An Introduction to Futarchy(blog.ethereum.org)
blog.ethereum.org
An Introduction to Futarchy
https://blog.ethereum.org/2014/08/21/introduction-futarchy/
12 comments
There are many governance variants that should outperform conventional decision-making practice in corporations but go unadopted. Either we're living in a decision-making Golden Age, which seems unlikely, or corporate decision making is very ego-driven and resistant to systemic change.
Corporate decision making is very ego driven and resistant to systemic change[1]. From which we can conclude either that stock markets are not very good at promoting good governance (even with narrow, homogenous criteria like "grow shareholder value) or that concentrating power in the hand of ego-driven, change resistant groups of [mostly] old men is not as bad for shareholders as running a corporation based on prediction markets. I'd say both were true
[1]though many corporations' shareholders would justifiably argue the latter part is a feature of the system rather than a bug
[1]though many corporations' shareholders would justifiably argue the latter part is a feature of the system rather than a bug
> If prediction markets were really the best way for a large, centralised entity to make decisions, you'd think at least a few successful corporations would have implemented it into their corporate governance.
Only if you think that every "best way" to do every thing has already been done, which I highly doubt.
Only if you think that every "best way" to do every thing has already been done, which I highly doubt.
Umm, so, basically, this is a system which would get rid of one-vote-per-person, and implement a pay-to-vote system, where those with more money to spend have more vote, built into the very fabric of the system. Unless I'm getting it completely wrong.
No, it's still one-person-one-vote. Voting is used to get agreement on what counts as a good outcome. The money and betting come in when trying to determine what policies are most likely to lead to the desired outcomes.
Yes, except that if you spend your money to vote irrationally, smaller players can use this as a profit opportunity to extract money from the "rich"... irrational/biased voting is penalized.
If the voting is secret and instantaneous, instead of via a market over a period time, those who control enough of the market won't be able to push the market in one direction, without exposing themselves to significant losses.
So, honest rich people get more voting power than honest poor people?
The poor people get to decide what is important. The rich people decide how to optimize for the important things.
For instance, if the one-person-one-vote decided, for whatever reason, that a metric of importance was grams of marijuana sold in a year to people older than 18, minus (18-age)^2*grams for any weed consumed by minors, then rich people would decide the best way to repeal marijuana prohibition while keeping it away from kids.
The prediction market would decide the policy. But this is where I get confused about the payouts. The predictions have to be tied to reality in some way to have any value. So the backers of a given policy choice have a financial incentive to see it exceed predictions, while the opposition has incentive to see it fail completely.
They could game the metric to avoid paying out as much, and do something like pass out pot brownies to kids in day care. They have an ongoing incentive to influence the metric. But if you remove the influence incentive, you also remove the motive to predict accurately. I feel like I'm missing something here. It seems like if you tried this with government, you're making renegade behavior potentially profitable.
In the article example, it seems that if banker wanted a bailout, he would go long on bailout and short on no-bailout. If the no-bailout policy won, he then has a giant incentive to do anything in his power to crash the economy and keep GDP down. Can anyone explain what I'm missing, if anything?
For instance, if the one-person-one-vote decided, for whatever reason, that a metric of importance was grams of marijuana sold in a year to people older than 18, minus (18-age)^2*grams for any weed consumed by minors, then rich people would decide the best way to repeal marijuana prohibition while keeping it away from kids.
The prediction market would decide the policy. But this is where I get confused about the payouts. The predictions have to be tied to reality in some way to have any value. So the backers of a given policy choice have a financial incentive to see it exceed predictions, while the opposition has incentive to see it fail completely.
They could game the metric to avoid paying out as much, and do something like pass out pot brownies to kids in day care. They have an ongoing incentive to influence the metric. But if you remove the influence incentive, you also remove the motive to predict accurately. I feel like I'm missing something here. It seems like if you tried this with government, you're making renegade behavior potentially profitable.
In the article example, it seems that if banker wanted a bailout, he would go long on bailout and short on no-bailout. If the no-bailout policy won, he then has a giant incentive to do anything in his power to crash the economy and keep GDP down. Can anyone explain what I'm missing, if anything?
I guess it depends on what exactly you mean by "honest." Rich people would have more voting power, but also the incentive to vote "correctly." Right now, in the real world, rich people have much more political influence than poor people, and very little incentive to vote "correctly."
Is it a truism that "correctly" has the same definition for a smart, effective, honest rich person as it does for a smart, effective, honest poor person?
The reason I put it in quotation marks is because it's not a very well-defined concept, and it assumes that there is objectively a correct society, when in reality, people have different preferences. One way to formalize it would be in terms of Pareto improvements, which are theoretical but useful for analysis.
Imagine a referendum where voting yes results in rich people receiving a benefit at the expense of the poor and voting no results in no benefit or expense to anyone. One example of this might be introduction of a regressive tax. Most of us would agree that, according to standard Western civil values, the "correct" vote is no. But obviously rich people in our current system are incentivized to vote yes, and perhaps also to spend money campaigning in support of this referendum.
Imagine a referendum where voting yes results in rich people receiving a benefit at the expense of the poor and voting no results in no benefit or expense to anyone. One example of this might be introduction of a regressive tax. Most of us would agree that, according to standard Western civil values, the "correct" vote is no. But obviously rich people in our current system are incentivized to vote yes, and perhaps also to spend money campaigning in support of this referendum.
And rich people in this new system are incentivized to not vote yes? They gain a benefit. The poor people, who don't have any market power, do not. Why would they vote any other way?
If I understand futarchy (I haven't studied it extensively, so I may be wrong), you need over 50% of the money in the system to be voting yes in order for it to be profitable to vote yes. If, say, 75% of the money was voting no (the "correct" decision), then the rich people voting no with 25% of the money would be losing money. In our current system, rich people are incentived to vote yes, even if they will be vastly outnumbered by the people voting no, because there is very little cost to voting for the "incorrect" option (if we're ignoring the cost of educating yourself about the effect of each vote, which we assumed away previously). In this system, rich people are incentivized to vote for the "correct" option, because voting for the "incorrect" option is costly.
The idea is that what "correctly" means is decided by normal voting; the markets merely determine how to get there. That's what they meant by "vote value, bet on beliefs": we use a normal democratic approach to specify what we want (things like "lower level of violent crime", "higher GDP in ten years") but then use a market-based system to decide how to get there.
The trick is that, once we've settled on the metric to target, trying to sabotage it using the markets would cause you to lose large amounts of money. Moreover, if rational actors realize you're trying to sabotage the system, they can bet against you and make large amounts of money. It provides an in-built incentive to execute whatever was democratically decided in the first step.
Not a perfect system, but it does address that particular issue.
The trick is that, once we've settled on the metric to target, trying to sabotage it using the markets would cause you to lose large amounts of money. Moreover, if rational actors realize you're trying to sabotage the system, they can bet against you and make large amounts of money. It provides an in-built incentive to execute whatever was democratically decided in the first step.
Not a perfect system, but it does address that particular issue.
No, smart, effective rich people get more voting power than smart, effective poor people. Which is not so bad, since if they are smart and effective, they will usually vote for the better policy anyway.
Smart and effective doesn't necessarily imply better policy.
Better policy for them, perhaps, but not for everyone else.
Better policy for them, perhaps, but not for everyone else.
In this system there's an agreed-on concept of "better", and this is standard one-person-one-vote with no money involved. If these "smart, effective rich people" then bet that certain policies will be better, but in fact these policies turn out to only be better for them and are worse for everyone else, they will lose lots of money for betting wrong.
You seem to assume the incentives are always correctly aligned, and agreed on concepts of "better" are immutable. They're not.
Simple example:
Country X decides to do something dastardly against the interests of Futarchy Y. Confidence in the economic outlook wavers, as happens in any country where there's an anticipated reduction in trade and maybe even war. Country X, could have made a lot of money shorting "future GDP per capita" on the Futarchy prediction exchange prior to their dastardly act though.
It gets worse because not only is Country X able to directly profit from making the lives of Futarchy Y worse, but the futarchic system actually makes retaliation impossible. Much as the government of Futarchy Y talks tough, and would like to take action, like sanctions, but when they actually put their sanction policy to the test, these proposed sanctions probably have a negative impact on "future GDP per capita", which is one of a perfectly reasonable set of metrics Futarchy Y has chosen. Despite the man on the street tending to agree that sanctions would be a just and moral cause of action Futarchy Y is forced into retreat because a priori metrics matter more than what the government and the public actually want to happen, and there's no way the market agrees that sanctions are going to help them achieve the given goal of growing GDP.
Smart people outwit crude algorithms in simple games like Go if they have an infinitude of possible outcomes. Now imagine that crude algorithm is calibrated by simpletons voting on parameters they don't really understand
Simple example:
Country X decides to do something dastardly against the interests of Futarchy Y. Confidence in the economic outlook wavers, as happens in any country where there's an anticipated reduction in trade and maybe even war. Country X, could have made a lot of money shorting "future GDP per capita" on the Futarchy prediction exchange prior to their dastardly act though.
It gets worse because not only is Country X able to directly profit from making the lives of Futarchy Y worse, but the futarchic system actually makes retaliation impossible. Much as the government of Futarchy Y talks tough, and would like to take action, like sanctions, but when they actually put their sanction policy to the test, these proposed sanctions probably have a negative impact on "future GDP per capita", which is one of a perfectly reasonable set of metrics Futarchy Y has chosen. Despite the man on the street tending to agree that sanctions would be a just and moral cause of action Futarchy Y is forced into retreat because a priori metrics matter more than what the government and the public actually want to happen, and there's no way the market agrees that sanctions are going to help them achieve the given goal of growing GDP.
Smart people outwit crude algorithms in simple games like Go if they have an infinitude of possible outcomes. Now imagine that crude algorithm is calibrated by simpletons voting on parameters they don't really understand
You seem to assume the incentives are always correctly
aligned, and agreed on concepts of "better" are
immutable. They're not.
> Better policy for them, perhaps, but not for everyone else.
That's precisely what the prediction market purports to solve.
That's precisely what the prediction market purports to solve.
That's the one thing this proposal gets right -- the returns to betting marginally better than everyone else are exponential, so they are mostly insensitive to initial conditions. In a world where everything is decided by cointoss, it's better to be born poor and lucky than rich and unlucky.
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Can you explain from first principles why "one vote per person" is a good way to efficiently produce law, given that most of us accept that it's not a good way to produce many other things (like food and automobiles)?
If everyone got a single vote on what model of automobile should be produced, and only the winning model was produced, surely we all agree that the resulting automobile would be much worse than the average automobile produced by the market. In this scenario, it's obvious that there would be mass voter apathy: the amount of time it takes to research automobile designs and manufacturers isn't worth it, because your vote is extremely unlikely to effect the automobile you receive. But when each person has to pay for their own automobile, it's absolutely worth you time to research automobiles, because you get exactly the automobile you purchase.
If everyone got a single vote on what model of automobile should be produced, and only the winning model was produced, surely we all agree that the resulting automobile would be much worse than the average automobile produced by the market. In this scenario, it's obvious that there would be mass voter apathy: the amount of time it takes to research automobile designs and manufacturers isn't worth it, because your vote is extremely unlikely to effect the automobile you receive. But when each person has to pay for their own automobile, it's absolutely worth you time to research automobiles, because you get exactly the automobile you purchase.
I think "one person one vote" is a first principle. It's a moral axiom that people then derive democratic practices from. It's not necessarily something you derive from other principles or facts. It's along the lines of "every life has equal value". People can disagree with those sorts of principles, but they're not logical derivations of universally accepted principles and facts.
I addressed that in this comment: https://news.ycombinator.com/item?id=8209696
Basically, I think that most people will not continue to make a moral argument if they are genuinely convinced that the results of that stance would be horrible for all (or most) people.
If you believed that "one vote per person" would lead to a society where every is much poorer than they would be under some other system, I suspect you would not continue to claim it is a moral axiom.
Basically, I think that most people will not continue to make a moral argument if they are genuinely convinced that the results of that stance would be horrible for all (or most) people.
If you believed that "one vote per person" would lead to a society where every is much poorer than they would be under some other system, I suspect you would not continue to claim it is a moral axiom.
Yes - particular moral axioms are by definition not accepted by everyone. That is the trick; convincing people to adjust/change their values (moral axioms) and then derive different beliefs/actions from them.
The reason that is a tough sell in this case is because it very quickly can come across as declaring a class of people as superior to another class of people. "One person one vote" might lead to certain negative side effects, but the side effects of an alternative can be much worse.
The reason that is a tough sell in this case is because it very quickly can come across as declaring a class of people as superior to another class of people. "One person one vote" might lead to certain negative side effects, but the side effects of an alternative can be much worse.
> That is the trick; convincing people to adjust/change their values (moral axioms) and then derive different beliefs/actions from them.
What I'm saying is that if you can make compelling economic arguments for why a different system would be better, most people will not stick to their "moral axioms" if they buy the arguments.
> "One person one vote" might lead to certain negative side effects, but the side effects of an alternative can be much worse.
That's an economic claim, and is precisely what I challenge.
What I'm saying is that if you can make compelling economic arguments for why a different system would be better, most people will not stick to their "moral axioms" if they buy the arguments.
> "One person one vote" might lead to certain negative side effects, but the side effects of an alternative can be much worse.
That's an economic claim, and is precisely what I challenge.
The rationale against voting on cars or food doesn't apply to all things. There is no voting system for what cars or food to produce... for good reason. Not everyone wants to eat the same food or drive the same car, and within certain limits (which are the subject of laws), what you eat and what you drive is not anyone else's business.
You need some sort of broad voting for public works projects and other issues of broad public concern, like how much pollution should be allowed into the environment from steady-state industrial processes, or how much tax money to spend regulating and engineering hedges against engineering disasters like Deepwater Horizon or Fukushima.
One person one vote may not be the universal best way to produce law, but it's the best way society has figured out how to run things that doesn't degenerate into dictatorships, or unjustified discrimination/disenfranchisement. It's true that certain people are better at determining proper policy, but once they get exclusive voting rights on policy, it turns into an oligarchy, a cabal, that too often seeks to increase its own wealth and power and sustain itself rather than serving the public interest.
You need some sort of broad voting for public works projects and other issues of broad public concern, like how much pollution should be allowed into the environment from steady-state industrial processes, or how much tax money to spend regulating and engineering hedges against engineering disasters like Deepwater Horizon or Fukushima.
One person one vote may not be the universal best way to produce law, but it's the best way society has figured out how to run things that doesn't degenerate into dictatorships, or unjustified discrimination/disenfranchisement. It's true that certain people are better at determining proper policy, but once they get exclusive voting rights on policy, it turns into an oligarchy, a cabal, that too often seeks to increase its own wealth and power and sustain itself rather than serving the public interest.
> There is no voting system for what cars or food to produce.
I was presenting the market for cars or food as essentially a "vote with your wallet" system. You don't literally vote, of course, but by choosing where to spend your money, you determine what product you end up, and also influence the producers.
> However, you need some sort of broad voting for public works projects and issues of broad public concern, like ...
That is an economic claim, and I would disagree. I think there are very plausible economic arguments that other ways of organizing society could solve these problems as well or better than the what we currently have.
I was presenting the market for cars or food as essentially a "vote with your wallet" system. You don't literally vote, of course, but by choosing where to spend your money, you determine what product you end up, and also influence the producers.
> However, you need some sort of broad voting for public works projects and issues of broad public concern, like ...
That is an economic claim, and I would disagree. I think there are very plausible economic arguments that other ways of organizing society could solve these problems as well or better than the what we currently have.
Do you have an example of such an alternative way of organizing society? An example that has been tested in a large society? It's easy to propose theoretical alternatives with no regard for psychological or sociological effects (which are complex and therefore difficult to predict in theory).
Changing culture, which is the means to change the psychological and sociological effects of different forms of governance (or different conditions, generally), is difficult. You can't legislate culture. Form of government A works in society B, therefore we can import A into the U.S. and get the benefits seen in society B even while Intel continues to turn out cpus and farmers in Iowa continue to grow corn?
In order to achieve what you want, you need not only a better form of government, you need a way to hack culture to get it to tolerate that form of government without significant shocks to perceived quality of life (A shock to perceived happiness in that sense is, I think, more likely to disrupt your plans for better political order than to anchor them).
Changing culture, which is the means to change the psychological and sociological effects of different forms of governance (or different conditions, generally), is difficult. You can't legislate culture. Form of government A works in society B, therefore we can import A into the U.S. and get the benefits seen in society B even while Intel continues to turn out cpus and farmers in Iowa continue to grow corn?
In order to achieve what you want, you need not only a better form of government, you need a way to hack culture to get it to tolerate that form of government without significant shocks to perceived quality of life (A shock to perceived happiness in that sense is, I think, more likely to disrupt your plans for better political order than to anchor them).
> Do you have an example of such an alternative way of organizing society? An example that has been tested in a large society?
There are examples of self-organization to various extents, although there is obviously no example of a society exactly like what I propose. Many parts of what we currently consider the standard role of government have been done without government by many societies. What is considered the "standard role of government" changes quickly (it would probably sound ridiculous 200 years ago to say that Western states would tax something like a third of national GDP). Private arbitration is already quite common, and government courts are widely recognized as slow, expensive, and unreliable. International trade by definition has no higher level central body governing it, and that constitutes a decent chunk of global GDP. Decentralized mechanics already govern nearly all everyday transactions which are not worth the cost and unreliability of using government arbitration (restaurants generally try to satisfy their customers not out of fear of prosecution or litigation).
> It's easy to propose theoretical alternatives with no regard for psychological or sociological effects (which are complex and therefore difficult to predict in theory).
In fact, the vast majority of my arguments revolve around psychological and sociological incentives. You're right that any significant change to society is difficult to assert with absolute confidence. But that alone doesn't mean that a given proposal is more like to be bad than good.
> In order to achieve what you want, you need not only a better form of government, you need a way to hack culture to get it to tolerate that form of government without significant shocks to perceived quality of life
I'm a proponent of gradualism, so while that's a valid criticism, I don't think it applies to me.
There are examples of self-organization to various extents, although there is obviously no example of a society exactly like what I propose. Many parts of what we currently consider the standard role of government have been done without government by many societies. What is considered the "standard role of government" changes quickly (it would probably sound ridiculous 200 years ago to say that Western states would tax something like a third of national GDP). Private arbitration is already quite common, and government courts are widely recognized as slow, expensive, and unreliable. International trade by definition has no higher level central body governing it, and that constitutes a decent chunk of global GDP. Decentralized mechanics already govern nearly all everyday transactions which are not worth the cost and unreliability of using government arbitration (restaurants generally try to satisfy their customers not out of fear of prosecution or litigation).
> It's easy to propose theoretical alternatives with no regard for psychological or sociological effects (which are complex and therefore difficult to predict in theory).
In fact, the vast majority of my arguments revolve around psychological and sociological incentives. You're right that any significant change to society is difficult to assert with absolute confidence. But that alone doesn't mean that a given proposal is more like to be bad than good.
> In order to achieve what you want, you need not only a better form of government, you need a way to hack culture to get it to tolerate that form of government without significant shocks to perceived quality of life
I'm a proponent of gradualism, so while that's a valid criticism, I don't think it applies to me.
#1: People should have some form of influence on their own governance.
#2: Any method of assigning relative degrees of influence is unacceptably vulnerable to a corruption by the advantaged party tantamount to a violation of #1.
Side note: Efficiency of law production is not a metric most people will consent to prioritizing above metrics like perceived justice.
#2: Any method of assigning relative degrees of influence is unacceptably vulnerable to a corruption by the advantaged party tantamount to a violation of #1.
Side note: Efficiency of law production is not a metric most people will consent to prioritizing above metrics like perceived justice.
What if, hypothetically, it were the case that switching from "one vote per person" to some new system would result in everyone being better off (by their own subjective notion of "better off," which can include things like how much justice they believe exists, how corrupt laws are, etc.)? Then wouldn't it make sense to argue in favor of this new system?
My point is that even though there are widely accepted moral arguments for why "one vote per person" is the best way to organize society, it really boils down to an economic argument about what the actual results of such a society will be. I suspect few people would support "one vote per person" on moral grounds if they believed that another system would result in a society where everyone is better off. Likewise, I suspect few libertarians, socialists, anarchists, etc. would continue to make moral arguments if they truly believed that their proposed society would end up the way their opponents believe it would end up.
> Side note: Efficiency of law production is not a metric most people will consent to prioritizing above metrics like perceived justice.
Economically efficient law is pretty difficult to argue against. I suspect the vast majority of people will support it if they understand the definition of economic efficiency. From Wikipedia:
"An economic system is said to be more efficient than another (in relative terms) if it can provide more goods and services for society without using more resources."
https://en.wikipedia.org/wiki/Economic_efficiency
My point is that even though there are widely accepted moral arguments for why "one vote per person" is the best way to organize society, it really boils down to an economic argument about what the actual results of such a society will be. I suspect few people would support "one vote per person" on moral grounds if they believed that another system would result in a society where everyone is better off. Likewise, I suspect few libertarians, socialists, anarchists, etc. would continue to make moral arguments if they truly believed that their proposed society would end up the way their opponents believe it would end up.
> Side note: Efficiency of law production is not a metric most people will consent to prioritizing above metrics like perceived justice.
Economically efficient law is pretty difficult to argue against. I suspect the vast majority of people will support it if they understand the definition of economic efficiency. From Wikipedia:
"An economic system is said to be more efficient than another (in relative terms) if it can provide more goods and services for society without using more resources."
https://en.wikipedia.org/wiki/Economic_efficiency
> > > Can you explain from first principles why "one vote per person" is a good way to efficiently produce law
> > Side note: Efficiency of law production is not a metric most people will consent to prioritizing above metrics like perceived justice.
> Economically efficient law is pretty difficult to argue against.
"Efficiently producing law" and "producing economically efficient law" are rather dissimilar concepts, in the same way that "efficiently producing automobiles" and "producing fuel efficient automobiles" are dissimilar concepts.
> > Side note: Efficiency of law production is not a metric most people will consent to prioritizing above metrics like perceived justice.
> Economically efficient law is pretty difficult to argue against.
"Efficiently producing law" and "producing economically efficient law" are rather dissimilar concepts, in the same way that "efficiently producing automobiles" and "producing fuel efficient automobiles" are dissimilar concepts.
> "Efficiently producing law" and "producing economically efficient law" are rather dissimilar concepts
Sorry, I didn't intend for you to infer that. I meant the same concept in both sentences. I am not talking about some more specific type of efficiency like fuel efficiency, which has nothing to do direct with the concept of economic efficiency.
Sorry, I didn't intend for you to infer that. I meant the same concept in both sentences. I am not talking about some more specific type of efficiency like fuel efficiency, which has nothing to do direct with the concept of economic efficiency.
> Sorry, I didn't intend for you to infer that. I meant the same concept in both sentences. I am not talking about some more specific type of efficiency like fuel efficiency, which has nothing to do direct with the concept of economic efficiency.
I think you misunderstand the problem; "Producing efficient X" and "Efficiently producing X" aren't the same thing. The first is about the efficiency of the process of producing something (how the inputs are used to produce the output), the other is about the qualities of the output. The problem isn't "economic efficiency" vs. "some more specific type of efficiency", its production efficiency (in whatever terms) vs. efficiency of the product (economic or otherwise.)
I think you misunderstand the problem; "Producing efficient X" and "Efficiently producing X" aren't the same thing. The first is about the efficiency of the process of producing something (how the inputs are used to produce the output), the other is about the qualities of the output. The problem isn't "economic efficiency" vs. "some more specific type of efficiency", its production efficiency (in whatever terms) vs. efficiency of the product (economic or otherwise.)
> "Producing efficient X" and "Efficiently producing X" aren't the same thing.
I understand your claim. I'm trying to avoid a semantic argument by making it clear what I meant. I'm not arguing about what the "true meaning" of those phrases are. Just know I was referring to economic efficiency both times.
https://en.wikipedia.org/wiki/Economic_efficiency
I understand your claim. I'm trying to avoid a semantic argument by making it clear what I meant. I'm not arguing about what the "true meaning" of those phrases are. Just know I was referring to economic efficiency both times.
https://en.wikipedia.org/wiki/Economic_efficiency
The market is not some entity that exists outside of human society, it's a product of that society. And "one person one vote" is a foundational principle of how we organize ourselves as a society in the first place. Demanding that someone make economic or legal arguments for it is a category error. It's the bedrock that law and economic life stand upon.
[deleted]
I addressed that in this comment: https://news.ycombinator.com/item?id=8209696
I don't think that "one vote per person" is so fundamental that many people would continue to advocate it if they truly believed that some other system would lead to a better life for everyone in the society.
I don't think that "one vote per person" is so fundamental that many people would continue to advocate it if they truly believed that some other system would lead to a better life for everyone in the society.
sure, but i think the reason no one has stopped advocating for it is that very few people believe that "some other system would lead to a better life for everyone in the society", especially seeing as many people count "having a voice in the structure of my society" as one of the very things that makes life good for them.
I agree. But that also means that it's not really a moral axiom, so the moral argument is insufficient.
Democracy need not be about declaring itself the most efficient way to pass the best laws. Even its strongest advocates would hesitate to fully endorse that. What democracy is, or at any rate what it's supposed to be, ideally, is a mechanism to act as a check on those in power. It's a way to formalize the power of mobs, and (hopefully) to channel it into something useful that doesn't involve burning down half the city when the ruling class goes too far. Namely, voting in a different government, which would still serve mainly the interests of the ruling class of course, but in an effort to keep its own power will make some concessions to the rest of us.
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Though I've advocated for more metrics-based accountability in the past and agree with the author on that level, I don't know that tying a profit incentive is necessarily a good thing. It encourages people to vote for which policy is more profitable, which may or may not equate to which policy is more effective. If the goal was, for example, to reduce crime rate, it would be more profitable for me to vote for the Sheriff who's slightly more likely to fail but simultaneously more likely to cook the books than the one who has a 50/50 shot of actually decreasing the crime rate.
What if the policy in question is a rather difficult problem where all solutions are equally likely to fail? Would that discourage everyone to vote on that policy except for those who are already wealthy enough to make a risky investment?
Stepping back further, this would likely discourage anyone who didn't have sufficient disposable income to vote, thus making policy more lopsided. If I lose my job, how do I vote on establishing/expanding a safety net when I have to worry about feeding my family? If I can't vote, does that effectively mean that welfare and similar programs will be voted out by those that have no use for it?
What if the policy in question is a rather difficult problem where all solutions are equally likely to fail? Would that discourage everyone to vote on that policy except for those who are already wealthy enough to make a risky investment?
Stepping back further, this would likely discourage anyone who didn't have sufficient disposable income to vote, thus making policy more lopsided. If I lose my job, how do I vote on establishing/expanding a safety net when I have to worry about feeding my family? If I can't vote, does that effectively mean that welfare and similar programs will be voted out by those that have no use for it?
This all just points to the importance of choosing a good metric. The article’s example of GDP as a metric was just an example – later in the article, the author points out that a few ways in which that metric would need to be patched.
I think the proper response to wanting to vote for a sheriff who would cook the books is to increase the penalty for sheriffs who are caught cooking the books, since their actions would incentivise others more than they do now. Hopefully then, even a more crooked sheriff would recognize that it is not in his interest to go to jail just so that the people who voted him in with can make more money.
To help those who are on welfare, perhaps the metric needs to additionally include a criterion such as average happiness of everyone, including those on welfare, as rated by a periodic survey.
I think the proper response to wanting to vote for a sheriff who would cook the books is to increase the penalty for sheriffs who are caught cooking the books, since their actions would incentivise others more than they do now. Hopefully then, even a more crooked sheriff would recognize that it is not in his interest to go to jail just so that the people who voted him in with can make more money.
To help those who are on welfare, perhaps the metric needs to additionally include a criterion such as average happiness of everyone, including those on welfare, as rated by a periodic survey.
The problem of selecting a good measurable metric is not solvable.
Markets only solve the information problem, they don't address the decision problem (given unlimited knowledge of the present, how do we optimize the future? -- an intractable problem) or the measurement problem (were the decisions we made in the past good or bad? What was the GDP in 2011? -- a very hard problem).
Applying markets to problems other than information problems won't work. Using markets to "deci[de] on a political party every few months and that political party makes decisions" isn't bad (just) because it's a one-party state, but because nobody--not even new Soviet man or Madison's government of angels--is actually competent to make the decisions that would be needed to make central planning work. Democratic or Plutocratic or Market-inspired or AI-based central planning all don't work because the problem is central planning, not the method of choosing the planners.
Applying markets to problems other than information problems won't work. Using markets to "deci[de] on a political party every few months and that political party makes decisions" isn't bad (just) because it's a one-party state, but because nobody--not even new Soviet man or Madison's government of angels--is actually competent to make the decisions that would be needed to make central planning work. Democratic or Plutocratic or Market-inspired or AI-based central planning all don't work because the problem is central planning, not the method of choosing the planners.
there seems a fundamental incongruence between a market based decision mechanism and a singular fiat decision. prediction markets are valuable because of their ability to absorb complex and dynamic information. while they point to a consensus it is a fleeting one by definition.
for theoretical examples the 2 presented are especially awkward and seem fated to trip over themselves not because of the mystic beauty of self reference but rather because they are the wrong tools for the job.
perhaps to start thinking this way its better to remove legacy institutions and things like government bail outs and ceo pay as a priori conditions.
for theoretical examples the 2 presented are especially awkward and seem fated to trip over themselves not because of the mystic beauty of self reference but rather because they are the wrong tools for the job.
perhaps to start thinking this way its better to remove legacy institutions and things like government bail outs and ceo pay as a priori conditions.
Agreed, futarchy seems clever but there seems to be too many reasons why you'd never reap the theoretical benefits in practice.
This idea is horrible since it is plutocratic and elitist. It encourages the lives of affluent people living in the finance sector/stock traders but empowers nobody else. It punishes those who don't participate in the stock market, fail to correctly predict trends. Remember the damage caused by the finance industry in recent years: the 2007 depression, the bursting of the housing market, as well as the initiation of austerity policies around the world. We should be concerned with eliminating the finance sector's control on society - not increasing it.
I actually really like the idea of Futarchy for corporates because it gives investors a way to invest in a change in the company, rather than just the company in general.
For example: There are plenty of people who would love to invest in the Microsoft Surface, but don't care at all about Microsoft Office or Microsoft Windows. Why would I want to package all of those together if I don't have to?
For example: There are plenty of people who would love to invest in the Microsoft Surface, but don't care at all about Microsoft Office or Microsoft Windows. Why would I want to package all of those together if I don't have to?
What's to keep someone from going short on a proposal and just going from house to house wrecking mailboxes with baseball bats?
The incentive that already exists – the law. A single person couldn’t do much damage on their own to affect a global metric like GDP much, and they would probably not consider it worth it to have made a little bit of money if they have to spend time in jail because of it.
I thought for sure futarchy had to have something to do with futa as a governmental system...
How do you pronounce "futarchy?"
The introductory paper on futarchy (http://hanson.gmu.edu/futarchy.pdf) says ‘For no particular reason, I’ve named this alternative “futarchy.”’ That seems to indicate that “fut” isn’t any kind of standard prefix with a known pronunciation. So the way I naturally read the word is “FOO-tar-ki”.
Somebody CC Bill Belichick - I'm sure he can get this thing in place for a fourth down play by the post season.
The irony of proposals to reform the whole stakeholders-periodically-approve-an-all-powerful-executive model, on the assumption that markets make for better decisions than individuals with great power and limited accountability, is that markets consistently don't penalise large, successful firms for being almost-invariably run by a bunch of powerful executives whose power is checked only by the occasional AGM.