Theme: Governance

PARETO VS NASH – THE PURPOSE OF GOVERNMENT

–“Should we only promote exchanges that are net Pareto improvements?”—

I think that we should only facilitate exchanges that produce no (known) negative externalities (those which cause involuntary transfers); and that if we facilitate exchange in such a matter, we will achieve a Nash equilibrium. (as we did with monogamy, ad as we have with the market.)

But I think a Pareto optimum is a Keynesian, Platonic, Analytic fallacy: such a thing is unknowable, and causes negative externalities no matter what we do. Our problem is not good collective decision making (the fallacy of the enlightenment) but facilitating moral exchanges between classes with heterogeneous interests – just as we do in the market.

The problem is that we cannot produce all goods and services in the market because someone always experiences loss of opportunity. Whereas in the production of commons we are generally prohibited from the consumption or privatization of the commons – and as such the majority of effort going into the commons is to pool capital and prohibit its consumption. The incentives of the market for goods and services are the precise inverse. Competition for and consumption of commons merely prohibits their construction by disincentivizing their production. Whereas in the market, lost opportunity (or selling at a lost) is useful information that provides incentives to make better use of your own and others’ resources.

The ‘we’ if their is to be such a thing in government, is to advocate for exchanges, not monopoly rules by which we advance the interests of some by mere majority rule.

Each imposition by force, is a lost opportunity for exchange. Each forced imposition, constitutes a lost opportunity for exchange, which in turn is a loss of opportunity to create a moral society free of involuntary transfers.

The only law is thou shalt not steal or cause loss, directly or indirectly. As such all political decisions are decidable. The poor can always contribute. The fallacy is that their contribution must come in in the production of goods and services, rather than in the production of the voluntary organization of production that we call morality, property rights, and the market. It also assumes that maintenance of the commons (which is what makes a place beautiful and desirable) is the province of those who engage in production of goods and services, rather than those who engage in the production of the commons both physical, and normative, and legal: the voluntary organization of production.

Arguing otherwise is to say that someone must pay the high costs of forgoing consumption (theft, free riding, privatization, rent seeking) for permission to enter the labor force, rather than permission to participate in the market.

We do it wrong so to speak. That does not mean we cannot do it right.

Curt Doolittle

The Propertarian Institute

Kiev Ukraine