Poverty as Pollution: Buchanan's Basic Minimum Income

Are transfer payments euvoluntary? Don't be silly. Of course not. Don't be DAFT. They're plainly coercive, so asking about their euvoluntarity is facile. What we might want to consider is whether or not there's an arrangement in a reasonable choice set that is both less distortionary and less wasteful.

In The Bases for Collective Action (Collected Works of James Buchanan. Vol. 15. Liberty Fund p. 21), James Buchanan forwards the following:

Extending the notions of externality and environmental quality even more broadly, we can also encompass the potential role of collective action in providing for the relief of primary poverty. In one sense, the mere existence of very poor members reduces the overall environmental quality of any community. Any action aimed at removal of this poverty will impose an external benefit on all members of the community. There are clear gains to be made from cooperative or collective efforts to eliminate or at least to reduce poverty.

 In another essay (Social Insurance in a Growing Economy, ibid p.410), he argues for clear separation between the social insurance function and the poverty relief function. He was dismayed at the illiberal clumping of the two for both analytical and practical purposes. "One of the chief sources of crisis in the existing social security system is the observed tendency of politicians, especially in recent years, to confuse the achievement of social insurance objectives with the relief of primary and secondary poverty and to load the same set of institutions with these quite different burdens." With an economists' eye, this is plainly obvious. But what is obvious to the trained economist may be hazy or irrelevant to the typical voter.

And in the taxonomy of umbrella-twirling pedestrian intuition, far from the clipped cane-tapping of the prudential pocketwatch-checkers, caring for the poor engages more or less the same moral machinery as caring for the elderly. In both instances, we have examples of unfortunate outcomes: Skid Row panhandlery on the one hand, grandma eating cat food so that she can afford her heart medicine on the other. In both instances we have at least the presumption of collective action "failures" (remember that there are no solutions, only tradeoffs), and in both instances, we have an increasingly powerful taxation authority and a bountiful œconomy poised to clean up not merely our dunnage-strewn shores, but our drunkard-strewn boulevards.

So how about that basic minimum income? Mike has a piece published on the topic, and I've got a working paper on it, and we both motivate the discussion using poverty relief rather than old age insurance. In light of Buchanan's concerns and my hunch that in the moral intuition, OASDI and welfare get conflated, does the analytical argument for basic minimum income improve? Why or why not? Is a two-birds, one-stone approach inappropriate if it means that there should be significant efficiency gains to be had?

Or is consideration of this question meaningless if the core of the game is null? How would you buy out the bureaucracy?

Anjie Brings the Heat (Again!)

Via The Ümlaut, a smashing Castillo piece on the directional euvoluntarity of female sexuality.

EE quote:

Female porn stars provide one case study. These women enjoy Bergner’s vision of uninhibited female sexuality and make money doing it. They preform sexually diverse acts, à la Bailey, and reside at Meanda’s commanding heights of male desire. While many are drawn to the sex industry under less than euvoluntary conditions, we can compare their preferences and outcomes to those of other women of similar socio-economic status. If the first order preference of sexual satisfaction is stronger for these women than the second order preference for a traditional family, we should expect porn stars to be happier and less desiring of monogamy on average than similarly-situated women outside of the porn industry.

While the male porn stars harbored few regrets from their time in “the biz,” many of the women were rattled or reeling. Their fame, power, and sexual satisfaction came at the extreme price of a diminished shot at a normal, “oppressive,” marriage and children. Undoubtedly, social stigma against sex workers is largely to blame for their plight. For better or for worse, the sexual cartel is a harsh mistress. Still, it is worth noting that some women who unwittingly live la vida Bergner jealously eye their sisters’ “shackles.”

People, the sexual menu is expanding. With heterogeneous preferences, Ozzie and Harriet are still on the table, but now so is Caligula. More choices, less stigma? That's the EE way.

Remittance Payments and Directional Euvoluntarity: Buttercoin and Brito

Jerry Brito (along with our pal Andrea Castillo) is busy doing the heavy lifting when it comes to the economics (and political economy) of Bitcoin, and since his work already addresses EE points, I have ruled it prudent and polite to keep from sailing upwind of his research. If you'll forgive a note of conceit, I'd like to cross tack just this once.

Buttercoin is a nascent startup aimed at slashing the tendon of Western Union's business model using Bitcoins as the medium of exchange* in lieu of the staple currency: US dollars. Their praedicatum is that the extant firms are circumstantially coercive. Expats have little recourse but to submit to being "gouged" to the tune of 10% per transaction. These guys call shenanigans and say that they can operate for less.

I for one hope they're right. Now, I don't claim to know what the "correct" price is here by any stretch, but I do know the following:
1) Overseas postal workers are far far more likely to steal from parcels and letters than US workers.
2) Setting up an international account with a bank is a hassle the likes of which most Americans have no idea.
3) Even if you do manage to safely and securely get your cash from point A to country B, you're still not out of the woods, since as cash shifts hands, you're not entirely unlikely to end up with a wad of counterfeit Russian bills lining your palms.

Given all that, 10% is often a lot better than the alternatives. Voluntary, as it were, though not euvoluntary. Buttercoin promises to sidestep all that. Bitcoin can't be counterfeited, can't be seized by unscrupulous agents of the state, and can be quickly and painlessly converted into the local currency. If it turns out that the prices charged are thanks chiefly to these technical hurdles, then the Buttercoin folks might well be able to successfully undercut them. If, as I fear might be the case, it's a matter of regime uncertainty (grease the right palms or your business license won't get through), it could well be that the 10% is there as a normal cost of doing business.

Fingers crossed, guys. Godspeed.



*this is sort of an interesting point of semantics here. In this application, is Bitcoin more a medium of exchange or a unit of account? It's a wonky question, and I'm not sure it really matters apart from some technical legal questions across regimes. After all, what really counts as "money" is a matter to be hashed out in arbitration, yes?

The Monotonicity of Directional Euvoluntarism

Foreword: this post is a little flightier than much of the other content here. It's also better suited to those who have formally studied poli sci or public choice. If you prefer to keep your euvoluntary exchange content deliciously free of abstraction and down to earth, you might want to give this one a pass. More below the fold...