[ExI] Why Cities Keep Growing, Corporations and People Always Die, and Life Gets Faster

Rafal Smigrodzki rafal.smigrodzki at gmail.com
Mon Jun 6 04:22:09 UTC 2011

On Sat, Jun 4, 2011 at 1:20 PM, Damien Sullivan
<phoenix at ugcs.caltech.edu> wrote:

 (And lower cost
> too, since socialized medicine is cheaper)

### No, it isn't, because it kills people.

> Being private doesn't magically make you better.  If you have a business
> that lives in a competitive market and occasionally gets government
> contracts, that's one thing.  If you have a business that exists on
> government contracts, I don't really see how it differs from a
> government owned industry with less oversight.

### Oh, Damien, just pause a bit and analyze - a government contractor
is not a budget item, only the contract is. A wholly-owned industry
*is* a budget item, with an oversight bureaucracy directly tied into
the government hierarchy. I am *sure* you can think your way through
to the implications for efficiency.

You seem to put a lot of weight on labels: "private", "government" -
these are just words. To understand outcomes you need to think in
terms of "feedback loop", "module", or "marginal analysis".


>> have GM now... sigh. It is very hard to determine government
>> efficiency, but it is easy to look at it and see that it is low,
>> however you would assign numbers.
> Herbert Simon thought government contribution to the economy was such as
> to justify a 90% tax rate; this might have been off the cuff.  A World
> Bank analysis was more in the 80% range, with something like 56% of US
> GDP attributed to law-and-order alone.
> Herbert Simon on social capital and 90% tax
> http://bostonreview.net/BR25.5/simon.html
> http://online.wsj.com/article/SB124165465339294011.html
> summary of the mentioned World Bank study
> http://reason.com/archives/2007/10/05/the-secrets-of-intangible-weal
> http://reason.com/archives/2005/12/16/the-intangible-wealth-of-natio
> note: the 56-57% may be % of intangible capital, not of the whole income
> the study
> http://siteresources.worldbank.org/INTEEI/214578-1110886258964/20748034/All.pdf
> "When we compare the poorest with the richest nations, it is hard to
> conclude that social capital can produce less than about 90 percent of
> income in wealthy societies like those of the United States or
> Northwestern Europe. On moral grounds, then, we could argue for a flat
> income tax of 90 percent to return that wealth to its real owners."

### Wow, quoting Simon and Bailey on the same side of an argument!
This induces hardcore cognitive dissonance in my mind, like listening
to Bach and a chainsaw at the same time (Mr Bailey is Bach in this
allegory, in care you wonder).

Simon is a bizarre ideologue. He argues that since 90% of wealth is
generated by the artful arrangement of peaceful economic exchange
among the citizens, then somehow depriving citizens of 90% of the
fruit of that exchange and remitting it to government bureaucrats is
somehow morally compelling. Because, well, taxation *is* a consignment
of wealth to government bureaucrats, to be used according to whatever
set of incentives those officials are laboring under. The term
"non-sequitur" doesn't even begin to describe the tortured logic
behind this argument.

Anyhow, Simon says taxation means returning wealth to its real owners
- are then Mr Obama and his tax-evading buddy Mr Geithner, or the
Republican losers who will soon replace them, indeed the rightful
owners of 90% of the fruits of my labor?


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