Cowen Disses Futarchy

From a recent Telegraph article:

Professor Tyler Cowen, also of George Mason University, thinks that the problem of bad governance is far too complex to be solved simply by making predictions of how policy decisions may or may not turn out. "I don’t agree with the futarchy idea," he says. "The record of prediction markets is a strong one, but I wouldn’t want to use them to run an entire government.

Imagine a similar statement on voting:

The problem of bad governance is far too complex to be solved simply by having citizens elect representatives.  The record of representatives is strong, but I wouldn’t want to use them to run an entire government.

Or imagine similar statements about propositions, laws, judges, administrative agencies, public hearings, free press, constitutions, etc.  See the problem?  Every institutional mechanism is going go be far simpler than the complex problems to be solved – can that really be a reason to reject them all?

GD Star Rating
loading...
Tagged as: ,
Trackback URL:
  • Stephen Day

    The most accurate representation–of any kind, of anything at all–will be just as complex as the thing being represented. If we’re to get anything done, we have to drastically over-simplify.

    However, Cowen didn’t “reject them all.” He said he “wouldn’t want to use them to run an entire government.” I think there is an important distinction.

    Sorry I’ve got nothing more to add to the discussion, but I don’t know much about this topic.

  • http://shagbark.livejournal.com Phil Goetz

    Good point.

    Another is that saying that prediction markets could have a role in government is not the same as saying they should be the government. This is a common fallacy: If X is proposed as a partial solution, reject it by claiming that it is not a complete solution.

  • http://yudkowsky.net/ Eliezer Yudkowsky

    Ha ha! My favorite-solution is of at least the same order of power as the problem! Of course it’s slightly more difficult to implement.

  • Tom

    Cowen is a master of the vague platitude.

  • ad

    Evidence is superior to theory. Have prediction markets been used for a substantial period of time to run a large part of a government?

    Or a small part?

  • http://shagbark.livejournal.com Phil Goetz

    Evidence is superior to theory. Have prediction markets been used for a substantial period of time to run a large part of a government?

    In other words: We shouldn’t try that, because it’s never been tried.

  • Jef Allbright

    Social decision-making seen as increasingly effective has two fundamental aspects: (1) powers of prediction effective over increasing scope (2) a model of values effective (coherent) over increasing context. Prediction markets as currently described are explicit about aspect #1 while relegating #2 (superficially repugnant to narrow libertarian thinking) to the natural tendency of evolutionary processes to preserve and promote increasing synergies. We would do well, as agents operating necessarily within the system, to explicitly promote *both* aspects.

  • Steve Schreiber

    The article quotes Cowen as saying “the record of prediction markets” not “representatives”.

  • http://www.iphonefreak.com frelkins

    In the contest over what constitutes good government, I’ll take James Madison over Tyler Cowen any day.

    The legislature’s need for private as well as public information was well understood by him, and reflected in the Federalist Papers:

    “No man can be a competent legislator who does not add to an upright intention and a sound judgment a certain degree of knowledge of the subjects on which he is to legislate. A part of this knowledge may be acquired by means of information which lie within the compass of men in private as well as public stations.”

    Prediction markets are nothing more than such a means of information lying within the compass of men in private….stations. As such it appears exactly the kind of resource of which the Founding Fathers would have approved.

    In their day information aggregation was primarily performed by the coffeehouse broadsheet, and in ours there doesn’t seem a sound argument not to consider adding well-designed markets into the mix.

  • Jay

    “The problem of bad governance is far too complex to be solved simply by having citizens elect representatives.”

    Seeing that P(My vote swings an election) < P(A tornado in Kansas assembles a Boeing 747) is an issue that can not be ignored. "The record of representatives is strong," Is without a doubt a fallacious statement (see Hugo Chavez for a starting point).

  • Nick Tarleton

    P(My vote swings an election) < P(A tornado in Kansas assembles a Boeing 747)

    It’s happened at least once, so this is very unlikely.

  • Ken

    “The record of [X] is a strong one, but I wouldn’t want to use them…” -Cowen

    I’m always confused by statements like this. “[X] is really good, but I don’t think you should use it” What? Am I missing something? If [S] is good, use it. Otherwise, what are you talking about? Are you saying you don’t like it and don’t want to use it because of that? That’s fine, but the statement above doesn’t say this. What Cowen said is essentially contradictory.

  • Ken

    [S] should be [X]in the above comment.

  • Ben Jones

    Have prediction markets been used for a substantial period of time to run a large part of a government?

    No. And once upon a time, neither had democracry.

  • Prakash

    Have prediction markets been used for a substantial period of time to run a large part of a government?

    Does the fed changing policy, (in this case, interest rates) just in time before the new york stock exchange opens count?

    Seriously, the gyrations of the stock markets of the world are a very strong input parameter in policy making in most of the nations of the world. From my understanding of prediction markets, they should be behaving similarly. So, atleast we have an analogous situation if not an exact one.

  • http://www.aleax.it Alex Martelli

    “The record of representatives is strong, but I wouldn’t want to use them to run an entire government.”, while apparently proposed as a straw-man, seems to be a fair summary of most modern so-called “democracies” (not matching the definition of “democracy” as used in the Federalist Papers, but closer to what the Papers called a “republic” instead) — rather than using elected representatives to run the ENTIRE government, they mix such representative with non-elected “experts” in some parts of the government AND typically some direct democracy in other parts.

    Which parts of the government are run by representatives, which ones by direct democracy, and which ones by experts, differ by country (and to some extent by state, e.g. within the US), but the existence of such complex mixes is nearly universal (the Federalist Papers make a pretty good case to advocate why that should be so, in general, details apart). So, I don’t see why, similarly, “new” tools such as prediction markets should not be added to the mix, while remaining quite short of running the ENTIRE government.