You allocated your limited time and energy to producing this story about Hayek. Even though I disagree with your analysis, I appreciate it. In order to easily and quickly inform you of my appreciation, I clicked on the *heart* button. Clicking the *heart* button allowed me to provide you some positive feedback on your work.
In markets the positive feedback primarily consists of spending money. Even though I appreciated and enjoyed your story, I didn’t spend any money on it.
I clicked the *heart* button on your story, but I didn’t spend any money on it. There’s a disparity in my feedback.
For comparison, consider this very short blog entry written by a 4th grader… Possum at Christopher’s house. I appreciated and enjoyed it. But rather than clicking the *heart* button on his entry, I spent 25 cents on it. Again, there’s a disparity in my feedback.
It’s a pretty basic economic fact that society’s resources are limited. Allocating all of society’s resources to producing food would leave no resources to allocate to the production of furniture or clothes or books or computers or houses.
Therefore, society’s resources have to be divided somehow among all the different things that people want and need.
In markets, people use their money to help determine how society’s limited resources should be divided. This works to the extent that the feedback is accurate. But in some cases the feedback isn’t very accurate. Lots of people who regularly utilize Wikipedia don’t spend their money on it. Why buy the cow when you can get the milk for free?
So regular markets have difficulties with public goods. Therefore, we have taxes… but then we allow them to be spent by a small group of elected representatives. Representatives aren’t mind-readers though. They can’t know how much I value your story about Hayek. Representatives can’t know how much you value environmental protection. Therefore, how they spend taxes does not even come close to reflecting people’s true priorities.
The solution is to create a market in the public sector by allowing people to choose where their taxes go. There won’t be any fixed prices, so people’s feedback will be more accurate. More accurate feedback will result in producers in the public sector making more correctly informed decisions. Producers in the public sector will do a better job than producers in the private sector. Consumers will want to spend more money in the public sector and less money in the private sector. The tax rate will increase, the private sector will shrink and the public sector will expand. This process will continue until the tax rate is 100%.
Everything will be free. Oranges will be free. You’ll never have to buy an orange. But if you perceive that there aren’t enough oranges, then you might as well use your tax dollars to share your perception with the world. You’d give some taxes to orange farmers and this would enable them to use more of society’s limited resources. You’d use your taxes to improve how society’s limited resources were divided. Everybody would specifically and substantially participate in the prioritization process.
All the means of production will be publicly owned. There certainly won’t be any profit. But an organization’s revenue will go up or down depending on how people spend their taxes.
The Invisible Hand (IH) will determine the order (relative importance) of all goods.
Right now the IH determines the order of Classtopia’s blog entries. Right now the IH does not determine the order of Medium’s stories.
Let’s consider the facts…
- Society’s resources are limited
- Society’s resources have to be divided
- Society should derive the most value from its resources
- Values are subjective
- Nobody is a mind-reader
- Communication of value is necessary
- Communication of value should be accurate
- Spending/sacrificing is the only way to accurately communicate value
- Correctly dividing/ordering society’s resources depends on accurate communication of value
- Markets with more accurate communication are better than markets with less accurate communication
Let me know if you have any questions or concerns.