People are not "rational economic actors" and do not make all their life choices by "incentives" of this type.
Most people will care a lot more about, for example, how they are perceived in the community. So simply making the payers list public would, in some cases, prevent people from playing chicken.
Many other solutions are possible, depending on context and culture. It's the job of the businessman to use creativity to find a solution, a way to persuade people to voluntarily participate in his project.
What's wrong with Government action?
Two main things:
1) some people will be taxed to pay for the dam who were not playing chicken but genuinely would rather have kept their money and not had the dam than have paid for it. Why? Because their kid urgently needs new shoes or expensive, urgent cancer treatments. Or their roof leaks, or many other reasons. Just because the damn project is profitable for them doesn't mean they don't have more urgent uses of capital at the moment.
2) some proposed projects should not be done. Why? Well maybe people are mistaken about it being a net win. Maybe it has hidden costs which I noticed but other people didn't notice. And I try to tell them but they don't understand my point.
The solution to the "same projects are mistakes" issue is voluntary participation so people use their judgment and win or lose based on their own choices.
Taxing everyone means the dissenters pay for it, and lose out if it fails, even though their judgment was correct.
The Government has no special skill at knowing which dams should be built now, which later (because some other use of capital is more urgent), and which never. Nor at knowing which look highly profitable now but will be rendered obsolete by new technology next year.
Interesting points, although I respectfully disagree.
It's pretty silly to talk about economics if you don't believe in rational economic actors. A public list is a nice theory, but then you would still have people trying to get on the list for the minimum amount possible and hoping that others would donate more to be higher on the list of donors. And what happens when you have 60 local farmers and 40 corporation farms. Most corporations would be pretty hard to shame into paying if they could somehow get others to pay.
Point #2 goes both ways. If the project becomes a net benefit then the dissenters get the benefit and win even though their judgement was incorrect.
Point #1 also goes both ways and points towards the need for public goods. In reality the sick farmer will benefit the most from public services such as dams and health care being shared by all of society. By sharing the cost of the dam and healthcare across all of the farmers they can help prevent one of them going bankrupt due to a bad case of cancer.
It's true that the government isn't better than everyone else at knowing which dams should built, but that doesn't mean that society can't figure out that some projects are best funded by the entire society.
Anyway - interesting perspective on your part. I wish more people could talk about the pros and cons without getting downvoted for disagreeing with the majority.
> Point #2 goes both ways. If the project becomes a net benefit then the dissenters get the benefit and win even though their judgement was incorrect.
Lots of people dissented from the iPhone. Now they benefit. Their benefitting doesn't hurt Apple or prevent Apple from having funded the project themselves and from making plenty of profit. Apple got what they paid for and then some. Other people come out ahead too but that isn't Apple's loss. I don't think some people getting unearned benefit is something to worry about as long as the primary actors are able to make their profit.
The same point could be made more broadly about computers as a whole. Funded by a minority initially, now hugely benefitting many people who didn't take any of the initial risk.
I think there is an asymmetry. I'm far more concerned about people being forced to pay for failed projects or projects requiring capital they more urgently need elsewhere -- being actively, involuntarily hurt -- than I am worried about people gaining broad benefits from projects that benefit the primary actors and risk takers plenty (I actually regard this free stuff to lots of people, which is the result of many projects, as a positive, happy thing, not a negative.)
If you'd like to discuss further, with interesting people and no downvotes, you could come to:
The same point could be made more broadly about computers as a whole. Funded by a minority initially, now hugely benefitting many people who didn't take any of the initial risk.
Libertarian selectivenes again. Government grants have always had a large part to play in computer development, but aside from that, what's really benefitting people is the internet, which was most definitely a government project, 'funded by all US taxpayers' rather than 'funded by a minority'.
> It's pretty silly to talk about economics if you don't believe in rational economic actors.
With respect: when you find rational economic actors in notable quantities, please do let the rest of us know. (My skepticism of the questionable assertions of libertarians is largely based on the conspicuous absence of such actors.)
Basing policies on the assumption that nobody will exploit obvious inefficiencies since people aren't entirely rational is the economic equivalent of using "drowssap" as your password.
Most people will care a lot more about, for example, how they are perceived in the community. So simply making the payers list public would, in some cases, prevent people from playing chicken.
Many other solutions are possible, depending on context and culture. It's the job of the businessman to use creativity to find a solution, a way to persuade people to voluntarily participate in his project.
What's wrong with Government action?
Two main things:
1) some people will be taxed to pay for the dam who were not playing chicken but genuinely would rather have kept their money and not had the dam than have paid for it. Why? Because their kid urgently needs new shoes or expensive, urgent cancer treatments. Or their roof leaks, or many other reasons. Just because the damn project is profitable for them doesn't mean they don't have more urgent uses of capital at the moment.
2) some proposed projects should not be done. Why? Well maybe people are mistaken about it being a net win. Maybe it has hidden costs which I noticed but other people didn't notice. And I try to tell them but they don't understand my point.
The solution to the "same projects are mistakes" issue is voluntary participation so people use their judgment and win or lose based on their own choices.
Taxing everyone means the dissenters pay for it, and lose out if it fails, even though their judgment was correct.
The Government has no special skill at knowing which dams should be built now, which later (because some other use of capital is more urgent), and which never. Nor at knowing which look highly profitable now but will be rendered obsolete by new technology next year.