Pragmatarian Discussion Thread

[Lord Dominator]

Because some of us like playing a game where the only possible advantage is how much you dislike sleep?

There is a widespread demand for a fair game among gamers. We tend to hate and despise games that are "pay to win" because we view it as inherently unfair. Games viewed as unfair are generally not fun to play, and therefore, not demanded.

Potato-potatoe

[Xerographica]

It would probably help our discussion if we all review, and carefully consider, the relevant economic timeline...

1776: Adam Smith explains the Invisible Hand...

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

Contrary to popular belief, the Invisible Hand is not about self-interest, it's about consumers using their money to communicate their interests to producers. The supply is optimally balanced because it’s constantly being regulated by the spending signals of countless consumers.

1850: Frederic Bastiat argues that forced-riding is a problem...

When James Goodfellow gives a hundred sous to a government official for a really useful service, this is exactly the same as when he gives a hundred sous to a shoemaker for a pair of shoes. It's a case of give-and-take, and the score is even. But when James Goodfellow hands over a hundred sous to a government official to receive no service for it or even to be subjected to inconveniences, it is as if he were to give his money to a thief. It serves no purpose to say that the official will spend these hundred sous for the great profit of our national industry; the more the thief can do with them, the more James Goodfellow could have done with them if he had not met on his way either the extralegal or the legal parasite. - Frederic Bastiat, That Which is Seen, and That Which is Not Seen

1896: Knut Wicksell recognizes that free-riding and forced-riding are both problems and he proposes that the minority be allowed to veto inadequately beneficial public expenditures...

If the individual is to spend his money for private and public uses so that his satisfaction is maximized, he will obviously pay nothing whatsoever for public purposes (at least if we disregard fees and similar charges). Whether he pays much or little will affect the scope of public services so slightly, that for all practical purposes he himself will not notice it at all. Of course, if everyone were to do the same, the State would soon cease to function. - Knut Wicksell, A New Principle of Just Taxation

It would seem to be a blatant injustice if someone should he forced to contribute toward the costs of some activity which does not further his interests or may even be diametrically opposed to them. - Knut Wicksell, A New Principle of Just Taxation

The first and most important consequence of the adoption of the system here proposed would be that taxes would cease to seem a burden. Instead they would come to be regarded as what they really should be, namely as means to procure to the community as a whole and to each of its classes particular benefits which could not be obtained in other ways. Each member of society would be happy in the knowledge that the goods which taxation withdraws from his private use are destined solely for purposes which he recognizes to be useful and in which he has a genuine interest, be it for purely selfish or for altruistic motives. Surely this would do more than anything else to awaken and maintain the spirit of good citizenship. - Knut Wicksell, A New Principle of Just Taxation

1945: Friedrich Hayek, in his Nobel essay, reinforces Smith’s idea that markets are all about communication...

We must look at the price system as such a mechanism for communicating information if we want to understand its real function — a function which, of course, it fulfils less perfectly as prices grow more rigid. (Even when quoted prices have become quite rigid, however, the forces which would operate through changes in price still operate to a considerable extent through changes in the other terms of the contract.) The most significant fact about this system is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action. In abbreviated form, by a kind of symbol, only the most essential information is passed on and passed on only to those concerned. It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement.  - Friedrich Hayek, The Use of Knowledge in Society

Hayek argued that command economies fail because, in the absence of prices, they are unable to utilize all the relevant and necessary knowledge that is dispersed among all the consumers and producers.

1954: The Nobel economist Paul Samuelson critiques Hayek's essay by pointing out that, because of the free-rider problem, the market fails to optimally supply public goods...

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. -   Paul Samuelson, The Pure Theory of Public Expenditure

Samuelson's basic assumption was that the optimal supply of all goods is entirely dependent on honest signals. For example, it’s possible to benefit from Linux without having to pay for it. Let's say that your true valuation of this operating system is $40 bucks. If you only donate $20 dollars to it, you still can fully benefit from it, but you can take the $20 bucks that you saved and use it to buy a nice steak. The amount you spent on Linux would be a false/dishonest signal because it would be less than your true valuation of the software. Your false signal on its own isn't so much of a problem... after all... you only cheated Linux out of $20 bucks. But when everybody else does more or less the same thing, then it’s a big problem. If everybody's contribution to Linux is less than their true valuation of it, then naturally its quality is going to be a lot lower than everybody truly wants it to be. Plus, there are going to be far fewer freely available operating systems than everybody truly wants.

The only reason that consumers have the incentive to be dishonest about their true valuation of Linux (a public good) is because they have the option to spend their money on steak (a private good) instead. If this option was eliminated, then so too would be the incentive to be dishonest. This fundamentally important insight was shared by another economist, James Buchanan, nearly a decade after Samuelson published his paper.

1963: The Nobel economist James Buchanan refutes Samuelson’s claim that a market can’t optimally supply public goods...

Under most real-world taxing institutions, the tax price per unit at which collective goods are made available to the individual will depend, at least to some degree, on his own behavior. This element is not, however, important under the major tax institutions such as the personal income tax, the general sales tax, or the real property tax. With such structures, the individual may, by changing his private behavior, modify the tax base (and thus the tax price per unit of collective goods he utilizes), but he need not have any incentive to conceal his "true" preferences for public goods. - James M. Buchanan, The Economics of Earmarked Taxes

Let me hedge my bets by sharing how other people have explained the idea of individual earmarking...

One strand of this approach-initiated in Buchanan’s (1963) seminal paper-argues that the voter who might have approved a tax increase if it were earmarked for, say, environmental protection would oppose it under general fund financing because he or she may expect the increment to be allocated to an unfavored expenditure such as defense. Earmarked taxation then permits a more satisfactory expression of individual preferences. -  Ranjit S. Teja, The Case for Earmarked Taxes

Individuals who have particularly negative feelings concerning a publicly provided good (e.g. Quakers on military expenditures, Prolifers on publicly funded abortions) have also at times suggested that they should be allowed to dissent by earmarking their taxes toward other public uses.  - Marc Bilodeau, Tax-earmarking and separate school financing

Imagine if Netflix gave subscribers the opportunity to use their monthly fees to help rank the content. Would subscribers have any incentive to be dishonest? Nope. This is simply because they would not have the option to spend their fees on things like food or clothes. Subscribers would not have the option to spend their fees outside of Netflix. Therefore, how subscribers earmarked their fees would honestly communicate their true valuations of the content. The result would be the optimal supply of content.

1981: The anarcho-capitalist Murray Rothbard makes the case that forced-riding is a bigger problem than free-riding...

And what of those individuals who dislike the collective goods, pacifists who are morally outraged at defensive violence, environmentalists who worry over a dam destroying snail darters, and so on? In short, what of those persons who find other people's good their "bad?" Far from being free riders receiving external benefits, they are yoked to absorbing psychic harm from the supply of these goods. Taxing them to subsidize more defense, for example, will impose a further twofold injury on these hapless persons: once by taxing them, and second by supplying more of a hated service. - Murray Rothbard, The Myth of Neutral Taxation

2018 January: Numerous economists, including three Nobel laureates, make the case to the Supreme Court that free-riding is a bigger problem than forced-riding…

National defense is a prototypical example of the potential for free riding, but the phenomenon is ubiquitous, occurring not only in connection with union fees, but also church donations, deficits, NATO contributions, vaccinations, and in countless other contexts.

In sum, it is well established that free riding follows from individual economic self-interest in the context of collective goods, even when everyone agrees that they benefit from those goods. If individuals are not required to contribute, many who undisputedly benefit will nevertheless withhold their contributions out of simple self-interest, and others will withhold their contributions to avoid being taken advantage of by the free riders. A committed core may be able to sustain itself and provide some amount of the collective good, but even if some contributors persevere, the amount of the collective good will be sub-optimal, and will tend to decrease further and further below the optimum as the contagion of free riding spreads, resulting in increasing exploitation of the dwindling contributors. - Brief Of Amici Curiae Economists And Professors Of Law And Economics In Support Of Respondents

2018 February: Justice Sotomayor argues that people can adequately express their preferences by simply speaking...

Any union member is free to get up publicly in any setting he or she wants to say they don't agree with the position the union is taking. - Sonia Sotomayor

2018 March: After reading the amicus brief of libertarians Will Baude and Eugene Volokh...

There is certainly no First Amendment violation when the government itself engages in taxpayer-funded speech that some find objectionable. The content of that speech is protected from First Amendment scrutiny by the government speech doctrine. No matter how much we disagree with the government's message, we cannot withhold the portion of our taxes that support it. The First Amendment permits taxpayers who object to government speech to raise their own voices in opposition and to associate with others who share their views. And, of course, disgruntled voters can express their frustration at the ballot box. But those are their only remedies. They have no First Amendment interest to resist subsidizing government speech they happen to disapprove of.

.... I email them the case for earmarking. Volokh replies...

Got it, thanks, but whatever the policy merits of union members earmarking their dues -- or taxpayers earmarking their taxes -- I don’t think the First Amendment mandates that, or precludes normal agency fees. - Eugene Volokh

I reply and he does too...

Sorry I can’t respond in more detail, but the First Amendment doesn’t cover all human activity that can be used to express one’s preferences. In particular, under the Supreme Court’s precedents, simply paying money to someone isn’t enough to qualify as speech, or else virtually all economic behavior would be governed by First Amendment doctrine. Nor does being required to pay money to someone (for instance, the government) qualify as compelled speech. - Eugene Volokh

2018 June: The Supreme Court rules 5-4 that compulsory dues violate the First Amendment. In other words, they rule that forced-riding is a bigger problem than free-riding...

Forcing free and independent individuals to endorse ideas they find objectionable raises serious First Amendment concerns. - Supreme Court, Janus v. AFSCME

Second, avoiding “the risk of ‘free riders,’” is not a compelling state interest. Free-rider “arguments . . . are generally insufficient to overcome First Amendment objections,” and the statutory requirement that unions represent members and nonmembers alike does not justify different treatment. - Supreme Court, Janus v. AFSCME

Experience shows that unions can be effective even without agency fees. - Supreme Court, Janus v. AFSCME

The First Amendment is violated when money is taken from nonconsenting employees for a public-sector union; employees must choose to support the union before anything is taken from them. Accordingly, neither an agency fee nor any other form of payment to a public-sector union may be deducted from an employee, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay. - Supreme Court, Janus v. AFSCME

The First Amendment, made applicable to the States by the Fourteenth Amendment, forbids abridgment of the freedom of speech. We have held time and again that freedom of speech “includes both the right to speak freely and the right to refrain from speaking at all.” - Supreme Court, Janus v. AFSCME

Perhaps because such compulsion so plainly violates the Constitution, most of our free speech cases have involved restrictions on what can be said, rather than laws compelling speech. But measures compelling speech are at least as threatening. - Supreme Court, Janus v. AFSCME

When speech is compelled, however, additional damage is done. In that situation, individuals are coerced into betraying their convictions. Forcing free and independent individuals to endorse ideas they find objectionable is always demeaning, and for this reason, one of our landmark free speech cases said that a law commanding “involuntary affirmation” of objected-to beliefs would require “even more immediate and urgent grounds” than a law demanding silence.

Compelling a person to subsidize the speech of other private speakers raises similar First Amendment concerns. As Jefferson famously put it, “to compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhor[s] is sinful and tyrannical.” - Supreme Court, Janus v. AFSCME

Because the compelled subsidization of private speech seriously impinges on First Amendment rights, it cannot be casually allowed. - Supreme Court, Janus v. AFSCME

Petitioner strenuously objects to this free-rider label. He argues that he is not a free rider on a bus headed for a destination that he wishes to reach but is more like a person shanghaied for an unwanted voyage.

Whichever description fits the majority of public employees who would not subsidize a union if given the option, avoiding free riders is not a compelling interest. As we have noted, “free-rider arguments . . . are generally insufficient to overcome First Amendment objections.” To hold otherwise across the board would have startling consequences. Many private groups speak out with the objective of obtaining government action that will have the effect of benefiting nonmembers. May all those who are thought to benefit from such efforts be compelled to subsidize this speech?

Suppose that a particular group lobbies or speaks out on behalf of what it thinks are the needs of senior citizens or veterans or physicians, to take just a few examples. Could the government require that all seniors, veterans, or doctors pay for that service even if they object? It has never been thought that this is permissible. “[P]rivate speech often furthers the interests of nonspeakers,” but “that does not alone empower the state to compel the speech to be paid for.” In simple terms, the First Amendment does not permit the government to compel a person to pay for another party’s speech just because the government thinks that the speech furthers the interests of the person who does not want to pay. - Supreme Court, Janus v. AFSCME

In sum, we do not see any reason to treat the free-rider interest any differently in the agency-fee context than in any other First Amendment context. We therefore hold that agency fees cannot be upheld on free-rider grounds. - Supreme Court, Janus v. AFSCME

It is an odd feature of our First Amendment cases that political patronage has been deemed largely unconstitutional, while forced subsidization of union speech (which has no such pedigree) has been largely permitted. As Justice Powell observed: “I am at a loss to understand why the State’s decision to adopt the agency shop in the public sector should be worthy of greater deference, when challenged on First Amendment grounds, than its decision to adhere to the tradition of political patronage.” We have no occasion here to reconsider our political patronage decisions, but Justice Powell’s observation is sound as far as it goes. By overruling Abood, we end the oddity of privileging compelled union support over compelled party support and bring a measure of greater coherence to our First Amendment law. - Supreme Court, Janus v. AFSCME

We recognize that the loss of payments from nonmembers may cause unions to experience unpleasant transition costs in the short term, and may require unions to make adjustments in order to attract and retain members. But we must weigh these disadvantages against the considerable windfall that unions have received under Abood for the past 41 years. It is hard to estimate how many billions of dollars have been taken from nonmembers and transferred to public-sector unions in violation of the First Amendment. Those unconstitutional exactions cannot be allowed to continue indefinitely. - Supreme Court, Janus v. AFSCME

The losing side of the Supreme Court primarily argues that free-riding is a bigger problem than forced-riding...

With all that in mind, the Court recognized why both a government entity and its union bargaining partner would gravitate toward an agency-fee clause. Those fees, the Court reasoned, “distribute fairly the cost” of collective bargaining “among those who benefit”—that is, all employees in the work unit. And they “counteract[] the incentive that employees might otherwise have to become ‘free riders.’” In other words, an agency-fee provision prevents employees from reaping all the “benefits of union representation”—higher pay, a better retirement plan, and so forth—while leaving it to others to bear the costs. To the Court, the upshot was clear: A government entity could reasonably conclude that such a clause was needed to maintain the kind of exclusive bargaining arrangement that would facilitate peaceful and stable labor relations. - Supreme Court (dissent), Janus v. AFSCME

And third, agency fees are often needed to ensure such stable funding. That is because without those fees, employees have every incentive to free ride on the union dues paid by others. - Supreme Court (dissent), Janus v. AFSCME

But basic economic theory shows why a government would think that agency fees are necessary for exclusive representation to work. What ties the two together, as Abood recognized, is the likelihood of free-riding when fees are absent. Remember that once a union achieves exclusive-representation status, the law compels it to fairly represent all workers in the bargaining unit, whether or not they join or contribute to the union. Because of that legal duty, the union cannot give special advantages to its own members. And that in turn creates a collective action problem of nightmarish proportions. Everyone—not just those who oppose the union, but also those who back it—has an economic incentive to withhold dues; only altruism or loyalty—as against financial self-interest—can explain why an employee would pay the union for its services. And so emerged Abood’s rule allowing fair-share agreements: That rule ensured that a union would receive sufficient funds, despite its legally imposed disability, to effectively carry out its duties as exclusive representative of the government’s employees.

The majority’s initial response to this reasoning is simply to dismiss it. “[F]ree rider arguments,” the majority pronounces, “are generally insufficient to overcome First Amendment objections.” “To hold otherwise,” it continues, “would have startling consequences” because “[m]any private groups speak out” in ways that will “benefit[ ] nonmembers.” But that disregards the defining characteristic of this free-rider argument—that unions, unlike those many other private groups, must serve members and non-members alike. Groups advocating for “senior citizens or veterans” (to use the majority’s examples) have no legal duty to provide benefits to all those individuals: They can spur people to pay dues by conferring all kinds of special advantages on their dues-paying members. Unions are—by law—in a different position, as this Court has long recognized. Justice Scalia, responding to the same argument as the majority’s, may have put the point best. In a way that is true of no other private group, the “law requires the union to carry” non-members—“indeed, requires the union to go out of its way to benefit [them], even at the expense of its other interests.” That special feature was what justified Abood: “Where the state imposes upon the union a duty to deliver services, it may permit the union to demand reimbursement for them.”

The majority’s fallback argument purports to respond to the distinctive position of unions, but still misses Abood’s economic insight. Here, the majority delivers a four-page exegesis on why unions will seek to serve as an exclusive bargaining representative even “if they are not given agency fees.” The gist of the account is that “designation as the exclusive representative confers many benefits,” which outweigh the costs of providing services to non-members. But that response avoids the key question, which is whether unions without agency fees will be able to (not whether they will want to) carry on as an effective exclusive representative. And as to that question, the majority again fails to reckon with how economically rational actors behave—in public as well as private workplaces. Without a fair-share agreement, the class of union non-members spirals upward. Employees (including those who love the union) realize that they can get the same benefits even if they let their memberships expire. And as more and more stop paying dues, those left must take up the financial slack (and anyway, begin to feel like suckers)—so they too quit the union. And when the vicious cycle finally ends, chances are that the union will lack the resources to effectively perform the responsibilities of an exclusive representative—or, in the worst case, to perform them at all. The result is to frustrate the interests of every government entity that thinks a strong exclusive-representation scheme will promote stable labor relations. - Supreme Court (dissent), Janus v. AFSCME

And if anything, the First Amendment scales tip the opposite way when (as here) the government is not compelling actual speech, but instead compelling a subsidy that others will use for expression. See Brief for Eugene Volokh et al. as Amici Curiae 4–5 (offering many examples to show that the First Amendment “simply do[es] not guarantee that one’s hard-earned dollars will never be spent on speech one disapproves of ”). So when a government mandates a speech subsidy from a public employee—here, we might think of it as levying a tax to support collective bargaining—it should get at least as much deference as when it restricts the employee’s speech. - Supreme Court (dissent), Janus v. AFSCME

The key point about Abood is that it fit naturally with this Court’s consistent teaching about the permissibility of regulating public employees’ speech. The Court allows a government entity to regulate that expression in aid of managing its workforce to effectively provide public services. That is just what a government aims to do when it enforces a fair-share agreement. And so, the key point about today’s decision is that it creates an unjustified hole in the law, applicable to union fees alone. This case is sui generis among those addressing public employee speech—and will almost surely remain so. - Supreme Court (dissent), Janus v. AFSCME

There is no sugarcoating today’s opinion. The majority overthrows a decision entrenched in this Nation’s law—and in its economic life—for over 40 years. As a result, it prevents the American people, acting through their state and local officials, from making important choices about workplace governance. And it does so by weaponizing the First Amendment, in a way that unleashes judges, now and in the future, to intervene in economic and regulatory policy. - Supreme Court (dissent), Janus v. AFSCME

And maybe most alarming, the majority has chosen the winners by turning the First Amendment into a sword, and using it against workaday economic and regulatory policy. Today is not the first time the Court has wielded the First Amendment in such an aggressive way. And it threatens not to be the last. Speech is everywhere—a part of every human activity (employment, health care, securities trading, you name it). For that reason, almost all economic and regulatory policy affects or touches speech. So the majority’s road runs long. And at every stop are black-robed rulers overriding citizens’ choices. The First Amendment was meant for better things. It was meant not to undermine but to protect democratic governance—including over the role of public-sector unions. - Supreme Court (dissent), Janus v. AFSCME

[Xerographica]

Economic Timeline Analysis

The timeline represents a very long/slow debate about the most beneficial way to regulate each other’s behavior. Obviously this debate began way before Adam Smith, but he’s the best place for the timeline to start because he made the single most useful contribution to the debate.

There are two main ways to regulate behavior…

1. Force
2. Communication

Communication involves two types of signals…

1. Cheap
2. Costly

The Invisible Hand is the idea that communication, via the costly signals of consumers, is the most beneficial way to regulate behavior. However, Smith definitely wasn’t an anarcho-capitalist. He believed that free-riding was a real problem that necessitated forcing people to help pay for public goods. To some extent he did apply the logic of the Invisible Hand to public goods, in the form of the benefit principle, but he didn’t do so very extensively, so he wasn’t a pragmatarian.

Bastiat also made the case for the benefit principle but it was really Wicksell who made the first real serious attempt to tell a coherent economic story. His essay was actually translated from German into English by James Buchanan. According to Buchanan, “In any overall evaluation of the history of fiscal thought, Wicksell alone commands the heights of genius.” Of course you should all read his essay, it's not that long. But if anybody wants an even shorter version, then here are the key passages.

Unlike Wicksell, Hayek didn’t really attempt to produce a coherent economic story. He was focused on combating the story of socialism. The weapon that Hayek primarily wielded was the price mechanism. Because pricing is really only used for private goods, he largely overlooked public goods. Perhaps in his defense we should recognize the possibility that his arguments, along with those of Mises, were instrumental in helping to inoculate the US and other countries against socialism.

In any case, Samuelson was correct to point out that public goods were a huge gap in Hayek’s economic story. But Samuelson failed to recognize that the Invisible Hand was a huge gap in his own story…

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

Evidently Hayek’s arguments weren’t enough to divert Samuelson away from socialism. Just like Samuelson’s arguments weren’t enough to encourage Hayek to focus on public goods.

It was Buchanan who, thanks in large part to Wicksell, managed to produce the most coherent economic story. Wicksell was a proto-pragmatarian while Buchanan was the first real pragmatarian.

Somehow Rothbard overlooked, or underappreciated, Buchanan’s coherent economic story. Rothbard made the case that forced-riding is a bigger problem than free-riding, so his verdict was that compulsory taxation should be eliminated.

Now, nearly 40 years later, the Supreme Court agrees with Rothbard that forced-riding is a bigger problem than free-riding, but their verdict is that compulsory dues should be eliminated. The thing is, it’s logically impossible for their verdict to only apply to compulsory dues… it inherently applies to all compulsory payments… including taxes. How could the Supreme Court not realize this? Did they not read, or understand, the very straightforward explanation offered by numerous leading economists, including three Nobel laureates, that the free-riding problem is the only economic justification for compulsory taxation? Right now there’s no way for the Supreme Court to turn around and argue that free-riding is a bigger problem than forced-riding for taxes. Therefore, based on the Supreme Court’s analysis, taxes are unconstitutional.

TFW you and four other people, who aren’t economists, inadvertently abolish taxation. Personally, I wish that they had inadvertently abolished death instead.

Honestly I really don’t know if forced-riding is a bigger problem than free-riding. I just know that they are both big problems. Of course I think that the optimal solution is earmarking. I brought this solution to the attention of Will Baude and Eugene Volokh, but obviously they didn’t think it was worth bringing to the attention of the Supreme Court. It shouldn’t be a surprise that Volokh doesn’t grasp the significance of the Supreme Court’s ruling.

Sure, I’m happy that the Supreme Court recognizes that spending is a form of communication. I’m also happy that they recognize that forced-riding is a big problem. But I’m appalled by the idea of nine people, who aren't even economists, deciding for everybody whether forced-riding or free-riding is a bigger problem. Just like I’m appalled by the idea of Volokh and Sotomayer that cheap signals adequately communicate preferences.

In this thread many of you have used cheap signals to express your preference for me to quit. But even if I do quit, it’s not like these serious economic issues are going to magically vanish. Problems don’t conveniently disappear just because you bury your head in the sand. The economic problems of free-riding and forced-riding have been carefully examined and rigorously debated by Nobel economists and Supreme Court justices. But it’s not like you have to be a prestigious economic or legal expert to grasp the crucial importance of figuring out the most beneficial way to regulate behavior.

BV and DV are very different things, which means that they can’t be equally effective at regulating behavior. Which one is better? That’s what we’ve been attempting to find out. Hopefully the economic timeline and my analysis of it will help you better understand and appreciate the importance of our task.

[The South Falls]

Some members have more cards than money, while others have more money than cards. Why would anybody oppose trading money for cards?

Because someone who didn't put in work to stay up and open lootboxes can out do someone who did, with their parent's cash.

[Galloism]

I might comment on the rest later, but I want to pick out these two points.

It would probably help our discussion if we all review, and carefully consider, the relevant economic timeline...

1776: Adam Smith explains the Invisible Hand...

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

Contrary to popular belief, the Invisible Hand is not about self-interest, it's about consumers using their money to communicate their interests to producers. The supply is optimally balanced because it’s constantly being regulated by the spending signals of countless consumers.

If it's not about self interest, why did he specify "private interests and passions of individuals" right up front? That's literally self interest.

1945: Friedrich Hayek, in his Nobel essay, reinforces Smith’s idea that markets are all about communication...

We must look at the price system as such a mechanism for communicating information if we want to understand its real function — a function which, of course, it fulfils less perfectly as prices grow more rigid. (Even when quoted prices have become quite rigid, however, the forces which would operate through changes in price still operate to a considerable extent through changes in the other terms of the contract.) The most significant fact about this system is the economy of knowledge with which it operates, or how little the individual participants need to know in order to be able to take the right action. In abbreviated form, by a kind of symbol, only the most essential information is passed on and passed on only to those concerned. It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement.  - Friedrich Hayek, The Use of Knowledge in Society

Hayek argued that command economies fail because, in the absence of prices, they are unable to utilize all the relevant and necessary knowledge that is dispersed among all the consumers and producers.

And THIS is an important point, and undermines your entire concept. Your system completely eschews price signals in favor of "value signals". There is no price signal to the consumer under "Pragmatarianism". It's an "allocate what you will" system (similar to a "pay what you want" system). If one presumes that the price signals are about communication, your system cuts off that communication at the head. Which is one (of many) reasons why it fails utterly.

Another one is that it enabled free riding. Why should you have the privilege of getting the usage of the roads without paying for them?

[Vectrova]

galloism can i say i admire your refutations tremendously

because you can articulate more clearly and eloquently what i'd be reduced to BUT THAT'S WRONG AND YOU'RE CRAZY as you can say precisely why

so, thanks

[Soldati Senza Confini]

You made a long series of post detailing the background of it.

What you have not successfully done is answer the question: in which ways does your own view of pragmatarianism differ from revealed preference theory?

See, Samuelson's basic assumption under revealed preference theory sounds awfully similar to yours still. And while you might say that "any economist with half a brain will dispute it", you haven't made any efforts to actually decouple your view from Samuelson's, therefore making your view only the latest attempt at trying something where Samuelson failed.

Either come up with a good reason why pragmatarianism is actually a different thing than what Samuelson tried to do, or just admit that your idea is wrong. It is really that simple. Because so far you have
not successfully decoupled both views, and you need to do this before you even begin to try something else.

Your timeline, while informational, doesn't really address the myriad problems we have tried to tell you your view has, and it sure as shit doesn't try to decouple your ideas from others, you're just anachronistically assigning labels to authors and you keep trying to bind your ideas to other things. That is not how this works.

[Xerographica]

Either come up with a good reason why pragmatarianism is actually a different thing than what Samuelson tried to do, or just admit that your idea is wrong. It is really that simple. Because so far you have not successfully decoupled both views, and you need to do this before you even begin to try something else.

In my timeline analysis, and earlier in this thread, I shared this quote...

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

Samuelson believed that markets are entirely unnecessary. Buchanan believed the exact opposite. I'm on Buchanan's side.

Samuelson's "revealed preference" does sound superficially similar to what I'm trying to do. But, as his quote proves, he believed that markets are unnecessary. So his "revealed preference" was a means to his desired end of eliminating markets. I really don't want to eliminate markets. I want to do the complete opposite... I want to create markets everywhere.

X = eliminating markets
Y = creating markets

Do you appreciate the difference between X and Y?

[Soldati Senza Confini]

Either come up with a good reason why pragmatarianism is actually a different thing than what Samuelson tried to do, or just admit that your idea is wrong. It is really that simple. Because so far you have not successfully decoupled both views, and you need to do this before you even begin to try something else.

In my timeline analysis, and earlier in this thread, I shared this quote...

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

Samuelson believed that markets are entirely unnecessary. Buchanan believed the exact opposite. I'm on Buchanan's side.

Samuelson's "revealed preference" does sound superficially similar to what I'm trying to do. But, as his quote proves, he believed that markets are unnecessary. So his "revealed preference" was a means to his desired end of eliminating markets. I really don't want to eliminate markets. I want to do the complete opposite... I want to create markets everywhere.

X = eliminating markets
Y = creating markets

Do you appreciate the difference between X and Y?

I do, but that is not significant enough to differentiate your idea to his.

That's just a quibble. It doesn't do much to differentiate your idea and his enough.

[Salandriagado]

Either come up with a good reason why pragmatarianism is actually a different thing than what Samuelson tried to do, or just admit that your idea is wrong. It is really that simple. Because so far you have not successfully decoupled both views, and you need to do this before you even begin to try something else.

In my timeline analysis, and earlier in this thread, I shared this quote...

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

Samuelson believed that markets are entirely unnecessary. Buchanan believed the exact opposite. I'm on Buchanan's side.

Samuelson's "revealed preference" does sound superficially similar to what I'm trying to do. But, as his quote proves, he believed that markets are unnecessary. So his "revealed preference" was a means to his desired end of eliminating markets. I really don't want to eliminate markets. I want to do the complete opposite... I want to create markets everywhere.

X = eliminating markets
Y = creating markets

Do you appreciate the difference between X and Y?

You don't believe in markets. You believe in a thing that you insist on calling a market despite it having little to nothing in common with an actual market.

[The South Falls]

Either come up with a good reason why pragmatarianism is actually a different thing than what Samuelson tried to do, or just admit that your idea is wrong. It is really that simple. Because so far you have not successfully decoupled both views, and you need to do this before you even begin to try something else.

In my timeline analysis, and earlier in this thread, I shared this quote...

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

Samuelson believed that markets are entirely unnecessary. Buchanan believed the exact opposite. I'm on Buchanan's side.

Samuelson's "revealed preference" does sound superficially similar to what I'm trying to do. But, as his quote proves, he believed that markets are unnecessary. So his "revealed preference" was a means to his desired end of eliminating markets. I really don't want to eliminate markets. I want to do the complete opposite... I want to create markets everywhere.

X = eliminating markets
Y = creating markets

Do you appreciate the difference between X and Y?

Markets are determined by price and communication. Your system has neither of those. The price is set by the consumer, and therefore there is no communication.

[Xerographica]

I might comment on the rest later, but I want to pick out these two points.

It would probably help our discussion if we all review, and carefully consider, the relevant economic timeline...

1776: Adam Smith explains the Invisible Hand...

Contrary to popular belief, the Invisible Hand is not about self-interest, it's about consumers using their money to communicate their interests to producers. The supply is optimally balanced because it’s constantly being regulated by the spending signals of countless consumers.

If it's not about self interest, why did he specify "private interests and passions of individuals" right up front? That's literally self interest.

Think about dangling a carrot in front of a donkey. Does the donkey want the carrot? Well yeah. Obviously. But this is no great insight. The incredibly useful insight is that the carrot is used to steer the donkey in the most valuable direction. The carrot is the best way to beneficially regulate the donkey's behavior.

All the members of this forum have self-interest. What is missing are the carrots. We don't use our money to steer each other in the most valuable directions. We don't use the most beneficial way to regulate each other's behavior. This forum is not a market. Except for this thread and the other BV vs DV threads.

[Xerographica]

In my timeline analysis, and earlier in this thread, I shared this quote...


Samuelson believed that markets are entirely unnecessary. Buchanan believed the exact opposite. I'm on Buchanan's side.

Samuelson's "revealed preference" does sound superficially similar to what I'm trying to do. But, as his quote proves, he believed that markets are unnecessary. So his "revealed preference" was a means to his desired end of eliminating markets. I really don't want to eliminate markets. I want to do the complete opposite... I want to create markets everywhere.

X = eliminating markets
Y = creating markets

Do you appreciate the difference between X and Y?

Markets are determined by price and communication. Your system has neither of those. The price is set by the consumer, and therefore there is no communication.

A market reveals the demand for things. Right now, thanks to the market created by this thread, we can see the demand for political systems.

[Galloism]

I might comment on the rest later, but I want to pick out these two points.



If it's not about self interest, why did he specify "private interests and passions of individuals" right up front? That's literally self interest.

Think about dangling a carrot in front of a donkey. Does the donkey want the carrot? Well yeah. Obviously. But this is no great insight. The incredibly useful insight is that the carrot is used to steer the donkey in the most valuable direction. The carrot is the best way to beneficially regulate the donkey's behavior.

All the members of this forum have self-interest. What is missing are the carrots. We don't use our money to steer each other in the most valuable directions. We don't use the most beneficial way to regulate each other's behavior. This forum is not a market. Except for this thread and the other BV vs DV.

The donkey/carrot thing works because of self-interest.

The donkey wants the carrot for its own self interest and therefore follows it. The person holding the carrot dangles it to make the donkey go where he wants because of his self interest.

Also, donkeys are strong and stupid, which is why the carrot thing persistently works.

Now how about actually answering the criticisms Xero instead of meandering off to talk about donkeys.

I might comment on the rest later, but I want to pick out these two points.

It would probably help our discussion if we all review, and carefully consider, the relevant economic timeline...

1776: Adam Smith explains the Invisible Hand...

Contrary to popular belief, the Invisible Hand is not about self-interest, it's about consumers using their money to communicate their interests to producers. The supply is optimally balanced because it’s constantly being regulated by the spending signals of countless consumers.

If it's not about self interest, why did he specify "private interests and passions of individuals" right up front? That's literally self interest.

1945: Friedrich Hayek, in his Nobel essay, reinforces Smith’s idea that markets are all about communication...

Hayek argued that command economies fail because, in the absence of prices, they are unable to utilize all the relevant and necessary knowledge that is dispersed among all the consumers and producers.

And THIS is an important point, and undermines your entire concept. Your system completely eschews price signals in favor of "value signals". There is no price signal to the consumer under "Pragmatarianism". It's an "allocate what you will" system (similar to a "pay what you want" system). If one presumes that the price signals are about communication, your system cuts off that communication at the head. Which is one (of many) reasons why it fails utterly.

Another one is that it enabled free riding. Why should you have the privilege of getting the usage of the roads without paying for them?

[Soldati Senza Confini]

Markets are determined by price and communication. Your system has neither of those. The price is set by the consumer, and therefore there is no communication.

A market reveals the demand for things. Right now, thanks to the market created by this thread, we can see the demand for political systems.

So would you say there is a legitimate demand for goats ruling over people?

[Xerographica]

The donkey/carrot thing works because of self-interest.

The donkey wants the carrot for its own self interest and therefore follows it. The person holding the carrot dangles it to make the donkey go where he wants because of his self interest.

Everybody is self-interested. But here are the questions...

1. Do we need to communicate our interests?

If so...

2. What is the best way to communicate our interests?

A. BV
B. DV

Now how about actually answering the criticisms Xero instead of meandering off to talk about donkeys.

If you don't understand that markets are all about communication, then your criticisms will continue to be irrelevant.

And THIS is an important point, and undermines your entire concept. Your system completely eschews price signals in favor of "value signals". There is no price signal to the consumer under "Pragmatarianism". It's an "allocate what you will" system (similar to a "pay what you want" system). If one presumes that the price signals are about communication, your system cuts off that communication at the head. Which is one (of many) reasons why it fails utterly.

A price signal is one type of value signal. So it's incorrect to say that my system eschews price signals for value signals. Since value signals are all about consumers using their money to communicate their valuations to producers, what matters is accuracy. Different types of value signals aren't equally accurate at communicating value. Does accuracy matter?

Another one is that it enabled free riding. Why should you have the privilege of getting the usage of the roads without paying for them?

If you don't perceive that roads are underfunded, then why should you allocate your taxes to them? If you do perceive that roads are underfunded, then why wouldn't you allocate your taxes to them?

[The South Falls]

Markets are determined by price and communication. Your system has neither of those. The price is set by the consumer, and therefore there is no communication.

A market reveals the demand for things. Right now, thanks to the market created by this thread, we can see the demand for political systems.

No, the supply and demand of a market reveal the demand. This is just a troll. And anyway, markets reveal demand only through communication of other markets. There is no lone market.

[Soldati Senza Confini]

If you don't perceive that roads are underfunded, then why should you allocate your taxes to them? If you do perceive that roads are underfunded, then why wouldn't you allocate your taxes to them?

Because that is hyperrational behavior.

hyper-rational behavior does dictate we all are going to put our money where the demand is. But we are not hyper-rational creatures. We are pretty irrational.

[Salandriagado]

If you don't perceive that roads are underfunded, then why should you allocate your taxes to them? If you do perceive that roads are underfunded, then why wouldn't you allocate your taxes to them?

Because that is hyperrational behavior.

hyper-rational behavior does dictate we all are going to put our money where the demand is. But we are not hyper-rational creatures. We are pretty irrational.

It's not even hyper-rational: the hyper-rational behaviour is "I put all of the money to the 'give all of the money to me' department".

[Soldati Senza Confini]

If you don't understand that markets are all about communication, then your criticisms will continue to be irrelevant.

Problem is though, communication is a secondary function of markets.

Markets are not all about communication, they are all about trading one thing for another. Communication happens organically, sure, but it is not in itself a goal of trade.

You're confusing an emerging communication system within markets with the primary reason for markets to exist. Markets do not exist because of communication, communications within markets exist because of the market itself creating said communication. In other words, communication in a market is an accidental feature, not an incidental one.

[Xerographica]

A market reveals the demand for things. Right now, thanks to the market created by this thread, we can see the demand for political systems.

So would you say there is a legitimate demand for goats ruling over people?

If the demand is illegitimate, it's because some people don't want markets to replace democracy. People who value democracy naturally have an incentive to try and make markets look bad. But this incentive only exists when markets are directly compared to democracy. Outside of this context, we don't have to worry about democracy lovers endeavoring to discredit markets by donating lots of money to the KKK.

[The South Falls]

So would you say there is a legitimate demand for goats ruling over people?

If the demand is illegitimate, it's because some people don't want markets to replace democracy. People who value democracy naturally have an incentive to try and make markets look bad. But this incentive only exists when markets are directly compared to democracy. Outside of this context, we don't have to worry about democracy lovers endeavoring to discredit markets by donating lots of money to the KKK.

So, you're saying that we just want to make the market look bad, and this works anywhere else?

[Soldati Senza Confini]

If the demand is illegitimate, it's because some people don't want markets to replace democracy. People who value democracy naturally have an incentive to try and make markets look bad. But this incentive only exists when markets are directly compared to democracy. Outside of this context, we don't have to worry about democracy lovers endeavoring to discredit markets by donating lots of money to the KKK.

You are thinking too deep about the issue what's being observed here.

See, nobody wants to not see markets replace democracy. Hey, it might be possible that you are on to something.

But you are the worst possible advocate for that idea. In the years you have spent arguing, you have shown why should we not trust people who think markets should replace democracies, because they sound like snake oil salemen, and while at one time people would have bought into snake oil, most people would not nowadays.

[Xerographica]

If the demand is illegitimate, it's because some people don't want markets to replace democracy. People who value democracy naturally have an incentive to try and make markets look bad. But this incentive only exists when markets are directly compared to democracy. Outside of this context, we don't have to worry about democracy lovers endeavoring to discredit markets by donating lots of money to the KKK.

So, you're saying that we just want to make the market look bad, and this works anywhere else?

The incentive to make the market look bad and/or democracy look good only exists when the two things are being directly compared.

[Galloism]

The donkey/carrot thing works because of self-interest.

The donkey wants the carrot for its own self interest and therefore follows it. The person holding the carrot dangles it to make the donkey go where he wants because of his self interest.

Everybody is self-interested. But here are the questions...

1. Do we need to communicate our interests?

It would generally be against our self interest to do so. Someone wrote a book where they argued that self-interest was in the best interests of all of society.

If so...

2. What is the best way to communicate our interests?

A. BV
B. DV

Well definitely not DV, given the way your "experiments" have gone, and your linked examples have gone, although BV isn't that great either.

Now how about actually answering the criticisms Xero instead of meandering off to talk about donkeys.

If you don't understand that markets are all about communication, then your criticisms will continue to be irrelevant.

You don't understand that your system eliminates even the accidental communication that occurs in a market.

And THIS is an important point, and undermines your entire concept. Your system completely eschews price signals in favor of "value signals". There is no price signal to the consumer under "Pragmatarianism". It's an "allocate what you will" system (similar to a "pay what you want" system). If one presumes that the price signals are about communication, your system cuts off that communication at the head. Which is one (of many) reasons why it fails utterly.

A price signal is one type of value signal. So it's incorrect to say that my system eschews price signals for value signals. Since value signals are all about consumers using their money to communicate their valuations to producers, what matters is accuracy. Different types of value signals aren't equally accurate at communicating value. Does accuracy matter?

A price signal is a type of value signal, but not all value signals are price signals. Just like all Dodge Rams are pickups, but not all pickups are Dodge Rams. Your system eschews all price signalling. The only communication you've argued form Hayek is in the form of price signalling, but your system kills this.

How do you square this with your "my system will improve communication", when it eliminates all price signalling?

Another one is that it enabled free riding. Why should you have the privilege of getting the usage of the roads without paying for them?

If you don't perceive that roads are underfunded, then why should you allocate your taxes to them? If you do perceive that roads are underfunded, then why wouldn't you allocate your taxes to them?

Because of self interest, basically. All my taxes will go to the IRS, because that's the funding that loops back around most directly to my pocket. Just as all Lockheed Martin's will go to the DoD. We're talking about such a vanishingly small impact on an individual level, that there's no incentive to fix it.

I'm going to ask you again, why should you be able to walk into Wal-Mart, pick up a TV, walk out of the store, and not pay for it because "you didn't value it" or "TVs are already overfunded"?