Designing New Governments for Actual Behavior
Below this summary is my response to your major points.
I’d summarize the thesis of your essay as:
People would allocate public money better than representatives and bureaucrats, and since people actually spend money differently than they say they will, thus revealing their true intent, the only accurate measure of a person’s policy intent would be to let them allocate their money directly on public services. This would prevent wars because people wouldn’t be willing to pay for them.
Yes, that would prevent many or most wars, but that’s largely beside the point as many other structural changes would as well.
But here’s the rub: The foundation hypothesis of your argument is that of all the methods of interpreting a person’s intent, purchase decisions are the most accurate. That’s subjective and situationally dependent, and ultimately without definitive evidence.
I believe some of the strongest evidence might actually point another direction. At first blush predictive markets seem to suggest markets are best at predicting the outcome of complex problems. But they work just as well without money as a feedback mechanism, as shown by experiments such as The Good Judgement Project. The key process with predictive markets isn’t the transfer of money, it’s the creation of a system of collective intelligence.
I’d characterize (perhaps unfairly) most other arguments about the superiority of purchases for showing intent as being something to the effect of “People often say their preferences differently than they actually purchase, but purchases are what actually matter because they’re taking action, therefor purchases are the truest intent.”
In many situations that may be the best method of understanding intent but those instances are narrow. For purchase to be effective as a means of diving intent the situation relies on having a fixed number of options and being zero-sum, neither of which are true of public policy situations.
Markets are a great tool but they aren’t appropriate for every situation.
Elections are a great tool (modern voting systems, at least) but they aren’t appropriate for every situation.
Collective intelligence systems are a great tool but they aren’t appropriate for every situation.
The research being done in behavioral psychology and neurology is illuminating a profusion of ways our thoughts are being shaped, influenced, and expressed. In such a time of richness and empathy we should be developing new tools to build upon our discoveries, not try to force a single tool to solve every situation.
Government should use the best tool for each situation. Preferential voting for selecting representatives. Collective intelligence for specific problem solving (by the way, our Common law legal system is a collective intelligence system!). Referendums for guiding principles. Appointments for executives. Meritocracies for technocrats. Etcetera.
The careful pairing of tools and scope can create balances of power to allow a government to run optimally. My thesis is that we now have far more precise and effective tools to give structure to a government than we did 250 years ago.
Lets get cracking on designing a new one.
Point by Point Responses
Never pick a fight with people who buy ink by the barrel
- Charles Brownson
You’ve left me a far ranging list of subjects to respond to. Ultimately your points apply broadly to public policy and various other subjects, not just defense, so I’ll largely set that aside in my responses.
For concision I’m doing a little editing, let me know if you think I’ve cut into the bone on any.
Bang For The Buck
Bang for [your] buck... is the most fundamental force [of] human behavior… it drives every living organism. Plants, fungi, microbes, insects, fish and coywolves all strive to maximize benefits… Hopefully somebody will coin a cool term for this essential element… in the meantime we can just use the word “biogine” (bio + engine)
I looked for an existing english word to capture your meaning but found none without baggage. If a new word is needed, as an amature etymologist I much prefer resurrecting old words to coining new ones, particularly when their root is already woven into modern English. I propose avēre: to hunger, to want, to desire. It is the root of words such as avarice, and avid.
The Free Rider Problem
Voting is subject to the free-rider problem. Voters…have the maximum incentive to vote for politicians who promise to provide free lunches.
Absolutely. This is one of the things that needs to be taken into account when designing a representative or social system. The most basic solution is to simply not use direct elections for roles where impartiality is particularly important, like the judiciary.
The Forced Rider Problem
Technically speaking, a public good is any good that is both non-excludable and non-rivalrous. This mean that it’s a public good when one country attacks another country (national offense).. It’s also a public good when one country attacks its own citizens.
Whoa whoa whoa. You’ve gotten loose with your concepts here; you’re using various aspects of “war” interchangeably, stretching the definition of a “good,” and mixing perspectives.
To start with, a “good” must provide a benefit. Air pollution is non-rivalrous and non-excludable, but that doesn’t make it a public good. “War” is generally not a benefit, and when it is, it’s not a non-rivalrous benefit. Wars cost lives, money, and time, nothing could be more rivalrous.
The good news for you is your argument doesn’t rely on war being a public good.
After 9/11… how many forced riders were there? How many people had to spend more money on the war on terror than they would have if they had been given a choice in the matter?
Here’s the first part of your thesis, which you’ll finish in the next sections: People would allocate public money better than representatives and bureaucrats…
Actions (Spending) VS Words (Opinions) & Fiscal Illusion vs Fiscal Equivalence
you were giving far too much weight to people’s words (votes/opinions)…
…Wars are extremely expensive… so people should demand a lot less. But with our current system, for most people war seems to be either free or really cheap. So until we change this insanely absurd system…. shouts for war will always be greater than the true demand for war.
People would allocate public money better than representatives and bureaucrats, and since people actually spend money differently than they say they will, thus revealing their true intent, the only accurate measure of a person’s policy intent would be to let them allocate their money on public services. This would prevent wars because people wouldn’t be willing to pay for them.
There we are, that takes us to the thesis I responded to at the top.
The Public VS Taxpayers
I believe you summed up this section well with your last passage:
So again, some people are a lot worse at allocating resources than other people.
I agree. And those “some” change based on the situation. I’m certain there are situations whether both you an I would poorly allocate resources because of our personal biases, information asymmetry, physiological condition, etc.
Irrational Choices Have Rational Consequences
Fools rush in where wise men fear to tread… so it’s a really good idea to minimize the amount of resources that fools control.
We’re getting really close! I agree with you, but like my last point, we’re all fools at times. Therefor we need to select which people can use which tools in which situation to keep foolishness in public policy to a minimum.
The market process is by far the most robust and accurate feedback/reputation/rating system. We don’t just give people stars or thumbs up for their rational/beneficial behavior… we give them our own personal sacrifice (money, time and other limited resources). We reward people who can correctly discern whether an advantage is real or imaginary.
As I’ve said with the explanations about: markets are the perfect tool in many situations, but a terrible tool in others.
Let’s say your friend Sally is in law school. She her grades are good but she tells you that she’s planning to drop out so that she can write children’s stories. Chances are extremely good that Sally will make a lot less money writing children’s stories than she would working at a prestigious law firm. But if she’s a lot happier writing than she would have been lawyering… then from her perspective she wouldn’t have made a mistake. From society’s perspective, however, she made a big mistake.
If you abstract away all of the benefits of happiness and costs of unhappiness, and if you assume money is the greatest single concern of a society, then sure. But neither are true. She could inspire generations of children with her stories. Even if she doesn’t make much money, her happiness could provide far more social benefits. And the cost? She probably makes less, but someone else would take her job and probably do much better at it because they don’t dislike it. It seems like you’re ignoring one of the basic tenants of capitalism, which is that people tend choose careers they are more proficient at because they enjoy them more.
I’m skipping some sections and going straight to your summary to get at the meat.
Markets work because people who incorrectly gauge the necessity of things have a lot less income/influence than people who correctly gauge the necessity of things.
You’ve missed a huge bias here. This passage, and the many others that make the same point about the effectiveness of markets, relies on time and iteration. A market isn’t a single decision-event played by people with an equal voice. It’s played by people over countless decision-events, where more money, however procured, gives greater advantages. Neither of those are true for public policy decisions.
Markets are fueled by the most powerful force in the universe… biogine. Biogine is the source of our success as a species. Humans are the best at choosing the most valuable option. If we truly want to make as much progress with public goods as we make with private goods… if we truly want to prevent unnecessary wars and free-up countless resources for far more valuable uses… then it’s imperative that we create a market in the public sector.
I addressed this all above but I’ll summarize here. Markets work exceptionally well in some situations but they are a crude instrument in others. The key to using the right tool in the right situation is in understanding all of the biases and influences endemic in each situation, then picking a tool that ameliorates or takes advantage of them.
Look for tools that address subtleties, not generalizations.