An email from Glen Weyl

I won’t do an extra indent, but this is all Glen, noting I added a link to the post of mine he referred to:

“Tyler, I hope all is well for you.  I am writing to try to somewhat more coherently respond to our various exchanges, partly at the encouragement of Mark Lutter, whom I copy.  As I understand it (but please correct me if I am wrong), you have two specific objections to the COST and QV and one general objection to the project of the book.  If I have missed other things, please point me to them.  Let me very briefly respond to these points:

  • On the COST: you wrote (I cannot actually find the post at this point…not sure where it went) that human capital investments that are complementary with assets may be discouraged or otherwise prejudices by the COST.  However, as we explain in the paper with Anthony (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2744810), it has been known since at least Rogerson’s paper (https://academic.oup.com/restud/article-abstract/59/4/777/1542650) that VCG leads to first-best investment, including in human capital, as long as those investments are privately valued; we show that this property extends to the COST.  You seem to focus on examples in your post where those human capital investments are privately valued.  I thus do not see an economic efficiency objection to the COST on these grounds.
  • On QV: you write (https://marginalrevolution.com/marginalrevolution/2015/01/my-thoughts-on-quadratic-voting-and-politics-as-education.html) that democracy is about far more than decision-making; it is about what people learn and are induced to learn through the democratic process.  This is a deep and critical point and central to what Sen has called the “constitutive” role of democracy.  And this objection has been lodged not just by you but, for example, by Danielle Allen.  It is one I greatly respect and have struggled with.  A fundamental problem here is that no one to my knowledge has managed to model this information acquisition process in a formal model in a way that allows comparison across systems; I have tried, but things get very messy very quickly.  Nonetheless, I have not been able to understand the informal arguments that suggest this would be systematically worse under QV and there are several suggestive arguments that it would be better.  For example, under QV people have the ability to specialize in certain areas of issue or candidate expertise, which in turn should allow for deeper education and for advertising campaigns targeted at those who actually know and care about an issue, rather than those who are hardly paying attention.  Perhaps some would argue that this is a bug, not a feature, because we want every citizen to be informed about every issue; but this seems to be as implausible as suggesting that the division of labor degrades our ability to perform a variety of household tasks.  For more on these, Eric and I have written several articles that discuss: https://www.vanderbiltlawreview.org/2015/03/voting-squared-quadratic-voting-in-democratic-politics/ [and] https://www.springerprofessional.de/en/public-choice-1-2-2017/12454020.
  • There is a broader Burkean argument that you seem to be making, namely that these institutions are extremely different than those we have historically used and may well have very bad, unintended consequences.  Here, I don’t think we disagree, but I think nonetheless there are at least two reasons I don’t see this as greatly diminishing the value of the ideas.  First, all novel improvements, whether to technology or social institutions, must confront this objection.  And they should confront it, I think, by experimenting at small scales and gradually scaling up and/or course-correcting as we learn about them.  The questions are then a) does the innovation have enough promise to be worth experimenting with, b) is it so risky to experiment with at small scales even that this vitiates a) and c) does it seem like these experiments will teach us something about broader scale applicability.  It seems to me that designs that so clearly address failures that economic theory we both accept says are very large, that are not just worked out in a narrow model but that we have studied from a range of not just economic but sociological and philosophical perspectives and which have caught the imagination of a broad set of entrepreneurs, activists and artists who are really interested in such experiments satisfies a).  I don’t see any objections you or others have raised as raising significant concerns on b).  And on c), it seems to me we will learn quite a lot from even relatively modest experiments (and already have) about the objections I hear most frequently (such as those related to collusion for QV or instability for the COST) that at very least will allow us to incrementally improve and scale a bit larger. So, it seems to me, the strong interest in experimenting with these ideas should be encouraged.

Finally, it seems to me that even if you remain convinced that there are unsurmountable practical difficulties with these mechanisms, that they play an important role in illustrating some pretty sharp divergences between what basic allocative efficiency calls for (and what the marginal revolutionaries like Jevons and Walras were quite explicit about their theories implying) and the outcomes we would expect to arise in the classic libertarian world.  I think the liberal radicalism mechanism makes this sharpest.  This seems instructive even if there is no way to remedy the limitations in these mechanisms because it suggests that the ideal toward which we should be steering societies using mechanisms that are not so dangerous are quite different than the ideal envisioned in standard libertarian theory.  For example, the ideal would seem to involve a much greater role for a range of collective organizations at different community scales with some ability to receive tax-based support than standard libertarian theory would allow.

I am interested in your thoughts on these matters and continuing the exchange.  Sorry for the length of this email, but I felt that I owed you a single, coherent and fairly detailed response.”

TC again: For further detail, I refer you to Glen’s book with Eric Posner.  For background, here are my earlier posts on their work.

Comments

COST = Common Ownership Self-Assessed Tax
QV = Quadratic Voting
VCG = Vickrey-Clarke-Groves auction

CUCKS = You MR Readers At Home

I’m at work, so guess that excludes me.

Darn, I'm at home ::sad:: I need unicorn love hugs. #metoo

Howdy! Dieses Posst konnte nicht gschrieben werdn viel besser!
artgicle erinnert mch an meine früheren Mitbewohner!
Er ständig reden dies. Ich werde vorwärts
Beitrag zu ihm. Ziemlich sicher Er ird nur einen guten lesen. Vielen Dank für Sharing!

Summary: 1) You object to the Common Ownership Self-Assessed Tax because it would discourage investment in human capital; to the contrary, a theorem shows that it incorporates this properly via the private valuation of assets.
2) You object to quadratic voting because it doesn’t promote the learning that majority-rule democracy does, but no one has made that comparison quantitative. 3) We have enough evidence for these ideas to justify trying them at small scales. 4) The radical liberalism results show a greater role for governments in efficiently allocating resources than classical libertarians would have thought.

Excellent summary. Why are academics so damn wordy!

I am mostly just waking up to these proposals so sorry if I have missed out on something.

My first concern on COST is that if assets are subject to tax, their value will depend a lot on the cash flow they generate, and tilting the economy too much towards short term cash-flow considerations could have serious unexpected consequences.

For instance if reforesting you would, besides the direct costs of it, also have to pay taxes now on that forest’s long-term increased value… which seems to me would imply less reforestation. And the value of forests could be forced to be more based on its immediate deforestation value… which would seem that a lot more chopping down would be going on.

Whenever I read about tax on wealth/assets I always ask the proponents just to consider that most of that wealth has already been redistributed to the real economy, when the wealthy buys services or freeze their Main-street purchase capacity in assets.

What is the bloke to do with his $450 million voluntarily frozen in Leonardo da Vinci’s Salvator Mundi, if he now has to pay taxes on it?

http://perkurowski.blogspot.com/2018/04/since-you-dont-eat-gold-bars.html

This first issue is addressed by Weyl in a lecture video: https://youtu.be/a7Pe4eqJF9I?t=1537

We don't need no stinkin' fancy foofoo ideas to fix out of control inequality and concentration of wealth, we can fix it the old fashioned way - via violent and chaotic revolution fueled by resentment and blood lust.

Listen kid, I have just two words for you, two words - medical supplies.

"The Hamptons are not a defensible position ... someday they are gonna come for you." - Mark Blyth

I still see COST as distorting consumption toward nonmarketable assets, the more prominent of which are going to be leisure and memories (experiences). I suppose Wyl and Posner might object that you could simply force people to put a value on their leisure time and then allow employers to call on that valuation. I also suppose eventually memories might be marketable. That sounds like a dystopian hellscape.

It also probably distorts toward the inherently consumptive but nonmarketable aspects of work. So less fancy offices etc. and more "good atmosphere". But depending on individual preferences and power, this could also be quite negative--less vigilent enforcement against discrimination, harassment, and so on.

Overall the system seems to work much better on the productive side, where it simply makes express opportunity costs that firms are already implicitly taking into account, and for land, where it may a much lower cost system of assessment. I wish Wyl and Posner would give more thought to the effects of partial implementation in these areas.

It doesn't really seem to have many benefits on the consumptive side, where it shares similar distortions with more traditional consumption tax, and it seems to have additional distortions towards experiential services that a traditional consumption tax does not. And factoring in the total compliance burden, including stress about doing the valuation incorrectly and time spent doing so, the burden seems much, much higher than a traditional consumption tax (even a more complicated progressive one).

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