
On Radical Markets - pepys
https://vitalik.ca/general/2018/04/20/radical_markets.html
======
CptFribble
Wouldn't the self-assessed tax lead to unfair competitive practices? Imagine a
small bookstore opening in the same town as a Barnes and Noble. What if
there's no tax level that the small store can afford that prevents a mega-corp
like B&N from buying out their property?

Imagine you live in a neighborhood with deep community or family ties. Someone
down the street wins the lottery/makes an 8-figure exit and wants to buy out
the block for a mega mansion. Can tax rates be low enough for you to raise
your own valuation to "defend" your middle class home against vast wealth?
What does that do to local government revenues?

The very rich regularly spend $15m or more on a home. If Jeff Bezos came by my
house and decided he liked the view, I would have to start paying $300k in
taxes or move (if 2% tax). I get that making $15m for my house would make me
rich, but this is our first home as a family and all our memories are here. I
shouldn't be forced to choose like that - protection from arbitrarily being
forced out of my home is one of the main reasons to own a home in the first
place.

~~~
dpc_pw
> What if there's no tax level that the small store can afford that prevents a
> mega-corp like B&N from buying out their property?

Be bookstore owner. Set the value to be twice as much as comparable neighbor
property. Get bought by B&N. Buy property next to you, move your books, pocket
the difference.

> I get that making $15m for my house would make me rich, but this is our
> first home as a family and all our memories are here.

Price it accordingly. :)

Yes, the whole idea is that the tax is much lower (1% maybe) than the value of
the land.

Also, some regulations might be added, that eg. a person who got forcefully
bought-out, has a year or two to move out, just to make it less convenient to
use it "aggressively", while allowing wise long-term investments.

~~~
frgtpsswrdlame
>Price it accordingly. :)

I don't see this as very helpful. The above poster views their home as
something to protect _from_ the market. It is a safehaven for family and
friends and community connections, it is something that holds all the most
important things in life and so it is above market mechanisms to the extent
possible. Seeing this and purposefully advocating a system which forces them
to put an actual price on their family memories supposes that there should be
zero aspects of our life which are safe from market mechanisms. That seems
like an impoverished way of looking at life.

------
JumpCrisscross
> _Consider a system where property owners themselves specify what the value
> of their property is, and pay a tax rate of, say, 2% of that value per year.
> But here is the twist: whatever value they specify for their property, they
> have to be willing to sell it to anyone at that price_

Valuing an asset takes work. The process consumes resources. There is a reason
we have brokers for assets where one needs someone standing ready to auction.
Making this proposal belies a fundamental misunderstanding of the history of
markets.

~~~
glifchits
Vitalik acknowledges your point:

"... people are not experts at property valuation, and would have to spend a
significant amount of time and mental effort figuring out what self-assessed
value to put for their house, and they would complain much more if they
accidentally put a value that’s too low and suddenly find that their house is
gone."

The solution: users would choose an AI to generate real time valuations.

In the property/personal home context, I think this is a bad idea, because if
the AI gets it wrong, and you're forced to sell your house, that is bad.
However, this idea could work very well in other types of property markets
(this was all discussed in the article).

~~~
bildung
* > The solution: users would choose an AI to generate real time valuations.*

Sadly this isn't a solution, it just adds another layer of complexity to the
decision making process. AI isn't magically unbiased, there's a multitude of
ways for human bias/ particular interests to enter the model, from feature
selection to model layout up to interpretation of the results.

So now people have to be _both_ experts at assessing housing and neighborhood
values _and_ AI to make an informed decision.

That's the big problem of market-based social designs: There's always the
fundamental asymmetry between a professional, better-equipped actor (a
corporation specialized in that particular market, or a rich person like the
bezos example, who can outsource that to employees) and a normal person.

Regulation, society's solution to that problem, tries to level the field:
People knowledgable in the problem domain think about possible negative
externalities and risks to citizens, and implemenent barriers for abuse.

~~~
glifchits
Normally I would agree with you completely, indeed AI is (very) far from
perfect. However, I think we're hung up on the home property example. As
Vitalik suggests, this proposal works a lot better in situations where the
underlying property is more fungible, and the participants in the market are
more or less equal. The property example I like from the article is radio
spectrum licenses.

I'd also add that using an AI also doesn't necessarily mean something opaque.
A hand-made decision tree would be preferable to a neural net, for example.
The decision tree could prompt you for your human decision if it encounters an
outlying, uncertain instance.

~~~
bildung
I actually find the housing problem quite apt, because it so easily
illustrates the problem of information asymmetry of the market participants.
If you can't guarantee that, you don't have an efficient market. How can you
prevent that, if not with the help of protection through law (i.e.
regulation)?

------
baddox
> As it turns out, it is absolutely possible to have a system that contains
> markets but not property rights: at the end of every year, collect every
> piece of property, and at the start of the next year have the government
> auction every piece out to the highest bidder.

I know this is just a hypothetical example, but...the government takes all
property at the end of the year, except for money? Since presumably people
need something with which to buy property at the auction. How does this work
out at all from individual economic incentives? Seems like that just
incentivizes everyone to try to end up with as much money and as little
property as possible as the end of the year. And does the money from the
highest bidder go to the previous owner? That would make sense, but this
article implies that it just becomes government revenue.

~~~
TheCoelacanth
This is basically just a system with no ownership and maximum of 1 year leases
for everything. If you rent an apartment with 1 year leases, you don't have an
incentive to try to sublet your apartment for the last day of the lease every
time the lease comes up for renewal because no one will pay you very much for
one day's use of the apartment and you wouldn't be able to use the apartment
for that day.

------
seiferteric
I like the self assessed property tax idea, although presumably if someone
wants to buy your property and you are not ready to sell, you should be able
to "correct" the assessment and pay the back taxes (for the year only) in
order to discover the true price.

~~~
notahacker
That sounds like a case for absolutely everyone to undervalue their property
unless and until someone wants to buy it (and speculators have little
incentive to try to buy houses when nobody actually accepts offers at the low
rates implied by their tax valuations)

~~~
seiferteric
If no one wants to buy your house at the current value then it is by
definition not undervalued. To your second point, speculators can put in any
offer they want, it doesn't have to be at or right above your current
valuation. If you claim your house is only worth 200k and they offer 500k,
suddenly you have a tough choice, either sell, or pay a large tax bill.

~~~
notahacker
If I value my property at a dollar, I'm signalling that I don't want to pay
property tax and don't have the slightest interest in selling my property
either, ergo there is no reason whatsoever for any speculator to waste their
time bidding on it (unless the government becomes a property speculator, or
somebody with deep pockets really resents my tax avoidance).

Of course, the system also needs a mechanism to deal with the opposite:
nuisance bids from people who don't have the will or ability to actually
complete the purchase. Buying property is not like buying shares.

------
sp527
His thought about designing incentive structures and systems to solve problems
and remove (inefficient, corruptible) humans from the equation is solid. I
think many of the more rational theorists, irrespective of their political
bent, would concur that this is an ideal approach.

What's missing is the how. He's far too optimistic about the complexity and
inertia inherent in the very constructs he believes we should revise.

Above all is the question of incentivizing progress: it's much easier to
describe sensible, efficient solutions than it is to move societies towards
them.

~~~
panic
Our human desires and values are the whole point of the system, though. Anyone
designing a "political economy" should treat the experience of the people
living in it as the most important thing -- abstract concepts like
"efficiency" are ultimately just ways to affect that experience.

~~~
sp527
I think you're conflating two different things: that such systems should
generally be oriented towards maximizing human wellbeing (which I
wholeheartedly support) and such systems should be vulnerable to human
input/error (problematic in almost every conceivable situation).

Of course you can't swap every system we have for a fair and automated
equivalent. You also run into problems around the question of what we should
optimize for, which will be swayed by a person's political opinion. Ideal
systems would probably lie at a balancing point between socialism and
capitalism (as a model, equivalent to tuning parameters), but establishing
that point and getting everyone to agree on it would be extremely challenging.

~~~
panic
Yeah, I think the question of what we should optimize for is the fundamental
problem here. There's really nothing called "human wellbeing" that can be
maximized. Everyone has different perspectives, values, goals, ideas, dreams,
and so on. It's impossible to turn all these ways of seeing the world into a
working system without involving the people themselves, especially given how
people's perspectives change over time.

------
Barjak
>However, markets are socially constructed because they depend on property
rights that are socially constructed, and there are many different ways that
markets and property rights can be constructed, some of which are unexplored
and potentially far better than what we have today.

This would be an interesting hypothesis to explore with swarm reinforcement
learning. It seems to me that rights have a lot to do with optimal/stable
cooperation strategies in certain types of games, and maybe RL can uncover
better strategies, or maybe not.

The simplest well-studied problem of this sort is the iterated prisoner's
dilemma. The strategies we have today are remarkably similar to the Axelrod's
original strategies three decades ago.

------
tramGG
A lot of talk about personal data ownership and markets, mentions repay-me,
datum, enigma, but there is also synapse, ocean, iota-ish, numerai-ish,
streamr.

Some taken from here:
[https://i.imgur.com/mOWKrQE.jpg](https://i.imgur.com/mOWKrQE.jpg)

------
baddox
When I saw the name “Eric Posner” as a coauthor of the book Vitalik mentions,
I figured he must be related to Richard. Indeed, Eric is Richard’s son.
Richard Posner has some extremely fascinating writing.

------
tw1010
I like how engineers have expanded their ambition from starting as almost
clerks to scientists (when the job of a programmer was almost exclusively data
entry a few decades ago) to nowdays feeling like they can understand and
modify everything in society with these powerful tools below their fingertips.

~~~
joosters
Vitalik can’t get his own flawed cryptocurrency to be useful or usable (except
for scammers) and yet he wants to tell everyone how to solve the rest of the
world’s problems?

~~~
baddox
I find his cryptocurrency useful, and I am not a scammer, a purchaser of
illegal drugs, or even (much of a) speculator.

