
Futarchy: Vote Values, But Bet Beliefs - mike_esspe
http://hanson.gmu.edu/futarchy.html
======
1053r
This system suffers from the same political economy problems that democracies
have. For example, if I am a corn producer in the USA, I have a strong
incentive to spend lots of money lobbying and contributing to political
campaigns to ensure a strong protectionist policy for sugar. It ensures that
my corn is purchased and used for corn syrup, and that Brazilian sugar cane
doesn't destroy my market.

The good from this policy is concentrated on the corn producers, and the harm
is spread diffusely across all people who consume sweets. If I am an average
consumer of sweets, I see little benefit fighting this policy today, since it
will only change the price of a soda by a few cents.

Under a "Futarchy", the corn lobby can spend lots of money to "predict" that a
sugar tariff will make the country better. They might even believe it, but I
will have little incentive to vote with my wallet against such a policy, since
the harm will be diffuse and extremely difficult to conclusively pick out from
the noise using econometric techniques. Result: a strong tariff, which almost
all economists agree is a bad policy. [1]

Just because Futarchy is vulnerable to some of the same problems as democracy
as practiced in the USA doesn't mean it is a bad system, but I fail to see how
it is functionally different than a plutocracy. [2]

The problem with prediction markets is that they are only accurate in so much
as one's incentive to "waste" money producing an incorrect prediction is
smaller than the amount of money to be made by having that incorrect
prediction.

Hanging all law off of the results of prediction markets creates HUGE
incentives for me to game the prediction markets, then extract rents elsewhere
in the economy to more than recoup my investment.

[1]
[https://en.wikipedia.org/wiki/Tariff](https://en.wikipedia.org/wiki/Tariff)

[2]
[https://en.wikipedia.org/wiki/Plutocracy](https://en.wikipedia.org/wiki/Plutocracy)

(Edited for grammar, citations).

~~~
coffeemug
But you're ignoring speculators. In a system like futarchy it's easy to
imagine organizations whose sole purpose is to make money on information
asymmetry. Wouldn't Goldman Sachs hop in to massively outbid the corn industry
and make a lot of money in the process?

~~~
altoz
There's Goldman Sachs, the Sugar Cane Lobby, non-profits that raise money
against childhood obesity. It'll really be voting with wallets.

~~~
alexeisadeski3
Voting with minds and wallets combined.

And I think Goldman Sachs wins that fight every time. Which is the whole
purpose - to let the smart money guide the policy.

~~~
mkohlmyr
Lots of money != smart money.

And even if that was the case - define smart. Smart in the interest of Goldman
Sachs is to make more money. Smart in the interest of humanity, society or a
community can be (and often is) something entirely different. Who are we
creating policy for?

~~~
yummyfajitas
_Lots of money != smart money._

Eventually it does. Manipulating markets == handing your money to someone
else, so the rich manipulators will exponentially [1] lose money as the smart
speculators take it.

In this case, it's "smart in the interests of predicting which policies
achieve the democratically selected objective function". For example, smart in
predicting whether Obamacare will bend the cost curve (assuming that's the
goal of obamacare).

[1] Assume 50/50 bets. The speculator bets $1, and takes $1 from the rich man.
Next bet, he bets $2, takes $2 from the rich. Next bet he bets $4. The rate of
growth doesn't have to be ln(2), but it is exponential.

------
exratione
The failure mode of all voting system with central control is that the elite
take over the most important part of the system: what is actually voted on.
This will happen in a futarchy just as it happens in democracy. The end result
will be, I'd predict, indistinguishable.

Only societies without strong centralization and with incentives on the elites
that stand opposed to collusion have the promise to evade what happens to
democracies. An example is that which prevailed for a fair time in Medieval
Iceland, but there are few others: the opening society of the US gave way to
growing centralization pretty quickly, and the original vision didn't last
much past two generations. There were not strong enough incentives to prevent
collusion of the elites against the masses.

~~~
RobinHanson
It is quite possible to have a decentralized and open system for making
proposals. For example, there can be a fee to make a proposal, which is paid
back at a multiple of the proposal is approved.

------
jayfuerstenberg
How is GDP a measure of wealth?

It's a measure of how much money is spent back and forth and not much else.

Some consider this money moving to be "progress" but it actually only
highlights how many problems a society's people are willing to pay in order to
solve.

The medical industry is a classic example of this. People are suffering and
paying an arm and a leg for cures and treatment. GDP reflects the money aspect
of this while ignoring the human aspect.

~~~
RobinHanson
GDP is only an initial starting point for developing a measure of national
welfare. Using GDP in this system might well be better than our current
system, and improvements should make it even better.

------
jjsz
I've searched your PDF and did not find the keywords from Voting Paradoxes and
Combinatrics [0]. What are your thoughts on this subject?

[0]
[http://www.youtube.com/watch?v=LFjApWH8R9c](http://www.youtube.com/watch?v=LFjApWH8R9c)

A speech by Noga Alon [1], Baumritter Professor of Mathematics and Computer
Science, Tel Aviv University

[1] [http://www.tau.ac.il/~nogaa/](http://www.tau.ac.il/~nogaa/)

~~~
gwern
Is there any reason to think those are worse for futarchy than for democracy?

------
baddox
This is similar to, although one step removed from, the anarcho-capitalist
proposal in David Friedman's 1973 book The Machinery of Freedom [0]. In this
proposed society, monopoly government is replaced completely by a market for
_everything_ that government currently does, including law production, law
enforcement, arbitration (courts), roads and infrastructure, and even
"national" defense. I'm admittedly a big fan of Friedman's proposal, and I
wonder what supposed advantage this futarchy provides over Friedman's
proposal. There's a decent 20 minutes illustrated summary video on YouTube
[1].

[0]
[http://www.daviddfriedman.com/The_Machinery_of_Freedom_.pdf](http://www.daviddfriedman.com/The_Machinery_of_Freedom_.pdf)

[1]
[http://www.youtube.com/watch?v=jTYkdEU_B4o](http://www.youtube.com/watch?v=jTYkdEU_B4o)

~~~
pdonis
I think you're misinterpreting what futarchy actually is. It is _not_
replacing our current system of government with a "market". Hanson's
description in the article is this:

 _When a betting market clearly estimates that a proposed policy would
increase expected national welfare, that proposal becomes law._

This is _not_ how a normal market works. In a normal market, everyone gets to
choose their own strategy for how they are going to act. The market only
conveys information to them, through prices, about how good (or bad) their
current strategy is.

In futarchy, the "market" would determine a strategy that _everyone_ would
then have to follow, because it's the law. In other words, it still retains
the key feature that makes our current system of government broken: whatever
is considered "a good policy idea" is imposed on everyone, instead of being
tested by allowing people who think it's a good idea to try it out
individually.

To really fix the current system, we need to really look hard at all the
things we currently think have to be decided by a single policy for everyone.
There may be some things (like national defense) that actually do need to be
decided that way. But a _lot_ of things don't, yet our current system forces
us to adopt a one-size-fits-all policy for them. Futarchy does not fix that:
in fact it is likely, if anything, to make it worse by making it easier for
special interests to simply buy the policy they want, by eliminating the
middleman (instead of having to buy politicians and elections, just buy into
the betting market).

~~~
RobinHanson
A futarchy could approve a private law anarchy of the sort that Friedman
suggests, if market speculators thought it would do better to achieve national
welfare as voters have defined it.

~~~
pdonis
As I commented in another subthread, the root problem is not that we need a
better mechanism for determining what policy will best improve national
welfare as voters have defined it; the root problem is the very concept of
"national welfare as voters have defined it".

We do not have a single concept of "national welfare". We have a multitude of
things that various people think are part of national welfare, but different
people pick different sets of things, and they often conflict with each other.
Many of these conflicts are fundamentally irreconcilable.

In our current system, we force people who do not agree with a certain policy
goal to abide by laws aimed at achieving that goal, if there is a sufficient
majority to pass such laws. That is bad. Futarchy would not change that.
Imposing private law anarchy on everybody because the betting market says it
would best achieve national welfare is just as bad as imposing, say, the
Federal Defense of Marriage Act on everybody because a particular Congress
passed it into law.

But futarchy adds another bad thing to this already bad system: now not just
individual policies, but the measure of success for _any_ policy, the
definition of "national welfare", gets decided by majority vote, and that
measure of national welfare gets imposed on everybody, whether they agree with
it or not. So futarchy imposes _more_ things on everybody against their will
than the current system does. That makes it worse than the current system, not
better.

~~~
baddox
In Friedman's system, it's not "everyone votes on each issue, and only the
winning issues get implemented," but rather "everyone pays for each issue they
personally want, and therefore gets it" (limited by their means, general
marketability of issues, etc.). It's the difference between "everyone votes on
which car should get made, and only the winning car gets made" and "everyone
pays for whatever car they want." Most economists and people agree that the
latter works better for cars, and I don't think that the production and
enforcement of law is an easier task than automobile production.

> Imposing private law anarchy on everybody because the betting market says it
> would best achieve national welfare is just as bad as...

It sounds like you're defining literally _any_ society as "imposing" its
traits on its members. I suppose that's true in a way, but I don't see it as a
very useful definition, since there's no way to simply not have society (apart
from something like transhumanism).

~~~
pdonis
_It sounds like you 're defining literally any society as "imposing" its
traits on its members._

In a sense I am, but I should first clarify the comment of mine that you were
responding to. I wasn't saying that private law anarchy imposes things on
people _per se_ ; I was saying that it imposes things on people _if_ they are
forced to adopt it because the national betting market said that would be the
best way to improve national welfare. The whole point of private law anarchy
is that people _choose_ it voluntarily.

With regard to the more general point, yes, living in a society at all imposes
certain restraints on people, but there are different ways that can be done.
One way is for people to rationally understand the benefits of living in a
society as opposed to living as Robinson Crusoe individuals, and to be willing
to accept restraints that are necessary parts of getting the benefits. The
other way is for society to impose the restraints regardless of whether the
people being imposed on agree with the need for them. In any real society,
there will be some element of the second way; but I think all of our current
societies are far too quick to adopt the second way instead of letting the
first way work.

------
pdonis
Quote from the article:

 _Futarchy seems promising if we accept the following three assumptions:

Democracies fail largely by not aggregating available information._

And we don't even need to go any further, because assumption #1 is wrong in
two ways:

(1) Democracies fail because people have conflicting goals, not just
conflicting beliefs about how to reach goals. Even people who have all the
same factual beliefs can still have inconsistent goals. That is a problem in
any system that requires everyone to adopt common goals in order to set
policy.

(2) The "information" that would need to be aggregated doesn't exist anyway.
Hanson assumes that there is _some_ policy that, if imposed on everyone, would
work; he never considers the possibility that the real problem is that
assumption--that the root problem is the very act of imposing policies on
everyone, not the particular policies that get imposed.

~~~
RobinHanson
But if there is no reason to think that problem is worse in this proposal, and
the info aggregation problem would get better, you might still want to support
this proposal.

~~~
pdonis
If the information that would need to be aggregated doesn't exist, then the
"info aggregation problem" as you've defined it doesn't exist either, so it's
meaningless to ask whether it gets "better".

As for the problem of imposing policies on everyone, doing it by a mechanical
procedure based on a betting market actually _does_ strike me as worse than
doing it the way we do it now, for a couple of reasons. But I'll respond
further to that in the other subthread where we are having that discussion.

------
gathly
blaming the poor countries for their poverty, because of "stupid policies"
displays an overwhelming lack of historical knowledge.

------
amalcon
_Instead, much of the difference seems to be that the poor nations (many of
which are democracies) are those that more often adopted dumb policies,
policies which hurt most everyone in the nation._

This is taken as obvious, but I don't find it so. There are many things that
are not attributable to tangible national assets, but that can nonetheless
change its course: things such as historical accident of where a particular
thing was invented, actions of other nations, natural disasters, etc. I see
every reason to think that this sort of thing is responsible for wealth
disparity, moreso than repeated adoption of "dumb" policies.

------
nairboon
This leads to a system where people will vote only on the issues that affects
them, which is a core principle of the panocracy system [1]. The problem with
futarchy is that if the betting works with money, it will ultimately lead to a
plutocracy. But this could be avoided if there would be some form of "voting
credits", so that every citizen has a ceratin credits to bet per
year/month/... The winning bets could then be paid out in money.

[1]: [http://en.panokratie.net/](http://en.panokratie.net/)

~~~
darkmighty
This would lead to non-expert masses (irrationally) giving a lot of credit to
certain groups.

It's a delicate issue, because you need to provide a long term stake to force
the decisions to be optimal (so future welfare is evaluated correctly and
optimized), but at the same time paying off those stakes leads to an unstable
plutocratic scenario.

Some kind clever compromise could probably be reached, I think, and this is
one of those wonderful ideas that will never be implemented.

------
DennisP
I like this idea, but I don't know how it would handle multiple conflicting
goals. Hansen gives a sample goal of improving the economy, but what if you
also want to protect the environment, take care of your old and sick, maintain
a strong defense, educate your children, etc?

I suppose you could weight them by importance (based on score voting maybe),
have people bet on each policy's effect on every goal, and apply an
optimization algorithm to the whole thing to get policy decisions, but not
many people would understand and trust the system.

~~~
gwern
> Hansen gives a sample goal of improving the economy, but what if you also
> want to protect the environment, take care of your old and sick, maintain a
> strong defense, educate your children, etc?

This is where the 'vote on values, bet on beliefs' part comes in (did you read
the paper?). The voters' job is to specify how much importance they place on
various goals or metrics, and the prediction markets are asked how to achieve
the goals.

~~~
DennisP
It had been a while so I looked through it again. Throughout he talks about
deciding everything with a single measure of national welfare (which could
include things besides GDP, weighted). I'm not convinced that's realistic.
That one function would get enormously complex, its exact definition hard to
decide but very influential on policy, and instead of debating specific
policies we'd have vicious debates on the right formula to use, mostly driven
by self-interested actors attempting to gain advantage, with even more
obscurity than we have now.

In principle I like the idea, I'm just trying to figure out how to make it
better.

~~~
yummyfajitas
_Throughout he talks about deciding everything with a single measure of
national welfare (which could include things besides GDP, weighted). I 'm not
convinced that's realistic._

If your decisionmaking process is consistent then an objective function
exists. That's just a topological fact.

[http://www.chrisstucchio.com/blog/2013/metrics_manifesto.htm...](http://www.chrisstucchio.com/blog/2013/metrics_manifesto.html)

~~~
DennisP
I didn't mean it's mathematically unrealistic, but politically unrealistic to
actually determine that function. Since the function decides all, it will
become the focus of continual, intense debate by people attempting to adjust
it to the advantage of their favored policies.

~~~
yummyfajitas
Of course, but that's the whole point. Rather than debating policies which are
nominally designed for one goal but secretly trying to promote another goal
(e.g., social security, nominally a pension, secretly a redistribution
scheme), we just debate the goals themselves.

This actually increases transparency. For example, if some party wants to
declare a War on Christmas (TM) or a War on Women's Bodies (R), they actually
need to put 23 x Dead Santa or -6 x Women's Freedom into the objective
function.

~~~
notahacker
I think people are pretty concerned about _means_ as well as ends. That's why
all parties want to reduce crime, and yet none campaign for a policy of
"dispose of crime reports after 24 hours" which is almost certain to fulfil
the objective function for "reduce recorded crime" (and will probably get
passed in "futarchy" if someone proposes it and the market acknowledges that
the highly-weighted variable "crime rate" will undoubtedly fall as a result).

Instead of voting for the party that wants to reverse something that directly
impacts their welfare or they otherwise consider to be stupid or immoral, the
electorate is forced to listen to a set of explanations of mathematical
equations that try to reverse engineer how it could have been passed, and how
to remove it with the least side effects. If I want to pay lower taxes I'd
prefer to vote for the party that makes lower taxes for people like me a core
plank of their platform, and not a set of equations purporting to show how a
tax cut could feasibly be approved by the market in the current economic
climate provided variables P, Q, R and S were held constant and Z was reduced
by a couple of basis points.

It's quite possible that a party advocating a high weight on lower-quartile
average incomes and a negative weight on birth rate wouldn't _want_ some
nutters to propose the "compulsory abortions for offspring of the unemployed"
law, and get it passed, but I'm not sure a welfare function that could avoid
all such unintended consequences even exists, never mind one intelligible to
the average voter.

~~~
yummyfajitas
The objective function would need to include the measurement methodology, i.e.
"reduce crime as measured by methodology X", where methodology X does not
delete crime reports.

As for voting for tax cuts, you probably want taxes cut as low as possible
while still providing certain vital services. (I'm assuming you aren't an
anarchist.) In that case, you don't merely want maximize (-1 x tax rate), you
instead want to maximize (-A x tax rate - B x # of murders). Lowering taxes
may or may not be the best way to achieve that goal, but you are unlikely to
be able to properly judge that (no offense intended - I can't either).

An objective function and it's unintended consequences may be hard to
understand for the average voter but the results of policy are even harder to
understand. For example, many voters are in favor of earning assistance for
firefighters and soldiers
([http://www.opencongress.org/bill/110-h3997/show](http://www.opencongress.org/bill/110-h3997/show)).
One unintended consequence of the "Earnings Assistance for Heroes" policy is a
gigantic bank bailout.

~~~
notahacker
> _An objective function and it 's unintended consequences may be hard to
> understand for the average voter but the results of policy are even harder
> to understand._ Reverse that statement and you've got my position. It's very
> difficult for an average voter to figure out where the cash for his tax cut
> is coming from, but it's crystal clear approximately how much disposable
> income they will personally benefit from it even if the indirect
> consequences are pretty hazy. It's up to the government to figure out how to
> pay for it, and to balance that out against the desires of people that are
> really far more concerned about murder rates, welfare cuts or national debt
> rises.

By contrast this system asks voters to become technocrats and carefully
predict the set of variable weightings that will allow the investors to pass
legislation that reduces their taxes; that is if Big Capital doesn't decide to
bet on a policy proposal that uses the freed-up budget to reduce _their_ taxes
instead. Frankly, if an average voter can't determine if they want the
candidate that offers them lower taxes instead of the one that offers them
better policing, they're certainly not capable of choosing between the two
candidates' proposed set of HDI weightings and calculation methodologies. Nor
does anything in the proposed mechanism stop policy proponents sneakily
attaching undesirable policies to desirable ones: in this case if you offered
the banking system bailouts they'd probably bet big enough on the bill to
allow it to pass even if it had subsidiary clauses mandating the execution of
firefighters' firstborn. It would be trivially easy to use this process to
enact laws whose consequences were essentially non-statistical, like most
civil liberties...

~~~
yummyfajitas
_By contrast this system asks voters to become technocrats and carefully
predict the set of variable weightings that will allow the investors to pass
legislation that reduces their taxes; that is if Big Capital doesn 't decide
to bet on a policy proposal that uses the freed-up budget to reduce their
taxes instead._

No it doesn't. It merely asks voters to decide how many dollars a prevented
murder is worth.

 _in this case if you offered the banking system bailouts they 'd probably bet
big enough on the bill to allow it to pass even if it had subsidiary clauses
mandating the execution of firefighters' firstborn._

Why would Goldman do this? Why wouldn't they just take billions from all the
other speculators willing to throw their money away to get bailouts and then
use their winnings to bail themselves out?

Further, there is a proposed mechanism to stop policy proponents from sneakily
attaching welfare-reducing policies: Goldman Sachs, George Soros, and other
speculators. These folks are smart enough to spot sneaky clauses and greedy
enough to rob the market manipulators pushing them.

------
judk
> Elected representatives would formally define and manage an after-the-fact
> measurement of national welfare

The paper scuttles itself in the first paragraph.

~~~
harshreality
That national welfare metric could be a legally required and binding part of
the platforms they run on.

------
qwerty9999
If we did this, 4chan would rig the votes and take over the world. ;-)

~~~
davexunit
There's already a futarchy on /d/.

------
eli_gottlieb
Get this shit out of here. We already have rule-by-money.

