What happens with my $5 dollars? Clearly I’m not going to spend it since I’m not getting my preferred option. What happens to your $25 dollars? Clearly you give it to me since I’m not getting my preferred option. The winner (YOU) compensates the loser (ME).

I get the principle (and I agree with it), but this is not how it should work IMO. There should be buying and selling — so we should not just be taking into account the willingness to pay, but also the price at which we’d be willing to sell. If I go to the shop to buy bread, I may be willing to pay £1 for a loaf, but the shopkeeper is willing to sell at 80p, so that is the level at which we trade.

So here we should express the price at which we’d be willing not to go to our favourite restaurant as well. If we don’t then for at least one of us this…

As a result of the trade… we are both better off. The outcome is mutually beneficial.

…is technically not true. $25.00 was the maximum I was willing to pay, so for me the exchange is indifferent. You of course are indeed better off — you are, in effect pocketing the entire surplus.

And the same issue applies with voting: we should be expressing the price at which we’d be selling, not just the price at which we’d want to buy.

Me: When everyone starts with an equal stake in roads then you’re disrespecting the producer rankings.

I don’t see why. Producers with a high ranking (and lots of money) can buy more roadspace than those with a low ranking (and less money).

If the citizens have not willingly transferred any of their power/money to Joe… then his producer ranking is going to be extremely low. By giving Joe an equal share in the roads… you’re subverting the will of the people. You’re overruling the people. You’re overriding their spending decisions.

Where does the road come from?

Perhaps a more realistic analogy is carbon permits. The market is primed by allocating producers a quantity of emission permits, and then they can start trading. Those to whom emitting carbon is important can make higher bids; those willing to invest in low-emission technologies can sell their surplus permits (and fund the investment in that way). Would you say there is any subverting going on here? All you do is set the initial conditions of the market (which you cannot avoid if you put the traded asset, i.e. road space or carbon permits, in the market at T0).

One practical problem with referring to Adam Smith’s original description is that this refers to the capital investment, not to the revenue cost, of what is in effect a public good.

You could envisage a system of private roads, owned by whomever paid for it and giving entitlements by those same investors in proportion to what they paid. Any surplus unused capacity could be sold to non-investors. But I doubt this could work in practice.

It’s not about equal stake… it’s all about the benefit principle. And the benefit principle can only be adhered to by allowing people to choose where their taxes go.

I don’t think that is essential. Most roads are not, in any meaningful sense, constructed where those paying for it want it to go, yet by and large they connect points between which people want to travel. That being as it is, does not preclude a system by which the capacity (which is the real asset, not the road itself) is allocated according to willingness to pay, without violating anything, IMO.

So everything boils down to trade. Because… trade is mutually beneficial and because it respects and utilizes everybody’s brainpower and information.

I agree — but trading is buying and selling.

Even though I’ve mentioned this idea to you several times… I really don’t remember you ever addressing it. I don’t remember you saying… “Oh, it’s a terrible idea because X, Y and Z.” Or… “Oh, it’s a wonderful idea because A, B and C”.

My memory is not so great either, but I am pretty sure I did address it, positively and perhaps even enthusiastically. I think it would be a great idea. But I am not sure it would be trading. Everyone on Medium is providing the content free of charge, so nobody is actually selling anything.

Arguably, pragmatarianism already exists on other platforms, like Wordpress. People don’t allocate their dollar, but they allocate their time and their clicks, and people with lots of clicks get a slice of the advertising revenue.

I do think trading is awesome, because it happens all the time. We even trade with ourselves. Trading is a comprehensive descriptor of much human behaviour: we trade whenever we give something up in return for something else, and someone else (who could be us also) does the reverse.

How many pennies would be spent on stories about the Invisible Hand? This is a really good question. Do you think it’s a good question? Would you like to know the answer?

What you are really referring to, I think, is the signalling function of those pennies. They would form the currency in which the preferences of the Medium readers is expressed. But there are already other currencies that do the same: views, reads and recommends. Only the latter is visible to the public at large, but it can definitely serve prospective producers to get an idea of what is in demand. The benefit of the Pragmatarian approach would be that it allows people to express the depth of their preference rather than just a binary preference, and set up a competition between different (types of) article — in the same way that quadratic voting does (which is where we came in :-))

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Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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