In my futarchy proposal, I suggest a big change in how we aggregate info re our policy choices, but not in how we decide what outcomes we are trying to achieve. My reason: one can better evaluate proposals that do not change everything, but instead only change a bounded part of our world. So I described choosing a “national welfare function” the way we now choose most things, via a legislature that continually passes bills to edit and update a current version. And then I described a new way to estimate what policy actions might best increase that welfare. (I also outline an agenda mechanism for choosing which policy proposals to evaluate when.)
Currently, all market prices encode a weighted average of the expected value, given the likelihood of each possible policy regime.You are proposing de-coupling the impact of each separate policy, and attempting to evaluate their impact-if-implemented and odds-of-implemenation, which is a completely different calculation.
Also, I would assert that no-one has ever made a decision based primarily on a market price. At a minimum, they had to chose:What decision to make,What market to look at, andWhat the critical price threshold is - before consulting the market price.
The specific objection is that if I think policy X will be bad, there is no way to trade on a market at a price below the price that would lead to policy X being implemented.
I'm pretty sure basing policy decisions on market results is logically impossible in an Aristotelian sense.Specifically, there is no way for a market to include pricing information below the "will not be implemented" line
Remember that futarchy looks at market estimates of the long run prices, not the current prices. But yes if you can actually make a credible threat re the long run, then futarchy is tempted to give in to that threat, unless someone can propose a plan to resist the threat that speculators actually expect will lead to better outcomes.
Congrats for coming up with a new "objection" to futarchy that I haven't heard before. I would have included this in my paper on the topic had I heard of it before then.
I felt I should add that I think these are interesting and promising ideas worth developing (though I'm not yet fully convinced). I nitpick because I think they are worth thinking through.
I think the basic point is just that a deterministic rule dictating how you act makes you vulnerable to a kind of mugging or demand for ransom. Having a system which always follows the best estimate for what maximizes long term value might attract predatory threats. Sometimes an element of uncertainty in what action will be taken would be preferable but the rules above don't seem to allow futarchy to change the structure of futarchy itself.
For instance, suppose Mexico has a deterministic rule for making policy choices based on betting markets about future citizenship value but the US doesn't yet. The US makes the following credible threat: If Mexico doesn't hand over 1/8 it's annual tax collections to the US we will let sell US citizenship for 1/10th the current market rate for Mexican citizenship. Now, a plausible counter to this point is that this won't work because competition among other countries with desirable citizenships will push what Mexico has to pay down to zero. That will sometimes be true but it seems easy to imagine a cabal forming to successfully pressure another country in just this way.
Secondly, either countries in this scheme can offer extra citizenships for sale on the global market or they can't (only citizens can sell no net immigration). In the later case the last first-world country to adopt the system gains considerable advantage. In the former case we shouldn't expect this proposal to set the number of citizenships sold to the welfare maximizing amount since those sales directly compete with the measurement.
While I still would like the welfare of other countries to be more directly relevant to decisions making this aspect is no worse than the current system so that's not really an objection.
Yes, and I agree that means we certainly factor in that country's welfare in some sense but I see no reason to think this will accurately aggregate the overall welfare in that country.
For instance, suppose only 10 million rich people worldwide gain enough benefit from buying a foreign citizenship to have a chance at persuading a first world citizen to part with their citizenship (say in exchange for money and some other citizenship). Now suppose the US is deciding whether or not to raise taxes on the rich to fund universal healthcare. That certainly reduces the demand of non-US rich people to buy US citizenship but is that compensated for by the greater benefits a US citizen would have to give up when parting with their citizenship?
No, not entirely. Most of the value in such a policy accrues to the unhealthy (or those who know they are likely to become unhealthy). As long as there are at least 10 million healthy Americans it is their willingness to sell that sets the price so the value of healthcare to the unhealthy never affects the citizenship price.
Wouldn't it create a (possibly modest) incentive for each nation to choose policies which make life in other nations worse, due to the observation in Alexander's last sentence above?
I think there is a definition of "national market value" that would be better suited.The value of all assets in a nation. By choosing only the value of one asset "the asset of citizenship" you exclude other assets, e.g. value of land, value of technological innovations...
By excluding these other assets and only optimizing for one you get distortions. E.g. the government could severely restrict citizenships/immigration to increase the value of citizenships.
Doing that is a short sighted move, because without that influx of labor there will be less economic growth. If you instead optimize for the sum of assets in a nation, you don't get these distortions.
Optimizing for the value of assets also prices in far more information than just the information priced into the value of citizenship.
I also think that a Harberger tax could be used to get better estimates for the value of untraded assets, but I am not really sure about that part.
In a first iteration I would abstain from a Harberger tax.
Market-based citizenship would account for the willingness of the seller as well, thus making life for the existing citizens worse would make them more likely to sell, lowering the price.
The big problem I see in national market citizenship is that it would be hugely affected by other the immigration policies of other countries. If Mexico was previously selling its citizenships to Central Americans but then America threw open its border to all Central Americans, the value of Mexican citizenship would plummet without anything in Mexico changing at all. It would also not account for other countries getting better, if the rest of the world converged with America overnight, the value of American citizenship would plummet.
Under futarchy, cooperation between nations can be achieved via treaties in which each nation agrees to give weight to the other nation's welfare in its choices.
Yes, but if you force the country to take whatever decisions maximize the value of it's citizenship doesn't that mean that (in the absence of enforceable international treaties) countries won't make altruistic choices to benefit the global community. Yes, ideally we'd have those enforceable coordination but isn't it the case now that a lot of the reason we don't fall into really bad tragedy of the commons situations is that citizens don't want their country to gain advantage in ways that hurt others?
Wow, that's quite a compliment coming from you. I don't think it's an insurmountable issue but I do think it's worth considering.
Currently, all market prices encode a weighted average of the expected value, given the likelihood of each possible policy regime.You are proposing de-coupling the impact of each separate policy, and attempting to evaluate their impact-if-implemented and odds-of-implemenation, which is a completely different calculation.
Also, I would assert that no-one has ever made a decision based primarily on a market price. At a minimum, they had to chose:What decision to make,What market to look at, andWhat the critical price threshold is - before consulting the market price.
The specific objection is that if I think policy X will be bad, there is no way to trade on a market at a price below the price that would lead to policy X being implemented.
I don't understand you. People choose policies on the basis of market prices all the time today.
I'm pretty sure basing policy decisions on market results is logically impossible in an Aristotelian sense.Specifically, there is no way for a market to include pricing information below the "will not be implemented" line
Remember that futarchy looks at market estimates of the long run prices, not the current prices. But yes if you can actually make a credible threat re the long run, then futarchy is tempted to give in to that threat, unless someone can propose a plan to resist the threat that speculators actually expect will lead to better outcomes.
Congrats for coming up with a new "objection" to futarchy that I haven't heard before. I would have included this in my paper on the topic had I heard of it before then.
I felt I should add that I think these are interesting and promising ideas worth developing (though I'm not yet fully convinced). I nitpick because I think they are worth thinking through.
I think the basic point is just that a deterministic rule dictating how you act makes you vulnerable to a kind of mugging or demand for ransom. Having a system which always follows the best estimate for what maximizes long term value might attract predatory threats. Sometimes an element of uncertainty in what action will be taken would be preferable but the rules above don't seem to allow futarchy to change the structure of futarchy itself.
For instance, suppose Mexico has a deterministic rule for making policy choices based on betting markets about future citizenship value but the US doesn't yet. The US makes the following credible threat: If Mexico doesn't hand over 1/8 it's annual tax collections to the US we will let sell US citizenship for 1/10th the current market rate for Mexican citizenship. Now, a plausible counter to this point is that this won't work because competition among other countries with desirable citizenships will push what Mexico has to pay down to zero. That will sometimes be true but it seems easy to imagine a cabal forming to successfully pressure another country in just this way.
Secondly, either countries in this scheme can offer extra citizenships for sale on the global market or they can't (only citizens can sell no net immigration). In the later case the last first-world country to adopt the system gains considerable advantage. In the former case we shouldn't expect this proposal to set the number of citizenships sold to the welfare maximizing amount since those sales directly compete with the measurement.
Ok, fair enough.
While I still would like the welfare of other countries to be more directly relevant to decisions making this aspect is no worse than the current system so that's not really an objection.
Yes, and I agree that means we certainly factor in that country's welfare in some sense but I see no reason to think this will accurately aggregate the overall welfare in that country.
For instance, suppose only 10 million rich people worldwide gain enough benefit from buying a foreign citizenship to have a chance at persuading a first world citizen to part with their citizenship (say in exchange for money and some other citizenship). Now suppose the US is deciding whether or not to raise taxes on the rich to fund universal healthcare. That certainly reduces the demand of non-US rich people to buy US citizenship but is that compensated for by the greater benefits a US citizen would have to give up when parting with their citizenship?
No, not entirely. Most of the value in such a policy accrues to the unhealthy (or those who know they are likely to become unhealthy). As long as there are at least 10 million healthy Americans it is their willingness to sell that sets the price so the value of healthcare to the unhealthy never affects the citizenship price.
But I didn't propose to only look at citizenship value; I talked explicitly about including other priced assets tied to a nation.
Wouldn't it create a (possibly modest) incentive for each nation to choose policies which make life in other nations worse, due to the observation in Alexander's last sentence above?
I think there is a definition of "national market value" that would be better suited.The value of all assets in a nation. By choosing only the value of one asset "the asset of citizenship" you exclude other assets, e.g. value of land, value of technological innovations...
By excluding these other assets and only optimizing for one you get distortions. E.g. the government could severely restrict citizenships/immigration to increase the value of citizenships.
Doing that is a short sighted move, because without that influx of labor there will be less economic growth. If you instead optimize for the sum of assets in a nation, you don't get these distortions.
Optimizing for the value of assets also prices in far more information than just the information priced into the value of citizenship.
I also think that a Harberger tax could be used to get better estimates for the value of untraded assets, but I am not really sure about that part.
In a first iteration I would abstain from a Harberger tax.
I don't see why its much of a problem if prices fluctuate due to external events.
Market-based citizenship would account for the willingness of the seller as well, thus making life for the existing citizens worse would make them more likely to sell, lowering the price.
The big problem I see in national market citizenship is that it would be hugely affected by other the immigration policies of other countries. If Mexico was previously selling its citizenships to Central Americans but then America threw open its border to all Central Americans, the value of Mexican citizenship would plummet without anything in Mexico changing at all. It would also not account for other countries getting better, if the rest of the world converged with America overnight, the value of American citizenship would plummet.
Under futarchy, cooperation between nations can be achieved via treaties in which each nation agrees to give weight to the other nation's welfare in its choices.
Yes, but if you force the country to take whatever decisions maximize the value of it's citizenship doesn't that mean that (in the absence of enforceable international treaties) countries won't make altruistic choices to benefit the global community. Yes, ideally we'd have those enforceable coordination but isn't it the case now that a lot of the reason we don't fall into really bad tragedy of the commons situations is that citizens don't want their country to gain advantage in ways that hurt others?