Hi Xerographic,
Kelly Garvy
11

Imagine if Medium created a pragmatarian market. We’d each pay $1 dollar per month but we’d be free to choose which stories we spend our pennies on. How many pennies would you spend on stories about the environment? How many pennies would you spend on stories about economics? How many pennies would you spend on stories about economics and the environment?

The demand for topics would influence the supply of topics. This should be pretty straightforward.

Now let’s imagine that the government created a pragmatarian market. We’d pay taxes but we’d be free to choose which public goods we spend our taxes on. How many tax dollars would you spend on environmental protection? How many tax dollars would you spend on public education? How many tax dollars would you spend on space colonization?

The demand for public goods would influence the supply of public goods.

You brought up the example of algae booms in Florida affecting hundreds of thousands of people. So, given the choice, all these people would spend the same amount of their tax dollars on solving this problem? I don’t think so. I’m sure that plenty of Florida residents would perceive that there were bigger fish to fry.

A pothole is a problem… but is it necessarily the biggest problem? Is it a bigger problem than robberies? Is it a bigger problem than cancer? Is it a bigger problem than giant asteroids? Is it a bigger problem than global warming?

By far the most important resource that society has is its brainpower. How money is spent roughly corresponds with how brainpower is allocated. This is simply because money is used to direct brainpower. The more money that is spent on solving problems of national defense… the more of society’s brainpower that will be used to solve defense problems… which logically means less brainpower available to be used to solve all of society’s other pressing problems.

There are a lot more problems than brainpower to solve them. This is the basic economic problem. The challenge then becomes to efficiently allocate brainpower.

Which results in a more efficient allocation of brainpower?

A. allowing taxpayers to choose where their taxes go
B. preventing taxpayers from choosing where their taxes go

I’m pretty sure that the correct answer is “A”. Deciding how you spend your money requires brainpower. You have to utilize all your available information in order to decide what’s truly important to you. So allowing everybody to spend their taxes would utilize a lot more brainpower than the alternative. Each and every taxpayer would have the option to decide which problem was bigger… national defense or algae blooms. As a result of so much brainpower being used to determine how public funds were spent, society’s brainpower would be more intelligently allocated. More brainpower would be used to allocate brainpower. Therefore, the allocation of brainpower would be more beneficial.

Yeah, I’ve heard concerns regarding the inequity of wealthy people having greater influence in a pragmatarian market. But we can kill two birds with one stone by applying this concern to your question regarding markets versus containers.

Container A: Medium
Container B: Government

Right now the market is in Medium. But most people don’t spend their money on stories that they enjoy. There’s a disparity between how people spend their money and their valuations of stories. Is this market failure? Nope. It’s a failure of the container that the market is in… Medium. Fixing the container would be as simple as charging members $1 dollar a month but giving them the freedom to choose which stories they spend their pennies on.

Right now the market is in the government? Well… people pay their taxes but they can’t choose where their taxes go. As a result, there’s a disparity between how people spend their money and their valuations of public goods. Is this market failure? Nope. It’s a failure of the container that the market is in… the government. Fixing the container would be as simple as giving people the freedom to choose which public goods they spend their taxes on.

Ok! Are you with me here? We’d still have two containers…

Container A: Medium
Container B: Government

Thanks to our simple fixes though, how people spent their money would more accurately reflect their true valuations. However, these containers wouldn’t have the same exact shape. In Medium… everybody would pay the same exact fee. In the government though… people’s fee/tax would progressively reflect their income. So some people would spend a lot more money than other people.

Each container would have a market… but the containers would have somewhat different shapes… which means that their markets would have somewhat different shapes…. which means that their outcomes would be different. Which outcome would be better?

You: Market failure!
Me: What do you mean? Do you mean markets in general? We should eliminate markets? Dictators should spend all our money? Representatives should spend all our money? 
You: No, I mean specifically that the market in the government is producing a less beneficial outcome than the market in Medium. 
Me: Oh, so the government as a container needs additional fixing?
You: Yes, that’s what I mean. Medium’s container is better.
Me: This rigmarole could have been avoided if you had simply said, “Medium’s container is better than the government’s container”.
You: Old habits die hard.

I don’t actually know which container/shape would produce a more beneficial outcome.