Libertarian Solutions to Social Problems
A book review of “Radical Markets,” by Eric A. Posner and E. Glen Weyl
This book — with a quote on the back by crypto-celebrity Vitalik Buterin — is having its cultural moment, quickly making the rounds in libertarian-leaning circles (Silicon Valley, blockchain, etc.).
In reading this book, I was initially skeptical of the authors’ viewpoints, as they struck me as regressively conservative in some cases. But in listening to an Epicenter podcast with Weyl, it is clear that he is both very critical of the wealth inequality of the day, as well as the ability of the blockchain space, as currently configured, to address these issues.
More recently, Weyl has published a paper Zoë Hitzig and Buterin furthering the development of some of these lines of thinking—Liberal Radicalism.
Summary
The book describes five political and economic frameworks, which are each a subset of what the authors self-define as “radical markets:”
I. Cost (Harberger Tax): all property has a publicly visible self-assessed tax. Anyone can purchase the underlying asset at any time at the inferred price.
Are there any examples of such a structure being deployed in the wild, and what have been the results? The one widely-practiced implementation of cost that I’m familiar with is with public companies and private equity. In a publicly-held company, fiduciaries are often obligated to sell a company to the highest bidder when there is an offer to take the company private. Leveraged buy-outs and hostile takeovers are common in this space. The basic strategy is to put all revenues into debt service, and liquidate aspects of the company that contribute to its long-term viability, as well as the social and environmental wellbeing of its stakeholders. This results in significant short-term increase in profitability, but can often compromise the company (or society) in the long-term.
Another challenge here is that such this structure is at odds with an understanding that humans can be in relationship with place. Christopher Alexander in A Pattern Language, goes as far as to say that ownership (and never tenancy) is the only ethical form of residence, as it encourages a sense of equity and stewardship in relation to a place. I’m immediately reminded of Colonialism and the seizure of land from indigenous peoples the world over, backed by superior financial capital and a paradigm that values land through economic utility. Although there are ways that people lose their property already (by not paying taxes, or through illegal behavior), a cost doesn’t seem compatible with a healthy and responsible relationship with place.
II. Quadratic Voting: votes can be stockpiled and deployed on issues deemed priorities by the voter, but with an inverse logarithmic weighting — one credit is worth one vote, four credits are worth two votes, nine credits are worth three votes, etc.
The authors of this book have experience with this system, as they founded a company — Collective Decision Engines — based on this technology.
The basic idea capitalizes on the failure of voting systems without built-in scarcity, such as the five-star rating system, where the mean tends towards four (instead of three), and there are a surprising number of ratings at both ends of the spectrum. A scarcity-based voting system requires participants to carefully prioritize issues, and only vote on a small percentage of issues that they care most about.
One of the challenges that I see with deploying such a system in the real world surrounds the impossibility of accurately predicting when significant political questions will arise in the future. Quadratic voting is driven by budgeting, and it seems almost impossible to determine years in advance when the next Bernie or Trump will be coming up for election. If anything, it seems quadratic voting would drive voter participation down (which is already alarmingly low), as there would now be scarcity.
Although being quadratic helps to neutralize this exploit, given that most eligible voters in the US don’t vote, there could be hacks related to get-out-the-vote techniques that target older voters with decades of unspent votes piled up…
Personally, I find quadratic voting the most promising framework shared in this book, and am interested in learning more about how and where it is being deployed in the world.
III. Immigrant Equity: citizens have the right to literally invest in immigrants, by sponsoring their time in the new country in exchange for a percentage of their income. The inspiration behind this mechanism is to encourage nationalists to become more cosmopolitan by sharing in the yields of open borders, all the while opening labor markets and reducing global wealth inequality. Although the ends sound very desirable, the means sound dystopian, akin to sharecropping.
IV. Shareholders as Owners: shareholders simultaneously are too concentrated across sectors, but not concentrated enough in individual companies. I had trouble following this section of the book. I don’t agree that the purpose of corporations are as profit engines (and it seems that the authors had some questions along these lines as well). I also don’t think owning shares should be conflated with true ownership; corporate law scholar Lynn Stout does an excellent job debunking this concept in her book, The Shareholder Value Myth.
V. Payment for Personal Data: we already treat people as products — why not start financially compensating them for their value? Just like the way that fossil fuel companies don’t have to pay for climate change (yet), big tech companies don’t pay for their most valuable resource — all of the free personal data and labor that their products (users) supply them with. But because of this, these companies often need to take circuitous and inefficient routes in coming to their most valuable data. Why not just start paying people for what they want, so that they could better communicate their needs? Although this is a novel solution to this problem, a more comprehensive solution would be for services like Google and Facebook to discontinue their ad businesses, switch to a zero-knowledge paid or gift-based revenue model, and for there to be a Universal Basic Income to deal with technology-driven unemployment.
Conclusion
In summary, I think that there are a lot of interesting ideas in this book. I would absolutely agree with the authors that these ideas are not ready for prime time, and I’d be interested in seeing ways that they’re put into practice and experimentation.
