Debunking the Crowding Out Concept (1 Viewer)

A frustrating aspect of today’s public policy debate is that many pundits seem oblivious to the fact that the private sector could take care of those people truly in need if it was allowed to retain more of its earnings from the clutches of government. The government “crowds out” all kinds of private efforts and resources. If the government were to recede, private sector efforts to aid the needy would expand. Tad DeHaven, Charitable Donations to the Government

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The is a very common libertarian/conservative argument. The problem is that in order to say that the government "crowds out" private efforts...you have to first assume that it's possible for a committee of government planners to somehow know the optimal level of funding for government organizations. But if you say that a committee can know the optimal level of funding for government organizations, then you're making the argument that liberalism/socialism is a viable concept.

Liberalism/socialism is definitely not a viable concept. There's just no way that a committee can predict exactly how much society values the goods/services that an organization supplies. Without knowing each and every one of our priorities/preferences it's impossible for the government to know how much money it should allocate to national defense, environmental protection, public healthcare, public education, infrastructure and so on.

The difference between socialism and liberalism is that of degree. Socialism results in epic fails...millions and millions of people die while liberalism results in minor fails...depressions/recessions. The more eggs you have in one basket the greater the failure. Unfortunately, when failures occur in our current system...each party conveniently blames the other party.

Are any of you going to use this argument to debunk the crowding out concept? Probably not right? It's a double edged sword. Liberals/socialists can't use it without debunking the idea of 538 congresspeople allocating millions and millions of people's taxes. The only people who can freely swing this sword around are advocates of tax choice.

It follows, then, that a less centralized society has the advantage of a greater diversification of its performance across a larger number of preceptors. This is because diversification here dilutes the impact of the ability, or the lack thereof, of each preceptor on the aggregate societal performance. - Raaj K. Sah, Fallibility in Human Organizations and Political Systems

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Serious question:

Why is your personal preference on the "value" of national defense more important than the government's? You seem to be operating under the presumption that all opinions are equal.

Deuce said:

Serious question:

Why is your personal preference on the "value" of national defense more important than the government's? You seem to be operating under the presumption that all opinions are equal.

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Yeah...it's all about revealing preferences...as my recent posts attest to...

http://www.debatepolitics.com/general-political-discussion/118935-why-your-partner-cheating-you.html
http://www.debatepolitics.com/general-political-discussion/120905-economics-threesomes.html

The premise that I operate under is that a tax choice system would result in a taxpayer division of labor. Our society operates on the basis of a division of labor. We have doctors, lawyers, carpenters, soldiers and so on. Our entire system is based on deferring to the expertise of others. If I have a toothache I don't seek advice from a web developer and if I want to develop a website I don't seek advice from a dentist.

But what if I need a website developed AND I need a root canal...but I only have enough money for one or the other? This is the opportunity cost concept and the partial knowledge concept...which combine to contribute to my decision...which reveals my preference/priority. This is how limited resources are efficiently allocated.

There's absolutely no doubt in my mind that national defense is a priority for many people. Is it a priority for enough people? The thing is...no two defense experts will agree on what constitutes an optimal level of funding for national defense. But what if both liberal and conservative defense experts agree that a threat is credible? If people have to pay taxes anyways...then why wouldn't taxpayers trust the opinions of the experts?

If I really value public education...but Canada is about to invade the US...do I give my taxes to the Dept of Education or the Dept of Defense? If Canada implemented a pragmatarian system...then why would Canadian taxpayers allocate their taxes to invading the US when that money could have been used for public education...public healthcare... infrastructure...and so on?

If all the countries in the world implemented pragmatarianism...then how many taxpayers would derive value from sponsoring offensive attacks on other countries? Maybe a few? But certainly not enough to launch full scale invasions. Wars are never an efficient use of limited resources. In other words...the opportunity costs of war are just too high. People have better things to spend their money on.

So wait. Under your plan people are responsible for funding individual actions by government agencies now? Like, I can fund the purchase of 10,000 M-16's for a base in Ohio but not fund an invasion of Afghanistan?

Deuce said:

So wait. Under your plan people are responsible for funding individual actions by government agencies now? Like, I can fund the purchase of 10,000 M-16's for a base in Ohio but not fund an invasion of Afghanistan?

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What do you want me to say? Back in my days you had to buy the entire album. Nowadays you can go on iTunes and buy individual songs. A huge portion of our mission in Afghanistan was dedicated to nation building. So what do you think...should people be able to specifically fund Civil Affairs units?

Xerographica said:

What do you want me to say? Back in my days you had to buy the entire album. Nowadays you can go on iTunes and buy individual songs. A huge portion of our mission in Afghanistan was dedicated to nation building. So what do you think...should people be able to specifically fund Civil Affairs units?

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I want you to tell me how pragmatarianism works. Before, I was under the assumption that funding would go by department or something, but now you seem to indicate it's more detailed than that.

Deuce said:

I want you to tell me how pragmatarianism works. Before, I was under the assumption that funding would go by department or something, but now you seem to indicate it's more detailed than that.

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Like I've said before, if you want to understand how pragmatarianism would work then just consider the non-profit sector. The granularity we see in the non-profit sector is determined by the dynamic between donors wanting to maximize their utility and non-profits wanting to maximize their revenue.

It would be the same exact thing in a pragmatarian system. The granularity would be determined by the dynamic between taxpayers wanting to maximize their utility and government organizations wanting to maximize their revenue. There's no way that I, or anybody else, could predict exactly how this would play out.

Xerographica said:

Like I've said before, if you want to understand how pragmatarianism would work then just consider the non-profit sector. The granularity we see in the non-profit sector is determined by the dynamic between donors wanting to maximize their utility and non-profits wanting to maximize their revenue.

It would be the same exact thing in a pragmatarian system. The granularity would be determined by the dynamic between taxpayers wanting to maximize their utility and government organizations wanting to maximize their revenue. There's no way that I, or anybody else, could predict exactly how this would play out.

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The structure has to be defined or else there is no system to work with. Paying taxes can't be a dynamic process the way you describe it, because otherwise nothing works. Either you have the option of earmarking your taxes for "tuesday afternoon garbage pickup" or you don't.

Deuce said:

The structure has to be defined or else there is no system to work with. Paying taxes can't be a dynamic process the way you describe it, because otherwise nothing works. Either you have the option of earmarking your taxes for "tuesday afternoon garbage pickup" or you don't.

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Here's a snippet from my post on Unglamorous but Important Things


"I’d love to be able to allocate my taxes. Seriously, I would. It’d be difficult to organize this on a high granularity level, though; I imagine everything would get of whack, as I probably have no information on how other people allocated theirs. So, to start with, I would suggest just a couple of categories, like, say, ‘the military’ and ‘everything else’." - Henri Vieuxtemps


If I had to choose between the current system...and Vieuxtemps's system...which system would you guess that I would choose? What about yourself? If you had to choose between the current system...and Vieuxtemps's system...which system would you choose?

The vast majority of Americans don't have the ability, the time or the mental capacity to understand every program and department in the Federal Government and wouldn't even begin to understand how each of these programs and departments actually benefits them.

You'd single handedly tear apart the federal government as Federal Agencies would be forced to advertise in order to get money for programs.

Imagine the idea of having to spend federal dollars informing people that they need to give money in a certain direction in order to have clean water, early detection warnings for tornados or hurricanes...

This whole idea is one of the most idiotic things ever thought of. You can barely trust voters to make responsible choices in who they vote for.

Churchill once said the greatest argument against democracy is 5 minutes with the average voter.

I wouldn't want your average joe deciding what gets funded and what doesn't, much as I distrust politicians.

Xerographica said:

Here's a snippet from my post on Unglamorous but Important Things


"I’d love to be able to allocate my taxes. Seriously, I would. It’d be difficult to organize this on a high granularity level, though; I imagine everything would get of whack, as I probably have no information on how other people allocated theirs. So, to start with, I would suggest just a couple of categories, like, say, ‘the military’ and ‘everything else’." - Henri Vieuxtemps


If I had to choose between the current system...and Vieuxtemps's system...which system would you guess that I would choose? What about yourself? If you had to choose between the current system...and Vieuxtemps's system...which system would you choose?

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You didn't answer the question.

Deuce said:

You didn't answer the question.

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This idea impracticable at best moronic at worst...What is actually amount to the is the Tribal mentality. You endup with a cast system of Federal departments jostling for money, and sort of dog eat dog world, federal department against Federal department. This is exactly what is wrong with Congress and Senate, where they don't attend to the business of the people but rather in Election mode 24/7 and campaigning. Now you want the federal agencies to do the same and hoping this somehow will fix this countries problems?

Don't forget we are not a Democracy, we are democratic republic, which means we elect people to represent us. If you are frustrated with the government, don't go Reagan on us and try to dismantle it instead of fixing what is broken.

Diving Mullah

Jetboogieman, I added your response to my list of people who do not understand how the invisible hand works...Unglamorous but Important Things. It's a long list!

My priority is for you to read through every single response that I included on that page. Is this your priority though? Do your priorities matter? Should I be able to impose my priorities on you? Should I be able to force you to read every single one of my blog entries? I honestly, sincerely and genuinely believe it would benefit you to do so.

The problem is...imposing our priorities onto others results in the inefficient allocation of resources. Maybe you have better things to do with your time than read my blog? This is the partial knowledge concept. Do you know how I know that this concept has a name? Because I've spent a ridiculous amount of time studying how resources are efficiently allocated.

Right now you believe that 538 congresspeople can determine the optimal level of funding for government organizations. That is a complete and utter myth. It really is. I'm not just making this stuff up. It's just like how when people believed that kings had divine authority. Did those people believe that their belief was a myth? Of course not! Nobody ever believes that their beliefs are myths. It's only after encountering some partial knowledge can we understand how what we used to believe was a myth.

Do you know why neither a king...nor a committee can ever determine the optimal level of funding for an organization? Because funding can only be determined by demand. And what is demand? Demand is the aggregate of priorities.

Are your priorities wrong if you don't read my blog? Of course! But guess what...we all make mistakes...because we all only have partial knowledge. Therefore, we shouldn't put all our eggs in one basket. Failing to hedge our bets is exactly why socialism failed and exactly why our system substantially fails.

So...it's not that people are idiots...it's simply that we all make mistakes...because we all only have partial knowledge. Therefore, rather than allowing 538 congresspeople to allocate 150 million people's taxes....we should simply allow taxpayers to directly allocate their individual taxes.

Deuce said:

You didn't answer the question.

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Today I watched Romney on C-Span talking about his economic plan. Man, he had to have said the word "freedom" like a gazillion times. What is the opposite of freedom? Maybe being locked in solitary confinement. Does anybody want to be locked in solitary confinement?

Freedom is basically being able to choose for yourself. I like having the ability to choose for myself. But what good is being able to choose for myself if I don't have any options? The more options the better.

Well...except...people shouldn't have the option to not pay taxes...but they should have the option to give their taxes to congress or directly allocate their taxes themselves. Even if people only had two categories to choose from..."the military" and "everything else" then this would certainly be better than our current system. What do you think?

Like I said...if all the countries implemented pragmatarianism...I don't see many taxpayers making attacking other countries their public goods priority...do you? National offense is a direct consequence of having too many eggs in one basket. It only occurs when a bad apple manages to take control of the power of the purse. The more decentralized the power and authority is...the safer we'll be from bad apples.

Diving Mullah said:

This idea impracticable at best moronic at worst...What is actually amount to the is the Tribal mentality. You endup with a cast system of Federal departments jostling for money, and sort of dog eat dog world, federal department against Federal department. This is exactly what is wrong with Congress and Senate, where they don't attend to the business of the people but rather in Election mode 24/7 and campaigning. Now you want the federal agencies to do the same and hoping this somehow will fix this countries problems?

Don't forget we are not a Democracy, we are democratic republic, which means we elect people to represent us. If you are frustrated with the government, don't go Reagan on us and try to dismantle it instead of fixing what is broken.

Diving Mullah

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You have no idea how much I love the thought of federal departments jostling for our money!!! How could that not solve our country's fundamental problems? How could forcing government organizations to compete for our own, hard-earned taxes not be the most awesomeness thing since the Magna Carta?

If you want my money...what do you have to do? You have to CONVINCE me that it's a good idea for me to give you my money. That would involve you sharing your partial knowledge with me. Then I would compare your partial knowledge with my partial knowledge and make a decision.

What would it mean if I gave you my money? It would mean that I gave up one thing I valued for another thing that I valued even more. People call this sacrifice...but it can also be considered free-trade. This is how resources are efficiently allocated.

Everybody wants the most bang for their buck. That's why it would be an incredibly awesome thing if government organizations were forced to compete for our taxes. Pragmatarianism would greatly benefit our society as a whole because scarce resources would be efficiently allocated. Immense value would be produced!! Ahhhh...yeah!

What partial knowledge do you have that would help me understand why it wouldn't be the best political idea to allow taxpayers to exchange something they value...their hard-earned money...for something that they value even more...public goods?

Who said anything about dismantling government? I want government to supply our public goods priorities. Why do you think this would lead to the dismantling of government?