tag:blogger.com,1999:blog-7665280159887667854.post588161708308720016..comments2023-11-03T08:36:57.066-04:00Comments on D.C. Exile: A Theory of Government – A ResponseUnknownnoreply@blogger.comBlogger15125tag:blogger.com,1999:blog-7665280159887667854.post-84344631046632104542011-08-19T16:08:58.478-04:002011-08-19T16:08:58.478-04:00As for your school scenario, I first off have to s...As for your school scenario, I first off have to say I find it incredibly implausible. How many communities face monopolies of anything? How many communities have monopolies on fast food? Clothing? Dry cleaning? Or pretty much any other product out there?<br /><br />But let's assume this actually occurs. One option is home schooling, which million of people do with some success from what I gather. Another is distance learning via the internet. Or hiring a tutor. I think that in a fully privatized marketplace that education options would only multiply as people try to capture these potential unserved markets for people such as in the scenario you outlined. <br /><br />As for how people would pay for schools, I assume they would do so like they do everything else -- with money. In any case I don't buy the logic that the amount of money parents can spend is equivalent to their property tax. That only makes sense if you assume they spend every dollar of every paycheck or are unable to shift consumption patters. It's perfectly reasonable to think that, if say, property taxes were refunds equaled $1200 that parents could contribute another $300 and make it $1500. <br /><br />Regardless, I am sure that inequities would result, just as we find with most things. But I don't see why that is the big concern. To me it should only matter whether their quality of education has improved or not.<br /><br />If you and I both live in huts, we have housing equality. But if you then move into a mansion while I move into a 3BR apartment our inequality has greatly increased while we are still better off. This concern seems rather misplaced. <br /><br />Anyway, I'd be willing to settle for a system in which the government ceases the operation of schools and instead provides vouchers to use at the school of the student's choice.Colinhttps://www.blogger.com/profile/03573575140584770666noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-5706174441412166192011-08-19T15:53:25.262-04:002011-08-19T15:53:25.262-04:00I think you misunderstand me. It's not that I ...I think you misunderstand me. It's not that I think democracy isn't the ideal system, it's that I think *government* isn't the ideal system. For those things that must be run by government, such as the police, military, courts, etc. -- I have no problem with using democracy. But let's not pretend that everything produced by democratic government is sweetness and light either. <br /><br />I have no idea how those private organizations should structure themselves. That's their business and not mine. They should do whatever they think is most effective. <br /><br />I don't see why a private company would be given, or should be given, eminent domain. If they want to build a road then they need to purchase land from the existing owners.Colinhttps://www.blogger.com/profile/03573575140584770666noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-86148345636482187702011-08-19T14:57:09.544-04:002011-08-19T14:57:09.544-04:00In a democracy, an individual is granted a stake o...In a democracy, an individual is granted a stake or share in the government by virtue of being a citizen and of a certain age.<br /><br />In a corporation, an individual is granted a stake or share in the corporate governance by virtue of buying a share.<br /><br />You clearly don't believe democracy is the ideal system and suggest that more functions that have been performed by the federal government should be handled by private organizations, which would have governance structures based largely around corporate organization structures.<br /><br />However, how will stakes in these organizations be apportioned? Will people need to buy shares to have a voice? Could someone establish a controlling interest in an organization and thus dictate where a road went or what would be in a school curriculum? That is how corporations function in markets, but markets are inherently inequitable.<br /><br />If a private entity decides to build a road, would they have eminent domain? If not, what would the do if someone held out? How does that improve on public infrastructure investment?<br /><br />As to public vs. private schools, let's assume education was entirely privatized. As my question above states, what happens if one company acquires all the school outlets and decides to teach Christian superiority in their classes, but your family is atheist. Is there a market for a new school? Potentially, but your kids don't stop growing up while the market sorts that out. Could you move? Maybe, but there's no guarantee of a job in a different locale.<br /><br />Also, let's assume all schools are private. How would people pay for these schools? Most school districts are funded by property taxes so let's say in a private school world there are no property taxes and households retain that money. But property taxes aren't uniform and so the money that has been freed up to all households to pay for private schools won't be uniform. And so in areas where property values are low, individuals will send their kids to cheaper schools. In areas where property values are high people will send their kids to more expensive school. What's more in areas with high property values people had the disposable income to send their kids to private school AND pay property taxes so that gap would be even greater. The elimination of that property tax and its re-distributive mechanism harms poor students.Jasonhttps://www.blogger.com/profile/04621444962752348431noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-49300297098185137262011-08-19T14:06:32.033-04:002011-08-19T14:06:32.033-04:00My question is who determines who gets what power?...<i>My question is who determines who gets what power?</i><br /><br />Not trying to be obtuse here, but I still don't see what you are getting at. What do you mean by this?<br /><br />As for education and equitability, it seems to me that the system we have *right now* is the most inequitable one, with the kids who have parents of means attending private schools and those of lesser means being stuck in the public system. Given that private schools routinely outperform public schools, it seems to me that leaving this area to the private sector -- and thus exposing students to a higher quality education -- would reduce, not increase inequalities. <br /><br />As for Newscorp, I think you are the one being naive. The fact is, companies fail all the time with minimal impact on the economy. If News Corp were to implode tomorrow the impact would be very, very small with other media companies rushing to fill the vacuum.Colinhttps://www.blogger.com/profile/03573575140584770666noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-6439883527028744532011-08-19T13:28:52.078-04:002011-08-19T13:28:52.078-04:00Your posts were an attack on democratic governance...Your posts were an attack on democratic governance. You feel it's wasteful and inefficient. I wouldn't argue that democratic governance is the most efficient, but it can be the most equitable.<br /><br />You espouse tearing away pieces of the government, which are accountable to voters through democracy, and replacing what was once a government function, say education, and turning it over to a private entity. That private entity would, itself, have a governance structure like a board of directors or established shareholders. My contention is that such a system would likely remove the equitability inherent in a representative democracy. Private entities based around the common rules of corporate governance are inherently inequitable. My question is who determines who gets what power?<br /><br />As to your second comment about News Corp and a wrong guess by shareholders only effecting those shareholders is naive on its face. In all probability millions of those currently unemployed did not own stock in AIG or Citigroup, yet the actions of AIG & Citigroup management and shareholders impacted the livelihood of people not a part of those companies during the Great Recession.Jasonhttps://www.blogger.com/profile/04621444962752348431noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-25841303747479722102011-08-19T09:47:56.841-04:002011-08-19T09:47:56.841-04:00I don't know what you are trying to get at her...I don't know what you are trying to get at here: "Who decides how has a larger interest? or who is an informed voter? Is education the determining factor? Wealth?"<br /><br />If you could clarify I'd be more than happy to answer.<br /><br />As for News Corp shareholders, yes I imagine that they were concerned Murdoch's lack of oversight has placed the company -- and its profits -- in danger (remember, News of the World was shut down). That seems rational to me. But let's say it was completely irrational. Well, again, that's another virtue of the private sector -- they bear the burden of their own irrationality alone, not the rest of us.Colinhttps://www.blogger.com/profile/03573575140584770666noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-189118956799645682011-08-19T09:24:41.313-04:002011-08-19T09:24:41.313-04:00Regarding shareholders you're saying some are ...Regarding shareholders you're saying some are rationally ignorant, but those that vote are not? Don't all share holders have a financial interest in the company? Sure, some people have a larger interest, but that's where your corporate governance structure begins to breakdown if applied to civic governance. Who decides how has a larger interest? or who is an informed voter? Is education the determining factor? Wealth?<br /><br />Were profits down at News Corp? I didn't realize shareholders (many you say are rationally ignorant) are omnipotent and can see next quarter's earnings. Now they may have suspected profit would be down because of the scandal, but given the number of quarters that Murdoch had led them to profitability, it could be seen as irrational to throw out such a leader based on the premonition of profit decline.Jasonhttps://www.blogger.com/profile/04621444962752348431noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-12703592338379220692011-08-18T19:36:41.820-04:002011-08-18T19:36:41.820-04:00Jason,
Regarding shareholders, you are correct th...Jason,<br /><br />Regarding shareholders, you are correct that many small shareholders remain rationally ignorant and turn over their voting rights to others (typically fund managers) to vote them. The point, at the end of the day those casting ballots are informed, or at least much more so than the average voter casting ballots for a politician. They are informed because they have an incentive to be -- they have a financial interest in the well being of the company.<br /><br />Regarding Rupert Murdoch, while bad publicity may have been the proximate concern for the ouster, ultimately it is because that publicity would have harmed profits. Profits are why companies exist. As for Steve Jobs, suffice to say he has far more leeway at his organization than Barack Obama does in the US government. I'd be surprised if even Obama would disagree with that. <br /><br />I don't understand how my posts are a pitch for a plutocracy or anything of the kind. They are rather a warning against the flaws inherent in government and the dangers in entrusting such a system with too much power.Colinhttps://www.blogger.com/profile/03573575140584770666noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-81472234774777596982011-08-18T17:33:02.279-04:002011-08-18T17:33:02.279-04:00Colin, a thorough rebuttal. Just a couple points ...Colin, a thorough rebuttal. Just a couple points in response:<br /><br />- <i>"As I said before, voters are rationally ignorant (why spend time researching a plethora of public policy issue when the election is virtually 100% guaranteed not to hinge on your vote),"</i><br /><br />This is a flawed analogy. Most shareholders are rationally ignorant, turning over their voting rights to other, larger share holders who serve as their proxy. The average individual shareholder, if he or she retains her voting rights, is as likely to influence the outcome of a board meeting as the average individual voter.<br /><br />- And to further question the Apple analogy. In the analogy, Jobs = Obama, so Apple's departments = executive departments, and shareholders = Congress. Obama could, much like Jobs, instruct the EPA to enforce regulations (launch a new ipod), if Congress objects they could pass legislation contrary to that directive. If shareholders object to Jobs launching a new ipod, they can remove him as CEO. It's incredibly naive to posit Jobs "just has to keep profits flowing." <br /><br />In light of the scandal of the News of the World, Rupert Murdoch's leadership of News Corp was questioned by his shareholders, not because of lowered profit margins, but rather a decision contrary to the interests of the company as perceived by said shareholders.<br /><br />- In so far as your posts are a theory of governance, they are a pitch for a plutocracy at best and a tyranny of an entrenched, wealthy minority as worst. As you say, democracy is the least worst form of governance. By definition then there is not a better form, whether that governance is based on a corporate governance structure designed to engage with the market or otherwise.Jasonhttps://www.blogger.com/profile/04621444962752348431noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-36631800709091740172011-08-18T15:30:16.258-04:002011-08-18T15:30:16.258-04:00* The Apple to government analogy does work -- jus...* The Apple to government analogy does work -- just not very well in your favor. Both are entities charged with carrying out certain tasks. If the president wants to roll out a new product -- let's call it Obamacare -- he certainly needs buy-in from Congress. Jobs does not need any such permission from his board -- he just has to keep the profits flowing. Any resemblance between democracy and the shareholder/board votes are purely superficial. While both vote, the former has rationally ignorant voters while the latter have very, very informed voters (money has a way of focusing the mind). <br /><br />* I acknowledge that the empire-building critique can be levelled at anything and noted that the private sector "may suffer from many of the same flaws" as government. But, as I also noted, the key difference is that unlike government, private sector entities can be killed off in the marketplace, while government faces nothing of the kind (indeed, a budget increase will probably be the result, with the argument that just a bit more money will turn the organization around). <br /><br />* Politicians, even when not personally flawed, operate within a flawed system with poor incentives. Telling someone that, hey, if they don't like the choices that they should quit their job and go traipse around New Hampshire trying to get someone better elected isn't much of an alternative. Thankfully we can still donate money to those we prefer, and I am encouraged that the internet is empowering the grassroots to make more of a difference.Colinhttps://www.blogger.com/profile/03573575140584770666noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-2528013913665617662011-08-18T15:29:10.527-04:002011-08-18T15:29:10.527-04:00* You state that by and large bureaucracies do a g...* You state that by and large bureaucracies do a good job, but compared to what? How do you arrive at this conclusion? After all, "good" is a relative statement. I can show that government functions are almost invariably inferior to their private sector counterparts where such counterparts exists (e.g. housing, schools, railroads). You can say that our military is the best -- and for the amount of money we spend on it, it better damn well be -- but compared to what? Other government-run militaries? I don't see how any of your points dispprove my contention that the private sector outperforms government, and therefore we should leave as much of our lives to the private sector as possible. <br /><br />Now, obviously many government functions have no private sector equivalent (e.g malaria control) and thus should be kept in the public domain (even Friedrich von Hayek advocated a government role in public health in the context of halting the spread of disease). On those we have no argument. But if something is not an obvious public good and can be run by the private sector (e.g. education) then why shouldn't it?<br /><br />* I think your attribution of bureaucratic failures to the personnel that were in place rather than something systemic is wishful thinking (I can understand the argument that Bush ordered the Minerals and Mines Service to take a three martini lunch under his reign to please his oil buddies, but I fail to see the incentive to wreck FEMA and botch the response to Katrina. Further, was Ray Nagin part of the right-wing conspriracy to turn Katrina into a cluster?). But for the sake of argument let us assume this is correct -- so what? If the bureaucracy only works when true believers win the election and turns into a mess whenever Team Red wins, well that suggests some pretty profound flaws. If your political theory only works provided the other guys never win any elections -- and the GOP can be counted on to win roughly half of all presidential elections -- that's not very workable at all.Colinhttps://www.blogger.com/profile/03573575140584770666noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-9989104715019262242011-08-18T15:28:38.205-04:002011-08-18T15:28:38.205-04:00* It is false that markets are premised on the abs...* It is false that markets are premised on the absence of information asymmetries. Now, markets work better when such asymmetries have been eliminated, but that doesn't mean they don't work at all when they exist. Take the purchase of a television for example. 20 years ago this would have required driving around to a number of different stores to compare prices (and that's if you didnt live out in the country and had several such stores nearby to visit) and talking to numerous people and/or consulting publications to find out how well they work. Information asymmetries were significant -- good luck to the person who only had access to one store and limited access to reviews. Today with the internet such asymmetries are near zero, with access not only to prices but reviews and an explanation of features as well. Does that mean that the television market didn't work 20 years ago? No, obviously it did, but it certainly didn't work as well as it does today. <br /> <br />I would submit that the information asymmetries between politicians and voters are massively greater than those found between consumers and sellers in the marketplace, with poorer results as an outcome.Colinhttps://www.blogger.com/profile/03573575140584770666noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-8157397178561296332011-08-18T15:27:47.121-04:002011-08-18T15:27:47.121-04:00This comment has been removed by the author.Colinhttps://www.blogger.com/profile/03573575140584770666noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-89668073727409201062011-08-18T15:26:58.267-04:002011-08-18T15:26:58.267-04:00* Regarding the government and market, and why som...* Regarding the government and market, and why someone would be rational in the marketplace but irrational in the voting booth, that's pretty simple. First off, I said that *voters*, not people, are irrational (or rationally ignorant). Someone can be a completely irrational voter but a perfectly rational consumer. As I said before, voters are rationally ignorant (why spend time researching a plethora of public policy issue when the election is virtually 100% guaranteed not to hinge on your vote), but consumers are much less so. Indeed, consumers have an incredible incentive to become informed, as failure to do so can produce some big direct costs to them. Is it not plausible that a voter can be ignorant as to even the capital of Iraq (while nonetheless voting) but devote substantial energy to researching the purchase of a television? <br /><br />Second, this is not to say that irrational consumers and market actors do not exist. Sure they do -- people make dumb choices all the time, perhaps purchasing a product because it was endorsed by a particular celebrity. But unlike voting, where we all suffer from their poor decision-making, in the private sector these actors bear the burden alone. This suggests moving more power from the public realm to the private. <br /><br />In fact, the curious stance is not from those of us on the right, but from the political left. Why does the left believe that people are too stupid, irrational or greedy to be left to their own devices -- thus making the case for expansive government -- but can be trusted in the voting booth? That makes absolutely no sense to me. If people are smart enough to run the country, shouldn't they be trusted to run their own lives with minimal government interference?Colinhttps://www.blogger.com/profile/03573575140584770666noreply@blogger.comtag:blogger.com,1999:blog-7665280159887667854.post-82457257136674011912011-08-18T15:26:22.796-04:002011-08-18T15:26:22.796-04:00Well, you knew this was coming. Some points:
* &...Well, you knew this was coming. Some points:<br /> <br />* "Obama was endorsed by celebrities, therefore voters are irrational." That's a strawman and not at all what I said. I noted that he was endorsed by celebrities and argued that some voters were likely influenced by this, which is a silly means of decision-making.<br /> <br />* "Obama’s victory over Sec. Clinton in the 2007–08 Democratic Primaries is attributable to youth, good looks, race, or oration (and, therefore, voters are irrational)." I never said that these were the only reasons -- I instead argued that a non-trivial number of people were swayed by such factors. Does anyone really disagree?<br /> <br />* It is unsurprising that progressives played a key role in Obama's victory, motivated largely by his policy beliefs. But how many voters cast their ballots following an exhaustive study of the issues? I have my doubts it was a majority. <br /> <br />* Single issue voters: I suppose it is possible that someone could be happy that, say, abortion is outlawed, and not really care that -- because of their preferred candidate's other stances -- we're all living on dog food, in a constant state of war, and basic freedoms have been eroded (an extreme scenario meant to illustrate a point). But I doubt it is very many. At the very least we can say that single issue voting, even if rational, can produce suboptimal outcomes (politicians only being held to account on one issue and being given free reign everywhere else).Colinhttps://www.blogger.com/profile/03573575140584770666noreply@blogger.com