Demand Clarity Would Eliminate Corporate Welfare

[Xerographica]

Question

"How are we going to bust up big ag that has caused so much disparity?" - rabbitcaebannog

Answer

We create a market in the public sector.  If people can choose where their taxes go then we will see exactly what the demand is for farm subsidies...




This chart shows us what the demand for farm subsidies might look like.  As you can see, there's very little demand breadth because the benefits are extremely concentrated...

Those who think that central planning will promote economic progress are naive.  When business enterprises get more funds from governments and less from consumers, they will spend more time trying to satisfy politicians and less time satisfying customers.  Predictably, this reallocation of resources will lead to economic regression rather than prosperity. - James Gwartney and Richard Stroup, What Everyone Should Know About Economics and Prosperity

Their resources can be used in two ways: investment in capital goods that can be used to produce a product for sale in competitive markets, or investment in lobbying and bribing politicians and in trying to develop legislation that will protect firms from competition or provide them with a share of the public budget.  Under a large government, "political investment" can become relatively more profitable than "market investment," and a shift in investment from the market to the political arena should be expected.  In private competitive markets, a firm must appeal to buyers to enter mutually beneficial trades: in political markets it can enlist the power of the state to force people to give up part of their income for the firm's benefit. - Richard B. McKenzie , Bound to Be Free

Politicians exploit rational ignorance by conferring large benefits on certain constituents whose costs are widely dispersed and borne by the general population. Take the sugar industry. It pays the owners and workers to organize and tax themselves to raise money to lobby Congress for tariffs on foreign sugar. If they're successful, it means millions of dollars in higher profits and wages. Since they are relatively small in number the organization costs are small and the benefits are narrowly distributed. The Fanjul family, who owns large sugar farms in the Florida Everglades, capture an estimated $60 million annually in artificial profits. - Walter E. Williams, Rational Ignorance

Because these benefits are so concentrated, if we implemented tax choice then it's highly likely that only a very small percentage of people will spend any of their tax dollars on farm subsidies...

What a delicious prospect: a government office having to explain itself in order to persuade taxpayers to support its existence. The elements within the government that can make a persuasive case will do fine. Americans are not stingy or shortsighted. We will still have plenty of mine inspectors and curators. But who will voluntarily pay for the layers of bureaucratic barnacles that make up so much of the organization charts? Who will pay for the billions in subsidies that are doled out to agricultural, corporate and nonprofit special interests? Who will pay for the enormous pork-barrel projects? - Charles Murray, You Are What You Tax

If enough people don't pay for a public good (insufficient demand breadth)...then it won't be considered a public good.  As a result, people won't be able to spend their taxes on it.  

Another example is war...

There are multitudes with an interest in peace, but they have no lobby to match those of the 'special interests' that may on occasion have an interest in war. - Mancur Olson

Going to war accelerated the move from indirect to direct rule. Almost any state that makes war finds that it cannot pay for the effort from its accumulated reserves and current revenues. Almost all war-making states borrow extensively, raise taxes, and seize the means of combat – including men – from reluctant citizens who have other uses for their resources. - Charles Tilly

In cases where a war has popular support (opinions, sentiment)...

As was noted in Chapter 3, expressions of malice and/or envy no less than expressions of altruism are cheaper in the voting booth than in the market.  A German voter who in 1933 cast a ballot for Hitler was able to indulge his antisemitic sentiments at much less cost than she would have borne by organizing a pogrom. - Geoffrey Brennan, Loren Lomasky, Democracy and Decision

...it's extremely unlikely that most people would spend any of their own money on it.  This is because talk is extremely cheap...which is exactly why we say that actions (spending) speak louder than words (voting).  The reality is that the multitude has a myriad of far more valuable/beneficial uses of their own money...

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people. This is, I repeat, the best way of life to be found on the road the world has been taking. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron...Is there no other way the world may live? - Dwight D. Eisenhower

Another excellent perspective on the subject...

The essential act of war is destruction, not necessarily of human lives, but of the products of human labour. War is a way of shattering to pieces, or pouring into the stratosphere, or sinking in the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent. Even when weapons of war are not actually destroyed, their manufacture is still a convenient way of expending labour power without producing anything that can be consumed. A Floating Fortress, for example, has locked up in it the labour that would build several hundred cargo-ships. Ultimately it is scrapped as obsolete, never having brought any material benefit to anybody, and with further enormous labours another Floating Fortress is built. In principle the war effort is always so planned as to eat up any surplus that might exist after meeting the bare needs of the population. In practice the needs of the population are always underestimated, with the result that there is a chronic shortage of half the necessities of life; but this is looked on as an advantage. It is deliberate policy to keep even the favoured groups somewhere near the brink of hardship, because a general state of scarcity increases the importance of small privileges and thus magnifies the distinction between one group and another. By the standards of the early twentieth century, even a member of the Inner Party lives an austere, laborious kind of life. Nevertheless, the few luxuries that he does enjoy his large, well-appointed flat, the better texture of his clothes, the better quality of his food and drink and tobacco, his two or three servants, his private motor-car or helicopter -- set him in a different world from a member of the Outer Party, and the members of the Outer Party have a similar advantage in comparison with the submerged masses whom we call 'the proles'. The social atmosphere is that of a besieged city, where the possession of a lump of horseflesh makes the difference between wealth and poverty. And at the same time the consciousness of being at war, and therefore in danger, makes the handing-over of all power to a small caste seem the natural, unavoidable condition of survival. - George Orwell

I've shown you charts that represent special interests...now, for comparison, here's a chart that represents what a general interest might look like...



Unlike with farm subsidies and war...many people will readily grasp the material benefit of spending their money on public healthcare.  We can see that, unlike with special interests, the demand for a general interest will be very broad.  This is because it will truly contribute to the well being of most people.

Consider this last passage...

The expenses of government, having for their object the interests of all, should be borne by every one, and the more a man enjoys the advantages of society, the more he ought to hold himself honoured in contributing to these expenses. - Turgot

Given the disparity between actions (spending/values) and words (voting/opinions)...the only way we can accurately discern how specific or general an interest truly is would be to create a market in the public sector.  If we do not clarify the demand for public goods then the interests of the many will continue to be sacrificed for the benefit of the few.

Any questions or concerns?

[zarus tathra]

I think forcing legislators to produce impact estimations would do a lot to improve politics. Impact estimations are engineering documents that try to predict what changes will come about as a result of a design idea. The CBO already creates their own impact estimations of high-profile legislation, but congressmen and their staffs should be expected to produce their own estimates just so that people can judge whether or not a legislation has failed. That would probably eliminate a lot of "amendments."

[Xerographica]

I think forcing legislators to produce impact estimations would do a lot to improve politics. Impact estimations are engineering documents that try to predict what changes will come about as a result of a design idea. The CBO already creates their own impact estimations of high-profile legislation, but congressmen and their staffs should be expected to produce their own estimates just so that people can judge whether or not a legislation has failed. That would probably eliminate a lot of "amendments."

Allowing people to choose where their taxes go is the only way to accurately determine the value of government effort.

[Jason78]

Allowing people to choose where their taxes go is the only way to accurately determine the value of government effort.

Oh look.  Another thread that supports Xerographica's pre-defined conclusion.

[Xerographica]

Allowing people to choose where their taxes go is the only way to accurately determine the value of government effort.

Oh look.  Another thread that supports Xerographica's pre-defined conclusion.

Read your quote...

We can easily forgive a child who is afraid of the dark; the real tragedy of life is when men are afraid of the light. -Plato

Now read this thread.

It's a real tragedy that you are afraid of clarifying the demand for public goods.

[zarus tathra]

I think forcing legislators to produce impact estimations would do a lot to improve politics. Impact estimations are engineering documents that try to predict what changes will come about as a result of a design idea. The CBO already creates their own impact estimations of high-profile legislation, but congressmen and their staffs should be expected to produce their own estimates just so that people can judge whether or not a legislation has failed. That would probably eliminate a lot of "amendments."

Allowing people to choose where their taxes go is the only way to accurately determine the value of government effort.

Hey hey hey it's not like our ideas are at all mutually exclusive.

[Xerographica]

I think forcing legislators to produce impact estimations would do a lot to improve politics. Impact estimations are engineering documents that try to predict what changes will come about as a result of a design idea. The CBO already creates their own impact estimations of high-profile legislation, but congressmen and their staffs should be expected to produce their own estimates just so that people can judge whether or not a legislation has failed. That would probably eliminate a lot of "amendments."

Allowing people to choose where their taxes go is the only way to accurately determine the value of government effort.

Hey hey hey it's not like our ideas are at all mutually exclusive.

In a pragmatarian system, if legislation is failing then it will lose revenue.  If the war on drugs is failing to match the preferences of taxpayers...then all relevant government organizations will lose revenue as a result.  

The market works because entrepreneurs can engage in all the due diligence in the world...but at the end of the day it's up to consumers to decide whether a new option provides them with more value than the alternatives.  Generally though...there is a positive correlation between diligence and success.  

So, yeah, you're right that the two things aren't mutually exclusive.  I just wanted to highlight the feedback/vouching/vetting system.

[zarus tathra]

The real and effectual discipline which is exercised over a workman is that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence. -Adam Smith

Your boss might yell at you if you fuck up, but probably won't fire you right away. But if you had to deal with customers directly, then they'd probably avoid you in the future and maybe even smear your name. I suspect that a large part of the reason why people gravitate towards big business isn't to make money but to distance themselves from the churn and chaos of the larger society. Adam Smith certainly agreed, he predicted that as joint stock companies got larger, fraud and mismanagement would become endemic.