A RadicalxChange between Vitalik Buterin and Glen Weyl

Vitalik Buterin:

I thought I would try my best to put into words the issues that I think still need to be addressed better. Not all of these are fully-formed thoughts, but they are things that I think are worth thinking about, that I feel like we haven’t been thinking about enough.

* 1. Collusion resistance, and more broadly not privileging people with better ability to coordinate (I’ve mentioned it before, but want to expand on what concerns me). For example, if QV/LR is used online, if you have a family of 4 people, you can get everyone together to open their laptops and each person see everyone else’s contributions, and so if everyone agrees to contribute minimum of what everyone is willing to contribute, every person in the group would be willing to contribute 4 times more. Even if contributions are done in a voting booth-type setup, groups of people where everyone cares about some issue but one person cares a lot could see that one person ensuring that everyone gets a lot of money going into the booth, and then everyone in the group would feel honor-bound to contribute more to the given cause. 1P1V does have this problem, but it’s not a big deal because there’s a natural ceiling, where everyone in a given group votes, and so we can try to get *everyone* closer to the ceiling by making voting maximally easy (the extreme is making it mandatory, but you can get most of the benefit by dropping costs, eg. by having more and well-trained voting stations, and having a holiday on voting day). With a QV/LR regime, groups with a 2x better ability to use the kinds of techniques I describe above would be 2x more effective at achieving their goals inside the system; that too me feels like a potentially scary level of distortion.

* 2. The role of social motivations — one of the bigger critiques of economics is that humans have many motivations that specifically directly have to do with the form of relationships that they have with other people, including differentiation, belonging, fairness, domination, avoiding submission, etc etc. These kinds of motivations make economics problematic because they mean people have plenty of opportunities to impose negative externalities on each other even without violence or fraud (eg. I buy a [fancier suit | well-designed website | college degree], I look more respectable and people pay more attention to me, but attention is zero-sum so people pay less attention to you….), and they peek into the structure of mechanisms in cases where the mathematical proofs of their optimality implicitly assume no one does (eg. people getting upset when they learn that they are getting lower salaries than their coworkers). A grand economic ideology that seeks to be useful in guiding society should have some conception of how the economics interacts with all of these other factors. In the case of radical markets ideas, how does it? Do they interfere, can we sidestep most of the issues by making voting/contribution private and non-provable, can social motivations be leveraged to make radical markets ideas work better? Is this something that can only really be understood once we have actual real live experiments?

* 3. Rational ignorance | irrationality — basically Bryan Caplan’s argument that people’s vote has a negligible impact on society, so they have basically no incentive to learn how to vote in the way that actually maximizes what they care about. Believing this does not require believing in atomistic selfishness; the thing with social motivations is that even though they exist, they are often wildly uncorrelated with consistent moral systems that make sense at large scales. If the farmer in Kansas believes apples are flat, he’ll have a hard time farming; but the farmer’s motivation to believe vs disbelieve anthropogenic global warming is decided more by his human desire to fit in with his friends than any direct connection with the truth. I understand that mathematically speaking, this problem is smaller in QV/LR than in regular voting, because people can specialize, and people can more easily see the results of specific changes that they played a significant role in causing to happen. However, is this improvement large enough to counteract the increased scale of the problem that would arise from voting-like mechanisms having a much larger role in society as you advocate?

I think looking at governance proposals with more elements of “skin in the game” would be interesting. This is part of why I liked your immigration proposal that included the idea that sponsors would be fined if the immigrants they sponsor commit any crimes.

* 4. Effect on centralization of physical power — one thing that scares me about more complex systems of property rights is that they would require more complex centralized infrastructure, including surveillance into people’s private activities, to be able to correctly enforce. Taxes already have this problem (you may recall Adam Smith believing that income taxes would be impossible because they would require an unacceptable level of intrusion into people’s private lives to enforce), and I wonder if the various proposals that we have for changing them would make things better or worse in this regard. I like Harberger taxes because they don’t require infrastructure to police whether or not undeclared transactions took place, though I worry in other cases, eg. your comment that your immigration proposal would require stronger enforcement of immigration rules, which realistically means stronger efforts to find and kick out people who overstay, which requires more surveillance of various kinds. All in all, I don’t think the radical markets ideas altogether fare that bad, but I guess my comment would be that non-panopticon-dependence should be an explicit desideratum to a greater degree than it is now.

Glen Weyl:

These are great points. Some thoughts below. Overall, my perspective is these are good issues, and I will add some of my own, but I don’t really view any as impediments to the experimentation with the RxC paradigm in the near-term…almost all seem like good seems for learning and basis for improvement.

Let me add one more concern that I think is absolutely critical and that I am still working on and will require much more research. The idea of distributing the funds raised by the COST as a social dividend is ill-defined and a complete kludge and I increasingly thing a dangerous one. For example, suppose that a community can influence individual valuations and that this community has greater (less) share of the value than the probability that that community or someone within it wants to purchase the asset from the current possessor. This will lead the community to want the citizen possessor to over (understate) the value. That will raise some of the potential collusion issues like those you raised above. In general, it seems to me, ownership shares need to be allocated as much as possible across communities and individuals in proportion to the probability that those communities or individuals are (in discounted present value terms) the efficient owner of the asset eventually. This would naturally lead to some combination of various uneven income flows to individuals and funding of public goods at the level of and within communities, avoiding Jaron’s concerns about central homogeneous flows which I increasingly share. It would also be much more efficient, less subject to risks of totalitarianism, and just more robust and stable. How to figure this all out and make it work, though, is tricky. It feels like there should be some elegant approximations floating around, but I haven’t closed the loop yet. In any case, I think this is a critical area to develop further.

Finally, a broader point that has really come home to me over the past couple of weeks talking to a wide range of academics about this stuff. I have come recently to feel that, especially with Liberal Radicalism, I’ve now made a breakthrough that lets me really reorganize thinking into a truly coherent political economy framework that integrates all the children fields but also really makes clear their fundamental failings at present. Basically, LR (as well as the signaling issues) highlight how bankrupt current economic discourse with its extreme individualist focus is. This is just not how social life is every organized; we live in societies where almost everything is produced by some at least partially increasing returns technology (from family through churches, networks, governments, corporations, etc) and economics takes as the basic starting point a totally individualist perspective that only works for decreasing returns stuff and when confronted with increasing returns has to treat it with market power or other awfully inefficient kludges. This makes no sense and once you look at things this way you can really cut through most of the standard problems that come up in economics. The last couple of weeks talking to economists, sociologists and philosophers I have felt like they are hacking through a forest with pen knife and this perspective enables me to look from above (things still fuzzy) and have a crew of chainsaws at my command. And the great thing is, you don’t need to exit the formalism of economics too much, just take it to its logical conclusions, and you end up in a substantive place that sociologists, anthropologist and political scientists have been for a long time, but without the ability to quantify, measure or precisely invent or prescribe because they lacked the formalism. Even if the particular RM ideas have weaknesses and need to be adjusted, I do truly believe we are push towards a powerful and integrated view of political economy as distinct from the neoliberal paradigm as the marginal revolution was from what came before, and in very parallel ways. Fundamentally the pre-marginal revolution paradigm depended on linear production functions and didn’t allow for the fact that marginal>average, so couldn’t handle profits, etc.. But somehow the marginal<average (public goods) got lost as a central problem we could actually address, and I think this is precisely what George and Walras were after. I think we now can really grapple with it.

Vitalik Buterin:

Definitely a great point that traditional liberalism doesn’t do a good job of handling scenarios with increasing returns to scale. I would also argue more broadly that economics based on equilibria and local optima and derivatives doesn’t do a good job of capturing how to deal with scenarios where there are multiple equilibria, as well as coordination problems. Whether or not to start engaging in an activity that has increasing returns to scale is just one example of this broader pattern. Adding or removing common holidays (as free time is more valuable if your friends are also free during the same time), switching time zones, regularizing irregular verbs in some language, etc etc. Having stronger social gadgets for making those kinds of agreements is something that seems quite valuable, and it seems also valuable to have those gadgets be constructed without requiring points of central control, both because central control can be abused and because sometimes (eg. think protocol standards that are trans-institutional and trans-national) there just is no central authority that would be up to the task.

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Glen Weyl

Glen Weyl

Principal Researcher at Microsoft, teaches economics at Princeton University and is co-author of Radical Markets.