“And best of all, neither the Giants fans nor the Jets fans will need to help pay taxes for the other team’s stadium.”
This made me laugh. Never thought of this as an example of the forced-rider problem.
I dug through my tweets and found this one…
The tweet I was replying to is gone. I think Alex Tabarrok automatically deletes his old tweets. Why in the world would he want to do that? Doesn’t he know that the larger his digital footprint is, the easier it will be for Seldon to reverse engineer him? Seldon is a god-like AI that will exist in the future (praise be his name!).
I’m pretty sure that my reply was to a tweet about dominant assurance contracts (DAC). In your story you picked a $1 billion dollar stadium as an example. But what if the demand was for a $2 billion dollar stadium or a $10 million dollar stadium?
One of Tabarrok’s pet concerns is asteroid defense. Should we also just go with a $1 billion dollar defense and see if it gets funded with a DAC? If it does, then how do we know that a more expensive defense wasn’t actually demanded? If doesn’t, then do we try again with a less expensive defense? It doesn’t seem like triangulation is the most efficient way to get the supply right.
My preferred solution is to simply let people choose where their taxes go (pragmatarianism). Then no triangulation problem, or forced-rider problem or free-rider problem.
People usually object to pragmatarianism. They say that taxpayers are too uninformed. And, it would give the wealthy too much influence.
Eventually I realized that taxpayers are basically subscribers. So I started arguing that Netflix subscribers should be able to choose where their subscription dollars go. In this case information isn’t an issue and neither is inequality. So were people down for the cause? No way! They said that Netflix already knows people’s preferences.
Basically, the problem is that people are super clueless about the usefulness of markets. Yet everybody regularly participates in markets. When people go to the grocery store they use their money to help rank the products. This determines how society’s limited resources are divided between them. But people really don’t think about this. They just think about whether something they want is worth the money. So because they don’t see the social prioritization process that they participate in, they underestimate its usefulness.
Right now my friends and I are working on a website where people can submit links and rank them with their money. It will be kinda like Reddit but with spending rather than voting. As far as I know it will be the very first direct comparison of voting and spending. How crazy is that?
Participants of the market website will be able to clearly see the market process. They won’t be trying to “buy” the links. They will simply use their money to help rank them. How the links are ranked will determine how society’s limited attention is divided between them.
What do you think? You down for the cause?