You should have been clearer. Now look what you've gotten us into.

but that's the American way.

It's one thing to urge people to be strong, and to pursue great things. But, it's quite another to encourage those who view these things as the province of governments who measure national greatness by how much of other people's money they commit to projects.

If you meant limited governmental response and great private responses, you should have said so. I know you are somewhat libertarian, but I take your messages like the prior one, and the encouragement of space exploration (for example) as appeals to use the government to provide more of these "public goods".

It never turns out as nicely as it sounds in speeches.

Gil

only about declaring ideals not necessarily being practical?
My impression is that libertarians always talk about right/wrong things to do in terms of coercion, personal freedom rather than working/not working things in a real society.
And when something doesn't work in reality - they wash their hands. For instance environmental concern cannot be entrusted to individuals and environment is, by definition our common limited irreversible resource, then libertarians just deny existence of such problem. Simply because environmental efforts cannot possibly be fitted into libertarianism. And this is where they loose connection with reality as it is. They say that rivers and forests should all be made private and then their owner would care about polution. But in reality, whether we like it or not, shrinking rainforests are not private and neither USA nor UK have any control over their property status. And we cannot even see how soon they are going to become private. Perhaps even never.
But libertarians can keep denying that less oxygen is produced and more carbon dioxide is emited. They resort to statistical and political tricks, to pointless discussions about what counted and how often and in what way we should look at the figures. I have no idea whether global warming is hapenning or not, but if it is - libertarian model has nothing to offer here at all simply because environmental concern doesn't fit into its idealistic model.
The best way to allocate limited resources is not to entrust everything to private property and to markets but to arrange pluralistic usage of it. If private property acts toward competition - it works, if it acts against pluralism (in case of monopoly) - it doesn't work.
The problem is not whether to pay taxes or not, whether to spend public money on re-building or not. The question is how to set up a proper truly pluralistic system of public money usage.

"Somewhat" libertarian? Is this implicitly saying they are less pure libertarians (and so am I?) than you are?

-- Elliot Temple
http://www.curi.us/

As the Our Politics section in the sidebar says: ‘we have a lot in common with Libertarians … except ….’

The except clause begins: "Except that we are not barking mad" (and continues along similar lines)

Do people really believe being barking mad *increases* libertarian purity?

-- Elliot Temple
http://www.curi.us/

The "barking mad" items were along the lines of opposing all military actions, or pushing the button to immediately invoke anarchy.

That's irrelevant to what I was talking about.

I think advocating large increases in government non-defense spending goes against a much more conventional libertarian position that The World generally seems to endorse.

Gil

Gil,

My comments about 'barking mad' were because the Editor seemed to concede he was not fully libertarian based on the stuff he linked. I think we can both agree *those* positions do not make the World less libertarian.

As for what you were talking about, I take that as: "yes, I was questioning the libertarian purity of The World". Glad to get that straightened out.

-- Elliot Temple
http://www.curi.us/

"limited government response and great private response..."

Given the World's previous comments, I interpreted the previous article on the rebuilding of New Orleans to mean that government should be somewhat involved, but not that public money should be thrown away, as appears to be happening.

The existence of the City of New Orleans as a whole, benefits most Americans, given its unique cultural and historical significance. Probably most of us would be willing to donate money to its reconstruction, and likely have. But one person's donation benefits, to a small extent, another person because the non-donor gets the pleasure of seeing the city restored without having to pay for it. These "positive externalities" from charitable giving will tend to lead to inappropriately small voluntary contributions towards reconstruction of a site of national importance, after a natural disaster.

Spending a little government money is therefore appropriate, even if the money is obtained by taxation. Not all government programs are equally awful. But the rebuilding effort does seem to be headed in the wrong direction, whether one is a libertarian or not.

And public officials in New Orleans and Louisiana are not known for being frugal.

I guess my problem is with what seems to be an attempt to dismiss a criticism of what is completely unlibertarian by characterizing it as a complaint of a lack of libertarian purity.

It has nothing to do with purity. Endorsing a massive federal program to rebuild the area is not even a little libertarian. There isn't even an emanation of a penumbra of libertarianism in that position.

Fortunately, The World seems to recognize what a disaster such a project would be.

Gil

Michael Golding,

I'll grant that there are cases where there are "underfunded" public goods such that economic efficiency would be enhanced with respect to those projects by government funding.

However, I do not grant that it's clear that rebuilding New Orleans in any particular way constitutes such a case, nor that even when we find such a case it's obvious that government funding is "therefore appropriate."

When you take people's money you take away some of their choices and autonomy. These projects, collectively, will prevent some people from buying a house, or a business, or training for a new career, or investing in their health, or saving better for their future, or taking a dream vacation, etc. Our models may say that these things have less economic value, but I think we should be very careful about ignoring the moral component when we decide what's best for everyone.

And, in addition to the inevitable waste and fraud of government projects, there are the many unintended, often unseen, negative consequences of interfering with people's private choices. For example, the expectation of free federal disaster insurance will encourage people to behave less responsibly, and it will discourage others from helping them with private resources.

In general, I think that it's better to rely on our ability to persuade others that projects are worthwhile, and on their ability to recognize and act on these truths, than on political decisions (with their perverse incentives) to decide how our life's work should be spent. I think that this disaster is a fine example that these private contributions often greatly exceed the predictions of our economic models.

There may be some theoretically worthy projects that will go undone, but I prefer that greatly over proceeding in a cycle of escalating, suffocating, collectivism.

Gil

My view is: The World's *actual* position is (an interpretation of) libertarian(ism). This does not surprise me at all. You seem too eager to declare them unlibertarian, when I think you ought to know them better than that.

-- Elliot Temple
http://www.curi.us/

"I'll grant that there are cases where there are underfunded public goods such that economic efficiency would be enhanced with respect to those projects by government funding."

"I think this disaster is a fine example that these private contributions often greatly exceed the predictions of our economic models."
Gil

Private contributions alone, without some government expediture on infrastructure, would be woefully inadequate, and New Orleans would not be rebuild. That would be a shame.

Polls suggest that most Americans do want the non-flood- prone areas to be rebuilt, probably suggesting that most people would be willing to vote to contribute if they knew that their neighbor was contributing as well, provided that the goverment exercised a modicum of fiscal responsibility. Given that there is political support for government intervention and given that there is theoretical justification for some government investment, particularly in infrastructure; some areas of New Orlean should be rebuilt. But the primary source of funding should be individual private investors.

I truly doubt, however, that most Americans would support spending 250 billion (!) dollars on rebuilding, including 8 million for alligator farms.

That is a shame.

Michael Golding

Well, that is exactly the nature of government projects. They always waste some people's money and buy the political/financial support of others. Either you think it's "appropriate" or you think it's "a shame". I don't see how you can view it as both. You can pretend that if only the right people were involved, then everything would be rosy; but pretending is all you'd be doing.

And, I strongly disagree with the implication that political support, and a plausible argument that a state interest exists, automatically justifies state action.

Democracy is the least-bad way to organize limited, coercive political power. It's not a magic ingredient that turns moral crimes into civic virtue.

In many areas of the U.S. there would be political support for outlawing homosexual activity. There are also arguments that can be made that there is a state interest in enforcing such restrictions (public health, local standards of decency, etc.) This only goes to show that there are many areas of life that should be beyond the reach of political institutions (with or without public support).

Gang rape isn't justified because the majority of participants favor it. Likewise for grand theft.

Gil

"Either you think it's appropriate (to spend public money on rebuilding New Orleans) or you think it's a shame"
Gil

This perspective is a little too "black and white" for me, Gil. It is possible to favor some government spending without favoring spending $250 billion. And the government has occassionally implemented a few projects that cost less than 250 billion dollars, so government spending less than this amount is certainly possible (Right?).

"Democracy is the least bad way to organize limited coercive power"
Gil

Perhaps I did not make myself clear. When a majority votes for government provision of a public good, if one prohibits the majority from realizing its wishes, this is coercive, as well.

For example, virtually all of us vote for defense spending because the cost of excluding someone who won't pay for the benefits of defense is prohibitively expensive. It would be quite costly to design defensive systems that direct incoming attacking missiles only to the homes of those who did not voluntarily support the military!

The point is not that "democracy rule" is ideal (it isn't, as many as 49% can be coerced in a vote), but rather that economic efficiency, supported by a vote of the majority *decreases* coercion, as well. Though some are coerced by taxation into paying for defense when they presumably never believe we will be attacked; failure to tax, coerces *the majority* into accepting an inadequately prepared military.

It is not logical to say that the majority should simply voluntarily contribute. What marginal benefit, in protecting myself, do I receive by voluntarily contributing an extra dollar to the military? Essentially none. The military is equally powerful whether I contribute an extra dollar or not. Unfortunately the situation is symmetrical for everyone in society, so the military will be inefficiently underfunded without government intervention to coordinate collections. Therefore, taxation to improve the military of a free nation, *decreases coercion* for the majority who favor it, just as it increases coercion for the minority who don't. This is a classic economic problem when transaction costs are high in the production, measurement, and distribution of a good.

Similarly with New Orleans, we can not exclude those who fail to pay for its reconstruction, from enjoying the benefits of the city. And despite its problems, on display for the whole world after the hurricane; its history, unique charm, wonderful Jazz, extraordinary cuisine and even Bourbon street, are valuable assets to most Americans; as would likely be expressed in their democratic preferences given polling data.

But what marginal benefit does an individual citizen receive in contributing an extra dollar to the reconstruction of New Orleans? Essentially none. New Orleans will have the same infrastructure whether I contribute an extra dollar or not, and the situation is symmetrical for all Americans, so infrastructure in New Orleans will not be adequately funded given the incentives of individuals, even if many are quite generous.

But the majority of Americans may very well be interested in contributing 100 dollars to rebuild New Orleans, in the form of new taxes, because they know that the combined total of everyones contribution, coordinated by taxation, will begin to rebuild the city. This commitment to progress then encourages private investment, which often follows infrastructure reconstruction. Failure to allow citizens in the majority to coordinate their economic efforts via a government action for which they are willing to pay, is coercive (and wrong) as well.

But there is surely a difference between government spending 250 billion dollars and 25 billion dollars. And yes, it would be better if most of the work were contracted out by government agencies to private firms using fair bidding practices. And yes, there is bound to be waste and fraud, in any government project.

But reconstructing New Orleans, sends a signal to ourselves and to the world, that we will not back down in the face of natural disaster. In not succumbing to natures wrath, we also force ourselves to learn from tragedy, yet still overcome it, and this is ennobling for our country.
Michael Golding

Evolution. Donald Trump and Martha Stewart jointly recruit apprentices to rebuild New Orleans. What a combination! What a concept! Everybody wins.

Too bad we have to wait until next season.

Michael Golding wrote:

Failure to allow citizens in the majority to coordinate their economic efforts via a government action for which they are willing to pay, is coercive (and wrong) as well.

This is nonsense.

No coercion is necessary for willing contributors to coordinate their economic activities, and nobody is interested in coercing them out of such activities. They can even set up a fund such that the activity is only triggered (and their contributions committed) when enough money has been contributed to pursue the project. If they insist on doing this extremely inefficiently, I suspect that the government would be willing to perform this voluntarily-supported project.

No, these people you speak of don't want the government to perform this because the government is so good at this work. They want the government to do it so that they can coerce unwilling people to contribute.

To accuse those who merely want to avoid this coercion of the crime they are threatened with is a gross moral inversion.

Gil

This is to assume that so-called 'public good problems' (or problems of externalities, or free rider problems), or at least versions of them that can apparently be solved by government but not by contracts and other voluntary cooperation, are an artefact of idealised ways of describing an economy and never arise in real life. That is what I happen to believe too, but it is surely not obvious.

Failure to allow citizens in the majority to coordinate their economic efforts via a government action for which they are willing to pay, is coercive (and wrong) as well.

Not nonsense! But I think mistaken. Let me point out two things:

In what sense are the citizens in question "willing to pay" for the government action they favor? They don't take on a higher tax rate for it. Those unwilling to pay, pay just as much (per person)!

What, precisely, do you believe a government is? Why do they need a *government* to coordinate their aid? Us libertarians think the difference between a government and a private organisation is the government takes taxes, effectively at gunpoint, even from those who don't want to pay for something. We don't see how that is a necessary part of coordinating aid.

-- Elliot Temple
http://www.curi.us/

"an artefact of idealised ways of describing an economy..."

How interesting. Unless I misunderstood, that quote fits very well what i would describe as the concept of Libertarianism. As a conceptual artefact it does not exist in real life. As a philosophical theory (Theory L) it does certainly exist but only in the minds of its theoretical practitioners.

Useful theory, yes; practical in direct action to effect hurricane repairs and revitalization of a city, no.

Government in public good, imperfect yes; practical in a messy way, yes, but it depends on the actual world responsiveness and involvement of people in the polis (market place of debate) as to whether the public good is actually served. Without some government, we are all members of some crazy economic tribe dealing in the mediums of yams, wild pigs, and real estate (otherwise known as the totally free market). Yelp loudly if you are bitten by the wild pigs. Catch as many as you can. Buy beachfront property with the proceeds.

I would rather that your wild pigs don't mess with mine. Debate your reasons in the polis as to how your wealth accumulation will also serve the public good, trade a few pigs feet to maintain your access to the common wealth that feeds us all. Call it Liberalism or Democratic Socialism if you wish but carry no illusions about either. Wild pigs exist and feed on the same land that drives markets. Call the land New Orleans, or Pittypat Parish. It makes no difference what you call it, but make sure it stays above water for all our sakes, and I will too. Wild pigs, and yams for that matter, don't do well at sea.

Debate your theories and share the wealth that serves the public good, willingly if you believe, or dragging your feet if you don't. That's practical government in a practical free market and you'll never do away with either in a free world. Theory L, or C or M never fed anyone. Neither did it starve us either. Well debated in the polis, however it might help us organize some ideas and dreams into reality. That's where the public good comes in. For the good of us all, keep your government (and mine) on a short leash, but keep it.

Long Live New Orleans, may it Rise.

Market Economics assumes, at a minimum that everyone knows who owns what, and transaction costs are low (actually assumes much much more...but these assumptions will do for the point of this example). If everyone knows who owns what, then everyone trades for mutual benefit. This is "unanimous rule", an ideal situation, according to libertarians and most with a conservative economic bent. I will, for the sake of argument, agree that unanimous rule (pure market economics) is ideal (for now) since this is really the libertarian assumption. As doctors say, "Above all else, do no harm." Or, as the the philosophers say, "the principle of non-maleficience takes precedence over the principle of beneficience." And the Economists (used to say) Pareto Optimality.

Economists are a bit smarter than the philosophers and doctors, because they have actually tried to model these situations...lot's of messy details.

If people in the majority wish to gang-rape a woman, they can't, according to market economics, because the woman owns her own body (has a property right to her body) and she did not come up with an amount of money that she would like to receive in order to permit the gang rape to proceed(it likely would be close to infinite, if there were a chance of death.)

Note that the principle of unanimous rule would be violated if she were not paid what she wanted and the rape proceeded without her receiving anything. So raping violates libertarian (unanimous rule) principles, as well as a host of other principles!

In the real world, however, we do not know who owns many or even most goods. That's often (but not always) why we fight with each other and have governments! Property rights have not yet been defined.

We often don't know who owns what. But, if transaction costs are low or zero; we still can make progress in our thinking using unanimous rule (libertarian) principles.

Let's take the case of our national defense. We really don't know whether the country as a whole has or does not have, a right to "national defense". Property rights have not been assigned to this entity.

Assume transaction costs are zero. So, we can take an open vote, and we assume that everyone HONESTLY casts their ballot for or against national defense. I emphasize honestly, because there is a real world actual cost associated with the *search* for peoples honest position.

So we take an open and honest vote and 40% vote against national defense and 60% vote for it. The majority certainly could ask all the people who voted against it, how much would it cost to get you to change your vote? In other words, we could say, "How much does it really bother you to be taxed 'X' amount, and get national defense in return" (remember, we're going for unanimous rule).

The problem is that those in the minority have a strong incentive to lie (a transaction cost) so they would get much too much money in a vote bribing scheme, because they wouldn't reveal how much it actually bothers them to pay the tax. They would exagerate. But remember, transaction costs are zero so in this hypothetical situation, people won't lie. Surely the most we would have to pay any of those opposed to being taxed for national defense, would be the cost of the proposed individual tax increase on everyone. But for some, who somewhat oppose substantially increased defense spending, we could get them to change their vote for less. They are unwilling to pay the full amount of the tax, but they want some national defense. So if we pay them a portion of what their increase in taxes is, they will change their vote. So, a free market *could* handle national defense issues, if transaction costs were zero. In a frictionless world, we could create a unanimous rule, libertarian solution.

But wait! Why is it that the majority has to pay the minority to get them to change their vote? Isn't it just as logical to ask the minority to pay the majority to change their vote, to maintain unanimous (libertarian) rule. Perhaps societies OWN the right to national defense, so if the minority wants to compromise that, this minority should pay off the majority. As long as either side is completely bought off, unanimous rule is preserved, but libertarian unanimous rule principles don't tell us which side is correct. And as long as transaction cost is zero, libertarian principles are neutral in regards to who should pay whom.

Is this surprising? After all, we started with the assumption that we did not know who owns what. This is why libertarians always favor a "strong judiciary," so they can have determined for them "who owns what". But libertarian (market) principles are *neutral" with respect to the initial division of property rights, including a possible right to a national defense.

But how should judges (government) decide when groups of people disagree. Should the majority pay the minority, or should the minority pay the majority. Actually, quite a lot of work by free market, transaction cost economists, has gone into thinking about this issue.

Some say the questions involve morality. But others, for example the "Law and Economics people" answer the question based on efficiency.

Should we pay polluters not to pollute, or should polluters pay us for using the air? Well, it depends on who owns the air. In the real world, there are transaction costs associated with organizing markets to pay polluters not to pollute, and there are transaction costs associated with organizing markets for polluters to pay citizens for their pollution. And there are huge transaction costs associated with getting people to be honest and setting up markets...so huge in fact, that we use government taxation or regulation to deal with pollution, and not the free market, and we also produce ideology (for example, religion and culture to try to increase honesty)

The Law and Economics people (for example circuit Judge Posner and I think Nobel Laureate Douglas North) say that judges should make decisions about who owns disputed property based on who can utilize and exchange the property with the least transaction costs. Actually they believe that societies will naturally evolve in time to assign property rights to individuals who can transact with the property the most cheaply. So societies will evolve toward more and more free exchange of goods and ideas (decreased friction in the economic system). According to Posner, it is a judges job, and the governments job in general, to help along the natural course of history. As far as I can tell, arranging initial ownership of property rights to goods to minimize cost of exchange, is as far as one can take free market economic ideas without also talking about "demand" curves and peoples "preferences".

Now, back to New Orleans. The majority of Americans (according to polls) favor its reconstruction. A minority do not. Who owns the joy of New Orleans, the wonderful Jazz that comes together in the city, the varied dining from a hundred different restaurants, the walk down Bourbon street with all of its sights and sounds (at least before I get married)...etc? Who owns the rights to all this conglomeration of different competing businesses, creating the unique ambience of the city?

Yes, it is one of those real world situations to which we don't know the answer. In other words, market economics is neutral about the question of who owns the ambience of the city (unless we invoke a transaction cost perspective). If the government were not involved, I would be willing to give say 100 dollars, but not for infrastructure, rather to help the needy. If, however, I know that the overwhelming majority of Americans are willing to give, say 300 dollars to rebuild the city, and that others in fact will actually give that money (say because they are taxed), I am now willing to give 300 dollars myself via taxation. Why am I willing to give more, now (just because others are taxed as I am taxed.)? Because if the vast majority of EVERYONE gives towards rebuilding New Orleans, the basic infrastructure of New Orleans will reappear, and millions of Americans, including me, may enjoy the city again. Giving to New Orleans is a "public good" because most Americans want it there as a whole(well, not quite *there*, but rebuilt somewhat away from the lowest parts of the area.)

The majority of us want to get together and are willing to pay for its partial reconstruction, provided we can guarantee that others (who also favor it) will pay, also.

How should a libertarian think about this? Let's assume transaction costs are zero, and let's assume 2/3rd's of Americans want to spend 300 dollars to reconstruct the city. Let's further assume a completed New Orleans has absolutely no value at all, to the other 1/3rd who vote against its reconstruction. If everyone is honest about his preferences (cost of ascertaining a persons true belief is zero) and the cost of market transactions are zero, then each of us in the majority, can use our government to combine our money (300 dollars a piece) confident that all others who actually favor this will pay this amount, too. So Gil and others like him pay nothing (and they are permanently excluded from New Orleans for life), but they pay no taxes. Unanimous rule.

But we can't do this, because the cost of people lying about their preferences is too high. The majority, who actually believes that the city should be constructed, should from a self-interested perspective, vote against the city, confident that each ones marginal contribution will do nothing to change the total amount given. So most in the majority will defect to the minority, no money will be generated, and the city will not be built, despite the willingness of the majority to pool money and build the city. So noone votes for New Orleans. So the city does not get rebuilt.

Why can't people organize their own money? Because the transaction cost associated with 200 million people each contributing 300 dollars is too high. Why? Because of the cost of contracting, but primarily because each person would have an incentive to lie about whether he wants to give, just as each has an incentive to lie about how much he favors national defense in a purely voluntary system. Each contribution of his neighbor benefits the individual, without the individual having to pay for it. So no one pays for it, and we will get no New Orleans and no National Defense.

So sometimes we settle things by majority vote with enforced taxes on everyone, when it is too expensive to create markets for certain types of goods. If Gil wants to stop the majority from organizing its money this way via the government, he must admit that he is being coercive, because I am fully willing to admit that my position coerces him.

And it is still a different discussion whether Gil and his friends in the minority should be willing to pay the majority to stop building New Orleans (if such markets for this type of exchange could exist). Again, Libertarian (free-market) principles are *neutral* on this disagreement, as well, unless one adopts the Judge Posner point of view.

Like many "real-world" problems, libertarian unanimous rule principles are helpful in deciding what should be done in New Orleans, or at least understanding who the winners and losers are. But when markets break down, as I have illustrated with the problem of the reconstruction of New Orleans, it is likely that someone will be coerced and we can only hope that this coercion can be kept to a minimum. We are very far from an ideal world.

And Gil and I would certainly agree that the current use of government funds is egregious, but this certainly does not imply that government should not be involved in the reconstruction of New Orleans, at all.

Michael Golding

"What, precisely, do you believe a government is?"

If it's a good government it's an organization that takes as much resources as it needs from its citizens to help its citizens in ways that volunteerism currently won't help with well enough.

"Why do they need a *government* to coordinate their aid?"

See above.

"Us libertarians think the difference between a government and a private organisation is the government takes taxes, effectively at gunpoint, even from those who don't want to pay for something. We don't see how that is a necessary part of coordinating aid."

As people shouldn't want to murder, they should want to pay taxes, therefore taxes are only coercive for people who are in the wrong, because taxes are the best system so far to cover the shortfalls of volunteerism.

I'm all for a completely voluntary system as soon as someone thinks of one that will prevent too many people from starving, etc.

Bob

Bob,

If it's a good government it's an organization that takes as much resources as it needs from its citizens to help its citizens in ways that volunteerism currently won't help with well enough.

So a good government takes as much as *it judges that it needs*, even when some citizens say that's too much. Correct?

And it does this *when it judges* that if it doesn't force something to happen, the thing won't happen. Correct?

And it will do this *when it judges* that the thing should happen, and is worth taking taxes for, even when some citizens say it isn't and don't want it. Correct?

And it will do all this even if it is unable to win arguments for its position against the best rival views (for example, mine. It never has to argue its position with me, or even try to, before taking my money). Correct?

In short, your position seems to be it's a good government *if it's right*. If it isn't mistaken. That position is a bit pointless. Everyone thinks they are correct.

-- Elliot Temple
http://www.curi.us/

If I produce automobiles and pollute the air, and the citizens own the air, but I don't have to pay them even though I am polluting, then I will tend to inefficiently OVERPRODUCE cars, because I won't take into account the spillover cost of polluting the air. So we have an argument for government coercion of polluters (for example taxing them) to prevent them from stealing property (the air).

On the other hand, if I administer a live vaccine that jumps from person to person and causes immunity in many, not just the patient who received the vaccine from me; in administering the live vaccine, people other than the recipient benefit, but don't have to pay. So I don't capture the full benefits of what I produce when I vaccinate. So I will tend to inefficiently UNDERPRODUCE vaccine because I don't take into account the spillover benefit of administering live vaccines to those who don't get the shot, but nonetheless become infected by a live virus vaccine, and so get immunity.

(By this argument, the descendants of Albert Einstein, and possibly David Deutsch and his friends, should be far more wealthy, according to free market principles, than Bill Gates. But the free rider argument [we all benefit from brilliant people but don't pay them] does possibly explain why we are willing to fund public universities. But it also explains why people don't think and learn as much as would be socially optimal)

I'm not paid by those who benefit from my work (giving live-vaccine shots) -- so I won't work hard enough, if I am a purely self-interested individual. Voluntary cooperation won't solve the problem because there is too much incentive for a given individual to "shirk". After all, if everyone gets vaccinated, it is likely the "free rider" will catch the vaccine virus, from everyone else. But this is everyones reasoning! So few people get the shot. Voluntary cooperation won't work.

So there is an argument for citizens to (voluntarily) vote to have everyone "coerced" by the government to pay taxes, and then use the tax money to subsidize live vaccine administration to get me to work harder, to get the efficient amount of vaccine administered.

We voluntarily coerce ourselves by mandating that if one person pays, so must the other! And theoretically, in certain situations, it is logical for 100% of the population to (voluntarily) vote to be coerced! And the government which gets 100% of the vote (unanimous rule) to force everyone to be taxed, should be considered to be operating perfectly!

Unanimous rule is unanimous rule...a perfect libertarian situation. A voluntary group of rational but selfish individuals, simply cannot create this optimum outcome without government assistance, because by many definitions, only the government has a monopoly on the use of force.

And those who would stop them (maybe like Gil?), would be willing on principle, to coerce 100% of the population, to force these individuals not to cooperate through their government. Now that is hatred of taxation! And reflects a complete misunderstanding of the free market principles that libertarians supposedly hold so dear.

Which is more important, hatred of taxation (ideology) or unanimous rule (principle and morality)?

Now, libertarians would properly say (as Gil did) that not only does one have to show that the market has not worked, leading to public goods and externalities, but rather that government intervention will efficiently solve these market "spill-over" effects, often a dubious proposition.

But, in both of the above cases, arguments can be made for government intervention to (financially) support administering innocuous vaccines which benefit whole sections of the population, and arguments can be made for government intervention to tax and therefore inhibit the production of cars, if this production pollutes the air.

Now, back to New Orleans. Let's say my neighbor gives a dollar to reconstruct New Orleans. Since I like New Orleans, too, my neighbor has benefited me by his contribution, but I have had to pay nothing. So I am getting something for free, a partially reconstructed New Orleans, and I have had to pay nothing.

Just like the person who gets free vaccine because he "catches it" from the person who paid the doctor, I get New Orleans reconstructed for free, without having to pay the donor. I am a "free rider", though I would have been willing to purchase an improved New Orleans, if my neighbor hadn't bought it for me and if we both had to contribute, together. I get something from the labor of someone else, and don't have to pay him. So he (the donor) won't work as hard (just like me, he will now become a "free-rider") In other words the donor will not donate as much and neither will I, though we both would VOTE to give more than we would give if no taxation were involved. We both would vote to give more, if we knew all our neighbors would have to give that amount, too. So voluntary cooperation won't work as well, we need to work through our government to cooperate, so we take a vote, or at least a poll.

So without government intervention, an inefficiently low amount of aid will flow into New Orleans, given the preferences of the citizenry, without government assistance in coordinating dollars, because of the "free rider" problem. We can't exclude those who don't contribute from enjoying New Orleans. So, just like with the live vaccines and with defense spending, you can't exclude people from enjoying the benefits of New Orleans, you can't exclude people from enjoying the benefits of a powerful defense, and you can't exclude people from enjoying the benefits of a live vaccine administration. In these cases, there is an argument for citizens to vote to impose taxes on themselves. Defense, live vaccinations, and possibly the reconstruction of a wonderful city after a hurricane, are examples of public goods in which, arguably, the government should be involved.

Unfortunately, when we voted (or sort of did through polls), there was not 100% agreement to coerce ourselves through taxation to help New Orleans. But the majority still would like to be coerced through taxation. And those who stop us, *are* coercing us, since we want to use our government to solve our "free-rider" problem, a classic argument for the use of the government. And that brings me back to the discussion in my previous post.(Please see that)

So what is the appropriate role of government? I think this is too complicated a question. But three major roles are:
1. Define and enforce property rights to goods (which includes developing defense and police forces since otherwise other countries and fellow citizens can take stuff from us)

2. Help solve "public good" problems, for example, possibly the reconstruction of infrastructure in New Orleans and

3. Help solve "externality" problems, like pollution.

Actually, if you think about it, roles 2 and 3 are subsets of role 1.

I would also add that Governments should decrease transaction costs....but that opens up a big can of worms!

Have a nice day.

Michael Golding

Michael Golding,

If two people are each willing to pay 1/3 the cost of a pony to share, but a third person is unwilling to pay that amount, then you might say that the two (who voted, or were polled, etc.), who want the pony on the condition that all three are forced to pay, should hire a thug to use force to extract the 1/3 cost from all three. After all, then they'd have a pony, and ponies are good, and the majority is willing to tax themselves to have the pony, and we're not sure who owns the joy of having a shared pony...

You might say that one could view it (as I do) as the two people coercing the third, or one could view objecting to this mechanism (as you seem to) as the third person coercing the first two.

I'm really surprised that someone who is obviously as bright as you are cannot see that these two instances of "coercion" are incredibly different. And, that the second instance of "coercion" is not considered as such at all by those who believe that people should have self-ownership.

I don't think the morality changes if we multiply the numbers by hundreds of millions.

Gil

I apologize Gil. I obviously have not been clear. I may have been using technobabble.

With your permission, perhaps I can try again.

I will get back to the pony in a minute.

Imagine that each of 100 people has 100 dollars that he can anonymously place in an envelope and place in a container. Everyone pools their money together and no one knows who gives what to the total, but each can give 100 dollars or any portion of 100 dollars.

The rules of the game are as follows. 10% of the TOTAL contribution of all 100 people is added to the total by an anonymous source. So if all 100 people give 100 dollars, that would make $10000.00 and the anonymous source then adds 10% of the total or 1000 dollars. So if everyone gives 100 dollars, there is now $11,000 in the container, once the 10% is added.

Now, the total is divided by all 100 people, so $11,000 divided by 100 people is $110 dollars per person. Everyone is happy and makes 10 dollars, since each has $110 dollars, and started with $100.

But let's allow some people to be selfish. So if no one knows who contributes what, one person might think, "Hmm, if I don't donate my 100 dollars then the total of everyone else will be $9,900 plus 10% equals $10,890. If that is divided by 100 people, everyone will receive ($10,890 divided by 100 which is) $108.90, not quite as much as 110 dollars, but close. But since I never donated the 100 dollars, I will have 100 dollars plus $108.90 which is $208.90, and that total is greater than 110 dollars, the amount I would have received had I contributed. I think I won't contribute and more than double my money."

Clearly if someone is selfish, he gets the benefit of everyone pooling their money (the extra 10% plus a portion of everyone elses contribution), but none of the cost (the contribution of 100 dollars). But of course the situation is symmetrical for everyone, so if everyone is selfish, no one contributes $100 dollars and the benefit (the extra 10% added to the total) is lost to EVERYONE.

So in this "game", the voluntary cooperation of people (if all are self-interested), will not lead to the optimal outcome. No one will contribute much of anything (or less will be contributed), and so the benefit of the extra 10% is lost to everyone. Voluntary cooperation will not lead to the optimal outcome. By the way, in economics, the people who don't contribute but expect the benefits anyway, are called "free riders".

But let's say there is a smart person in the group who says, "You know, we could get an extra 10% if we had some way of guaranteeing that everyone will pay, or excluding the people who don't contribute from enjoying the benefit."

But let's say there is no way of "excluding" the people who don't contribute from the benefit.

A smart person might continue, "if we hire a 'police-man', say for 10 dollars and he makes sure (able to use coercion) that everyone pays their 100 dollars, then at the end of the night we will have $10,000 plus 10% is $11,000, minus 10 dollars for the policeman, leaves $10,990 dollars. This, divided by 100 leaves $109.90, not quite the $110 dollars and 10 dollar profit, but still a profit of $9.90.

So the smart person asks everyone whether he would like to take a vote to decide what to do. Should everyone voluntarily cooperate without the policeman, and pool his contributions, or should the group hire a policeman and pool the money that way?

One can see that if this were a real world scenario, it is very likely that 100% of people in the group would agree *TO VOTE TO BE COERCED*. That is, 100% would vote to hire a policeman, provided the policeman did his job.

Of course the problem is always the "who polices the policeman?" situation. Could not the policeman abscond with everyones money? Obviously we need "checks and balances", to try to hold policemen accountable, too, and these checks and balances will never be perfect.

By the way, the outcome of hiring a policeman could be considered an entirely libertarian outcome. (Why?) Because 100% of everyone votes for the outcome. Everyone agrees to be coerced, provided that his neighbor is equally coerced, to create an outcome that 100% of everyone favors. It is using coercion to allow free citizens the option of *unanimous rule*, the essence of libertarianism. So paradoxically, in this hypothetical example, libertarians NEED A COERCIVE force (like the government) to realize their highest ideals.

Back to the Pony. Let's imagine that it is a "pony of defense" that enables our 100 villagers to protect their farmlands from theft, when ridden by a police officer. After much debate, all 100% of the villagers agree that it would be worth 100 dollars for each to pool their money and buy the needed one pony of defense, riden by a policeman, per year. They come to this rational conclusion, because after arguing back and forth for a while, they all believe that their best theory (they all read "The Fabric...!") argues that more than 110 dollars is stolen from each farm every year, so it is worth pooling their money to buy the Pony.

Gil, do you see the analogy to the situation previously described when people were pooling their money? If everyone decides "voluntarily" to pool their money, the fact that there is a policeman on a Pony, protects everyones farm from attack by marauding evil-doers. So should a selfish individual contribute? If one person does not contribute, and if everyone else does, everyone still has a pony and a policeman protecting everyones farm, but a given individual who does not contribute, has the pony and the policeman and gets to keep his 100 dollars. (Well, because one 100 dollars contribution is missing, perhaps the policeman and pony take a day or two off per year). Since the situation is symmetrical for everyone, self-interested individuals do not contribute and "free ride" on everyone elses contributions. So everyone loses. But if the group hires the policeman not only to protect their property, but also to collect taxes (err...collect the contributions), if everyone shares the theory that more than 110 dollars will be stolen per farm unless each contributes 100 dollars, there will be a vote in which 100% of everyone (unanimous rule) prevails. A perfect libertarian solution (unanimous rule) requires the coercion of a government (err...voluntarily hired policeman).

Now, enter the real world. a. Policemen steal, too, and they have guns! Obviously, in deciding to vote for the policeman, the townspeople will need to take into account their best theories about the amount that a policeman might steal.

But another problem is: What if there is 1 person in the group who does not agree with the "best theory" of the other 99. In fact his theory is that "defense ponies" attract "evil-doers" and that if a pony and policeman are hired, the town will surely lose $1,000,000, the entirety of the town.

So when the vote is taken, 99 say hire the "defense pony and policeman" and 1 says don't hire the defense pony and policeman.

So what's a good unanimous rule libertarian to do? There are several options. The 99 could agree to hire the defense-pony by themselves, and ignore the 1 person who disagrees, and at least don't ask him to pay 100 dollars, even if he thinks he's going to lose his entire $10,000 farm if the others get the pony.

But if the 99 know before-hand that someone who votes against the defense-pony, won't have to pay for it, (even if this hypothetical selfish person secretly wants a defense pony), an actual selfish person amongst the 99 could say, "I ought to pretend to not want the defense-pony."

Then when the vote is taken, 98 will vote for the defense pony, and the person who does not want the defense pony will vote against, as will the selfish man who wants the defense pony but would like others to pay for it for him.

But the situation is symmetrical for everyone, so if you can opt out of paying by voting against, all selfish people will vote against, and pretend to have the same viewpoint as the person who actually believes the "defense-pony" will be bad for the village. So if the majority in a vote does not have the ability to coerce the minority in a vote to also pay, all selfish people will lie, to get their neighbor who votes for something to pay instead. (Their neighbor being the one who "foolishly" is honest, votes for what he actually thinks and ends up being the only one contributing to the global good of the community by contributing to the "defense pony.") So, people wisely agree that in the case of "defense-ponys", they will not allow the minority to prevent them from increasing their efficieny.

Note that in my first example, where 100 people pool their $100 to get an extra 10% on the total collected, if a person can "opt out" of contributing by voting against, yet he still gets 1/100th of the total, a selfish person will "opt out" and vote against pooling money. But this is true for all selfish people in the group. So virtually everyone will vote against pooling their money, and the group forfeits its extra 10%! If a minority can prevent the majority from pooling its money, the minority is coercing the majority into forfeiting its extra 10%, and this is wrong.

So one of the reasons that there is no "opt-out" clauses in votes on defense, for example, is that it would prevent *the majority* from coercing itself into a contribution that each and every person in the majority wants.

Yes the majority coerces the minority in a democratic vote. But if there is a "good" that is produced (like defense or the reconstruction of New Orleans) in which, regardless of someones contribution, everyone gets to enjoy the benefits: If the minority can "opt out" of paying taxes, then a group of individuals pursuing their "rational self-interest," who actually want Defense or New Orleans reconstructed, will also "opt-out" and vote against it, even if they want it. Why? Because if everyone else votes for it, they won't have to pay taxes because they "opted-out" and they still get New Orleans reconstructed or proper defense, with no contribution. Since this situation is symmetrical for everyone, *allowing the minority to "opt-out" of paying taxes, coerces the majority into not being able to coerce itself, into an outcome that each one in the majority wants.*

This is why we do not allow a minority to "opt-out" of paying taxes when they disagree with the majority. Obviously, part of the reason is because (as Gil suggests), the majority wants to take money from the minority, but part of the reason is to allow efficient collective action of the majority, in the production of a good from which others cannot be easily excluded (like national defense or the reconstruction of New Orleans.)

Way up above, Gil wrote,"Our models may say that these things have less economic value..." But aren't most innovations the result of letting people play with resources? Beyond completely original ideas, money can buy time to think about relationships, for example, which may in turn reduce the cost of violence in society. Don't we generally want people to have control of their resources so they can make use of their local knowledge including their knowledge of what is needed to help themselves learn? Doesn't knowledge have a large economic effect?

Without coercion some valuable projects would not get done. However, in Michael's scheme 49 percent may not think the goal in question has as much value as other possibilities. Of those who wish to contribute, some will find themselves voting to spend more than they would want because only one amount can be chosen for everyone. For them, the excess is money they would otherwise have better uses for but need to contribute to get the project to go through.

In Gil's scheme, if no one pays unless everyone puts up their money, nobody may lose resources they can see a better use for. Can we know for any ordinary project how the sums would work out?

Michael,

You say:

If a minority can prevent a majority from pooling its money, the minority is coercing the majority into forfeiting its extra 10%, and this is wrong.

This is where we are in complete disagreement.

If you have a scheme (e.g. a plantation system) that will produce a profit, but only if some people (e.g. slaves) involuntarily contribute to it then you do not have a right to that project, even if you sincerely believe that the project makes the unwilling better off. I think that people have a right to their own lives and to the fruits of their labor.

If a minority prevents the majority from imposing that scheme on them or on others, they are not coercing the majority, they are protecting individual rights. And, that is not wrong.

Now, given our current state, I agree that national defense and law enforcement may be areas that are so vital for the exercise of other liberties, and the consequenses of inadequate funding are so great, that they may justify involuntary collection. But, this is a rare exception, and I hope that we can be creative enough to finance these services voluntarily soon.

Other projects, worthy as they may seem, just don't rise to the level of such justification.

And, I will even agree that there may be non-defense projects such that they would provide every single person with more value (in his own opinion) than he could get by using the funds himself; and that creative supporters of these projects would not be able to raise funds voluntarily.

However, I think that a rule that forbids involuntary financing of non-defense projects is better (more moral and more efficient) than one that permits it. In the real world, this power will not be limited to cases where efficiency is increased. The power will be abused by politicians and special interests who see opportunities to use other people's money to further their own interest. Then there will be a race to see who can get more loot for themselves. See this great article.

By the way, a tremendous amount of money was raised voluntarily to help the victims of Hurricane Katrina. Even though rationally-self-interested people could have kept their money and have seen almost as much good done. No, people (like me) decided that the right thing to do with their money was to contribute it to a cause that they judged to be more valuable than any other plans that they had for the money (even though they could get away with refraining). If it is your theory that, unless forced, people will not contribute much money to causes that they can be convinced are worthy (and the benefits are not limited to contributors), then your theory is obviously false.

So, I think that the vast majority of worthy projects would get done without involuntary funding. This will often require creativity (educational/promotional campaigns, telethons, sponsorships, matching contributions, contributions uncommitted until the funding goal is reached, etc.)

Again, some "worthy" projects might go undone, but I'm confident that the moral (and economic) consequences of my rule are better those of yours.

Gil

romr,

I agree that the value of private use (with local knowledge) of funds is likely to greatly exceed estimates of central planners. I just don't think that anybody can make good estimates of these uses for particular cases, and that's a good reason to be cautious before we decide to socialize costs.

But, though the economic arguments against this socialization are strong, I think the moral ones are even stronger.

Gil

Gil,

I respect your desire to protect the minority in many instances. I share that desire with you. By the way, I liked the article you referenced. But I still think there is a subtle point that we are not communicating clearly on.

Let us define a public good as a good that many people want, but that everyone can enjoy, regardless of who pays for it (A national defense and a reconstructed New Orleans, are two examples). This definition will have to do for now, but more precise definitions involve relative divisibility of goods and transaction costs.

But please consider that your position could be considered to be even stronger than wanting to just protect the minority. Your position also prevents the potentially unanimous ability of people to voluntarily contract with each other to produce a public good, if the contracts (in everyone’s interest) have to be enforced by a police officer to make everyone feel comfortable and wish to voluntarily contribute. Your position is really against *collective action*, if there is even a possibility that someone *might* oppose the community arrangements, even if no one actually does. Let me explain.

Think of the decision described in my previous post with the community buying the “defense pony”. Or think of everyone wanting to pool their money so that 10% is added to the total contributed, and then redistributed to everyone, whether an individual contributes or not. Everyone’s individual (self-interested) incentive is not to contribute since everyone will get his share of the divided pooled money, without having to contribute to begin with. So without enforcement, this collective pooling arrangement won’t take place and the community loses the extra 10% it could have had. Little money is pooled. 10% of a small amount is a small amount. Notice, however, that every single person in this group would want to contribute, provided that a police officer enforced everyone else’s giving. But, if anyone had the option of “opting-out” of the payment scheme, and just getting the rewards when the sum is divided, the arrangement would not occur, because few would voluntarily give to begin with, since their money would have to be divided amongst those who did not give.

So your position, Gil, is not only that the minority should always be protected, but also what follows if a policeman can not be hired to enforce agreements. Even if there is a *possibility* that someone might disagree with a group, you logically favor not allowing an actual unanimous group of people to form, if the formation requires a policeman to guarantee each persons honest contribution. And so an interesting “counterfactual” situation is created. The fact that someone *might not* have to contribute because there is no police enforcement (and everyone becomes aware of it), means that everyone else *will not* contribute (much.) And so this violates the rights of even a unanimous group to organize and pursue collective projects in the construction of public goods. This atomistic perspective about how to benefit humanity may be morally justifiable in certain situations, but sacrificing every single person’s actual beliefs on the alter of protecting a hypothetical minority individual’s beliefs, is morally problematic at times.

Furthermore, allowing a minority to “opt-out” of paying for the provision of a “public good” encourages lying. If the group cannot hire a policeman (utilize a government) to enforce it’s own agreed upon laws, this encourages everyone to disobey the law, when it suits them, and even to lie about whether they support a law. Consider a situation where some people favor spending a certain amount of money on a good that they cannot prohibit others from enjoying as well (a public good), even if the others don’t pay. And suppose that a few do not favor spending money on this public good, because even though they cannot be excluded from using it, they simply have no interest in using it.

If the minority, who actually does not favor the production of the “public good” can always “opt out” of paying, then virtually everyone in the majority *will pretend* to agree with the minority, even if they actually don’t: And so everyone will “opt-out” In other words, the majority will lie about how much money they wish to spend to support a public good, in order to put the costs on others, when there is no enforcement. Think again about the situation where everyone wants to pool their money so that 10% is added to the total contributed, and then redistributed to everyone, whether an individual contributes or not. Everyone’s individual (self-interested) incentive is not to contribute since everyone will get his share of the divided pooled money, without having to contribute to begin with. If a vote is taken that is not enforceable by a policeman, everyone will pretend to not be in favor, and vote against the measure, even though everyone (or a majority) actually wants the measure to pass. So not allowing individuals to utilize policemen (a government) to enforce rules on everyone, encourages everyone to lie to each other about their actual views, and so desperately hurts knowledge creation about the opinions of people, needed for the evolution of society.

But Gil your position has even worse implications than preventing unanimous groups of individuals from reaching their highest ideals and encouraging people to lie. I have acknowledged that minorities are injured when a majority takes something from them. This is undoubtedly true. But you really should acknowledge that the majority is also injured if they are not allowed to utilize their government (hire a policeman), to coordinate their activities.

Because one of the fundamental “public goods” in a society is its laws! Should the minority in a 100-person community be able to “opt-out” of laws stopping stealing? Just like in the situation where everyone who pools their money gets 10% extra divided amongst everyone else, laws against stealing may add more than 10% to the bottom line of every single business. Should someone in the minority be able to opt-out of this law? Should he be able to say, “I don’t have very much. I would like the right to steal just 1/100th of the property of everyone else? It is morally wrong to stop me from taking 1/100th of everyone’s property. A minority of us simply want to steal. Stop forcing us to abide by your crazy ideas about not stealing. Read the arguments of Gil.”

How is this person in the minority, stealing say 1% from everyone else, different than a previously discussed hypothetical person in the minority? In that case everyone wanted to pool their money and then a guaranteed 10% is immediately added to the total, contributed from an outside source, and then redistributed to everyone. So everyone gains 10% only if everyone gives, just like everyone gains hypothetically 10% if everyone gives their consent to laws against everyone stealing 1% (or more) of others' property. That is, everyone gains 10% if all the laws are enforced by a policeman (a government). But the group who wants to pool their money needed a policeman to coordinate their activities and prevent “free-riders,” too, just as many communities need a policeman to stop stealing.

Gil was opposed to the policeman in the case of the people who want to pool their money. He felt that someone in the minority should feel free to opt-out of the arrangements and should not be “coerced” by the majority into participating and pooling money. But I have argued that if one person can opt-out, with no consequence, then every self-interested person will opt-out. And the whole community loses the 10%. The same is true for stealing. If any person in the “minority” can decide to opt-out, of an arrangement to stop stealing, so there is no consequence to those who steal, then virtually every purely self-interested person will steal (just as virtually everyone will not contribute to the collective pooled money, if there is no policeman enforcing a "law" guaranteeing the pooling of money).

So I say to you Gil. Why is it OK for a community to sometimes pass a law against stealing, even if its enforcement hurts a minority of individuals who do not favor it; but not OK to sometimes pass a law supporting a public good, even if it also hurts a minority of individuals who do not favor it?

Gil, what is the difference between the community that wants to pool its money for profit, and the community that wants to prevent the loss of money, for profit?

Democratic rule, in deciding what should be produced, causes individuals to call too many things "public goods," because as Gil suggests, it allows one group of individuals to force another group of individuals to subsidize its production. If we all eat out and are not friends, and we agree to divide up the check according to the average cost per individual, selfish people will all order too much, because such individuals put the cost of their eating on their neighbor. But the situation is symmetrical for everyone, so if we are selfish, we all order too much. Although sometimes difficult to tell, one needs to look carefully at the good itself, to decide whether it really is the case that others cannot be excluded from using it, if they do not pay. Is it really a "public good" so that my contribution to it benefits my neighbor, but I cannot collect from my neighbor. In addition, one also has to decide that the inevitable governamental waist associated with coordinating production of the public good (the cost of the policeman) justifies the benefits from its production.

But the abscence of democratic rule causes too few things to be funded as "public goods," because it prevents majorities from coordinating their activities in the provision of goods that may be economically or morally important to produce, but from which those who do not contribute can not be excluded.

Both arguments are morally and economically correct. To acknowledge one without the other makes little rational sense.

Your position also prevents the potentially unanimous ability of people to voluntarily contract with each other to produce a public good, if the contracts (in everyone’s interest) have to be enforced by a police officer to make everyone feel comfortable and wish to voluntarily contribute.

Policy A: something everyone wants, but some people only want if Policy B also happens to make them feel comfortable

Policy B: a police man that some people strongly oppose

you call this unanimous support. i call it anything but. with no policy B, many people don't want it. but many people don't want policy B.

-- Elliot Temple
http://www.curi.us/

Gil,

You confuse two very different kinds of economic goods, despite my (apparently unsuccessful) attempts to explain the difference. There are goods in which people can be excluded from benefiting (standard economic goods), and goods in which people cannot be excluded from benefiting (or in which the cost is very high to create exclusivity). Goods in which people cannot be excluded from the benefits, I have (simplistically) defined as “public goods”, as more precise definitions require discussions of transaction costs and divisibility of goods.

I can easily exclude someone from using my horse by not inviting the person over to my pasture. We cannot exclude people, for example, from visiting the city of New Orleans, or enjoying the benefits of citizens who do not steal. Both of the latter could arguably be considered “Public Goods”. I am certainly not saying that the majority should be able to vote to make someone else pay for my horse, because horses are not “public goods.” Citizens can restrict the access of others to their horses! I also don’t think most sane people would vote to make someone work for someone else for free (slavery). I don’t know how you could construe anything I have said to favor these propositions. A person’s labor is a standard economic good. Labor can be given to one person (for a price) or *excluded* from that person and given to someone else (for a price). So where a person works or how much he makes or whether he chooses to contribute to my horse, are in general not subject to a vote of the majority! Or at least they shouldn’t be. A person has a right to his own decisions about these subjects. Yes, I completely agree with you Gil. Such a vote to make someone work for someone else for free or to make someone buy someone else a horse would almost always be wrong. We have been in agreement about this from the very beginning.

We are (or at least I have) been trying to discuss the production of PUBLIC GOODS: Goods in which people cannot be excluded from enjoying the benefits. These goods pose many more interesting ethical and economic challenges.

Elliot,

Actually my initial example was an example of complete unanimous rule, in a given group, where everybody favored both "A" and "B", in your terms. Someone from outside of the group, not subject to the policeman, not asked to contribute money, and not involved in any voting might try to coerce the group as follows,

"I say this group is not allowed to hire a policeman (use the government) to pool money to produce their “public good”, because it would require a vote and a policeman to enforce the vote, and we can't have policemen enforcing what might not be unanimous voting (even if the vote later turns out to be unanimous and even if people voluntarily decide to live in the community). Your group can’t have the policeman because it is theoretically possible for someone in your group to vote against the proposition, and then majority rule would hurt that minority member. We ought to protect that potential minority member, even if the ‘public good’ is therefore not produced.” And if the speaker forces what ultimately would have turned out to be a unanimous group of people, to give up their money-collecting policeman then, as argued repeatedly in other posts, this group of unanimous individuals will not be able to fully cooperate in pooling their money. Their “public good” will not be produced despite unanimous support.

I then added a second part of the argument, which I acknowledged no longer involved unanimous rule. I allowed someone who will be subject to the arrangements to object to the policy and the policeman. For example, people could object to a law against stealing, promulgated by the group: And if the majority forces the minority in this group to not steal, the people who want to steal are then penalized for their minority viewpoint, namely they are penalized because they no longer are permitted to steal.

And I asked, why is it OK for a community to pass a law against stealing, even if its enforcement hurts a minority of individuals who do not favor it, but not OK to pass a law supporting a public good, even if it also hurts a minority of individuals who do not favor it?

And what is the difference between the community that wants to pool its money for profit, and the community that wants to prevent the loss of money (by for example stopping stealing) for profit?

Indeed, the LAW itself is the quintessential public good, if it is JUST LAW! One can (almost) define a“just law” as one that inexpensively promotes the production of a “public good”. Laws against stealing, for example, promote the public good “efficient trade.” And the implications of the law, "don't steal or you go to jail" will likely be supported by a majority of individuals in society. The enforcement of this law is a "public" good, as I have defined the term, because one cannot *exclude* anyone from benefiting from the absence of stealing, unless you exclude everyone from benefiting from the law. Universal application of a law is the hallmark of a law, even if the minority objects.

If there is a law against stealing, everyone (no exclusions) has the right to set up a business without fear of people stealing, even though some (in the minority) might not want to set up a business and would prefer instead to make their living by stealing.

Why can't one exclude someone in the minority from the benefits and costs of the law banning stealing, and so allow him to steal and be stolen from? Why does the law have to be universal and affect the minority who do not favor the law? Because if anyone in the minority is allowed to "opt-out" of a majority vote in which stealing is determined to be against the law, and if such a person is permitted to steal, then every selfish person in the majority also has an incentive to "opt-out”, as well. Why should I vote to restrict myself from stealing when others will be permitted to steal from me? So everyone opts out, and there are no enforced laws.

If one cannot enforce a just law (the consequence of which is, almost by definition, the production of a public good!), even if a minority of individuals do not favor it, then one might as well have *no laws* and simply allow people to choose to do whatever they want (anarchy).

This is as close to a "reductio ad absurdum" as can be done, in showing that the majority ought to be able to support the production of universally taxed "public goods"; because if we cannot produce public goods (in which an objecting minority cannot “opt out”), we cannot have law. And if we cannot have law, we cannot have society. Three cheers for public goods.

Thanks.

Michael:

You have commented on this thread. The comments benefit some readers. You have no way of preventing anyone from enjoying those benefits. (We could charge to view the site, but even then, we could not prevent the subscribers from passing on the benefit to their friends who had not subscribed.) So those comments satisfy your criterion for being public goods. Correct?

Michael,

I didn't misunderstand you. I just disagree with you.

Everything I argued applies to public goods (sorry if the plantation/slave examples threw you). You want to finance public goods by forcing unwilling people to contribute.

I reject the idea that if you have a scheme such that you don't know how to exclude me from benefitting, then you automatically have a moral claim against me to contribute to your scheme.

I agree that if people do not contribute to such schemes in proportion to their benefits, then these goods will be "under produced". I say "too bad". I choose liberty over economic efficiency in such cases.

I am not at all against allowing any group to collectively finance a project, and to enforce contractual commitments. I merely insist that participation in such "agreements" be voluntary. Don't you think it's reasonable that everyone in the agreement actually agrees?

A law against stealing is an invalid example because it's merely the protection of rights. Violating such a law would entail the kind of coercion that I object to.

Gil

FWIW, unlike Gil, I make no choice for liberty over economic efficiency; I don't think they are in conflict.

-- Elliot Temple
http://www.curi.us/

I do think knowledge creation is a public good.

But I like exchanging ideas with you, and you like exchanging ideas with me (I think -- otherwise you wouldn't), so we are more likely doing this because we are having some fun, and not particularly because we are benefitting other people. But I guess it's possible that we could benefit somebody.

But for our exchange to be a public GOOD, our exchange would have to benefit somebody else, who would benefit from our wisdom and possibly (if we are very lucky), benefit from our knowledge creation, without paying us.

Indeed, such an individual should have to pay us, in a perfect world with perfect markets, except in the real world, the costs of measurement of the quality of our good and the costs of collection of our money, are likely very much higher than the value of the knowledge we create in this exchange!

No Professor Deutsch. I don't think we're gonna get any money.

The costs of measurement of the quality of our good (our ideas) and the costs of capturing the benefit we produce are obviously very much higher than any benefit our mutual exchange brings to anyone else, especially if the government were to become involved!

You, on the other hand, are pretty smart. And if you bring us viable quantum computers or a new conception of quantum gravity, one can be sure that you will not capture the economic benefit of the knowledge you create for the world. And neither did Einstein or his descendants. (If you wanted to make money, you should have gone into business: You could have captured the economic value of the goods you create. Knowledge is not a cleanly packaged good like breakfast cereal)

As I've said, if the market worked properly, the descendants of Einstein should be far more wealthy than Bill Gates.

Yes, knowledge is a public good, and capitalist economies will certainly tend to underproduce it, as will all other economies. Other economies will usually do even worse. Have you looked around at all the people who don't do a lot of thinking, even though they live in Oxford? Have you ever wondered why?

I do favor public subsidies of (particularly) higher education.

Do you think anyone is reading this exchange other than you and I?

"A law against stealing is an invalid example because it's merely the protection of rights. Violating such a law would entail the kind of coercion that I object to."

Gil all just laws (rights, if you will) are public goods. If you do not favor applying them to the minority who disagree with your conception of "rights", then you are in favor of no law and no rights. To be in favor of "rights" is to be in favor of forcing the minority (or majority) to support your conception of rights, even if the minority (or majority) disagrees. To be in favor of universal rights is to be in favor of universal laws defending those rights. These universal rights are otherwise known as public goods; since no one can be excluded from having them and they are *a good* or just *plain good* for everyone.

So you want to call public goods, "rights"? Economists used to say (before conceptions of transaction costs) that a public good is a good in which everyone has a non-exclusive "property right". So yes the language of "rights" and the language of "public goods" are often used interchangeably.

So you are (of course) in favor of coercion, you just want to call it universally applying "rights", even if someone, (a minority, a majority, but someone) disagrees with your conceptions of rights. I happen to agree that there are "public goods" (rights), but I recognize that sometimes we need to use coercion to defend them...sometimes taxes and sometimes the police and sometimes the military. You do as well, you just want to call it something different.

In between checking out the football scores, perhaps a few.

So you are motivated by altruism?

I can testify that I read David's posts, and enjoyed them, and did not pay for them. I similarly benefitted from MG's posts.

This doesn't mean David was motivated by altruism. I think the point is more that he *wasn't* motivated by altruism, did not use force, and created a public good anyway.

-- Elliot Temple
http://www.curi.us/

Economists are very good at explaining why people don't cooperate in altruistic ways, but not why they do.

I long for a society governed by cooperation and morality, too.

But until then....we still need taxes, at least to help with the infrastructure of New Orleans!

I like Davids (and Gils and your) posts, too.

But why don't you think any of David's motivation is altruism?

Michael Golding wrote:

"A law against stealing is an invalid example because it's merely the protection of rights. Violating such a law would entail the kind of coercion that I object to."

Gil all just laws (rights, if you will) are public goods. If you do not favor applying them to the minority who disagree with your conception of "rights", then you are in favor of no law and no rights. To be in favor of "rights" is to be in favor of forcing the minority (or majority) to support your conception of rights, even if the minority (or majority) disagrees.

People need access to the things we term property in order to pursue their own ideas. I think what Gil might want is something like this: we should have a legal system under which when Jim is the legal owner of a commodity Jack cannot take it away from him unless Jim has voluntarily made some agreement that stipulates he should allow Jack to take it away. For example, if Jim defaults on a mortgage he has agreed to pay to Jim in a contract, then Jack may take the house away.

Now suppose Jim doesn't leave and tries to stay. Then he is violating an agreement he made voluntarily with Jack. Their siutations are in fact asymmetric, Jim is in fact violating his contract; Jack is, in fact, not violating that contract. Both of them made the contract voluntarily. A law stipulating that people should respect contracts they make voluntarily at the time even if they later regret those contracts doesn't imply that people have unequal rights. Rather people have equal rights and end up with different outcomes because they take different actions.

Economists are very good at explaining why people don't cooperate in altruistic ways, but not why they do.

I think you probably haven't been reading the right economists. Or maybe not the right philosophers. Some people support altruistic polices because they like to think they are being generous and doing good by backing such policies. None of this is incompatible with economics, which does not comment on motives but just assumes that people have motives for what they do. See economists like Hayek and Ludwig von Mises for instance.

As for needing taxes to reconstruct New Orleans. Every year charities get lots of voluntary donations to give African villages waterpumps or whatever. These charities work in places a lot worse than New Orleans and some do a good job. I am not suggesting that charities should reconstruct New Orleans. For one thing there is a profit to be made by reconstructing New Orleans so I don't imagine much charity will be needed. But I am suggesting that there is no particular reason why it can't be done voluntarily.

Obviously Alan, if everyone agrees on who owns what, there is not a problem. We all trade for mutual benefit. If we all agree about the same universal rights, there is very little to discuss. I would think that goes without saying, but thank you for clarifying that.

But issues in the real world sometimes involve the following: One person thinks someone is stealing, and another person thinks he owns the very thing he is accused of stealing.

Some people are claiming that everyone in society "owns" a part of a debt that they must pay to society for providing a package of goods to everyone. Others claim that they own no such debt and asking them to pay amounts to stealing!

Those who believe that defense is a "public good" (like me) would argue that in choosing to live in this country, we are choosing to have delivered to us a basket of goods, but also choosing to pay for them (taxes). We are choosing to have a basket of goods produced for us by this country, including, for example, national defense, police protection, and I would add (but Gil apparently would not), infrastructure in cities.

So if we are choosing to live in a country, we are choosing a basket of goods. We choose the country that, to the best of our knowledge, provides the best basket of goods for the least money. We know we can't get those goods for free. We have to pay for them. And the currency is taxes -- the price of citizenship. Gil (apparently) thinks, however, that when he decided to live here, he didn't know he would have to pay for infrastructure in cities, or at least not for infrastructure in cities destroyed by hurricanes. So asking him to pay now (he feels) is stealing. But I thought it was made pretty clear to me that if hurricanes destroyed our cities, the government (via taxes) would help reconstruct the infrastructure. It seemed clear to me when I decided to live here that that was part of every citizens contract, even though Gil wants to weazle out of it now. Even if Gil didn't know, he should have. If he looks back at virtually all the historical precedents, the US government always seems to help out in building infrastructure. The majority won't let Gil get out of his citizenship contract with the country just because the going gets tough.

So who is right? Gil or me.

I would say that countries which tend to provide "infrastructure in cities" in exchange for tax revenue will be more powerful and secure than countries that do not. I think Gil would disagree with me on this point, although I am not sure. Those who do not believe that providing infrastructure in cities is a public good, and also believe that the provision of such services via taxation ruins the entire country, are (of course) in this country free to move to another country that does not supply city-infrastructure, as part of its basket of "public goods" in exchange for taxes.

Or Gil could argue with the majority that thinks that "city infrastructure" should be part of the basket of public goods for citizens, as he is effectively doing. He could try to convince us that government often makes a mess of things in providing infrastructure and he could ask us to look at all the waist that is happening in New Orleans, *right now*.

He could say that if we considered changing our minds, and made it such that city infrastructure is not part of the public good package offered to American citizens in exchange for tax revenue, America would be even greater.

And he might even be right, but I don't think so. But he can try to change our (the majorities) minds. And who knows, if he does, then more people will consider his position accurate. And then perhaps the majority will believe that paying taxes for city infrastructure is stealing. And at that point perhaps it will be. But not now.

Anyway, what Gil considers an act of stealing, I think of as the provision of a public good. So Alan, as you can see, Gil and I don't agree about who owns what. Gil thinks I'm violating the contract I "signed" when I agreed to be an American citizen and pay taxes for a basket of goods, because Gil doesn't think "city-infrastructure" was one of the items. But I think it was. Some Americans agree with me and some Americans agree with him. I think the polls suggest more agree with me.

One way of solving Gil's and my disagreement is by seeing what a vote of the people conclude (I think I would win).

But another way to solve the problem would be to leave it up to "Law and Economics" Judges (like Posner). Does it lower transaction cost more for "infrastructure in cities" to be owned by the city, or by individuals? I think I know the answer to that question, that's why I want tax revenues to support city infrastructure development. But I certainly could be pursuaded otherwise if someone could show me some corporate models of city ownership (or other private models) which still protect freedoms and are cheaper, and still provide credible city infrastructure. I hope there could be evidence that could convince Gil, too.

The majority could certainly be wrong.

But with all due respect, Alan, there has not been carefully constructed mathematical/evolutionary models of how true altruism comes into being (like the anonymous donation of blood vs. say repeat dealings helping to define property rights, which has been well modeled). Such a model of true altruism would require fully incorporating the evolution of "preferences" as endogenous variables in the economic model (so supply and demand curves could not be derived independently).

Some of us have been working on such models, because we believe that ultimately they would go a long way in explaining the evolution of such seemingly disparate phenomena as "common preferences", certain types of mental illness, bipolar illness, brain waves, business cycles, and ultimately "culture" and "institutions", the holy grails in property right theory economics.

Think about the concept of businesses trying to avoid too much variance in money flows (potentially destructive to a business) vs. someone with coronary heart disease trying to avoid too much variance in blood pressure (potentially destructive to a heart vessel).

Now imagine the evolution of memes causing complementary preferences in interacting people, and how that might decrease such varience, in both circumstances. Such complementary preferances promote altruism, and smooth (and healthy) human exchange, without a government having to coordinate it. And we know that some of the memes we share can sometimes overrule our "selfish" genes.

Under what circumstances would such (complementary) memes evolve? Have they evolved in humans? When would it be optimal for there to be increased varience in money flows....would such conditions promote "search" for increasingly optimal outcomes?

I'm affraid there is much to learn about the evolution of altruism and its place in economic models. And reasonable mathematical models for these phenomena have not been fully developed yet, although people are trying.

Thanks!

At issue is whether public good problems justify government. We are faced with the following issue: There are many possible public goods to produce. Which ones should be produced, and which not?

I suggest the proper way to approach this question is exactly the same way we approach the question: which goods should be produced, and which not? The critical thing is not to create the perfect plan for what to produce and then implement it exactly as written; it is that errors (there *will* be errors) in what is produced be corrected. The best way to achieve this is for every individual to use his own knowledge of his own situation to produce what he thinks he ought to, and to change what he produces when he is confronted with a problem. This overall approach accesses vast knowledge that would not be available to a group of planners deciding what goods should be produced in the entire US.

I think I agree with that, if I understand you correctly. Even if something is a "public good" there is no reason for "planners" (at a distance) to organize most projects. Local contractors may be more familiar with the lay of the land and one can organize competitive bidding so that (hopefully) there is a chance that the most efficient (best) economic ideas are used, if corruption can be kept to a minimum. And only those who want to be involved in a project will bid.

Elliot, given your ideas, should there be any tax collection? Should tax dollars ever be used to produce something, like a national defense or infrastructure in a city? Should taxes ever support roads or a police force, to the extent that these goods are produced by individuals using the "deductive" procedures you outline above?

Thanks.

Michael

Presently, taxes are the only way certain things happen at all. So, for valuable things that we are unable to have otherwise, I support taxes. A good example of that is our military. Private armies present numerous problems that have nothing to do with a military being a public good. The problems include not wanting our best weapons to fall into the wrong hands, and avoiding rival armies fighting over what should happen. I don't consider these problems insurmountable, but so far no one has created an effective, valuable, private, modern army.

Building cities (also a public good) is nothing like this. We know how to build cities (within our borders) without government funding. OK, not every last part of a city -- I'll be happy to let the government help with the laws and police. But we don't need government to build houses, malls, grocery stores ... in fact, most stuff lost in New Orleans was created by private enterprise in the first place.

I was in a bookstore today (Borders). I read their books for two and a half hours, then left, without paying a dime. They had nice chairs for me to sit in. We do not need government funding to have a new (public-good-producing) Borders in New Orleans.

-- Elliot Temple
http://www.curi.us/

Here is an interview: http://www.reason.com/0112/fe.rb.post.shtml

Romer claims that the careful allocation of resources is essential to promote the development of knowledge and that this is a very important economic goal.

If this is the case, a system that constantly pools resources against the better judgement of large numbers of people will sacrifice many large and small opportunities. The size of this cost cannot be estimated very well (I suppose) but the importance of the lost value apparently will be cumulatively great.

I don't see, therefore, how we can estimate that a given (ordinary) project will actually yield economic advantage for those who support it or for anyone else. The advantage may be modeled but the disadvantage cannot be, so it is impossible to know whether it is a public good or a shared mistake. If the relative values can't be argued one way or the other, then why sacrifice a methodological rule that is normally so successful?

This reasoning seems especially relevant to a project like rebuilding New Orleans, which is not being promoted for economic reasons but for the social value of the gesture and for aesthetic reasons.

By the way, with these sorts of arguments I become fuzzy about what should be considered a moral issue and what should be considered an economic one. Anyone, please feel free to help me.

Moral issues are about how to live, or what choices to make, or what is a good life strategy, or what are good ways to treat people.

Economic issues are about money, trade, business, wealth, the economy.

Sometimes these overlap. But is it particularly important to decide which label is best?

-- Elliot Temple
http://www.curi.us/

Some of the comments here have opposed moral and economic considerations and others have come close to equating them, so I was curious about what I was missing. I don't think everyone is using these words the same way.

Surely for present purposes, "the social value of the gesture" and "moral reasons" and "aesthetic reasons" are all special cases of economic reasons. The situation is that many people would like various building projects to take place, and are willing to forgo a certain class of other goods in return. Whether this takes the form of a religious person wanting a church to be rebuilt, or a jazz lover wanting to see culture revived, or some blogger wanting to 'defy nature', or a hotelier wanting to accommodate tourists at the waterfront because they will pay more in rent than the hotel costs to build, these are all preferences and they are all part of the economics of the situation. For one class of possible building projects, what people are willing to forgo to have them happen is worth less than what it would cost. To meet those preferences is to destroy net wealth, cause net harm. Where the balance is the other way round, the project would create wealth and do net good. It is up to various sorts of entrepreneur to guess which is which, and to create ways of exploiting these preferences in such a way as to prevent the first kind of project from happening and to cause the second kind to happen.

Although executives and owners at Barnes and Nobles and Borders are more than capable of being altruistic, it is likely that their set-up ultimately encourages people to buy, even though not every person does every time he goes into the store. Barnes and Nobles and Borders make probabalistic estimates, implicitly or explicity, about the likelihood of somebody buying given comfortable surroundings in which people can browse. In short, from an economic perspective, I don't think your browsing or reading without purchasing something is really an example of the store producing a public good. Their behavior in allowing you to browse is calculated to optimize profit. But if you become happy, and treat your friends more nicely after visiting the store, which gets passed on, that could arguably be an example of a public good being created by the store's ambience, the profit from which the bookstore or you will likely not be collecting.

David and Elliot: Do you favor using tax money to fund anything other than a police force in New Orleans? Should tax money be used to finance new roads destroyed by flooding or get rid of water, for example.

Michael

Let us define a public good as a good that many people want, but that everyone can enjoy, regardless of who pays for it

Borders provides a public good. The Borders-armchair-policy is something many people want, and everyone can enjoy, regardless of who pays for the cost of the policy.

I'm sure providing a public good in this way *is* profitable for Borders (overall). It is for grocery stores too. And countless other cases.

Other public goods are provided for other reasons, such as someone feels strongly about an issue and enjoys providing it.

My point is public goods are provided all the time, without government. What makes something hard to provide isn't being a public good. There must be some *other* quality that makes the hard cases (like having a military) unlike the Borders case.

-- Elliot Temple
http://www.curi.us/

Barnes and Nobles and Borders make probabalistic estimates of somebody buying given comfortable surroundings in which people can browse ... I don't think your browsing or reading without purchasing something is really an example of the store producing a public good.

You might as well say that governments don't really maintain public goods because they're only concerned with winning votes.

In addition to benefiting the public, what's wrong with making a profit? Is my job bogus because the salary exceeds my mortgage and other expenses? What if I like my job exceedingly, or work for a good charity?

Consider friendship, which involves a kind of emotional balance sheet. If I feel good about my friend and he does about me does that mean we're both wrong and it's not really a friendship?

The 'profit motive' is condemned everywhere but in reality profit is only one of a hierarchy of motives for the individual starting an enterprise.

This is recognised by consumers who rave about companies that innovate, care about their services and try to improve the world.