↑ comment by Xerographica ·
2015-02-13T08:13:10.957Z · LW(p) · GW(p)
What I'm suggesting is that we create a market in the public sector. Individual citizens would choose where their individual tax dollars go.
Citizens would only be able to choose to give their taxes back to themselves if this option was available. But why, if the public sector is about overcoming collective action problems, would this option be available? Is putting money back into your pocket a collective action problem?
So far not a single person has made a donation to my blog. Maybe it's because nobody values my blog? Naw, that can't be right! It's because of the free-rider problem! People guess that I'm going to continue blogging whether or not I get any money... so why should they contribute if they don't have to?
With this in mind I can pretend there are gazillions of people who derive value from my blog. But what if you wanted to challenge my belief? One way you could do it would be to create a blog sector. Everybody would get "taxed" $5 a month but... they could choose which blogs they gave their money to.
With this system in place, what would I be able to say if I still didn't receive any contributions? Unfortunately I wouldn't be able to blame it on the free-rider problem. I'd have to come up with some other rationalization.
Well... maybe I'd give myself $5 a month for my own blog. Why not? Do you think everybody would start a blog so that they could put their $5/month back in their own pockets? If so, then you'd probably have to figure out some sort of threshold. Maybe something like... any blog that 30 or fewer people contributed to would be booted from the blog sector.
Now let's apply this logic to the public sector. If too few people contributed to a public good then we would say that it has insufficient demand breadth. If it has insufficient demand breadth then it's not an adequately large enough collective action problem to warrant inclusion in the public sector. Therefore, people wouldn't be able to spend their taxes on helping to overcome it.
With that under our belt.. we can get back to congress. If people have to pay taxes anyways, but they don't give any of their taxes to congress... then congress wouldn't have sufficient demand breadth. Perhaps congress creates some value (just like my blog) but clearly people derive more value from other public goods.
A blog sector makes perfect economic sense. There's plenty of studies on the free-rider problem. But if you wanted people to elect a small group of representatives to allocate everybody's blog "taxes"... then I'd ask you to cite the economic justification for the additional step. And you wouldn't be able to because it doesn't exist.
I've been digging and debating this for several years and there's absolutely no economic evidence to support our current system. Yet, most people believe in it. This is why I like Carnegie's quote... it's painfully pertinent.
Replies from: 27chaos
↑ comment by 27chaos ·
2015-02-14T00:16:50.502Z · LW(p) · GW(p)
So, you're suggesting that the public should get to choose where their tax dollars go out of a list of preselected options. Who selects the options that go onto the list?
Replies from: Xerographica
↑ comment by Xerographica ·
2015-02-14T08:34:46.086Z · LW(p) · GW(p)
Voters? Would they want a department of books to be added to the list? It stands to reason that if the list gets longer... congress would probably receive more positive feedback (money) if it raised the tax rate.
Initially I thought that, in a pragmatarian system, the government would be the perfect embodiment of unmet demand. But now I'm not sure whether the public sector would grow larger. This is because the public sector market would be different from the private sector market.
In the private sector market there would be prices and profits but in the public sector market there wouldn't be. But in both markets there would be consumer sovereignty. I don't think that both types of markets can be equally effective though. It's hard for me to wrap my mind around.
Imagine that every vegetarian lied about their preferences. This would result in the destruction of value. They'd order steak that they really wouldn't want to eat! As a result of this increase in demand, more meat would be supplied and society's limited resources would be shifted accordingly. The supply would less accurately reflect the true demand. The lies of the vegetarians would create a distortion.
So the basic rule here is that more honesty equals more value. Getting back to my blog example... if people don't communicate (via money) the amount of value they derive from blogs... well... clearly this will result in less blogs being supplied and less value being created for consumers. Markets work because people have the opportunity to communicate what they value... and this helps guide production. But, as we can see from blogs, music and numerous other example... it's quite possible for people to not communicate their values.
So if the public sector market facilitates better communication of values... then it will create more value and expand accordingly.