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A LOT fewer than someone dying from cancer.KevinKohler, I added your response to my entry...Unglamorous but Important Things.
Regarding the guy with no licence...you see that he did not spend any of his taxes on roads...but what you didn't see was that he spent his taxes on government research for a cure for cancer. The economic term for this is "opportunity cost" and it's a fundamental part of the invisible hand concept.
How many potholes would you be willing to endure for a cure for cancer? Nobody can answer that question for you. Congress just guesses what all of our answers are...and it's the equivalent of somebody that's blindfolded trying to drive you across town. When the car crashes you just vote for another blindfolded person to try and get you to your destination. How many times now have the keys to the car been passed back and forth between Republicans and Democrats?
Congress does a pretty fair job of guessing, so far as infrastructure and such goes.It has nothing to do with which party's in charge and everything to do with the simple fact that congress tries to guess what the invisible hand knows. In other words...taxpayers should be given the keys to the car. The challenge is that you'll only appreciate this if you truly understand how the invisible hand works.
rathi, having worked for the federal government I know exactly what a portion of the federal government does.
Here are the two main problems that you just demonstrated...
1. You have trouble understanding the idea of a taxpayer division of labor. As a taxpayer you wouldn't have to know how many federal departments there are any more than consumers have to know how many corporations there are. You would just pick a few areas that you really care about and concern yourself with those areas. Or...you could just give all your taxes to congress if you felt overwhelmed by the prospect.
2. If you had even the basic understanding of knowledge requirements then you would know that the premier Nobel prize expert in this area was Hayek. You would have already read his essay on The Use of Knowledge in Society and understood that the market operates on the basis of partial knowledge.
Given that you lack a basic understanding of how the invisible hand works...it's clear that you don't need to know how the invisible hand works for it to work. But you do need to understand how the invisible hand works in order to understand why taxpayers should be allowed to directly allocate their taxes. Right here you have an epic opportunity to be way ahead of the curve...so why not take the time to thoroughly read Hayek's essay.
Honestly I had to carefully read through it several times before it really made sense to me. That's when I realized that he was saying pretty much the same thing as Buddha's parable of the blind men and the elephant. We all have some information but nobody has all the information. By allowing taxpayers to directly allocate their taxes we would be incorporating an infinitely greater amount of information which would produce an infinitely more efficient allocation of limited public resources.
Without understanding this concept you'll never truly grasp why socialist systems failed. If you do grasp this concept then you'll understand that socialism could totally succeed as long as taxpayers could directly allocate their taxes.
You're missing one vital piece for this puzzle to work properly, and that's faith...and, as far as I'm concerned...the lack of it.
You either believe in the invisible hand or you believe in congress. The invisible hand is the foundation of modern economics while congress only has their job because a long time ago some barons were fed up with the king wasting their taxes on war so they fired him and took control of the power of the purse.
There is absolutely no rational or logical basis for 538 people allocating resources more efficiently than 150 million taxpayers. The only explanation for congress's control of taxes is historical. To learn more about this see my post on whether the tax allocation disparity is divine or delusional.
imagep, that's not how the invisible hand works...that's how representational democracy works (or doesn't). That you can't tell the difference between the two clearly indicates that you have no idea how the invisible hand works.
How many people does it take to answer the question of what the private sector should produce? Every single one of us. You might say...well...every single one of us votes for who should decide what the public sector produces.
Ah...there's the difference. The difference is how we contribute to the answer. Your vote does't reveal crap about you...but your spending decisions speak volumes about you. This is the key difference. This is the basis of Bastiat's opportunity cost and Hayek's partial knowledge which are the key elements in Smith's invisible hand.
If you're going to compare representational democracy to the invisible hand then you have to understand how the invisible hand works. This requires that you read both those essays as many times as it takes to understand the fundamental difference between saying that you want something and actually spending your money on something that you want. Spending your money reveals your true preferences and contributes to the efficient allocation of limited resources.
KevinKohler said:As for taxation, my answer is NO. People are illogical. They tend only to see the things right in front of them, and lack vision.
rathi said:There is a department is the U.S. government called the Pipeline and Hazardous Materials Safety Administration. You and 99.999% of the American populace have never even of heard of it. If they don't get funding, a natural gas line will explode and kill a lot of people. How does your proposal handle that?
Xerographica said:Without understanding this concept you'll never truly grasp why socialist systems failed. If you do grasp this concept then you'll understand that socialism could totally succeed as long as taxpayers could directly allocate their taxes.
Xerographica said:Should taxpayers have the option to directly give their taxes to the government organizations that they believe are underfunded?
Xerographica said:Socialism failed because of the knowledge problem and the incentive problem. Why wouldn't allowing taxpayers to directly allocate their taxes solve both problems?
TNAR...libertarians say that the private sector can do X, Y and Z better than the public sector can. If this is true...then why would any taxpayers pay the government to do X, Y and Z? If taxpayers stop paying the government to do X, Y and Z then the scope of government would narrow. If the scope of government narrows then the tax rate would decrease.
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So we should leave these decisions to politicians and bureaucrats because they're not people!
Up until the point that the 99.80% (reduced slightly for the 10 million truckers) fail to allocate taxes towards interstates, to maintain them.There is a disconnected and independent conglomeration of transportation companies called the Trucking Industry. You and 99.999% of the American populace don't realize that some 70% of our goods are moved on a daily basis using these trucks and the roughly 10 million people employed therein (which I suppose reduces the 99.999% figure a bit). They are directed by the "invisible hand" and allow each of us to enjoy our coffee in the morning, fuel to get to work, food waiting on the table at home, and virtually everything else we consume each and every day. Despite oppressive regulation they successfully transport an awful lot of goods across the nation 24 hours a day.
Xerographica said:Socialism failed because of the knowledge problem and the incentive problem. Why wouldn't allowing taxpayers to directly allocate their taxes solve both problems?
Xerographica said:In terms of a socialist system where taxpayers could directly allocate their taxes... What economic calculations need to be made? You work for a government organization...which pays you $50,000 a year...and you have to pay $50,000 a year in taxes.
Xerographica said:With 150 million taxpayers vs 538 congresspeople...the knowledge problem would be adequately addressed...so what about the incentive problem? … So we can see that employees of government organizations would have an incentive to produce given that their jobs would depend on their productivity.
Xerographica said:Since there's 100% ownership of the means of production...spending your money is the same thing as paying taxes.
Xerographica said:Here's another challenge...imagine what wars we would have avoided if in 1922 Mises had declared that there was a third solution.
Xerographica said:If you get a chance I'd be interested to hear your thoughts on these three compromises.
The taxpayer ought to determine this. They should be able to allocate funds to whatever government function they wish, including none. That, my friend, is the invisible hand at work.The most glaring question I see initially is who determines the “proper” level of taxation?
imagep, nope...you really don't get how the invisible hand works. That's the problem...you think you understand but you really don't. It's easy to tell because you think that other people can represent your opportunity costs decisions.
The thing is...you can make me look ignorant in a gazillion different ways. That's because you have a ton of information that I don't have. But given that you don't understand how this is relevant to the invisible hand means that you can't make me look ignorant when it comes to the invisible hand. In this specific case you're only revealing your own ignorance.
"Nevertheless, the classic solution to the problem of underprovision of public goods has been government funding - through compulsory taxation - and government production of the good or service in question. Although this may substantially alleviate the problem of numerous free-riders that refuse to pay for the benefits they receive, it should be noted that the policy process does not provide any very plausible method for determining what the optimal or best level of provision of a public good actually is. When it is impossible to observe what individuals are willing to give up in order to get the public good, how can policymakers access how urgently they really want more or less of it, given the other possible uses of their money? There is a whole economic literature dealing with the willingness-to-pay methods and contingent valuation techniques to try and divine such preference in the absence of a market price doing so, but even the most optimistic proponets of such devices tend to concede that public goods will still most likley be underprovided or overprovided under government stewardship." - Patricia Kennett, Governance, globalization and public policy
"When it is impossible to observe what individuals are willing to give up in order to get the public good, how can policymakers access how urgently they really want more or less of it, given the other possible uses of their money?"
This is the opportunity cost concept that is completely missing from your understanding of how the invisible hand works. If you genuinely want to become knowledgeable in this area then take the time to read my lengthy blog entry on the subject...a taxpayer division of labor. Do you have better things to do than read my blog? That's the opportunity cost concept. Nobody can answer that question for you. That's the basic premise of the invisible hand.
If a person is receiving free cheese from the government, why would he allocate any tax dollars to the free cheese department. He gets free cheese anyway, why not just free-ride and get the cheese that is paid for by other people?What if the Dept of Free Cheese happened to stumble upon a cheese formula that was even tastier, healthier and more cost effective than any cheese you could buy on the private market? The demand for free cheese would skyrocket...more and more people would allocate their taxes to the Dept of Free Cheese and less and less people would buy private cheese. This would represent another step towards socialism.
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