a new economic paradigm: pragma-socialism

imagine if we could choose where our taxes go. taxes would still be mandatory, but we could personally decide how our own tax dollars were divided between defense, education, healthcare and everything else the government supplies. over time, would the tax rate go up, down, or stay the same?

the tax rate would go up, all the way up to 100%. everything would be free. there would be no prices or profits or private goods. all goods would be public goods. nobody would have to work.

i call this "pragma-socialism" (ps). regardless if you're a capitalist or socialist or somewhere in between, i'm sure that ps sounds crazy to you but please carefully consider my logic. if my logic doesn't make sense, i highly recommend copying and pasting this post into grok ai and asking for the cliff notes version.

capitalists and socialists should both appreciate and understand the idea that you shouldn't bite the hand that feeds you. in fact, if you think about it, how strange is it that this expression even exists? shouldn't this be common sense?

the caldo de rez lesson: the power of reciprocation

many years ago here in los angeles my poor neighbor from el salvador gave me the best soup of my life. it was beef soup "caldo de rez" filled with carrots, celery, yuca, chayote and other veggies. i definitely didn't bite her hand. because i loved the soup so much, i felt greatly indebted to her. she gave me the soup as a gift, no strings attached, but since i valued it so highly, i felt like i owed her a lot. so i reciprocated by sharing with her bags of tropical fruit from my trees.

hopefully its intuitive that reciprocation is a good thing. nobody wants to be in a one-sided relationship. when we do a favor, we expect to receive a favor. you scratch my back, i'll scratch yours. this makes relationships mutually beneficial as opposed to parasitic.

what might not be so intuitive is the idea that in all cases, there's some optimal amount of reciprocation. this brings us to traditional economics...

the core paradox of traditional economics

• free-riding: a bad thing
• consumer surplus: a good thing

paying nothing (free-riding) is bad, but getting a deal (consumer surplus) is good? except, doesn't paying nothing count as the best possible deal? these two concepts clearly conflict, which is why this is the most important paradox of traditional economics. resolving it depends on recognizing that in all cases, there exists an optimal payment.

let's backtrack to our first common ground: you shouldn't bite the hand that feeds you. why not? because the hand will stop feeding you. biting the hand that feeds you is like shooting yourself in the foot. rather than bite the hand, put a gift in it. the bigger the gift, the more likely the hand will continue to feed you.

pricing vs. honest valuation

if, rather than receiving the "caldo de rez" soup from my neighbor, i had ordered it at a restaurant she started, how much would i have paid? i would have paid the price on the menu. no more, no less.

x = $20 (menu price of the soup)
y = $100 (my valuation of the soup)
y - x = $80 (consumer surplus)

$80 dollars of consumer surplus means that i got a really good deal! the problem is, there's a big difference between putting $20 in my neighbor's hand and putting $100 in it.

$20 = "i really like this soup"
$100 = "i really love this soup!!!"

consider the tax choice alternative at the current tax rate (ie 50%). instead of my neighbor starting a restaurant, she starts a soup kitchen. there's a menu but no prices. should i try and get a deal? there's no point. if i allocate $20 of my taxes to her soup, its not like i can spend the "saved" $80 on some private good like clothes. all i can do is spend the $80 on some other public goods. therefore, i might as well allocate $100 of my tax dollars to her soup. since i'm more honest with her and everyone else about the true depth of my love for her soup, everyone makes more correctly informed economic decisions.

basically...

x = don't bite the hand that feeds you
y = honestly reward the hand that feeds you

x isn't enough. for maximum abundance we need y.

when it comes to economics, honesty is the best policy. if consumers are more honest and transparent about their valuations, producers will make better use of society's limited resources.

this is why with tax choice the tax rate will go up. in the public sector, consumers will be more honest, so they will get more benefit. they will want to spend more money in the public sector, which is why congress will increase the tax rate, and more and more goods will change from private to public, until all goods are public.

the public will own the means of production, but what's produced will be entirely determined by the invisible hand.

the invisible hand: gas pedals, brakes, and beehives

here's what a socialist economist wrote about the invisible hand...

>the system of free competition is a rather peculiar one. its mechanism is one of fooling entrepreneurs. it requires the pursuit of maximum profit in order to function, but it destroys profits when they are actually pursued by a larger number of people. - oskar lange, on the economic theory of socialism: part two

i love it. not because i agree with it, but because it perfectly reveals what socialism is missing.

a long time ago oranges were ultra rare and expensive. growing them was extremely profitable. but as more and more people grew oranges, and the supply went up, their prices came down. now oranges are abundant and affordable. the high prices effectively recruited more farmers to grow oranges. except, imagine if more and more farmers grew oranges until it was the only crop in the world. there wouldn't be anything else to eat. so while the gas pedal is important, so is the brake pedal.

bees don't have prices or profits. when a forager finds a valuable patch of flowers, she quickly flies back to the hive and dances long and hard to recruit other foragers to the flower patch. many hands make light work. what effectively persuades the onlooking bees of the value of her discovery, is the amount of her precious calories she is willing to sacrifice dancing for the patch. they fly out to inspect the patch for themselves, and return to the hive to recruit more foragers. this is the gas pedal... rapid recruiting. but no flower patch lasts forever. when its harder and harder for foragers to find unvisited flowers at this patch, they will dance less and less energetically for it. this is the brake pedal.

the invisible hand is based on signals. the most important thing about signals is their accuracy. the more accurate the signals, the more optimal the distribution of resources. this is true whether we're talking about a beehive or a human society.

ownership and the problem with pricing

let's consider another socialist morsel...

>following a three-hour time-off-for-personal-exploration period, an excited sylvia returns to the campsite and announces: "i've stumbled upon a huge apple tree, full of perfect apples." "great," others exclaim, "now we can all have apple sauce, and apple pie, and apple strudel!" "provided, of course," so sylvia rejoins, "that you reduce my labour burden, and/or furnish me with more room in the tent, and/or with more bacon at breakfast." her claim to (a kind of) ownership of the tree revolts the others. - g.a. cohen, the socialist’s guide to camping

her claim over the tree is what allows her to "sell" the apples. in the absence of her selling the apples, how else will we know their worth? if we don't know their worth, then how will we know how many apple trees should be planted?

ownership -> pricing -> recruitment

this works, but not optimally. as the bees clearly prove, ownership isn't necessary for optimal recruitment. in fact, pricing results in suboptimal recruitment. we don't equally value apples anymore than bees equally value apple flowers. we all value everything differently. when the economy is directed by everyone's true valuations, then recruitment will be optimal.

decentralized applications: donation ranking

practically speaking, tax choice is way out of reach. but imagine if trader joes puts on their homepage a list of their products ordered by donations (made to trader joes). if you love a product, and are worried about trader joes discontinuing it, you could donate to move it higher on the list. the higher a product is on the list, the less likely that it will be discontinued.

a socialist might knee jerk react that wealthy people would have too much influence on the ranking of trader joes products. but this objection doesn't make sense, given that wealthy people would be voluntarily giving more of their money away. nobody should object to a rich person voluntarily putting $2000 into my poor neighbor's hand instead of $20.

poverty only exists because the current treasure map sucks. a while back i visited my friend in culver city. from her front yard, i could see in the distance something bright orange on a tree right next to obama blvd. we walked towards it and confirmed my guess... it was a chicken of the woods mushroom, perfectly ready to harvest and enjoy. countless people, poor and rich alike, had walked and driven right past it. their loss was my benefit? in reality nobody in a society benefits when its members regularly overlook treasure.

even way more within reach than trader joes, imagine if everyone had a homepage where anyone could post anything and rank the items using donations to the owner of the homepage. what would be the top ranked content on your homepage? some possibilities... exercise more. eat healthier. quit smoking. read the wealth of nations. watch chungking express. listen to yo la tengo. don't drop out of college. become a mormon. replace your lawn with a food forest. people will give you a lot of advice and suggestions for free, but what information will they be willing to pay for you to prioritize? maybe your top ranked item on your homepage will be... switch to geiko.

no man is an island. many of the numerous things we do on a daily basis have an impact on others. being ignorant about this impact isn't beneficial, its highly detrimental. therefore, communication. we like using words to try and convey value, but words are cheap, which is why sacrifice is so prominent in both religion and economics. sacrifice is a reliable and trustworthy measure of value. well, it should be, and can be.

i love capitalism so much. sadly, i suck at writing. if you don't understand this post then please copy and paste it into your favorite ai for clarification.

why do i love capitalism? because i love fruit trees. thanks to markets, there's a wide variety of affordable fruit trees available for purchase.

personally i wish that fruit trees were everywhere. unfortunately, my hoa doesn't allow fruit trees to be planted in common areas. i know the reasons by heart... the fruit attracts rats and other pests, the fallen fruit is messy and slippery, people might climb the trees to pick the fruit and break their necks falling out of them, and so on.

my workaround has been donating my time, labor, and fruit trees to plant in neighbors' front yards, creating an informal arrangement where anyone in the community is welcome to pick the fruit. basically i go around the hoa.

yes, i know how to change the hoa using civics 101. i know that i can gather signatures, and if that doesn't work i can run for the board. and if that doesn't work i always have the option to just leave the community.

the incoherence that needs to be solved is that my hoa is socialist or communist or whatever. we can debate what it is, but we shouldn't debate what it isn't... it isn't capitalist. neither is starbucks. no organization is capitalist. it might sound strange to hear that for-profit companies aren't capitalist.

what I’m saying isn't new. if its new to you, then you've been super screwed by schools just like everyone else. it makes sense... since schools aren't capitalist, why would they teach you about ronald coase? coase was the one who attempted to explain why corporate firms themselves aren't actually capitalist. he used a quote by d.h. robertson, describing organizations as 'islands of conscious power in this ocean of unconscious co-operation like lumps of butter coagulating in a pail of buttermilk'.

what coase missed is how easy it would be for every organization to actually be capitalist. for my hoa, rather than letting a committee decide whether fruit trees should be planted in common areas, the community would decide by donating for either yes or no. whichever side donated the most money to the hoa wins. not only would this lower hoa dues, but individuals would be using their own money to steer the hoa in the most valuable direction—as opposed to the current system, which lets a small handful of popularity-contest winners steer it in a far less valuable direction.

introducing this simple 'decision by donation' (dbd) system would easily transform my hoa from socialist to capitalist. the proof of its validity is irrefutable when you look at its critics: the number-one objection to dbd is that it would give too much influence to wealthy individuals. this argument is entirely ignorant. dbd doesn't grant disproportionate influence to the rich—it gives every individual the freedom to exercise the influence that they've already earned.

so the incoherence of capitalism is the notion that its beneficial to have countless spaces, both big and small, where people don't have the freedom to exert their earned influence. this freedom either is, or isn't, important. which is it?

because i love capitalism, i am acutely aware of its absence. it’s the same with fruit trees. when i walk into a public park and immediately notice the total absence of fruit trees, i recognize it as the direct result of a total absence of capitalism within the park's organization. the solution is simple, and it is entirely within our reach. we all belong to multiple organizations. all that is necessary is to introduce dbd, lightly disguised as a fundraiser. that’s it. the wolf, disguised in sheep's clothing, will tear socialism to shreds.

ficus petiolaris/palmeri and ficus socotrana in southern california (vista) are starting to be pollinated by one or more wasps. the figs are ripening and their seeds are fertile.