From: Anders Sandberg (asa@nada.kth.se)
Date: Wed Mar 12 2003 - 16:08:15 MST
On Wed, Mar 12, 2003 at 02:01:04PM -0800, Hal Finney wrote:
> I wanted to explain and comment on the paper by Groves and Ledyard
> that I mentioned in another thread, Optimal Allocation of Public
> Goods (http://www.finney.org/~hal/GrovesLedyard.pdf, temporarily).
> This paper shows how a government can provide public goods at what is
> called a Pareto-optimal level, which means in effect that you can't
> improve the situation for anyone unless you make someone else worse off.
Interesting. Seems to be a neat trick.
The basic problem isn't that the allocation is unfair, but that
political pressures can introduce more stuff as "public goods".
Are puppet theaters public goods taxpayers should fund? At
least in Sweden they are :-) So this means the government can
introduce a nearly arbitrary number of new goods to vote about.
It is a bit like direct democracy: we all may vote, but who
defines what we are allowed to vote about? Maybe there should
be some kind of voting process to add and remote public goods.
But if I can get a minimal tax on all of you to end up favoring
my group, then I'm better off and you don't feel much worse off
- until everybody does it, which means the money ends up in the
pockets of those who get to represent the biggest groups.
And what would the default M be? If a new dial appears on all
our taxameters set to M_gov, then I will find that lowering my
dial will cost me, so I won't lower my dial very much even if I
think the new good is useless. The same goes for everybody
else, which means that the inertia in the system will lead to
people voting for an allocation of nearly M_gov for something
none might actually want. So maybe a better rule would be that
any new public good should start out with an allocation of zero
(after all, that was the state before the new dial anyway), but
now we get the opposite effect: it is hard to raise the
allocation to the level people might want, even if we all want
it.
These are likely manageable problems given the basic system.
Over time things would likely stabilize. People would try to
convince each other to change their dials in concert. Compared
to the current system it seems quite reasonable.
Maybe a more serious issue is how it would affect change in the
economy. This is a very neoclassic model. But what about
entrepreneurs and dynamic destruction?
-- ----------------------------------------------------------------------- Anders Sandberg Towards Ascension! asa@nada.kth.se http://www.nada.kth.se/~asa/ GCS/M/S/O d++ -p+ c++++ !l u+ e++ m++ s+/+ n--- h+/* f+ g+ w++ t+ r+ !y
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