The Political Party, from First Principles

Prologue

If you are someone who believe that politics is (or, worse, should be) a once-in-a-while competition between abstract ideas that bureaucrats have to translate into policies (to be funded by your opponents’ constituency’s taxes), I suggest you don’t waste any more time here. If, on the other hand, you believe that politics should be about mass techno-movements, building their ideal futures through consortia of complementary startups and competing for intelligent citizens’ attention and talents, then welcome! You have come to the right place! This essay is my quest for how we should go about achieving that.

Real entrepreneurs are counter-cultural figures. Someone who thinks that humanity is missing out on something and he or she will work as hard as necessary to go from 0 to 1 and bring that change about. Some entrepreneurs become founders, some even CEOs. Some works in Startup Studios. Some are designers, some engineers. All are researchers.

Given the stated goal, the first questions an entrepreneur should ask himself are: “What are the barriers to entry?” and “How much does it cost to earn political support?”. Questions like these, even when contextualized, tend to bifurcate into a maze that is easier to comprehend by looking from a high level perspective. My case study, Italy, has a lot to teach. It’s political system remained fairly solid (while fragmented) from the end of WWII to the end of WWIII (Cold War), a period in which Italy’s standing in the world greatly improved (especially from the immediate post-war and up to mid-1960s). Different people will tell you different stories regarding how and when, exactly, things started to go wrong. For the sake of simplicity let’s remember what happened June 2nd 1992, on a yacht called Britannia.

One hundred and fifty nine (159) days earlier, the Soviet Union was formally dissolved and Italy lost the kind of geostrategic centrality that allowed a decade (1980s) of undesirably high current account deficits to go unpunished by “the Market”. The Britannia Agreement (between the City of London and italian élites) unleashed a massive wave of privatizations that dismantled the unwieldy IRI, one of the largest conglomerates in the world. Conglomerate was a bad word, back then. Let alone a state owned one. The Britannia agreement was not the cause, it was a symptom, but without IRI’s coordination and guidance, most Italian companies were forced to play in someone else’s garden (read: value chain). As many cheerleaders were later forced to realize (but have yet to admit): debt is bad but everybody’s got debt (and it can be shuffled around quite a bit); what not everybody does have, is the ability to take a stand and build an alternative future. Not every country gets to be a Civilization.

The negative feed-back loop that started with the loss of a coordinating actor like IRI (no matter how unwieldy and imperfect) can only be healed by the bottom-up reemergence of a plurality of actors that, while externally behave like corporations (tactically competing or collaborating), internally are able to generate a consensus that is both legitimate and meritocratic and that allows to coordinate efforts and to rationalize the allocation of scarce resources. We shall soon see how such actors could come into being (as the title suggests a reinvented political party could play a mayor role).

1. How much does it cost to earn political support?

In order to gauging how much a brand new party would cost, the starting point is the P&L of two of the main ones: the centrist Partito Democratico (or PD) and the populist Lega Nord. The former is the inheritor of two historical parties (almost 100 years old) while the latter is the most successful new party from the 1990s. Lega Nord’s old leadership was recently overthrown and the party has since grown from 4% to 16%.

Given that Italy’s public funding of political parties will end in 2017, the most relevant entries are contributions (∼€11mln for PD and ∼€3mln for Lega). The amount of funds raised makes for quite a low figure but even more shocking is the use of those funds. Between salaries and rentals, the PD spends €10.2mln. If that money where their sole “barrier to entry”, it would take shockingly little money to challenge such a party, especially if the challenge were to include a credible path to growth, able to attract private investors.

I know what you are thinking: it’s anathema.

Why would having private investors meddling with a political party ever be a good thing? The quick answer is “it depends”. On the governance’s bylaws (among other things).

Private investors could be interested in the party not as a tool to influence policy but as a (potential) quasi-captive market for portfolio companies (A/B testing up to product-market-fit, pre-sale financing, etc.), companies in which militants and citizen would have the chance to invest. That market would be so valuable for them that they would have at stake to mess with politics. I guess many of you will not like that part either. Please, bear with me as I walk through (and gauge the strength of) the status quo’s building blocks.

Extra-party funding: Foundations and beyond

In order to better appreciate the potential for the course of action that I am suggesting, we need to take a few step back and contemplate the full picture of political parties’ decline. In so doing we should also internalize the negative feed back loop between economic decline, the end of intra-parties democratic debates and the institutional loss of representation.

A recent law, sets fairly high limits for political contributions: €200k for companies and €300k for individuals, up to 5% of P&L revenues. This figures pales compared to US’s SuperPACs but, before Citizen United and before bundlers became a factors, US’s limits were stricter.

(Source)

If it’s too difficult to effectively bundle donations in a politically coherent way and if the individually affordable contribution is too small, the rational thing to do is to spare both the money and the time one would have considered to volunteer. This is bad enough but it’s far from being the whole picture (the PD don’t receive just €11M/yr in contributions). To the revenues shown in the P&L we must add the foundations’ contributions. In order to better evaluate the role of political foundations I will quote Raffaele Cantone:

“The proliferation of foundations is the proof of national parties’ demise: they are almost always an expression of an individual, to a maximum of heads of factions, culturally the opposite of a party.“

Cantone again:

”The documents show the dissolution of politics. (…) Some electoral systems have ended up facilitating the relationship between clans and politicians. Each brings her dowry of votes and makes his play. “

Foundations, no matter how opaque their inflows might be, are still transparent in their outflows. That doesn’t mean that there will be much appetite for truth, regarding their thereabouts, but the mere possibility (of such appetite) should ensure that certain standards are upheld.

Could it be that politics intermediate “funds” that don’t require outflow accountability because there is no actual inflow? It’s impossible to rule out but the real question is: what are the most socially and politically destructive ways in which those “funds” could be allocated? Anything that prevents society from self-defending and/or self-healing.

How does money undermines democracy? (basic version)

You can undermine democracy by:

  1. Legally paying a few people (like opinion makers) a lot of money.
  2. Illegally paying a few people (like judges) a lot of money.
  3. Legally giving some money to a lot of people (like the Church, unions and, yes, even the governments do) create bundles (only of votes instead of donations) within society that skew the level playing field. The more hierarchical an institution, the more it concentrates power, the more incentives it create for hijackers. Then there are the emergent behaviors. Whenever in doubt, the collective mind of an institution optimize for self-preservation over whatever noble statutory mission it might have been founded to pursue.
  4. Illegally giving some money to a lot of people (like in mob “ecosystems” in which Might is Right and in which generations upon generations of individuals have been deprived of their dignity. Mob ecosystems reach well beyond their core, both in socio-economic and geographical terms, and are keen to leverage the diaspora that they create by restricting opportunities in the territories that they control).

In every society there is a tipping point beyond which citizens re-evaluate their positions and, after they become convinced that they would be materially better off by pledging their loyalty to some “Lord Protector”, they just stop conceiving themselves as citizens. I know of nobody that have successfully demonstrate to know where exactly that tipping point is but I posit we (northern Italy) are not far from it. Am I being too pessimistic? I wish I were. When politicians from a very civil province (of 530k people) take the time to parade on Patron Saint Day of a 10k village, 1000km away from their constituency, you take notice. When the “diaspora” from that village is twice the village itself (20k) and happens to live within their constituency and to work in industries heavily infiltrated by mobsters, you are well beyond the tipping point. Once people downsize their Maslovian needs, they can only recover them by following “lantern carriers”. The only way I can see to turn the tide and salvage democracy is to empower the “lantern carriers” by :

a) identifying the elements within society that are not exposed to the above mentioned four “electromagnetic fields”;
b) nurture and consolidate them into a coherent entity with its own “electromagnetic field”.

An entity able to keep growing its mass by attracting outside elements bonded by “weak links”. This is a long process and while the clean and healthy part of society coalesce, it has the duty to protect itself, through a broad interpretation of sousveillance.

  • You protect your network from mob ecosystems by staying away from them but you can only do so by reversing the information asymmetry that usually works in their favor (can’t be more specific, as of today).
  • You protect your network from adverse opinion makers and any other actors by creating your own media. (more on this here). Of course some actors won’t be content with trying to assassinate characters. They will try to sue them into submission. This is where young accountants and lawyers (which, because of AI, are forced to be entrepreneurial about their career) can be helpful: crowdfunding for lawsuits has a great future and not just as a defensive tool.
I’m banking on a big assumption, one that previously failed startups couldn’t count on: a built-in audience that comes for the political agency and stays for the social capital.

Somewhat related to the issue of self-defense are the actions of hacktivists. We have all heard of cyber vigilantes’ attacks (on officials, governments, corporations, non state actors). They are increasingly common. So common, in fact, that even more standard intelligence operation like the Panama Leaks are still using the whistleblower/hacktivist cover for legitimacy. Going forward, I would not be surprised if pernicious liars-for-hire, obstructors of justice and similar champions of humanity were to be attacked by unsolicited hacktivists as soon as the word of foul play gets out in the streets. Amir Taaki is about to provide them with Darkleaks a decentralized, anonymous marketplace for leaks. Hacktivist aren’t the only players in this game, though.

Publicity is a free commodity, up for grab. Newcomers in the hacking-for-profit market can mount serious operations (knowing that they will quickly recoup the costs ). Bruce Schneier’s forecast is that within a few years we will see NSA’s TAO tools in the hand of common criminals but also of hacktivists which now have an Award-winning TV series to boost egos, recruitment and ambitions.

Bottom line: The means for corrupting the political process are enormous but, by definition, insufficient to compromise everybody. If you want to change things, your allies are those that are being squeezed. Of course, each member of the squeezed categories is individually compromisable but, as long as he doesn’t have any individual power (of any sort, not just political) and he is properly compartimentalized, there is nothing for the “Keepers of the System” to buy nor informations to extort. Sometimes it’s impossible not to concentrate power (you can’t run a startup through a prediction market) and each one of us has his own individual spot on the “hierarchy of uncompromisability”. At the top are Jedis and, at the bottom, people hopelessly poor, hopelessly empty or hopelessly scared. And everybody else is in between. Prices, of course, vary according to the interplay between ethical standards and bargaining positions.

This excursion in the underworld should leave you more optimistic. The funds that political parties can raise through legal means are negligible, in absolute terms, and incomparable, value-for-money, with what a skilled team could create, out of a tiny recurring revenue. Assuming that my premise holds, of course:

an audience that comes for the political agency and stays for the social capital.

The potential audience it there, unfortunately. There are far too many social categories that have been, are being (or will soon be) squeezed. The audience has to be built, though, and it’s not a job for growth hackers. It takes a lot of human, social and institutional finesse and a lot of non-scalable work, all excellent barriers to entry.

On top of the laundry list of things to do, is addressing the asymmetries in media access. Positive media coverage represents an obviously valuable (and financially unaccounted) contribution. It requires a suite of creative workarouds. I cannot go into details here but we shouldn’t consider audience-building and media-building as two separated endeavors. The recent law that enhances whistleblowers’ protection represents an unprecedented boon to media companies seeking to reinvent many aspect of the industry.

The original sins of Democracy

The worst risk for democracy? Not #1 and #2! As I’ve shown, we can defend against them. The worst case scenario would be if #3 (the governments) were allowed to use helicopter money to muddle through in exchange for the incumbents’ (among which #4) permission to stifle society’s bottom-up reorganization.

For more, see Nicolas Colin here and especially here.

This is possible because the current democratic competition is geared toward capturing the State monopoly on the decision making (monopoly more or less “checked and balanced”): a huge prize, especially because it doesn’t just enable a faction. It also disable the opposite one(s).

Even without being cynical regarding establishment-vetted candidates (be them secular or religious), Democracy, as we know it, is a legal superstructure laid on top of existing power structures. A superstructure set up by lawyers.

Now, while sciences, by definition positive-sum, quickly became captive of the Leviathan, lawyering is intrinsically zero-sum. Lawyers are the blood-free equivalent of military personnel. Democracy didn’t swap cutting heads with counting them. It swapped the lead in battelfield’s survivors with the lead in the ballot numbers. And winners keep taking all.

It is no wonder that, given those premises, politicians’ rational objectives (withing a democratic system) are:

a) Obtain the majority (within the party and the country) and
b) Promote policies that will help in keeping such majority.

Those two objectives are considered obvious to the point that nobody ever questions their systemic value let alone their legitimacy, even though the most prosperous (per capita GDP weighted by economic complexity) and democratic country on earth is governed by a permanent coalition. The Leviathan’s monopoly on the “right to decide”, inherited by democratic systems, intolerably (and unnecessarily) heightens the impact of “history’s non-bifurcability”. I suggest we leave such monopoly aside, for now, while we focus on the second original sin: the policy.

The policy requires 51% of votes of a Parliament filled with people with opaque incentives and the slim prospects of accountability depending on:

a) millions of citizens remembering their representatives’ misdeeds (years after the fact) and
b) fully transparent bureaucratic processes (beyond the easy part of budgetary control).

A vaste programme, in a world in which attention is the scarce resource. And don’t get me started with the coordination problem. Each policy, even the most clever, generates unforeseen second or third order effects. Now, multiply those effects for the number of policies and consider the results in light of the low self-awareness (and lower responsiveness) of the legislative-bureaucratic complex. The result? Once in a generation reform cycles. Governments (even more than Education and Health) suffer from the most extreme form of Baumol effect. The governance quality don’t improve while the speed of the world (over which they enjoy governance monopoly) increases exponentially. In a normal democratic system, it takes at least 12 months from the first draft to the final approval of a reform. Within that interval the Singularity University changes 80% of its content, just to remain relevant.

Focusing only on the outcomes achievable through the blunt policy tools, politicians surrender to procedures and intermediaries (not just bureaucratic) that they don’t control and by whom they are, mostly, controlled. Since the goal, in politics, isn’t to merely win but to remain in office, even the best government will find difficult to reconcile the two goals without expanding the voters’ cognitive map, today within the media’s tight grip. To the average citizen, politicians’ surrender to the policy tool is the source of yet another negative feed back loop. No matter the stated goal, the policy tool makes it feel remote and disconnected, which makes it difficult to motivate and mobilize militants which makes it harder to fight back against concentrated interests.

Even if the policy were the perfect tool (which it clearly isn’t) we would still have a problem with the “governance monopoly” and with “history’s non-bifurcability”. A system of monopolistic democracy leaves no room for counterfactuals, not even inside a party. Suppose that a party minority won’t share choices a), b) e c) e that for next party congress will set itself the goal to supplant the current leadership. How will they go about doing it? 
The should convince delegates that the party would be better off if, instead of a), b) and c) the party had agreed on x), y) and z). And that future plans i), ii) and iii) are wrong and that a better course of action would be §), §§) and §§§). Unfortunately they could not demonstrate anything about second or third order effect regarding their past alternative policies let alone their future’s ones.

The monopolistic democracy, like Kickstarter, is “all or nothing”. In the“all-or-nothing-model”, instead of being invested in a constructive competition (getting alternative things done in a measurably better way), minorities energies are wasted in obstructionism and shadenfreude. We can do far better than that. Are we really sure that Indiegogo’s approach wouldn’t be more sensible? In areas where power sharing is possible, any faction/party could get to allocate the political capital that it has “raised”. As messy as it sound, it is both more rational and fairer towards minorities that setting policy against the wish of the 49% all the while using their tax money to pay for those policies. It certainly would be more efficient to spread the risk and more resilient to increase diversity. Of course, as with all large scale ideas, this one too should be (in)validated quickly and cheaply, at the smallest scale possible.

Representative Democracy in the Age of Talent

Representative Democracy was born during the Age of Capital, today we are in the Age of Talent. During the eponymous age, Capital was scarce and access to information enormously asymmetrical. The capital goods were heavy and expensive. The capitalist fought tooth and nail to squeeze as much money as possible out of those machines, humans be damned. Dissent, even when coherent and superior to the status quo, was indistinguishable from subversion. Today we are in the opposite situation. Assets are more and more intangibibles , less and less expensive, “rebellion” and intellectual nomadism, are positive traits.

The startup costs has been transferred from the birth to the scale-up and capital is no longer allocated at the stage of assets creation/acquisition but at the distribution stage ( exclusive deals, sales teams, lawyers, lobbyists etc.). This shift in the stage of capital deployment is the core of the opportunity to make money while reforming society, “from the party up”.

Let us never forget that…

Political parties’ raison d’être is to collect (for free) citizens’ attention, the kind of attention for which startup usually have to pay with very dilutive money.

This is even more valuable if you happen to agree with Ev Williams (and many others, here) that we are in an increasingly big-company-tilted world.

Where should we look for leaders?

If we want to get to a society in which each individual is able to reach his/her own full potential, we need to give network centrality to the right people. Right people in terms of both knowledge and character. Nobody should be born into “network centrality”, everybody (politician included) should have to earn it. In that spirit we should look at the startups where the leadership goes to someone who a) has a vision, b) is able to coordinate the work of people able to bring it about and c) has the ability to forge and maintain a consensus.

At this level of generality, we could find the same requisite in a political leader. What sets successful startup CEOs apart from (even) successful political leaders is that the former are tested harder, much more frequently and in a quantifiable ways. The leadership of a politician (out of office) is tested by rhetorical challenges, subjectively evaluated and quantified through electoral cycles longer that the life of most startups. Given that it takes forever to root out incompetent leaders, competent ones are discouraged from taking part in what amounts to self-reinforcing cycles of adverse selections.

The leader, in a startup, is not elected but chosen by those who bet on that opportunity (among equally enticing ones). The people that incur an opportunity cost have a real, if hard to quantify, power vis-a-vis the founders. The decision making is not majority-based although, especially at the first stages and especially in case of business “pivot”, the founders must thread lightly and not take anything for granted as employees could manifest their discontent in various ways. Nobody has a formal (Constitutional?) veto power but defections carry a huge cost (both financial and motivational).

The difficulties in gauging the size of the “market”

One of the most common errors (especially for people not trained to think exponentially) is to assume that things might always worked as they do now and/or that they shall not change in the future. This (largely unconscious) preference is so prevalent to merit a name: normalcy bias.

Quanto vale Uber? Bill Gurley (a sinistra) aveva “skin in the game” e “quindi” il giusto mindet analitico: non poteva correre il rischio di sottostimare Uber.

Given that this essay isn’t exclusively geared towards the venturati, it is useful to remember the debate between Bill Gurley and prof. Aswath Damodaran (NYU), intellectually invested in a valuation method called Discounted Cash Flow (DCF) widely (and rightly) rejected by venture capitalist (see here, here and here).

Damodaran ha completamente sottostimato il feed back loop positivo e l’emersione di nuovi modi di usare il servizio una volta raggiunta un certo prezzo.

You can find Gurley’s answer, which ended the debate, here. Just to give you an idea of how difficult it can be: the split between the opinions of two equally clever people was 25x. You read it right. Not 25% but 25 times. Unsurprisingly, Gurley’s valutation turned out to be far closer to the mark. Why unsurprisingly? He could afford to neither undervalue nor overvalue Uber, but you can only lose your money once, hence: better be sorry than (too) safe. On the other hand, the professor’s only risk was the ridicule: an overvaluation heretical vis-a-vis DCF’s orthodoxy.

Having said that, let’s go back to the fundraising potential of a tech-enabled political party. In 1950, when Italy had little more that 45 million inhabitants (many of whom children) and when women had a far smaller role in society, there were at least 5 million people carrying political party’s membership cards in their pocket. Why? Because the party was part of their everyday life. It was a bundle of (at the very least) Facebook, LinkedIn, Adecco, Lending Club, Tinder and even cashless and reciprocal versions of Task Rabbit, Homejoy and Instacart. There were all sort of (crowdsourced) volontary work. Was the party, back then, merely a clunky bundle, whose sole rationale was the meatspace’s monopoly on human interactions? Perhaps. My assumption is that it wasn’t. My assumption is that, like in everything, the UX went from full meatspace to full cyber before they began merging. For the party, the dematerialization coincided with the end of the Cold War and the ensuing neo-liberal rejection of representative parties and mobilized societies. Today’s there is plenty of mobilization but UX, objectives and strategies remains largely the same, which (if I am right) explains why the latent demand isn’t fulfilled.

Anyway, in today’s Italy (with 60 million inhabitants), those 5 million (members & voluntaries: M&V) would be more like 7 million. A party that were to inspire just a 5% of them (350k) and that were able to monetize a bit of their free time (say: €100/yr) could raise €35mln, or 3.5x what is currently being raised by the biggest party (with 30% of voter’s turnout). Is this feasible? I believe it is. Of course, not by a traditional party but certainly by a team of skilled startuppers. A party with 1/6th of PD’s voters (5% vs. 30%) and which would have expenses far below 1/6th of the fund raised by the PD (11:6 = €1.8M) could find itself raising €35M/yr. What would that mean? Well, it would mean that money in excess of expenses would be invested in startups, it would mean that the team will have to have thought leadership, not just technical skills. If I am right, it would also mean a sizeable positive feed-back loop between a) the amount of donations, b) the surplus invested, c) the performance of the startups and d) the perceived utility of the time donated.

A “plug-in” for the Party.

If you are still reading I can safely assume that we agree. We need an alliance between technology and politics. What we don’t know is what kind of alliance and how to set it up.

Whenever possible, it would be slightly preferable to work with existing parties rather than to build a new party from scratch. We should offer to all parties, something that they cannot build themselves: a plug-in able to grow the militants’ number, their efficacy and the amount of their donations.

In exchange for…? In exchange for greater party democracy. Refusing this kind of deal will be equivalent to declaring themselves undemocratic. It would also be a bold and desperate bet against technology, one that could quickly push them into political irrelevance.

How should the parties change their bylaws to accommodate greater democracy?
a) No party member should be allowed to have independent funding. 
b) A ranking of analytical skills will keep leaders accountable;
c) The maximum donation will be €1000/yr 
d) Given that each member will be required to perform a modicum of voluntary work, the party will use the plug-in to help militants monetize their skills, knowledge and/or time.

The above mentioned “Plug-in” would be a kind of Betaworks for crowdsourcing &/or telework.

For people unfamiliar with the tech sector, Betaworks is a hybrid conglomerate that acquires (Digg, Instapaper), seeds and builds media-tech companies at all stages of the funnel, from creation and distribution, to discovery and analytics. To the extent that my assumption will hold, the small but captive market and the broader mission would allow for a greater economies of scope than the one enjoyed by Betaworks.

Like Betaworks, the Plug-in would build the companies that are needed to carry on its mission (monetizing volunteers’ data, their remote work and knowledge). It’s through those companies that militants’ skills, knowledge and time will be monetized. Down the line, like Betaworks, the Plug-in could also acquire or seed invest, together with militants.

Any party that accept our conditions can have its militants and voters selling their time/knowledge through Plug-in and donating the proceeds. The best part? Militants can choose as to whether they want to help cover the party’s expenses (and which ones) or (after reaching a certain donation threshold) if investing in startups that are part of the future the party is committed to build.

The legal infrastructure that regulates equity crowdfunding already allows to vote (with up to €1000/yr) for the favorite future. I avoid using the word “investment” because, when applied to this context, it would mystify more that it would clarify. A citizen that puts that kind of money doesn’t do it for the financial returns he could reasonably expect but, instead, to help bring about the future in which he and his co-investors wishes to live.

If you want your financial investment to allow you to “buy” the services of a human version of Jetson’s Rosie, it would require infinitely more than anything a 40-years-person could ever hope to accumulate. If we don’t invest a little today, come tomorrow, we will have neither the means to pay for expansive human help nor the affordable robotic alternative.

The controversial Letta Reform allows VAT-free fundraising through mobile apps. Add to that a 36% tax credit for political donations or a 20% tax credit for equity crowdfunding. Finally, consider that you get a 35% tax credit over the salaries of PhDs and of certain M.A.s.

Everybody can submit both startup ideas and futures. (think of it as a matryoshka: each future contains many startup ideas and the ideas are promoted to followers of all compatible futures).

The Plug-in will provide tools to allow technical talent to quickly do their due diligence on a number of projects, minimizing the biases that social proof introduces (especially vis-a-vis non technical deep thinkers). It will also seek to create a process for building teams while effectively matching talents and projects (not unlikely what Entrepreneur First seems to have mastered).

Not all the parties will have the same ability to switch to our model (most won’t) but in the last years we have already experienced the meteoric rise of new parties.

Policy (a.k.a future guessing) vs. Future building

Within his 15 propositions (for a left wing party) Fabrizio Barca writes:

The frontier of social inclusion and social relations must be continuously pushed forward. A long-term vision of society must be developed which, by understanding the technological, organizational and social behavior that are continuously determined and by spreading knowledge, constitute the possible structure of the society more just and sustainable for future generations. This long-term vision of society works as a spur for the achievement of short and medium-term public action “

If I were to ask Barca whether or not he thinks the future is knowable, he would most likely roll his eyes. And yet the idea of a long-term vision implies some sort of deterministic future. He is not alone. Paul Graham e Fred Wilson, two top performing investors. wrote:

Live in the future and build what is missing.(Paul Graham)
Invest in the future you believe will happen, [rather than the incremental improvements in today’s world]. (Fred Wilson)

I don’t think that that’s the way we should look at the future. It’s neither a logically consistent thing to expect nor a prudent allocation of scarce resources (especially of entrepreneurs’ time). We are at an inflection point in the exponential curve that multiplies the number of potential futures.There are many lessons that we could draw from this simple truth, the one I find more valuable is Alan Kay’s.

While a VC fund can use their portfolio companies to actively participate in the process of future’s emergence , for the politicians, the only way to live up to the goal that Barca have rightly set, is to ignore the distraction presented by the accelerating proliferation of “means” which increasingly will allow any kind of economical and political equilibria, from Distopia to Utopia. Ignore the “means”, focus of the “ends” and work back from there, narrowing the attention, gathering the resources and focusing the efforts toward the building (vs. the guessing) of what can be considered a deterministic future.

This is insane, right? The future is emergent and there is no way to deliberately build toward one of infinite combinations of elements, most of which still unknown.

It depends on which subjects will be doing the building, which incentives will be driving them (more on this later). Focusing on the technological feasibility (both current and expected, long term) of the most desirable future, future builders are not foolishly tied to any given technology but are committed to outcomes. What does that mean?

If you believe that humanity’s knowledge maximization works at all level (spiritual, political and economical) your goal should be to bring about the ultimate positive feed back loop, precondition for a just and harmonious society, one in which everyone would have a shot at reaching his/her full potential and maximum network centrality. That’s a future. The innumerable strategic adaptations and technological iterations in pursuit of an exponential expansion of knowledge’s transmission bandwidth are just moving parts, approached with the freedom that comes from not having to optimize for ROI.

What do I mean by knowledge’s transmission bandwidth? Going from the current learning system (individual, IRL with words and symbols-based math) to a new one that is VR-based, collective and experiential, which is already, at least partially, Stanford MediaX’s approach.

Future building doesn’t have to be long term or futuristic, it can be a near future. What matters is that it focus on outcome rather than ROI, it allows to create (and maintain) permanent, constructive and measurable competition:

a) between faction within parties and

b) between parties within parliaments.

It allow to leave behind zero sum games and shadenfreude and the emergence of the best leaders. It will give different levels of agency and a stake to an increasingly large number of citizens.

The future building is a deeply political issue. We (the venturati) know that better equilibria are within reach but many better equilibria have historically failed to materialize because the stakeholders did not come together at right time with enough critical mass.

We have sleepwalked deep into a transition without reaching a consensus over a comprehensive equilibrium (that ordinary people can understand and buy into) but with plenty of mainstream Morozov(s).

Why? Because investors, politician and founders work at a wildly different speed and under wildly different incentives. Can we reasonably expect to change the speed of those actors? Slowing founders is neither feasible nor desirable. Speeding the politicians is desirable but not feasible.

What about the incentives? Politicians need their constituents to sign up to any change in society’s direction, otherwise, when push come to shove, they will always side with retail salespersons, cashiers, clerks and truck drivers. Even if one considers politicians as salesmen, one cannot reasonably expect them to Always Be Closing without a good product to sell. One can say that he doesn’t care about the social contract but one cannot fool himself into thinking that he does care and, at the same time, fail to give politicians a coherent future to sell, a future in which everyone is better off. And yet this is what has been happening, what is happening and, absent the successful emersion of a new model like the Plug-in, what will continue to happen. Until we reach the tipping point.

On the other hand, VCs’ fiduciary responsibility is not to build a better world (although I’m sure most of them try their best) but to maximize return for their LPs. And they do so by managing a lot of risks, many more that most people could remember (let alone act upon). Among those risks, though, there is neither anomie-risk nor, as Angus Deaton could put it, narrative-less-ness risk. The opportunistic stock-picking of current VC model trickles down social angst. Every new product, every new company that chip away at incumbents (no matter how abusive) will continue to be perceived as destabilizing. And not just by people directly affected but by all those that aren’t ready to accept the trade-off between their surplus, as consumers, and their ever decreasing individual agency. Because that’s the trade-off that it’s being imposed. Failing to realize the implacable logic of the above, condemn politicians to an exponentially shorter and brute life as electrical fuses (shields for the .01 percenters) thus skewing their incentives in the worst possible way. Absent changes in the LP-to-VC relationship, VCs will not be very helpful in the task of ensuring that consumer surplus is not paid for with individual agency, but they could certainly act indirectly, by investing in new hybrid institutions like the Plug-in.


PS: Silicon Valley is working on representative democracy

DemocracyOS has been funded by YCombinator. What does that mean? First a little of context (for the layperson) from Marc Andreessen:

There are 200 companies (among 4000) that are funded by Top VCs. YCombinator hosts two batch/yr and in the last one there were 102 startups (here and here). It’s not about how many of top 200 might have emerged from YCombinator. The point is that those that do are disproportionately represented among the fifteen that generate 97% of the value. Furthermore, each YCombinator cohort, ipso facto, has come to be given a cumulative valuation of one billion dollars. (see list)

Through prodding by Michael Arrington, who interviewed him, Sam Altman admitted that Y Combinator has a monopoly on startup accelerators. “So you’ve sucked 99.9% of the oxygen out of the accelerator [category],” Arrington asked. “Unlike other stages of investing, there is a monopoly.”
“We get the best companies, which is 90%,” Altman said.

YCombinator’s main value is the ever expanding alumni’s network. Some calls its the startuppers’ Ivy League, some their foxehole. One thing is for sure, if you are part of it, “you will never walk alone”.

How to interpret YC’s endorsement of DemocracyOS? Let’s start from what it isn’t. It isn’t the final word on this “industry” but the signal that there might be one such industry. DemocracyOS is little more than a LiquidFeedback with a better usability. This generates a higher engagement level than LiquidFeedback (not diffcult) but still far too low for a democratic legitimacy’s purposes. And there lies the problem, the citizens engagement (or lack thereof). Pia Mancini, admits that “the problem isn’t a technological one, but a cultural one. The complete surrender to the inevitability of the policy tool is DemocracyOS main limit. What DemocracyOS’ endorsement probably means is a message to all who are interested in using technology to improve the governance of the state and of its fractal: the political party. And the message is: “YC is open for business”.

From the Silicon Valley comes another “message”, this one “aimed” at bureaucrats. It’s an even louder and clearer one because the answer, here, is not a fancy white paper or an in progress codebase, but a full fledged product with obvious market fit and tens of billions of dollars in annual customer revenue. It’s called OpenGov and on its board sit Marc Andreessen , Balaji S. Srinivasan and Joe Lonsdale.

OpenGov solves the Catch-22 of “limited budget for understanding the budget”. Because local government budgets are tight, it’s more important than ever to find out where the dollars are going. Yet because local government budgets are tight, it’s often difficult to find new resources for software engineers and data scientists. OpenGov solves this Catch-22 by making it extremely inexpensive to upload local government data into a cloud service and get started with visualizing budgets. Because information is valuable to the extent that it is actionable, information that increases the efficiency of government spending by even a few basis points can save millions of dollars annually — and easily recoup the cost of the OpenGov software.
People routinely debate whether government spending should be increased or decreased, but virtually everyone agrees that it should be spent as transparently and efficiently as possible. After all, taxes form the the single largest line item for many citizens, and the single largest source of income for many governments. Unfortunately, even as millions of people come to depend on social services in tough times, trust in the government has hit historically low levels. To restore faith, it would thus be highly useful for government officials to have the tools they need to ensure that every dollar is spent appropriately and transparently. Transparency is a non-partisan good. From the right perspective, you can’t cut what you can’t see: visibility allows one to identify monies being spent sub-optimally. From the left perspective, you can’t claim what you can’t see: increasing taxes becomes easier once the public has evidence that government funds are being spent on popular services. (source)

Is that all? Of course not.

You already know the importance of YCombinator. Now they have began putting their network centrality at the service of long term research (5 years) related to Universal Basic Income. Sam Altman wrote:

50 years from now, I think it will seem ridiculous that we used fear of not being able to eat as a way to motivate people. I also think that it’s impossible to truly have equality of opportunity without some version of guaranteed income. And I think that, combined with innovation driving down the cost of having a great life, by doing something like this we could eventually make real progress towards eliminating poverty.

Don’t hold your breath for this to become a full fledged, organized lobbying effort like Naval Ravikant did with the JOBS Act or Zuckerberg (and many others) tried with FWD.us. It is however impressive the number (and the status) of the VCs supporting very strong safety nets, be it basic income or negative income tax.

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