Tag Archives: Politics

Merkle’s Futarchy

My futarchy paper, Shall We Vote on Values But Bet on Beliefs?, made public in 2000 but officially “published” in 2013, has gotten more attention lately as some folks talk about using it to govern blockchain organizations. In particular, Ralph Merkle (co-inventor of public key cryptography) has a recent paper on using futarchy within “Decentralized Autonomous Organizations.”

I tried to design my proposal carefully to avoid many potential problems. But Merkle seems to have thrown many of my cautions to the wind. So let me explain my concerns with his variations.

First, I had conservatively left existing institutions intact for Vote on Values; we’d elect representatives to oversee the definition and measurement of a value metric. Merkle instead has each citizen each year report a number in [0,1] saying how well their life has gone that year:

Annually, all citizens are asked to rank the year just passed between 0 and 1 (inclusive). .. it is intended to provide information about one person’s state of satisfaction with the year that has just passed. .. Summed over all citizens and divided by the number of citizens, this gives us an annual numerical metric between 0 and 1 inclusive. .. An appropriately weighted sum of annual collective welfares, also extending indefinitely into the future, would then give us a “democratic collective welfare” metric. .. adopting a discount rate seems like at least a plausible heuristic. .. To treat their death: .. ask the person who died .. ask before they die. .. [this] eliminates the need to evaluate issues and candidates. The individual citizen is called upon only to determine whether the year has been good or bad for themselves. .. We’ve solved .. the need to wade through deceptive misinformation.

Yes, it could be easy to decide how your last year has gone, even if it is harder to put that on a scale from worst to best possible. But reporting that number is not your best move here! Your optimal strategy here is almost surely “bang-bang”, i.e., reporting either 0 or 1. And you’ll probably want to usually give the same consistent answer year after year. So this is basically a vote, except on “was this last year a good or a bad year?”, which in practice becomes a vote on “has my life been good or bad over the last decades.” Each voter must pick a threshold where they switch their vote from good to bad, a big binary choice that seems ripe for strong emotional distortions. That might work, but it is pretty far from what voters have done before, so a lot of voter learning is needed.

I’m much more comfortable with futarchy that uses value metrics tied to the reason an organization exists. Such as using the market price of investment to manage an investment, attendance to manage a conference, or people helped (& how much) to manage a charity.

If there are too many bills on the table at anyone one time for speculators to consider, many bad ones can slip through and have effects before bills to reverse them can be proposed and adopted. So I suggested starting with a high bar for bills, but allowing new bills to lower the bar. Merkle instead starts with a very low bar that could be raised, and I worry about all the crazy bills that might pass before the bar rises:

Initially, anyone can propose a bill. It can be submitted at any time. .. At any time, anyone can propose a new method of adopting a bill. It is evaluated and put into effect using the existing methods. .. Suppose we decided that it would improve the stability of the system if all bills had a mandatory minimum consideration period of three months before they could be adopted. Then we would pass a bill modifying the DAO to include this provision.

I worried that the basic betting process could bias the basic rules, so I set basic voting and process rules off limits from bet changes, and set an independent judiciary to judge if rules are followed. Merkle instead allows this basic bet process to change all the rules, and all the judges, which seems to me to risk self-supporting rule changes:

How the survey is conducted, and what instructions are provided, and the surrounding publicity and environment, will all have a great impact on the answer. .. The integrity of the annual polls would be protected only if, as a consequence, it threatened the lives or the well-being of the citizens. .. The simplest approach would be to appoint, as President, that person the prediction market said had the highest positive impact on the collective welfare if appointed as President. .. Similar methods could be adopted to appoint the members of the Supreme Court.

Finally, I said explicitly that when the value formula changes then all the previous definitions must continue to be calculated to pay off past bets. It isn’t clear to me that Merkle adopts this, or if he allows the bet process to change value definitions, which also seems to me to risk self-supporting changes:

We leave the policy with respect to new members, and to births, to our prediction market. .. difficult to see how we could justify refusing to adopt a policy that accepts some person, or a new born child, as a member, if the prediction market says the collective welfare of existing members will be improved by adopting such a policy. .. Of greater concern are changes to the Democratic Collective Welfare metric. Yet even here, if the conclusion reached by the prediction market is that some modification of the metric will better maximize the original metric, then it is difficult to make a case that such a change should be banned.

I’m happy to see the new interest in futarchy, but I’m also worried that sloppy design may cause failures that are blamed on the overall concept instead of on implementation details. As recently happened to the DAO concept.

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Future Fears

People tend to act to help themselves. Sometimes that is good, and sometimes it is bad. We economists distinguish situations where such acts on net 1) help others, 2) hurt others less than they help oneself, and 3) hurt others more they help oneself. We see only type #3 acts as bad, and the others as good.

However, I’m coming to realize that most people actually use a different criteria; they care more about loyalty than efficiency. That is, they ask: are the acts subject to “our” prestige control? How well can “we”, by applying or changing our common notion of prestige, shame people to make them stop, or praise people to make them start?

We fear powerful people who feel free to defy us. When they can make big changes to the world, and put only minor weight on our prestige influence. We are afraid of this even when their actions have so far been of type #1, benefiting us. We fear that their inclination to be helpful could change after they accumulate enough power.

This is the standard attitude of foragers, as described by Boehm in Hierarchy in the Forest, where the main fear was individuals strong enough to defy the consensus of their local band. It is also echoed in the classic “illicit dominator” fictional villain. (A “dominator” needs only a source of power that can defy prestige.) In schoolyards, kids have long sought to ridicule nerds who submit to teachers, instead of joining other kids in resisting teacher dominance.

In the classic tv show Survivor, participants tended to vote off the island opponents strong enough to earn immunity from group votes, no matter what those people’s other virtues. Similarly, in office politics workers who feel productive enough to not need to make arbitrary displays of submission are often seen as “difficult”; putting them in their place becomes a priority.

In larger politics today, the main villains are powers who feel free to defy national or world culture’s regarding proper behavior. Criminals (and “terrorists”) and foreign powers, especially in war, obviously, but also one’s own government unless it uses democracy or something to show its submission to local prestige. In the past, when religion was stronger, churches demanded so much submission that they were vulnerable to being labelled illicit dominators. Politics has often been about gaining support for one power via seeing it as protecting us from other powers.

Today, our other main candidate for illicit dominators are for-profit firms. Bigness triggers forager suspicions all by itself, ordering employees about adds a vivid image of dominance, and a for-profit status declares the limited influence of prestige. So we are very suspicious of big organization choices, especially for-profits, and especially regarding employees. We want to regulate their prices and quality, and especially how they hire, fire, and promote. We mostly don’t trust competition between firms to induce them to benefit us; yeah that might work sometimes, but more direct control feels more reliable. (Even if it actually isn’t.)

All of this makes it pretty easy to predict our fears regarding the future. Foreign powers create the classic apocalyptic conflict, and criminals going wild is the classic post-apocalyptic fear. A foreign power winning over us is the classic alien war allegory. Governments being non-democratic, and acquiring new powers, describes most of the new young adult dystopias. Sometimes there’s a new church with too much power, defying reader prestige rankings.

But if you imagine religions, governments, and criminals not getting too far out of control, and a basically capitalist world, then your main future fears are probably going to be about for-profit firms, especially regarding how they treat workers. You’ll fear firms enslaving workers, or drugging them into submission, or just tricking them with ideology. In this way firms might make workers into hyper submissive “inhuman robots”, with no creativity, initiative, or leisure, possibly even no socializing, sex, music, or laughter, and maybe just maybe no consciousness at all.

And if you are one of the rare people who don’t even fear firms, because you see competition as disciplining them, well you can just fear technology itself being out of control. No one has been driving the technology train; tech mostly just appears and gets used when some find that in their interest, regardless of the opinions of larger communities of prestige. One can fear that this sort of competition and tech driven change will be the force that makes human workers into “inhuman robots.” Making you eager for a world government (or a super-intelligence) to take control of tech change.

This framework seems to successfully predict the main future fears raised early in the industrial revolution. And also the main concerns about the scenario of my book. Of course the fact that we may be primed to have such concerns, regardless of their actual relevance, doesn’t make them wrong. But it does mean we should look at them carefully.

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Prestige is Political

Imagine an ancient forager band had a conflict. For example, imagine some were eating foods that induced stinky farts which bothered others who slept nearby. There are several generic ways to deal with such a conflict:

  1. Force – someone strong might destroy the stinky foods, or threaten to beat up those who eat them.
  2. Deal – those bothered by the smell might compensate others for not eating stinky foods.
  3. Exit – those bothered by the smell might leave and find or form another band.
  4. Prestige – prestigious folks could push the idea that eating stinky foods is low prestige, to shame people into not eating them.

I think foragers had a strong preference for this last type of solution. But note that prestige is not available as a solution to conflicts unless prestige is in part political. If prestige were a fixed thing, say some fixed weighting of smart, strong, tall, etc., then it couldn’t be changed to solve problems. But if prestige is somewhat flexible, a dominant political coalition can try to flex it to encourage desired outcomes.

Now consider an analogous global conflict today, such as global warming. It seems to me that people also intuitively prefer a prestige solution. Instead of forming a world government powerful enough to impose its will, or making a deal where rich nations pay poor ones whatever it takes to get them to sign, what elite nations actually seem to be doing is visibly cutting back on carbon, and trying to shame other nations into following their lead. They’d rather risk failing to solve the problem than having to resort to a non-prestige solution. Arguably prestige is in part how world elites actually pushed for changes such as more democracy, less slavery, and better protected environments.

I’m also reminded of how people seem to prefer to choose their lawyers, doctors, investment advisors, etc. via prestige, instead of via track records or incentive contracts. And how people want to change who succeeds in the world via pushing elite colleges and institutions to change their admissions process, instead of reducing barriers to competition to make success more meritocratic.

There are two kinds of status, sometimes called “prestige” vs. “dominance.” Both exist, but on the surface at least we want the former to matter more than the latter. And we often seem to categorize gaining via trade or personal effort as gaining via dominance. Which is in part why we often dislike market based solutions. But note that these two kinds of status could also be called “politics” vs. “non-political reality”. We prefer social outcomes to be determined by prestige that can be influenced by dominant political coalitions, and fear and suspect social outcomes determined by nature, personal effort, or social competition, even when such competition is peaceful.

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Super-Voting Scenario

I recently posted on a hypothetical “kilo-vote” scenario intended to help show that most of us don’t vote mainly to influence who wins the election. However, the ability of any given scenario to convince a reader of such a result depends on many details of the scenario, and of reader beliefs about behavior. So on reflection, I’ve come up with a new scenario I think can persuade more people, because in it fewer things change from the prototypical voting scenario.

Imagine that polls stayed open for a month before the election deadline, and that a random one percent of voters were upgraded to “super-voters,” who can privately vote up to twenty times, as long as they wait at least an hour between votes. When a super-voter votes all twenty times, their votes are doubled, and counted as forty votes. “Privately” means no one else ever knows that this person was a super-voter. (Yes that could be hard to achieve, but just assume that it is achieved somehow.)

To a voter who cares mainly about picking the election winner, and who casts only a tiny fraction of the votes, the value of voting is proportional to their number of votes. Twice the votes gives twice the value. If such a person votes when they are an ordinary voter, then they should be greatly tempted to vote twenty times as a super-voter; their costs aren’t much more than twenty times their costs from voting once, yet for that effort they get forty votes.

I feel pretty sure that most of the people assigned to super-voter status would not in fact vote twenty times. Yes I haven’t tested this, but I’d be willing to bet on it. Most voters care a lot more about seeming to have done their duty than they do about maximizing any new opportunities that arise from being assigned super-voter status. So most super-voters would think they’d done their duty with their first vote. After all, if voting once is good enough for ordinary voters who are not assigned to super-voter status, why shouldn’t that be good enough for super-voters as well?

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What Price Kilo-Votes?

Imagine that at every U.S. presidential election, the system randomly picked one random U.S. voter and asked them to pay a fee to become a “kilo-voter.” Come election day, if there is a kilo-voter then the election system officially tosses sixteen fair coins. If all sixteen coins come up heads, the kilo-voter’s vote decides the election. If not, or if there is no kilo-voter, the election is decided as usual via ordinary votes. The kilo-voter only gets to pick between Democrat and Republican nominees, and no one ever learns that they were the kilo-voter that year.

“Kilo voters” are so named because they have about a thousand times a chance of deciding the election as an ordinary voter does. In the 2008 U.S. presidential election the average voter had a one in sixty million chance of deciding who won the election. The chance that sixteen fair coins all come up heads is roughly a thousand times larger than this.

Consider: 1) How much is the typical voter willing to pay to become a kilo-voter? and 2) How much does it cost the typical voter, in time and trouble, to actually vote in a U.S. presidential election? As long as these numbers are both small compared to a voter’s wealth, then for a voter motived primarily by the chance to change the election outcome, these numbers should differ by at least a factor of one thousand.

For example, if it takes you at least a half hour to get to the voting booth and back, and to think beforehand about your vote, and if you make the average U.S. hourly wage of $20, then voting costs you at least $10. In this case you should be willing to pay at least $10,000 to become a super-voter, if you are offered the option. Me, I very much doubt that typical voters would pay $10,000 to become secret kilo-voters.

Yes, the 2008 election influenced the lives of 305 million U.S. residents, and someone who cared enough might pay a lot for a higher chance of deciding such an election. But typical voters would not pay a lot. Which suggests that the chance to decide the election is just not the main reason that they vote. The chance of being decisive actually doesn’t seem to matter remotely as much to typical voting behavior as it should to someone focused on changing outcomes. For example, states where voters have much higher chances of being decisive about the president don’t have much higher voter turnout rates, and turnout is actually lower in local and state elections where the chances of being decisive is higher.

My conclusion: we don’t mainly vote to change the outcome.

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Can’t Stop Lecturing

Imagine a not-beloved grade school teacher who seemed emotionally weak to his students, and was fastidious about where exactly everything was on his desk and in his classroom. If the students moved things around when the teacher wasn’t looking, this teacher would seem disrupted and give long boring lectures against such behavior. This sort of reaction might well encourage students to move things, just to get a rise out of the teacher.

Imagine a daughter who felt overly controlled and under considered by clueless parents, and who was attracted to and tempted to get involved with a particular “bad boy.” Imagine that these parents seemed visibly disturbed by this, and went out of their way to lecture her often about why bad boys are a bad idea, though never actually telling her anything she didn’t think she already knew. In such a case, this daughter might well be more tempted to date this bad boy, just to bother her parents.

Today a big chunk of the U.S. electorate feels neglected by a political establishment that they don’t especially respect, and is tempted to favor political bad boy Donald Trump. The main response of our many establishments, especially over the last few weeks, has been to constantly lecture everyone about how bad an idea this would be. Most of this lecturing, however, doesn’t seem to tell Trump supporters anything they don’t think they already know, and little of it acknowledges reasonable complaints regarding establishment neglect and incompetence.

By analogy with these other cases, the obvious conclusion is that all this tone-deaf sanctimonious lecturing will not actually help reduce interest in Trump, and may instead increase it. But surely an awful lot of our establishments must be smart enough to have figured this out. Yet the tsunami of lectures continues. Why?

A simple interpretation in all of these cases is that people typically care more about making sure they are seen to take a particular moral stance than they care about the net effect of their lectures on behavior. The teacher with misbehaving students cares more about showing everyone he has a valid complaint than he does about reducing misbehavior. The parents of a daughter dating a bad boy care more about showing they took the correct moral stance than they do about whether she actually dates him. And members of the political establishment today care more about making it clear that they oppose Trump than they do about actually preventing him from becoming president.

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Why I Lean Libertarian

Imagine that one person, or a small group, wants to do something, like watch pornography, do uncertified medical procedures, have gay sex, worship Satan, shoot guns, drink raw milk, etc. Imagine further that many other people outside that small group don’t want them to do this. They instead want the government to make a law prohibiting similar groups from doing similar things.

In this prototypical situation, libertarians tend to say “let them do it” while others say “have the government make them stop.” If we take a cost-benefit perspective here, then the key question here is whether this small group gains more from their activity (or an added increment of it) than others lose (including losing via their “altruistic” concern for the small group). Since this small group would choose to do it if allowed, we can presume they expect to gain something. And if others complain and try to make them stop (or cut back), we can presume they expect to lose. So we are trying to estimate the relative magnitude of these two effects.

I see three considerations that, all else equal, lean this choice in the libertarian direction.

  •  Law & Government Are Costly – It will take real resources to create and enforce a law to ban this activity. We’ll have to negotiate the wording of this law, and then tell people about it. People will complain about violations, and then we’ll have to adjudicate those complaints, and punish violators. We’ll make mistakes in which laws to create, who to punish, and how to manage the whole process. More rules will discourage innovation, and invite more lobbying. All of which is costly.
  • Local Coordination Might Work – If people do something that hurts those around them more, often those nearby others can coordinate to discourage them via contract and freedom of association. If playing your music loud bothers folks in the apartment next door, your common landlord can set rules to limit your music volume. And kick you out if you don’t follow his rules. The more ways that smaller organizations could plausibly solve a problem, the less likely we need central government to get involved.
  • Lawsuits Might Work – Legal systems have well-established processes whereby some people can sue others, claiming that the actions of those others have hurt them. Suit losers must pay, discouraging the activity. Yes, people harmed can need to coordinate to sue together, and yes legal systems tend to demand relatively concrete evidence of real harm, and that the accused caused that harm. It might be hard to figure out who to accuse, the accused might not have enough money to pay, and the legal process might be too expensive to make it worth bothering. But again, the more situations where the law could plausibly solve the problem, the less likely that we need extra government involvement.

Again, each of these considerations leans the conclusion in a libertarian direction, all else equal. Yes, they can collectively be overcome by strong enough other considerations that lean the other way. For example, I’ll grant that for the case of air pollution, we plausibly have strong enough evidence of large harms on outsiders, harms insufficiently discouraged by local coordination and lawsuits. So yes in this case central government might be an attractive solution, if it can act cheaply and efficiently enough.

But the main point here is that the three considerations above justify a libertarian default that must be overcome by specific arguments to the contrary. If outsiders complain about an activity, but aren’t willing to buy less of it via contract, or to sue for less of it in court, maybe they aren’t really being hurt that much. There is an asymmetry here: if we don’t ban an activity and might get too much, contract & law could reduce it a lot, but if we ban an activity and might get too little, contract & law can’t increase it much.

Yes, other persuasive contrary considerations might be found, including considerations not based on the net harm of the disputed actions. But the less you think you know about these other considerations, the more your choice will be influenced by these three basic considerations, all of which seem to me pretty solid.

While I have said before that I am not a libertarian according to common strict definitions, I still usually tend to lean libertarian, because in fact arguments based on further considerations often seem to me pretty weak. While one can often make clever arguments, it is often hard to have much confidence in them; the world seems just too complex. And so I often have to fall back on simple defaults. Which, as I’ve argued above, are libertarian.

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Tax Coastal Cities?

(Nobel-winner) Thomas Schelling just gave a talk here at GMU Econ on “Two Major Infrastructure Worldwide Projects to Prepare for Global Warming.” He said most work on global warming focuses on how to prevent it, and that there’s been a bit of a taboo on looking at how to mitigate harm if it happens.

He defied that taboo, and talked about two harms from global warming: 1) crop drought due to snowpacks melting earlier in the annual cycle, and 2) sea levels rising if the Greenland or Antarctic ice sheets suddenly slip into the sea. For both problems Schelling wants central governments to start planning possible large engineering projects.

On overly-early farm-water, he wants new canals and reservoirs dug to hold water until farmers want it and then deliver that water to them. For rising sea levels he wants dikes etc. to keep coastal cities dry. Such city protection systems could be at the scale of the harbor of a single city, or at the scale of blocking the Strait of Gibraltar to protect the entire Mediterranean Sea.

On protecting coastal cities, John Nye pointed out that if governments are willing to do anything now they should consider taxing coastal cities to collect revenue to pay for future mitigation. This has the further big benefit of discouraging risky coastal development. And if governments aren’t willing to do this obvious easy thing now, what hope is there of them doing much useful later?

Most of the coastal city structures that would be hurt via rising sea levels probably haven’t been built yet. So trying to get governments to start planning to protect coastal cities runs the risk of encouraging too much coastal development, which then becomes insufficiently protected or protected at excess expense.

The fact that central governments are not coordinating much to reduce global warming suggests that they will also fail to coordinate at large scales to mitigate harm from warming. So a simpler safer solution might be to have central governments try to commit to not protect coastal cities in advance. Don’t even start central government initiatives to coordinate and plan for coastal protection, and stop current central government coastal protection programs, such as subsidized hurricane insurance.

If coastal cities want to tax themselves to pay for their own local mitigation, fine, but to the extent we expect that more central governments won’t be able to resist helping later, have them tax low-lying coastal development in advance to pay for that. Let everyone know its time to start focusing new development away from low coasts.

The problem of building reservoirs for farmers seems more easily dealt with via private property in water. If private parties can pay to dig reservoirs to sell water to private farmers at market prices, it isn’t clear why much central government coordination is required.

Added: Seems Glenn Reynolds proposed to tax coastal development a month ago. HT Robert Koslover in the first comment below.

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Hive Mind

Some people like murder mystery novels. I much prefer intellectual mysteries like that in Garett Jones’ new book Hive Mind: How Your Nation’s IQ Matters So Much More Than Your Own:

Over a decade ago I began my research into how IQ matters for nations. I soon found that the strong link between average IQ and national productivity couldn’t be explained with just the conventional finding that IQ predicts higher wages. IQ apparently mattered far more for nations than for individuals. In my early work, I estimated that IQ mattered about six times more for nations than for individuals: your nation’s IQ mattered so much more than your own. That puzzle, that paradox of IQ, is what set me on my intellectual journey. …

I’ll lay out five major channels for how IQ can pay off more for nations than for you as an individual: Continue reading "Hive Mind" »

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Seeking Super Factors

In a factor analysis, one takes a large high-dimensional dataset and finds a low dimensional set of variables that can explain as much as possible of the total variation in that dataset. A big advantage of factor analysis is that it doesn’t require much theoretical knowledge about the nature of the variables in the data or their relations – factors are mostly determined directly by the data.

Factor analysis has had some big successes in helping us to understand how humans differ. As many people know, intelligence is the main factor explaining variation in cognitive test performance, ideology is the main factor explaining variations in political positions, and personality types explain much of the variation in stable attitudes and temperament. These factors have allowed us to greatly advance our understanding of intelligence, ideology, and personality, even while remaining ignorant of their fundamental causes and natures.

However, people vary in far more ways than intelligence, ideology, and personality, and factor analyses have been applied to many of these other human feature categories. For example, there have been factors analyses of jobs, brands, faces, body shape, gait, accent, diet, clothing, writing styleleisure behavior, friendship networks, sleep habitsphysical health, mortality, demography, national cultures, and zip codes.

As my last post on media genre factors showed, factors found in different feature categories are often substantially correlated with one another. This suggests that if we put together a huge super-dataset describing many individual people in as many ways as possible, a factor analysis of this dataset may find important new super-factors that span many of these features domains. Such super-factors would be promising candidates to use in a wide range of social research, and social policy.

Now it remains logically possible that these super-factors will end up being simple linear combinations of the factors that we have already found in each of these feature categories. Maybe we already know most of what there is to know about how humans vary. But I’d bet strongly and heavily against this. The rate at which we have been learning new things about how humans vary doesn’t remotely suggest we’ve run out of new big things to learn. Yes, merely knowing the super-factors isn’t the same as understanding their origins. But just as we’ve seen with factor analysis in more specific areas, knowing the main factors can be a big help.

So I’d guess that the super-factors found in a super dataset of human details will be revolutionary developments. We will afterward see uncovering them as a seminal milestone in our progress in understanding human variation. A Nobel prize worthy level of seminality. All it will take is lots of tedious work to collect a super dataset, and then do some straightforward number crunching. A quest awaits; who will rise to the challenge?

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