You might want to slow down and untangle some things if you want other people to be able to understand what you’re proposing. To me, your idea seems similar to:
Robin Hanson’s idea of “futarchy”—a conditional prediction market where investors analyze whether a given proposal will improve or harm the overall utility function that voters and representatives determine. If investors think a proposal will help, it is adopted. Futarchy has the advantage of working by itself, without needing a giant bureaucracy to constantly run (potentially biased/corrupt) studies on the impact of interventions like fixing stoplights.
Eliezer Yudkowsky’s idea of a kickstarter-like mechanism to coordinate social change in order to escape inadequate equilibria. (To my knowledge, such an experiment hasn’t really been tried, except in things like the Free State Project assurance contract.)
The general idea that it would be nice to tax negative externalities (called a “pigovian tax”), and other tax-efficiency ideas like the fact that it would seemingly be nice to tax land value instead of property value or wealth instead of income (although wealth taxes, so appealing in theory, run into notorious difficulties in practice).
The concept that regulations should be adopted if they are able to pass a cost-benefit test and should not be adopted if they can’t. Cost-benefit analyses are naturally doomed to be incomplete and uncertain for the same reason that all utilitarian analyses are hard, but they still seem like a big step in the right direction to me. This idea, at least, has progressed far enough to get partially implemented and become the source of partisan political disputes. Note that this kind of bickering and hypocrisy when deciding what gets included in a cost-benefit calculation is exactly what your proposal would also have to deal with.
The idea that we can use mechanism design to create systems where private actors (rather than government officials) identify the best proposals that benefit the common welfare, and those proposals are then paid for by a tax levied on all. This is the core vision of the innovative “quadratic funding” mechanism that is being used by gitcoin to support development of the ethereum cryptocurrency ecosystem.
I think it would help if you clarified how your idea relates to some of these. One of the most unique ideas of your scheme is trying to compensate the originators of a valuable social proposal by awarding them a share of the broad (but otherwise diffuse) societal benefits benefits their idea produced. Is there some way that we could get that benefit using some clever kind of mechanism design, instead of relying on a bureaucracy to figure out how to dish out the prizes? (Even if not, having a stronger government focus on giving out retroactive prizes for people who produced socially-valuable innovations would probably be a great idea! In general it would be amazing to see a stronger focus on aligning incentives and internalizing externalities throughout government… the question I suppose is how we get from here to there.)
Finally, I am definitely NOT saying “this has all been done before, nothing new here”. Rather I think all of the ideas I linked to are very promising, and indeed I find it a little depressing to me that there is such a plethora of good ideas for governance reform, and yet they have so rarely been tested out in the real world. I strongly share your hope that in the coming years, there will be more opportunities to experiment with these reforms on a small scale and test them out for the first time. In the meantime, maybe we can get involved in helping develop them further and helping advocate for their adoption!
Thank you for your detailed response! I am glad when we explore the design-space; to find a decent idea, we must find the patterns amongst many.
In regards to each specific option you mentioned:
futarchy hopes to create a prediction-market, and reward those who make good predictions, yet it does nothing to reward those who invest in the implementation of beneficial projects, the key difference.
Eliezer is looking for a way to coordinate crowd actions; again, the people who invest time and resources are not rewarded directly and materially for funding those benefits.
pigovian taxes, for negative externalities, are included in my line of reasoning, yet they miss the key point again: material reward for those who invest in beneficial projects.
partisan cost-benefit discussions are commonly among elected officials prior to knowing the truth; I contrast that with verification that policy performed as expected, carried-out by apolitical experts randomly assigned, by metrics agreed upon in legislation, in line with the concepts of principled negotiation (see Bill Ury’s classic “Getting to Yes”). I have no expectation that a legislature should ever determine the worth of each proposal—they’d never finish! And I would be glad to pass a ban on political parties at a Constitutional Convention, though I know that won’t happen. Instead, I expect we will need to start from scratch, in which case a foundation of apolitical metrics is better than none.
quadratic funding is nice, to balance the interests of the majority, yet again it does nothing to directly and materially reward those who invest in the solutions. A hope that the coin functions better, maintaining its value or increasing in value, is only a secondary reward, and that reward is focused in the hands of the largest holders.
So, the key difference I have with all of those mentioned is that I propose an incentive for regular, self-interested investors to pay for benefits. That certainly would not happen in each other method. (And yes, those taxes and dividends would be retroactive, similar to the prizes for social good you mentioned.) Without material rewards for the investors, we will only pull a few tens of billions in philanthropic dollars toward benefits every year, while my goal is to internalize externalities in totality or close to it.
This is a critical distinction, because there are a few hundred trillion dollars sloshing around in businesses and real estate, NOT because the investors like capitalism—rather, they like a high rate of return! :0 Due to the efficiencies available in the space of positive externalities, we can give investors that rate of return, while keeping the lion’s share of the benefits in the public. Investors would look at their distribution of assets and say “oh, I was only holding this real estate as a HEDGE against inflation, I’d rather put my cash into a diversified portfolio of public benefits, because they earn an annual return of greater than 12%!” That’s how we can get tens of trillions thrown toward beneficent work. Just give them enough cash back that they are happy. (...and, that shift in assets would lower the price of urban real estate, once they clear out of it!)
[[It’s also worth noting that the article you gave to dismiss wealth taxes only showed that “European countries had all kinds of weird exemptions, while they didn’t exclude basics like your farm or small business, so some people suffered… they also let the millionaires leave—which they did.” Elizabeth Warren’s wealth tax plan, in contrast, is shown in that same article to address those concerns. Compared to the disincentives from sales tax and income tax, I’d prefer a progressive-rate wealth tax only, with a hefty cut taken from those who leave citizenship behind.]]
I see some form of governance as essential to enforce taxation; and that taxation is the only reliable means to gather the broadly-distributed value of most positive externalities, in order to reward investors. Without that reward-structure, we’re leaving tens of trillions of dollars on the table, when we could be spending that on public benefit. So, what might that governance look like? A smart contract, binding sea-steaders into a loose federation, perhaps? I look forward to any other ideas that come up! It should seek to internalize as much as possible, ideally leaving no externality untouched, so that pricing is an accurate representation of public value, and allocation is efficient. Then, I wouldn’t be so worried about markets ruining planets. :)
You might want to slow down and untangle some things if you want other people to be able to understand what you’re proposing. To me, your idea seems similar to:
Robin Hanson’s idea of “futarchy”—a conditional prediction market where investors analyze whether a given proposal will improve or harm the overall utility function that voters and representatives determine. If investors think a proposal will help, it is adopted. Futarchy has the advantage of working by itself, without needing a giant bureaucracy to constantly run (potentially biased/corrupt) studies on the impact of interventions like fixing stoplights.
Eliezer Yudkowsky’s idea of a kickstarter-like mechanism to coordinate social change in order to escape inadequate equilibria. (To my knowledge, such an experiment hasn’t really been tried, except in things like the Free State Project assurance contract.)
The general idea that it would be nice to tax negative externalities (called a “pigovian tax”), and other tax-efficiency ideas like the fact that it would seemingly be nice to tax land value instead of property value or wealth instead of income (although wealth taxes, so appealing in theory, run into notorious difficulties in practice).
The concept that regulations should be adopted if they are able to pass a cost-benefit test and should not be adopted if they can’t. Cost-benefit analyses are naturally doomed to be incomplete and uncertain for the same reason that all utilitarian analyses are hard, but they still seem like a big step in the right direction to me. This idea, at least, has progressed far enough to get partially implemented and become the source of partisan political disputes. Note that this kind of bickering and hypocrisy when deciding what gets included in a cost-benefit calculation is exactly what your proposal would also have to deal with.
The idea that we can use mechanism design to create systems where private actors (rather than government officials) identify the best proposals that benefit the common welfare, and those proposals are then paid for by a tax levied on all. This is the core vision of the innovative “quadratic funding” mechanism that is being used by gitcoin to support development of the ethereum cryptocurrency ecosystem.
I think it would help if you clarified how your idea relates to some of these. One of the most unique ideas of your scheme is trying to compensate the originators of a valuable social proposal by awarding them a share of the broad (but otherwise diffuse) societal benefits benefits their idea produced. Is there some way that we could get that benefit using some clever kind of mechanism design, instead of relying on a bureaucracy to figure out how to dish out the prizes? (Even if not, having a stronger government focus on giving out retroactive prizes for people who produced socially-valuable innovations would probably be a great idea! In general it would be amazing to see a stronger focus on aligning incentives and internalizing externalities throughout government… the question I suppose is how we get from here to there.)
Finally, I am definitely NOT saying “this has all been done before, nothing new here”. Rather I think all of the ideas I linked to are very promising, and indeed I find it a little depressing to me that there is such a plethora of good ideas for governance reform, and yet they have so rarely been tested out in the real world. I strongly share your hope that in the coming years, there will be more opportunities to experiment with these reforms on a small scale and test them out for the first time. In the meantime, maybe we can get involved in helping develop them further and helping advocate for their adoption!
Thank you for your detailed response! I am glad when we explore the design-space; to find a decent idea, we must find the patterns amongst many.
In regards to each specific option you mentioned:
futarchy hopes to create a prediction-market, and reward those who make good predictions, yet it does nothing to reward those who invest in the implementation of beneficial projects, the key difference.
Eliezer is looking for a way to coordinate crowd actions; again, the people who invest time and resources are not rewarded directly and materially for funding those benefits.
pigovian taxes, for negative externalities, are included in my line of reasoning, yet they miss the key point again: material reward for those who invest in beneficial projects.
partisan cost-benefit discussions are commonly among elected officials prior to knowing the truth; I contrast that with verification that policy performed as expected, carried-out by apolitical experts randomly assigned, by metrics agreed upon in legislation, in line with the concepts of principled negotiation (see Bill Ury’s classic “Getting to Yes”). I have no expectation that a legislature should ever determine the worth of each proposal—they’d never finish! And I would be glad to pass a ban on political parties at a Constitutional Convention, though I know that won’t happen. Instead, I expect we will need to start from scratch, in which case a foundation of apolitical metrics is better than none.
quadratic funding is nice, to balance the interests of the majority, yet again it does nothing to directly and materially reward those who invest in the solutions. A hope that the coin functions better, maintaining its value or increasing in value, is only a secondary reward, and that reward is focused in the hands of the largest holders.
So, the key difference I have with all of those mentioned is that I propose an incentive for regular, self-interested investors to pay for benefits. That certainly would not happen in each other method. (And yes, those taxes and dividends would be retroactive, similar to the prizes for social good you mentioned.) Without material rewards for the investors, we will only pull a few tens of billions in philanthropic dollars toward benefits every year, while my goal is to internalize externalities in totality or close to it.
This is a critical distinction, because there are a few hundred trillion dollars sloshing around in businesses and real estate, NOT because the investors like capitalism—rather, they like a high rate of return! :0 Due to the efficiencies available in the space of positive externalities, we can give investors that rate of return, while keeping the lion’s share of the benefits in the public. Investors would look at their distribution of assets and say “oh, I was only holding this real estate as a HEDGE against inflation, I’d rather put my cash into a diversified portfolio of public benefits, because they earn an annual return of greater than 12%!” That’s how we can get tens of trillions thrown toward beneficent work. Just give them enough cash back that they are happy. (...and, that shift in assets would lower the price of urban real estate, once they clear out of it!)
[[It’s also worth noting that the article you gave to dismiss wealth taxes only showed that “European countries had all kinds of weird exemptions, while they didn’t exclude basics like your farm or small business, so some people suffered… they also let the millionaires leave—which they did.” Elizabeth Warren’s wealth tax plan, in contrast, is shown in that same article to address those concerns. Compared to the disincentives from sales tax and income tax, I’d prefer a progressive-rate wealth tax only, with a hefty cut taken from those who leave citizenship behind.]]
I see some form of governance as essential to enforce taxation; and that taxation is the only reliable means to gather the broadly-distributed value of most positive externalities, in order to reward investors. Without that reward-structure, we’re leaving tens of trillions of dollars on the table, when we could be spending that on public benefit. So, what might that governance look like? A smart contract, binding sea-steaders into a loose federation, perhaps? I look forward to any other ideas that come up! It should seek to internalize as much as possible, ideally leaving no externality untouched, so that pricing is an accurate representation of public value, and allocation is efficient. Then, I wouldn’t be so worried about markets ruining planets. :)