Skip to main content

The Public Good


There exists a game by which the famed economist Paul Samuelson, with support from fellow economist Amartya Sen, contends that the self-interested economic man is revealed to be a rational fool. The game here is one in which eight participants individually enter a room with five one-dollar bills — that is, each individual holds in his or her possession five one-dollar bills. 

Let us suspend for a moment, and in doing so indulge the position of imprudent economists, any curiosity regarding the source of these five-dollar windfalls to conveniently afford the game the convenient assumption that some form of recognized labor, or sacrifice, enabled their acquisition and their utility as money.

The participants are then informed that their anonymous donations to the envelope of “public good” will be doubled then distributed evenly amongst the participants. 

The prediction in this game, as forecasted by the aforementioned economists, is that the individual, facing an 80% loss on his individual dollar contribution if no other participant joins him, will merely forego the donation. In total, the principal prediction is that nobody will contribute. 

Despite this forecast’s accuracy with any given test group, this experiment hardly bears any semblance to the way in which the “public good” is carried out in practice, let alone the way in which the purchasing power of money is created and multiplied. 

This game grossly overstates the value of the so-called “public good” by simply assuming that the headline objective is sufficient grounds for it to be so. Is it at all possible that the alternative investment, or the deferred investment in the form of present savings, may eventually further the “public good” by market transactions not explicitly carrying the “public good” title? 

This game falls devastatingly short in explaining the means by which the investment would multiply, let alone the way by which money empowers interests and actively incentivizes and orchestates the mechanics of the market, by which individuals coordinate directly and indirectly in the fulfillment of their own respective agendas, the total expression of which forms the only up-to-date and accurate expression of the so-called “public good.” 

If nothing else, the outcomes derived from this game highlight the propensity of human beings to be attitudinally risk-averse with their money. Ultimately, this game promises an infinite multiplication of monetary value if only the participants will overcome the statistical biases which impede the realization of their advanced collective good. 

If this were self-evidently the case that the “public good” here were so calculated and tested an investment, how might privatization of this good sterilize its fruits? Might this game then evolve to permit self-interested and privy investors to buy a real stake in this supposed gold mine? As it turns out, players in this game demonstrate a decreased willingness to contribute as they repeat the game, dropping from the usual 50% to near zero. 

One crucial spin, however, on the same experiment weighs considerably on the direction of outcomes. After ten rounds of play, the subjects are informed that they will participate again for another ten rounds with the same cast of players. 

With a more sophisticated understanding of the game and with a more intense sensitivity to the ramifications of their individual actions and their attending influences on the group, the individuals became more willing to contribute. 

These individuals essentially become what is known as conditional cooperators, actors who are willing to cooperate if a critical mass of others have already committed. 

Short of demonstrating the folly of human action, this experiment brilliantly exposes a gaping hole in the precepts of socialist, communist or generally statist leanings: governance is most powerful, responsive and cooperative at the most local level.   

Comments

Popular posts from this blog

Free Money: The Tech Secret Even Silicon Valley Doesn't Know

In July of 2015, Vitalik Buterin officially released the game-changing technology of Ethereum, an immediate competitor to its now-popular and relatively better-known counterpart Bitcoin. A cursory evaluation of the following chart might lead the reader to some wild conclusions, so continue reading to acquire a better understanding of the trajectory of this new-age abstraction of online currency that, despite its massive gains in recent weeks, hasn't remotely become a household name in even Silicon Valley, the tech capital of the world.


A variety of formal and informal polls suggest a lagging familiarity with the increasingly popular cryptocurrency giants. Those who claim awareness are most likely to recognize Bitcoin, while Ethereum has still flown largely undetected in even the heart of Silicon Valley. One might assume with a chart like this, with its major parabolic upswings and indefinite streams of free money, that awareness of the blockchain medium of exchange would have surg…

Hurricane Irma Reveals How Nationalistic America Really Is

It's interesting how the Weather Channel seems to treat the devastation of the Caribbean, even American territories, as precursors to what they have identified as the event, otherwise known as landfall upon the continental United States.

For the people presently facing Irma, the event is happening now.

The reason this is important is that it implies a lot about the way we view the world and its inhabitants.

Although the political map clearly illustrates borders between nations, views from the International Space Station reveal that these boundaries are mere imaginary lines drawn by history's political pundits whose self-interested motives altogether failed to represent the unanimous consensus of the time, and yet they fail even more miserably in that capacity today.


Notwithstanding the fact that we are all inhabitants of this earth, of the same species and familiar family dispositions, we are subliminally inculcated by political representations of this terrestrial world to ass…

Market Manipulation: Mirages in the Desert of Economic Despair

An article published today by MarketWatch, entitled The world is becoming desperate about deflation, reveals the astounding truth that interest rates would not have remained as low as they are today if the American economy had truly recovered from its most recent recession.

Economists of the political ranks tend to support lower interest rates and inflationary measures because they advance spending, boondoggles and measurable economic activity to the limited timeframes of their active administrations, at the real expense of future output and thoughtful investment that simply affords no benefit to present-day headline economic indicators and the intellectuals who wield them.

In an anemic economic climate, infrastructural change is the antidote to misinvestment, while monetary manipulation is the politically-convenient mirage in the desert of economic despair.


While wanderers across that desert perceive advantage in continuing to chase elusive returns and public policy tacitly rewards t…