Wednesday, November 15, 2017

Mark Rosenman: Why 'Crowdfunding' Government Is A Bad Idea

In March 2015, Mark Rosenman penned an article for the Philanthropy News Digest "Why 'Crowdfunding' Government Is A Bad Idea."

Mr. Rosenman is looking at the debate under our present system in which voluntary contributions to government programs crowd out philanthropic spending. This is a legitimate concern under our current system of involuntary taxation and voluntary philanthropy. Voluntary contributions to government in excess of involuntarily collected taxes do crowd out philanthropic efforts, so we agree with Mr. Rosenman that crowd funding government is a bad idea, but only when involuntary taxes are already being collected.

Instead, all government revenue should be collected voluntarily. Voluntarily crowd funding all government programs will increase the available funding for philanthropic efforts. In addition, nongovernmental organizations could then partially supplement, or entirely replace, government programs when citizens decide that the private sector provides those services more efficiently. Those efficiencies would then result in greater individual spending on consumption, investment, philanthropy, or government.
Mr. Rosenman makes the argument that "funding for important public initiatives and programs ought not to depend on the whims of individual donors and foundations." Mr. Rosenman's fear is that "it will make it much more difficult in the long run for government to adequately support and advance the broad-based efforts necessary to improve our social, political, and economic institutions."

We disagree with the argument that citizens don't know what's best for them and that citizens can't see the bigger picture when choosing what to fund. That's exactly what citizens can do that politicians can't: consider the utility of every dollar spent.

Citizens should listen to the opinions of experts, examine the budgets for potential government programs themselves, and then contribute to only the programs that they choose to. It is theft to involuntarily take a citizen's money to support government programs that they would not voluntarily support.

When every citizen has a chance to review the proposed government budgets and make voluntary contributions to only those programs that they support, then that is truly a government of the people, by the people, for the people. Allowing this process to continue will be self-correcting: Citizens will see the effects of their funding on social, political, and economic institutions, and then each citizen can individually decide whether those programs require more or less funding. Those individual decisions will aggregate.

The free market will decide the budgets of future government programs at exactly the level of funding that the citizens want to provide. 

To answer Mr. Rosenman's questions:

"Do we really trust people's personal motivations and sometimes impulsive altruism to substitute for government in prioritizing problems and aggregating resources to address those problems over the long haul?"

"Do we really want to substitute the fickleness of individual altruism for what is in fact a shared obligation?"

Yes and yes. We believe in the free market.

Thursday, November 2, 2017

Are There Any Programs That Can't Be Crowd Funded?

@petr3pan asked one of the more complex questions: "are there any programs that can't be crowdfunded? I'm thinking like military for national defense and justice system in particular."
In general, every government program should be transparently budgeted, locally administered, and voluntarily crowd funded. National defense programs may require special considerations at times, but they should not be complete exceptions to these principles.

National defense programs have similar characteristics to other government programs: In order to accomplish their legally defined objectives, they require labor, materials, equipment, and assets. Each of these components can and should be transparently budgeted to the maximum extent possible.

Secret national defense programs, it could be argued, should not be fully transparently budgeted. If providing a transparent budget would put lives at risk or disclose strategies, then the budget presented to the public for those programs should not disclose exact details.

It would be the responsibility of national defense advocates to make the case to the public that certain programs are deserving of funding, even though some details may be classified. This is true of any government program requiring crowd funding: If advocates are not able to convince the public that the program is important enough to fund, then the program should not, and will not, be fully funded.

The needs of the most critical national defense emergency programs are already anticipated in the Crowd Funded Government framework. If there are emergency programs that require funding immediately that the previously defined budgets did not anticipate, then that is why there would be ongoing crowd funding efforts for the current year's budgets, in addition to the ongoing crowd funding for future years' budgets.

Regarding the justice system's programs, those would be crowd funded like any other government program. As more money would be crowd funded for a justice system's budget, then more labor and assets would be available. If those budgets are not crowd funded fully, then the productivity of those programs would not reach their full potential.

Consider a small town that budgets for one courthouse that operates during normal business hours with enough judges and support staff to handle an average amount of caseloads in a standard amount of time. If the budgets for that town's justice system are not fully crowd funded, then that courthouse may defer maintenance, and court rooms may only operate for a few days per week. This will cause the courthouse to be in disrepair, and the backlog of cases will grow beyond what is considered a standard amount of time.

The word will spread that the paint is peeling at the courthouse, one of the bathrooms is out of order, and it takes double the average time to get a case through the system. Citizens will either accept the condition of their justice system, or they will provide emergency funding to correct the current year's imbalances. Then, in the funding cycles for future years, they will either collectively realize the importance of keeping their local justice system's programs fully funded, or they will accept the flaws resulting from not fully funding their justice system.

Crowd Funded Government is designed to be a self-correcting system. Not every government program's budget needs to be fully funded every year. Citizens could realize that they are satisfied with the reduced services being provided at a fraction of the fully funded budgeted amounts. Alternatively, citizens could realize the importance of keeping certain programs fully funded, and the advocates would go to great lengths to spread that message and remind everyone of the negative effects that could result.

Thank you @petr3pan for the great question. Please keep the questions coming. Crowd Funded Government is not afraid of the toughest questions. The truth should not fear the light!