Futarchy and its discontents

Chris Masse might well call me a Hanson fanboy for it, but I am a fan of Hanson's Futarchy idea. I like it so much, I usually lecture on it in the closing week of my public choice class.

The mechanism, in a nutshell:

1. We vote democratically on some aggregate measure of social welfare, which Hanson calls GDP+. Take GDP and whatever else you think it part of "good stuff", assign all components a weight by democratic voting, and voila! You have an aggregate measure of whatever we're trying to maximize. Scale it to some sensible interval.
2. Open sets of futures markets that pay out based on the value of GDP+ at future dates stretching far into the future.
3. Open sets of policy markets that pay out based on whether particular policies are implemented. Anyone can propose a policy, though there'd be a charge for proposing a policy as setting up the sets of markets isn't free.
4. Open sets of contingent contracts for future prices on GDP+ conditional on the policy being implemented or not being implemented.
5. If a particular policy improves GDP+, as measured by price differences across enough of the futures markets for a long enough period of time, then that policy is implemented.

Hanson poses and answers a long series of objections in the original paper (linked to here), including the potential for market manipulation.

My main worry about futarchy has been the definition of GDP+. Right now, politicians can dissemble relatively easily about the amount of weight they put on various objectives. Many of these objectives are important political symbols to a lot of folks, but they only really want their symbols to be shown respect and attention; they pay little attention to whether effective policies are actually implemented. So protectionists and trade unionists can be bought off with a "Buy New Zealand Made" advertising campaign that's utterly ineffectual in doing anything but showing those groups that the government cares about them and values their views. If politicians don't want to completely kill the economy (and thereby reduce tax revenues), they're well advised to offer up cheap symbolic policies in lieu of growth-killers.

By contrast, GDP+ is completely transparent. There's no reason to expect that the same biases that plague regular voting wouldn't also plague voting on constitutional matters like the definition of GDP+. But it could well be worse because politicians would have far less slack to work around silly definitions of GDP+ than they have to work around silly pandering election promises.

That worry aside, I like Futarchy and I love the idea of contingent markets on the effects of policies as a useful input for policy evaluation.

Paul Hewitt is less keen. He winds up, in the comments, asking Robin three questions.

First and second are whether it's possible for long term markets to be accurate and whether traders would be able to understand GDP+, given that economists have a hard time forecasting simple GDP for medium horizons. I'll expect Robin to answer that so long as whatever inaccuracies there are in such forecasting are constant across the sets of markets for any period of time, then the price differences across such markets are going to be meaningful, and it's the price differences across markets that really matter. Suppose that we have a market on what the value of GDP will be in 20 years time. I have no clue what that number will be; at best I'd take the current value and assume a 2% real growth rate. But that doesn't matter. If there's one market that pays out on GDP in 20 years conditional on no change in policy and the other pays out conditional on adopting a $50/hr minimum wage, I'd short the latter if its price were high relative to the former.

Third, he asks whether the high market listing fee isn't anti-democratic. I'll here expect Robin to reply "relative to what?" I have a very very hard time imagining that it would ever be more expensive to get a policy listed on Hanson markets than it is under the current system to get a policy considered by Parliament.

I'll look forward to seeing Hanson's debate with Moldbug later this month on Futarchy...I trust there'll eventually be a webcast....

Update: Hanson discusses here.

Links posts

I've pretty much abandoned the "assorted links" posts now that Google's made it very very easy to note other pieces as part of a shared items feed. If there's any strong demand, I can bring those posts back, but I'd otherwise recommend the shared items feed as a running tally of other things that are fun enough to read but about which I've little I currently want to say.

A whistle, not a hack [updated]

The Hadley files. Or, so concludes a Saskatchewan UNIX network engineer.

HT: NotPC

Update: A commenter at Catallaxy notes substantial discussion of the quality of the above-linked analysis, here. I'd still pay $0.80 for a contract paying off at a dollar if the Hadley files wind up being revealed as the work of a whistleblower (or alternatively are shown not to be the work of a hacker).

Media watch

Radley Balko fisks the Washington Post's coverage of the DC cop who pulled a gun on folks having a snowball fight. Long story short: the Post was more than happy to reprint without question the Assistant Police Chief's assertions that the gun was never drawn despite one of their reporters having been on the scene at the fight and despite youtube video clearly showing the cop having pulled his gun. Bloggers and the City Paper get it right; Washington Post fails.

For all the "and then the adults took over" anti-new media sneer in Fisher's post (and hey, Fisher did write all of this in a blog post—so maybe he has a point!), the link for his "on the blogs" condescension actually goes the City Paper, which got the story right from the outset. The City Paper called Newsham, too. But instead of running with Newsham's denials as fact, that paper's reporters also viewed the video evidence posted around the web and talked to eyewitnesses—including the Post's own staffer, whom Zapotosky ignored.

Instead of turning his nose up at new media and social networking, Fisher should be asking himself whether, if it weren't for Twitter, YouTube, blogs, and alternative weeklies like the City Paper, the Post would have ever gotten this story right. Or whether the Post would have eventually given credence to Baylor's accusers had this happened not on a busy U-Street intersection teeming with wired gentrifiers, but in D.C.'s poorer, blacker Southeast quadrant, where confrontations with the police are more common yet less covered, and where corroborating video would be less likely. More to the point, if what Zapotosky did was "real journalism," how many other police misconduct stories might the Post have gotten wrong all this time because it merely deferred to MPDC flacks like Newsham?

Maersk Navy

Maersk has hired a warship and some soldiers to help protect its shipping assets from Somali pirates; other shippers shipping lines may soon do the same.

I had expected that the insurance companies (shipping insurance is a rather concentrated industry) would eventually start doing this; big shippers shipping lines doing it instead isn't particularly surprising though. I'm not surprised that it took a while since piracy initiation for private solutions to start coming through: there was always a decent chance that the shippers shipping lines could offload the costs on taxpayers by convincing governments to send more naval vessels there.

If piracy gets bad enough, I'd still expect the solution to wind up being protected convoys, with protection covered by insurance companies charging a premium to client ships travelling outside of convoys (or refusing them coverage altogether). Unless organizing convoys is more logistically costly than I'm guessing, of course.

HT: Jeet Sheth

Idiocracy: history, not prophesy [updated, disappointedly]

Update: Original post below. I was too credulous. Ryan (comments below) points to contrary findings; the Discover piece also now is updated to include a link to that piece as well. Hawks there points to his earlier debunking. The latter link is the money one. Sigh.

Discover points to huge-brained early hominids, now extinct, whose cranial capacity suggests an average IQ around the 150 mark.

Might the very large Boskop skull be an aberration? Might it have been caused by hydrocephalus or some other disease? These questions were quickly preempted by new discoveries of more of these skulls.

As if the Boskop story were not already strange enough, the accumulation of additional remains revealed another bizarre feature: These people had small, childlike faces. Physical anthropologists use the term pedomorphosis to describe the retention of juvenile features into adulthood. This phenomenon is sometimes used to explain rapid evolutionary changes. For example, certain amphibians retain fishlike gills even when fully mature and past their water-inhabiting period. Humans are said by some to be pedomorphic compared with other primates.Our facial structure bears some resemblance to that of an immature ape. Boskop’s appearance may be described in terms of this trait. A typical current European adult, for instance, has a face that takes up roughly one-third of his overall cranium size. Boskop has a face that takes up only about one-fifth of his cranium size, closer to the proportions of a child. Examination of individual bones confirmed that the nose, cheeks, and jaw were all childlike.

The combination of a large cranium and immature face would look decidedly unusual to modern eyes, but not entirely unfamiliar. Such faces peer out from the covers of countless science fiction books and are often attached to “alien abductors” in movies. The naturalist Loren Eiseley made exactly this point in a lyrical and chilling passage from his popular book, The Immense Journey, describing a Boskop fossil:

“There’s just one thing we haven’t quite dared to mention. It’s this, and you won’t believe it. It’s all happened already. Back there in the past, ten thousand years ago. The man of the future, with the big brain, the small teeth. He lived in Africa. His brain was bigger than your brain. His face was straight and small, almost a child’s face.”

Boskops, then, were much talked and written about, by many of the most prominent figures in the fields of paleontology and anthropology.

Yet today, although Neanderthals and Homo erectus are widely known, Boskops are almost entirely forgotten. Some of our ancestors are clearly inferior to us, with smaller brains and apelike countenances. They’re easy to make fun of and easy to accept as our precursors. In contrast, the very fact of an ancient ancestor like Boskop, who appears un-apelike and in fact in most ways seems to have had characteristics superior to ours, was destined never to be popular.

Forget cloning dinosaurs. Bring these guys back. Do it now.

Awards

The Bayesian Heresy lists Offsetting as one of the top "New Zealand, Australian and Irish" blogs of the year, while the Church of Rationality says my sweatshops post is the top blog post of the year, just edging out Tabarrok at Marginal Revolution's "The Inheritance of Education".

Both bloggers are clearly very perceptive and discerning judges of such things.