that Quiggin was smart enough to not even hazard a shot. Quiggin didn't link me to Graeber... but you did. Is it because Quiggin is not familiar with Graeber's work? Nope. Quiggin didn't link me to Mazzucato... but you did. Is it because Quiggin is not familiar with her work? Nope. Quiggin didn't link me to Kay... but you did. Is it because Quiggin is not familiar with Kay's work? Nope. Quiggin didn't link me to Piketty's work... and neither have you. Is it because Quiggin is not familiar with Piketty's work? Nope.

Quiggin didn't make these shots because he understands that none of them would come even close to the target.

[Galloism]

I'm pretty sure that Quiggin is informed enough to clearly see my target.

I think he hit it pretty dead-center honestly.

But, you should understand what it means when someone refuses to hit your target. You do it constantly every time we undermine all your arguments.

[Ad Nihilo]

Ad Nihilo,

1. You're not addressing my main argument. Either you know that you can't hit the target... or... you're not seeing the target.

You know how when you keep reading stuff you've written, you stop being able to read what the words actually say and you start reading what you think the words should say?

That's pretty much what you have done here.

The "argument" was this: you listed 3 "rules" (we'll ignore the loose usage of the word) and then said

In my opinion, these rules are all good rules. I think it's beneficial when we abide by them and harmful when we don't.

So the argument was about whether these three rules are good rules.

You have since gone off into your "pragmatarianism" agenda, but the way you set up the argument in the OP, it was not about that. It was about the plausibility of your three rules.

To those, my response was:

1) Buchanan Rule - all very well but with the caveat that it only applies at one instant in time for synchronous choices. For the reason I listed and we debated about, across time the limits of scarcity become ill defined and the relative values of choices become uncertain.

2) Quiggin's Rule - this is a happy tautology. And it only becomes interesting in the debate about the quantification of value.

3) Tabarrok's Rule - reduces all judgement of value to monetary value and implies that the same amount of money holds equal value for every human. This is demonstrably not the case.


Ultimately, your last response to me perfectly demonstrates our point of disagreement. You re-hash your argument about the use of resources in terms of use of human brain power, and then you do the sort of arguments you'd expect an economics undergrad to make "from the logic of economics".

But in order for that to work, brains would need to be fungible. Any brain is as good as any other. "Brain power" is a tradable commodity, and you can apply simple maximising functions to the collective brain power of everyone.

To which my answer is going to be the same as every one of my answers in this thread so far: what you have done here is you have taken methodological simplifications that economists make in order to be able to model things, you have asserted them to be accurate descriptions of humans and then you have gone to work out the logical implications of how you'd go about organising a perfect society for these fictional creatures.

Shall I direct you towards some cognitive science stuff? (this is quite close to what I am working on, but I don't want to shove my interests down other people's throats)


Now then... your "main argument". Is this your thing about "pragmatarianism"? Or am I supposed to be reading your mind about what it is? You do write like a social scientist: "here's a bunch of points, and some evidence. It's therefore obvious what my argument is. What? You're not getting my point? You're obviously avoiding my point because it's good and you have nothing on me. Ha!"

[Xerographica]

So the argument was about whether these three rules are good rules.

You have since gone off into your "pragmatarianism" agenda, but the way you set up the argument in the OP, it was not about that. It was about the plausibility of your three rules.

To those, my response was:

1) Buchanan Rule - all very well but with the caveat that it only applies at one instant in time for synchronous choices. For the reason I listed and we debated about, across time the limits of scarcity become ill defined and the relative values of choices become uncertain.

2) Quiggin's Rule - this is a happy tautology. And it only becomes interesting in the debate about the quantification of value.

3) Tabarrok's Rule - reduces all judgement of value to monetary value and implies that the same amount of money holds equal value for every human. This is demonstrably not the case.

I'm pretty sure that I've never argued that a rich person and a poor person equally value a dollar. It's a given that the poor person values a dollar more than a rich person does. Therefore...? Let's disregard how the poor person spends his dollar? Let's not give anybody the opportunity to use their dollars to communicate whether they value X more than Y? Your conclusion really doesn't follow from the premise. It's a non sequitur.

You're welcome to throw Tabarrok's Rule out the window. You're welcome to say... "let's get rid of spending entirely and use X method to ensure that we don't violate Quiggin's Rule." If this is what you want to say then say it. And I'm all ears to hear what X is. But if you don't want to throw Tabarrok's Rule entirely out the window then it would be great if you could offer some sort of justification for your simultaneous acceptance/rejectance of this rule. And if you don't have a justification then it would be great if you acknowledged this and accepted the possibility that it's problematic that you haven't thought your position through.

But in order for that to work, brains would need to be fungible. Any brain is as good as any other. "Brain power" is a tradable commodity, and you can apply simple maximising functions to the collective brain power of everyone.

I have absolutely no idea what's going on here.

To which my answer is going to be the same as every one of my answers in this thread so far: what you have done here is you have taken methodological simplifications that economists make in order to be able to model things, you have asserted them to be accurate descriptions of humans and then you have gone to work out the logical implications of how you'd go about organising a perfect society for these fictional creatures.

Uh, again, still no idea.

Shall I direct you towards some cognitive science stuff? (this is quite close to what I am working on, but I don't want to shove my interests down other people's throats)

You're welcome to direct me to whatever you want. Although, I'm pretty familiar with behavioral economics. Lots of it says, "People are human *gasp*... but only when it comes to spending. When it comes to voting... people are perfect." It doesn't say this exactly. I wish it did because then it would be more readily apparent how moronic most of it is.

So yeah... direct away! But if your sources do not apply their theories to the fact that we elect our leaders... then please do so yourself.

Now then... your "main argument". Is this your thing about "pragmatarianism"? Or am I supposed to be reading your mind about what it is? You do write like a social scientist: "here's a bunch of points, and some evidence. It's therefore obvious what my argument is. What? You're not getting my point? You're obviously avoiding my point because it's good and you have nothing on me. Ha!"

I value X and Y but I value X more than Y...

X > Y

A. I vote for Y
B. Y happens to be implemented
C. Y uses resources
D. The resources that Y uses could have been used for X
E. Quiggin's Rule is broken
F. You agree that Quiggin's Rule should not be broken

[Imperializt Russia]

Buchanon's is fallacious since it suggests that consumption of resources is a zero-sum game. Sure, consuming, say, this specific tonne of steel for a purpose means it can't be used for something else unless the first product is melted back down, but because we produce so much steel, it would be silly to truly suggest that we have to carefully choose what steel is used for.

Buchanon's statement is a good point about sustainability, and ensuring that future generations will have resources to use. But that's about it.
Eisenhower's statement is rather beautifully poignant. It was made in a much more uncertain time when there might not have been a western world in the near future to worry about its poverty levels. Luckily, there was and still is.
But the point of it is that even in Eisenhower's time the "this is why we can't have nice things" statement was not a joke, but is very true.

At the highest level, at the grandest of schemes, the arms race of the cold war was not idle indulgence, it was not facile. Had they not done what they did, we may not have been able to have this discussion.

[Ad Nihilo]

I'm pretty sure that I've never argued that a rich person and a poor person equally value a dollar. It's a given that the poor person values a dollar more than a rich person does. Therefore...? Let's disregard how the poor person spends his dollar? Let's not give anybody the opportunity to use their dollars to communicate whether they value X more than Y? Your conclusion really doesn't follow from the premise. It's a non sequitur.

That wasn't what I argued. That is the implication of the system you are advocating.

If Bill Gates "communicates" $1bn worth of his valuing X, and one thousand "Middle Class" mugs "communicate" $10 worth of valuing Y, when you aggregate the results, your society values X because Bill Gates said so. What Bill Gates communicates goes.

That is what people object to. Not least because it is not plausible under any scheme to suggest that Bill Gates' opinion is 100,000 more valuable than that of the average person.

You're welcome to throw Tabarrok's Rule out the window. You're welcome to say... "let's get rid of spending entirely and use X method to ensure that we don't violate Quiggin's Rule." If this is what you want to say then say it. And I'm all ears to hear what X is. But if you don't want to throw Tabarrok's Rule entirely out the window then it would be great if you could offer some sort of justification for your simultaneous acceptance/rejectance of this rule. And if you don't have a justification then it would be great if you acknowledged this and accepted the possibility that it's problematic that you haven't thought your position through.

Yeah... I propose rule X. Check this out:

"Though shall not communicate in bets. Thou shalt communicate in English, voice what you value, elaborate on your convictions, leverage agreement with others to work together and produce policy which is better than one you would have thought of yourself, negotiate in good faith around disagreements an make reasonable compromises, work towards consensus whenever possible and respect the integrity of the decision-making process whenever it is not".

You know, like... democracy.

If you think democracy is about voting, then you have completely misunderstood the society you live in. Democracy is about communication - it is about people engaging with each other to discuss their values and preferences and to negotiate the best way to accommodate and satisfy everyone's needs and requirements, as much as possible.

This is in contrast with a monetary bet. If I put money on it, I don't have to engage with what you want, or need. I just have to wait for the result of the bet.

This is also, to a large extent, the reason why Western political institutions are unraveling at the moment. Everyone is treating democracy as a consumer: "I pay my fee (=taxes), I want Service (=whatever inane shit I happen to believe, my representatives need to repeat it and make me feel represented)". That is nonsense. Democracy was always supposed to be for citizens: people who want to get involved in the administration of the public sphere, will volunteer ideas, time and effort to make collective life work for everyone and so on. Democracy cannot work for consumers.

What you are proposing is a manifesto for the consumer rights of your citizens. What you need to argue is that this is better than democracy.

But in order for that to work, brains would need to be fungible. Any brain is as good as any other. "Brain power" is a tradable commodity, and you can apply simple maximising functions to the collective brain power of everyone.

I have absolutely no idea what's going on here.

To which my answer is going to be the same as every one of my answers in this thread so far: what you have done here is you have taken methodological simplifications that economists make in order to be able to model things, you have asserted them to be accurate descriptions of humans and then you have gone to work out the logical implications of how you'd go about organising a perfect society for these fictional creatures.

Uh, again, still no idea.

I tend to write an argument by saying what I mean at the top. So that it is clear. What was going on there was what it says just above those two paragraphs:

Ultimately, your last response to me perfectly demonstrates our point of disagreement. You re-hash your argument about the use of resources in terms of use of human brain power, and then you do the sort of arguments you'd expect an economics undergrad to make "from the logic of economics".

Shall I direct you towards some cognitive science stuff? (this is quite close to what I am working on, but I don't want to shove my interests down other people's throats)

You're welcome to direct me to whatever you want. Although, I'm pretty familiar with behavioral economics. Lots of it says, "People are human *gasp*... but only when it comes to spending. When it comes to voting... people are perfect." It doesn't say this exactly. I wish it did because then it would be more readily apparent how moronic most of it is.

Maybe (just maybe), that's because behavioural economics is interested in the sorts of things that economists are interested in. Like spending. And will not go over into things that economists do not deal with. Like voting? Crazy conspiracy theory, I tell you.

Nobody claimed, or implied, that people are not moronic when they vote. The point is that WE KNOW they are moronic when they spend. So it is perfectly reasonable to conclude that in your pragmatarianist utopia, people will choose to spend their taxes LIKE FUCKING MORONS.

So yeah... direct away! But if your sources do not apply their theories to the fact that we elect our leaders... then please do so yourself.

The fundamental point I was going to push there was about intractable difference in opinions and values between people, which is an inevitable feature of the way humans make sense of their world.

Because you have these intractable differences, and you can map them in observable patterns in society: e.g. the ideological chasm between liberals and conservatives in the US, any assumption that a system of voting with your money will be coherent and maximise the deployment of resources is silly.

Take for example the billions of dollars that go every four years into the Presidential election campaigns. One guy spends $2-3bn making a point, and the other guy spends $2-3bn dollars making the opposite point. Even in the best case scenario, at most one of them is correct and at least $2-3bn is wasted.

What you are proposing to do is a system where there is a permanent civil war between liberals and conservatives fought on every single issue with money through the tax system, with both sides trying to outbid each other up to the point where their side "wins the argument". Side X puts money in for abortion clinics so that they are more widely available. Side Y puts money into the ever stricter regulation of abortion, so that even though they are widely available, the number of abortions the clinics can actually perform gets ever smaller. And so on indefinitely.

I hope I don't have to explain how much of a retarded waste of resources that would be in aggregate.

Now then... your "main argument". Is this your thing about "pragmatarianism"? Or am I supposed to be reading your mind about what it is? You do write like a social scientist: "here's a bunch of points, and some evidence. It's therefore obvious what my argument is. What? You're not getting my point? You're obviously avoiding my point because it's good and you have nothing on me. Ha!"

I value X and Y but I value X more than Y...

X > Y

A. I vote for Y
B. Y happens to be implemented
C. Y uses resources
D. The resources that Y uses could have been used for X
E. Quiggin's Rule is broken
F. You agree that Quiggin's Rule should not be broken

Oh dear.

Different scopes sonny boy.

You value X > Y. [this is about you]

"E. Quiggin's Rule is broken" - it is not broken. [this is about society]. All that has happened here is that your preference for X has not been expressed at the aggregate level. But you could just as well be wrong in you preference. It could be the case that at the social aggregate level it is indeed the case that Y > X. And voting reflects that outcome.

It really sounds like your "main argument" is that living in a democratic society requires you to make compromises you don't like.

You are aware that living in ANY SOCIETY requires compromises, right? Wherever there are two people, there are competing claims over the same limited set of available resources.

Besides... your alternative... pragmatarianism really DOES NOT HELP you.

Let X = that abortion should be a choice available to women who need it.
The converse Y = abortion should not be a choice available to women who need it.

1) For you X > Y.
2) You choose to spend to fund the availability of abortion clinics.
3) Bill Gates thinks Y > X.
4) Bill Gates outspends the living daylights out of you, and regulates these things to the hilt, so that the abortion clinics you built cannot actually carry out abortions for women who need.
5) Oh look... "Quiggin's Rule is broken".

[Xerographica]

I'm pretty sure that I've never argued that a rich person and a poor person equally value a dollar. It's a given that the poor person values a dollar more than a rich person does. Therefore...? Let's disregard how the poor person spends his dollar? Let's not give anybody the opportunity to use their dollars to communicate whether they value X more than Y? Your conclusion really doesn't follow from the premise. It's a non sequitur.

That wasn't what I argued. That is the implication of the system you are advocating.

If Bill Gates "communicates" $1bn worth of his valuing X, and one thousand "Middle Class" mugs "communicate" $10 worth of valuing Y, when you aggregate the results, your society values X because Bill Gates said so. What Bill Gates communicates goes.

That is what people object to. Not least because it is not plausible under any scheme to suggest that Bill Gates' opinion is 100,000 more valuable than that of the average person.

Right now Elizabeth Warren's opinion is 100,000 more valuable than my own. Why? Because she received a lot more votes than I did.

Right now Gates' opinion is 100,000 more valuable than my own. Why? Because he has received a lot more dollar votes than I have.

"Though shall not communicate in bets. Thou shalt communicate in English, voice what you value, elaborate on your convictions, leverage agreement with others to work together and produce policy which is better than one you would have thought of yourself, negotiate in good faith around disagreements an make reasonable compromises, work towards consensus whenever possible and respect the integrity of the decision-making process whenever it is not".

You know, like... democracy.

Yeah... great pitch for democracy. But you forgot about your pitch for markets. If voting is so great... then why do we need spending at all? Come up with a coherent story. Or admit that you can't.

If you think democracy is about voting, then you have completely misunderstood the society you live in. Democracy is about communication - it is about people engaging with each other to discuss their values and preferences and to negotiate the best way to accommodate and satisfy everyone's needs and requirements, as much as possible.

This is in contrast with a monetary bet. If I put money on it, I don't have to engage with what you want, or need. I just have to wait for the result of the bet.

Therefore... let's get rid of spending? Or.... is spending necessary? If it's necessary... then explain why we need it. I understand why spending is necessary... which is why I understand the value of...

1. replacing voting with spending
2. pragmatarianism

You don't appreciate the value of these two things... which means that you must have a different understanding of why spending is necessary. So please share your pitch for spending. If you don't have one, then clearly you should advocate replacing all spending with voting and/or representation.

What you are proposing is a manifesto for the consumer rights of your citizens. What you need to argue is that this is better than democracy.

I've already argued, quite extensively, that replacing voting with spending would prevent citizens from shooting themselves in the feet.

I tend to write an argument by saying what I mean at the top. So that it is clear. What was going on there was what it says just above those two paragraphs:

Ultimately, your last response to me perfectly demonstrates our point of disagreement. You re-hash your argument about the use of resources in terms of use of human brain power, and then you do the sort of arguments you'd expect an economics undergrad to make "from the logic of economics".

This made no sense to me either and I failed to see how it was connected to the other two paragraphs. Personally, I try to throw in an example to hedge my bets that the other person will catch my drift. It doesn't always work. But I'm under the impression that... the harder it is for me to come up with an accessible example... the more necessary an accessible example is.

Nobody claimed, or implied, that people are not moronic when they vote. The point is that WE KNOW they are moronic when they spend. So it is perfectly reasonable to conclude that in your pragmatarianist utopia, people will choose to spend their taxes LIKE FUCKING MORONS.

Again, and again, clearly you're not arguing that we should entirely replace ALL spending with voting/representation. So come up with a pitch for spending. Explain why we should tolerate spending at all when "WE KNOW" that "people will choose to spend their taxes LIKE FUCKING MORONS." Personally, if I was so certain that people would spend their taxes like fucking morons, then I would certainly be against people being able to spend any money on anything. Then again, I would also be against people voting. I guess that would leave... dictatorships?

What you are proposing to do is a system where there is a permanent civil war between liberals and conservatives fought on every single issue with money through the tax system, with both sides trying to outbid each other up to the point where their side "wins the argument". Side X puts money in for abortion clinics so that they are more widely available. Side Y puts money into the ever stricter regulation of abortion, so that even though they are widely available, the number of abortions the clinics can actually perform gets ever smaller. And so on indefinitely.

Again, and again, and again, and again... I don't know why you think we need any spending at all. Clearly you don't care how many of their tax dollars liberals would actually spend to support abortions. If you don't care how much money liberals would truly spend to support abortions... then why do you care how much money liberals, or anybody, would spend to support anything?

Besides... your alternative... pragmatarianism really DOES NOT HELP you.

Let X = that abortion should be a choice available to women who need it.
The converse Y = abortion should not be a choice available to women who need it.

1) For you X > Y.
2) You choose to spend to fund the availability of abortion clinics.
3) Bill Gates thinks Y > X.
4) Bill Gates outspends the living daylights out of you, and regulates these things to the hilt, so that the abortion clinics you built cannot actually carry out abortions for women who need.
5) Oh look... "Quiggin's Rule is broken".

Gates outspent me which means that... Y is truly more valuable than X. Therefore... Quiggin's Rule was not broken. Evidently you missed the part where I correlate spending with valuation.

Obviously it's not perfectly correlated. But, again, for the gazillionth time, if you want to argue that the alternatives are better at clarifying people's valuations... then why don't you argue that we should replace all spending with the superior alternatives?

In case you missed it, I'm endeavoring to provide a coherent story. You're not happy with my story.... but your own story is wildly incoherent. Well... it sure seems that way. You haven't necessarily even attempted to offer a coherent story. I'm just guessing that it's really incoherent because you...

A. criticize the heck out of spending
B. praise the heck out of the alternatives
C. do not advocate replacing all spending with the clearly superior alternatives

Let me try and help you by providing the basic structure for a coherent story...

We should care how much money liberals spend on computers because _____________
We should not care how much money liberals would spend to support abortions because _____________

From my perspective, it makes absolutely no sense to care about the first but not care about the second. The reason that I care about the first is because it's the only way that we can ensure that Quiggin's Rule isn't broken. We can't possibly put society's limited resources to more valuable uses if we don't know the actual valuation of computers. This logic is just as applicable to abortions. If Lilith the liberal spends money on a computer... then the only thing that I can conclude is that, in that unique set of circumstances, she values computers more than abortions. After all, the money that she just spent on computers will allow computer producers to compete resources away from abortion clinics. If Lilith should be free to use her money to help computer producers compete resources away from abortion clinics.... then why, in a completely different set of circumstances, shouldn't she be free to use her tax dollars to help abortion clinics compete resources away from computer producers? When her circumstances/valuations change... then why shouldn't she be entirely free to use her money to communicate this change to the rest of society?

I'm guessing that a lot more money is spent on computers than is spent on abortions. Would it be a good idea to switch their funding? Shall we simply assume that society values abortions more than it values computers? Of course not. That would be a stupid assumption because it's virtually guaranteed to break Quiggin's Rule. If you agree that this would be a stupid assumption... then you, like most people, already have the correct intuition.

[Ad Nihilo]

So what you are saying is:

Logic entails that if we want to maximise an outcome (e.g. optimum allocation of resources), we can only use one mechanism of social interaction.

Your favourite is monetary transaction. If I say that that is all very well in some areas (private sector markets), but has obvious disadvantages on other areas (the provision of public goods), you are placing the burden on me to come up with another mechanism of social interaction which can be used in absolutely all aspects of social interaction (both private markets and the common provision of public goods) and which, on aggregate would be better at maximising our designated outcome.


My argument is that this is imbecilic thinking. Your simple-minded logic abstracts away from significant differences in the real world about which kinds of social interactions and which kinds of strategies maximise outcomes in the different contexts of different social institutions.

My argument is that you should look at reality, rather than at "economic logic". Market institutions work well for the production and distribution of private goods. There is overwhelming evidence that market institutions work atrociously poorly for the production of public and club goods. For the optimal production of these kinds of goods you need to use other mechanisms of social coordination, such as political negotiation and enforcement through the power of the state.

To insist that we absolutely need to use the exact same mechanism of social interaction in both cases, because we must, because logic says we must, so we must, is just, and I'm sorry to say this, obnoxiously simple-minded.


Your response is: "oh well, if people won't choose to pay for education when given the free opportunity to do so, clearly they don't value education and we shouldn't do it." (education is a good with huge positive externalities and all evidence shows that if left to it, people would under-invest in it)


My answer is: "very well, but only if you let me take away from you everything you value and was produced by people who were educated (and who would not have been able to produce these things had they not been educated as you propose)."

[Alvecia]

That wasn't what I argued. That is the implication of the system you are advocating.

If Bill Gates "communicates" $1bn worth of his valuing X, and one thousand "Middle Class" mugs "communicate" $10 worth of valuing Y, when you aggregate the results, your society values X because Bill Gates said so. What Bill Gates communicates goes.

That is what people object to. Not least because it is not plausible under any scheme to suggest that Bill Gates' opinion is 100,000 more valuable than that of the average person.

Right now Elizabeth Warren's opinion is 100,000 more valuable than my own. Why? Because she received a lot more votes than I did.

Right now Gates' opinion is 100,000 more valuable than my own. Why? Because he has received a lot more dollar votes than I have.

Actually, Elizabeth Warren's vote is equally as valuable as yours. Her vote will not count for 100,000 in the upcoming presidential election.

What you are proposing is a manifesto for the consumer rights of your citizens. What you need to argue is that this is better than democracy.

I've already argued, quite extensively, that replacing voting with spending would prevent citizens from shooting themselves in the feet.

Actually it won't. People are just as stupid at spending as they are at voting. More so, one could argue.

[Celseon]

Actually, Elizabeth Warren's vote is equally as valuable as yours. Her vote will not count for 100,000 in the upcoming presidential election.

There's also the eensy weensy little problem of buying copies of Microsoft's operating systems not being directly comparable to a vote for Microsoft's top brass. When people make decisions about whether to go for Windows, Mac, or Linux they're generally assessing the features, compatibility, requirements, and general capabilities between them. They are, in other words, more often intensely interested in what operating system they need or want given their budget and computing needs than they are in who the current president of Microsoft Corporation is, which doesn't necessarily impact them in the slightest. Elizabeth Warren would, thinking about voting for her as comparable to people making decisions about whether to purchase a Microsoft or Apple OS or to download a Linux OS, be comparable to the operating systems themselves rather than the people who make those operating systems. Questions about Warren's positions are like questions about a particular operating system's features and compatibility, for example.

People do not generally know who the top brass of the companies they buy things from even are. Conduct as many surveys as you need to in order to convince yourself of that, Xero. Go door knocking and ask if people can name the presidents and CEOs of each and every company that produced each and every product in their pantries. Let me know how many you turn out finding. They're making their decisions based on other factors.

[Xerographica]

Celseon, voila!?? First Imperializt Russia magically reappears and now you too!? And without any need whatsoever to offer an explanation?! People randomly coming and going is chaos!!!! It's no wonder that we can't have nice things!

Yeah, I have absolutely nooooo idea who's responsible for supplying the large majority of things that I spend my money on. There's no need for me to knock on doors to figure this out. Even though you're right about this point... it really doesn't damage my argument. If we accept that Warren should have more influence by virtue of receiving more votes... then we should accept that whoever should have more influence by virtue of receiving more dollar votes. Votes reflect the will of the people and so do dollar votes.

The challenge is seeing just how stupid it is to have both systems. Votes and dollar votes are very different... so they can't both be equally good at reflecting the will of the people.

Lilith the liberal buys a computer because she wants a computer. This logically helps Mr. Whoever to compete resources away from Ms. Whoever is in charge of supplying abortions. I think this is pretty straightforward. It's a pretty basic fact that the more resources that Mr. Whoever uses to make computers... the less resources will be available for Ms. Whoever to supply abortions.

Of course Lilith, being a liberal, wants it to be really easy for anybody and everybody who needs an abortion to have an abortion. So she votes for Elizabeth Warren and Warren helps determine how much funding is giving to Ms. Whoever. Giving more funding to Ms. Whoever logically helps her to compete resources away from Mr. Whoever is in charge of supplying computers. Again, I think this is pretty straightforward.

Of course Lilith, being a human, wants to have her cake and eat it too. But clearly it's problematic when, by voting for Elizabeth Warren, Lilith ends helping Ms. Whoever compete too many resources away from Mr. Whoever. It's problematic when Lilith tramples her own interests. It's problematic when she shoots herself in the foot.

Can you argue that the same thing is true when Lilith buys a car? Does she shoot herself in the foot by helping Mr. Newever compete resources away from Mr. Whoever? While Lilith's car purchase does help Mr. Newever compete resources from Mr. Whoever... she would only shoot herself in the foot if she spent more money on a car than she truly wanted to.

If we trust Lilith to decide how much money she spends on computers... then we're trusting her to decide how many resources should be competed away from cars and abortions and gazillion other products that she also values. Except, when we expect Lilith to vote for a representative to decide how much money will be spent on abortions, which will logically determine how many resources are competed away from cars and computers, then we're untrusting Lilith. So we simultaneously trust and distrust her.

If this system doesn't seem fundamentally incoherent and blatantly harmful to Lilith's own true interests.... then you're really not thinking hard enough. Or, I'm doing a really terrible job of articulating the absurdity. Which is entirely possible.

Here are the facts...

1. We trust Lilith to decide how much money she spends on computers
2. The more money that she spends on computers, the less resources that will be available for abortions
3. We trust Lilith to decide how many resources will be available for abortions and computers
4. We trust Lilith to vote for a representative who will protect her interests
5. Her representative will help determine how much money is spent on abortions
6. The more money that's spent on abortions, the less resources that will be available for computers
7. We don't trust Lilith to decide how many resources will be available for computers or abortions

We really need to make up our minds! And by "we" I mean all of yous! I've already made up my mind that I truly trust Lilith. Well, my mind made up my mind. My mind refused to simultaneously hold such blatantly contradictory beliefs.

[Blakk Metal]

Xero, why do you keep on ripping off Molbug's writing style, despite the fact it makes your posts inconvenient to read?