Monthly Archives: March 2021

Explaining Stylized UFO Facts

In my last post I summarized some key stylized social facts that a theory of UFOs-as-aliens would need to explain:

Any aliens behind UFOs would be amazingly long-lived creatures who have somehow coordinated to limit any small part of themselves from expanding and remaking the universe. This gets easier to believe the smaller and rarer they are. (They also seem to have limited their tech.) Yet they’ve overcome their self-limits to travel to be here now, so they must be close enough to come quickly once they saw signs of advances, or they saw signs of interest very early and traveled very far.

We can see practical reasons for them to come here, at least if they can coordinate to achieve such plans. But most such motives seem better served by destroying us than by the usual reported UFO encounters, which seem to accomplish little. Yes, humans today do many things for indirect “symbolic” motives, and lazy organizations often pretend to achieve more than they do. But these require slack, and fig-leaf stories to justify them. So from whence comes alien slack, and what could be their justifications?

My tentative explanation for all this has four main supporting elements: panspermia siblings, world government, moral ideology, and complexity rot.

1. Panspermia Siblings – Imagine that life started on some previous planet Eden, where it went through some very hard steps. Life then spread from Eden to Earth, as well as to some other planets. Even if it were hard for life to spread between planets, the Eden-to-Earth scenario could still be statistically favored compared to the Earth-only scenario, as Eden can start much earlier and can be in more places. This is because Earth had to have a much calmer environment than Eden to host the last half-billion years of fragile multi-cellular life. These few seeded planets might be the only ones with life in the million nearest galaxies.

Once seeded, Earth and its sibling planets would then compete to complete the remaining hard steps required to reach advanced life. If one of those planets succeeded before Earth, then it would host close but rare aliens, who share a lot of biology detail (e.g., DNA) with Earth. Those aliens could have then searched out their sibling stars (which have a clear signature that we can see even now), found Earth around one, and then waited perhaps millions of years for civilization to appear here. These aliens had several good and practical possible reasons for coming here in time to see us now up close.

Positing that the aliens behind UFOs come from just one nearby sibling planet, with the nearest other aliens many galaxies away, makes it easier to believe that these aliens have successfully imposed sufficiently-strong self-limits on expansion and on tech advance, leaving the empty universe we see.

2. World Government – Over the last few centuries, one of the most consistent world trends has been an increase in human organization size and complexity, with more functions and decisions drifting up to higher levels. We have developed both better networks and better hierarchical organizations. Plausibly this trend is behind most others; it seems to be the main driver of faster innovation, which is the main cause of more wealth, which drives most other trends.

A straightforward long-term prediction from this trend is “world” (really “civilization-wide”) government. After all, a few have come close to creating this via force, we now have a United Nations by consent, and regulators worldwide share an elite culture that creates a de facto world government on many issues. Stronger, more formal versions seem likely within centuries.

Within a star system, talk delays are modest, and it is easy to see and shoot at most anything, making a world government quite feasible there. However, world government is quite hard to start (and if started harder to maintain) once independent self-sufficient colonies at other stars can grow as fast as at the home star system. Thus the existence of such colonies becomes a deadline for the creation of a world government. As near Earth this deadline seems likely to be met, that may also have happened for sibling star aliens.

The advantages of a world government will seem clear and compelling: a civilization that can better coordinate on global problems like war, pollution, and innovation. And that can better enforce widely-liked regulations. Also, global majorities will be eager to impose their will on global minorities, and to lock down their temporary advantages via a permanent world government.

By its very nature, a world government reduces innovation and adaptation in, but also promotes the stability of, the largest scale civilization structures. An advanced star-system-wide civilization probably has a large enough base of knowledge and resources, and a stable enough environment, for this tradeoff to allow for stability over many millions of years. Thus the fact that aliens have lasted for millions of years weakly suggests that they have a world government.

3. Moral Ideology – While pre-human primate groups were held together mainly by kin and alliances, human groups could be larger due to social norms, which were enabled by human weapons and language. Social norms have also aided our other more recent methods of social organization. As norms matter more in collective politics than in private life, a world government would gain legitimacy and stability by more strongly supporting widely-held moral norms.

Thus a world with a world government is likely to impose more stronger regulations in support of widely-held moral intuitions. And in an era of rapidly changing technology often in tension with moral intuitions that evolved in prior eras, that may result in substantial limitations on tech. Sibling star alien world governments might ban advanced artificial intelligence, brain emulations, or nuclear-powered space ships. They might also insist on preserving their biological bodies.

By using strong surveillance, embedded political officers, and using the threat of destruction from a distance, a world government might hope to keep control over a rapidly expanding sphere of interstellar colonies. But surely such control is far easier if substantial interstellar colonies are simply banned. Independent colonies would threaten not only the relative status of the current world government leaders and polity, but they’d also threaten to allow evasion of morally-treasured regulations.

Thus aliens with a world government might limit expansion, and also tech, not just to support environmental and anti-colonialism type ideologies, but also to preserve the relative status of locals and their ability to impose civilization-wide regulations. We have often seen similar behavior in human history, when secure isolated local regimes have discouraged contact with outsiders. The fact that aliens have not yet destroyed us also suggests that they have moral ideologies.

In a very long-lived civilization with a stable world government, the high-level organization of government and its key principles and regulations might become so stable that other structures of that civilization evolve to match them more often than the government evolves to match other structures. The government becomes like a mountain, where life adapts to behave differently at the mountain’s foot versus near its peak. So over millions of years the intuitions and practices of individuals and local groups may well evolve differently to match different parts of the stable world government with which they most strongly interact.

And if their world is more stable than our ancestors’ worlds have been, their minds might become less general, being adapted more to a particular range of situations.

4. Complex System Rot – Since the origin of life, competition has been the main driver of adaptation and innovation. Yes, cooperation has been important, but it is competition that has designed and promoted cooperation. While genetic forms of competition once dominated, cultural competition now matters more. Individuals and their practices compete within organizations, while organizations and their practices also compete for members, customers, investors, and more.

Across this long history, individual organisms, species, human organizations, and even empires have consistently tended to “rot”. That is, their long-lasting materials and structures slowly decay, becoming less flexible or general and more fragile, until they simply die or are eaten or displaced by rivals. This continues to happen today even with software and legal systems, as they try to adapt to new circumstances, and it happens even when their materials do not decay. It is competition that has corrected for this tendency to rot, by ensuring that simpler more general robust structures are available to replace failing fragile versions.

A civilization lasting for millions of years with a stable ideological world government preventing most expansion and tech innovation seems to me a recipe for high level system rot. New agencies, rules, and regulations would slowly accumulate on top of old ones, instead of being sufficiently culled, refactored, or reorganized. Agency growth and changes would have been often made to suit local ambitions instead of external needs, often using newly invented moral imperatives.

In our limited Earth history, we have often seen spectacular waste by stable secure empires, religious authorities, and secure monopolistic firms. Each example has found ways to spin stories justifying its waste, stories accepted by many observers. Many observers have also often believed decaying organizations who claimed that they had not yet lost any flexibility or generality, claims only clearly disproved when they were displaced by rival competitors.

Over millions of years, an ancient alien world government would accumulate far worse wasteful habits, and yet always offer semi-plausible if tortured justifications, stories not yet clearly disproved by competitors, who are not allowed to exist. Such governments would proudly tell themselves that they are still flexible and general, and up to most any challenge. But they’d be lying to themselves.

5. Putting it all together – So here is my best scenario to explain UFOs as aliens. I’m not saying it is good enough to let us believe that some UFOs are more likely than not aliens. I’m just saying that it is the best I’ve been able to come up with. You judge how good.

Life started long ago on Eden, which then seeded both Earth and our siblings’ home planet. Their home is somewhere in our galaxy, and yet they are the nearest advanced aliens for a million galaxies. For many millions of years, they’ve had a stable world government enforcing ideologically-justified regulations limiting expansion, tech innovation, and perhaps much more. Local intuitions and practices have long since adapted to this stable mountain; it feels to them very legitimate.

This world government made an exception to its expansion bans to allow trips to sibling planets hosting life, and allowed the development of whatever tech that required. This was done in support of key ideologies, which is probably why they haven’t destroyed us, and yet they plan to make sure we obey their regulations on expansion and tech innovation. And data on us may help prepare them to meet other aliens. (They may or may not believe they will eventually meet future grabby aliens.)

This long trip, and their management of Earth, is a task calling for great generality and flexibility, which their government mostly lacks, though it claims otherwise. Worse, their fear of allowing an expansion escape led them to tightly control this expedition. So most key choices have been made ahead of time, and aliens here at Earth are kept on a tight leash, dependent on resources and equipment shipped from home, and on tight rules of engagement.

These aliens long ago made their plans for how to monitor Earth civilization, and how to control it if that became necessary, and they built and shipped equipment and resources here based on that plan. Local alien administrators here have little discretion, are watched by local political officers, and have very limited abilities to make equipment or to collect resources beyond their pre-anticipated needs.

In drug regulation on Earth today, we have an ideology wherein conclusions drawn from observations are declared insufficient; one must also have proper government-managed “experiments.” If these aliens have a similar epistemological ideology, they would plan to observe Earth hidden safely from a distance, but they’d also need to periodically “poke” the locals and watch reactions. Alternatively, they might have an ideology of “touch”, wherein they couldn’t in good conscious control us unless they had before touched us “directly” somehow.

So, maybe, this was the safest most robust plan they could come up with to touch/poke us, when planning long ago back on their home planet: They poke us via making local disturbances in air or water usually by sending dark beams from safely hidden orbital projectors.

At a controlled distance, these beams can cause glowing balls of air, or smooth surfaces. (These can cause radar reflections, burn marks on the ground, and even sounds.) Their orbiting projectors would be safe from retaliation by Earthlings who would at first not even notice the beams, and who later would find it hard to trace those beams back to their orbital origins. And even finding those projectors probably doesn’t find the weapons by which they stand ready to destroy us if we get out of control.

So long ago these aliens sent to Earth equipment for installing telescopes, beam projectors, and weapons in orbit around Earth. All supplied with energy, covered to remain unseen, and with supports to keep them running for eons. And the main thing that aliens have done since their arrival is to maintain these facilities, and process the info collected.

These local administrators send regular and positive TPS reports back home regardless of how well things are actually going. The local aliens are likely bad at interpreting all the info they collect, their home world is bad at judging the quality of their efforts, and also at incentivizing such efforts. Thus maybe they not have learned much so far, and may not even be able to understand our electronic traffic that they can hear from space. They may not have detectors on the ground tapping into communications here. Perhaps they don’t even have language among themselves, and so aren’t capable of understanding our talk.

Maybe the fastest that their economy grew back on their home planet, before it slowed down due to regulations, was much slower than the Earth economy is growing now. So they never really planned much for how to react to the rapid change that we are undergoing here now. Local administrators keep sending TPS reports back home, doing the scheduled UFO projector runs, and keeping their fingers nervously on their weapons buttons. But like most government administrators, they are terrified of having to take the initiative to make a big decision, and so would rather wait until the choice becomes completely obvious.

If this all sounds implausibly incompetent to you, consider that if many UFOs are in fact aliens, the U.S. military and many militaries around the world have in fact been spectacularly incompetent at considering UFO reports and studying the threats that they imply. Yet these militaries existed in an era of competition and a burst of UFO reports started during a major war (WII) during which militaries had rapidly evolved to become unusually competent. Imagine how worse would be a military with a secure budget but no actual war for a million years. (Note that UFO activists have also been spectacularly incompetent in many ways.)

You might think that all this alien incompetence would give humans a fighting chance to defy these aliens and break out of their control. Possibly, but probably not. They probably do have their finger on the big kill-all-humans button, and that button probably does actually work. We might have a chance to sneak off and start a very distant stealthy interstellar colony, but that also seems damn hard.

But if the aliens behind UFOs are incompetent at understanding us and communicating with us, that sounds like bad news for our ability to learn and abide by their rules. It would be nice if they had some effective plan for integrating us into their world, beyond just pushing the button on us when we cross some line. But I wouldn’t count on that.

Note that not all of the elements of the story I’ve just told are strictly necessary to explain the stylized facts I’ve outlined. Those extra story elements are indicated by words like “maybe”, and are added to help you see how this story might be realized. If you don’t like my story, what story would you tell to explain all these stylized facts, not just one or two?

Note also that I’ve told this story thrice before, though this version is more elaborate.

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UFO Stylized Social Facts

Even though many or even most UFO sightings are best explained as delusions, hoaxes, and ordinary stuff misunderstood, there appears to be a large remnant (>1000) that are much harder to explain, and which show consistent patterns. Such as ~30-1000 second episodes peaking near ~9pm (tied to local sideral time), at random spatial locations, of quiet lights or objects in the sky with intelligent purposes and amazing speeds and accelerations. Sometimes confirmed by many people and recorded by many instruments.

If they aren’t delusions, hoaxes, or misunderstandings, the main remaining explanations are a) some sort of secret society or agency that arose on and is tied to Earth, or b) some sort of aliens. I’m not saying its aliens, but in this post, it’s aliens. That is, here I want to “go there”, and think about how best to explain UFOs, if they are in fact aliens.

Many have worked on trying to explain UFOs in terms of their immediate physical effects. I kinda like “laser pointers for cats” style theories wherein aliens in orbit send beams to paint a local disturbance, while using telescopes to watch local reactions. But these details aren’t that important for whether we believe that UFOs are aliens, as aliens would almost surely be a lot more advanced than us, and so plausibly capable of a wide range of such approaches.

No, it seems obvious to me that the main reason that most resist believing that UFOs are aliens (or secret societies for that matter) is the apparent implausibility of the social thesis. We find it hard to integrate this hypothesis with the rest of our social world views. That is, with our views on what agents can exist, how they are socially organized, and the sorts of behaviors that we expect of social agents within particular kinds of organizations. If aliens are around, why haven’t they made more direct contact, or built more obvious stuff, or traded with us, or conquered or killed us?

If the main block to believing in UFOs as aliens is a lack of a plausible enough social theory of aliens, then it seems a shame that almost no one who studies UFOs is a social science theorist. As I’m such a person, why don’t I step in and try to help? If we can find a more plausible social theory, we could become more willing to believe that UFOs are aliens. And if we can’t, we can at least confirm more expertly that the usual reluctance is justified; the social theories you’d have to invoke are so crazy unlikely that yeah, we gotta attribute UFOs to delusions, hoaxes, and misunderstandings, no matter what our eyes and instruments seem to say.

In social science, we often prepare for theorizing about a topic by first summarizing its “stylized facts”. These are key data patterns in need of explanation, phrased in language that is closer to theory. In this post, I will attempt this “stylized fact” exercise for UFOs-as-aliens. In my next post I’ll take my shot at explaining them. Here are three key stylized facts:

1. LIMITATION – The very idea that UFOs are aliens, rather than a secret society on Earth, implies either a completely independent origin from us, or that any common ancestor was long ago. (~100Myr+.) So unless aliens civilizations are very short-lived, then any modest randomness in the timing along either evolutionary path implies that one of us reached our current level of civilization millions of years before the other. And since we just got here, it must be they who reached our level millions of years ago.

(Note that having a civilization last for many millions of years is itself quite an achievement. Which raises obvious questions: what sort of genetic, cultural, organizational, etc. changes were required to achieve that, and at what cost came such longevity?)

If UFOs on Earth are aliens from elsewhere, then there are in fact aliens out there, who can and do travel between the stars. Because here they are, aliens who have actually traveled between the stars. So right off the bat we must reject theories that say that such travel is impossible or crazy impractical. Or that some motivational convergence ensures that advanced life almost never does actually travel.

Now put these two facts together: they’ve been around for many millions of years, and they can and do travel between the stars. With so many millions of years and this same tech they used to get here, they could have gone everywhere. The big dramatic implication: they could have remade the universe, or at least a big chunk including our galaxy, but have not done so. Somehow they have self-limited their expansion.

(Note that in addition to limiting their expansion, aliens behind UFOS also seem to have limited their tech; UFO tech seems advanced, but not 100Myr+ level advanced.)

Now one possibility that I want to note, and set aside, is that the universe is in fact chock full of aliens who have in fact remade it, but that we are fooled to see otherwise by crazy advanced tech wielded by a vast tightly-coordinated alien conspiracy based on arbitrary inscrutable motives. Like theories of powerful intrusive gods and simulation managers with arbitrary inscrutable motives, it is not that such theories are impossible, but that they offer little room for structured analysis. I see little to gain from discussing them.

Stylized fact #1: UFO aliens are very old, and could have remade universe, but some self-limit stops them.

2. CORRELATION – This failure to remake the universe gets more puzzling the more common are aliens in space and time. If UFOs-as-aliens are as thick on all planets at all times as they are here and now, then there must be a crazy huge number of well-hidden alien facilities out there where UFO equipment is made, repaired, refueled, staffed, etc. All strongly limited to ensure that it never remakes its local universe.

Worse, there have been literally an astronomical number of opportunities for any one deviant alien to start to remake its local universe. If a deviation could last long enough, to acquire enough local resources and power, other aliens would have a hard time shutting it down without also acquiring similar levels of local resources, and thus also remaking their local universe. Even if some sort of local conformity pressure tends to stop most deviations, that pressure has to be crazy extreme reliable to work everywhere always in a vast densely populated universe.

The simplest way to resolve this puzzle is to posit that aliens are in fact pretty rare, and that they coordinate to preserve that rarity. After all, the fewer are the possible alien travel events, the higher of a deviant event chance that we can tolerate in our theory of their behavior.

(If aliens are very short-lived, then there have to be even huger numbers of them for one to be here now, requiring an even more crazily-low chance of any of them allowing any deviations.)

Besides perhaps interstellar travel being impractical, advanced life arising very extremely rarely is the simple story most of us most start out with to explain our empty universe. And even if one must postulate that aliens are only extremely rare, not very extremely rare, to explain humanity’s early arrival in the universe, that still means aliens are so rare that we won’t meet them for roughly a billion years.

But for aliens that rare we have a different problem: why are they right here right now, but almost nowhere else? Something has caused a huge correlation between them and us, so that even though aliens are rare enough for their facilities to stay hidden, and even though they have created local pressures to ensure that they only rarely travel or have opportunities to try to remake the universe, they’ve made an exception for traveling to be with us here now.

The rarer are such aliens, the more time they’d need to get here from where they started. So either they’ve been around for a very long time, and decided to come here based on what Earth looked like a very long time ago, or they happened to start very close to us, a remarkable spatial coincidence in need of explanation.

Stylized fact #2: UFO aliens are rare and self-limited, and yet are here now.

3. INDIRECTION –  We can think of a number of plausible practical motives for rare self-limited aliens to make an exception to visit us. First, they may fear us as rivals, and so want to track us and stand ready to defend against us. Second, if their limitation policies are explicit and intentional, then they’d anticipate our possibly violating them, and so want to stand ready nearby to enforce their limitation policies on us.

In either of these two cases, aliens might want to show us their power, and even make explicit threats, to deter us from causing problems. And note the big the question of why they don’t just destroy us, instead of waiting around. A third possible motive that can explain this is that the origins of independent aliens like us are a rare valuable datapoint to them on far-more-capable aliens who they may fear eventually meeting. In this case they’d probably want to stay hidden longer, and then maybe destroy us later.

Note that all of these motive theories suggest a substantial ability of these aliens to organize and plan actions on the basis of such abstract, collective, and long-term considerations. A very decentralized alien society might not be capable of it, nor perhaps of maintaining whatever pressures prevent their own travel and remaking the universe.

The most striking fact about UFO encounter events is how little they seem to accomplish, not for any of these goals, nor for any other easily identifiable practical goals. Advanced aliens could surely monitor us sufficiently from a distance unseen, and to control us via commands or threats would require much more direct contact. These UFO events don’t seem to much help them collect useful info or resources, nor do they much limit or expand our info, powers, or resources. Yes, they show some of us that the universe can look weird, but surely they know that we know that fact regardless.

Now we humans are widely known to often act on indirect motives, not tied very closely to simple direct practical outcomes. Many animals “play.” Human ancestors who did things for “symbolic” reasons are often seen as especially “advanced”. People today often have “obsessions” that make them spend far more on some things than simple practical ends can explain. Lazy secure organizations are at times quite “wasteful”, doing things that pretend to achieve practical ends, but in fact achieve them at best quite ineffectively. And I’ve recently coauthored a book on how common are hidden motives in humans today; many things we do just don’t much accomplish the goals to which we give lip service, like learning at schools, and healing at hospitals.

So it isn’t crazy to think that aliens might have indirect obsessive lazy motives for UFO encounters, motives hidden perhaps even from themselves. But this case, of overcoming the usual coordinated limits to take eons to fly to a distant star just to glow-buzz their treetops, seems spectacularly extravagant even by the standards of dreamtime humans today.

For this to happen, aliens need a sufficient level of “slack” resources available to spend on such symbolic activities. And even with hidden motives and lazy organizations, we humans usually at least make up vague stories about practical ends served by our actions, even when such stories don’t stand up to close scrutiny. So a decent theory of aliens should explain their level of slack, and suggest some ideas for what stories aliens are telling themselves about the ends they accomplish via UFO encounters. And why they haven’t just destroyed us.

Stylized fact #3: Alien-driven UFO encounters accomplish little, yet must somehow be justified to them. 

And those are the key stylized facts that a social theory of aliens must explain. Again, it is the lack of seeing a sufficiently plausible explanation of such facts that is why most are reluctant to believe in UFOs-as-aliens. (Yes, many are not so reluctant, but mostly because they don’t understand enough to be puzzled.)

Added 31Mar: My explanation attempt is here.

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Given Our Date, Is Sun Birth Late?

In our grabby aliens paper, we use a simple model that predicts the appearance of advanced life in terms of when habitable stars are formed, how long they last, and the hard steps power law of when advanced life appears within a planetary habitable lifetime window. We showed that this is well approximated by a power law during grabby alien birthdates, and that humanity looks quite early relative to its predictions.

Using this same model, we can also ask: how early or late is the sun’s birthdate, given our current appearance date?  This graph shows the percentage of dates that are after our sun’s birthdate of 9.23Gyr, for stars that give rise to advanced life at 13.77Gyr:

Unless the max planet lifetime is very short, our Sun’s birthdate starts to look substantially late for powers above about five. So either the power is below five, or panspermia happened, in which case Earth’s star had to come later to come after the earlier star of Eden. And in which. case, the power is probably high, as it would be the sum of hard steps on both Earth and Eden.

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Are Expansive Aliens Obvious?

In our 3 parameter model of where are the grabby aliens in space and time, each parameter can be estimated using existing data: our current date, the dates of major events in Earth history, and the fact that we don’t see aliens clearly visible in our sky.

That last “fact” might seem most open to question, so what if we reject it? Well if we still assume that we would have noticed being directly inside a grabby-controlled volume, then our model still applies. That is, we would still know where grabby aliens are distributed in time, and they’d be distributed the same shape in space, except that their density in space rises by a factor of one thousand for every factor of ten by which their speed falls.

Instead of our usual assumption, that we would have by now noticed differences between volumes controlled or not by grabby aliens, we’d be in a world where they make their spherical-until-meeting volumes look only subtly different, a difference that we have not yet noticed.

In this case, there could be hope for astronomers to search the sky for subtle circular borders in the sky between GC volumes and surrounding volumes. The next two graphs show, as a function of power n and speed ratio s/c, distributions over how many such volumes there would be in the sky, and their total length in radians of their borders on the sky. (The maximum length of a circle on the sky is 2π radians.)

These distributions are mainly due to varying birthdate; earlier civilizations see fewer others in their sky.

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Power Laws Approximate Appearance

Feb. 1, we posted our first grabby aliens working paper, and yesterday we just posted our first revision, which is 85% longer:

If Loud Aliens Explain Human Earliness, Quiet Aliens Are Also Rare

Robin Hanson, Daniel Martin, Calvin McCarter, Jonathan Paulson

The hard-steps model of advanced life timing suggests humans have arrived early. Our explanation: “grabby” civilizations (GC), who expand fast and long, and change their volumes’ appearances, set an early deadline. If we might soon become grabby, today is near a sample GC birthdate. Fast GC expansion explains why we do not see them. Each of our three model parameters is estimable from data, allowing detailed GC predictions. If GCs arise from non-grabby civilizations (NGCs), a depressingly low transition chance (~10^-4) seems required to expect even one other NGC ever active in our galaxy.

After we learned that Jay Olson had previously said many of the things that we said, we went looking for new things to say. One of them is results on the tension between optimism for our future and optimism for SETI. I’ll describe some more additions in posts soon.

We also fixed some minor errors. And while before we just claimed that a simple power law well approximates the appearance function for advanced life, this time we got around to showing it:

These graphs show the % error between a more realistic model for the timing of advanced life, and a best approximating power law. That % error is averaged over the actual times when grabby aliens would appear according to that power law, assuming that humans today have a certain rank within that distribution. The error seems quite acceptable, <~10%, for powers of 2 or more.

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Super Hostile Takeovers

For a brief period in the late ’50s, until the mid-’60s, when modern hostile takeover techniques were perfected, we had a pretty much unregulated market for corporate control. Shareholders received on average 40% over the pre-bid price for their shares. But… 1968 … Williams Act … made it vastly more expensive for outsiders to mount successful tender offers. The highly profitable element of surprise was removed entirely.

The even stronger inhibition on takeovers resulted from actions taken by state legislatures and state courts in the ’80s. The number of hostile tender offers dropped precipitously and with it the most effective device for policing top managers of large, publicly held companies. … now, with the legal power to shift control in the hands of the incumbent [managers], they, rather than shareholders, will receive any premium paid for control. … It should come as no surprise then that, as hostile takeovers declined to 4% from 14% of all mergers, executive compensation started a steep climb. (more)

As this quote shows, current laws make it crazy hard to buy public firms, which has the effect of greatly entrenching CEO power and raising their compensation. Like blackmail laws, this is another way in which law goes out of its way to favor powerful elites. Law pretends to dislike and oppose elite dominance, but key details show otherwise.

Even during U.S. historical period when takeovers were easiest, still “shareholders received on average 40% over the pre-bid price for their shares.” That means those trying to takeover in essence faced a 40% tax; no point in taking over a firm if you can’t make it worth at least this much more. So this most effective device for policing top management would be even more effective if we could cut this tax, so takeovers could help in more cases.

The key problem is that when a takeover attempt starts to buy up lots of stock in a firm, people start to notice and then bid up their prices, expecting that a takeover will improve the value of the firm. Can we fix this problem?

Yes, consider that when the government wants to buy a bunch of land properties to build a project like a road, it faces a similar problem, that after the first few purchases the other property owners will greatly raise their price, knowing that the government can’t do its project without all the needed properties. 

The standard solution to this problem is eminent domain, where the government forces them all to sell at some official “market price”. But, as I’ve discussed, a better solution is to use a Harberger tax, where each property owner must always declare a value for their property, a value which is used both to set their property tax, but also to be an always-available sales price for the property. These values will generally be reasonable, due to owners trying to avoid paying high taxes, allowing the government or any other party to quickly assemble large property bundles for any big project without needing any special powers.

We could use the same trick for stocks. Tax stock ownership, and require every stock owner to declare a value for their stock, a value used both to set their tax, and also available to takeover attempts as a sales price. Then a takeover could happen overnight, as 51% of the stock is suddenly purchased at its declared Harberger tax value.

Most speculators might want to declare a value just above the current stock price, and we’d make it easy for them to just declare a percent increment, like say “My value is always 10% over the current market price.” If most did that, a takeover might only face a 10% tax, instead of the 40% tax described above.

I gotta admit that cases like current policy discouraging hostile takeovers makes me despair of trying to introduce any more complex or less effective innovations. The case for allowing more hostile takeovers seems to me especially simple and strong. If even a change this valuable and simple can’t be done, what hope is there for other policy changes?

Added 3p: The tax seems to be about the same size today, but so the main extra problem now is allowing far fewer takeovers:

In large-sample studies, the winning offer premium typically averages approximately 40%–50% relative to the target price two calendar months before the initial bid announcement. (more)

Of course we should also make it easier for someone who owns 51% of stock to actually control the firm. So not using poison pills, staggered boards, supermajority voting rules, voting vs non voting stock, required prior notice of or plan to purchase, etc.

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Live And Learn

In my last four posts you’ll see a pattern repeated twice: first I participate in “ground” talk on a particular issue, then I stand back and reflect on some patterns in that ground talk. I see this as a healthy way to think about social behavior.

If I only participated in each topic, I’d miss the chance to notice key social patterns up close. A great pleasure and power of being a social scientist is that most all social behavior you see around you is grist for your mills.

If I only thought about behaviors from a distance, without participating in them, I’d miss many crucial details useful in testing broader theories. Yes, by participating I risk collecting biases due to my particular stances, biases that my block me from seeing larger pictures. That probably does happen, maybe even a lot. But this still seems like a good mix.

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Who Wants Good Advice?

Bryan Caplan:

1. Finish high school. 2. Get a full-time job once you finish school. 3. Get married before you have children. ….
While hardly anyone explicitly uses [this] success sequence to argue that we underrate the blameworthiness of the poor for their own troubles, critics still hear this argument loud and clear – and vociferously object. … Everyone – even the original researchers – insists that the success sequence sheds little or no light on who to blame for poverty. … talking about the success sequence so agitates the critics.

A scene from the excellent documentary Minding the Gap:

Bing: Do you, do you feel, like, concerned that [your young son] Elliot’s going to grow up, like, messed up?
Zack: Sigh. I’m 50/50 about it.
Lately I have been concerned over my influence on him, and as he gets older, how he’s gonna look at the difference between the [middle class] way his family lives and the [lower class] way I live. And.
A lot of people grow up and they are [starts a denigrating head wiggle and affected speaking style] nununu, fucking, I’m gonna play football, and I’m gonna go to college and I’m gonna get this nice office job and start a family and have 2.5 kids and a car and a garage and everything’s just gonna be nice. And I’ll buy a boat and a snow mobile. [end nodding and affected style]
I’m like ‘Fuck you, you piece of shit.’ Like, just cause you’re too fucking weak to make your own decisions and decide what you want to do with your own life, doesn’t mean everyone else has got to be like you.
Ha, ha, I don’t know, fuck, ha ha. I, ah, ask me another question. (1:10:52-1:12:00)

Zack seems to have long been well aware that he flouted the usual life advice. He lashes out at those who do, and he seems quite sensitive about the issue. Much like all those sociologists sensitive about discussing or recommending the success sequence.

Many people, including myself and Bryan, think it is a shame that so many seem worse off from making poor lifestyle choices, and so are inclined to recommend that good advice be spread more widely. However, what if most everyone who makes poor choices is actually well aware of the usual good advice when they make their poor choices? And what if they like having the option to later pretend that they were unaware, to gain sympathy and support for their resulting predicaments? Such people might then resent the wider spreading of the good advice, seeing it as an effort to take away their excuse, to blame them for their problems, and to reduce their sympathy and support.

That’s my best guess interpretation of the crazy paranoid excuses I’ve heard to oppose my free agents for all proposal. (If you doubt me, follow those links.) It would cost nothing to give everyone an agent who gets ~15% of their income, and so has a strong incentive to advise and promote them. Yet I mainly hear complaints like that such agents would: force clients to work in oppressive company towns, censor media to cut any anti-work messages, lobby for higher taxes, or send out minions to undermine promising artistic careers. Even though becoming an agent gives you no added powers; you can only persuade.

In a poll, most oppose even a test of the idea:

My conclusion: most people are well aware of a lot of advice, widely interpreted as good advice, that they don’t intend to follow. So they don’t actually want agents to give them good advise, as others would hear about that and then later give them less sympathy for not following the good advice that they have no intention of following. Yes, their children and other people in the world might benefit from such advice, but for this issue they are too focused on themselves to care.

Note this theory is similar to my standard theory of why firm managers don’t want prediction markets on their deadlines. Early market estimates take away their favorite excuse if they miss a deadline, that all was going well until something came out of left field and knocked them flat. Its so rare a problem that it couldn’t be foreseen, and will never happen again, so no need to hold anyone responsible.

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Sell Tax Rights To Make Agents

Assume the federal government is owed X% of a certain person’s future wages w(t). Or some fixed function F(w(t)). You might not think the government entitled to such income taxes, but you gotta admit the odds of changing this situation anytime soon look slim.

I propose that the government auction off this right to collect these income taxes. Ideally at birth, if not sooner. Government could use the auction revenue to pay off part of its government debt, and thus in effect convert one kind of debt into another. So the government’s expected tax revenue need not suffer.

This selling-tax-rights action would create a job agent out of the auction winner. Someone with an incentive to try to help and promote this taxpayer, to get them to earn more money, and thus to pay more taxes to their agent. The auction would find the person or organization who thinks they can do this job best, and if they actually succeed then they would benefit. And if this system works on average then the government also gains in expectation at auction time.

This system would probably also benefit the taxpayer themselves, as we aren’t giving the agent any powers but persuasion. The agent can suggest options and strategies to the taxpayer, and can recommend the taxpayer to others. But the taxpayer and others can ignore any of this advice, and can refuse to divulge any info to this agent.

The agent could at any time sell their agency role to anyone else who thought they could do a better job. This might be to the parents or schools of children. For adults, it might be to an employer. Or adults might buy the rights to become their own agent, maybe taking out loans to pay for that. As long as these various agents do a better job advising and promoting the taxpayer than would the government, this system becomes a net win for all parties, at least in expectation.

You might worry that an agent would threaten their taxpayer, saying that unless the taxpayer does certain unpleasant things the agent will refuse to advise or promote them, and thus somehow trash their career. This seems an unlikely problem to me, but if this issue becomes a dealbreaker, I know how to use conditional speculative markets to solve it, at the cost of a bit more mechanism complexity.

You might worry that an agent would be mistaken about their ability to help, and thus harm their taxpayer in the process of hurting themselves. Thinking you were protecting both parties, you might regulate who is allowed to become an agent, and what agents are allowed to do. I don’t recommend this path, but I admit that only severe regulation might kill off most benefits of this system.

If the taxpayer dies, then of course their agent stops getting paid. So agents will want to advise on health, in addition to careers. And on anything that promotes health. For example, if getting happily married helps careers, the agent will want to advise on that. If a taxpayer emigrates, their target nation might not accept this taxation transfer system, in which case the agent would also lose. But this is a standard reason nations have given for not allowing citizens to emigrate; as the world hasn’t accepted that argument for nations, I don’t see why they’d accept it for agents.

Once the rights to tax revenue is sold to agents, governments would lose a direct incentive to provide services to citizens in order to increase citizen income. But governments would retain the incentive to create the appearance of high future income, to induce higher auction prices. And modern governments mainly choose service levels to citizens based on the threats and actions of voters, not based on government calculations on tax revenue.

What about non-federal governments? Well they could just collect their taxes as usual. Or their taxes could also be auctioned off at birth, and then the federal government could over time reimburse the jurisdiction where the taxpayer resides for their lost taxes. This second approach seems preferable, as it creates stronger agent incentives.

And that’s my proposal. Looks like a clear win-win for everyone. What don’t you like?

Added 10p: Please note that I did not propose to give agents control over how taxes are collected. This is not about “tax-farming.” No need or reason to change the tax collection process for this system. The IRS collects taxes because it is assigned to do so, not because the rest of the government gets to spend the money right then. I collects taxes nearly the same no matter who gets the tax revenue or when.

Yes, agents would want to lobby for higher taxes, while taxpayers want to lobby for lower taxes. Taxpayers have more votes, however, to influence policy, and their long term incentives are for good tax levels. Note that a similar problem is that governments can print money to avoid having to pay their debts, yet this only rarely actually happens. Just as governments are afraid to scare bondholders, since that raises the interest rates they pay, governments should be afraid to scare tax auction bidders, as that would lower their auction revenue.

There is a reasonable concern that taxpayers might try to commit to trash their lives, or to emigrate, until they are sold their agent rights. Or until a secret ally can buy their rights. As with insurance fraud, it probably works sufficiently well to call this behavior fraud, criminalize it with large penalties, and offer rewards to those who report violations. And we don’t have to let emigrants who stop paying taxes ever return.

Many offer the generic works-against-anything argument “We can’t allow a conflict of interest to exist between two groups, as the bad side might lobby harder”. Here the groups are agents and taxpayers re tax levels.

If there any doubts re if individual taxpayers would benefit, let’s only auction the rights for a random half (or tenth) of the population. That would also reduce problems with changing enforcement and revenue patterns. And maybe also only for newborns whose parents approve.

Added 20Mar: Another solution to the fiscal discipline problem is to put the auction revenue into a separate trust fund like we do with social security payments. Also, see my next post for a poll on this topic.

Added 21Mar: Here is a related proposal. Also, maybe once a year the government can include info on how to contact your agent in the mail they send you about your taxes. See more comments on the idea here.

Added 22Mar: Most who dislike seem mainly offended by their not being able to pick their agent. But if the relation is much more productive in that case, then target-picked agents should be able to win auctions, and get other agents to sell the role to them.

Added 24Mar: We should also note that this would allow ordinary people to invest more easily in, and diversify more over, a whole new class of assets. That should be worth something in terms of reducing risk for any given average return.

Added 30Jun2021: I tried to write a easier clearer presentation of the idea.

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Our Default Info System: Status And Gossip

Around 1988-1990, I was working on the idea of “hypertext publishing”, which today we call the web. I was invited to give a talk to a few (<10) academics working on computer based info systems, I think at Xerox PARC. I argued that we then were hampered by our poor systems for finding out what other people had done and said.

One of the audience members said that, via gossip, he had no problem finding out what others were doing in his field. If anything was important, he’d hear about it via gossip, and if someone didn’t have enough status to get people to gossip about his work, it couldn’t be important enough for him to attend to.

Today, a physics academic told me (and a few others) that it isn’t a problem that physicists can’t be persuaded by contrarian arguments published in respectable peer reviewed physics journals, as they won’t read or consider it if it goes against their prior expectations. He said what really matters is your status, not whether you’ve published or where. Gossip about high status people gets their arguments considered even without publication, and no one else’s arguments matter anyway. Low status people can contribute by working out the details of high status people’s arguments.

And from a sociological point of view, of course, they are both correct. In a world that has decided that only arguments from high status people are worthy of considering, each one of them can safely ignore all the others. Even if some low status person somehow forces the world to hear and be persuaded by their argument, the high status people can and will close ranks to ensure that this low status person gains minimal concrete advantages from it, to make sure everyone learns the lesson about going through proper channels.

I presume you can see the social problem here, of insufficient information aggregation and intellectual progress. They can probably see it too, if forced to think on it. But why should they, and even if they saw the problem why should they risk personal prestige to change things, as success just makes it easier for others to compete with them.

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