What would a REAListic party program look like?
Today, for the first time in 16 years, a chancellor not named Angela Merkel will be elected in Germany. At the time of this writing, it is not clear who will be her heir, but it is abundantly clear that democracy has become somewhat stale in Germany.
The positions of the individual parties are, all their clamoring to the contrary, remarkably similar. Sure some parties want to introduce a limit on how fast your are allowed to drive on highways and others don’t, but given how congested most roads are, this doesn’t really make an impact. I’d like to outline some ways for improving the situation.
Philosophy
Philosophically, I think our society has become pessimistic and afraid of change.
I’d’ like to offer a counterpoint and advocate for Deutschian meliorism, the idea that all evils come from a lack of knowledge, yet fortunately humans are universal explainers and constructors. This means that we will be able to solve our problems eventually, if we keep searching for good knowledge and explanations. And if we setup our institutions and societies to allow for change. I am also intrigued by the Rawlsian minimax principle, where the well-being of the least advantaged in society is of primary concern, a position that arises from behind the “veil of ignorance”; the imagined constraint on knowledge that makes the position of an individual in society the result of a random process. The idea is: if you don’t know, if you will end up powerful, beautiful and smart, or poor and ill, what would you like the institutions to be like? (Of course, this ideal is hard to achieve, but providing a base-level for society’s weakest members seems to be a good starting point)
Popperian piecemeal engineering tries to improve institutions by incrementally changing them in what would be called “agile” today. Hayek’s insights about local knowledge and the role of prices in a market system as mediator are valuable and has been extended by Taleb with the concept of fractal localism, where societies are structured to look the same at all relevant scales and each layers competences are created bottom-up from the special knowledge at that layer. Overall, the idea of creating anti-fragile societies, i.e. communities which gain from variation and unpredictable innovation, while insuring against the worst outcomes, is what I want to achieve. I believe, we can have both, state provided certainty for the basics, like food, housing, healthcare etc. and market-driven innovation, supported by robust deployment and research funds from the state, forming the “barbell strategy” of governmental concern.
Here are a few ideas. Not all of them might work together or as intended, but I think these are issues well worth of political deliberation. Openness to ideas and a willingness to experiment our way to a better solutions is the core of REALism - randomized, experimental, advancive liberalism. It is a centrist position picking an choosing ideas from different political streams with one goal: setting the stage for human flourishing and programmatically eliminating the greatest sources of suffering, without being tied down by ideological and historical shackles.
Democracy
The most basic tenet of democracy is the principle of consent of the governed. The people are allowed to choose their government on their own. I think it is clear that this principle does not hold anymore. Political parties, tasked with “assisting” the people in governing themselves, have arrogated themselves the reigns of power. The established parties have setup a process that funnels influence, prestige and money their way, closing the door in the face of newcomers. The election process itself is conductive to this: given that no party with less than 5% of the cast votes will get any say in the parliament, voting for a party most closely resembling your own volition is a fool’s game. Many voters are forced to cast votes contrary to their conscious. Even superficially scanning the literature on these topics, it seems clear that there are some good answers to dealing with this issue. Let’s reduce parties to their proper role: drafting legislation proposals, commenting on the pros and cons of their own and other parties’ ideas and doing some honest footwork for issues. Parties are supposed to be a group of citizens engaging the citizenry, and not wannabe rulers playing a game of thrones.
How we mark our ballots
Let’s fix how we mark our ballots. Instead of using on cross, let’s have a system, where you score candidates of parties on scale of 0 to 5. I think STAR (score, than automatic runoff) voting is a great choice. This system has two rounds. In the first round, the scores of voters are aggregated. The two candidates with the highest aggregate scores proceed to the runoff stage. In this stage, a ballot that assigns a higher score to one of the runoff candidates is counted as a vote for that candidate; the same score for both is counted as abstention. The candidate with the most votes wins.
This system has several advantages, most prominently that smaller parties are less likely to act as spoilers and that voters can vote their conscious without throwing away their vote.
How we cast our ballots
It’s 2021 and technology has come a far way since the method of counting ballots we still use today has been implemented. I think it’s completely inexcusable and frankly incomprehensible to have a system, where a voter cannot check for herself that her vote has been recorded as cast and counted as recorded. There are numerous candidates for end-to-end verifiable voting systems, like “Prêt à Voter”, “Scratch & Vote”, “Wombat Voting”, which would offer such assurances to the voter. Ideally, I would like to have a system, where voters can cast their vote by letter and check that it was properly recorded. On “election day”, you could get to a voting place and challenge your vote (via some secret information about the ballot) to make sure that the system worked as intended.
Who casts ballots? And whom or what are they cast for?
Germany has a representative democracy, where the people elect locally a person that casts votes on actual legislation. Given the remarks above about how established parties are rigging the process, candidates without a party affiliation have a really hard time to garner enough support to break rank and get into a position of actual influence. An alternative would randomly select committees of citizens to vote on proposals. These would be drawn by lot to deliberate on a specific question or proposal. These people, because they are randomly selected, should be a good sample of all ages, genders, backgrounds, sexual preferences etc. of the people according to their proportion in the general population. These people are not easily bribeable, because they are “in power” for too short a time and they have to live with the consequences of their decisions. Representatives today are everything but representative, they are in general too old, too educated and too rich. I would much rather see a system, where debates about issues, not party affiliation are the center of politics and hope that “getting” rid of the vote for political parties is a way to fullfil the promise of democracy even better. See Fishkin for successful experiments with this mode of participation or my take on it. When people are thinking about issues in an as ideal as possible setting, democracy can thrive and “the people” can assume power.
Laws
The political quarrel about laws seems to stem, at least in part, from the high stakes they represent. I think we could foster compromise, if we change our view of “laws” to mean “experimental rules of conduct”.
Temporal reach
The infinite lifespan of laws makes them so high stakes. We could make laws to only last for example for 5 years. After this period they have to be approved again or expire automatically. We could validate what works and what doesn’t.
Spatial Reach
One of the major changes I’d like to see in politics is the recognition that reality trumps theory. I think we need to come to terms with the idea of radical uncertainty: there are just a lot of things we don’t know and cannot know a priori. I think it would be valuable to set up opportunity zones, where certain smaller jurisdictions are allowed to experiment with locally changed laws. These experiments would have to be monitored closely and the results could inform larger jurisdictions. Instead of spending decades debating the theoretic merits of a proposal, we could test it in small and learn. We are living in a VUCA world: volatility, uncertainty, complexity and ambiguity. Years of work in companies, a scale much smaller than a city, have taught us that being able to correct errors based on feedback and experience is more valuable than devising “the perfect plan” beforehand. There is no perfect plan: obviously, there are infeasible, overly complicated and excessively expensive plans, but like with so much, it is far easier to detect the worst aspects than it is to find the optimal or perfect solution. The world changes with every new invention and technology, we should strive to incorporate it into our knowledge and system and always keep open for the positive black swans.
Topical Reach
Most legislation is written by lawyers and for lawyers. This is a big problem, because the governed can’t even comprehend what rules they are supposed to follow. Laws should be written in a style and language that is easy enough for the general public to understand. Additionally, a law that does not fit on a single page is probably too complex and could be refactored into shorter, more easily comprehensible parts.
Technology
The Enlightenment and industrial revolution has freed us from the shackles of agriculture and has made huge improvements in our standard of living possible. We are infinitely far away from the end of this road.
Energy
Energy is a technology, which can solve a lot of other questions for us. Given cheap enough energy, creating drinking water from seawater, heating and cooling, indoor farming, recycling, and so much more become feasible. Remember that almost all goods need energy to be manufactured or transported to see what an impact energy technology has on our lives.
There are several options on the table for creating a reliable, high-energy future for ourselves. These are primarily the use of fossil fuels with some form of carbon-capture and storage (CCS) or nuclear power. There are two different forms of nuclear power, at least conceptually. The so called nuclear fission power plants, these are the ones that have been the largest source of clean energy for several decades and than there are fusion power plants, which are still in development. Increasing investments in this area seems like a no-brainer to me, but is in stark contrast with the policy of all major German parties, which chose to close down zero-carbon nuclear power plants now and continue to run coal power plants until 2038. We know the physics of nuclear fission very well and there are dozens of nuclear startups currently designing advanced nuclear power plants. Some of them are smaller and less complex versions of the older, large power plants we already know, while some power plants are operating on liquid salt as a fuel and can use what we call waste from the previous generation of power plants. The now known and quite mature technologies could easily power us for thousands of years. If we can get the advanced reactors going until than, they can last us for hundreds of millions of years, by extracting uranium from seawater. So called graphite-moderated, molten salt reactors are approximately 6 times as efficient using Uranium. Put differently, they would be able to replace most of todays thermal fossil fuel plants without any increase in Uranium mining (itself a rather minor sector of that industry) and enrichment capacities (which we could easily do).
Fusion power plants have not yet demonstrated to be capable of producing more power output than input. But the companies and research institutions have come closer. We know that fusion works, because the sun and all the other stars are the embodied proof of it. Once we get it going, there are two fuels on this planet (DD+, HB11) that could each last us easily until our sun becomes a red giant. And these sources of power could also be used for the exploration of space, other planets and moons.
We have spent almost 600G€ on renewable energy and we are running up against instability and reliability issues. We could probably fix a lot of them with cheap enough storage. But we don’t have that and we don’t know how to build it. Storage and nuclear power (of both types) seem like the obvious routes to direct RD&D money towards. But then there are geothermal energy, hydrogen producing algae and solar-power satellites. As always the problem with centralized decisions and plans is the fragility of plans to new knowledge and the limited knowledge of the planner. Despite my personal strongly favorable views on nuclear power, I think a broad RD&D initiative has the highest change of success. Maybe it will turn out that nuclear heat can produce hydrogen from deep sea methane hydrate cheaply enough to power us for a century or two. Who knows? And that’s the point. We’ll have to figure it out.
What’s less uncertain, probably more controversial route for energy investments: reliable fossil fuels for the developing world. The developed world is blocking investments in the development of such energy sources. Access to electricity has been declining in Africa! But even if it tripled its electricity consumption using natural gas, it would increase global CO2 emission by 1%, but lift a lot of people out of misery. Similar numbers are true for a lot of the developing world. There are of course also large, undeveloped hydro capacities in Africa, which could be financed. But for some reason, the Western world has decided that keeping people of color in desperate poverty is a good climate strategy; a position I wholeheartedly despise.
Information
Access to research information is another very important topic. Having access to scientific literature is so important, that I think any interested individual should be able to access as much of it as possible. One way to achieve that are of course open-access papers, which are fortunately becoming more popular. The other side would constitute a kind of “universal library pass” for every citizens that wants one. All publicly funded research should be accessible publicly.
Public discourse is often stifled by misinformation: information that is out of context, not comparing the right things or outright made up. I think it would be wonderful to disseminate information on “all sides” to people, just like services like Ground News are trying to do. This should of course be the task of the publicly funded media, but I think it is not spending enough money on having hard debates and too much money on inflating the prices of soccer tickets. Discourse in the argument - counter -response format, publicly stated and indexed, from proponent and opponent would often be helpful to facilitate the debate. We could easily use graphical tools to assist this process, like Kialo. I think our democracy is not as vibrant and by far not as close to the population as it could - and I think should - be.
While the question of a person’s identity is often discussed under the label of identity politics, I am more concerned with the practical questions concerning the identification of a person. I think it is well past due to issue secure electronic identities. These could be in the form of the human readable plastic cards we are already accustomed to. If these cards would also hold cryptographic keys, we’d be able to electronically identify a person for contracts and all sorts of legal documents. The IDs could act as root anchor of trust and would allow us to experiment with concepts like eVoting or even liquid democracy. Almost all contracts can be signed remotely with them, in most cases making even the notary unnecessary. Also, if companies are uniquely identifiable, there would be less opportunity for scammers to found similarly sounding shell companies to funnel money around. Every apartment, every house, every m² of land could have a GUID, which could be referenced in contracts.
Having access to information is important, but so is control over data. I think that information about a person belongs to that person. For that reason, I think that the control over their own data and social graphs has to rest with the individual. Systems like solid could put control back into the hands of citizens and would allow a person to tightly control what information a service or company is allowed to access about an individual.
Other Technology
Problems are inevitable. We will always have them, the best we can do is to make sure we have a good set of problems. Starvation, cholera and civil war are a really bad set of problems to have compared to too much processed food, diabetes and plastic waste. The sure fire way to get to a better set of problems is technology. I think it is probably true that technological solutions spark as much problems as they are supposed to solve, but the good thing is that they solve a problem that’s really hurting you and give you a problem that is manageable. Dying of cold and heat is a really bad problem, calling the HVAC-guy, because of that irritating sound it makes is a better one.
We are, as always, in need for innovation. We need cheaper housing, more food plants and animals that are resilient against droughts and plights and offer higher productivity, we could even go beyond GMOs right to cellular agriculture, we need cheaper public transport, more desalination capabilities, recyclable plastics or even better materials for packaging and hygiene, better ways of disposing of our waste, like plasma torches, green cement and steel, direct air capture of CO2 and so on and on. I think we as society should finance innovation and reap its benefits.
There is no obvious reason, why public or pension money cannot act as venture capital. Getting innovations out of the lab and into industry could boost our productivity and welfare tremendously.
Immigration
The movement of people into a new country is contested. But the benefits are enormous.
Open to immigration
There is probably no other policy on which economists agree as much as on the issue of immigration. It has been described as “picking up a trillion dollar bill”. The accident of birth - and therefore citizenship - determines to a large part the productivity and income of individuals. It’s estimated that “optimal” immigration can boost world GDP by 60 to 150%. The division of labor is that powerful. Opening a path to immigration is not the same as a policy of open boarders, though. It’s important to know how is within the boundaries of a country. It’s also no equivalent to an immigration policy, where immigrants live in secluded parallel societies. Integration is work for all members of society. The optimal level of immigration could be set by a council of economists. We could determine the need in different sectors of the economy and set standards accordingly. Qualifying immigrants could be selected by lot. If the market is (over)saturated, fewer lots could be drawn and vice versa. It’s also feasible to “ask a price” for immigration in the form of higher taxes. Excluding immigrants from certain services is equivalent to levying higher taxes on immigrants, which can be seen as price for entry that immigrants have to pay.
Healthcare: Vouchers
Healthcare is such an essential service, that the argument can be made that it is a human right to have insurance. However the debate about the ethics of it will turn out, it stands to reason that it is cheaper to provide recent immigrant with healthcare insurance than to have to support them via emergency medicine facilities. Healthcare can be privately and competitively provided, given that access to them is guaranteed by a system of vouchers. It is the task of politics to set the market incentives in a way the benefit the population. Health insurers need to compete against each other to provide the best service at a reasonable cost. Maybe that entails selling the prestigious addresses and company cars and maybe that entails engaging their insureds and making them abstain from sugar, tobacco and alcohol and sponsoring a fitness class. I don’t know. And that’s point. It’s a hard question and local knowledge transmitted by prices is well suited for answering such questions. Too much state control is locking in profits and stifling progress.
Pension as investments: open to all participants
It has become common knowledge that our current pension schemes are not sustainably financed. Just increasing contributions to these schemes will shift the problem a little bit farther down the road, but it will not solve this problem. The alternative, a privately founded retirement system is disliked by many, but it does not seem like there are many alternatives. Maybe the Swiss model of instituting minimum and maximum pensions without capping the contribution might be seen as one. One idea is to freeze payouts from the current system, introduce a fixed, tax-financed pension payout that is the same for all retirees and leave the rest to private retirement schemes, with mandatory or merely default minimum contributions. This scheme could include features such as shared contribution by parents of children, paying half of the total retirement money of a family onto each parent’s retirement account. Such a scheme would also be great for immigrant workers, which would contribute to such a system for however long they are working and would then get payouts from their capital, where ever they happen to living at that time.
Taxes & Finance
Taxes are used to raise revenue and to influence the distribution of income. How we levy taxes has a great effect on where the burden falls. Here are some proposals that could stabilize the market system, make it far more inclusive and equitable and even entirely reshape the power balance between labor, capital, banks and landholders.
Income Tax
Probably all citizens agree that the tax laws are arcane, contrived and at least feel like they were designed to offer loopholes for those well above the mean income.
An easy solution to this might be to just levy a flat tax on all incomes.
This would of course be a rather regressive approach, if this were the only change in the tax system. That’s why this proposal is often combined with other measures, like higher level of tax free incomes. A particularly attractive option is the combination of a flat tax with what is called a negative income proposal. More on that later. Uncluttering tax laws is very popular with ordinary people, but could “rob” better off people of attractive tax deduction opportunities.
Property Income Limited Leverage
There are typically two kinds of assets that spur speculative bubbles. One of them is real estate. The property income limited leverage proposal is geared towards countering the positive feedback-loop of increasing debt-levels driving higher home prices. In this proposal, the maximum amount of debt a buyer can assume is limited to a fixed multiple of the average level of rent a comparable house can generate, for example for 10 years.
That will of course reduce house prices, because a lot of buyers would like to assume higher levels of leverage. But if millions of people assume a little bit more risk than is prudent, individual risk quickly add up to systemic risks. Higher house prices will therefore create a counter-force, because buyers with too little own capital will get priced out of the market, severing the positive, often destructive feedback-loop.
Value Added Tax
A tax levied on each and every sale. Companies “forward” VATs to their customers, in the end, the consumer is paying these taxes. Mathematically, a VAT equivalent to a tax on existing wealth, because the net present value of liquid capital is reduced by the tax. Interestingly, a VAT is highly regressive, because poorer households tend to spend a far larger portion of their income. Their net tax rate is therefore substantially higher, than it may look like, if you only look at income tax rates. The solution to this is the payment of a reimbursement to all citizens, to make the equivalent of “subsistence level spending” VAT-free for all. We got the tax, we don’t have the reimbursements.
Expenditure Tax
The expenditure tax has been proposed by Rawls as possibly the best and “fairest” tax to levy. This tax measures how much an individual is extracting from society. The tax base is calculated by adding all income of a person, containing so called imputed rents of houses, yachts, etc. The Difference between this income and investments (also non-material investments like education) are taxed above a threshold. This threshold could be several hundreds of thousand of dollars per year. This is a tax on consumption. While investing money is not taxed, throwing around money at a party, a luxury trip to the Bermudas or buying fancy handbags on the other side is taxed.
Carbon Price
There are two general ideas to do this. Either creating certificates that allow a certain amount of CO2 emissions, which can be traded at an exchange or levying a tax on CO2 emission. Practically, both proposals would primarily look at large emitters, like refineries, oil, gas and coal producers, power plants and so on. In both proposals, these produces would have to pay according to how much CO2 their products emit. In the case of a tax, this amount is set by political means. In the case of certificates, the price is set via a market. This means that an economic downturn will result in lower prices on certificates, in the case of direct taxes, this price might stay the same. A tax on carbon is often combined with a dividend, paying all citizens the averaged amount of taxes. Certificates could also be issued for individual citizens. They can choose to sell these at the market, but they can also opt to delete these certificates, “paying” for a reduction in carbon emissions by forfeiting some of their possible income. A price on carbon is widely seen as the most efficient way to deal with the looming threat of climate change. Both described models would make the cost of CO2 salient and even be progressive, hitting higher income households on average more, while for example roughly 80% of American households would gain more than they pay. These proposal can of course only work, when there is a border adjustment tax on all goods, otherwise, carbon-intensive products would just be produced abroad and imported.
Minimum Income/Services
To limit the gap in society, a minimum income or the idea of a minimum services would mitigate how far a person can fall. The idea of minimum services might actually be more progressive, as poorer people are more likely to use them. Minimum basic services would include housing, electricity, water, heating, internet, some device to use the internet, food (possibly in a public kitchen), health insurance, public transport, access to education and information sources (library++) and maybe access to some sports. This would ensure a minimum level of social participation, especially for children, while eliminating means testing, which is often inefficient, humiliating and expensive.
An interesting form of a basic income is a negative income tax. In this scheme, each person is granted an income tax rebate, for example 500€ and a tax exemption, for example 250€. If a person does not earn anything, the difference between taxes owed and taxes payed is exactly this 500€. If we assume a tax rate of 45% and a monthly income of 1000€, this person would have to pay taxes on 750€ (income - exemption), which is 337,50€, but having the tax rebate of 500€, the person will actually have a net income of 1162,50€, which is a negative net tax rate. A person making 10000€ a month on the other hand, will have to pay 3887.5€, resulting in a net tax rate of 38.88%. When health insurance and the pension scheme are basic services, the gross income of people should markedly rise, because a company does not care how much a person gets on net, but how much a company has to pay gross to that employee.
If there is any fear of foreigners “flooding” the country to get their hands on this money, it seems entirely defensible to have a phase-in time for working migrants. There could for example be 0€ of tax rebate for the first 3 years and then 100€ per full year of employment till reaching the maximum level, at which point a working migrant should be qualified for naturalization anyway. This is equivalent to a higher net tax rate and could be said to be the price of immigration.
Limited Purpose Banking
Limited purpose banking is a proposal of Kotlikoff, which would revoke the limited liability status for financial institutions, if they do not become mutual funds. Mutual funds cannot go bankrupt, but of course the value of the underlying assets can tend towards zero. A mutual funds company is not allowed to invest on their own. The adherence to these stipulations is overseen by new regulatory organs, which might replace all the different other financial regulators. These new regulators would assess the risk of assets and tabulate real-time risk exposure of funds. Funds would buy their assets at auctions. For people in need of a credit, things would get better. They would get assessed by one of the regulators and put their credit request up for auction on the market place. This would invert the information asymmetry, because the request for a credit can get assessed by all creditors, eliminating the need to “shop” for a good credit contract. Derivatives would be created in the parimutuel system only, which again, would be overseen by the regulator. Mutual funds would hold “cash funds”, which are backed to the buck by the state. These replace “checking” accounts, wrestling the general public out of the hands of banks, where they are hostages during large crises, like the 2008/09 crash. This would derisk banks and shift risks to potential beneficiaries of risk and might help to prevent speculative bubbles.
Transaction Tax
The transaction tax puts friction on an industry that tries to extract arbitrage and is suspected of not only not generating any positive social value, but to the contrary destroy a lot of it. This tax would be a little percentage of the traded value, which will most probably eliminate the gain a trader was expecting and enforce longer holding times. It will, however, probably not be a source of substantial revenue. Instead, it will grind an especially suspicious blossom of the financial industry, the so called “robotraders” to a halt. The effect on the liquidity of the market, often cited as possible downside of such a scheme, would have to be assessed and weighed of course.
Jubilee Shares
Jubilee shares are another tool to limit the potential for speculative bubbles in stocks. This is done by limiting a stock’s life-time. The issuance of share would probably work the same as before (but could of course be substituted by cryptographic tokens) and the shares would work the same as before. But once a share is traded, it get and expiration date. This period has been proposed to be 50 year, but I think a time span of 25 years might boost the efficacy of this tool. The idea is that the initial shareholders of a company put some of their capital into it, when it needs money to expand. The secondary market does not add to the company’s capital. An expiration date of shares should cause investors to work with their net present value, thereby forcing them to look at the fundamentals of a company and not some speculative and imagined value.
Land Value Tax
A major reform would be the land value tax. This tax has had many proponents, the most vocal of them probably being Henry George. This tax limits the speculative potential of land by extracting money on the basis of how valuable the land is. Idle land gets taxed as well. The diversity of supporters for such a tax range from Milton Friedmann to Joseph Stiglitz across the spectrum of economic schools.
This tax does not diminish the productivity of capital and labor and can arguably even boost it.
The tax is based on the idea, that it represent a fee for the exclusive use of land. The holder of land does not necessarily contribute to the increase of land value. A sprawling, industrious city will raise nearby land value, giving the control of large rents to these landlords, which get rich without risk and exertion.
It is also a means of raising public revenue progressively. Landlords are unable to pass the tax onto tenants because the supply and demand of rented land is unchanged. Because the supply of land is perfectly inelastic, land rents depend on what tenants are prepared to pay, rather than on the expenses of landlords, and so the tax cannot be passed on to tenants. Stiglitz showed with his “Henry George Theorem” that this tax could, under certain assumptions, raise enough revenue to pay for all of the (optimally chosen) public investments.
Land in the economic sense describes every input that is not labor or capital, i.e. not human-made. This includes solar radiation, minerals, special conditions for usage of gravity, the electro-magnetic spectrum etc. I recently argued for the inclusion of “locale rent”, something that is generated just because a lot of people choose to congregate at a spot, even a digital one. A local sporting team will reap a lot of local patrons, a social media platform creates network effects, an online RPG will keep gamers, if the community is great.
Seigniorage
The benefit from creating money and being able to use it to buy goods at pre-inflation prices, is called “seigniorage”. Today, we create new money in the form of debt. Does it have to be that way? I don’t know. But if it does have to be this way, do the first holders have to be a specially selected group of well connected banks? Or could ordinary people become the holders of the seigniorage, for example being given shares in a mutual fund corresponding to the debt created with the newly “minted” money? Could entrepreneurs be preferentially given such credit? I think there are several scenarios that are able to distribute seigniorage far more equitable than it is done today.
Education
The world is changing and we need to make sure people can get the education they need in our dynamic world.
Vouchers for Education
The topic of schools and education in general is fraught with distrust and inefficiencies. Schools still look pretty much exactly like they looked in 1850 and they are still in a lot of cases more of a glorified daycare facility than an institution of education. It stands to reason that a lack of innovation in the form we run schools is directly linked to its status as “too important to leave to market forces”-category. But there is wide area between “state-run schools with compulsory attendance” and “if you cannot pay, you have to starve in the cold outside”. And this area could be used productively with vouchers. Sweden of all places has had positive experiences with this model, where they grant each and every student a voucher that can only be used for schooling. Schools cannot get another way of earning compensation. These schools can be privately run and compete with the government run schools. Apparently, there are substantial gains in students’ performance, thanks to at least some room for experimentation. The other question regarding “schools” is of course not only “how do they teach”, but “what do they teach”? And the problem is that this question is often answered politically or ideologically instead of needs driven. English, mathematics & statistics, information theory, physics, economics, evolutionary biology, logic, psychology and communication skills seem like obvious candidates for a modern curriculum. These topics are often hard and it seems that softer topics are replacing those in the students’ curricula, even though there are a lot of students who’d love to dive deeper into these topics and ditch literature reviews for it. And the market would love it as well! Or at least more so than knowledge in Latin or ancient Greek. There needs to be more leeway in how a student gets “the stamp of approval” also known as diploma.
Foundational year(s)
It is an open question for me, whether a mandatory year for young people to work on public infrastructure and helping out people should be instituted. This could help young people to grow as person and get some contact with the real world. The merger of practical experience and maybe parallel education could also help to level differences in experience and personal wealth in these important foundational years. Electrical, civil and communications engineering, construction work, care work, clearing forests to manage the fire hazard, etc., there is a lot do be done and a lot to be improved for society. Here and abroad.
Post-secondary education
Typical university courses are probably not well-suited for the demands of today. The speed of innovation makes the model of “learn once, get a certificate, be done” less attractive. Incrementally learning new technologies seems to be a far better model for most people today. “Real” scientists dedicated to the advance of knowledge have probably been a minority of university graduates for more than 30 years. It does not make sense to create the administrative overhead for universities and equipment, when most people are interested in applicable, job-relevant knowledge. It could be said the “the university experience” is valuable for students, because they get to mingle and grow as persons. But this positive experience should not cost hundreds of thousands of dollars per person. Maybe the foundational year(s) could be a substitute.
Addiction
Managing addiction will become a superpower of the next century.
Currently illegal highs
The war on drugs has mostly failed. The criminalization of a lot of substances, like the war on THC, has created a lot of suffering. Criminals reap huge sums of money from the monopoly on selling these substances. So much money in fact that some countries, like Mexico or Afghanistan are controlled by people benefiting from the flow of drug money. The experience of some countries, like Portugal or the Czech Republic make a different approach more promising. The legalization AND regulation of some substances, like THC, the decriminalization of psychotropics (LSD, psilocybin) for treatment of mental illnesses (depression), the offering of substitution substances, a shelter first strategy and generous treatment offerings. Too many families have suffered from loss of relatives to an early death or the prison system. There is no reason to destroy the life of people for consuming certain substances, while nicotine and alcohol remain legal. The sale of regulated substances could of course create an additional revenue stream for the state, but this is not the main concern. All people agree that the heroin “junkie” in the streets is offensive to our sense of community and human dignity. But that does not mean that we can help them best by driving them into criminal activities, prostitution and out of their social environment. And it’s hard to imagine how that person is helped by pestering well functioning adults for a few grams of weed in their pockets. Minors should of course be protected in their cognitive development. The legal age for these substances should therefore be determined by the best available evidence. It might even end up above the legal voting age. The sale could be facilitated by shops similar to what emerged in the US in response to a partial legalization of cannabis in some states. People that become too dysfunctional to participate in normal social life and opt for criminal behavior to finance their addictions should be giving the choice between jail and treatment.
Cartels have become a scourge on society and far too many people of color pay with their lives for the developed countries’ attempt to control the consumption behavior of their own populations. Smashing the monopoly rent on this money will probably not drain their power immediately, but it would probably make it more economical for them to convert themselves into more or less regular large companies. That’s arguably better.
Currently legal highs
Countless companies are measuring the addictiveness of their products to make them as addictive as possible. What once started with slot machine manufacturers designing their games for maximum player retention, has moved into smartphone game developers measuring engagement and colossally large social media companies optimizing their algorithms for “outrage”, shares and likes. Food companies are testing their creations in laboratories to make them more addictive by tweaking the sugar to fat ratio and the artificial flavors. Then there are of course the “classic” addiction problems, like “gambling” and “alcohol”, destroying lives and families. It’s hard to imagine that we’d allow alcohol for general consumptions, if it were invented today.
Pornography has reached new levels in sophistication geared towards delivering ever more niche content to release these sweet, sweet hormones more effectively. Even dating has become more addictive by turning it into a game on a smartphone. It might sound old fashioned, but I think it is a problem, when peoples’ lives are ruled by their addictions. Addictions, that got implanted on purpose by the vendors of the products. The effect of these addictions has to be monitored and counteracted. I am open to ideas such as a tax on sugar in products, a blanket ban on social media for minors, the treatment of food addictions with one of the various drugs currently under research or voluntary registries for addicts, where they can exclude themselves from the consumption of products like gambling or porn. This would of course imply a credible and secure electronic ID system and mandatory ID verification of such sites… anything but popular I imagine. But of course there might be better solutions these - and I fully acknowledge that I might be wrong in my judgement - problematic products. I’d love to see credible data on that.
Systems for Societal Progress
What we can work on everyday to make society better at all levels.
Strategic Openness
Strategic openness is a society’s best shot at creating wealth. Integrating new ideas and challenging the status quo prevents stagnation. But this openness implies the shunning of ideological ideas. When people trade openness to dogma, they can gain certainty and a community of like minded individuals, but they close off innovation and improvements. We need to become more like idealized scientists and abstain from calcifying. New people, new ideas, new technology. These can get us forward. We need to put a conscious effort in being open and not to be wed to our current ideas.
Use Nudges
When ever possible, changes in the behavior of people should be facilitated with the least amount of force possible. Nudges are a powerful technique to shape the behavior of people. This could for example be how the food selection is sorted in a cafeteria, how incentives are structured, what happens to your bank account or organ donor status, if you don’t do anything and so on. A handy mnemonic is:
iNcentives
Understanding mappings
Defaults
Give Feedback
Expect error
Structure complex choices
Nudges are the primary tool of what Sunstein would call libertarian paternalism, leaving people the choice to do how they please, but having nudges in place to influence people in a way that would be beneficial to an average citizens: for example, paying a default percentage of your income into a pension scheme, if you don’t opt out of it.
A welcome structuring of complex choices would constitute the creation of standardized, easily comprehensible, juristically air-tight contracts for renting an apartment, leasing or buying a car or a house, EULAs for software products, several insurance, credit and mobile contracts etc. There is no reason why anybody should ever spend money or time on drafting, comprehending and challenging these in front of court. Specify the contract, tick the boxes for the elements that apply, sign it electronically and be done with it.
Debias and Denoise Institutions
While bias describes a systematic error, for example a process always treats certain groups worse, noise describes how much variance is in a process, for example differences in prison sentences for very similar crimes. While randomization is a great tool to combat bias for example in hiring (design a test, take all people above a predetermined cut off, select one of the eligible candidates at random, or selecting members of legislative councils by lot), there is a rather straight forward solution for noise: using simple predictors and adhering to structured procedures geared towards reducing noise, so called noise audits. The variance of noise is often higher than the variance caused by bias, it is therefore extremely important to reduce its influence. If we want to have a credible institutions, we will have to work on both topics.
Choose Sensible Metrics
“You manage what you measure” is a common quip. But the inverse is all too often also true, “you don’t manage, what you don’t measure”. Too often, conveniently measurable quantities are elevated to the rank of “performance indicator” and thus indirectly to a determinant of society’s future. I think, if we switched form measuring “total” GDP, but instead opted for measuring “spread of wealth” or “income of lowest income stratum”, our politicians would probably behave differently. The same is of course true for other things, like the response to Covid. If “lives saved” is the only relevant indicator, instead of for example “quality adjusted life years” or a weighted metric of “lives saved” and “lives harmed”, the response looks markedly different. We have to be careful in what we want to measure and make the methods and data transparent, because the public has a right to check the efficacy of their elected officials and their administration.
Give Foreign Aid Efficiently
There is astonishingly much good we can do with astonishingly little money. I am convinced that strategically investing in improvements prioritized by the method the Copenhagen Consensus Center and similar NGOs have spearheaded is the right way to go. We can eradicate a lot of awful diseases and parasites, provide nutrition to young children, help with farming practices, climate adaption, energy projects, family planning and so on. We should orient our help along these lines and help to improve the life of many people.
Reducing the Prevalence of Bullshit Jobs
David Graeber has popularized the concept of “Bullshit Jobs”. These are jobs that are seen by their holders as entirely devoid of purpose. There are different flavor of such jobs: Flunkies, who only exist to boost the prestige of the boss, Goons, who are only hired, because other companies have goons (i.e. corporate lawyers), Duct Tapers, who are mending an organizational flaws or software bugs that can easily be automated, Box Tickers, who are hired so a company can pretend to work on something it isn’t (CSR Manager) and Task Masters, people who are monitoring productive people.
Trading time against money, employees are essentially becoming temporary slaves and made to do senseless stuff, because it’s “owed” to the business owner that they do “something” while on the clock. There are a lot of useless corporate jobs and layers of hierarchy, that effective prevent the rise of talent, muddle responsibilities, prolong times needed for making a decision and are creating in effect the “Dilbert” corporate world. These jobs, often paying handsomely, are doing harm to their holders’ psyche.
The reductions of such jobs could help to address widespread depression. A social safety net like outlined above could help to reduce the amount of Bullshit Jobs from two sides: the employees can more easily leave such jobs and a change in the property and power structure could recenter the economy around the needs of the masses, instead of the needs of the top 1%, which nonetheless holds over half the wealth on this planet, along with that comes of course the power to shape huge parts of it.
And maybe, just maybe, the interest of the top 1% are not as relevant to the people at large.