Neutraligon wrote:Alvecia wrote:A fair point. Charity and altruism kind of poke a hole in your "people only pay for what they think is useful to them" theory Xero.
So does the fact that people often lack the knowledge to know what is and is not useful. I will give an example. Let's say someone decided that they wanted to create a perpetual motion machine. This of course would be highly useful to society if we could get it to work. Now, are there enough people in society who know that this is impossible so that they won't end up funding what will be a useless attempt?
What people in general think will be useful might not actually be so.
Like I said, correctly estimating the usefulness of things depends on brainpower and information. People aren't equally intelligent/informed. This means that people aren't equally effective at estimating the usefulness of things. In a market, each and every person has the opportunity to give their money to the most effective estimators of usefulness. The logical consequence is that more effective estimators have more influence than less effective estimators.
Is the distribution of influence optimal? No. Not even close. Many markets are missing. For example, the market is not going to make the decision whether to put the presidential center into the park. The reason that the market is not going to make this decision is because most people underestimate the usefulness of markets. The reason that most people underestimate the usefulness of markets is not because they are inadequately intelligent... it's because they are inadequately informed. The reason that most people are inadequately informed is because schools and universities are not markets. Each and every person does not have the opportunity to give their money to the teachers who most effectively estimate the usefulness of knowledge. It's a vicious cycle of ignorance that results in the suboptimal distribution of influence.
Hopefully we should all agree that nobody would benefit if the least intelligent/informed individuals had the most influence. So we should all agree that we would all greatly benefit by correctly determining which system is the most effective at giving the most influence to the most intelligent/informed individuals.