Monday, October 15, 2012

Gaming Proves Free Stuff (Entitlements) Will Bury Us Unless…

By John Sykes

Not often do I find nuggets like this in popular psycho-babble that so ably show why, if given free stuff (government handouts) in ever increasing amounts, the recipients of that stuff (entitlements) will almost all become parasites.

Why? Jose Azel in Taxes: those who pay, those who consume reports:

In an effort to understand the social dynamics of financing public goods, economists have developed standard economic experiments such as the Public-Goods Game that has been extensively play-acted around the world. In the basic Public-Goods Game, subjects secretly choose how many of their private tokens to put into a public pot in each of a number of rounds. On each round, a player can either contribute tokens into the public pot or keep them. Each player gets to keep the tokens they do not contribute. The tokens in the public pot are then evenly distributed among all the players.

What terrifies me is this:

The typical result over a series of rounds is a declining proportion of public contribution. During the first round many people unselfishly contribute about half of their tokens to the public pot. In subsequent rounds, as trusting contributors see “free riders” (called defectors in game theory lexicon), the rate of contribution drops. In later rounds, close to 80 percent of the players become free riders and the amount contributed to the public pot has been greatly reduced.

So disaster truly looms even sooner, if we assume the 47% who pay no income taxes in America today expand, over time, to the 80 percent cited above!

Is there any hope?

Interestingly, those who choose not to contribute in the first round rarely change their minds; they continue to not contribute in later rounds even after discovering that other players are contributing. On the other hand, most “conditional consenters” that start by contributing some of their wealth stop cooperating as they observe others free riding.

Strangely, the paragraph gives me hope if We the People (“conditional consenters”) are and will increasingly stop cooperating with progressive plunder of our hard-earned income. In the end, either we will finally collapse as a society or we will intentionally, hopefully peacefully, cease consenting until the “public pot” shrinks to an appropriate level.

Historically, it would appear that that pot should be no more than 18-20% of GDP, borrowed, taxed or printed by an inflationary Federal Reserve!