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The Free-Rider Problem

I see. So the solution to the perceived underproduction is to take other people's money to subsidize the gardener. I would admit that then, yes, with a government subsidy, we would have more gardeners. But this comes at the expense of what? The solution is not Pareto efficient - you have now made other people (the ones whose money has been taken) worse off. Are you sure that the overall efficiency has actually been raised?

If you are concerned about Pareto efficiency, then the market failure causes by public goods is not Pareto efficient in the first place. In addition, if people were taxed less than the value that they receive from the additional gardens, then it would be a Pareto improvement. No one would be made worse off since the benefits received outweigh the costs incurred.

I'll state right up front that I don't agree with any solution to underproduction that involves coercion. I see the problem of free riders and underproduction as simply the excuse to force other people to subsidize certain producers. I'm sure there are economists up and down the line that can show that some good is being underproduced, and if we could only take money from other people we could have the "right" amount of the good. But as soon as they start talking about forcibly taking money from other people they've lost me.

Then it is not just economists who believe in using public policy to correct for a public good/positive externality such as streetlights, national defense, open spaces, roads, but taxation in general in which you are antagonistic to. Taxation is a coercive practice by nature.

In addition, it is not my prerogative to make you believe in the concept of public goods or public policy used to correct the market failure regarding public goods. I was just clarifying some confusion on what the free rider problem was. Again, I personally don't view the free rider problem and the provision of public goods an interesting problem.

Xerographica said:
They wouldn't have "complete" control over their taxes. By "taxes" I'm referring to the portion of their income that they have to spend in the public sector.

In other words...taxpayers would be able to directly allocate their taxes to the government organizations of their choosing. The point of taxing them, but allowing them to directly allocate their taxes, would be to determine which public goods, if any, the free-rider problem applies to. If the private sector is producing "adequate" levels of a certain public good then it stands to reason that taxpayers would not choose to allocate any of their taxes to the government organization responsible for producing the same exact public good.

In other words, if the people who value a public good are getting their needs for that public good met by the private sector...then why would they "waste" their taxes by allocating them to the government organization redundantly producing the exact same public good?

But you definitely would not want to get rid of taxes and then discover the hard way that the free-rider problem applies to say...national defense.

Why are you just focused on public goods? The provision of collective goods, regardless if they satisfy the criteria of public goods, is much more practical. The problem with this scenario, is that it is only limited to public goods, in which there are no pure public goods. First you have to determine what a public good is. For example, is the LA Arboretum really a public good? People can be excluded if they do not pay the admission charge. It is also subject to rivalry during busy days. Therefore, the LA Aboretum is not a true public good.

In addition, many more goods, besides public goods, are produce by the public sector. What if a city wants to build a new public school? This is not a public good. It can also suffer from excludability and rivalry. A concern with this scenario is that it is only limited to public goods and who decides which goods are public goods and which ones are not? What is the criteria that you use to place a public good on a referendum where people can vote on it with their taxes?

In addition, you still don't solve the public good issue with this approach. For example, if national defense was determined by whether or not people wanted to donate their taxes to it, then many people would not donate do to the nonexcludable nature of national defense. Why would people allocate their tax money towards national defense, if other people will allocate their tax money to national defense? After all, they cannot be excluded from this public good.
 
It could, but I was merely pointing it out as an example of the free-ridership problem. In other cases, it's not so easy to exclude folks from using public goods. Public radio would be a good example.

XM does it just fine. I'm sure that radio stations that wanted to could encode or scramble their signals in such a way that only those who are paying for the service can receive it, if they so chose. Besides, radio is a poor example because, by design, *EVERYONE* gets it free. Radio is advertiser sponsored
 
If you are concerned about Pareto efficiency, then the market failure causes by public goods is not Pareto efficient in the first place.

I don't agree with that statement. Any proposed solution to the so called market failure would move away from the Pereto optimum, as it would require making at least one person worse off.

In addition, if people were taxed less than the value that they receive from the additional gardens, then it would be a Pareto improvement. No one would be made worse off since the benefits received outweigh the costs incurred.

They were getting the benefit anyway. Any tax placed on them makes them worse off.

Then it is not just economists who believe in using public policy to correct for a public good/positive externality such as streetlights, national defense, open spaces, roads, but taxation in general in which you are antagonistic to. Taxation is a coercive practice by nature.

If the government is going to provide these services, then everyone should pay for them. I just disagree that the impetus is a market failure.

In addition, it is not my prerogative to make you believe in the concept of public goods or public policy used to correct the market failure regarding public goods. I was just clarifying some confusion on what the free rider problem was. Again, I personally don't view the free rider problem and the provision of public goods an interesting problem.

Fair enough. It's not your problem to argue for the free rider problem. You've explained enough. Thanks. Happy Thanksgiving.
 
I don't agree with that statement. Any proposed solution to the so called market failure would move away from the Pereto optimum, as it would require making at least one person worse off.

You are only seeing the cost of taxation as making people worse off. If the benefit people received from having additional gardens (or any public good) exceeds the cost of taxation, then they are not made worse off. In fact, they are made better off. If this is the case, then public policy that taxes and subsidizes home gardens (or any public good) will be a move towards Pareto efficiency, not away from it.

They were getting the benefit anyway. Any tax placed on them makes them worse off.

The person supplying the public good is not receiving the full benefits that everyone else is deriving from the supply of the public good. Even though people value this good, the non-exclusion characteristics gives the incentive to under-provide this good or service in which people value. Left up to the market place, the under-provision of a public good means that people are deriving less benefits from it than they would under efficient conditions.
 
But it isn't an example, since the owners could easily exclude anyone they wish.



What problem do free riders pose to a radio broadcaster?

You answered your own question. Radio can't exclude listeners who don't pay.
 
I'm still trying to understand exactly what the free rider "issue" is. What is the problem posed by free riders?

Demanding resources but not providing the necessary minimum price associated with providing those resources.
As an example, if everyone who used this forum on a regular basis, donated, then the regular donors wouldn't have to pay as much as they currently do.

In essence, the non free riders are subsidizing the free riders, whether or not it is deserved.
 
Donations are, by definition, voluntary. Not a good example.

Doesn't take away from the fact that many benefit from the use of this site, while only some pay. That's an example of free-ridership if ever there was any.
 
Doesn't take away from the fact that many benefit from the use of this site, while only some pay. That's an example of free-ridership if ever there was any.

Sure, but since there is no requirement to pay and paying is entirely voluntary, it still makes a poor example. Just benefiting from something that is offered explicitly for free doesn't make it wrong.
 
Wouldn't this just shift the power to rich people? I mean, its basically voting with your wallet, and so much of the wealth (and thus taxes) are in the hands of such a small percentage of the population, that would mean that less than 20% of the people would hold half of the power. I just think that this is inherently undemocratic. It should be one person one vote, not one dollar one vote.

Perhaps it wouldn't be so bad if the IRS averaged the percentages across the whole population.

I also think logistically it would be a nightmare. But it is a nice mental excercise
 
Free riders are a problem to the folks that AREN'T free riders, in a morale since. Imagine going to work everyday, and busting ass, only to find that there are other people at your job doing NOTHING but making the same pay as you. How would that make you feel, and how would that affect your work?

This is actually why I support-- in principle at least-- welfare programs. I don't think of it as useless people being paid for nothing, I think of it as useless people being paid to stay out of my way while I'm working. I have problems with current welfare programs because they undermine work ethics and family values, to the extent that I'm afraid they do so intentionally, but the principle of the government taking some of my money to ensure that non-producers can still be consumers does not bother me. It is essential in an industrialized society to keep a certain percentage of the population permanently unemployed-- or non-productively employed-- in order to maintain a functional balance between the demand for labor and the demand for manufactured goods. In general, the better this system channels more talented people into productive employment and less talented people into welfare, the better the system is going to work for everyone-- especially the more talented.

As I explained in my original post...if you don't trust the invisible hand to efficiently allocate taxes...then please help me understand why you trust congress to efficiently allocate taxes.

You have to understand, I don't. I don't trust the Congress any better than I trust the invisible hand to sufficiently allocate taxes. The only entity that I trust to allocate taxes in a fashion that is beneficial to society is me. The difference between the Congress and the market isn't a matter of competence so much as it is a matter that-- as relatively powerless as I am-- the Congress is the force that I have more control over. If you offered me the choice between Congress and an agency that I could wield even more control over, I would choose the latter, and so forth between any two possible agencies until I ultimately had the option of choosing myself.

Also, I never concern myself with the "most efficient" allocation of resources any more than I worry about perfection in any other endeavor. I only concern myself with whether the current solution is good enough for right now and whether or not it can be improved upon in the future. Not only is it impossible for the Pareto optimal to ever be achieved, societies and economic systems change too fast for any solution to remain the Pareto optimal for very long. There is always room for improvement, and so as long as we have the capacity to improve something we have a moral imperative to do so.

I see. So the solution to the perceived underproduction is to take other people's money to subsidize the gardener. I would admit that then, yes, with a government subsidy, we would have more gardeners. But this comes at the expense of what? The solution is not Pareto efficient - you have now made other people (the ones whose money has been taken) worse off. Are you sure that the overall efficiency has actually been raised?

The problem with economics is that it is effectively a sub-discipline of biology that has deluded itself into thinking it is a sub-discipline of mathematics. A biologist would never theorize that excessive production of white blood cells is harmful, merely because those resources could have been used to build muscles or nerves instead, unless the surplus of white blood cells was damaging in itself. The allocation of resources does not need to be efficient, especially when those resources are abundant, as long as the allocation of resources is sufficient to keep the economic system functioning.

I'll state right up front that I don't agree with any solution to underproduction that involves coercion. I see the problem of free riders and underproduction as simply the excuse to force other people to subsidize certain producers. I'm sure there are economists up and down the line that can show that some good is being underproduced, and if we could only take money from other people we could have the "right" amount of the good. But as soon as they start talking about forcibly taking money from other people they've lost me.

The beautiful thing about using force is that it means you don't need to win the argument. If the government can not ever convince you to allow them to take your money, by all means try to stop them. If you win the fight, you will have proven your point, and if you lose we'll just continue taking your money anyway.

I'm not being flippant here, either. If you are right and it is possible to maintain a functional system of government without coercive taxation, the only way you will ever be able to prove it is by actually doing it-- and you'll never be able to prove the efficacy of non-coercion within a coercive system. I do not agree with you morally or practically, but I would be fascinated to see how your experiment would play out on large enough scale to matter.

Sure, but since there is no requirement to pay and paying is entirely voluntary, it still makes a poor example. Just benefiting from something that is offered explicitly for free doesn't make it wrong.

No, but if the number of people using the site without paying starts discouraging donors from doing so, the site will be forced to shut down to the detriment of paying and non-paying users alike. That's the essence of the the free rider problem, which is essentially a form of the tragedy of the commons.

Wouldn't this just shift the power to rich people? I mean, its basically voting with your wallet, and so much of the wealth (and thus taxes) are in the hands of such a small percentage of the population, that would mean that less than 20% of the people would hold half of the power.

It could be argued that this is a good thing, since the 1% essentially have a better understanding of what our society needs to continue functioning and have a larger vested interest in seeing that it does. Not to mention that if paying more taxes gave you a bigger say in how our tax dollars were spent, we would have people generally being far more willing to pay more in taxes. One might even argue that the wealthy are at least somewhat intellectually and morally superior to the poor, since they have managed to avoid the personal failings that are most often responsible for downward mobility and generational poverty.

I wouldn't make this argument myself, given the demonstrable moral myopia of the business and political elite in this country, but there is still some truth to it.

I just think that this is inherently undemocratic. It should be one person one vote, not one dollar one vote.

Why? Why should anyone be allowed to vote, for that matter? Remember, every dime of unearned wealth and unaccountable power that the extremely wealthy and the multinational corporations have in this country was either given to them or enabled by the very same government that we the people elected time and time again. If we are going to vote consistently for less and less democracy, what is the point of trying to preserve it?
 
It could be argued that this is a good thing, since the 1% essentially have a better understanding of what our society needs to continue functioning and have a larger vested interest in seeing that it does. Not to mention that if paying more taxes gave you a bigger say in how our tax dollars were spent, we would have people generally being far more willing to pay more in taxes. One might even argue that the wealthy are at least somewhat intellectually and morally superior to the poor, since they have managed to avoid the personal failings that are most often responsible for downward mobility and generational poverty.

I wouldn't make this argument myself, given the demonstrable moral myopia of the business and political elite in this country, but there is still some truth to it.



Why? Why should anyone be allowed to vote, for that matter? Remember, every dime of unearned wealth and unaccountable power that the extremely wealthy and the multinational corporations have in this country was either given to them or enabled by the very same government that we the people elected time and time again. If we are going to vote consistently for less and less democracy, what is the point of trying to preserve it?

I think some if not most of the top 1% income earners are indeed there because they are very smart and work hard. But I think there is a distinct lack of social mobility in America, and I think that it is alot easier for someone born into the top 1% has alot easier time remaining there than someone who is born into in the bottom 60%, even 80% do in getting there. Plus I think that there are plenty of very intelligent, able people who choose to pursue a career that does not earn them a huge salary. So basically, I don't think the smartest people who would be able to best decide how tax money should be spent would necessarily be the rich.

Furthermore, due to the lack of social mobility, very few people in the upper echelons of our society have experienced life being part of the bottom 50% (less than 2% of people from the lowest three quintiles have children who earn wages that place them in the top 5% of income earners: source) and may be unable to understand their needs, which would be the needs of the vast majority of Americans.

I do agree, though, that if people felt they had more say in what they how their tax dollars were being spent they would be more likely to pay taxes.

I believe that the reason we keep electing people into office that help business at the expense of the common person is BECAUSE we have a system in which it in many ways IS one dollar one vote, and not one person one vote. If I could change anything in our democracy I would ban all money from politics except for individual donations and I would limit individual donations to $100-$2000 so that most if not all could afford to pay the maximum so that no one could hold undue influence.
 
Viktyr Korimir, would you be willing to give your kidney to somebody that didn't need it?
 
nathanj63, can you truly generalize people's values based on their wealth?
 
Antiderivative, in a pragmatarian system voters would determine the functions of government and taxpayers would determine which functions they funded.
 
The beautiful thing about using force is that it means you don't need to win the argument. If the government can not ever convince you to allow them to take your money, by all means try to stop them. If you win the fight, you will have proven your point, and if you lose we'll just continue taking your money anyway.

I'm not being flippant here, either. If you are right and it is possible to maintain a functional system of government without coercive taxation, the only way you will ever be able to prove it is by actually doing it-- and you'll never be able to prove the efficacy of non-coercion within a coercive system. I do not agree with you morally or practically, but I would be fascinated to see how your experiment would play out on large enough scale to matter.

Don't get me wrong. I'm not at all saying it's possible to maintain a functional government without coercive taxation. I believe government is required, and taxes are required to support it. I am only pointing out that this free rider problem is nothing more than an economic argument to justify government intervention. My preference is to allow producers and consumers to determine what to produce and in what quantities.
 
No, but if the number of people using the site without paying starts discouraging donors from doing so, the site will be forced to shut down to the detriment of paying and non-paying users alike. That's the essence of the the free rider problem, which is essentially a form of the tragedy of the commons.

Or the owners can simply shift models and require that people pay to use the site. The control is in the hands of the owners, not in the hands of the "commons". You're criticizing people for doing exactly what is required of them. People are not required to pay, they are not paying, they are doing what they are supposed to do. Leave them alone for not doing more than they are expected to.
 
Viktyr Korimir, would you be willing to give your kidney to somebody that didn't need it?

The answer to that question depends entirely on how many kidneys I have and how many kidneys I'm actually using. If I've only got two kidneys and I'm using both of them, I'm not about to give one of them to someone unless he really needs it, and even then, he'd better be family. On the other hand, if I've got ten kidneys and I'm only really using the first three, I'm not going to begrudge the government taking two for a guy who only needs one. Sure, I'm going to lobby for the government to either let me keep the other kidney or at least give it to someone else-- but I'm not going to use the inefficiency of the second kidney as an excuse to deny the need for the first.

It doesn't matter if the government is perfect. It only matters that it's good enough today and going to be better tomorrow.

Don't get me wrong. I'm not at all saying it's possible to maintain a functional government without coercive taxation. I believe government is required, and taxes are required to support it. I am only pointing out that this free rider problem is nothing more than an economic argument to justify government intervention. My preference is to allow producers and consumers to determine what to produce and in what quantities.

That's fair. I think there is a profound difference between what is worth preserving and what the unwashed masses are willing to support, and I am willing to use any tool at my disposal to compensate for that difference. The argument that anything the public won't support voluntarily isn't worth supporting only convinces me that I have to try that much harder-- because you're essentially telling me that you don't think they're worth preserving, either.

Or the owners can simply shift models and require that people pay to use the site. The control is in the hands of the owners, not in the hands of the "commons". You're criticizing people for doing exactly what is required of them. People are not required to pay, they are not paying, they are doing what they are supposed to do. Leave them alone for not doing more than they are expected to.

Oh, sure. I'm not criticizing users for not donating to the site, and I'll be the last person to endorse making it mandatory; I think that the ability to interact with the wide variety of people our site attracts, because it is free, is what is worth paying for. But it is still subject to the tragedy of the commons, because if there aren't enough donations in the long run, the site will go down and both the paying members and the non-paying members will lose. I'm not criticizing anyone; I'm making an economic statement, not a moral one. No single user has any moral responsibility whatsoever to donate to the site, but everyone who wants the site to keep running has a collective economic responsibility to ensure that vauge gets enough donations to keep it running.

It isn't about what people owe. It's about what people want.
 
Oh, sure. I'm not criticizing users for not donating to the site, and I'll be the last person to endorse making it mandatory; I think that the ability to interact with the wide variety of people our site attracts, because it is free, is what is worth paying for. But it is still subject to the tragedy of the commons, because if there aren't enough donations in the long run, the site will go down and both the paying members and the non-paying members will lose. I'm not criticizing anyone; I'm making an economic statement, not a moral one. No single user has any moral responsibility whatsoever to donate to the site, but everyone who wants the site to keep running has a collective economic responsibility to ensure that vauge gets enough donations to keep it running.

It isn't about what people owe. It's about what people want.

But that is the problem, it isn't the people, it's the site. Nobody is required to donate. Nobody is even asked to donate. It's an option, made available by the site owners and some people do. Most do not. It's not the fault of the users if they don't donate, it's the fault of the site for not requiring it. Certainly the owners could alter their design and either require payment, use advertising-driven revenue, subscriptions or some other form of revenue-gathering. It's not the fault of the users if they don't do that. They set the system, the users do not. If the site were to fail, it wouldn't be the fault of the users, but of the people who designed the system in place.
 
Who cares whose fault it is? Again, that's a moral argument, which I'm not interested in.
 
It could, but I was merely pointing it out as an example of the free-ridership problem. In other cases, it's not so easy to exclude folks from using public goods. Public radio would be a good example.

You failed. This forum is a private good, provided to all comers, that asks people freely assist.
 
But that is the problem, it isn't the people, it's the site. Nobody is required to donate. Nobody is even asked to donate. It's an option, made available by the site owners and some people do. Most do not. It's not the fault of the users if they don't donate, it's the fault of the site for not requiring it. Certainly the owners could alter their design and either require payment, use advertising-driven revenue, subscriptions or some other form of revenue-gathering. It's not the fault of the users if they don't do that. They set the system, the users do not. If the site were to fail, it wouldn't be the fault of the users, but of the people who designed the system in place.

A required donation would no longer be a donation, it would be a membership fee. A donation is freely given of ones own free will, because you feel the product (in this case, the forum) has earned that donation.
 
If I've only got two kidneys and I'm using both of them, I'm not about to give one of them to someone unless he really needs it, and even then, he'd better be family. On the other hand, if I've got ten kidneys and I'm only really using the first three...

Mr. Viktyr Korimir...on the other hand...if you've got 10 kidneys...? Really? How can we realistically communicate if you live in left field? What is the definition of economics? It is the study of scarcity. You really don't have 10 kidneys. I mean...I'm pretty sure you don't have 10 kidneys. You just might be exceptionally exceptional...but exceptions do not make the rule. So...let's accept the fact that most people do not appreciate wasting what they've labored to produce. Let's accept the fact that we're not all better off throwing away the fruits of our labor. With that fact in mind would you mind making an intellectually honest attempt at evaluating pragmatarianism?
 
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The forum owners could easily forbid non-donating members from posting, if that's what they wished, no?

The question is: how many people feel that this forum is worth paying for every month?

If enough don't, then what happens is that much less people will post here, the quality falls, more people leave, until eventually the membership dues is not enough to support the monthly costs and the site get closed down.

Even if there is enough payment to keep the site going, the quality will still be lower given the fact that people come to such forum to argue with a variety of people.
 
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Hicup, compare your concern with Keridan's concern. Then compare your concern with these people's concerns. Then compare your concern with these people's lack of concern.

Your concern, and everybody else's concerns, is what decreases my concerns regarding the outcome of pragmatarianism. If you want to decrease your concerns then go ask all your friends what their concerns would be. Their concerns will indicate how they themselves would allocate their taxes. That's how the invisible hand works. We want the demand for public goods to determine the supply of public goods. The demand for public goods can only be determined by people's values...and values can only be determined by forcing people to consider the opportunity costs of their tax allocation decisions.

It's when people's concerns lead them to provide these public goods for people who don't care enough about these goods that the free-rider problem arise. Instead of claiming people don't understand the "Invisible Hand" why don't you try understanding the implications of your own theory first?
 
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