Replace Voting With Spending

1. People are unequally informed. 2. Voting gives people equal influence. 3. It's a problem when unequally informed people have equal influence. 4. The solution is to replace voting with spending. Have you ever been to a dog show? I haven't. My interest in dogs is less than the cost (time/effort/ticket) of the show. But if Samantha offered me $100 to accompany her to a dog show, then I'd accept it. Dogs at shows are judged by a small handful of experts. They might also have a people's choice award. Everybody can vote for their favorite dog. I might vote for my favorite dog. The cost would be less than my interest. But if voting was replaced with spending, I probably wouldn't be willing to spend more than 25 cents. This amount would roughly equal my interest/information. The majority of people at the show are going to be far less informed/interested than the minority. voting (democracy) = tyranny of the majority/ignorant spending (markets) = tyranny of the minority/informed In terms of dogs, I'm in the majority. But in terms of economics, I'm in the minority. I've purchased far more books about economics because I'm far more interested in economics. Information and interest go hand in hand. Based on my info, Adam Smith's Wealth of Nations is far more important than Thomas Piketty's Capital. Yet, unlike Piketty's book, Smith's book has never made the NY Times bestseller list. So Smith's book is less important than Piketty's book? The "minor" detail is that Smith's book is freely available online. Why buy the cow when you can get the milk for free? It might seem like market failure, but the failure was the market design. Fully appreciating the failure of market design depends on fully understanding markets. Say you spend your money on Piketty's book. It's easy to see that you exchanged your money in order to acquire the book. You wanted it, so you bought it. But the act of buying his book has consequences. The most obvious is that you now own a copy. Less obviously, your money helped increase the importance of his book, which changed the allocation of society's limited resources. The basic economic problem is... Society's resources: limited Society's wants: unlimited Society's limited resources (ie attention) must be divided somehow among society's unlimited wants (ie books). When you spent your money on Piketty's book, you... 1. acquired it 2. divided society's resources Which is more important, acquiring or dividing? Dividing is more important because it determines what's available to acquire. Everything that's currently available to acquire is the result of how society's resources have been divided. The quantity/quality of economics books that are now available is the result of how society's resources have been divided. When we focus on the acquiring, it seems great that Smith's book is freely available. But when we focus on the dividing, then the problem should be clear. If you appreciate Smith's book, but you don't spend any money on it, then you're failing to help improve the division of society's limited resources. As a result, the future supply (what will be available to acquire) will provide you with less benefit. So how much money should you spend on Smith's book? The amount that you spend on it should correctly reflect/signal your perception of its importance. With this in mind, the standard market design (SMD) didn't just fail for Smith's book, it also failed for Piketty's book. Most people who purchased it paid the same price even though they unequally value it. Imagine that we use this website to help improve our understanding of the social importance of the two books. Should we simply vote to determine their importance? Nope. Again, the problem is that the majority is less informed than the minority. Tyranny of the ignorant produces untrustworthy results. In order to minimize fake news, spending must replace voting. People wouldn't spend their money to buy the books. Instead, they would spend their money to help determine the importance of the books. More economic interest/info, more willingness to spend. Spending money would filter out economic ignorance. The results would embody/broadcast economic knowledge, which would help reduce economic ignorance. If $100 was spent on Piketty's book, and $1000 was spent on Smith's book, then the spending disparity would accurately reflect the importance disparity. Correctly ranking the books would improve the division of society's limited resources, which would improve the supply of books. I refer to this design as the bee market design (BMD). Bees sacrifice their precious calories dancing in order to signal the importance of flower patches. Their goal, in this case, isn't for the bees to spend their calories in order to acquire the pollen/nectar, it's to improve the division of the hive's foragers among the different flower patches. By improving the division of resources, the spenders help to improve the supply of nectar, pollen and honey. An alternative design is the pragmatarian market design (PMD). For example, people who subscribe to Amazon Kindle Unlimited (AKU) would have the option to use their monthly fees to help determine the importance of the books. Each month I could allocate some, or even all, of my monthly fee to Smith's book. Since Smith is long dead, I would not be trying to encourage him to write an even better book. Instead, I'd be trying to encourage... 1. other economists to write a better book 2. more people to read Smith's book With the PMD, consumers would use their fees to help determine the relative importance of all the books. This information would help consumers/producers make far better informed resource allocation decisions. The goal of both the PMD and BMD is not to spend money to acquire the books. The goal is to spend money to improve the division of society's resources among the different books/topics. Improving the division of resources would improve the supply of books. With the AKU PMD, every subscriber would pay the same monthly fee. However, as I've established, unequally informed people shouldn't have equal influence. But once AKU subscribers grasp the benefit of using their fees to help determine the social importance of books, then more interested/informed subscribers are going to be willing to pay more than their fair share in order to improve the division of resources. Let's say that the PMD was applied to the government. "Subscribers" (taxpayers) would have the option of using their own tax dollars to help determine the relative importance of defense, healthcare, environmental protection and all the other goods supplied by the government. Improving the division of resources would improve the supply of public goods. Since taxpayers would pay different amounts of tax dollars, they would have different amounts of influence. One common concern is that markets give too much influence to the wealthy. J.K. Rowling has lots of money/influence because lots of people bought her book. But as I endeavored to explain, the SMD is problematic because the focus is on acquiring rather than on dividing. Imagine AKU PMD with Harry Potter versus Adam Smith, Isaac Newton and Charles Darwin. Lots of subscribers would still be happy to read Harry Potter. But when subscribers decide how to divide their fees (and any additional money) between Potter, Smith, Newton and Darwin, then voila! Real magic! Rowling would still be rich, but not as rich. Her wealth/influence would more accurately/correctly reflect the importance of her contributions compared to the importance of other people's contributions. She would still be able to exert a lot more influence than most people at a BMD dog show. But would she be willing to spend a million dollars to help determine the winner? Would she also be willing to spend a million dollars to help determine the winner at a BMD orchid show, and a BMD car show, and a BMD quilt show, and...? She definitely wouldn't exert considerable influence at every show in the world. How she divided her money/influence among all the different shows would roughly correspond to her interests/information. This would be a good thing. In terms of a PMD government, if Rowling allocates half her tax dollars to the environment, we can reasonably conclude that the significant division of her tax dollars reflects that she has considerable interest/information concerning the environment. The challenge for those of you who disagree that spending should replace voting is to explain why, exactly, voting should not replace spending in the non-profit sector. Rowling probably makes plenty of big donations to various charitable organizations. She uses her money to help determine the importance of the different causes. Would it be better if the importance of causes was determined by voting? Would it be better if the importance of books was determined by voting? Is voting truly the best way to divide society's limited resources and facilitate the most beneficial supply? Nearly everybody perceives that voting works. But where's the proof/evidence that it works better than spending? Why aren't dog shows judged by spending? Is there proof/evidence that spending is less effective than voting at determining the importance of things? If such proof/evidence existed, then it really wouldn't be only applicable to dog shows. It would also be applicable to the non-profit sector and the for-profit sector. We should use voting to determine the importance of everything from computers to soup-kitchens. The fact that spending and voting are both used to divide society's limited resources is evidence that there's little evidence regarding the effectiveness of either method. We need much more evidence which is why Debate.org should replace voting with spending.