Futarchy And Self-Dealing Governance

Compared to a more divided government, a more central government has stronger incentives to help the polity as a whole. But it also has more of a risk of self-dealing. It may increase the budgets of its government systems, and pie shares of its allies, and work to entrench itself, making it harder to remove.

The simplest form of futarchy is a pretty centralized form of governance. All covered policies are evaluated by the same traders estimating the same metric conditional on policy changes. So how much risk is there of futarchy self-dealing?

In principle, we’d have a separate system to set the key parameters of futarchy, such as its metric, system for making proposals, trading subsidies, price difference evaluation function, trading rules, and constitutional limits on policies. But there may be many hard to see and block channels by which allowed futarchy policies might influence such things, as well as influence the processes by which futarchy might be replaced with some other system.

When a futarchy outcome metric is entirely short term, it should only be interested in changing futarchy parameters to those that are more likely to on average raise its metric in the short term. But when its metric care about things that happen in the distant future, futarchy will also care about preserving its existing metric against change, as any other metric is less likely to improve things according to its current metric. But it will only want to allocate more of its society’s budget to the futarchy system to the extent that would actually help to achieve its overall metric.

A futarchy with a long term metric will also want to prevent a switch away from futarchy, to the extent that it fears that a new form of governance will be less effective at achieving goals, or to the extent that it would have different goals. But futarchy should be eager to induce a switch to another form of governance that it estimates to be more effective at achieving its goals, as specified in its metric.

The part of the futarchy system that it would most consistently try to undermine is probably constitutional limits on allowed policy changes. Yes, there might be policy commitment problems, where hard to resist later temptations would tend to undermine earlier strategies to achieve good ends. Like the temptation to not punish someone who you had threatened to punish in order to deter them. But absent commitment problems, constitutional limits seem to just prevent futarchy from achieving its desired ends.