No Such Thing As A Free Lunch

On Twitter I saw this tweet with this pic...





There's no such thing as a free lunch. The massive amount of resources needed to build a giant wall aren't going to magically appear out of thin air. They are going to be taken from other endeavors. However, this is just as true for the National Endowment for the Arts (NEA) as it is for a giant wall. Here's how I illustrated this...





If you genuinely appreciate that every endeavor is going to take resources away from other endeavors... then clearly the goal should be to take resources away from the least valuable endeavors. This is Quiggin's Implied Rule of Economics (QIRE).

Imagine that Batman is at home twiddling his thumbs. In this case, there would be absolutely no problem with having him rescue a cat from a tree. Batman would be put to a more valuable use. But what if Batman isn't at home twiddling his thumbs? What if he is actually trying to save Gotham from imminent destruction? Then it would be a terrible idea for him to stop what he's doing in order to rescue a cat from a tree. The opportunity cost would be way too high.

So the most important question is... how do we determine the actual value of an endeavor?

Market = Everybody decides for themselves, with their own money, which trade-offs are acceptable
Not-market = Everybody does not decide for themselves, with their own money, which trade-offs are acceptable

How many places are missing a market? The public sector is missing a market. Taxpayers can't decide for themselves, with their own taxes, which trade-offs are acceptable.

Netflix is also missing a market. Subscribers can't decide for themselves, with their own fees, which trade-offs are acceptable. The NY Times is also missing a market. So is this forum.

There's a multitude of places that are missing markets. Therefore...

A. Markets aren't the best way to determine the value of endeavors?
B. In some cases it's not necessary to know the value of endeavors?
C. People don't understand the benefit of using markets to determine the value of endeavors?

A problem exists with the idea of taxpayers earmarking their personal tax payments - they assume that they alone know what is best (highest priority) which is also not a market decision since their tax funds are gone no matter what.

Using your given taxpayer choices of a building/manning a border wall or giving a NEA grant which would "win" is moot since we are talking about .00001% of a federal budget yet a taxpayer earmark poll of this sort dedicates up to 100% of their funds to one or the other.

Imagine the chaos of placing millions of government programs, offices and/or write-ins as "options" for each taxpayer to allocate thier personal taxation funds toward. Gosh, we ended up with billions for wind farm subsidies and $500K for paying the military - I guess those people knew best so lets convert 99.9% of military bases into wind farms.

ttwtt78640 said:

Imagine the chaos of placing millions of government programs, offices and/or write-ins as "options" for each taxpayer to allocate thier personal taxation funds toward. Gosh, we ended up with billions for wind farm subsidies and $500K for paying the military - I guess those people knew best so lets convert 99.9% of military bases into wind farms.

Click to expand...

There wouldn't be any "write-ins". If, at any time, you thought that the DoD needed more money, then you'd simply go to the DoD website and make a tax payment. You'd receive a receipt and save it in case the IRS wanted to verify that you were paying your fair share.

Except for that last part, this is exactly how the non-profit sector works. Do you think that the non-profit sector is chaos? It's just millions of people deciding for themselves, with their own money, which trade-offs are acceptable. In other words, the non-profit sector is a market.

Perhaps it helps to focus on a more simple example... Netflix. Netflix is in a market which means that you can decide for yourself, with your own money, whether it's worth it to subscribe. I'm sure that you agree that it's beneficial that you can choose for yourself whether or not you give your money to Netflix. Let's say that you do decide to subscribe to Netflix. Netflix is not a market which means that you can't decide for yourself, with your own fees, whether it's worth it to help pay for Westerns. Do you think it would be beneficial if you could choose for yourself how much of your fees you spend on Westerns?

Let's say that a new Western movie comes out in theaters. You can choose for yourself, with your own money, whether or not you purchase a ticket to see it in the theater. I'm sure that you agree that it's beneficial that you can choose for yourself whether or not you can purchase the ticket. So wouldn't it be beneficial for Netflix to give you the option to decide for yourself how much of your fees you spend on Westerns?

Xerographica said:

On Twitter I saw this tweet with this pic...

There's no such thing as a free lunch. The massive amount of resources needed to build a giant wall aren't going to magically appear out of thin air. They are going to be taken from other endeavors. However, this is just as true for the National Endowment for the Arts (NEA) as it is for a giant wall. Here's how I illustrated this...

If you genuinely appreciate that every endeavor is going to take resources away from other endeavors... then clearly the goal should be to take resources away from the least valuable endeavors. This is Quiggin's Implied Rule of Economics (QIRE).

Imagine that Batman is at home twiddling his thumbs. In this case, there would be absolutely no problem with having him rescue a cat from a tree. Batman would be put to a more valuable use. But what if Batman isn't at home twiddling his thumbs? What if he is actually trying to save Gotham from imminent destruction? Then it would be a terrible idea for him to stop what he's doing in order to rescue a cat from a tree. The opportunity cost would be way too high.

So the most important question is... how do we determine the actual value of an endeavor?

Market = Everybody decides for themselves, with their own money, which trade-offs are acceptable
Not-market = Everybody does not decide for themselves, with their own money, which trade-offs are acceptable

How many places are missing a market? The public sector is missing a market. Taxpayers can't decide for themselves, with their own taxes, which trade-offs are acceptable.

Netflix is also missing a market. Subscribers can't decide for themselves, with their own fees, which trade-offs are acceptable. The NY Times is also missing a market. So is this forum.

There's a multitude of places that are missing markets. Therefore...

A. Markets aren't the best way to determine the value of endeavors?
B. In some cases it's not necessary to know the value of endeavors?
C. People don't understand the benefit of using markets to determine the value of endeavors?

Click to expand...

I'll take the free lunch.....
..... and the only one to exist is the market in private goods. For public goods the only way to go is total transparency, robust control and reliable punishment for misuse.

You can get a free lunch if you spend enough money at some places that advertise 'free beer tomorrow'.

:lol:

Xerographica said:

There wouldn't be any "write-ins". If, at any time, you thought that the DoD needed more money, then you'd simply go to the DoD website and make a tax payment. You'd receive a receipt and save it in case the IRS wanted to verify that you were paying your fair share.

Except for that last part, this is exactly how the non-profit sector works. Do you think that the non-profit sector is chaos? It's just millions of people deciding for themselves, with their own money, which trade-offs are acceptable. In other words, the non-profit sector is a market.

Perhaps it helps to focus on a more simple example... Netflix. Netflix is in a market which means that you can decide for yourself, with your own money, whether it's worth it to subscribe. I'm sure that you agree that it's beneficial that you can choose for yourself whether or not you give your money to Netflix. Let's say that you do decide to subscribe to Netflix. Netflix is not a market which means that you can't decide for yourself, with your own fees, whether it's worth it to help pay for Westerns. Do you think it would be beneficial if you could choose for yourself how much of your fees you spend on Westerns?

Let's say that a new Western movie comes out in theaters. You can choose for yourself, with your own money, whether or not you purchase a ticket to see it in the theater. I'm sure that you agree that it's beneficial that you can choose for yourself whether or not you can purchase the ticket. So wouldn't it be beneficial for Netflix to give you the option to decide for yourself how much of your fees you spend on Westerns?

Click to expand...

That (bolded above) is a distinction without a difference. Whether you allocate your total annual taxes due as you see fit bit by bit or once per year changes nothing at all. The bottom line is that congress has the power to spend and they are not giving it up.

Xerographica said:

There wouldn't be any "write-ins". If, at any time, you thought that the DoD needed more money, then you'd simply go to the DoD website and make a tax payment. You'd receive a receipt and save it in case the IRS wanted to verify that you were paying your fair share.

Click to expand...

So if not enough people decide the DoD need money this month, what do they do? Not pay their staff? Cancel those anti-terrorism missions? Quickly sell off some tanks to keep the lights on?

What if not enough people think welfare needs more money? Do the people on food stamps just have to starve this week? What is not enough people think Medicare needs more money? Grandma’s hip replacement surgery gets cancelled again? What if not enough people think the Border Force needs more money? Close the doors and don’t let anybody in?

Government spending can’t work like that. Running budgets and capital projects all need to be planned and have money allocated well ahead of time. It simply isn’t practical to have the kind of system you’re proposing at any kind of scale or for any kind of critical functions.

Xerographica said:

Except for that last part, this is exactly how the non-profit sector works. Do you think that the non-profit sector is chaos?

Click to expand...

To an extent, yes. It’s full of corruption and inefficiency and highly imbalanced in what it actually supports. Anyway, large non-profit work the same way as government, collecting money on the basis of general principles for what they’ll spend it on but making the specific plans and budgetary decisions internally. Just because they say “$10 will feed a child in Africa” doesn’t mean the actual $100 you donate actually ends up being spent on that.

Wow ... went I do this, it's a big deal. :lol:

Xerographica said:

There wouldn't be any "write-ins". If, at any time, you thought that the DoD needed more money, then you'd simply go to the DoD website and make a tax payment. You'd receive a receipt and save it in case the IRS wanted to verify that you were paying your fair share.

Except for that last part, this is exactly how the non-profit sector works. Do you think that the non-profit sector is chaos? It's just millions of people deciding for themselves, with their own money, which trade-offs are acceptable. In other words, the non-profit sector is a market.

Perhaps it helps to focus on a more simple example... Netflix. Netflix is in a market which means that you can decide for yourself, with your own money, whether it's worth it to subscribe. I'm sure that you agree that it's beneficial that you can choose for yourself whether or not you give your money to Netflix. Let's say that you do decide to subscribe to Netflix. Netflix is not a market which means that you can't decide for yourself, with your own fees, whether it's worth it to help pay for Westerns. Do you think it would be beneficial if you could choose for yourself how much of your fees you spend on Westerns?

Let's say that a new Western movie comes out in theaters. You can choose for yourself, with your own money, whether or not you purchase a ticket to see it in the theater. I'm sure that you agree that it's beneficial that you can choose for yourself whether or not you can purchase the ticket. So wouldn't it be beneficial for Netflix to give you the option to decide for yourself how much of your fees you spend on Westerns?

Click to expand...

If I’m thinking just of myself and that I’d like more X and I don’t care about Y, perhaps that makes sense. If I’m Netflix that probably doesn’t make sense and is not beneficial. Netflix has to care about the X and the Y because its subscriber base is more than one individual. You can say, well if enough people want Westerns and dictate their money be spent that way, then democracy in motion and they are appeasing their customers. But they are playing only to a subset, and the money they then have to spend on securing licenses may mean that they end up losing many more license agreements out of other genres and the people who enjoy those may end up so upset that they unsubscribe, thus costing Netflix money.

From Netflix’s perspective, what they want to know is the number of Westerns they need to secure to keep you from unsubscribing, anything else can then be used to ensure that other people who enjoy other genres also do not unsubscribe. Making themselves into a “market” per say may actually cause them to lose money. They try to aggregate buying decisions and purchasing power to ensure the most number of licenses and shows across the many genres to ensure that people keep paying their monthly bill. In essence, it’s your QIRE again. Where does Netflix reinvest in in order to keep profits high? It may not be where “market” incentives would drive it to.

Which is, in many ways, why government is not a market, why it is not a business, nor can it be taken for one.

HonestJoe said:

So if not enough people decide the DoD need money this month, what do they do? Not pay their staff? Cancel those anti-terrorism missions? Quickly sell off some tanks to keep the lights on?

Click to expand...

Either the DoD serves us, or we serve the DoD.

HonestJoe said:

What if not enough people think welfare needs more money? Do the people on food stamps just have to starve this week? What is not enough people think Medicare needs more money? Grandma’s hip replacement surgery gets cancelled again? What if not enough people think the Border Force needs more money? Close the doors and don’t let anybody in?

Click to expand...

What if not enough people buy meat? What if not enough people buy clothes? What if not enough people participate in online discussions about economics?

HonestJoe said:

Government spending can’t work like that. Running budgets and capital projects all need to be planned and have money allocated well ahead of time. It simply isn’t practical to have the kind of system you’re proposing at any kind of scale or for any kind of critical functions.

Click to expand...

For-profit spending adjusts and adapts to changes in demand. Non-profit spending adjusts and adapts to changes in demand. Government spending can't adjust and adapt to changes in demand? Who told you that?

HonestJoe said:

To an extent, yes. It’s full of corruption and inefficiency and highly imbalanced in what it actually supports. Anyway, large non-profit work the same way as government, collecting money on the basis of general principles for what they’ll spend it on but making the specific plans and budgetary decisions internally. Just because they say “$10 will feed a child in Africa” doesn’t mean the actual $100 you donate actually ends up being spent on that.

Click to expand...

Donors to the NRA and PETA don't pool their donations and elect representatives to divide the money between the two organizations. Because that would be an entirely stupid bundle. The government bundle of services is far more stupid. You have to pay for a bundle that includes killing people and protecting the environment. Seriously?

ttwtt78640 said:

That (bolded above) is a distinction without a difference. Whether you allocate your total annual taxes due as you see fit bit by bit or once per year changes nothing at all. The bottom line is that congress has the power to spend and they are not giving it up.

Click to expand...

The bottom line is that you don't understand why congress should give up the power to spend. In other words, you don't understand the problem with allowing a small group of planners to spend everybody's money. In other words, you don't understand the problem with command economies.

It's an old paradigm that if someone gains another person has to lose. Take your example of the arts. You're completely segregating artists from the rest of society, when in fact the creative class are needed in order to innovate. Someone who is painting pictures may also be hired to help create innovative gaming environments, for example. The very systems we use on a daily basis, like computers, have software environments that were conceived of by artists.

The whole premise is too simplistic. The government is not a market and shouldn't be considered one. Programs aren't just funded based on demand or immediate utility.

Northern Light said:

The government is not a market and shouldn't be considered one. Programs aren't just funded based on demand or immediate utility.

Click to expand...

To override demand is a crazy idea. The next time that you're at the grocery store please try and override somebody's demand. Reach into a complete stranger's shopping cart and take some items out. Are you going to do this? Of course not. Because you're not crazy.

So what is it, exactly, about the government that makes it qualified to override demand? Is it because we vote for representatives? What is it, exactly, about voting for somebody that makes them somehow qualified to override demand?

Me: Why are you taking beer out of my shopping cart?
You: Because 100 people voted for me.
Me: 100 people voted for you... so now you know what's best for me?
You: Yes!

Voters can certainly empower you to override demand... but it really doesn't make the idea any less crazy.

Xerographica said:

For-profit spending adjusts and adapts to changes in demand. Non-profit spending adjusts and adapts to changes in demand. Government spending can't adjust and adapt to changes in demand? Who told you that?

Click to expand...

I didn’t need telling, I have my own mind.

For-profit organisations are about making a profit (obviously). They don’t really care what or how much product they’re selling as long as they end up with more money than they started with. They adjust their businesses to demand (though they also artificially influence it too) but then extract as much money out of customers as they can get from that. The amount we pay isn’t exclusively based on demand or our need (even when we’re led to believe it is).

Government is about providing services to the nation. They change to meet those needs and the practical realities of trying to meet them (it’s generally impossible for them to do it all). Governments (and prospective replacements) will declare how they intend to meet those needs and the taxation and other economic policies they’ll need to achieve that. An individual government could theoretically change tax policy to the kind of thing you wanted but it would have to be part of a complete overhaul of how government works and would be, IMO, a disaster.

Non-profits cover a wide area. Some work a lot like for-profits, the extra money is just handled differently. True Charites work a little more like governments in that they’ll generally have an expected level of income and will make promises within that budget. Some charities also receive grants from governments precisely so they can be confident they have the money before proceeding with larger and high-impact projects.

Xerographica said:

Donors to the NRA and PETA don't pool their donations and elect representatives to divide the money between the two organizations. Because that would be an entirely stupid bundle. The government bundle of services is far more stupid. You have to pay for a bundle that includes killing people and protecting the environment. Seriously?

Click to expand...

It isn’t a government bundle though, it’s a country bundle. Running a country, whoever is doing it, includes managing all of those diverse (though often inter-related) aspects.

Xerographica said:

There's no such thing as a free lunch.

Click to expand...

Really?? Two more punches on my New York Sub Shop punch card and I get a free sandwich. YAY for a free lunch!!!!

Xerographica said:

On Twitter I saw this tweet with this pic...

There's no such thing as a free lunch. The massive amount of resources needed to build a giant wall aren't going to magically appear out of thin air. They are going to be taken from other endeavors. However, this is just as true for the National Endowment for the Arts (NEA) as it is for a giant wall. Here's how I illustrated this...

If you genuinely appreciate that every endeavor is going to take resources away from other endeavors... then clearly the goal should be to take resources away from the least valuable endeavors. This is Quiggin's Implied Rule of Economics (QIRE).

Imagine that Batman is at home twiddling his thumbs. In this case, there would be absolutely no problem with having him rescue a cat from a tree. Batman would be put to a more valuable use. But what if Batman isn't at home twiddling his thumbs? What if he is actually trying to save Gotham from imminent destruction? Then it would be a terrible idea for him to stop what he's doing in order to rescue a cat from a tree. The opportunity cost would be way too high.

So the most important question is... how do we determine the actual value of an endeavor?

Market = Everybody decides for themselves, with their own money, which trade-offs are acceptable
Not-market = Everybody does not decide for themselves, with their own money, which trade-offs are acceptable

How many places are missing a market? The public sector is missing a market. Taxpayers can't decide for themselves, with their own taxes, which trade-offs are acceptable.

Netflix is also missing a market. Subscribers can't decide for themselves, with their own fees, which trade-offs are acceptable. The NY Times is also missing a market. So is this forum.

There's a multitude of places that are missing markets. Therefore...

A. Markets aren't the best way to determine the value of endeavors?
B. In some cases it's not necessary to know the value of endeavors?
C. People don't understand the benefit of using markets to determine the value of endeavors?

Click to expand...

I snipped those pictures because they took up to damned much space.

Now...to your "most important question: The first thing you must realize is that "government" does not equal "market". They operate under totally different parameters and constraints.

Market...people make individual choices based on their own wants and needs. They pay for those choices with money and resources they have earned.

Government...representatives make choices based on the wants and needs of their constituents and constrained by the dictates of the Constitution and laws. They pay for those choices with money provided by taxpayers (primarily).

The actual value of an endeavor of the government cannot be determined by the simple mechanism of the market. For example, something might cost a LOT...say a wall...but I may determine that cost should be payed because I am charged...by the Constitution...to protect the security of the country. On the other hand, something might cost very little...say funding for the Arts...but I may determine that is or is not useful...is or is not mandated by the Constitution...and, based on those determinations, I'll decide to fund it or not. Or, I may just decide I'm already spending way too much money and cannot afford to support the Arts with taxpayer dollars.

Since I, as a government employee, didn't actually "earn" those dollars I have a responsibility to the taxpayer to spend the money wisely. You, as a constituent and a taxpayer, are beholden to MAKE me spend that money wisely. If you don't do your part...don't expect me to do my part. And don't complain when I don't.

One other point in reference to that tweet: Government programs are not a zero-sum game. We don't HAVE to cut one program to pay for another...and we don't have to ONLY cut a program to pay for another. In the interest of having a government that spends money wisely, it very well could be a good idea to cut a program simply because we don't NEED it. Myself, that's how I see this Arts funding. It's not mandated by the Constitution and the existence of Art is not dependent upon it. Let's just cut it so we spend less money.

I'm not talking about the why's or anything else, just that the government is not a market like you're describing. Depicting it as such is a major hole in your argument.

Governments are about maintaining the general welfare and well being of the nation. Politicians all have different ideas about what this looks like, but the principle is the same. Business is about profit, end of story.

Thus the government may fund things that a business would never fund because it increases the well being of a population, even though it may represent an opportunity cost or seem like it has little utility to the opposition.

Xerographica said:

To override demand is a crazy idea. The next time that you're at the grocery store please try and override somebody's demand. Reach into a complete stranger's shopping cart and take some items out. Are you going to do this? Of course not. Because you're not crazy.

So what is it, exactly, about the government that makes it qualified to override demand? Is it because we vote for representatives? What is it, exactly, about voting for somebody that makes them somehow qualified to override demand?

Me: Why are you taking beer out of my shopping cart?
You: Because 100 people voted for me.
Me: 100 people voted for you... so now you know what's best for me?
You: Yes!

Voters can certainly empower you to override demand... but it really doesn't make the idea any less crazy.

Click to expand...

Xerographica said:

The bottom line is that you don't understand why congress should give up the power to spend. In other words, you don't understand the problem with allowing a small group of planners to spend everybody's money. In other words, you don't understand the problem with command economies.

Click to expand...

Changes that require substantial modification of our constitution are off the table, IMHO.

Mycroft said:

For example, something might cost a LOT...say a wall...but I may determine that cost should be payed because I am charged...by the Constitution...to protect the security of the country.

Click to expand...

If you are truly better than the entire market at determining the true value of things... then why in the world would we want any markets?

You're a conservative so perhaps you'll particularly appreciate this passage... in the multitude of counselors there is safety. That's exactly what a market is. Each and every taxpayer is a counselor. They would have the option to use their hard-earned money to communicate just how relevant and necessary a giant wall truly is. Just like each and every consumer has the option to use their hard-earned money to communicate just how relevant and necessary computers and cars are.

Socialism is the idea that it's desirable and beneficial to solely rely on your own understanding of things. A market is the idea that your own understanding of things can be wrong... therefore it's beneficial to know other people's different understanding of things.

What is it, exactly, about a giant wall... that makes you think that socialism is a better idea than a market?

Xerographica said:

If you are truly better than the entire market at determining the true value of things... then why in the world would we want any markets?

You're a conservative so perhaps you'll particularly appreciate this passage... in the multitude of counselors there is safety. That's exactly what a market is. Each and every taxpayer is a counselor. They would have the option to use their hard-earned money to communicate just how relevant and necessary a giant wall truly is. Just like each and every consumer has the option to use their hard-earned money to communicate just how relevant and necessary computers and cars are.

Socialism is the idea that it's desirable and beneficial to solely rely on your own understanding of things. A market is the idea that your own understanding of things can be wrong... therefore it's beneficial to know other people's different understanding of things.

What is it, exactly, about a giant wall... that makes you think that socialism is a better idea than a market?

Click to expand...

1. In that quote, I was talking as if I'm an elected representative in Congress...not as if I'm an individual. And that was my point about the government being totally different than "the market".

2. As a citizen, you already have the means to communicate your position on any subject, such as the wall, by talking to your representatives. Talk to them...tell them what you want them to do...if they don't do it, vote them out.

3. The Founding Fathers knew that your democracy-oriented approach was not the way to go. It would allow too much control by the majority over the minority. That's why they built so many systems that diminish the will of the majority.

Northern Light said:

Thus the government may fund things that a business would never fund because it increases the well being of a population, even though it may represent an opportunity cost or seem like it has little utility to the opposition.

Click to expand...

You expect congress to make public goods choices with due consideration for my well-being. My well-being? In the private sector I have to spend so much time and energy going around informing producers what works for my well-being. I shop and shop and shop. For example, I go to the store and buy some artichokes. In doing so I tell Frank the farmer, "Hey! You correctly guessed that my well-being depends on artichokes! Thanks! Good lookin' out! Here's some money! Keep up the good work!"

Yet here you are telling me that congress can somehow know what works for my well-being despite the fact that I've never once in my life shopped in the public sector. It boggles my mind. It blows my mind. It bears repeating with emphasis... congress can know what works for my well-being despite the fact that I've never once in my life shopped in the public sector. If you think that this is really true... then please... don't hide your insight under a bushel. Start a thread here, there and everywhere and say "Hey folks! Shopping is entirely redundant! It's entirely unnecessary for us to spend so much of our limited time and energy using our cash to communicate what works for our well-being."

Then again, it pays to double check. E-mail your representative and ask them what works for your well-being. If they say general things like food and defense are you going to be super impressed? Are you super impressed when a fortune teller makes "divinations" that are so vague and general that they pretty much apply to everyone?

The market is based on the premise that producers really aren't mind-readers. So in order for the well-being of the population to truly increase, there has to be constant monetary communication between consumers and producers. You gotta use your hard-earned money to specify exactly what works for your well-being. You gotta use your money to advocate for yourself. Because nobody knows you better than you do.

Xerographica said:

On Twitter I saw this tweet with this pic...

There's no such thing as a free lunch. The massive amount of resources needed to build a giant wall aren't going to magically appear out of thin air. They are going to be taken from other endeavors. However, this is just as true for the National Endowment for the Arts (NEA) as it is for a giant wall. Here's how I illustrated this...

If you genuinely appreciate that every endeavor is going to take resources away from other endeavors... then clearly the goal should be to take resources away from the least valuable endeavors. This is Quiggin's Implied Rule of Economics (QIRE).

Imagine that Batman is at home twiddling his thumbs. In this case, there would be absolutely no problem with having him rescue a cat from a tree. Batman would be put to a more valuable use. But what if Batman isn't at home twiddling his thumbs? What if he is actually trying to save Gotham from imminent destruction? Then it would be a terrible idea for him to stop what he's doing in order to rescue a cat from a tree. The opportunity cost would be way too high.

So the most important question is... how do we determine the actual value of an endeavor?

Market = Everybody decides for themselves, with their own money, which trade-offs are acceptable
Not-market = Everybody does not decide for themselves, with their own money, which trade-offs are acceptable

How many places are missing a market? The public sector is missing a market. Taxpayers can't decide for themselves, with their own taxes, which trade-offs are acceptable.

Netflix is also missing a market. Subscribers can't decide for themselves, with their own fees, which trade-offs are acceptable. The NY Times is also missing a market. So is this forum.

There's a multitude of places that are missing markets. Therefore...

A. Markets aren't the best way to determine the value of endeavors?
B. In some cases it's not necessary to know the value of endeavors?
C. People don't understand the benefit of using markets to determine the value of endeavors?

Click to expand...

can you tell us what your point is??

James972 said:

can you tell us what your point is??

Click to expand...

The Invisible Hand is just as necessary in the public sector as it is in the private sector.

Xerographica said:

The Invisible Hand is just as necessary in the public sector as it is in the private sector.

Click to expand...

I agree. Too bad liberals are opposed to the concept of all the people deciding through their market place activity. They prefer a few people in Washington deciding for everyone.

Xerographica said:

There's no such thing as a free lunch. The massive amount of resources needed to build a giant wall aren't going to magically appear out of thin air. They are going to be taken from other endeavors. However, this is just as true for the National Endowment for the Arts (NEA) as it is for a giant wall.

Click to expand...

Except....

Trump's wall is estimated to cost around $20 billion, and will be deeply ineffective. For those who aren't keeping up, not only has southern border crossings been falling for years, most of the unauthorized immigrants these days are flying into the US, and overstaying their visa. What border walls really do is keep unauthorized immigrants inside the US; they can't round-trip, they can't migrate and go back for seasonal work. This is why increased border enforcement also increased the size of the unauthorized immigrant community in the US.

Meanwhile, the NEA's budget is roughly $150 million per year -- roughly 0.003% of the federal budget. Meals on Wheels spending is harder to pin down, but it's probably somewhere between $150m and $300m per year.

And of course, Trump's plan is to whack $50 billion from social spending and the State Department -- and increase defense spending by $50 billion. When you add in the planned tax cuts, and infrastructure spending, the current plan will significantly increase federal debt.

Equally important is that most people have no idea of the composition of the federal budget. The reality is that almost 80% of the budget is Social Security, Medicare, Medicaid, interest on the debt, defense spending, and the Veterans Administration.

Eliminating funding for programs like the NEA, NEH, and CPB have absolutely nothing whatsoever to do with fiscal discipline. That's total bull****. It's a smokescreen. The purpose of the cuts is purely ideological.

If you genuinely appreciate that every endeavor is going to take resources away from other endeavors... then clearly the goal should be to take resources away from the least valuable endeavors. This is Quiggin's Implied Rule of Economics (QIRE).

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Yeah, I'm pretty sure he didn't come up with the idea of opportunity cost. Anyway....

You want efficiency in federal spending? OK, great. Forget the wall. And let's whack military spending.

While military is important, the reality is that we spend more than the next 8 nations combined, and given its massive cost, there are certainly many inefficiencies. I'm sure we can find $1 billion of savings in the $603 billion of annual defense spending.

Or, how about this? Federal spending is not a zero-sum game. Revenues rise and fall. We can borrow more, we can borrow less. We are nowhere near the point where people are refusing to loan the federal government money. Inflation is also a factor, since increasing spending appropriations by 2-3% per year is just keeping up.

We may choose to keep spending frozen, or indexed to inflation. However, that's not a rule or law. It's not even a norm.