ObamaCare - exchanges ,report your states options!

[Phatscotty]

[Night Strike]

It's great being ruled by a dictator!!!

[Phatscotty]

You guys should write a book... wait, nevermind, I think this counts.

TGD, this is a serious discussion. Stay on topic and contribute to the serious discussion that is going on in the Off Topic forum, otherwise someone will create a whole new forum for extra-extra serious discussion.

On topic, this is all over my head. Continue.


--Andy

Thank you for contributing to the point of my post in this thread (I also added a post in the suggestions forum to reinforce the point).

For what it's worth, I suspect universalchiro and Phatscotty did not read any of Mets's or BBS's recent posts in this thread (which Phatscotty has made).

If Phatscotty feels this is too far afield for a topic on ObamaCare, we can move it to a separate thread.

It's precisely on topic (in my opinion... I was a former global moderator, so that carries a little weight).

To make my point bluntly, Phatscotty is upset that he was called about by individuals for saying he cares only about fiscal policy. That point has made its way into a number of threads. He also is apparently pissed about Andy's contributions to serious threads, which most of us have been able to ignore. Again in my opinion, the proper venue is for him to report the individuals with whom he's having a problem; not to suggest a separate subforum for "serious" discussions, which would not actually solve the stated problem. Additionally, the discussion you and BBS have been having is a perfect example of why a subforum is not needed. A serious discussion is being had in this very thread, created by Phatscotty, between two individuals who arguably would be on the list of people who have "derailed" threads with jokes.

I haven't seen it this badly since Woodruff. I'm not going to report anyone, unless they think they can get away with it because they know I won't report people. And trust me, I will know when that happens.....NEITZE!!!!

And I have another suggestion. How about we keep the suggestions discussion in the suggestions thread? There really doesn't need to be a nuclear invasion of 'whose forum is it anyways'.

Chill the F out

[BigBallinStalin]

We're hitting diminishing returns here, so I'll just sum up my position.

(1) Without a clear standard for comparing utilities, people won't know the optimal trade-off between donations and exchanges. It could be the case that 100% trade maximizes net utility or that 99% trade and 1% donations maximize net utility, or ??% donate and ??%trade. Picard can't tell which trade-off is best for himself--much less for the world (in terms of utility).

(2) Regrettably, some people will ultimately behave as if they do know that optimal point for everyone without explicitly stating how. This is done by making arbitrary assumptions of people's utility functions. I don't find this to be very convincing.

(3) Normative positions such as "instead of spending money on frivolous items, we should donate to the worst off in the world," can increase our feeling of Warm and Fuzzies, but there is a lurking danger here. The armchair planning of ethics can become disastrous when it remains oblivious to what actually helps poor people. Think of all the good intentions which have created more harm than good. Much of the donation industry subsidizes poor institutions abroad, thus perpetuating the poverty.

(4) Instead, we should adhere to the normative belief in a liberal order: (a) promote everyone with the freedom from the coercive control of others, while (b) abstaining from the desire to exert coercive control over others. When we examine history, we find that donations have played a relatively minor role in improving the well-being of others. The heavy-lifter is trade coupled with the belief in a liberal order organized by markets with minimal governance (see: England and the Industrial Revolution). This vision of a liberal order has been adopted in marginal degrees, but steps toward this vision have been the main cause in pulling people from the depths of poverty (e.g. the East Asian Tigers, India post-socialist policies, etc.).

Therefore, we can drop the normative position on donating some optimal amount and instead insist on trading with people with whom we feel are most deserving (whoever they may be). Even though buying a Indonesian T-shirt helps multiple people of various incomes across the production process, your purchase along with many others' purchases help coordinate everyone within our global community around the goal of mutually benefiting each other. If you want to donate, then that's still fine, but I won't insist that you must donate. When trading, even the most self-interested dickhead in the world would still be helping others.

(5) The normative vision of a liberal order can provide enough robustness to handle the most selfish while still lifting people out of poverty. A utilitarian vision of obligatory donation cannot.

[Metsfanmax]

OK, we can make this the end of the discussion.

(1) Without a clear standard for comparing utilities, people won't know the optimal trade-off between donations and exchanges. It could either be the case that 100% trade maximizes net utility or that 99% trade and 1% donations maximize net utility. Picard can't tell which trade-off is best for himself--much less the world (in terms of utility).

My standard is clear: increasing the ability of people to obtain life necessities such as clean water and enough food is, in nearly every instance, more important (read: utility-maximizing) than increasing the number of DVDs one owns. Therefore if you have the choice between buying a $15 DVD and buying someone in Africa a week's worth of food, the latter is the more moral action. There's a difference between clarity of the standard and your insistence that it doesn't apply to every single person on the planet.

(2) Regrettably, some people will ultimately behave as if they do know that optimal point for everyone without explicitly stating how. This is done by making arbitrary assumptions of people's utility functions. I don't find this to be very convincing.

Yes, it would be regrettable if someone claimed to know the optimal donation amount for each person. That person clearly wouldn't understand my argument.

(3) Normative positions such as "instead of spending money on frivolous items, we should donate to the worst off in the world," can increase our feeling of Warm and Fuzzies, but there is a lurking danger here. The armchair planning of ethics can become disastrous when it remains oblivious to what actually helps poor people. Think of all the good intentions which have created more harm than good. Much of the donation industry subsidizes poor institutions abroad, thus perpetuating the poverty.

I obviously support paying careful attention to what types of donations one makes, so as to further magnify the impact of one's donation. That is, generally the most effective interventions we know about work directly to improve the health or purchasing ability of the poor, rather than subsidizing institutions that are then supposed to trickle down.

(4) Instead, we should adhere to the normative belief in a liberal order: (1) promote everyone with the freedom from the coercive control of others, while (2) abstaining from the desire to exert coercive control over others. When we examine history, we find that donations have played a relatively minor role in improving the well-being of others. The heavy-lifter is trade coupled with the belief in a liberal order organized by markets with minimal governance (see: England and the Industrial Revolution). This vision of a liberal order has been adopted in marginal degrees, but steps toward this vision have been the main cause in pulling people from the depths of poverty (e.g. the East Asian Tigers, India post-socialist policies, etc.).

I fully believe in a liberal order, and find it to be not mutually exclusive with restructuring how one spends one's disposable income.

Therefore, we can drop the normative position on donating some optimal amount and instead insist on trading with people with whom we feel are most deserving (whoever they may be). Even though buying a Indonesian T-shirt helps multiple people of various incomes across the production process, your purchase along with many others' purchases help coordinate everyone within our global community around the goal of mutually benefiting each other. You can be the most self-interested dickhead in the world, but you'd still be helping others if you trade. The normative vision of a liberal order can provide enough robustness to handle the most selfish while still lifting people out of poverty.

Finally, your standard absurdly claims that if I donate money to a poor person in Africa, then I am somehow giving up on the idea of trade, which is silly because the poor person is going to spend the money that I give to them. And they'll spend all of it in the market that most needs to be reinforced rather than having some of it stay in a developed nation.

[AndyDufresne]

Sorry to butt in again, Mets and BBS.

It's great being ruled by a dictator!!!

Back you go.


--Andy

[thegreekdog]

Sorry to butt in again, Mets and BBS.

It's great being ruled by a dictator!!!

Back you go.


--Andy

Every time I see this dude, I'm reminded of his role as Q. Like when he was on Breaking Bad and he did something stupid (no spoiler alert), I was like, "Just go back and do the ole Q thing!"

[BigBallinStalin]

Finally, your standard absurdly claims that if I donate money to a poor person in Africa, then I am somehow giving up on the idea of trade, which is silly because the poor person is going to spend the money that I give to them. And they'll spend all of it in the market that most needs to be reinforced rather than having some of it stay in a developed nation.

Well, trade != donation because of the difference between the two. A donation is a transferral of wealth, and a trade is an exchange of two goods which each side values more than their own (thus ex-ante is positive-sum, which != a transfer). If you disagree about the exchange, then you'd be wrong because it's an a a priori synthetic proposition. If you disagree about the fact of donations, then please patiently read the next paragraphs together.

Sure, you can argue that each side gains from a donation--but that's strictly in utility terms with presumed utility functions which hold for an unknown amount of people. Nevertheless, it still doesn't follow that a donation != a transfer. A donation is always a transfer--in terms of wealth/income/money.

The underlined follows from a failure to understand opportunity cost and the distinction between trade and donations. Sure, if you donate, they'll spend that as they please, but you've just committed the Broken Window fallacy. Analogously, if I tax you, take the $10, and give it to TGD, then sure, TGD will spend that $10. Does his spending $10 helps markets? Kind of but not at all in the same way as an exchange. (Prices emerge from exchanges, and prices are the most efficient means to coordinate the satisfaction of human wants--wherever property rights and markets can emerge. Main point: donations and taxes don't coordinate markets in the same way that exchanges do).

Has wealth been created from TGD's $10 spending? No, wealth has merely been transferred. Why? Because that $10 could've been spent freely by you on something else (opportunity cost). The potentially additional wealth created from an exchange has been foregone. All that remains is the transferral of wealth from the donation (or tax).

If you disagree, then you'd have to argue that taxation creates wealth instead of transferring it (so you'd have to argue that the Broken Window fallacy is not a fallacy). If you argue that taxation/donation is not a transfer but a creator of wealth--just like an exchange, then you'd be going against standard Kaldor-Hicks cost-benefit analysis, thus orthodox economics. Please be my guest.

(To cut to the chase, the "multiplier effect" is bogus because the econometric approach ignores opportunity cost, thus every tax magically creates wealth. The analysis is fallacious because it ignores the fact of deadweight loss. A reductio ad absurdum about taxation is that natural disasters create wealth).

[Metsfanmax]

Well, trade != donation because of the difference between the two. A donation is a transferral of wealth, and a trade is an exchange of two goods which each side values more than their own (thus ex-ante is positive-sum, which != a transfer). If you disagree about the exchange, then you'd be wrong because it's an a a priori synthetic proposition. If you disagree about the fact of donations, then please patiently read the next paragraphs together.

Sure, you can argue that each side gains from a donation--but that's strictly in utility terms with presumed utility functions which hold for an unknown amount of people. Nevertheless, it still doesn't follow that a donation != a transfer. A donation is always a transfer--in terms of wealth/income/money.

The underlined follows from a failure to understand opportunity cost and the distinction between trade and donations. Sure, if you donate, they'll spend that as they please, but you've just committed the Broken Window fallacy. Analogously, if I tax you, take the $10, and give it to TGD, then sure, TGD will spend that $10. Does his spending $10 helps markets? Kind of but not at all in the same way as an exchange. (Prices emerge from exchanges, and prices are the most efficient means to coordinate the satisfaction of human wants--wherever property rights and markets can emerge. Main point: donations and taxes don't coordinate markets in the same way that exchanges do).

Has wealth been created from TGD's $10 spending? No, wealth has merely been transferred. Why? Because that $10 could've been spent freely by you on something else (opportunity cost). The potentially additional wealth created from an exchange has been foregone. All that remains is the transferral of wealth from the donation (or tax).

If you disagree, then you'd have to argue that taxation creates wealth instead of transferring it (so you'd have to argue that the Broken Window fallacy is not a fallacy). If you argue that taxation/donation is not a transfer but a creator of wealth--just like an exchange, then you'd be going against standard Kaldor-Hicks cost-benefit analysis, thus orthodox economics. Please be my guest.

(To cut to the chase, the "multiplier effect" is bogus because the econometric approach ignores opportunity cost, thus every tax magically creates wealth. The analysis is fallacious because it ignores the fact of deadweight loss. A reductio ad absurdum about taxation is that natural disasters create wealth).

If I spend $10 on food or give $10 to TGD and then he spends it on food, the same amount of wealth is created (to first order), because the same transaction took place. There is no opportunity cost to speak of because I'm talking about taking money that you would have spent on that food, and not spending that money. Instead, you're restructuring your own purchases so that your consumption for goods for yourself is decreased. So, in this sense (and again, to first order), taxation is indeed neither wealth-destroying or wealth-creating, as you say. But there's also no opportunity cost, because that money is being spent on a real trade either way. Since it's not wealth-destroying, but it is utility-maximizing, then it's an obvious win.

The opportunity cost only exists if, by giving TGD the money, I displace another $10 that would have been spent by him. And for TGD, maybe that's true. But it's untrue for people in Africa who would absolutely spend the money if they had it.

[patches70]

Hey, BBS, slavery is an absolutely valid solution to the problems Mets wants addressed. A slave is no good if he starves to death, so slaves have to be fed. Slaves are no good if they freeze to death outside, so you have to house them. Slaves are no good if they get sick and die, so you have to provide medical care. Slaves are no good if they don't know how to do the job one needs them to do, so job training has to be provided. Since slaves aren't paid wages they make idea workers and there will be virtually no unemployment.

There would be slaves feeding other slaves, slaves providing medical care to other slaves, slaves administering other slaves, slaves building housing for other slaves, etc etc.

That solves virtually every problem meeting "basic needs" doesn't it?

Now all that has to be done is making everyone slaves without them realizing they are slaves. Now...how to do that.....maybe by promoting a moral code that exalts the virtues of slavery? Of course you can't call it slavery, maybe collectivist? Neo con? Progressive? I don't know, some one can figure what to call slavery "slavery" without the negative connotations associated.

I don't know, but there seems to be a small problem with the $100,000 guy giving the $0 guy $10. Now the first guy has $99,990 and the other guy now has $10. Now the $10 guy is still so much lower than the other guy, shouldn't the other guy give another $10 to bring the guy up to $20, like everyone else? It seems to me that eventually everyone ends up equally poor in the end.

Maybe I'm missing something. What's wrong with people deciding how much to give to whomever they wish? And what about the $10 guy? Why doesn't he have to give anything? Sure, he can't give money because he has none, but at least he could give a little bit of his time for that $10 from the $100,000 guy, right? Maybe an hour or so doing something for the $100,000 guy. Mow his lawn, trim some hedges, I don't know, something.
From where I come from that's called working and not donation.


If Mets wants to help poor people wherever, then he can come over to my house and mow the lawn, clean the septic tank, fix the fence and some various other things I need done and I'll give him a wad of cash that he can then go on down to the supermarket parking lot and give to some homeless people if he wants. Or he could send it to some poor African who happens to be a down on his luck Nigerian prince and everyone ends up happy. I get some much needed labor done, Mets gets to feel good about helping some poor schmuck and some Nigerian prince gets to pocket some cash with which he can spend on more bandwidth sending messages to other people about his ill fortunes to get more help.

It's win win for everybody!

[patches70]

If I spend $10 on food or give $10 to TGD and then he spends it on food, the same amount of wealth is created (to first order), because the same transaction took place.

But where did you get the $10 you gave to TGD?

If you worked for it, you produced something and were compensated for that work. Thus wealth is actually created. TGD did nothing at all, he spends your $10. You just gave away your labor for nothing to TGD who created nothing at all.

Slowly but surely these types of transactions begin eroding actual wealth because it's pure consumption with no return of resources.


And what about BBS over here? He needs to eat as well, you have to give him $10 since you gave TGD $10, or are you prejudice against funny looking men in dinosaur costumes grinning like a madman?

If you don't have another $10 to give to BBS then I'd suggest you get your ass to work and get some more money to give to everyone else besides just TGD. Fair is fair.

[BigBallinStalin]

Well, trade != donation because of the difference between the two. A donation is a transferral of wealth, and a trade is an exchange of two goods which each side values more than their own (thus ex-ante is positive-sum, which != a transfer). If you disagree about the exchange, then you'd be wrong because it's an a a priori synthetic proposition. If you disagree about the fact of donations, then please patiently read the next paragraphs together.

Sure, you can argue that each side gains from a donation--but that's strictly in utility terms with presumed utility functions which hold for an unknown amount of people. Nevertheless, it still doesn't follow that a donation != a transfer. A donation is always a transfer--in terms of wealth/income/money.

The underlined follows from a failure to understand opportunity cost and the distinction between trade and donations. Sure, if you donate, they'll spend that as they please, but you've just committed the Broken Window fallacy. Analogously, if I tax you, take the $10, and give it to TGD, then sure, TGD will spend that $10. Does his spending $10 helps markets? Kind of but not at all in the same way as an exchange. (Prices emerge from exchanges, and prices are the most efficient means to coordinate the satisfaction of human wants--wherever property rights and markets can emerge. Main point: donations and taxes don't coordinate markets in the same way that exchanges do).

Has wealth been created from TGD's $10 spending? No, wealth has merely been transferred. Why? Because that $10 could've been spent freely by you on something else (opportunity cost). The potentially additional wealth created from an exchange has been foregone. All that remains is the transferral of wealth from the donation (or tax).

If you disagree, then you'd have to argue that taxation creates wealth instead of transferring it (so you'd have to argue that the Broken Window fallacy is not a fallacy). If you argue that taxation/donation is not a transfer but a creator of wealth--just like an exchange, then you'd be going against standard Kaldor-Hicks cost-benefit analysis, thus orthodox economics. Please be my guest.

(To cut to the chase, the "multiplier effect" is bogus because the econometric approach ignores opportunity cost, thus every tax magically creates wealth. The analysis is fallacious because it ignores the fact of deadweight loss. A reductio ad absurdum about taxation is that natural disasters create wealth).

If I spend $10 on food or give $10 to TGD and then he spends it on food, the same amount of wealth is created (to first order), because the same transaction took place. There is no opportunity cost to speak of because I'm talking about taking money that you would have spent on that food, and not spending that money. Instead, you're restructuring your own purchases so that your consumption for goods for yourself is decreased. So, in this sense (and again, to first order), taxation is indeed neither wealth-destroying or wealth-creating, as you say. But there's also no opportunity cost, because that money is being spent on a real trade either way. Since it's not wealth-destroying, but it is utility-maximizing, then it's an obvious win.

The opportunity cost only exists if, by giving TGD the money, I displace another $10 that would have been spent by him. And for TGD, maybe that's true. But it's untrue for people in Africa who would absolutely spend the money if they had it.

With every action, there is an opportunity cost. You choosing to agree or disagree with this post each come with an opportunity cost. You "taking money and putting it in X" comes with an opportunity cost. You "not spending money but doing Y with it" comes with an opportunity cost.

The broken window fallacy is still a fallacy. There's a distinction between exchanges and donations--in terms of the measurable value of the goods (i.e. money/income/wealth). Taxes/donations and exchanges have obviously different consequences for the coordination of market activities. You didn't overcome the reductio ad absurdums of your position. You didn't overcome the problems of your presumed net utility maximization.


Sorry, dude. You failed.

[Metsfanmax]

With every action, there is an opportunity cost. You choosing to agree or disagree with this post each come with an opportunity cost. You "taking money and putting it in X" comes with an opportunity cost. You "not spending money but doing Y with it" comes with an opportunity cost.

The broken window fallacy is still a fallacy. There's a distinction between exchanges and donations--in terms of the measurable value of the goods (i.e. money/income/wealth). Taxes/donations and exchanges have obviously different consequences for the coordination of market activities. You didn't overcome the reductio ad absurdums of your position. You didn't overcome the problems of your presumed net utility maximization.


Sorry, dude. You failed.

You're still asserting that a donation is mutually exclusive with an exchange when I just demonstrated, very simply, how that is false. Your argument how a donation has a "different consequence for the coordination of market activities" is not a flaw in my argument -- it's the point of my argument. I want the market to coordinate itself so that wealth is created in Africa and not the United States. The way to do that is to have people in Africa spending money on trade in Africa (at least, when it comes to marginal individual donations; a different strategy is necessary if you're a large corporation). If you're going to actually make an argument, it has to be better than "don't have to respond cuz opportunity costs LOL."

But where did you get the $10 you gave to TGD?

If you worked for it, you produced something and were compensated for that work. Thus wealth is actually created. TGD did nothing at all, he spends your $10. You just gave away your labor for nothing to TGD who created nothing at all.

Yes, wealth is created. That's why my argument is valid. The only difference is that the recipient of part of my wealth is TGD and not myself. I'm OK with giving away my labor for nothing, if it helps other people. There are second order effects (BBS is possibly hinting at them but not being very explicit), like that my $10 means that TGD won't work as hard. That's obviously not true in the case of TGD; he has a fixed salary, presumably. More importantly, it's not true in the case of impoverished Africans, who obviously don't have enough that they can just stop working when they get a one-time donation. If you don't believe that, then just donate to a microcredit organization instead (which explicitly encourages people to work). In other words, it's patently false to say that donations are inherently not wealth creating, because they allow transactions to occur that otherwise would not have, and in doing so may provide the kick-start to a person's future financial earnings (escaping "the poverty trap," as it is sometimes called). Or I can put this in an American context. If you give $1000 to a homeless person, and without that donation, the homeless person would have lived on the street for years and eventually died, but with the donation, he can buy a suit and get a job, then you've created a significant amount of wealth that otherwise would not have existed. This is a non-trivial example because the market does have non-zero barriers to entry for the poor. In Africa, that translates to the idea (for example) that you can only work if you have enough sustenance to provide you with the energy to work -- i.e. you need enough money to feed yourself before you can afford to feed yourself. If you don't have any to begin with, then you are trapped in a vicious cycle. Providing someone with a donation could be the way out of that.

In the language of the previous conversation, the opportunity cost of not donating is explicitly that you're not helping to bolster the market in developing nations. And it's what BBS has been ignoring (his best attempt was to argue that if I buy an expensive Manhattan dinner that maybe some small fraction of my consumption ends up in Africa).

And what about BBS over here? He needs to eat as well, you have to give him $10 since you gave TGD $10, or are you prejudice against funny looking men in dinosaur costumes grinning like a madman?

Utility is maximized with larger targeted donations. That may not be what you call "fair," but I'm ok with being "unfair" if it's the difference between someone starving and someone living.

Maybe I'm missing something. What's wrong with people deciding how much to give to whomever they wish?

There's nothing wrong with that. I'm trying to convince people that they should decide to give more, and to wish that the targets of the donations should be in developing nations. I feel that this is the logical conclusion of convincing them to agree with a utilitarian moral framework. If you don't want to act morally, that's fine too -- but many people do, and I am speaking to them.

[thegreekdog]

Mets - Let's say if you hadn't given me the $10 for food, I would have done something to earn $10 and then bought food with my own $10? By the way, that's my argument relative to the healthcare law (and the WashPo article).

[BigBallinStalin]

With every action, there is an opportunity cost. You choosing to agree or disagree with this post each come with an opportunity cost. You "taking money and putting it in X" comes with an opportunity cost. You "not spending money but doing Y with it" comes with an opportunity cost.

The broken window fallacy is still a fallacy. There's a distinction between exchanges and donations--in terms of the measurable value of the goods (i.e. money/income/wealth). Taxes/donations and exchanges have obviously different consequences for the coordination of market activities. You didn't overcome the reductio ad absurdums of your position. You didn't overcome the problems of your presumed net utility maximization.


Sorry, dude. You failed.

You're still asserting that a donation is mutually exclusive with an exchange when I just demonstrated, very simply, how that is false. Your argument how a donation has a "different consequence for the coordination of market activities" is not a flaw in my argument -- it's the point of my argument

Trading = allocating wealth on anything but a donation. With trading, you can invest, borrow, consume, and more. What else is there? Nothing. It's trading v. donation--within one's realm of discretionary spending. Hopefully, you understand what's at stake. Now:

The choice is between trading and donation---on the margin (which is what you said you wanted to talk about). Of course, you can both trade and exchange, but we live in a world of scarcity, so it makes sense to get the most 'bang for your buck'. Thus, the question involves the optimal amount between the two; this is a question about marginalism. The choice toward optimality or away from optimality becomes a choice between 1 unit for trading v. 1 unit for donation (marginal analysis). In the real world, choices are made on the margin. I've already talked about this with the Picard example. Unfortunately, you haven't understood, so you've launched yourself into an argument which isn't my position. The choice between trade and donation is not--at the absolute level--exclusive, but it is exclusive on the margin. Why does this matter? Because our topic is about the optimal point between trading and donation. What implication does this have? Donations might be counter-productive, i.e. they might be less better than other options--e.g. 100% trade or 99% trade or whatever. If you understand this point about marginal analysis, then you'll understand what's been wrong with your position. You presume to know the right amount, which is silly. Then, your utilitarian position becomes harmful when there's better options which have better implications for everyone and even the poor--e.g. trade. So, you'll really have to consider how your moral obligation argument can be destructive.

I want the market to coordinate itself so that wealth is created in Africa and not the United States. The way to do that is to have people in Africa spending money on trade in Africa (at least, when it comes to marginal individual donations; a different strategy is necessary if you're a large corporation). If you're going to actually make an argument, it has to be better than "don't have to respond cuz opportunity costs LOL."

If you want the right kind of economic institutions within developing nations, then donations hardly don't bring that about. (Most subsidies--e.g. from the World Bank are counter-productive. Even Habitat for Humanity which builds homes for free is destructive--it displaces workers from the local housing industry. They can't compete against $0.00 per home).

This is why your concern about donations is completely misplaced and often leads to harm--even harming the very poor. Instead, the facilitation of trade encourages the right kind of economic institutions. Trade is most efficient (thus most beneficial to the most people) when it can be conducted across more borders. Having more people to trade with is better. Autarky is stupid; therefore, restricting trading to an arbitrary space (e.g. political/continental boundaries) is stupid. Would you want to produce everything on your own, or would you rather produce some amount while trading for others? Everyone opts for the second choice. Why? Because it results in relatively greater well-being. Don't you want that for Africa? If you hold your current position, you must conclude that you don't want greater well-being for Africa. If you disagree, it's extremely likely that you don't understand the implications of trade. Ask questions instead.

[Metsfanmax]

Mets - Let's say if you hadn't given me the $10 for food, I would have done something to earn $10 and then bought food with my own $10? By the way, that's my argument relative to the healthcare law (and the WashPo article).

I answered this in the above post. You're you in this example. Aren't you earning a salary either way? Isn't getting $10 just going to increase your total consumption instead of encouraging you to work less? And if you're a poor African, you don't have the capability to earn that $10, so it's a moot point.

Trading = allocating wealth on anything but a donation. With trading, you can invest, borrow, consume, and more. What else is there? Nothing. It's trading v. donation--within one's realm of discretionary spending. Hopefully, you understand what's at stake. Now:

The choice is between trading and donation---on the margin (which is what you said you wanted to talk about). Of course, you can both trade and exchange, but we live in a world of scarcity, so it makes sense to get the most 'bang for your buck'. Thus, the question involves the optimal amount between the two; this is a question about marginalism. The choice toward optimality or away from optimality becomes a choice between 1 unit for trading v. 1 unit for donation (marginal analysis). In the real world, choices are made on the margin. I've already talked about this with the Picard example. Unfortunately, you haven't understood, so you've launched yourself into an argument which isn't my position. The choice between trade and donation is not--at the absolute level--exclusive, but it is exclusive on the margin. Why does this matter? Because our topic is about the optimal point between trading and donation. What implication does this have? Donations might be counter-productive, or it might be less better than other options--e.g. 100% trade or 99% trade or whatever. If you understand this point about marginal analysis, then you'll understand what's been wrong with your position. You presume to know the right amount, which is silly. Then, your utilitarian position becomes irrelevant when there's better options which have better implications for everyone and even the poor--e.g. trade.

Your argument is still non-responsive because you continue to not acknowledge that a donation is the same thing as a trade. It's just that someone else is doing the trading instead of you. There's two possible scenarios here:

(A) I spend $15 on expensive food; poor African spends $0 on food.

(B) I spend only $5 by buying cheap food; poor African spends $10 on food.

Thus in either scenario, the same amount of net trade (and therefore wealth generation) is occurring. The only way for you to leverage any kind of offense in this argument is to demonstrate why -- on the margin -- it is worse for total utility for the poor African to be the one creating wealth instead of me.

In other words, in every scenario in which I can choose between spending $10 on trade that gives me a product that I don't need, and having the poor African do it on products that he or she does need, it is utility-maximizing for the latter to occur. The only point at which this strategy becomes suboptimal on the margin is when there are no more poor Africans, or when I have become as poor as they are.

This is why your concern about donations is completely misplaced and often leads to harm--even harming the very poor. Instead, the facilitation of trade encourages the right kind of economic institutions. Trade is most efficient (thus most beneficial to the most people) when it can be conducted across more borders. Having more people to trade with is better. Autarky is stupid; therefore, restricting trading to an arbitrary space (e.g. political/continental boundaries) is stupid. Would you want to produce everything on your own, or would you rather produce some amount while trading for others? Everyone opts for the second choice. Why? Because it results in relatively greater well-being. Don't you want that for Africa? If you hold your current position, you must conclude that you don't want greater well-being for Africa. If you disagree, it's extremely likely that you don't understand the implications of trade. Ask questions instead.

We've already covered this. My marginal dollar spent on any Western institution essentially does nothing to facilitate trade in Africa specifically, whereas my dollar can do something to substantially improve the life of a poor person.

If you want the right kind of economic institutions within developing nations, then donations hardly don't bring that about. (Most subsidies--e.g. from the World Bank are counter-productive. Even Habitat for Humanity which builds homes for free is destructive--it displaces workers from the local housing industry. They can't compete against $0.00 per home).

Why don't you respond to the donation strategies I am actually advocating for (direct cash transfers and microcredit)?

[patches70]

TGD owns a widget factory. He employs BBS who is a good widget maker. Taking into account all the costs associated with producing widgets minus labor and taxes, it costs TGD about $3 to have a widget built. He can sell them for $20. With this consideration, TGD pays BBS $10 per widget BBS makes everyday.

TGD has a profit of $7 per widget made, and the more widgets BBS makes the more money he earns. They are both quite happy with the deal. The widgets themselves are not something that is actually needed by anyone, that is anyone could get by in life without a widget. But people like these little widgets so TGD never has any problems selling them. They are convenient but certainly not anything like the absolute need to eat.

One day, Dear Leader Mets takes over and decrees that everyone buy one less widget and the money they would have spent on that would instead be sent to help the people of Bumfuckistan. The people in Bumfuckistan live wretched lives to be sure. Except for the warlords who rule over everyone else in Bumfuckistan with an iron fist. Why, they even use child soldiers to actually stir up trouble with the neighboring nations around Bumfuckistan. It is a destitute place to be sure.

Now of course Deal Leader Mets sets up a government agency to administer the forced donations that people would have spent on widgets. He promises that 100% of the money forcibly taken donated will make it to those who actually need it. Mets shows this is true by paying all the government administrators and contractors with tax revenue directly from the general fund, not from the stolen donated fund. Of course with such dictatorial regimes there is always a ton of graft, so the cost from the general tax revenue is about 75cents per dollar stolen donated. But 100% of the stolen donated funds goes directly to the warlords people who need it most. It just costs us an arm and a leg to do so, but who cares, we are helping people.

Meanwhile, TGD has some decisions to make. He just had his sales cut in half because on average per year each customer would purchase two widgets per year. Now they are only purchasing one. On top of that, because of the cost of the stolen funds distribution donation program, taxes have increased so now everyone has a little bit less disposable income. Widgets are purchased almost exclusively from disposable income, so that further bites into TGD's sales numbers.

Now, BBS even though he can produce 20 widgets a day, TGD can only sell 10 of those widgets. The other 10 widgets are as good as waste because they aren't sold. BBS is now cut to half days, even though he is a good worker he gets his wages cut in half to help the people of Bumfuckistan.

You see, even though the widgets weren't so important people still wanted them. People who would labor to get those widgets. Why there were people who would dig ditches, build roads, treat sick people, teach children, grow food, serve meals and pretty much everything else that gets done, needs to be done for a society to function. So that those people could spend some of their money buying widgets.

All these people are creating wealth and trading their labor with each other.
The people in Bumfuckistan don't teach any children, don't build any roads, don't grow any food, don't serve any meals. Why they fight with each other for whatever they can get and when they get their meager share of the stolen donation money, they simply say "Where's the rest?".

Eventually, BBS gets laid off because Dear Leader Mets decreed one day that everyone must make the equivalent of $15 a widget made. TGD began losing money so he had to lay off BBS and shut the factory down because people couldn't afford the new price for the widgets (they are after all a luxury, not a basic need). The math doesn't add up you think? $15 goes to BBS, $3 goes to cost so that still leaves TGD with a $2 profit per widget?
No, because the makers of the raw materials now have to pay their workers more, so TGD's costs rise to $8 per widget, $15 labor on top of the tax burden which Dear Leader Mets cannot lower because he has to pay for the stolen fund campaign donation program.

Now BBS enters onto the rolls of needing money from the stolen fund donation program along with lots and lots of other widget makers. The people in Bumfuckistan get pissed because they now get a decreasing share in the stolen funds donation campaign because they have to share that money with dead beats like BBS because of ungrateful employers like TGD.



The money one has to spend in society should be based on the amount of labor, wealth creation or some service provided to society. That way ever resource is constantly refreshed and invested in. In the case of simply giving TGD money for doing nothing, he fails to deliver his share to society's needs and simply consumes without replacing anything.


The best way to help poor people is make it easier for them to do something, anything for anyone through a free exchange. Provide a service, create a product, build a product, it doesn't matter so long as there is someone who wants that product or needs that product. Even the spoiled rotten movie actress or actor provides a service and benefits society in a way, even though they may be a pain in the ass to work with.

About the only people who don't do a damn thing is government employees who are really only middle men who suck out resources when it's not really needed. The case of the donations being a good example.
Instead of you, Mets, being able to give the $10 directly to TGD, if you had to give the $10 to a government agency from which the agency would give TGD money, TGD wouldn't get the whole $10. The administrators of the government agency would have to be paid (after all, presumably they are human and have families of their own they have to feed as well as needs of their own).

It's that middle man who sucks out a lot of the value. Which is why for people to make donations, it's best to do it locally and directly to those in need. If the people giving have any care if as much of their help actually gets to those who need the help.
It seems such a thing is very hard to centrally plan and in doing so become horribly inefficient and wasteful as well as ultimately harmful.

IMO.

[patches70]

(A) I spend $15 on expensive food; poor African spends $0 on food.

(B) I spend only $5 by buying cheap food; poor African spends $10 on food.

But the $15 you spent was gotten by digging a ditch that keeps flooding from happening on a field. Your labors ensure a health crop to come. What did the poor African do to earn that $10 he spent on food and why do you think the poor African even received any of that $10?

Did you take a flight to Africa and put the $10 in his hand?
Did you donate to some organization that ultimately put that $10 in the African's hand?
If the latter, how much of your $10 had to be used to get that $10 to Africa?
If you think there wasn't a cost involved just to move your $10 to that African's hand then you've lost your mind.

If instead you had spent that $15 to people who also created products, wealth or services, they between the two of you you both contribute to replenishing the supplies need for people to live and eat, including that African.

So when you think you are giving $10 to that poor African you are really only giving $1 to that poor African. Meanwhile, there is a guy in your town, sitting on streets you walk down, who is hungry. You hand him $10 and you know for a fact that every bit of your money went to exactly where you wanted it to. And you don't need anyone else to help facilitate that transaction either! No middle man at all that ends up just sucking out portions of your donation.

[Metsfanmax]

(A) I spend $15 on expensive food; poor African spends $0 on food.

(B) I spend only $5 by buying cheap food; poor African spends $10 on food.

But the $15 you spent was gotten by digging a ditch that keeps flooding from happening on a field. Your labors ensure a health crop to come. What did the poor African do to earn that $10 he spent on food

The poor African is presently working harder than any of us in the US just to stay alive, and is barely making enough to subsist. That's not 'fair' in any sense of the word.

and why do you think the poor African even received any of that $10?

Did you take a flight to Africa and put the $10 in his hand?
Did you donate to some organization that ultimately put that $10 in the African's hand?
If the latter, how much of your $10 had to be used to get that $10 to Africa?
If you think there wasn't a cost involved just to move your $10 to that African's hand then you've lost your mind.

Look up GiveDirectly. Because they donate to accounts linked to cell phones, and thus the overhead is very low, over 90% of the donation actually gets into the hands of the recipients. So while the transaction cost took out a little under $1, that's still much better than spending that money on goods in the U.S. (from the perspective of maximizing utility).

If instead you had spent that $15 to people who also created products, wealth or services, they between the two of you you both contribute to replenishing the supplies need for people to live and eat, including that African.

Very little of what I spend in the U.S. will actually help the African person. Certainly much less than 90%.

So when you think you are giving $10 to that poor African you are really only giving $1 to that poor African. Meanwhile, there is a guy in your town, sitting on streets you walk down, who is hungry. You hand him $10 and you know for a fact that every bit of your money went to exactly where you wanted it to. And you don't need anyone else to help facilitate that transaction either! No middle man at all that ends up just sucking out portions of your donation.

This argument would be persuasive if the transaction costs were as high as you say. But they're not.

Also, it's not even true that my money went exactly where I wanted it to. A homeless person in the U.S. is significantly better off than a homeless person in Africa.

[thegreekdog]

Mets - Let's say if you hadn't given me the $10 for food, I would have done something to earn $10 and then bought food with my own $10? By the way, that's my argument relative to the healthcare law (and the WashPo article).

I answered this in the above post. You're you in this example. Aren't you earning a salary either way? Isn't getting $10 just going to increase your total consumption instead of encouraging you to work less? And if you're a poor African, you don't have the capability to earn that $10, so it's a moot point.

[/quote]

We're arguing different things (my fault entirely). I'm saying we have a law (the ACA) that encourages people not to work by giving money to those people.

[thegreekdog]

TGD owns a widget factory. He employs BBS who is a good widget maker. Taking into account all the costs associated with producing widgets minus labor and taxes, it costs TGD about $3 to have a widget built. He can sell them for $20. With this consideration, TGD pays BBS $10 per widget BBS makes everyday.

TGD has a profit of $7 per widget made, and the more widgets BBS makes the more money he earns. They are both quite happy with the deal. The widgets themselves are not something that is actually needed by anyone, that is anyone could get by in life without a widget. But people like these little widgets so TGD never has any problems selling them. They are convenient but certainly not anything like the absolute need to eat.

One day, Dear Leader Mets takes over and decrees that everyone buy one less widget and the money they would have spent on that would instead be sent to help the people of Bumfuckistan. The people in Bumfuckistan live wretched lives to be sure. Except for the warlords who rule over everyone else in Bumfuckistan with an iron fist. Why, they even use child soldiers to actually stir up trouble with the neighboring nations around Bumfuckistan. It is a destitute place to be sure.

Now of course Deal Leader Mets sets up a government agency to administer the forced donations that people would have spent on widgets. He promises that 100% of the money forcibly taken donated will make it to those who actually need it. Mets shows this is true by paying all the government administrators and contractors with tax revenue directly from the general fund, not from the stolen donated fund. Of course with such dictatorial regimes there is always a ton of graft, so the cost from the general tax revenue is about 75cents per dollar stolen donated. But 100% of the stolen donated funds goes directly to the warlords people who need it most. It just costs us an arm and a leg to do so, but who cares, we are helping people.

Meanwhile, TGD has some decisions to make. He just had his sales cut in half because on average per year each customer would purchase two widgets per year. Now they are only purchasing one. On top of that, because of the cost of the stolen funds distribution donation program, taxes have increased so now everyone has a little bit less disposable income. Widgets are purchased almost exclusively from disposable income, so that further bites into TGD's sales numbers.

Now, BBS even though he can produce 20 widgets a day, TGD can only sell 10 of those widgets. The other 10 widgets are as good as waste because they aren't sold. BBS is now cut to half days, even though he is a good worker he gets his wages cut in half to help the people of Bumfuckistan.

You see, even though the widgets weren't so important people still wanted them. People who would labor to get those widgets. Why there were people who would dig ditches, build roads, treat sick people, teach children, grow food, serve meals and pretty much everything else that gets done, needs to be done for a society to function. So that those people could spend some of their money buying widgets.

All these people are creating wealth and trading their labor with each other.
The people in Bumfuckistan don't teach any children, don't build any roads, don't grow any food, don't serve any meals. Why they fight with each other for whatever they can get and when they get their meager share of the stolen donation money, they simply say "Where's the rest?".

Eventually, BBS gets laid off because Dear Leader Mets decreed one day that everyone must make the equivalent of $15 a widget made. TGD began losing money so he had to lay off BBS and shut the factory down because people couldn't afford the new price for the widgets (they are after all a luxury, not a basic need). The math doesn't add up you think? $15 goes to BBS, $3 goes to cost so that still leaves TGD with a $2 profit per widget?
No, because the makers of the raw materials now have to pay their workers more, so TGD's costs rise to $8 per widget, $15 labor on top of the tax burden which Dear Leader Mets cannot lower because he has to pay for the stolen fund campaign donation program.

Now BBS enters onto the rolls of needing money from the stolen fund donation program along with lots and lots of other widget makers. The people in Bumfuckistan get pissed because they now get a decreasing share in the stolen funds donation campaign because they have to share that money with dead beats like BBS because of ungrateful employers like TGD.



The money one has to spend in society should be based on the amount of labor, wealth creation or some service provided to society. That way ever resource is constantly refreshed and invested in. In the case of simply giving TGD money for doing nothing, he fails to deliver his share to society's needs and simply consumes without replacing anything.


The best way to help poor people is make it easier for them to do something, anything for anyone through a free exchange. Provide a service, create a product, build a product, it doesn't matter so long as there is someone who wants that product or needs that product. Even the spoiled rotten movie actress or actor provides a service and benefits society in a way, even though they may be a pain in the ass to work with.

About the only people who don't do a damn thing is government employees who are really only middle men who suck out resources when it's not really needed. The case of the donations being a good example.
Instead of you, Mets, being able to give the $10 directly to TGD, if you had to give the $10 to a government agency from which the agency would give TGD money, TGD wouldn't get the whole $10. The administrators of the government agency would have to be paid (after all, presumably they are human and have families of their own they have to feed as well as needs of their own).

It's that middle man who sucks out a lot of the value. Which is why for people to make donations, it's best to do it locally and directly to those in need. If the people giving have any care if as much of their help actually gets to those who need the help.
It seems such a thing is very hard to centrally plan and in doing so become horribly inefficient and wasteful as well as ultimately harmful.

IMO.

In real life I would lobby the shit out of Dear Leader Mets, try to get him to invade Bumfuckistan, and then set up a subsidiary in Bumfuckistan so I can pay Bumfuckistanis rather than BBS.

[Metsfanmax]

We're arguing different things (my fault entirely). I'm saying we have a law (the ACA) that encourages people not to work by giving money to those people.

I understood your argument, but the amount by which someone is discouraged to work is controlled by, among other factors, 1) the size of the donation (health care subsidy) and 2) the amount of wealth already amassed. A $10 donation to a person with $100,000 is not enough to meaningfully encourage him to work less. A $100 donation to a person with $10 is not enough to seriously encourage someone to work less either (and in fact, may be more likely to encourage them to work -- cf. the poverty trap argument above).

In principle, I like schemes like the EITC that, while redistributing wealth, simultaneously give people an incentive to work more.

Re: patches' long post. I'm not trying to centrally plan anything here. I am just trying to convince people, on the individual level, that they are morally obligated to donate. I have no idea how to properly handle centrally planned foreign aid, so I'm not trying.

[patches70]

I am just trying to convince people, on the individual level, that they are morally obligated to donate.

Actually, there is nothing wrong with you doing that. So long as you don't turn to government to force people to do what you want when you are unable to convince them to give the someone on the other side of the world as opposed to people in their own neighborhood. Or not give at all.

The problem arises when people can't take no for an answer and turn to coercive (or more coercive) means. By all means attempt to get people to contribute to Bumfuckistan and keep spamming with your pet donation sites all you wish. Not a thing wrong with that IMO.

But don't go using coercion of any type. "Morally obligated" to share with <pick whom you think should get help> gets a bit untenable when you start trying to say this group deserves help more than this other group.
Individuals assign their own value on such things. Trying to guilt people into your schemes isn't much better than the Evangelical oil salesman scamming people out of their money to save their souls from Hell.

In real life I would lobby the shit out of Dear Leader Mets, try to get him to invade Bumfuckistan, and then set up a subsidiary in Bumfuckistan so I can pay Bumfuckistanis rather than BBS.

And you know, that just may actually improve the quality of life for the average Bumfuckistani. But then you'd be accused of running a sweatshop like another widget producer <cough cough Apple>. At least the people of Bumfuckistan would actually be producing something of value to the rest of the world.

Of course, while you benefit from this, BBS is crap out of luck as is the rest of the American citizens who end up paying for it all. As well as any soldiers who might happen to be killed along with their grieving families back home. I'm sure they'd take heart that their loved ones sacrifice was worth making TGD Inc even more rich.

I ain't got no problem with companies producing things, trying to find the best deals possible on labor and other costs. But it starts getting all fuzzy (to say the least) when corporations start getting government and her military involved to better their positions.

The open door policy between Corporations and Government is quite a corrupting effect, IMO.

But that's another story, a story more in line with the ACA.....
Hahahaha!
That's what the ACA is isn't it? A corporate grab using government to better their bottom line. Meanwhile the government spits out lies, unfulfilled promises and crushing debt.
We get what we deserve I suppose.

[patches70]

Look up XXXXXXXXXXX. Because they donate to accounts linked to cell phones, and thus the overhead is very low, over 90% of the donation actually gets into the hands of the recipients. So while the transaction cost took out a little under $1, that's still much better than spending that money on goods in the U.S. (from the perspective of maximizing utility).

[

I'm going to be honest here and tell you right off the bat that I'm not going to look up your spam. But I have to ask, the donations go to accounts linked to cell phones?

Is that people who donate have to have cell phones?
Or is it the people who receive have to have a cell phone account?

If it's the former, that still doesn't guarantee a damn thing about where the money actually goes and who gets it.
If it's the latter, then you are donating to people who have cell phones but no food to eat?

I've seen pictures of destitute Africans before and never once have I seen one with a cell phone.

Naw, it's a waste of money to give to nations where the government is dictatorial. That money is all too often siphoned off by the ruling regimes and helps keep those regimes in power which thus keeps harming the very people trying to be helped even more. I guess we could always send in the Marines. "We're here to help you even if we have to kill you!"

I admit there are no easy answers, it may be that violence is the best answer. It's better to go to war to open reliable aid shipments than to go to war over corporate interests.
Oh wait, it's the corporate interests who will be delivering that aid. Catch 22's every where! Are moral obligations always filled with such contradictions?

I truly hope you succeed though, Mets, convincing everyone to get everyone else to the same level of living standard as the one you are used to. Because that's just what the world needs, a high standard of living across the entire planet on a world with limited resources.
What could possible go wrong with that.

[Metsfanmax]

Is that people who donate have to have cell phones?
Or is it the people who receive have to have a cell phone account?

If it's the former, that still doesn't guarantee a damn thing about where the money actually goes and who gets it.
If it's the latter, then you are donating to people who have cell phones but no food to eat?

I've seen pictures of destitute Africans before and never once have I seen one with a cell phone.

It's the latter. Cell phone penetration is actually fairly high in certain countries, even when people are very poor. Something like 1/3 of Kenyans have a cell phone, despite the GNI per capita being the equivalent of less than $5/day income.

Naw, it's a waste of money to give to nations where the government is dictatorial. That money is all too often siphoned off by the ruling regimes and helps keep those regimes in power which thus keeps harming the very people trying to be helped even more. I guess we could always send in the Marines. "We're here to help you even if we have to kill you!"

I am not asking for donations to the nations, I am asking for donations to individuals in the nations.

I truly hope you succeed though, Mets, convincing everyone to get everyone else to the same level of living standard as the one you are used to. Because that's just what the world needs, a high standard of living across the entire planet on a world with limited resources.
What could possible go wrong with that.

I am asking people to cut back on their standard of living, so that they can improve the lives of others. People who were born in America are wealthy due to pure circumstance rather than having put in special effort that people in Africa do not. That is not fair, but there's a way to rectify that lack of fairness by leveling out the wealth inequality.