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Why would PayPal refuse to pay adult content creators on Patreon? Why would it matter to PayPal?
I was really moved by an urge for haste when Jonathan Brill (whom I like to thank) asked me to answer this question the past weekend, but then I realized that there is much more to it than PayPal, and I remembered a beautiful article by an Italian screen writer which I read a few months ago and which fits perfectly in my intended answer. The article was written by Francesco Mazza and it talks about the origins of the #metoo movement, but I consider it an absolutely necessary introduction (a long one, so bear with me) to my answer, because it explains very well what is currently going on in our society when it comes to sex and how the path that we seem to have taken originated.Here is my freely adapted translation of the most relevant (to my answer) bits of the original Italian article,[1][1][1][1] kindly authorized by Francesco Mazza himself.I really suggest you to read it all, but if you are in a hurry or lazy, you can jump straight to my angry bits right below. If you suffer of the micro-aggression syndrome, though, you better directly and immediately skip this answer, because it might be directed to you too, dear reader, and it’s not going to be a pleasant one.The real starting point of this madness goes back to June 23, 1972, when Nixon was in full swing and the US Congress approved the so-called Title IX, a historic victory of the feminist movement of the late 1960′s.[2][2][2][2]Title IX establishes that no person, because of their gender, can be excluded or discriminated against in any school program or educational activity that receives federal grants.This is an improvement of the Civil Rights Act of 1964, the milestone that put an end - in theory - to any kind of racial segregation, but which did not clearly include gender among the categories of discrimination.However, as it always happens in the United States, idealism immediately got exploited by economic interests and for decades the main application of Title IX was in the sporting field. This is because sports in university, in the US, is a very serious thing: it is the universities that start athletes to professionalism, send the best to the Olympics and, through the university championships, give life to a business worth hundreds of millions of dollars.With Title IX, the university sport was forced to open up also to female athletes, who started gaining access to special treatments and grants, until then reserved only to male athletes-students.However, with the arrival of the new millennium, the whole American society got shaken by the plague of rapes on university campuses. One after another, dozens of episodes of sexual violence committed by unsuspecting students started to emerge, often enrolled in the most prestigious universities (the famous Ivy League).The turning point came on March 15, 2011, when Yale's student Alexandra Brodsky and another fifteen girls who were victims of sexual violence denounced the same University on the basis of Title IX.[3][3][3][3]It was a turning point: for the first time it was claimed that a University which fails to offer its students a safe environment would in fact discriminate against them, and the school is therefore to be considered as responsible for the offense as its material authors.Following the example of the girls of Yale, the denunciation on the basis of Title IX started spreading like wildfire, because widespread was (and is) the scourge of rape on campuses. And since the list of the involved campuses featured dozens of colleges belonging to the Ivy League, the problem rose to the attention of the highest levels of the American establishment: in universities where fees cost 100 thousand dollars a year the most likely students are the children of the most prestigious families in the United States - the same who are part or finance the two main political parties - and the Obama administration was forced to intervene in haste, succeeding in the difficult task of worsening a situation almost impossible to worsen.In April 2011 it was established, through a letter by the Department of Education, that all Universities that fail to ensure effective application of Title IX in cases of sexual harassment will immediately stop receiving any kind of federal grants, including "federal loans" used by about two thirds of American students to pay for college.[4][4][4][4]If until then universities, before a rape charge, could protect themselves by relying on the competent authorities, with the consequent times and outcomes of the ordinary justice, now they are called to a preventive control, in order to avoid being blacklisted. But at this point the panic breaks out: entering the black list means losing the students who require federal loans, which would mean seeing their business collapse.For this reason, colleges began to apply Title IX on the basis of a particular legal system, that of "preponderance of the evidence" , which in the Anglo-Saxon system is an alternative criterion to that of "Beyond a Reasonable Doubt" used in criminal cases and to that of "clear and convincing evidence" used in most civil trials.It's a difference that has culturally revolutionized the current decade: from this moment, in fact, those accused of having committed a rape in a campus undergo two procedures: one by ordinary justice, based on the "beyond reasonable doubt" criterion, another managed internally and directly by the college, based on the "preponderance of the evidence" concept, whose interpretation is left to the discretion of the college itself.While the data of the US Department of Justice speak of 6.1 cases of sexual violence per thousand students,[5][5][5][5] from 2011 onward the complaints are counted in the hundreds; complaints that, however, are always sent to the college and only to a much lesser extent to the judicial authorities, where the outcome of the investigations is much more uncertain: there are several universities sued by male students expelled because they were convicted of sexual violence by the college internal justice system but exonerated completely by the judicial authorities.And there is not only the theme of the preponderance of proof. In this overexcited climate, in order to anticipate and avoid trouble, Universities invent regulations such as that of Northwestern University, which explicitly forbid sexual relations between two sentient adults "in conditions of different power".[6][6][6][6]It is argued, that is, that a sexual relationship between two individuals who occupy different positions within any scale of social differentiation (ie. a professor-student) is forbidden regardless, because the consent of the subaltern person would be determined not by a free choice but influenced by unbalanced power relations. Does that ring the Hollywood bell?It is on the basis of this doctrine that the captain of Yale's basketball team, Jack Montague, was expelled from the University in 2014 following an accusation of sexual assault by his ex-girlfriend. A year after the end of their relationship, the woman reported to the University authorities -- but not to the police -- that her consent was not "free" but influenced by the prestigious role that Montague played in the university environment. [7][7][7][7] Exactly what happened to James Franco two years later, when one of his ex girlfriends stated, a year after the facts, to have consented to oral sex in the actor's car only on the basis of his fame.[8][8][8][8]Not all academics, however, turn out to be willing to accept a breakthrough that smells of witch-hunts a mile away.In 2015, Harvard professors Jacob Gersen and Jeannie Suk wrote on the University of Berkeley's California Law Review like the application of Title IX based on the preponderance of the evidence has effectively ratified the birth of "a bureaucratic apparatus" that "supervise and control the sexuality of free citizens" as a kind of Big Brother; the same year, Laura Kipnis, professor at Northwestern University, published an essay, in which she affirms the right of women of the 21st century to freely choose who they have sex with, without bureaucracies or limitations of any kind.[9][9][9][9] [10][10][10][10] [11][11][11][11]According to Kipnis, the new pseudo-feminism from a university campus would reduce women to the role of "helpless girls", in need of other men to write regulations to protect them, instead of considering them human beings with free will.For Kipnis, if Obama had wanted to do something to solve the plague of campus rape, he could have tightened controls or even banish the "frats", the male student associations repeatedly involved in acts of sexual violence. But touching the "frats" would have meant touching one of the most powerful social structures at the base of the lobbying system with which power is organized in the United States.Obama literally sit on the fence, by allegedly taking a provision to solve the emergency while leaving it to the individual Universities' responsibility instead, through the threat of interrupting funding and with devastating effects on individual freedom.Poor Kipnis is even suffering a proceeding for violation of Title IX just for having called into question...Title IX...With the election of Donald Trump, the situation has worsened even further: every trickle of public debate is polluted with ideological hatred, poisoning the climate to exasperation.In May 2017, Reed College students denounced a professor for proselytism in favor of white suprematism . It happened that the teacher showed an old sketch of Steve Martin dressed as a pharaoh at Saturday Night Life in class to analyze the comic language, and the students saw an attempt to discriminate and ridicule the customs of the Egyptian people.[12][12][12][12]Meanwhile, at Evergreen State College, professor Bret Weinstein refuses to join the protest held by liberal college students who, for one day, forbid access to white students and professors "to reflect on their privileges". Weinstein disputes the crazy idea of wanting to fight racism with other racism, and the students react by threatening him and denouncing him for discrimination. The University decides to terminate its relationship with the teacher, paying a half-million-dollar liquidation.[13][13][13][13]Two cases which show how America has fallen into a nightmare remake of the Lord of the Flies, with the colleges becoming the exclusive territory of the so-called "snowflakes", hypersensitive students who are unable to deal with any kind of critical thought, continually in need of "safe space".It is in this torn and ideological climate that last October the New York Times and The New Yorker dealt with film producer Harvey Weinstein, who all New York City knew and know to be a kind of psychopath. Just go over the weekend at the Balthazar brunch - the well-known restaurant of Soho - to see him smoke cigar despite the ban, ruining the meal throughout the room, and get such an idea.But the sacrosanct accusations against a man who has made blackmail and violence his trademark become a pretext for the principle of the preponderance of evidence to be smuggled well beyond the boundaries of the "safe zones" dear to the "snowflakes" of American colleges. Under the guise of the #metoo movement, the principle extends to the cinematic sphere, then to the entire civil society, and finally breaks down like a hurricane to force 5 on a completely unprepared rest of the world, that of the criterion of "preponderance of evidence" opposed to "clear and convincing evidence" knew absolutely nothing until now.To understand how things work, just think of Woody Allen, acquitted not once but twice but equally dragged into infamy.And what a mockery irony is to see Rose McGowan, muse of Ronan Farrow and first accuser of Harvey Weinstein, being #MeToo-ized by Andi Dier, a transsexual who in New York has accused her of insulting transgender women and of having no idea what it means to be really molested.Got it? We have allowed for the law of suspicion and for the demonization of sex, by endorsing the principle that because sex might not be consensual or just the consequence of a free decision, sex and everything related to it cannot be tolerated; and even when it can be tolerated, that is only until someone regrets it and starts blaming any part directly or indirectly involved in what caused the regret. Why not...even PayPal.Sex is the new evil and its moralization is the new religion of the 21st Century. And the fault is all yours! It’s a generic you of course, but not for this a little inclusive one.Most of you watch porn and have a sex toy somewhere in your household. There are people who work in banks, maybe even at PayPal, among you. You are men and women, trans-sexual, transgenders, blacks, whites and yellows; you masturbate, have casual sex with untested partners every weekend, you cultivate your fetish — be it being penetrated with a strap-on by your mistress or going with prostitutes or swapping your partner in private clubs; the reality is that most of you financially support the adult industry and benefit off of it in terms of your senses' well-being and that almost all of you have sex, some of the kinky type some of a more canonical type, but nonetheless you have sex.Meantime, you can have access to PayPal, to financial credit, you can open a bank account, you can have your business web site hosted wherever you want, you pay regular fees when you use your credit card, you can use any existing service available on the Net and outside of it, you can pay taxes, get insured...all things that most people working in the adult industry can only dream of.Then I have to tell you, and forgive my bluntness: you are hypocrites, when you don't take an open, clear position over the discrimination of adult workers. There is no bigger, most infamous, vile sex discrimination than dividing those who publicly orbit around the business of sex from those who exploit that business and activity in their private yard and taking away from the first those social rights which are instead granted to the latter.Did you know that if you are publicly associated with the adult industry in any shape or form you cannot adopt? Isn't that discriminating? It's like suggesting that the natural children of an adult performer are a an unfortunate event, a despicable incident. "Make children, niggers, so we will have more slaves, because the son of a slave is a slave himself." Sometimes I have the feeling that the only reason why nobody has yet proposed to neuter adult workers is to keep the sluts species alive, like it was for the nigger species: we hate adult performers, but we love the benefits of their work. Just make sure to keep them ghettoized.Imagine the riots if gays or blacks or women weren't allowed to use PayPal. Well, you are not imagining: black, gay and women adult workers are not allowed to use PayPal. We are not even a species anymore: we are a sub-species which crosses the entire spectrum of all other species. Remember it next time when you fight for black, gay and women's rights: you are just fighting for the rights of some blacks gays and women, not for the rights of all blacks gays and women. Unless you start taking this matter seriously by acknowledging the problem and stop this witch-hunt by raising it publicly like you do when Trump tells a locker-room joke. Or when a woman claims that a kiss given to a guy 20 years ago was a stolen one.Society is stealing adult industry workers' rights as I write and before your very eyes; why do I say rights...society steals many adult workers lives, right now as I write and before your very eyes. Would you agree with me that your life has been stolen if I told you that you cannot start a family, have access to credit, being employed in any mainstream business — no matter if you have high top qualifications —, sleep in certain hotels, dine in certain restaurants, invest your savings, getting life and health insurance, and sometimes even opening a bank account? What a fucking life is that?This is the reality: some of these people whose the most basic rights are being denied on a daily basis are gay, some are women, some are blacks, but all of them are people who work in the adult industry at different levels. Don't forget it, the next time you feel the urge of moralizing us; and enjoy sex in your yard until you can: first they isolate patient zero, then they take care of the "disease". Better safe than sorry.Just let me summarize my answer for you, by asking you a question: would you put your money on this answer being even considered for publication outside of Quora? There you have it.Footnotes[1] Ecco perché il #metoo ha fatto a pezzi il garantismo e lo stato di diritto[1] Ecco perché il #metoo ha fatto a pezzi il garantismo e lo stato di diritto[1] Ecco perché il #metoo ha fatto a pezzi il garantismo e lo stato di diritto[1] Ecco perché il #metoo ha fatto a pezzi il garantismo e lo stato di diritto[2] Title IX - Wikipedia[2] Title IX - Wikipedia[2] Title IX - Wikipedia[2] Title IX - Wikipedia[3] Was Yale Really Cleared on Sexual Harassment? [3] Was Yale Really Cleared on Sexual Harassment? [3] Was Yale Really Cleared on Sexual Harassment? [3] Was Yale Really Cleared on Sexual Harassment? [4] Dear Colleague Letter from Assistant Secretary for Civil Rights Russlynn Ali.-- Pg 1[4] Dear Colleague Letter from Assistant Secretary for Civil Rights Russlynn Ali.-- Pg 1[4] Dear Colleague Letter from Assistant Secretary for Civil Rights Russlynn Ali.-- Pg 1[4] Dear Colleague Letter from Assistant Secretary for Civil Rights Russlynn Ali.-- Pg 1[5] http://www.aei.org/publication/new-justice-department-study-reveals-1-52-6-college-women-victims-rapesexual-assault/[5] http://www.aei.org/publication/new-justice-department-study-reveals-1-52-6-college-women-victims-rapesexual-assault/[5] http://www.aei.org/publication/new-justice-department-study-reveals-1-52-6-college-women-victims-rapesexual-assault/[5] http://www.aei.org/publication/new-justice-department-study-reveals-1-52-6-college-women-victims-rapesexual-assault/[6] Consensual Relations and Sexual Misconduct[6] Consensual Relations and Sexual Misconduct[6] Consensual Relations and Sexual Misconduct[6] Consensual Relations and Sexual Misconduct[7] Yale plays hardball with Jack Montague, expelled hoops star, as reverse discrimination lawsuit continues[7] Yale plays hardball with Jack Montague, expelled hoops star, as reverse discrimination lawsuit continues[7] Yale plays hardball with Jack Montague, expelled hoops star, as reverse discrimination lawsuit continues[7] Yale plays hardball with Jack Montague, expelled hoops star, as reverse discrimination lawsuit continues[8] James Franco Accuser Violet Paley: 'I Wish He Made a Promise to Change'[8] James Franco Accuser Violet Paley: 'I Wish He Made a Promise to Change'[8] James Franco Accuser Violet Paley: 'I Wish He Made a Promise to Change'[8] James Franco Accuser Violet Paley: 'I Wish He Made a Promise to Change'[9] The Sex Bureaucracy[9] The Sex Bureaucracy[9] The Sex Bureaucracy[9] The Sex Bureaucracy[10] http://laurakipnis.com/wp-content/uploads/2010/08/My-Title-IX-Inquisition-The-Chronicle-Review-.pdf[10] http://laurakipnis.com/wp-content/uploads/2010/08/My-Title-IX-Inquisition-The-Chronicle-Review-.pdf[10] http://laurakipnis.com/wp-content/uploads/2010/08/My-Title-IX-Inquisition-The-Chronicle-Review-.pdf[10] http://laurakipnis.com/wp-content/uploads/2010/08/My-Title-IX-Inquisition-The-Chronicle-Review-.pdf[11] http://laurakipnis.com/wp-content/uploads/2010/08/Sexual-Paranoia-Strikes-Academe.pdf[11] http://laurakipnis.com/wp-content/uploads/2010/08/Sexual-Paranoia-Strikes-Academe.pdf[11] http://laurakipnis.com/wp-content/uploads/2010/08/Sexual-Paranoia-Strikes-Academe.pdf[11] http://laurakipnis.com/wp-content/uploads/2010/08/Sexual-Paranoia-Strikes-Academe.pdf[12] The Surprising Revolt at the Most Liberal College in the Country[12] The Surprising Revolt at the Most Liberal College in the Country[12] The Surprising Revolt at the Most Liberal College in the Country[12] The Surprising Revolt at the Most Liberal College in the Country[13] Evergreen professor at center of protests resigns; college will pay $500,000[13] Evergreen professor at center of protests resigns; college will pay $500,000[13] Evergreen professor at center of protests resigns; college will pay $500,000[13] Evergreen professor at center of protests resigns; college will pay $500,000
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Terms Of UseRESTAURANT OWNERSThis Restaurant Agreement (the "Agreement") constitutes a legally binding agreement made between you, whether personally or on behalf of an entity (the "Restaurant"), and MealHi5 LLC. and its affiliates (collectively, "MealHi5"), regarding the Restaurant's use of MealHi5' website, currently located at Places To Order Meals & Takeaway Restaurant Food Delivery Online (including the webpages contained or hyperlinked therein and owned or controlled by MealHi5, the "Website"), and the Restaurant's inclusion in applicable services provided by MealHi5 via the Website (as determined by MealHi5 from time to time and in its sole and absolute discretion) and such other media or media channels, devices, software, or technologies as MealHi5 may choose from time to time (the "MealHi5 Services").RESTAURANT MENUThe Restaurant agrees to provide, and thereafter maintain and promptly update for so long as the Restaurant this Agreement is effective, true, accurate, current and complete information regarding the Restaurant as is requested during the Restaurant's registration process via the Website (the "Registration Process").MealHi5 may perform a variety of marketing activities to promote the Restaurant and the Restaurant's menu, many of which are described on the Website; provided, however, that all such marketing activities will be determined in MealHi5Hour's sole and absolute discretion and the Website may be changed, without notice and from time to time, to reflect any such changes.The Restaurant will provide MealHi5 with the Restaurant's current menu, and any updates, changes, or modifications thereto (the "Restaurant Menu"), in such format as is requested by MealHi5 (collectively, the "Marketing Materials") for MealHi5' inclusion in the Website and the MealHi5 Services or for any marketing or advertising activities undertaken by MealHi5, in its sole and absolute discretion (the "MealHi5 Marketing Activities"). The Restaurant hereby grants to MealHi5 a non-exclusive, transferable, royalty-free, fully-paid, worldwide license, to use, copy, publicly perform, publicly display, reformat, translate, excerpt (in whole or in part), and distribute such Marketing Materials, including any trademarks, trade names, service marks, logos, telephone numbers, and addresses therein, for any purpose, including marketing, commercial, advertising, promotional activities or otherwise, and with a right to sublicense, in connection with the Website, the MealHi5 Services, or the MealHi5 Marketing Activities; and, in connection with MealHi5' exercise of the license rights granted by the Restaurant, MealHi5 may prepare derivative works of, or incorporate into other works, all or any portion of the Marketing Materials. The license rights granted hereby will apply to any form, media, or technology now known or hereafter developed. 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Are proponents of markets aware of Kenneth Arrow's impossibility theorem (markets are either intransitive, or preferences are determined by a dictator)?
UPDATE: I did not give the question sufficient credit when I answered and so what follows is misdirected. That is to say, it’s the correct answer for the incorrect interpretation of the question. The update below the fold will address Isaac Darche’s rather deeper application of Arrow’s Impossibility Theorem; I’m keeping the original answer out of honestly admitting my error, and to demonstrate how even while misdirected, a significant part of the response remains sound.Updates [in brackets] will indicated additions to my original answer.That’s… not at all in any circumstances what Arrow’s theorem says. [This is not true; there are applications where Arrow’s Impossibility Theorem (AIT) says this. See below.]Firstly, the “dictator” element has to do with whether any one person has a greater marginal instrumental effect on the outcome of an election than any other. This has nothing to do with political dictators. More on this later.Secondly, and more importantly, Arrow’s impossibility theorem has to do with group choice, in this case voting rules in elections with 3 or more options.You may have heard of the phrase, “The Will of the People”? It’s the concept that when a polity votes on something, the winner of the election embodies the aggregated preferences of the group. This is how democratically-elected representatives justify taking your money and using it to bomb foreigners: because this group of representatives accurately represents what people want. Arrow’s theorem calls bullshit:In elections with3 or more optionsdecided by ranked voting (ie: 1st Choice, 2nd, 3rd, etc)no system can produce transitive (ie: if A>B, and B>C, then A>C) aggregate community preferences unless one of the following qualities of elections is violated.Unrestricted domain (ie: all preferences of all voters matter)Non-dictatorship (ie: no single preference order determines the winner)Pareto efficiency (ie: nobody is worse off, and at least 1 person is better off)Independence of irrelevant alternatives (ie: including or precluding irrelevant choices that nobody likes best shouldn’t change the result of the election)You saw the word “dictator” and thought this had something to do with your life experience. Nope. Kenneth Arrow was an economist. We use words differently. While an actual dictator might well qualify as an Arrow dictator, what he’s talking about is a median voter. Someone whose preferences sit right in the middle of everyone else’s. This person might have no additional political power than anyone else, but if his preferences direct the outcome of the election, he is a “dictator”.Comment from Zachary Taylor:Small quibble: A median voter isn't a dictator in the Arrovian sense, because who is median is itself a function of the social preference profile. But a preference aggregation rule is a function from all possible preference profiles to a social preference ranking. Nondictatorship just rules out any rule of the form “xPy if and only if xP_iy” for some specific voter i. It's a weakening of anonymity (the identity of specific voters shouldn't matter) and in fact real world dictators aren't Arrovian dictators, because even they usually have some small group of people they need to appease to stay in power.You have completely misread (or have been mislead to) what Arrow’s theorem means.But there’s a deeper irony at work here.You wonder if market proponents were aware of Arrow, as if his work demonstrated those proponents were getting something very obviously wrong. See, the thing is that Arrow illustrated the difficulty of aggregating individuals’ preferences into a single coherent social preference order. Markets don’t really care about social preference functions; at least, not nearly to the extent politics does. Markets care about what their customer base — which is a small segment of the overall population — wants; their preferences. Markets segment populations. They sell vanilla ice cream to folks who like vanilla; chocolate to chocolate; and pistachio to pistachio. There is no single universal product for everyone; there’s a diversity of products we each may choose — or not!Which is entirely different from politics.Would you like a trade policy different from President Trump’s? I would. Too bad: we all get Trump’s tariffs. Would you have preferred a different foreign policy from President Bush’s? I would. Too bad: we’re all responsible for bombing foreigners because elections represent the “Voice of the People”. Every person holding up a “Not My President” sign was saying, “golly, I wish politics was more like Amazon.com.”The irony of this question is that it’s holding up Arrow as an example of why market-directed activity leads to problems when what Arrow concludes is that non-market electoral decisions made on behalf of the entire polity should not be taken as reflective of some aggregated social preferences… unless that election was “unfair” by violating at least one of 1–4 above.So yeah. This market proponent is aware of Arrow. He’s one of the reasons why I’m a market proponent.[UPDATE PROPER]The above answer was written addressing choice, production, and distribution within a market order compared to the same within a centralized economic control order. Lange’s “market socialism” vs “laissez-faire capitalism” perhaps (I’m not interested in quibbling over terms). So far as that goes, my answer was accurate: market orders allow for individual choice, so preference aggregation isn’t necessary to generate prices, or coordinate labor with capital such that what is produced satisfies what is desired at the prices offered; centralized orders do need to aggregate preferences because the whole point of central control is to allow the economic planner the ability to maximize some social objective function. This is part of the argument made by James Buchanan in “Social Choice, Democracy, and Free Markets” (1954):…the voting process is fundamentally different from the market when the two are considered as decision- making processes rather than as bases for deriving social welfare functions.Buchanan 1954 p1 [Emphasis added]Within the comments below, Elon-Mosque makes it clear he was not referring to decisions made within economic orders, but to decisions made between competing potential orders. He’s making an institutional critique that is far more interesting than the facile critique I had erroneously assumed he had been making.First of all, his source is Arrow’s “Social Choice and Individual Values”. Within this work Arrow does indeed dispense with the distinction between the market mechanism and voting:“In the following discussion of the consistency of various value judgments, the distinction between voting and the market mechanism will be disregarded, both being regarded as special cases of the more general category of collective social choice.”Arrow, Social Choices and Individual Values P.4But it’s important to understand the context of this dispensation.“In a capitalist democracy there are essentially to methods by which social choices can be made: voting, typically used to make “political” decisions, and the market mechanism, typically used to make “economic” decisions.” [Emphasis added]Ibid. p 1. First line.Immediately Arrow constrains his analysis; he is not talking about one’s choice of ice cream, nor the central planner’s choice of which ice cream to mandate. He is talking about social choices.“In the present study the objects of choice are social states.” …“In general, there will, then, be a difference between the ordering of social states according to direct consumption of the individual and the ordering when the individual adds his general standards of equity. … We may refer to the former ordering as reflecting the tastes of the individual and the latter as reflecting his values. … Intuitively, of course, we feel that not all the possible preferences which an individual might have ought to count; his preferences for matters which are “none of his business” should be irrelevant. Without challenging this view, I should like to emphasize that the decision as to which preferences are relevant and which are not is itself a value judgement and cannot be settled on an a priori basis. From a formal point of view, one cannot distinguish between an individual’s dislike for having his grounds ruined by factory smoke and his extreme distaste for the existence of heathenism in Central Africa. There are probably not a few individuals in this country who would regard the former feeling as irrelevant for social policy and the latter as relevant, though the majority would probably reverse the judgement. I merely wish to emphasize here that we must look at the entire system of values, including values about values, in seeking of a truly general theory of social welfare.This passage is incredibly important in understanding the scope of Arrow’s work. We aren’t talking only about our own personal consumption, but he includes our values about how others are permitted to consume. Further…“It is the ordering according to values which takes into account all the desires of the individual, including the highly important socializing desires, and which is primarily relevant for the achievement of a social maximum. The market mechanism, however, takes into account only the ordering according to tastes. This distinction is the analogue, on the side of consumption, of the divergence between social and private costs in production developed by Professor Pigou.”Ibid. pp 17–18. [Emphasis added; emphasis in original]And here we have the kicker. Because the market only works with tastes and not values, the market does not account for, say, my neighbor wearing a paisley tie with a plaid shirt, something which violates my sense of values. My neighbor is imposing an external cost on me through his consumption. In the same way that uncompensated externalities on the production side, such as pollution, suggest that there is more pollution-producing manufacturing going on than there would be if all costs were internalized, uncompensated externalities on the consumption side suggest there’s too much consumption going on: too many neighbors in plaid shirts and paisley ties.Plaid and paisley may seem trivial, but pay attention to Arrow here, forementioned: “the decision as to which preferences are relevant and which are not is itself a value judgement and cannot be settled on an a priori basis.” What Arrow is saying — and this is why nobody likes economists — is that you cannot distinguish between sartorial preferences and, say, racial interbreeding preferences until after you’ve constructed an institutional framework (Arrow’s social welfare function) within which either markets or voting processes may identify between the two types of preferences.It’s worth pointing out Arrow’s work didn’t appear ex nihilo. He was engaged in conversation with others facing the same issue. I’ll mention two contemporaries: Frank Knight and James Buchanan. The arcs of their research programs were similar: they asked how social governance could be established to best enable the identification and pursuit of “the good”, and came to not dissimilar conclusions. I’ll reference their work below.Having properly framed Elon-Mosque’s question via Arrow, we can re-appraise the position of “market proponents”.Start with Pigou’s externalities and proposed solution. The idea is to make the creator of the negative externality internalize the total social costs of production such that production occurs at a level compatible with maximum social welfare. Uncompensated negative externalities imply over-production and inefficiency within the market system. The implication is that the existence of the externality demands a response to eliminate inefficiency.John Nye in “The Pigou Problem” (2008) responds to this claim:This article questions the economic justification for these Pigovian taxes and argues that existing empirical work is inadequate to justify such a tax in the standard neoclassical framework. In particular, it calls into question claims that the identification and measurement of a Pigovian externality is a sufficient condition for determining the optimal level of the tax.…Even in a world with compensating transfers and regulations, the observed amount of the externality (e.g., pollution) is unlikely to be zero. Any tax calculation that is determined using the size of the measured externality but that does not consider all regulations and transfers affecting equilibrium will not tell us what the optimal tax should be. Any tax recommendation requires empirical work that is not undertaken in any of the cited papers. A tax imposed without such calculations may well be superfluous and inefficient.This is not a theoretical demand, but an empirical one. In order for policy-makers to properly identify an “optimal tax”, a higher degree of rigor is necessary. This rigor is not without cost: academics need to eat, too. But here’s the catch: as identifying the solution becomes costlier, the marginal benefit of imposing the optimal tax decreases. It’s certainly possible for the solution to be costlier than the original externality.Another illustration:When I pay the price of eating buffet food, say $12, I gain immediate access to as much or as little as I would like. Each bite I take is free in an economic sense; that is, putting one more spoonful of pudding or whatever onto my plate carries zero marginal cost. This means I will spoon pudding onto my plate until I am satiated with pudding (however my particular dietary taste defines "satiated"). Satiation points are defined by having zero marginal benefit to the consumer. For the diner, MB = MC = 0.But from the perspective of the restaurant owner, that spoonful of pudding has a positive marginal cost, however small it might be, but he gets no additional revenue. For the restaurateur MB < MC.Which means we've arrived at the bizarre market outcome where the price scheme is such that MB < MC. Buffets over-supply food and fail to efficiently assign the costs of food production to food consumption. And yet, despite buffets existing for hundreds if not thousands of years of civilization, markets have failed to eliminate this inefficiency. Is this not market failure in action?——//——The first instinct upon hearing this reasoning is that certain policies should be adopted to correct for this market failure, policies either voluntarily adopted by the restaurateur or imposed by a government concerned with eliminating inefficient food distribution. In exercises I've run with my classes I've solicited solutions from students to correct the market outcome; it seems they grow cleverer every year and the solutions more extensive.After listing the policies, I ask them to estimate what kinds of information you'd need to have to properly assign costs such that MB=MC across both patron and restaurateur. In every case I demonstrated how either how the monitoring and enforcement costs were greater than the recovered inefficiency from when MB < MC, or how the restaurant ceased to be a buffet.The point of the whole exercise was to demonstrate that verifiable evidence of inefficiency in a market does not imply non-optimality of the market. To be sure, restaurateurs (or agents in any market) seek for ways to minimize inefficiency to increase their profits; but so long as the inefficiencies bear sufficiently small proportion to the realized gains from trade such that buyers and sellers continue to voluntarily enter into the market, the argument for government-imposed efficiency measures ought to be viewed from an initial point of skepticism.A point illustrated beautifully by the economics of buffets.From Austin Middleton's answer to What are the economics of all-you-can-eat buffets? [Emphasis added]Yes, buffets are inefficient. MB<MC. No, buffets are not inoptimal because of this.And again, for thoroughness sake, consider club goods, or “artificially scarce” goods. Here you have a good which is excludable in production and non-rival in consumption. At the extreme, it is a good characterized entirely by fixed costs and zero marginal costs; Netflix operates this way, offering streaming services for movies the costs of which have already been paid. But even as the marginal costs of production are zero, the price of accessing the movie is positive. P>MC, thus inefficient, thus “artificial scarcity”.The implication that the allocatively efficient condition of P=MC would result in maximizing the social surplus is an easy conclusion to reach. But would it, really? I don’t think it’s terribly contentious to say that in the face of an social efficiency P=MC mandate Netflix would not operate — or at least not operate as it currently does. In the event Netflix shuttered, the social surplus would be reduced by the quantity of surplus generated by the current arrangement. The resulting society might be more efficient, but it would be worse off. In the event Netflix restructured, you’d have to answer why, if the restructured firm is generating greater social surpluses, Netflix didn’t restructure in the absence of a mandate. You’d return to Nye’s demand for a weightier empirical burden on policy-makers to show they know Netflix’s business better than Netflix.But even granting such Pigouvian regulations can theoretically improve market outcomes, it’s still the case that regulation perfectly tailored for time t=1 may well be perfectly awfully tailored for time t=2. This is true for Pigou’s negative externalities of production as technologies change (and indeed, regulations may inhibit the pursuit or adoption of less inefficient technologies), but it is also true for social choices: the kinds of institutional arrangements best suited to today probably aren’t the arrangements best suited to folks in 1820.No direct measurement of the total interdependence costs under existing or alternative decision-making rules is readily available. Certain conclusions can be drawn, however, on the basis of the facts of history. We may observe a notable expansion in the range and extent of collective activity over the last half century—especially in that category of activity appropriately classified as differential or discriminatory legislation. During the same period we have witnessed also a great increase in investment in organized interest-group efforts designed specifically to secure political advantage. These facts allow us to reach the conclusion that the constitutional rules that were “optimal” in 1900 are probably not “optimal” in 1960. If we may assume that the fundamental rules for organizing collective decisions were more closely in accordance with the “ideal” in 1900 than in 1960, these same rules will tend to produce a higher level of interdependence costs than necessary. This suggests that some shifting in the direction of more inclusive decision-making rules for collective choice and some more restrictive limits on the range of collective activity might now be “rational” to the individual considering constitutional changes. The contrary possibility, of course, also exists. If the operation of existing constitutional rules produces roughly “optimal” results today, clearly these same rules were overly restrictive in earlier stages of development marked by relatively less organized pressure for differential legislation.Buchanan and Tullock, The Calculus of ConsentThough the previous discussion was in the context of externality-internalizing and efficiency-improving regulation, Buchanan demonstrates the same issues may be applied to social institution theorizing. Social choices between institutions, the kind of choices Elon-Mosque and Arrow address, are creatures of context in the same way: there is no permanent ideal. The optimality target moves.The impermanence of ideal institution means that social choice theorizing cannot fix its target on some desired equilibrium, then, but must work in terms of processes: how can society move from status quo institutions to an alternative set of institutions?Frank Knight’s concept was “governance by discussion”.[Knight] maintained at the end of his life, as he had at the beginning, that life was ultimately an exploration in the field of values, not simply an exercise in the satisfaction of a generally accepted set of needs and wants. …What does Knight’s analysis have to do with religion other than the criticism of religious ethics in modern society? After years now of reading and discussing Knight’s work, I keep returning to three themes in his work, themes that Christians and perhaps other religious persons can appropriate from his work. The first is the affirmation of the duality: Life is economic; economics is not all of life. The effort of many religious ethicists to segregate life into the realm of this world (economic and political) and the realm of the next world (spiritual) is problematic on both scores. Similarly, following George Stigler and Gary Becker (1977), Knight’s students at Chicago extended the first proposition—life is economic—so far that one wondered if any room remained for Knight’s second proposition—economics is not all of life. The fact that Knight refused to yield on the second is one of the reasons I have argued that Chicago rejected Knight. …Secondly, Knight was tenacious in his opposition to those who tried to claim special authority in a democratic society for their ethical or scientific viewpoint. In the same way that exchange value cannot be known outside the market process, societal values cannot be known outside the democratic process of discussion. Knight never argued that Christians could not bring their moral values into that discussion, but he did insist that those values should not be given authority simply because of religious claims to truth. The relation of Christianity to democratic discussion is a difficult one, and one can find both Christian affirmations and rejections of democratic openness (see Heclo 2009 and Kraynak 2001 for different considerations of the problem). While Knight’s personal rejection of religious belief came through clearly in his work, his opposition to religious ethics was primarily rooted in what he saw as the church’s claim to a special authority.Ross Emmett, “Economics is not all of life” (2014)But what should be discussed? Immediately preceding the forementioned quote:In the absence of the assumption that values would converge in a democratic society, common agreement on values would require significant discussion. At the same time, Knight was under no illusion that current ethical norms were sufficient—he criticized every ethical system known in his time.Ibid.Unanimity over all possible aspects of social choice (the rule favored by Arrow in his affirmation of the Pareto Principle) was simply too costly. What Knight aimed for was consensus over a sufficiently wide breadth of issues, not because the result of the discussion would produce optimality, but because it could maybe produce sufficiency. A sufficiency that is, perhaps, the best we can hope for in a time-scarce world.Buchanan — yes, a student of Knight — expressed the problem of the costs of collective action with this cost curve:The Calculus of Consent (2004, 1990, 1960) p197C+D is the combination of external costs of a decision (decreasing in the number of individuals required to affirm the decision) with the costs of decision-making (increasing in the number of individuals required). A threshold of “K” will minimize the expected costs, well below the unanimous “N”. Decisions characterized by relatively higher expected external costs will have a “K” closer to “N”; those with relatively higher costs of decision-making will have a “K” closer to “0”.But the fundamental recognition this framework makes is that, at some point, you need to stop talking, and get on with the business of doing business. At some point, the perfect is the enemy of the good. Established constitutions are the result of sufficiently-satisfactory discussions. But then, as already stated, sometimes the inherited institutions are sufficiently outdated such that they deserve review. To this purpose, constitutions are well-advised to include means by which constitutions may be amended. These revisions Buchanan calls “constitutional moments”, where it becomes apparent the status quo is insufficiently serving its purpose.Where does that leave us?Honestly, not much better off. “Governance is hard” is pretty much the conclusion of three of economics’ brightest minds. But I’ll try to wrap up here, bring it back to my original answer, and re-affirm why Arrow supports my market advocacy.Markets cannot identify rational institutions that satisfy the social welfare function. Granted. But neither can government. Such an ideal is a pipe-dream of modernism, the impossibility of which threatens to drive you to drink.What markets might be able to do is identify a sufficiently-rational institutional framework that satisfies an approximate social welfare function. The means by which they could do this between institutions, analogous to price and production decisions within markets, is through competing sets of institutions. Albert Hirschman in “Exit, Voice, and Loyalty” and “Exit, Voice, and the State” addresses competing social institutions in the context of secession: a sufficiently undesirable set of institutions induces exit; a relatively desirable set induces entrance from outside. Individuals’ fluidity within and between sets of institutions resembles the movement of people within and between social clubs that provide “public goods” to the club membership; this relates to Buchanan’s work “An Economic Theory of Clubs” (1965).Exit, ie: secession, may not be a surprising element to market social choice for anyone who’s read Nancy MacLean’s “Democracy in Chains”, where she attempts to tie Buchanan to mid-century “massive resistance” to school integration and modern libertarians (she horrendously mangles the historical record in doing so, however), but it is sensible that it does so: exit is also the means by which markets allow agents to withdraw from exchanges and thereby temper the excesses of other party’s demands. A strawman might accuse libertarians of desiring an atomistic social order where everyone has withdrawn from everyone else, but this is hardly necessary: even though we are permitted to exit from contracts within markets, contracts still happen. Firms exist. Supply chains and logistics on Amazon’s scale indicate that people do indeed occasionally refrain from exiting. These market orders, retaining the ability to exit, persist as long as they are sufficiently satisfying the participants. And while allocative efficiency certainly isn’t attained, the resulting order may be said to satisfice.Why should this market-generated social order then be preferred to a government-generated social order? Firstly, the options are not mutually-exclusive. Democratic discussion can satisfy some choices; markets satisfying other. Only an anarcho-capitalist would be beholden to argue for the complete elimination of governance by discussion, and there is certainly room for non-anarcho-capitalists under the umbrella of “market proponents”. But the answer is that a market social order would be preferred when it is able to engage in constitutional moments more responsively at a lower cost per benefit gained.Though I can hardly claim this to be true, I am sufficiently confident that it is more likely to be true than false.In any case, Arrow remains in my quiver (lol) as a reason to prefer market social order to government orders.
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