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Date: Fri, 31 Aug 2007 02:05:13 -0400 (EDT)
To: Daniel Reeves <dreeves &AElig umich.edu>
cc: Dave Morris <thecat &AElig umich.edu>, improvetheworld &AElig umich.edu,         Steven Reeves <steven &AElig aptigi.com>, reeves-hayos &AElig umich.edu,         reeves-kalkman &AElig umich.edu
From: Kevin Lochner <klochner &AElig eecs.umich.edu>
Subject: Re: mind the gap

On Fri, 31 Aug 2007, Daniel Reeves wrote:

> Dave makes 7 other points, listed here, that I haven't addressed.  Little 
> help, anyone? :)
>
> Dave's points:
>
> 2. Poor people derive more benefit from museums than they are willing to
>   pay for.

This is a "false dilemma".  You're assuming the choice is between museum 
or no museum, where in fact, once you've appropriated funds in accordance 
with our progressive tax code, you can just redistribute to the poor 
instead of paying for a museum with the funds.  I'm speculating here, but 
a lot of lower income people may prefer food and shelter to museums.

> 3. Slavery is an example of how making money can be worse than losing
>   money.

I still think this is more of an ethical question than a "net social 
welfare" question.  This is along the lines of "what if you can save the 
entire planet by torturing an iraqi insurgent".   Clearly torturing will 
give you higher social welfare, but it's a question of ethics.  What if it 
was save the world vs. torture 1/4 the world?

> 6. How, in a purely free-market system, does anyone decide it's a good
>   idea to have a mental hospital for the poor?

This is an externality or "neighorbood effect" as Milton Friedman would 
refer to it.  Sometimes it does make sense to decide on a policy level 
that everyone should pay for something, but he advocated doing so when 
it's not possible to collect fees from the "users".  For the mental 
hospital, you would collect fees from everyone that doesn't want crazies 
in the streets, which is a logistical and incentive nightmare.  For the 
museum, you collect from everyone that goes in - much easier.  If you want 
to let poor people in, you can give them their entrance fee and let them 
decide what to do with it.

>
> 7. Speed limits are an example of why it is too simplistic to allow all
>   consensual behavior.

Why are speed limits such a good example?
"Despite the prevailing high speeds, the accident, injury and death rates 
on the Autobahn are remarkably low.  The Autobahn carries about a third of 
all Germany's traffic, but injury accidents on the Autobahn account for 
only 6% of such accidents nationwide and less than 12% of all traffic 
fatalities were the result of Autobahn crashes (2004).  In fact, the 
annual fatality rate (3.2 per billion km in 2004) is consistently lower 
than that of most other superhighway systems, including the US Interstates 
(5.0 in 2003)."[1]

[1] http://gettingaroundgermany.home.att.net/autobahn.htm (and others)