Category: Political Science
Assisted dying in the UK
I would say that overall I am more suspicious of “assisted dying” policies than are many of my libertarian friends. I am fine with legalizing suicide, but I get nervous when a state — especially a less than fully competent, fiscally strapped state — enters the picture with so much influence over the proceedings. In the longer term, no matter how the legislation is initially written, what will be the incentives of that state? What will be the incentives of family members and legal guardians?
That said, I do recognize that as medical technology and life-saving techniques advance, something has to give. We can’t just keep tens of millions of people hooked up to life support for decades.
I do not have any “top down” way of resolving all of the difficult moral and practical issues here. I will simply note that the returns to federalism have risen. Different American states can try out different policies, as indeed they do, and we can see what is happening and judge accordingly.
I believe this point remains underrated. As technology advances, and the world changes more rapidly, the returns to federalism rise. We are coming off a long period when the returns to federalism were relatively low.
I am more optimistic about England than many people, but this is one of my worries. Devolution doesn’t quite do the same, but rather means that for anything England does, two other polities are likely to choose something even worse.
Thanksgiving and the Lessons of Political Economy
It’s been a while so time to re-up my 2004 post on thanksgiving and the lessons of political economy. Here it is with no indent:
It’s one of the ironies of American history that when the Pilgrims first arrived at Plymouth rock they promptly set about creating a communist society. Of course, they were soon starving to death.
Fortunately, “after much debate of things,” Governor William Bradford ended corn collectivism, decreeing that each family should keep the corn that it produced. In one of the most insightful statements of political economy ever penned, Bradford described the results of the new and old systems.
[Ending corn collectivism] had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been by any means the Governor or any other could use, and saved him a great deal of trouble, and gave far better content. The women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability; whom to have compelled would have been thought great tyranny and oppression.
The experience that was had in this common course and condition, tried sundry years and that amongst godly and sober men, may well evince the vanity of that conceit of Plato’s and other ancients applauded by some of later times; that the taking away of property and bringing in community into a commonwealth would make them happy and flourishing; as if they were wiser than God. For this community (so far as it was) was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort. For the young men, that were most able and fit for labour and service, did repine that they should spend their time and strength to work for other men’s wives and children without any recompense. The strong, or man of parts, had no more in division of victuals and clothes than he that was weak and not able to do a quarter the other could; this was thought injustice. The aged and graver men to be ranked and equalized in labours and victuals, clothes, etc., with the meaner and younger sort, thought it some indignity and disrespect unto them. And for men’s wives to be commanded to do service for other men, as dressing their meat, washing their clothes, etc., they deemed it a kind of slavery, neither could many husbands well brook it. Upon the point all being to have alike, and all to do alike, they thought themselves in the like condition, and one as good as another; and so, if it did not cut off those relations that God hath set amongst men, yet it did at least much diminish and take off the mutual respects that should be preserved amongst them. And would have been worse if they had been men of another condition. Let none object this is men’s corruption, and nothing to the course itself. I answer, seeing all men have this corruption in them, God in His wisdom saw another course fitter for them.
Among Bradford’s many insights it’s amazing that he saw so clearly how collectivism failed not only as an economic system but that even among godly men “it did at least much diminish and take off the mutual respects that should be preserved amongst them.” And it shocks me to my core when he writes that to make the collectivist system work would have required “great tyranny and oppression.” Can you imagine how much pain the twentieth century could have avoided if Bradford’s insights been more widely recognized?
Prediction Markets Podcast
I was delighted to appear on the a16z crypto podcast (Apple, Spotify) talking with Scott Duke Kominers (Harvard) and Sonal Chokshi about prediction markets. It’s an excellent discussion. We talk about prediction markets, polling, and the recent election but also about prediction markets for replicating scientific research, futarchy, dump the CEO markets, AIs and prediction markets, the relationship of blockchains to prediction markets and going beyond prediction markets to other information aggregation mechanisms.
Why more South Asian than East Asian CEOs?
Analyses revealed that East Asians faced less prejudice than South Asians and were equally motivated by work and leadership as South Asians. However, East Asians were lower in assertiveness, which consistently mediated the leadership attainment gap between East Asians and South Asians. These results suggest that East Asians hit the bamboo ceiling because their low assertiveness is incongruent with American norms concerning how leaders should communicate.
That is from a new piece by Jackson G. Lu, Richard E. Nibett, and Michael W. Morris, via the excellent Kevin Lewis.
Milei and populism
Bryan Caplan and Daniel Klein both opine on Milei and populism, Dan being very enthusiastic, while Bryan praising Milei but more reserved in his praise of populism. I too am a big fan of Milei, and I think he is still on a good track. If his reforms do not succeed, likely it will not be his fault, but rather the result of soft commodity prices, pending credit lawsuits (predating him), and an impatient public. But so far things are holding up.
What neither Klein nor Caplan mentions — and it is very very important for this issue — is that Milei has hewed pretty closely to the IMF playbook for his most important reforms. He named a very serious and mainstream finance team to oversee his changes. And his plan is dependent on an IMF bailout. The more “populist” elements of the original promises, such as rapid dollarization, have been put on hold indefinitely. In other words, the actual policies, for the most part, are not populist at all.
It is fine to call Milei a populist in some very critical rhetorical regards. But the project is working because he has turned his back on a lot of populism and is mainly following the recommendations of expertise, as well as relying on the IMF.
Sunstein on DOGE
Good advice from Cass Sunstein, who did improve government efficiency as head of OIRA:
There is a major focus these days on the topic of government efficiency, spurred by the creation of what is being called a “Department of Government Efficiency.” I have had the good fortune of being involved in simplification of government, and reduction of paperwork and regulatory burdens, in various capacities, and here are six quick and general notations.
- The Administrative Procedure Act is central to the relevant project. It needs to be mastered. It offers opportunities and obstacles. No one (not even the president) can clap and eliminate regulations. It’s important to know the differences among IFRs, TFRs, NPRMs, FRs, and RFIs. (The best of the bunch, for making rules or eliminating rules: FRs. They are final rules.)
- The Paperwork Reduction Act needs to be mastered. There is far too much out there in the way of administrative barriers and burdens. The PRA is the route for eliminating them. There’s a process there.
- The Office of Information and Regulatory Affairs is, for many purposes, the key actor here. (I headed the office from 2009-2012.) A reduce-the-regulations effort probably has to go through that Office. Its civil servants have a ton of expertise. They could generate a bunch of ideas in a short time.
- It is important to distinguish between the flow of new burdens and regulations and the stock of old ones. They need different processes. The flow is a bit easier to handle than the stock.
- The law, as enacted by Congress, leaves the executive branch with a lot of flexibility, but also imposes a lot of constraints. Some of the stock is mandatory. Some of the flow of mandatory. It is essential to get clarity on the details there.
- The courts! It’s not right to say that recent Supreme Court decisions give the executive branch a blank check here. In some ways, they impose new obstacles. Any new administration needs a full understanding of Loper Bright, the major questions doctrine, Seila Law, and much more (jargon, I know, I know).
How DOGE is really going to work
In the last few days, Vivek has issued a series of tweets showing he understands how the regulatory process works. That is good, but in turn it means DOGE ambitions end up scaled down. Now there is a WSJ piece by Vivek and Elon. Here is what I take to be the critical passage:
DOGE will work with legal experts embedded in government agencies, aided by advanced technology, to apply these rulings to federal regulations enacted by such agencies. DOGE will present this list of regulations to President Trump, who can, by executive action, immediately pause the enforcement of those regulations and initiate the process for review and rescission.
I’m all for this (and more), but take a look at what we are getting here. Paused enforcement is better than nothing, but the rule doesn’t go away. In the meantime, private companies probably will continue to act as if the rule may continue, given limited time horizons in politics and indeed for DOGE itself. The process for “review and rescission” of course is extremely time-consuming and labor-intensive. Again, bring it on but just do not expect too much from this. Note further that “right-leaning regulatory troops” are quite thin on the ground, most of all in these agencies.
The column has numerous further points of interest, which perhaps I will take up in the future. Here is a very good indeed essential piece by Stuart Buck on government efficiency, Here again is my earlier Bloomberg column on priorities for DOGE. James Broughel has a sunset suggestion for regulations.
Peter Coy on DOGE
The federal government doesn’t have the people it needs to adequately monitor and vet its enormous streams of payments to defense contractors, hospitals and individuals. For example, administrative expenses account for only half a percent of the budget of the Social Security Administration. Trying to squeeze down that half percent by cutting personnel could lead to misspending of the other 99.5 percent of the budget.
Here is more from the NYT, interesting throughout. Here is another bit:
To fix such problems, [Brian] Riedl said, “you need G.A.O. and other government experts and others who have done auditing to do most of the legwork.” There is no single easily repeatable fix: “Every program, every program failure and example of mismanagement has its own story.”
You may recall that private health insurance companies have fairly high “overhead,” perhaps a misleading term but nonetheless relevant for these debates. There are hundreds of billions of “lost” funds at DOD and in Medicare. Does the plan to improve on that performance involve more staff or less staff?
*Is Inequality the Problem?*
Lane Kenworthy has a book coming out next year, I have read it, and it is superb (rooftops) and also very important. Here is a brief excerpt:
Rich democratic nations with higher levels of income inequality or larger increases in income inequality haven’t tended to have slower economic growth, lower or slower-growing household income, or worse household balance sheets…
The notion that income inequality is harmful for health has recieved substantial attention from researchers, and some now take it for granted that inequality reduces longevity. But the country evidence offers very little support for this conclusion.
I will let you know when a pre-order is possible. In the meantime, it shouldn’t matter, but I can also report that Kenworthy is very much a left-leaning thinker, as you can adduce from his policy recommendations toward the end of the book.
How to make DOGE work
That is the topic of my latest Bloomberg column, here is one excerpt:
Another priority should be to deregulate medical trials. America is now in a golden age of medical discovery, with mRNA vaccines, anti-malaria vaccines, GLP-1 weight loss drugs and new treatments against cancer all showing great promise. AI may bring about still more advances.
Unfortunately, the US system of clinical trials remains a major obstacle to turning all this science into medicine. There are regulations concerning hospital protocols, the design of the trials, FDA requirements, the procedures of universities and institutional review boards, and the handling of data, among other barriers. America can have better and speedier approval procedures without lowering its standards.
Of all the tasks I’ve outlined, this is by far the most difficult, because it involves changes in so many different kinds of institutions. Yet it has one of the highest possible payoffs, because more treatments might be developed and made available if the clinical trial process weren’t so onerous. Reforming clinical trials should also appeal to older Americans, who are especially likely to vote and who think the most about their medical care. The goal should be an America where most people live to 90.
Many Republicans are very excited about DOGE. But its governance structure is undefined and untested. It does not have a natural home or an enduring constituency. It cannot engage in much favor-trading. Its ability to keep Trump’s attention and loyalty may prove limited. And it’s not clear that deregulation is a priority for many voters.
The more I read about DOGE from Vivek and Musk, the more I feel it needs a greater sense of prioritization.
Where are incumbents still popular?
From my email, here is your Switzerland fact of the day:
The media is awash with stories about western countries incumbent parties losing elections in the last two years:
- https://www.semafor.com/article/11/08/2024/the-democrats-join-a-long-list-of-global-parties-wrecked-by-post-pandemic-backlash
- https://www.ft.com/content/e8ac09ea-c300-4249-af7d-109003afb893
The exception no one seems to remember: Switzerland. In the october 2023 election, 3 out of the 4 governing parties increased their vote share. And it wasn’t just parties that are formally in government but effectively act as an opposition: The right wing Swiss People’s Party won. The left wing Social Democrats one. And the moderate Centre party one. The losers: The centre right Liberal Party (in government) and two different green parties (both outside of government).
Possible cause: Low inflation (https://marginalrevolution.com/marginalrevolution/2022/10/the-polity-or-is-it-culture-that-is-swiss.html)?
From Johann C.
Info Finance
Excellent post by Vitalik on prediction markets and the broader category of what he calls info finance:
Now, we get to the important part: predicting the election is just the first app. The broader concept is that you can use finance as a way to align incentives in order to provide viewers with valuable information.
…Similar to the concept of correct-by-construction in software engineering, info finance is a discipline where you (i) start from a fact that you want to know, and then (ii) deliberately design a market to optimally elicit that information from market participants.
One example of this is prediction markets: you want to know a specific fact that will take place in the future, and so you set up a market for people to bet on that fact. Another example is decision markets: you want to know whether decision A or decision B will produce a better outcome according to some metric M. To achieve this, you set up conditional markets: you ask people to bet on (i) which decision will be chosen, (ii) value of M if decision A is chosen, otherwise zero, (iii) value of M if decision B is chosen, otherwise zero. Given these three variables, you can figure out if the market thinks decision A or decision B is more bullish for the value of M. 
Info finance as a three-sided market: bettors make predictions, readers read predictions. The market outputs predictions about the future as a public good (because that’s what it was designed to do).
Importantly, Vitalik notes that AI agents can make decision and prediction markets more liquid at much lower cost.
One technology that I expect will turbocharge info finance in the next decade is AI (whether LLMs or some future technology). This is because many of the most interesting applications of info finance are on “micro” questions: millions of mini-markets for decisions that individually have relatively low consequence. In practice, markets with low volume often do not work effectively: it does not make sense for a sophisticated participant to spend the time to make a detailed analysis just for the sake of a few hundred dollars of profit, and many have even argued that without subsidies such markets won’t work at all because on all but the most large and sensational questions, there are not enough naive traders for sophisticated traders to take profit from. AI changes that equation completely, and means that we could potentially get reasonably high-quality info elicited even on markets with $10 of volume. Even if subsidies are required, the size of the subsidy per question becomes extremely affordable.
China’s Libertarian Medical City
You’ve likely heard of Prospera, the private city in Honduras established under the ZEDE (Zone for Employment and Economic Development) law, which has drawn global investment for medical innovation. The current Honduran government is trying to break its contracts and evict Prospera from 
Honduras. The libertarian concept of an autonomous medical hub, free to attract top talent, pharmaceuticals, medical devices, ideas, and technology from around the world is, however, gaining traction elsewhere—most notably and perhaps surprisngly in the Boao Hope Lecheng Medical Tourism Pilot Zone in Hainan, China.
Boao Hope City is a special medical zone supported by the local and national governments. Treatments in Boao Hope City do not have to be approved by the Chinese medical authorities as Boao Hope City is following the peer approval model I have long argued for:
Daxue: Medical institutions within the zone can import and use pharmaceuticals and medical devices already available in other countries as clinically urgent items before obtaining approval in China. This allows domestic patients to access innovative treatments without the need to travel abroad…. The medical products to be used in the pilot zone must possess a CE mark, an FDA license, or PMDA approval, which respectively indicate that they have been approved in the European Union, the US, and Japan for their safe and effective use.
Moreover, evidence on the new drugs and devices used within the zone can be used to support approval from the Chinese FDA–this seems to work similar to Bartley Madden’s dual track procedure.
Daxue: Since 2020, the National Medical Products Administration has introduced regulations on real-world evidence (RWE), with the pilot zone being the exclusive RWE pilot in China. This means that clinical data from licensed items used within the zone can be transformed into RWE for registration and approval in China. Consequently, medical institutions in the zone possess added leverage in negotiations with international pharmaceutical and medical device manufacturers seeking to enter the Chinese market.
… This process significantly reduces the time required for approval to just a few months, saving businesses three to five years compared to traditional registration methods. As of March 2024, 30 medical devices and drugs have been through this process, among which 13 have obtained approval for being sold in China.
The zone also uses peer-approval for imports of health food, has eliminated tariffs on imported drugs and devices and waived visa requirements for many medical tourists.
To be sure, it’s difficult to find information about Boao Hope medical zone beyond some news reports and press releases so take everything with a grain of salt. Nevertheless, the free city model is catching on. There are already 29 hospitals in the zone including international hospitals and hundreds of thousands of medical tourists a year. The medical zone is part of a larger free port project.
Prospera is ideally placed for a medical zone for North and South America. The Honduran government should look to China’s Boao Hope Medical Zone to see what Prospera could achieve for Honduras with support instead of oppositon.
Hat tip: MvH.
Do you want a Democratic or Republican doctor?
Political polarization is increasingly affecting policymaking, but how is it influencing professional decision-making? This paper studies the differences in medical practice between Republican and Democratic physicians over 1999-2019. It links physicians in the Medicare claims data with their campaign contributions to determine their partyalignment. In 1999, there were no partisan differences in medical expenditure perpatient. By 2019, Republican physicians are now spending 13% more, or $70 annually per patient. We analyze four potential sources of this partisan difference: practice characteristics (i.e., specialization and location), patient composition, preferences for financial gain, and beliefs about appropriate care. Even among physicians in the same specialty and location treating patients for the same condition, Republican physicians spend 6% more, especially on elective procedures. Using a movers design, we also find large partisan differences for treating the same patient. We find no evidence that these partisan differences are driven by profit incentives. Instead, the evidence points to diverging beliefs. Republican physicians adhere less to clinical guidelines, consistent with their reported beliefs in prior surveys. The timing of the divergence matches the politicization of evidence-based medicine in Congress. These results suggest that political polarization may lead to partisan differences in the beliefs and behavior of practitioners.
That is from the job market paper of Woojin Kim from UC Berkeley. I found this one of the most interesting job market papers of this year.
Prediction Markets for the Win
The prediction markets predicted the election outcome more accurately and more quickly than polls or other forecasting methods, just as expected from decades of research. In this election, however, many people discounted the prediction markets because of large trades on Polymarket. Paul Krugman, for example, wrote:
Never mind the prediction markets, which are thin and easily manipulated.
None of that was true but perhaps that was par for the course. Even some prediction market experts, however, began to wobble under the influence of “whale” manipulation theories. But this story was always shaky. What was the supposed logic?
Few directly articulated the theory—perhaps because it sounds absurd when spelled out. The idea seems to be that whales shifted market odds from 50:50 to 40:60, hoping this would drive more people to vote for Trump. Really? Were voters in Pennsylvania watching Polymarket to decide who to vote for? In a decision market, manipulation might be desirable to a whale (albeit unlikely to succeed), but in prediction markets, this scenario seems dubious: a) people would need to know about these markets, b) they’d need to care about probability shifts on these markets (as opposed to voting say the way their family and neighbors were voting), and c) this would have to be an effective way to spend money to influence votes compared to the myriad other ways of influencing voting. Each step seems dubious.
Alternatively, maybe whales were simply wasting money, “memeing” away millions of dollars? Is that something that whales do? The memeing theory is more plausible with many small traders, not a few whales. Or maybe the whales aimed to spark excitement among the minnows, hoping to build momentum before cashing out. However, exciting small traders to inflate prices and then exiting is risky; the same power that whales have to drive up prices can drive prices down just as quickly, making a profitable exit challenging. In short, while not impossible, the idea of whale-driven manipulation in prediction markets was far-fetched.
In fact, we now know that the biggest whale was moving the markets towards accuracy (against his own interest by the way). In an excellent WSJ article we learn:
The mystery trader known as the “Trump whale” is set to reap almost $50 million in profit after running the table on a series of bold bets tied to the presidential election.
Not only did he see Donald Trump winning the presidency, he wagered that Trump would win the popular vote—an outcome that many political observers saw as unlikely. “Théo,” as the trader called himself, also bet that Trump would win the “blue wall” swing states of Pennsylvania, Michigan and Wisconsin.
Now, Théo is set for a huge payday. He made his wagers on Polymarket, a crypto-based betting platform, using four anonymous accounts. Although he has declined to share his identity, he has been communicating with a Wall Street Journal reporter since an article on Oct. 18 drew attention to his bets.
In dozens of emails, Théo said his wager was essentially a bet against the accuracy of polling data. Describing himself as a wealthy Frenchman who had previously worked as a trader for several banks, he told the Journal that he began applying his mathematical know-how to analyze U.S. polls over the summer.
Here’s the most remarkable bit. Theo commissioned his own polls using a different methodology!
Polls failed to account for the “shy Trump voter effect,” Théo said. Either Trump backers were reluctant to tell pollsters that they supported the former president, or they didn’t want to participate in polls, Théo wrote.
To solve this problem, Théo argued that pollsters should use what are known as neighbor polls that ask respondents which candidates they expect their neighbors to support. The idea is that people might not want to reveal their own preferences, but will indirectly reveal them when asked to guess who their neighbors plan to vote for.
…In an email, he told the Journal that he had commissioned his own surveys to measure the neighbor effect, using a major pollster whom he declined to name. The results, he wrote, “were mind blowing to the favor of Trump!”
Théo declined to share those surveys, saying his agreement with the pollster required him to keep the results private. But he argued that U.S. pollsters should use the neighbor method in future surveys to avoid another embarrassing miss.
Thus, a big win for prediction markets, for Polymarket and for GMU’s Robin Hanson, the father of prediction markets, whose work directly influenced the creation of Polymarket.