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Radical Markets: Uprooting Capitalism and Democracy for a Just Society
Revolutionary ideas on how to use markets to bring about fairness and prosperity for all
Many blame today's economic inequality, stagnation, and political instability on the free market. The solution is to rein in the market, right? Radical Markets turns this thinking--and pretty much all conventional thinking about markets, both for and against--on its head. The book reveals bold new ways to organize markets for the good of everyone. It shows how the emancipatory force of genuinely open, free, and competitive markets can reawaken the dormant nineteenth-century spirit of liberal reform and lead to greater equality, prosperity, and cooperation.
Eric Posner and Glen Weyl demonstrate why private property is inherently monopolistic, and how we would all be better off if private ownership were converted into a public auction for public benefit. They show how the principle of one person, one vote inhibits democracy, suggesting instead an ingenious way for voters to effectively influence the issues that matter most to them. They argue that every citizen of a host country should benefit from immigration--not just migrants and their capitalist employers. They propose leveraging antitrust laws to liberate markets from the grip of institutional investors and creating a data labor movement to force digital monopolies to compensate people for their electronic data.
Only by radically expanding the scope of markets can we reduce inequality, restore robust economic growth, and resolve political conflicts. But to do that, we must replace our most sacred institutions with truly free and open competition--Radical Markets shows how.
Many blame today's economic inequality, stagnation, and political instability on the free market. The solution is to rein in the market, right? Radical Markets turns this thinking--and pretty much all conventional thinking about markets, both for and against--on its head. The book reveals bold new ways to organize markets for the good of everyone. It shows how the emancipatory force of genuinely open, free, and competitive markets can reawaken the dormant nineteenth-century spirit of liberal reform and lead to greater equality, prosperity, and cooperation.
Eric Posner and Glen Weyl demonstrate why private property is inherently monopolistic, and how we would all be better off if private ownership were converted into a public auction for public benefit. They show how the principle of one person, one vote inhibits democracy, suggesting instead an ingenious way for voters to effectively influence the issues that matter most to them. They argue that every citizen of a host country should benefit from immigration--not just migrants and their capitalist employers. They propose leveraging antitrust laws to liberate markets from the grip of institutional investors and creating a data labor movement to force digital monopolies to compensate people for their electronic data.
Only by radically expanding the scope of markets can we reduce inequality, restore robust economic growth, and resolve political conflicts. But to do that, we must replace our most sacred institutions with truly free and open competition--Radical Markets shows how.
368 pages, Hardcover
First published May 18, 2018
About the author
Eric A. Posner
37 books73 followersEric Posner is the Kirkland & Ellis Professor of Law at The University of Chicago.
His books include Law and Social Norms (Harvard 2000); Chicago Lectures in Law and Economics (Foundation 2000) (editor); Cost-Benefit Analysis: Legal, Economic, and Philosophical Perspectives (University of Chicago 2001) (editor, with Matthew Adler); The Limits of International Law (Oxford 2005) (with Jack Goldsmith); New Foundations of Cost-Benefit Analysis (Harvard 2006) (with Matthew Adler); and Terror in the Balance: Security, Liberty, and the Courts (Oxford 2007) (with Adrian Vermeule). He is also an editor of the Journal of Legal Studies. He has published articles on bankruptcy law, contract law, international law, cost-benefit analysis, constitutional law, and administrative law, and has taught courses on international law, foreign relations law, contracts, employment law, bankruptcy law, secured transactions, and game theory and the law. His current research focuses on international law, immigration law, and foreign relations law. He is a graduate of Yale College and Harvard Law School.
His books include Law and Social Norms (Harvard 2000); Chicago Lectures in Law and Economics (Foundation 2000) (editor); Cost-Benefit Analysis: Legal, Economic, and Philosophical Perspectives (University of Chicago 2001) (editor, with Matthew Adler); The Limits of International Law (Oxford 2005) (with Jack Goldsmith); New Foundations of Cost-Benefit Analysis (Harvard 2006) (with Matthew Adler); and Terror in the Balance: Security, Liberty, and the Courts (Oxford 2007) (with Adrian Vermeule). He is also an editor of the Journal of Legal Studies. He has published articles on bankruptcy law, contract law, international law, cost-benefit analysis, constitutional law, and administrative law, and has taught courses on international law, foreign relations law, contracts, employment law, bankruptcy law, secured transactions, and game theory and the law. His current research focuses on international law, immigration law, and foreign relations law. He is a graduate of Yale College and Harvard Law School.
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May 27, 2018
This book introduces five provocative ideas for major economic and political reforms: a common-ownership self-assessed tax (COST) for taxing property, quadratic voting for political influence, a visas between individuals program (VIP) for liberalizing immigration, breaking up institutional investors' ability to own large stakes across an industry, and vague digital unions so "technoserfs" are paid for their digital labor.
The arguments for the proposals get steadily weaker through the book, to the point that the authors are clearly far beyond their comfort range in the "technofeudalism" chapter (e.g., they put virtual reality as a kind of machine learning, they posit insane numbers for the marginal value of data—saying that Facebook should be willing to pay $15 for someone to confirm that two of his friends have indeed broken up—and so on). Unfortunately, this leaves me distrusting the authors' expertise in the other chapters as well.
I wanted to like the book. The common-ownership self-assessed tax idea is provocative and exciting, and deserves to be better known. Quadratic voting is also interesting. However, I think you can get most of the books' ideas more efficiently from listening to the Econtalk podcast with one of the authors, http://www.econtalk.org/archives/2018... . Beyond this podcast, the book adds a poorly written science-fiction vignette at the beginning of each chapter, some history (that you probably already know), and slightly repetitive elaboration of the ideas. It is not poorly written, but it would be better if it were more focused, and perhaps edited to a long magazine article.
The arguments for the proposals get steadily weaker through the book, to the point that the authors are clearly far beyond their comfort range in the "technofeudalism" chapter (e.g., they put virtual reality as a kind of machine learning, they posit insane numbers for the marginal value of data—saying that Facebook should be willing to pay $15 for someone to confirm that two of his friends have indeed broken up—and so on). Unfortunately, this leaves me distrusting the authors' expertise in the other chapters as well.
I wanted to like the book. The common-ownership self-assessed tax idea is provocative and exciting, and deserves to be better known. Quadratic voting is also interesting. However, I think you can get most of the books' ideas more efficiently from listening to the Econtalk podcast with one of the authors, http://www.econtalk.org/archives/2018... . Beyond this podcast, the book adds a poorly written science-fiction vignette at the beginning of each chapter, some history (that you probably already know), and slightly repetitive elaboration of the ideas. It is not poorly written, but it would be better if it were more focused, and perhaps edited to a long magazine article.
July 18, 2018
Absolutely the most insufferable book I have read in years, and I have an ulterior motive to like it since I'm cited in it. Somehow despite living in the US, on earth, for several decades, the authors have not gotten the memo that RICH PEOPLE IMMEDIATELY GET TO WORK RIGGING ANY SOCIAL STRUCTURE THE MOMENT IT COMES INTO EXISTENCE. And that the one and only solution that has consistently worked historically is CLASS STRUGGLE. Instead of recognizing this to any degree whatsoever, the authors instead propose a bunch of mechanism design concoctions that are ~10x more complicated than our current economic market designs, and thus ~10x easier for the rich to rig while the poor suffer what they must.
November 29, 2021
"Radical Markets" is an excellent book on the fascinating topic of mechanism design. Designed mechanisms are all around us. Take a look at eBay auctions. What about the US presidential elections? Why do they have the rules they have instead of a different set of rules? Are some mechanisms more effective than others at achieving particular outcomes?
I disagree with a lot of the specific implementation details proposed in this book. Nevertheless, this is a five stars book because I like where the authors' train of thought is going.
Despite its title, this book incorporates many socialist elements. This book illustrates that the socialist vs capitalist dichotomy is profoundly misguided. I am sure many people will misconstrue the word 'radical' in the title of this book to mean ‘unfettered’, but that is incorrect. This book advocates for plenty of regulation. However, it is a different kind of regulation. It is regulation through well-designed protocols that achieve certain desired societal outcomes.
Before we get started, I would like to indulge in addressing two common criticisms of this book.
- Impractical: This is the classic "it is impractical" counterargument. Democracy, too, was thought of as a fantasy at some points in history, yet ~14% of countries in the world today are fully democratic.
- Unnatural: I hear people saying, "mechanism design is unnatural technocratic bullshit." I don't understand what these people want. What do they propose as an alternative to designed mechanisms? Natural selection? Should we all go back to being hunter-gatherers? Is that somehow more practical?
Mechanisms are all around us, and we don't pay much attention to them. Fishes are oblivious to the existence of water, blithely living out their lives without noticing its presence until it is no longer there.
Let us consider an eBay auction as an example of an effective mechanism design. When you bid on an item on eBay, you nominate the highest price you are willing to pay for the item. However, when the auction concludes, and you are the auction winner, you are not obliged to pay that price. Instead, you pay the price equal to the second-highest bid. This auction design is advantageous to both the buyer as well as the seller. This design eliminates the "winner's curse," which is a phenomenon that can occur when the highest bid is much larger than the second-highest. The advantage for the seller is that buyers are less afraid to participate in an auction and make high bids. This design is called a Vickrey auction, for which William Vickrey was awarded the 1996 Nobel Prize in Economics.
This book can be divided into 4 sections:
1. Self-assessed tax.
2. Quadratic voting.
3. Visa sponsorship between individuals.
4. Data compensation.
This review will focus on the first two proposals. I don't find the last two particularly insightful or engaging.
Self-Assessed Tax
Self-assessed tax is a protocol stating that individuals ought to evaluate their assets and submit a public price. Their annual tax will be calculated based on this self-assessed valuation of their assets. Simultaneously, individuals must be willing to sell their assets at that price. For example, a doctor would be required to announce a price for their surgery and be willing to pay an annual tax based on this price and also be willing to perform the surgery at that price. This mechanism incentivises honesty.
The self-assessed tax could potentially help address the problems of tax havens and loopholes. If Facebook tried to do price gouging to pay less in taxes and valued itself to be worth less than what it is actually worth, then this protocol will require Facebook to sell its shares for a lower price.
This is a very crude idea. I like the idea of addressing problems at the incentive-structure level instead of applying bandaids. However, I cannot imagine a practical implementation of this mechanism because I cannot imagine anyone wanting the government to force them to sell their assets or services.
The logic behind self-assessed taxation goes all the way back to ancient Athens:
Quadratic Voting (QV)
QV is absolutely fascinating and has the potential to solve big problems in the world. Under QV, voters cast a number of votes proportional to the degree they care about something by making the marginal cost of each additional vote linearly increasing. For example, if you were a Jew in 1933 Germany, then you would be willing to buy more votes to vote for a candidate who doesn't hate the Jews even if those votes get really expensive.
QV is primarily a surgical fix for the tyranny of the majority by allowing voters to express the degree of their preference, and thus, the people who really really care about something will have a stronger voice than those who only care a little about that matter. The primary benefit of being able to express the degree of preference when voting is that voters will feel a lesser need to "scream" in order to be heard. With 1P1V, you have a single vote so you better make it count. With QV on the other hand, voters will be more inclined to allocate their votes to issues according to how much they value said issues.
One major issue with QV is collusion. The marginal cost of buying one vote is different for different people, therefore if you could spread a number of votes out across multiple people, you could buy more votes for the same amount of money.
I personally don't see collusion as a big deal. First of all, insider trading is impossible to prevent but we have laws that do a good job in discouraging it. Second, most people don't trust enough people for large scale coordination to work. Third, isn't collusion just a form of cooperation?
The QV model can be used to create a public market for public goods, called Quadratic Payments (QP). QP is a surgical fix for the tragedy of the commons.
Vitalik Buterin (creator of Ethereum) wrote an excellent explanation of this topic on his blog: https://vitalik.ca/general/2019/12/07....
Overall, this is an excellent book despite not being perfect.
I disagree with a lot of the specific implementation details proposed in this book. Nevertheless, this is a five stars book because I like where the authors' train of thought is going.
Despite its title, this book incorporates many socialist elements. This book illustrates that the socialist vs capitalist dichotomy is profoundly misguided. I am sure many people will misconstrue the word 'radical' in the title of this book to mean ‘unfettered’, but that is incorrect. This book advocates for plenty of regulation. However, it is a different kind of regulation. It is regulation through well-designed protocols that achieve certain desired societal outcomes.
Before we get started, I would like to indulge in addressing two common criticisms of this book.
- Impractical: This is the classic "it is impractical" counterargument. Democracy, too, was thought of as a fantasy at some points in history, yet ~14% of countries in the world today are fully democratic.
- Unnatural: I hear people saying, "mechanism design is unnatural technocratic bullshit." I don't understand what these people want. What do they propose as an alternative to designed mechanisms? Natural selection? Should we all go back to being hunter-gatherers? Is that somehow more practical?
Mechanisms are all around us, and we don't pay much attention to them. Fishes are oblivious to the existence of water, blithely living out their lives without noticing its presence until it is no longer there.
Let us consider an eBay auction as an example of an effective mechanism design. When you bid on an item on eBay, you nominate the highest price you are willing to pay for the item. However, when the auction concludes, and you are the auction winner, you are not obliged to pay that price. Instead, you pay the price equal to the second-highest bid. This auction design is advantageous to both the buyer as well as the seller. This design eliminates the "winner's curse," which is a phenomenon that can occur when the highest bid is much larger than the second-highest. The advantage for the seller is that buyers are less afraid to participate in an auction and make high bids. This design is called a Vickrey auction, for which William Vickrey was awarded the 1996 Nobel Prize in Economics.
This book can be divided into 4 sections:
1. Self-assessed tax.
2. Quadratic voting.
3. Visa sponsorship between individuals.
4. Data compensation.
This review will focus on the first two proposals. I don't find the last two particularly insightful or engaging.
Self-Assessed Tax
Self-assessed tax is a protocol stating that individuals ought to evaluate their assets and submit a public price. Their annual tax will be calculated based on this self-assessed valuation of their assets. Simultaneously, individuals must be willing to sell their assets at that price. For example, a doctor would be required to announce a price for their surgery and be willing to pay an annual tax based on this price and also be willing to perform the surgery at that price. This mechanism incentivises honesty.
The self-assessed tax could potentially help address the problems of tax havens and loopholes. If Facebook tried to do price gouging to pay less in taxes and valued itself to be worth less than what it is actually worth, then this protocol will require Facebook to sell its shares for a lower price.
This is a very crude idea. I like the idea of addressing problems at the incentive-structure level instead of applying bandaids. However, I cannot imagine a practical implementation of this mechanism because I cannot imagine anyone wanting the government to force them to sell their assets or services.
The logic behind self-assessed taxation goes all the way back to ancient Athens:
"Most of us think of the liturgy as the words chanted by members of a religious community. But the term originated in ancient Athens where it meant roughly “public works” and referred to the responsibility of the roughly 1,000 wealthiest citizens to fund the operations of the state, particularly the army and navy. How did the Athenians determine which citizens were the wealthiest? According to Demosthenes, any member of the liturgical class could challenge any other citizen he believed was wealthier to antidosis or “exchange.” The person being challenged would have to either assume the liturgical responsibility or exchange all possessions with the challenger. The system gives everyone an incentive to be honest despite the burdens of the liturgy. If you falsely claimed to be poorer than the top 1,000 so as to avoid the liturgical burdens, then you could end up being forced to exchange your possessions with someone who is poorer than you are."
Quadratic Voting (QV)
QV is absolutely fascinating and has the potential to solve big problems in the world. Under QV, voters cast a number of votes proportional to the degree they care about something by making the marginal cost of each additional vote linearly increasing. For example, if you were a Jew in 1933 Germany, then you would be willing to buy more votes to vote for a candidate who doesn't hate the Jews even if those votes get really expensive.
QV is primarily a surgical fix for the tyranny of the majority by allowing voters to express the degree of their preference, and thus, the people who really really care about something will have a stronger voice than those who only care a little about that matter. The primary benefit of being able to express the degree of preference when voting is that voters will feel a lesser need to "scream" in order to be heard. With 1P1V, you have a single vote so you better make it count. With QV on the other hand, voters will be more inclined to allocate their votes to issues according to how much they value said issues.
One major issue with QV is collusion. The marginal cost of buying one vote is different for different people, therefore if you could spread a number of votes out across multiple people, you could buy more votes for the same amount of money.
I personally don't see collusion as a big deal. First of all, insider trading is impossible to prevent but we have laws that do a good job in discouraging it. Second, most people don't trust enough people for large scale coordination to work. Third, isn't collusion just a form of cooperation?
The QV model can be used to create a public market for public goods, called Quadratic Payments (QP). QP is a surgical fix for the tragedy of the commons.
Vitalik Buterin (creator of Ethereum) wrote an excellent explanation of this topic on his blog: https://vitalik.ca/general/2019/12/07....
Overall, this is an excellent book despite not being perfect.
May 12, 2018
From its Table of Contents, “Radical Markets” might seem to be a meandering hodgepodge of thought experiments. Each chapter elaborates on specific and unexpected areas where “radical markets” might be introduced in their current absence, but the interrelation of these case studies and policy proposals can appear tenuous. Book projects in the social sciences are typically deep elaborations on a tight substantive areas. However, the contrasting breadth of “Radical Markets” isn’t an overreach beyond appropriate area-expertise. Rather, each topic and chapter maps to ongoing published papers and academic projects, reflecting the span of the authors’ recent research careers.
Modern economics increasingly occupies itself with tight empirical identification and meticulous mathematical models. Meanwhile, Posner and Weyl audaciously use “Radical Markets” to expound on topics like the inherent justifiability of private property or equal-vote democracy. The key to understanding this approach — and the authors’ research agendas generally — lies in the book’s introduction and conclusion. There, Posner and Weyl harken back to a cast of figures that they dub the “Philosophical Radicals”, including post-enlightenment Political Economists like Adam Smith, David Ricardo, John Stuart Mill, and Henry George, as well as more controversial thinkers like Karl Marx (*collective gasp*) and Ludwig von Mises (*aghast gasp*). In orthodox economics, these figures are treated like Pre-Newtonian physicists or medieval scholastics. In heterodox circles, they serve as rallying points for hopelessly opposed camps of partisans. Posner and Weyl instead evoke these thinkers for their common commitment to questioning the inefficient public institutions of their day, no matter how entrenched and inevitable they may have seemed. Even though the modern liberal democratic order is a product of these thinkers’ astounding success, the authors suggest that our present day calls for its own cadre of questioning “Radical Philosophers” with unexpected disruptive ideas.
Among those the authors dub the “technocratic middle”, this exercise might seem unnecessary. Modern “neoliberal” types seem to take Fukuyama’s “end of history” seriously in its broad strokes. When I glossed the premise of “Radical Markets” to one such friend (pursuing an economics PhD), he suggested that we’re in an era of diminishing marginal returns for new ideas — better to carefully tinker and keep the machine of modernity humming along. Posner and Weyl destabilize this intellectual complacency in “Radical Markets”. First, they use their introduction to synthesize a wealth of contemporary research suggesting that the liberal order is threatened by rising inequality, stagnation, polarization, nativism, and coercive market power. In the “meat” of the work that follows, the authors convincingly argue that institutions we take for granted are both hopelessly inefficient/inequitable and theoretically substitutable. The authors argue that these alternative — including continuous auctions for property and an alternative voting scheme based on the Vickrey-Clarke-Groves mechanism — could both help address present social ills and build towards a brighter future that’s inconceivable in the same way today’s world would have seemed far-fetched in the 18th century.
“Radical Markets” doesn’t provide a flawless utopian vision for tomorrow’s brave new world. The authors openly demur on the merit of their proposals, suggesting a gradual and iterative path for implementation to help forestall the disasters that occur when humans act unexpectedly in new institutional settings. This seems advisable. The concerns of critics on both ethical and practical grounds are worth listening to. Care should be taken in pursuing alternatives to systems that presently provide a basic bulwark against inefficiency or violations of human rights. Posner and Weyl, however, are right to point out the status quo is already a moral disaster on many dimensions, inattentive as it is to unjustly appropriated wealth, violations of meaningful minority rights, and abhorrent intra- and international income inequality. The authors are shouting from their platform that the Emperor has no clothes, and suggesting he put on a coat. Critics may argue vehemently for pants instead, but have basically ceded to the authors’ premise that present public institutions are unjustifiable and ought to be uprooted for a more just society.
I’ve been exposed to most of the ideas covered in “Radical Markets” ahead of time through lectures, working papers, op-eds, and casual conversations. My first reaction is usually dismissive, given how decently capitalism and democracy seem to be doing in their broad strokes. In the months and years that followed these encounters, Posner and Weyl’s ideas have come to roost and relentlessly gnaw at this initial skepticism, especially when I’m forced to reckon with the many failings of the present liberal order. I’d encourage other doubtful readers to let the ideas presented here stew in a similar fashion before jumping to conclusions. The parallel to Socrates introduced earlier fits in the following sense: some of Posner and Weyl’s proposals may smack of dystopia in the same way his ideal “Republic” does, and perhaps justifiably so in cases. However, taking the time to engage seriously with the authors’ ideas can leave anyone feeling a little bit like Socrates’ unfortunate interlocutors, and they will be made better thinkers for it. In a world where little matters like ideas do, “Radical Markets” provides the most articulate and accessible package of the authors’ radical ideas to date. Therefore, I enthusiastically recommend picking up a copy, and hope you find the journey as thought-provoking as I have.
A fuller review can be found on my blog
Modern economics increasingly occupies itself with tight empirical identification and meticulous mathematical models. Meanwhile, Posner and Weyl audaciously use “Radical Markets” to expound on topics like the inherent justifiability of private property or equal-vote democracy. The key to understanding this approach — and the authors’ research agendas generally — lies in the book’s introduction and conclusion. There, Posner and Weyl harken back to a cast of figures that they dub the “Philosophical Radicals”, including post-enlightenment Political Economists like Adam Smith, David Ricardo, John Stuart Mill, and Henry George, as well as more controversial thinkers like Karl Marx (*collective gasp*) and Ludwig von Mises (*aghast gasp*). In orthodox economics, these figures are treated like Pre-Newtonian physicists or medieval scholastics. In heterodox circles, they serve as rallying points for hopelessly opposed camps of partisans. Posner and Weyl instead evoke these thinkers for their common commitment to questioning the inefficient public institutions of their day, no matter how entrenched and inevitable they may have seemed. Even though the modern liberal democratic order is a product of these thinkers’ astounding success, the authors suggest that our present day calls for its own cadre of questioning “Radical Philosophers” with unexpected disruptive ideas.
Among those the authors dub the “technocratic middle”, this exercise might seem unnecessary. Modern “neoliberal” types seem to take Fukuyama’s “end of history” seriously in its broad strokes. When I glossed the premise of “Radical Markets” to one such friend (pursuing an economics PhD), he suggested that we’re in an era of diminishing marginal returns for new ideas — better to carefully tinker and keep the machine of modernity humming along. Posner and Weyl destabilize this intellectual complacency in “Radical Markets”. First, they use their introduction to synthesize a wealth of contemporary research suggesting that the liberal order is threatened by rising inequality, stagnation, polarization, nativism, and coercive market power. In the “meat” of the work that follows, the authors convincingly argue that institutions we take for granted are both hopelessly inefficient/inequitable and theoretically substitutable. The authors argue that these alternative — including continuous auctions for property and an alternative voting scheme based on the Vickrey-Clarke-Groves mechanism — could both help address present social ills and build towards a brighter future that’s inconceivable in the same way today’s world would have seemed far-fetched in the 18th century.
“Radical Markets” doesn’t provide a flawless utopian vision for tomorrow’s brave new world. The authors openly demur on the merit of their proposals, suggesting a gradual and iterative path for implementation to help forestall the disasters that occur when humans act unexpectedly in new institutional settings. This seems advisable. The concerns of critics on both ethical and practical grounds are worth listening to. Care should be taken in pursuing alternatives to systems that presently provide a basic bulwark against inefficiency or violations of human rights. Posner and Weyl, however, are right to point out the status quo is already a moral disaster on many dimensions, inattentive as it is to unjustly appropriated wealth, violations of meaningful minority rights, and abhorrent intra- and international income inequality. The authors are shouting from their platform that the Emperor has no clothes, and suggesting he put on a coat. Critics may argue vehemently for pants instead, but have basically ceded to the authors’ premise that present public institutions are unjustifiable and ought to be uprooted for a more just society.
I’ve been exposed to most of the ideas covered in “Radical Markets” ahead of time through lectures, working papers, op-eds, and casual conversations. My first reaction is usually dismissive, given how decently capitalism and democracy seem to be doing in their broad strokes. In the months and years that followed these encounters, Posner and Weyl’s ideas have come to roost and relentlessly gnaw at this initial skepticism, especially when I’m forced to reckon with the many failings of the present liberal order. I’d encourage other doubtful readers to let the ideas presented here stew in a similar fashion before jumping to conclusions. The parallel to Socrates introduced earlier fits in the following sense: some of Posner and Weyl’s proposals may smack of dystopia in the same way his ideal “Republic” does, and perhaps justifiably so in cases. However, taking the time to engage seriously with the authors’ ideas can leave anyone feeling a little bit like Socrates’ unfortunate interlocutors, and they will be made better thinkers for it. In a world where little matters like ideas do, “Radical Markets” provides the most articulate and accessible package of the authors’ radical ideas to date. Therefore, I enthusiastically recommend picking up a copy, and hope you find the journey as thought-provoking as I have.
A fuller review can be found on my blog
October 28, 2018
So I ordered this without paying enough attention to notice that, for all his references to Gary Becker in the introduction, co-author Eric Posner is… my age!
Turns out he’s the son of judge Richard Posner, from whose text, along with Polinsky’s, my teacher Keith Hylton introduced me to the subject of Law and Economics some thirty (gulp!) years ago and whose blog with Gary Becker was such a joy to read until Becker’s recent passing.
Eric Posner and his co-author Glen Weyl start by surveying the state of the post-2008 world and stating that our economics and our politics have reached the end of the line. Now, they argue, is the time for some radical ideas.
There are, indeed, lots of non-standard ideas here. Hacks, more like. Some are, frankly, duds. One, just one, is solid gold!
Hack number one aims to unlock the economy’s potential for growth by setting underutilized assets free. It is dubbed COST for “common-ownership self-assessed tax” and the idea is that nobody really ought to own anything in permanence. The scheme works as follows: if you’re sitting on an asset you need to let the world know what it’s worth and you must pay tax on that assessment of its value. Crucially, everybody else is allowed to buy it from you at the price at which you’ve assessed it! As a result, the asset is always being used by whoever (thinks he) can put it to its best use and society is always earning a cut.
The thing is, before John Lennon sang “Imagine no possessions” the Beatles first sang “I, me, mine.” Even leaving to one side the fact that this idea is rather “coercive” (as the authors most certainly do!) it’s also rather impractical, because it turns every citizen into a trader. Some of us are good traders, but is that a good use of everybody’s time? And there’s the issue of deciding upfront what the typical lifetime of an asset can be. Plus the fact that many assets require upkeep of the kind you’d try to avoid if your tenure as the custodian was uncertain.
There are myriads of other impracticalities; indeed the authors dedicate pages 64 to 66 addressing a number of them, but just as they are discussing how to solve one problem a keen reader can think of another. Example: to circumvent the fact that many assets are owned on a leveraged basis, the authors suggest that loans must automatically move with property. Erm, right there, that’s the end of banking, the activity of lending chiefly against character, rather than collateral. I could go on…
Hack number two is “quadratic voting.” The idea is to allocate to every citizen a bunch of votes and then allow you to save your vote on one or more issues and allow you to use multiple votes on another, with the caveat that you can only influence the outcome by the square root of your voting power. So the square root of one is one, but if you are allocating sixteen votes to something you really care about, then it only counts as four votes. It’s a neat trick, because that way majorities who don’t really care about a subject can get outvoted on this subject by minorities who actually do. The minority who does so, however, has to give up on the other things on which it can’t vote.
Again, the idea sounds fantastic (and the associated math, whereby the cost of an externality grows with the square of the externality itself, is rather convincing), but the practicalities are daunting. How many issues do we really vote on to begin with, how does one go about allocating votes to people and over what period? How many votes do people get for President and how many for local school council? How should we deal with surprise elections?
Suppose we’ve solved all those problems, bigger ones arise: once we’ve broken one-man-one-vote, have we not opened pandora’s box? This could be the thin edge of the wedge in terms of introducing all sorts of ways to disenfranchise the underprivileged or the poor. Even more importantly, those of us who can do the math know that on the margin our vote will rarely swing any results. We chiefly vote out of civic duty. In my view, schemes that assign weights to votes undermine this principle.
The third hack, Visas Between Individuals Program (VIP) would allow each citizen to bring to the country an immigrant for a fixed period of time on a pre-agreed stipend and to earn for himself any money the immigrant would make in the host country in excess of the pre-agreed stipend. The idea is that everybody comes out of this better and that the people of the host country benefit directly from immigration, rather than read in textbooks that it’s a good thing…..
Erm, where do I start with this brilliant idea?
I almost stopped reading right there, but thank goodness I didn’t, because hack number four (no more implementable than hacks one, two or three) aims to solve an important problem of twenty-first century capitalism that has a much deeper and much more concentrated cause than I ever realized.
Long story short, if you ever come across “Radical Markets,” go straight to page 168 where the authors give the answer to one of the big unsolved mysteries of modern finance. To wit, anybody you ask what’s wrong about twenty-first century capitalism in America will list at least one of the following:
1. Market Power, the result of continuing mergers eliminating competition among companies in every sector both for our custom and to employ us.
2. Lack of investment, as companies increasingly prefer to buy back their own shares, rather than invest in capital and human capital.
3. Inequality, as CEOs benefit from said buybacks via their share option schemes, while everybody else is left with fewer options in terms of picking employers.
The authors explain that a major contributor to this malaise is the fact that at least thirty percent of all stocks are owned by indexers and quasi-indexers such as Fidelity, Vanguard, Blackrock etc. The main thing these companies need is the stock index to go up and they don’t even need to exercise their substantial voting power to force it up. CEOs know that to keep their jobs they need to get the share price to go up now, and who cares about later. As part of the bargain, their own share options make them millionaires, while the ones who get forced out have the consolation of a golden parachute.
The hack the authors propose is simple: no investor with more than 1% of the market should have more than one holding per sector! “Good luck with that one,” I hear you say, but God knows it would do the trick: these players would suddenly need to win in the marketplace!
Hack number five isn’t much of a hack: the authors observe that while we have a way to unionize as workers, we have not found a way to do so as providers of our own data to Google and Facebook. “Datapoints of the world, unite” they scream, but I read the chapter and I could not find any concrete proposals, not even of the unworkable variety…
Finally come the chapters that attempt to tie it all together.
Whether you agree or disagree with the authors, there is no denying that the two of them are still looking for a unifying theory. You read this book and you hope they can somehow pull these seeds of ideas together, but they decidedly don’t! Five or six “hacks,” even if they are good hacks, do not amount to redefining the field of Economics.
So this was a fun read that kept me on my toes, taught me stuff and even came with a major “aha” moment, but it wasn’t worth the praise lavished on it by the luminaries on the back cover. It would be an amazingly dangerous first book in Economics for a layman, let’s put it that way.
Turns out he’s the son of judge Richard Posner, from whose text, along with Polinsky’s, my teacher Keith Hylton introduced me to the subject of Law and Economics some thirty (gulp!) years ago and whose blog with Gary Becker was such a joy to read until Becker’s recent passing.
Eric Posner and his co-author Glen Weyl start by surveying the state of the post-2008 world and stating that our economics and our politics have reached the end of the line. Now, they argue, is the time for some radical ideas.
There are, indeed, lots of non-standard ideas here. Hacks, more like. Some are, frankly, duds. One, just one, is solid gold!
Hack number one aims to unlock the economy’s potential for growth by setting underutilized assets free. It is dubbed COST for “common-ownership self-assessed tax” and the idea is that nobody really ought to own anything in permanence. The scheme works as follows: if you’re sitting on an asset you need to let the world know what it’s worth and you must pay tax on that assessment of its value. Crucially, everybody else is allowed to buy it from you at the price at which you’ve assessed it! As a result, the asset is always being used by whoever (thinks he) can put it to its best use and society is always earning a cut.
The thing is, before John Lennon sang “Imagine no possessions” the Beatles first sang “I, me, mine.” Even leaving to one side the fact that this idea is rather “coercive” (as the authors most certainly do!) it’s also rather impractical, because it turns every citizen into a trader. Some of us are good traders, but is that a good use of everybody’s time? And there’s the issue of deciding upfront what the typical lifetime of an asset can be. Plus the fact that many assets require upkeep of the kind you’d try to avoid if your tenure as the custodian was uncertain.
There are myriads of other impracticalities; indeed the authors dedicate pages 64 to 66 addressing a number of them, but just as they are discussing how to solve one problem a keen reader can think of another. Example: to circumvent the fact that many assets are owned on a leveraged basis, the authors suggest that loans must automatically move with property. Erm, right there, that’s the end of banking, the activity of lending chiefly against character, rather than collateral. I could go on…
Hack number two is “quadratic voting.” The idea is to allocate to every citizen a bunch of votes and then allow you to save your vote on one or more issues and allow you to use multiple votes on another, with the caveat that you can only influence the outcome by the square root of your voting power. So the square root of one is one, but if you are allocating sixteen votes to something you really care about, then it only counts as four votes. It’s a neat trick, because that way majorities who don’t really care about a subject can get outvoted on this subject by minorities who actually do. The minority who does so, however, has to give up on the other things on which it can’t vote.
Again, the idea sounds fantastic (and the associated math, whereby the cost of an externality grows with the square of the externality itself, is rather convincing), but the practicalities are daunting. How many issues do we really vote on to begin with, how does one go about allocating votes to people and over what period? How many votes do people get for President and how many for local school council? How should we deal with surprise elections?
Suppose we’ve solved all those problems, bigger ones arise: once we’ve broken one-man-one-vote, have we not opened pandora’s box? This could be the thin edge of the wedge in terms of introducing all sorts of ways to disenfranchise the underprivileged or the poor. Even more importantly, those of us who can do the math know that on the margin our vote will rarely swing any results. We chiefly vote out of civic duty. In my view, schemes that assign weights to votes undermine this principle.
The third hack, Visas Between Individuals Program (VIP) would allow each citizen to bring to the country an immigrant for a fixed period of time on a pre-agreed stipend and to earn for himself any money the immigrant would make in the host country in excess of the pre-agreed stipend. The idea is that everybody comes out of this better and that the people of the host country benefit directly from immigration, rather than read in textbooks that it’s a good thing…..
Erm, where do I start with this brilliant idea?
I almost stopped reading right there, but thank goodness I didn’t, because hack number four (no more implementable than hacks one, two or three) aims to solve an important problem of twenty-first century capitalism that has a much deeper and much more concentrated cause than I ever realized.
Long story short, if you ever come across “Radical Markets,” go straight to page 168 where the authors give the answer to one of the big unsolved mysteries of modern finance. To wit, anybody you ask what’s wrong about twenty-first century capitalism in America will list at least one of the following:
1. Market Power, the result of continuing mergers eliminating competition among companies in every sector both for our custom and to employ us.
2. Lack of investment, as companies increasingly prefer to buy back their own shares, rather than invest in capital and human capital.
3. Inequality, as CEOs benefit from said buybacks via their share option schemes, while everybody else is left with fewer options in terms of picking employers.
The authors explain that a major contributor to this malaise is the fact that at least thirty percent of all stocks are owned by indexers and quasi-indexers such as Fidelity, Vanguard, Blackrock etc. The main thing these companies need is the stock index to go up and they don’t even need to exercise their substantial voting power to force it up. CEOs know that to keep their jobs they need to get the share price to go up now, and who cares about later. As part of the bargain, their own share options make them millionaires, while the ones who get forced out have the consolation of a golden parachute.
The hack the authors propose is simple: no investor with more than 1% of the market should have more than one holding per sector! “Good luck with that one,” I hear you say, but God knows it would do the trick: these players would suddenly need to win in the marketplace!
Hack number five isn’t much of a hack: the authors observe that while we have a way to unionize as workers, we have not found a way to do so as providers of our own data to Google and Facebook. “Datapoints of the world, unite” they scream, but I read the chapter and I could not find any concrete proposals, not even of the unworkable variety…
Finally come the chapters that attempt to tie it all together.
Whether you agree or disagree with the authors, there is no denying that the two of them are still looking for a unifying theory. You read this book and you hope they can somehow pull these seeds of ideas together, but they decidedly don’t! Five or six “hacks,” even if they are good hacks, do not amount to redefining the field of Economics.
So this was a fun read that kept me on my toes, taught me stuff and even came with a major “aha” moment, but it wasn’t worth the praise lavished on it by the luminaries on the back cover. It would be an amazingly dangerous first book in Economics for a layman, let’s put it that way.
November 5, 2018
When this came out, the real focus was on the immigration proposal that was more or less slavery with extra steps. Then there was also the part where all property is continually for sale. I wasn't sympathetic to most of the proposals they had in here - one, quantum voting sounds interesting but can also feel full of holes once you start asking questions - because they feel like some sort of rehashed cross between radical libertarianism and public choice. These both have been in practice used as intellectual justification to further marginalize the already marginalized. That is not the state goal here, it is market worship in extremis, but I worry about Market Failure even more when it become your god.
July 5, 2019
Interesting in places. The authors diagnose some of the political & economic problems we're facing today, but (imo) underestimate their scale/importance. And I'm not convinced by the solutions they propose, which range from the bizarre and frankly unethical (improving the US immigration system by allowing individuals to "import" migrants as indentured servants...?) to the really mundane (changes to voting design, which might be a small step up, but hardly seem radical given the problems diagnosed).
The last chapter has some weird, half-baked thoughts on tech companies inferring consumer preferences through machine learning, and how we could run the whole economy that way. A data-obsessed startup founder's wet dream, maybe, the authors don't make a solid case for why this digital surveillance dystopia would be beneficial to anyone else.
Overall: worth reading if you're doing research on a related topic. Not recommended for the general reader interested in radical economic policy - this book is light on grand narratives or interesting ideas, and spends way too much time bogged down in the details of their policy proposals.
The last chapter has some weird, half-baked thoughts on tech companies inferring consumer preferences through machine learning, and how we could run the whole economy that way. A data-obsessed startup founder's wet dream, maybe, the authors don't make a solid case for why this digital surveillance dystopia would be beneficial to anyone else.
Overall: worth reading if you're doing research on a related topic. Not recommended for the general reader interested in radical economic policy - this book is light on grand narratives or interesting ideas, and spends way too much time bogged down in the details of their policy proposals.
September 4, 2018
Absolutely impractical, unworkable technocratic drivel.
June 2, 2018
A brilliant, provocative work that is somewhere along the spectrum between economics and science fiction. The book is framed around a critique of economics that belies its central thrust—which is the unsparing discussion of how various systems straight out of mechanism design but often untethered from any psychological/historical/enforcement/implementation considerations could help make highly rational, utility/profit-maximizing agents better off.
Each chapter develops and presents a specific proposal: (1) abolishing private property and instead making all physical capital and tangible possessions effectively available for rent at any time by anyone that wants them; (2) shifting to “quadratic voting” where people have a budget for votes and can cast a limited number of them; (3) a new immigration system whereby everyone could bring an immigrant to the country to work here; (4) a rule to limit the largest asset managers from owning multiple competitors in an industry; and (5) a new system whereby users of Facebook, Google and other “siren servers” would pay people for the data they generate.
The chapters can be read independently of each other but they have a common form (a science fiction vignette about a future society organized along the idea, a political/economic/philosophical/historical grounding for the idea, the economics of the idea, responses to objections, and in some cases a smaller version of the idea to start with). More importantly, they have a common thrust which is to assume people are rational, assume essentially nothing about history or the status quo, and ask how the economy/society could be reconstructed in a radical fashion to give primacy to markets as a way to provide incentives, collect and transmit information, and make collective decisions—but without private property.
The book is strong and deep on the economic rationale for its ideas but weak on the objections and tradeoffs and in some cases even on the motivation. Take the opening idea, COST, that all people should declare the value of all of their property, pay a 7% annual tax on it, and anyone else could buy it at cost. This is intended to create a mechanism for the accurate revelation of value because too high and you pay more taxes but too low and you risk it being bought out. But what problem exactly is this solving? Just about the only problem identified by the authors is the hold up problem (or “monopoly problem” in their language), whereby a transportation line doesn’t get built because the last person refuses to sell their house for anything less than the full surplus. It is hard to believe, however, that this is the major reason for the misallocation of capital that Posner and Weyl lament and it seems like an awful lot of effort to solve the problem. Also, how would you shift from the current system to this? How would you force people to disclose all of their complicated assets? Do we care about privacy? How would uncertainty about future ownership affect investment incentives? How would people handle the complexity of the system when they already make systematic errors about much easier financial decisions, like retirement savings? Etc. This is just a few of the points one could ask about one of the chapters.
One point to add, largely unrelated to the core chapters, one of the parts of the book I found interesting and novel was the reformulation of some economic issues in terms of computation/computer science instead of economics/math. For example, the discussion of how hard it would actually be to solve the equations you would need to for central planning—along with speculation about what would happen if this ever became possible.
Overall, I think there is an important space for books like Radical Markets, there may be a few relatively small applications (spectrum licenses, more effective polling), but worth continuing to think bigger thoughts on the very small chance something with a big payoff does happen to work out. Plus, I like speculative fiction—and this can be read as an outstanding exemplar of the genre.
Each chapter develops and presents a specific proposal: (1) abolishing private property and instead making all physical capital and tangible possessions effectively available for rent at any time by anyone that wants them; (2) shifting to “quadratic voting” where people have a budget for votes and can cast a limited number of them; (3) a new immigration system whereby everyone could bring an immigrant to the country to work here; (4) a rule to limit the largest asset managers from owning multiple competitors in an industry; and (5) a new system whereby users of Facebook, Google and other “siren servers” would pay people for the data they generate.
The chapters can be read independently of each other but they have a common form (a science fiction vignette about a future society organized along the idea, a political/economic/philosophical/historical grounding for the idea, the economics of the idea, responses to objections, and in some cases a smaller version of the idea to start with). More importantly, they have a common thrust which is to assume people are rational, assume essentially nothing about history or the status quo, and ask how the economy/society could be reconstructed in a radical fashion to give primacy to markets as a way to provide incentives, collect and transmit information, and make collective decisions—but without private property.
The book is strong and deep on the economic rationale for its ideas but weak on the objections and tradeoffs and in some cases even on the motivation. Take the opening idea, COST, that all people should declare the value of all of their property, pay a 7% annual tax on it, and anyone else could buy it at cost. This is intended to create a mechanism for the accurate revelation of value because too high and you pay more taxes but too low and you risk it being bought out. But what problem exactly is this solving? Just about the only problem identified by the authors is the hold up problem (or “monopoly problem” in their language), whereby a transportation line doesn’t get built because the last person refuses to sell their house for anything less than the full surplus. It is hard to believe, however, that this is the major reason for the misallocation of capital that Posner and Weyl lament and it seems like an awful lot of effort to solve the problem. Also, how would you shift from the current system to this? How would you force people to disclose all of their complicated assets? Do we care about privacy? How would uncertainty about future ownership affect investment incentives? How would people handle the complexity of the system when they already make systematic errors about much easier financial decisions, like retirement savings? Etc. This is just a few of the points one could ask about one of the chapters.
One point to add, largely unrelated to the core chapters, one of the parts of the book I found interesting and novel was the reformulation of some economic issues in terms of computation/computer science instead of economics/math. For example, the discussion of how hard it would actually be to solve the equations you would need to for central planning—along with speculation about what would happen if this ever became possible.
Overall, I think there is an important space for books like Radical Markets, there may be a few relatively small applications (spectrum licenses, more effective polling), but worth continuing to think bigger thoughts on the very small chance something with a big payoff does happen to work out. Plus, I like speculative fiction—and this can be read as an outstanding exemplar of the genre.
July 8, 2018
Though not every idea in this book was fully convincing, the quality of the unique ideas that were was enough to give this 5 stars. Redefining the ownership model of physical property (land, resources, energy, water etc) to an auction-based model is one of those interesting ideas.
The idea is that property, as currently defined, acts like a monopoly in the sense that it prohibits others from using that resource to offer more value to society if the owner prohibits from selling it. One can look at land acquisition costs for large public projects as one example where some sellers would "hold out" selling and jack up their prices causing additional delays and expenditures to the public. Another example in history would be landlords acquiring land through generations, not using that land efficiently and keeping lands fallow even if it could be put to more efficient use by some other means.
A continuous auction model would work as follows. Everyone declares the price of their assets. They are taxed at a certain percentage of that (perhaps set close to the average return on capital?) so people are incentivised to not raise their prices over the ideal price. However, if someone proposes buying the asset at a higher price than what is declared, the ownership is transferred to them. Thus people are also incentivised to not lower their prices above what they deem it worth. This would mean that physical property as capital would flow towards whosoever would use it to gain the highest return. The tax would serve to redistribute the returns on this "property".
Of course, people are also incentivised to invest in such "property" if they have some assurance that they will own it for some time so Capital could be transferred only after a certain time period. We can balance this investment incentive of capital against its allocative efficiency and decide on the ideal time period for different classes of "property".
Another interesting idea is that of quadratic voting in political power. That votes can be distributed as currency and that people can choose to make multiple votes for multiple candidates in any preference order. Though I was aware of the different voting systems available, the concepts of multiple votes as currency creating a market for political power was intriguing. The author proposes that multiple votes would lead to a quadratic root effect on impact so that if I save up 4 votes and use it to vote on a policy decision, I would get 2 effective votes (If I use 9, I would get 3 effective votes etc). Though the author offers some technical reasons for the quadrating voting system, they also show a study where people are asked to vote on different policy debates on both sides of the spectrum in the US (abortion, gun rights etc). People were polarised on their opinions on these debates (fully for or against abortion or gun rights for example) but when they were asked to use a quadratic voting system, the shape of their allocations changed to a more nuanced distribution, caring about some issues not so much as earlier but caring equally (and hence more expensively) about others.
There are some more ideas on Immigration, taxing human labour (as opposed to "property") and an interesting epilogue on the future of markets where the author talks about Markets as efficient, parallel, information processing systems (Hayek's Markets) and that, unlike what most economists say, Markets may not be the perfect allocative engines of the future if there were scalable systems that could do it better (AI ?).
The idea is that property, as currently defined, acts like a monopoly in the sense that it prohibits others from using that resource to offer more value to society if the owner prohibits from selling it. One can look at land acquisition costs for large public projects as one example where some sellers would "hold out" selling and jack up their prices causing additional delays and expenditures to the public. Another example in history would be landlords acquiring land through generations, not using that land efficiently and keeping lands fallow even if it could be put to more efficient use by some other means.
A continuous auction model would work as follows. Everyone declares the price of their assets. They are taxed at a certain percentage of that (perhaps set close to the average return on capital?) so people are incentivised to not raise their prices over the ideal price. However, if someone proposes buying the asset at a higher price than what is declared, the ownership is transferred to them. Thus people are also incentivised to not lower their prices above what they deem it worth. This would mean that physical property as capital would flow towards whosoever would use it to gain the highest return. The tax would serve to redistribute the returns on this "property".
Of course, people are also incentivised to invest in such "property" if they have some assurance that they will own it for some time so Capital could be transferred only after a certain time period. We can balance this investment incentive of capital against its allocative efficiency and decide on the ideal time period for different classes of "property".
Another interesting idea is that of quadratic voting in political power. That votes can be distributed as currency and that people can choose to make multiple votes for multiple candidates in any preference order. Though I was aware of the different voting systems available, the concepts of multiple votes as currency creating a market for political power was intriguing. The author proposes that multiple votes would lead to a quadratic root effect on impact so that if I save up 4 votes and use it to vote on a policy decision, I would get 2 effective votes (If I use 9, I would get 3 effective votes etc). Though the author offers some technical reasons for the quadrating voting system, they also show a study where people are asked to vote on different policy debates on both sides of the spectrum in the US (abortion, gun rights etc). People were polarised on their opinions on these debates (fully for or against abortion or gun rights for example) but when they were asked to use a quadratic voting system, the shape of their allocations changed to a more nuanced distribution, caring about some issues not so much as earlier but caring equally (and hence more expensively) about others.
There are some more ideas on Immigration, taxing human labour (as opposed to "property") and an interesting epilogue on the future of markets where the author talks about Markets as efficient, parallel, information processing systems (Hayek's Markets) and that, unlike what most economists say, Markets may not be the perfect allocative engines of the future if there were scalable systems that could do it better (AI ?).
November 22, 2020
What a great food for thought this book is. Very rarely a book dominates my thinking for weeks like Radical Markets managed to do.
The book covers topics that we seldom challange in a serious but peaceful way like the taxation system(how to make it more fair but also limit inequalities), voting (is there a better system than democracy), migration, monopolies and the use of data by corporations. The books is worthy 5 stars not because the solutions it gives are perfect (they are not), but because it provides enough details and context to nudge you into thinking about the fundamentals of the society we live in. Your own thinking is worth all the stars.
Do not just read the book, use it as a starting point for your own thinking. I'd love a society that can have a productive discussion about such topics, not just fights and dogmas.
The book covers topics that we seldom challange in a serious but peaceful way like the taxation system(how to make it more fair but also limit inequalities), voting (is there a better system than democracy), migration, monopolies and the use of data by corporations. The books is worthy 5 stars not because the solutions it gives are perfect (they are not), but because it provides enough details and context to nudge you into thinking about the fundamentals of the society we live in. Your own thinking is worth all the stars.
Do not just read the book, use it as a starting point for your own thinking. I'd love a society that can have a productive discussion about such topics, not just fights and dogmas.
February 21, 2022
Are some of the ideas in this book worth considering and further developing to make them more useful? Yes. Are these the authors to learn them from? No. A few points:
1. The authors manage to talk about migration, in 2018, as a process that comes about by people making rational choices in moments where they can fully consider their options. Not a single mention of climate change. This fits with their failure to engage with any ecological thinking whatsoever. "Some people will care more about reducing pollution and we should take their preferences into account" isn't really a sophisticated enough take in our current predicament.
2. They also fail, in any way, to talk about how existing inequality of wealth would influence the outcomes of their COST proposal. Under their current scheme, someone like Bezos could, presumably, buy up an excessive amount of property and potentially leave others with no place to go. (What's that you say, we're building an Amazon warehouse in space where the rent is free? Guess you'll just have to go there! That may sound far-fetched, but hasn't he said his desire is to get people off the planet "for conservation"?) Regardless of that example, unless one addresses wealth inequality in a more meaningful fashion, or puts other serious bounds on how much property people can bid for, one is about to put the world's propertyless and renters into an even more precarious position.
3. As a book, this just didn't do it for me. The pieces that might need to better explained, for non-economists, are rushed through, while some of the historical points are belabored in a more patronizing fashion. The imagined vignettes opening each chapter were uninspiring, if not eye-roll inducing. It all just felt like something that folks who were already on board with their program would eat up, while leaving those who are new but curious forced to go find other sources to really evaluate any of these proposals more seriously.
I would hope that the authors would engage with the work of thinkers like David Graeber (see https://www.goodreads.com/book/show/5...) to update their rather tired story about the history of democracy and to consider more deeply the question of how wealth translates into power in a given society and what might need to be done to prevent that and create a deeper experience of freedom for everyone, not just those who are willing to spend all their time evaluating the price of their possessions.
1. The authors manage to talk about migration, in 2018, as a process that comes about by people making rational choices in moments where they can fully consider their options. Not a single mention of climate change. This fits with their failure to engage with any ecological thinking whatsoever. "Some people will care more about reducing pollution and we should take their preferences into account" isn't really a sophisticated enough take in our current predicament.
2. They also fail, in any way, to talk about how existing inequality of wealth would influence the outcomes of their COST proposal. Under their current scheme, someone like Bezos could, presumably, buy up an excessive amount of property and potentially leave others with no place to go. (What's that you say, we're building an Amazon warehouse in space where the rent is free? Guess you'll just have to go there! That may sound far-fetched, but hasn't he said his desire is to get people off the planet "for conservation"?) Regardless of that example, unless one addresses wealth inequality in a more meaningful fashion, or puts other serious bounds on how much property people can bid for, one is about to put the world's propertyless and renters into an even more precarious position.
3. As a book, this just didn't do it for me. The pieces that might need to better explained, for non-economists, are rushed through, while some of the historical points are belabored in a more patronizing fashion. The imagined vignettes opening each chapter were uninspiring, if not eye-roll inducing. It all just felt like something that folks who were already on board with their program would eat up, while leaving those who are new but curious forced to go find other sources to really evaluate any of these proposals more seriously.
I would hope that the authors would engage with the work of thinkers like David Graeber (see https://www.goodreads.com/book/show/5...) to update their rather tired story about the history of democracy and to consider more deeply the question of how wealth translates into power in a given society and what might need to be done to prevent that and create a deeper experience of freedom for everyone, not just those who are willing to spend all their time evaluating the price of their possessions.
June 3, 2018
Overall, one of the best books I've ever read. Basically describes ways markets could be used to increase economic inefficiency, decrease inequality (and in particular, increase the proportion of rewards going to productive labor vs. accumulated capital), and fix various systems (political and social). Largely an extension of the ideas of William S. Vickrey.
Things I particularly liked about the book: a credible argument against "conventional" Georgist land-value tax (difficulties in valuation), and an interesting alternative. A superior form of voting (accumulated/bankable votes). "Quadratic" increases in cost for certain policy preferences (such as reducing pollution, or regulations. An interesting immigration scheme where individuals could sponsor foreign workers, gaining a portion of their income, to more broadly distribute the benefits of immigration along with costs.
The chapter on data (data sovereignty, data markets, etc.) seemed pretty weak in comparison to the rest of the book (ironic given the background of the authors), and detracted from the whole.
One interesting element was prefacing each chapter with a fictional story of what life would be like under their proposed rules -- more abstract policy arguments should include these.
There were a lot of flaws with the specific proposals they make, and overall I think for most private property, taxation is theft, and their taxing schemes were in some ways even more immoral than the status quo (personal/portable property being taxed in such a way that third parties could forcibly purchase it for the declared value at any time seems rife for malicious exploitation by trolls, or effective censorship of unpopular people), but they propose testing in much less challenging environments (such as as an alternative way to distribute public assets like radio spectrum or resource exploitation on public property), which I'd support.
I strongly recommend this book.
Things I particularly liked about the book: a credible argument against "conventional" Georgist land-value tax (difficulties in valuation), and an interesting alternative. A superior form of voting (accumulated/bankable votes). "Quadratic" increases in cost for certain policy preferences (such as reducing pollution, or regulations. An interesting immigration scheme where individuals could sponsor foreign workers, gaining a portion of their income, to more broadly distribute the benefits of immigration along with costs.
The chapter on data (data sovereignty, data markets, etc.) seemed pretty weak in comparison to the rest of the book (ironic given the background of the authors), and detracted from the whole.
One interesting element was prefacing each chapter with a fictional story of what life would be like under their proposed rules -- more abstract policy arguments should include these.
There were a lot of flaws with the specific proposals they make, and overall I think for most private property, taxation is theft, and their taxing schemes were in some ways even more immoral than the status quo (personal/portable property being taxed in such a way that third parties could forcibly purchase it for the declared value at any time seems rife for malicious exploitation by trolls, or effective censorship of unpopular people), but they propose testing in much less challenging environments (such as as an alternative way to distribute public assets like radio spectrum or resource exploitation on public property), which I'd support.
I strongly recommend this book.
January 21, 2020
Radical markets to czyste złoto. W co najmniej kilku miejscach podważa fundementy obecnego postrzegania ekonomii, własności i społeczeństwo. Przedstawiając być może korzystniejsze alternatywy.
1) Potraktowanie własności prywatnej jako szkodliwego monopolu, który spowalnia rozwój. Zamiast tego podatek Harbergera - sam wycieniasz swoją własność. I płacisz tej wyceny podatek. Ale jak ktoś złoży Ci ofertę powyżej tej wyceny, to musisz ją przyjąć
2) Podważenie sensowności założenia jedna osoba jeden głos. Zamiast tego ludzi mogę dysponować pulą kredytów do głosowania do wykorzystania. Mogę je wydawać w wybranych przez siebie głosowaniach. W sprawach dla nich ważnych
3) W jednym głosowaniu możesz zużyć więcej niż jeden głos. Ale każdy kolejny gloś kosztuje Cię jego kwadrat w postaci kredytów. 1 głos -> 1 kredyt, 2 głos -> 4 kredyty, 3 głos -> 9 kredytów etc.
4) Dzięki temu głosujący może mieć silniejszy wpływ na bliskie mu decyzje. Zmniejsza to też radykalizacje poglądów, bo zabranie głosu, zwłaszcza silnego głosu, kosztuje.
5) Potencjalnie ciekawe do wykorzystania w decentralized governance. Gdzie posiadacze większej liczby tokenówg (mocy obliczeniowej) nie mają aż takie przewagi nad mniejszymi uczestnikami. Potrzeba jednak wprowadzić wiarygodny system tożsamości.
6) Polityka wizowa otwarta na sponsoring ze strony każdego i oparta o aukcje. Część z dochodu migranta, trafia społeczeństwa, które mogło by odczuwać negatywne skutki napływu taniej siły roboczej.
7) Dochodu z podatku od własności czy z aukcji wizowych mogę być podstawą do wypłacania Universal Basic Income
W wielu miejscach książka prezentuje odważne tezy, kształtujące podstawowe reguły funkcjonowania na totalnie nowyc zasadach. Warto przeczytać, choćby dla spostrzeżenia, że tak jak jest teraz, to nie jest prawda objawiona wyryta w kamieniu. Można to zmieniać
1) Potraktowanie własności prywatnej jako szkodliwego monopolu, który spowalnia rozwój. Zamiast tego podatek Harbergera - sam wycieniasz swoją własność. I płacisz tej wyceny podatek. Ale jak ktoś złoży Ci ofertę powyżej tej wyceny, to musisz ją przyjąć
2) Podważenie sensowności założenia jedna osoba jeden głos. Zamiast tego ludzi mogę dysponować pulą kredytów do głosowania do wykorzystania. Mogę je wydawać w wybranych przez siebie głosowaniach. W sprawach dla nich ważnych
3) W jednym głosowaniu możesz zużyć więcej niż jeden głos. Ale każdy kolejny gloś kosztuje Cię jego kwadrat w postaci kredytów. 1 głos -> 1 kredyt, 2 głos -> 4 kredyty, 3 głos -> 9 kredytów etc.
4) Dzięki temu głosujący może mieć silniejszy wpływ na bliskie mu decyzje. Zmniejsza to też radykalizacje poglądów, bo zabranie głosu, zwłaszcza silnego głosu, kosztuje.
5) Potencjalnie ciekawe do wykorzystania w decentralized governance. Gdzie posiadacze większej liczby tokenówg (mocy obliczeniowej) nie mają aż takie przewagi nad mniejszymi uczestnikami. Potrzeba jednak wprowadzić wiarygodny system tożsamości.
6) Polityka wizowa otwarta na sponsoring ze strony każdego i oparta o aukcje. Część z dochodu migranta, trafia społeczeństwa, które mogło by odczuwać negatywne skutki napływu taniej siły roboczej.
7) Dochodu z podatku od własności czy z aukcji wizowych mogę być podstawą do wypłacania Universal Basic Income
W wielu miejscach książka prezentuje odważne tezy, kształtujące podstawowe reguły funkcjonowania na totalnie nowyc zasadach. Warto przeczytać, choćby dla spostrzeżenia, że tak jak jest teraz, to nie jest prawda objawiona wyryta w kamieniu. Można to zmieniać
Want to read
November 30, 2018I was led to this book by the authors' excellent and very thought-provoking article on Liberty versus Monopoly, which argues that the "business-libertarian nexus of the late twentieth and early twenty-first century [so beloved of Silicon Valley types] is an aberration, with a brief history and no future." Lots of great historical perspectives on the evolution of political-economic theory in the US. If the book is as good as this essay it's a must read.
https://americanaffairsjournal.org/20...
https://americanaffairsjournal.org/20...
March 28, 2021
After having read this as part of our EA reading group, we will probably use quadratic voting to choose books until we finally get prediction markets that estimate the highest expected utility for each and every book (so far we chose The Book of Why) (quadratic voting online app). I liked the book, I had mechanism design on my That Sounds Pretty Cool list for maybe 7 years and I really find it pretty cool. I read Robin Hansons critique beforehand (which I'll try to avoid even more going forward, to practicing noticing flaws myself) and wholeheartedly agreed with how unrealistic the proposals around making gaming and social media browsing an economically viable profession felt:
Furthermore, the authors seem completely out of touch with reality in imagining that this could substitute for real jobs:
In a world where digital contributions were appropriately valued by society, many video gaming young men could convert their enjoyment of gaming into a productive skill. … It is not hard to imagine that the skills these young men have acquired in their life as gamers might help them earn a living if data were treated as labor.
June 4, 2018
So this law and economics guy walks into a bar ...
I had heard some good reviews of this book and put it in my queue. Then someone I told about it got back to me and said it was fairly good - a bit wacky but worth a read. So ...
It is actually worth reading. The premise is that market ideas can address some contemporary problems, but only if markets are unleashed and allowed to work in a radical fashion. Then through the magic of mechanism design (and a bunch of math that gets left in the basic reference papers) the real potential for economics to improve life even in the digital ages can be uncovered. This includes how to handle the regidities of private property, the inability of simple voting schemes to take into account the intensity of feelings on key issues, the needs to free trade in people across national boundaries (remember your old au pere), and dealing with the nascent platform monopolists threatening to control the economy by appropriating the value of the data we all produce on such sites as Google or Facebook. ... and while this may not all be practical right now, who knows, given the march of technology and besides, it sure gets you thinking, right?
I do not deny the entertaintment value and the book focuses on some interesting ideas. Besides, it is a good introduction to some interesting ideas if you are not up to working through some dense equations by going through the original papers.
Do not take the pitch too seriously, however. There is quite a bit of hand waving about how the details can be worked out and need not be covered in the text. Whenever you read that, be certain that the details do matter, that the really hard implementation issues have been pushed aside, and there are some darn good reasons why implementation has been postponed. The same is true with appeals to the need for regulatory fill ins to set the conditions for whatever is being suggested. The paradox is that the “freeest” market goes with quite a bit of regulation to set rules and I would appreciate a discussion of those rules too. The chapter on quadratic voting reads as if the authors are pitching some decision making app that can assist in market research of some sort. The overall argument for how this solves the problems of democracy is highly oversold, especially given recent election results in the US and Europe.
Taken as a well written tour of some interesting ideas, the book is fine. I am not holding my breath for more detailed implementation plans. It is a bit too complicated and earnest to sit well in an age of “fake news” and electioneering bots. ... it did have a good beat, however, and I could dance to it.
I had heard some good reviews of this book and put it in my queue. Then someone I told about it got back to me and said it was fairly good - a bit wacky but worth a read. So ...
It is actually worth reading. The premise is that market ideas can address some contemporary problems, but only if markets are unleashed and allowed to work in a radical fashion. Then through the magic of mechanism design (and a bunch of math that gets left in the basic reference papers) the real potential for economics to improve life even in the digital ages can be uncovered. This includes how to handle the regidities of private property, the inability of simple voting schemes to take into account the intensity of feelings on key issues, the needs to free trade in people across national boundaries (remember your old au pere), and dealing with the nascent platform monopolists threatening to control the economy by appropriating the value of the data we all produce on such sites as Google or Facebook. ... and while this may not all be practical right now, who knows, given the march of technology and besides, it sure gets you thinking, right?
I do not deny the entertaintment value and the book focuses on some interesting ideas. Besides, it is a good introduction to some interesting ideas if you are not up to working through some dense equations by going through the original papers.
Do not take the pitch too seriously, however. There is quite a bit of hand waving about how the details can be worked out and need not be covered in the text. Whenever you read that, be certain that the details do matter, that the really hard implementation issues have been pushed aside, and there are some darn good reasons why implementation has been postponed. The same is true with appeals to the need for regulatory fill ins to set the conditions for whatever is being suggested. The paradox is that the “freeest” market goes with quite a bit of regulation to set rules and I would appreciate a discussion of those rules too. The chapter on quadratic voting reads as if the authors are pitching some decision making app that can assist in market research of some sort. The overall argument for how this solves the problems of democracy is highly oversold, especially given recent election results in the US and Europe.
Taken as a well written tour of some interesting ideas, the book is fine. I am not holding my breath for more detailed implementation plans. It is a bit too complicated and earnest to sit well in an age of “fake news” and electioneering bots. ... it did have a good beat, however, and I could dance to it.
February 28, 2019
5 stars for 1 single reasons - it IS thought-provoking & it actually spurs you to THINK, consider, evaluate & confront the concepts suggested in the book. Contrary to the initial impression, it doesn't really wrap ready-to-use ideas, but it's practical enough to avoid being a foggy utopia (at least in majority of cases).
On the other hand, the ideas are ... uneven. Not only in terms of detail, but also in terms of "polishing". Going through all the 5 major chapters:
* COST - I totally loved it, it's ultra-radical, but it triggers a very valuable discussions
* QV - likewise, pure gold, the easiest to implement, prolly the least controversial
* VIP - I'm totally NOT buying it, it does not look sustainable, in some countries (like Poland) there are already behaviors/contructs that exploit similar setups
* antritrust regulations - another chunk of interesting ideas, yet much harder (IMHO) to actually turn into legislation (especially in "era of digital")
* DaL - I love the idea (quite similar to what TWL proposed as a modern web successor), but I find it very "foggy" & hard to actually execute
I got lured to reading "RM" because of one related blog posts I've found on the web. It was a good choice. I can easily recommend this book to everyone who questions the reality & believes that it can be improve by sheer power of human brain.
On the other hand, the ideas are ... uneven. Not only in terms of detail, but also in terms of "polishing". Going through all the 5 major chapters:
* COST - I totally loved it, it's ultra-radical, but it triggers a very valuable discussions
* QV - likewise, pure gold, the easiest to implement, prolly the least controversial
* VIP - I'm totally NOT buying it, it does not look sustainable, in some countries (like Poland) there are already behaviors/contructs that exploit similar setups
* antritrust regulations - another chunk of interesting ideas, yet much harder (IMHO) to actually turn into legislation (especially in "era of digital")
* DaL - I love the idea (quite similar to what TWL proposed as a modern web successor), but I find it very "foggy" & hard to actually execute
I got lured to reading "RM" because of one related blog posts I've found on the web. It was a good choice. I can easily recommend this book to everyone who questions the reality & believes that it can be improve by sheer power of human brain.
November 18, 2018
Probably the most important book of the year, as it provides five clear examples of applying free market economy to solve the most ardent problems of our times, at the behest of common good and
social equality. I am confident there will be follow-ups in future writings and hope to see some of the newly proposed solutions applied to a functional economy.
social equality. I am confident there will be follow-ups in future writings and hope to see some of the newly proposed solutions applied to a functional economy.
September 11, 2020
I like what they are aiming for. Unsure about the specific mentioned proposals, but hope that this is the start of a much more significant body of work.
April 29, 2019
Bold burst of fresh air thinking
This is book is nothing if not ambitious. To paraphrase the words of the authors Eric Posner and Glen Weyl, they react to the growing populism in the West by “aiming to give people hope based not on giving more power to governments, but on empowering individuals through markets to have more freedom”. Talk about ambition! The aim is nothing less than to use markets to solve a plethora of the world’s woes – from wealth concentration to skewed stock market ownership to the rise of automation to immigration to the capture of representative democracy by special interest groups.
The lofty goals are not all achieved, and the misses are due to the solutions either being too complicated (anybody for quadratic voting where voting power equals the square root of votes bought by an individual to solve the problems associated with the majoritarianism, apathy or capture by special interest groups?), or too hard to be accepted in the current social mood (try selling the idea that more immigration is good and each individual should have the right to sponsor a certain number of immigrants for a fee!). And in the case of the diatribe against the power of some investment institutions and their impact on the stock market and on the working of capitalism itself, the charges themselves are simply misguided and therefore the solutions a waste of time!
Such over-simplification and a slight negligence of social realities are the reason why, despite its intelligent “radicalness”, I am rating it 4 and not 5 stars.
But that said, simply because something is too complicated doesn’t make it wrong. In fact, the solutions that M/s Posner/Weyl propose have many things going for them. Yes, they are very much the creation of wonks, but they are also well thought through and the authors more or less do a fair job in examining the various problems that may creep up in their implementation. They are indeed radical, as the lines above on the topics would suggest.
Most importantly, they are a breath of urgently needed fresh air addressing issues that are being addressed very poorly by both the Left and the Right, stuck as they are to their equally rigid dogmas. The underlying principle behind most of the solutions proposed here are in distributive efficiency, and in the process while the authors suggest things like allowing votes to be traded (something that any self-respecting liberal may not even be able to imagine) to banning private ownership of assets such as land, instead recommending taxing property-owners based on how dearly they value holding on to their property, something that is sure to make free-marketers cry “Socialists! Commies!” without bothering with the details, logic or even history – after all philosophers such as Henry George had argued this rationale for land tax centuries ago.
The book is best read as a series of imaginary lectures, where the reader can almost imagine the authors drawing equations and arrows and diagrams to explain their recommendations and how some part will affect another and what they propose to mitigate, if necessary. In that sense the book is detailed and prescriptive, which is a good idea given the ambitious nature of solutions proposed and their inherent complexities as the rubber of academia meets the real life road. Perhaps local experiments are the best way forward to implement some of these proposals, rather than one-shot large scale adoption.
This is book is nothing if not ambitious. To paraphrase the words of the authors Eric Posner and Glen Weyl, they react to the growing populism in the West by “aiming to give people hope based not on giving more power to governments, but on empowering individuals through markets to have more freedom”. Talk about ambition! The aim is nothing less than to use markets to solve a plethora of the world’s woes – from wealth concentration to skewed stock market ownership to the rise of automation to immigration to the capture of representative democracy by special interest groups.
The lofty goals are not all achieved, and the misses are due to the solutions either being too complicated (anybody for quadratic voting where voting power equals the square root of votes bought by an individual to solve the problems associated with the majoritarianism, apathy or capture by special interest groups?), or too hard to be accepted in the current social mood (try selling the idea that more immigration is good and each individual should have the right to sponsor a certain number of immigrants for a fee!). And in the case of the diatribe against the power of some investment institutions and their impact on the stock market and on the working of capitalism itself, the charges themselves are simply misguided and therefore the solutions a waste of time!
Such over-simplification and a slight negligence of social realities are the reason why, despite its intelligent “radicalness”, I am rating it 4 and not 5 stars.
But that said, simply because something is too complicated doesn’t make it wrong. In fact, the solutions that M/s Posner/Weyl propose have many things going for them. Yes, they are very much the creation of wonks, but they are also well thought through and the authors more or less do a fair job in examining the various problems that may creep up in their implementation. They are indeed radical, as the lines above on the topics would suggest.
Most importantly, they are a breath of urgently needed fresh air addressing issues that are being addressed very poorly by both the Left and the Right, stuck as they are to their equally rigid dogmas. The underlying principle behind most of the solutions proposed here are in distributive efficiency, and in the process while the authors suggest things like allowing votes to be traded (something that any self-respecting liberal may not even be able to imagine) to banning private ownership of assets such as land, instead recommending taxing property-owners based on how dearly they value holding on to their property, something that is sure to make free-marketers cry “Socialists! Commies!” without bothering with the details, logic or even history – after all philosophers such as Henry George had argued this rationale for land tax centuries ago.
The book is best read as a series of imaginary lectures, where the reader can almost imagine the authors drawing equations and arrows and diagrams to explain their recommendations and how some part will affect another and what they propose to mitigate, if necessary. In that sense the book is detailed and prescriptive, which is a good idea given the ambitious nature of solutions proposed and their inherent complexities as the rubber of academia meets the real life road. Perhaps local experiments are the best way forward to implement some of these proposals, rather than one-shot large scale adoption.
June 19, 2021
What a book! Thought provoking, backed up by a lot of literature and names that are well known in an economic world. The book proposes changes that, if applied, can evolve the way we live our lives, how we interact with the market and each other. I use evolve instead revolve as in my opinion even if the proposed changes, reforms are huge, I'd treat them as a next step in moving forward.
If you're interested in markets with less monopoly, better voting systems, evolution of our society, this is a book for you.
If you're interested in markets with less monopoly, better voting systems, evolution of our society, this is a book for you.
Read
July 26, 2023A curious book, with some interesting propositions on the organization of markets. It’s really exciting to witness propositions for the organization of the world, no matter how credible/absurd they may be.
1. COST. Tax based on self assessed value.
2. Quadratic Voting
3. Immigrant labor lol
4. Payment for data
Honestly, I kind of hated the « one of us » structure they use to talk about their accomplishments. Which one!
1. COST. Tax based on self assessed value.
2. Quadratic Voting
3. Immigrant labor lol
4. Payment for data
Honestly, I kind of hated the « one of us » structure they use to talk about their accomplishments. Which one!
April 2, 2021
"So you like markets? Let's push markets as far as they can go." —"Not like this!"
Most people who say they like markets use it as an excuse to cover up their desire to maintain entrenched power relations, monopolies and inequality.
I like many of the proposals in this book but more than that I think the way of thinking about society, coordination and exchange is very valuable. I've seen a talk by Weyl where he supersedes many of the ideas in the book based on new evidence and research.
Is there a path towards realizing something like the COST? Probably not working in the tired democracies that we are stuck with at the moment, but most of the institutions that we have are shearing to the point of breaking anyway. Once they break for real, it's nice to have alternative ways of organizing ready to go.
Most people who say they like markets use it as an excuse to cover up their desire to maintain entrenched power relations, monopolies and inequality.
I like many of the proposals in this book but more than that I think the way of thinking about society, coordination and exchange is very valuable. I've seen a talk by Weyl where he supersedes many of the ideas in the book based on new evidence and research.
Is there a path towards realizing something like the COST? Probably not working in the tired democracies that we are stuck with at the moment, but most of the institutions that we have are shearing to the point of breaking anyway. Once they break for real, it's nice to have alternative ways of organizing ready to go.
April 9, 2019
Radical economics introduces a few ideas that serve as valuable thought experiments, even though none could be considered a serious policy proposal. The one closest to my expertise was a complete waste, so even though I'd like to give the book a higher rating, landed at 3 stars.
1. Property taxation marketplace -- The premise is that we could use markets to self-enforce valuations on property tax, thus incentivizing property owners declare the actual value of each item they own. I was convinced, and like it as a means to make wealth taxes actually work.
2. Quadratic voting (marketplace) -- everybody gets a pool of votes that they can use to express more nuanced choices than 'yes' or 'no'. Definitely an interesting idea.
3. Immigration marketplace -- I agree with the premise but it seems like the authors were looking for a way to make immigration politically feasible (enable regular citizens to benefit) which didn't seem as efficient from a marketplace incentive. What I appreciated more in this chapter was the implicit criticism of free capital markets having little to no benefit for average people.
4. Data marketplace -- This seemed like a lame remix of Jaron Lanier's better reasoned ideas from 'Who Owns the Future?'. Also seemed to make fundamental mistakes regarding the intrinsic value of usage data. The idea was so bad it gave me pause about whether I should trust any of the other ideas put forward in the book.
5. Markets as distributed computing -- actually the most interesting part of the book, it created a mental model where society is akin to a large computer server, and markets are simply the most effective protocol to transfer data. Will definitely use this idea going forward.
1. Property taxation marketplace -- The premise is that we could use markets to self-enforce valuations on property tax, thus incentivizing property owners declare the actual value of each item they own. I was convinced, and like it as a means to make wealth taxes actually work.
2. Quadratic voting (marketplace) -- everybody gets a pool of votes that they can use to express more nuanced choices than 'yes' or 'no'. Definitely an interesting idea.
3. Immigration marketplace -- I agree with the premise but it seems like the authors were looking for a way to make immigration politically feasible (enable regular citizens to benefit) which didn't seem as efficient from a marketplace incentive. What I appreciated more in this chapter was the implicit criticism of free capital markets having little to no benefit for average people.
4. Data marketplace -- This seemed like a lame remix of Jaron Lanier's better reasoned ideas from 'Who Owns the Future?'. Also seemed to make fundamental mistakes regarding the intrinsic value of usage data. The idea was so bad it gave me pause about whether I should trust any of the other ideas put forward in the book.
5. Markets as distributed computing -- actually the most interesting part of the book, it created a mental model where society is akin to a large computer server, and markets are simply the most effective protocol to transfer data. Will definitely use this idea going forward.
June 22, 2019
The book opens with a talk about Musk's Hyperloop. That is just an excuse to use key words, as the talk is never about Hyperloop. And that opens up the whole situation. Posner could be a physicist writing the formulas that would lead to the next generation transportation. But Posner never had the brain to do physics. Posner could be a mathematician that would solve the physicist's formulas and simplify them in a way that Humanity would be closer to the next generation of transportation. But Posner never really got math in school. Bad genes, or maybe a toxic environment. Who could tell? Posner could be an engineer, but, again, he is not capable of any real work. So Posner got to be a minor governmental bureaucrat in academia and write about chu-chu trains, which are about the same as Hyperloop in what he could understand. And here is the drama of the current Society. The people competent to clean tables at the local eatery get to be the ones to tell others what the "next generation" should look like.
February 2, 2019
The book’s last chapter should have been its first. What I write in the next few paragraphs is based on the topic in the chapter. The descriptions are to preface what the authors attempt in the book although they are mostly mine. Economic societies are highly complex systems. With millions of variables and unknown equations, there is no easy way to optimize them. As various communist experiences proved at high costs, any central body that tries to manage an economy top-down by allocating resources, guiding economic activities and planning is bound to fail because of the inherent complexities. In math talk, the equations are too numerous and too lengthy for a decent solution set to emerge from rudimentary solution attempts.
Somewhat mysteriously, “free market” (quotes important and explained later) forces end up providing boundary conditions (through price-driven mechanisms) that cause some decent economic solution to emerge. The empirical proof is clear: market provided solutions - in the form of economic growth or human welfare they have created - have done far better than everything else in the last hundred years. As a result, proponents of free-market theories feel justified in their belief that open markets and capitalism are the only way to run an economy. This is a deeply flawed assumption.
Continuing with the math talk, latest technologies have repeatedly made complex equations we could never attempt before more solvable now. In other cases, we have been able to increase the level of optimization with more processing power and information. “Free markets” are never truly free. In fact, there are myriads of ways in which one can design a “free market” capitalistic system and there is no way to know whether anyone leads any locally optimal solution, let alone a globally optimal or a perfect solution (let’s say measured in terms of highest quality, best economic growth for everyone without externalities). The fact, rather, is that capitalism - as it exists - is failing on many fronts. And with the tools and data at our disposal, we must attempt to at least develop systems better than what we have. If we open our minds to incremental tinkering, over and above the basic market-based systems in existence, we could engineer some quick society-wide improvements worldwide.
The five radical ideas are definitely radical. This reviewer has reservations against all of them. Yet, the book not only makes one think but also takes great strides in pointing new ways. For the record, let me briefly explain my one biggest problem with each of the suggestion below:
- A self-assessed tax system could massively increase the power of the wealthy and worsen inequality. Those with deep pockets could keep accumulating small pieces of land/capital at prices smallholders can barely sustain (given the taxes they need to pay). The big parties’ ability to scale-up after hoarding could intensify inequality substantially given the value they ascribe to any capital (post the scaling) is far more than what smallholders could ascribe on their utility and cashflow driven constraints.
- Quadratic voting: why quadratic? Why not some other system - say the power of 2.05 or power of 3 or logarithmic? One person, one vote has sound philosophical justifications. There might be hundreds of mathematical equations that give better preference representation, but why should society choose the quadratic function only?
- Individually sponsored immigration: The suggestion here is perhaps least radical and most effective. But more than for any other suggestion, this reviewer does not envision how any Western society could transition to a system that would suddenly allow immigration to expand nearly tenfold.
- Fund ownership issues: The best way to restrict monopolistic influences is the simplest - just use the caps! Size limits could solve many problems far quicker than other convoluted ways. If regulations prohibit fund companies from holding more than x% in any company, and y% in industry etc, the solution would be neater for everyone involved rather than other methods described here. Similarly, if individual annual income and/or wealth are capped, we may have quicker solutions for inequality. Those who feel that billionaires will stop providing value once they reach those levels by stopping work may have a tiny point, but marginal disutility from the richest non-working or non-consuming from the loss of additional wealth is likely far less than marginal gains for the rest.
- “Data unions”: Perhaps the most impractical of all discussed in the book. This reviewer cannot foresee how global community could spontaneously come up with such worldwide unions that have power to sit on a table against the tech giants.
All that said, the main point of the book is that we must begin thinking in different directions to get more out of the economic systems in existence before we run into serious societal and political crises. And, the author’s solutions - even if not perfect - are good starting points.
Somewhat mysteriously, “free market” (quotes important and explained later) forces end up providing boundary conditions (through price-driven mechanisms) that cause some decent economic solution to emerge. The empirical proof is clear: market provided solutions - in the form of economic growth or human welfare they have created - have done far better than everything else in the last hundred years. As a result, proponents of free-market theories feel justified in their belief that open markets and capitalism are the only way to run an economy. This is a deeply flawed assumption.
Continuing with the math talk, latest technologies have repeatedly made complex equations we could never attempt before more solvable now. In other cases, we have been able to increase the level of optimization with more processing power and information. “Free markets” are never truly free. In fact, there are myriads of ways in which one can design a “free market” capitalistic system and there is no way to know whether anyone leads any locally optimal solution, let alone a globally optimal or a perfect solution (let’s say measured in terms of highest quality, best economic growth for everyone without externalities). The fact, rather, is that capitalism - as it exists - is failing on many fronts. And with the tools and data at our disposal, we must attempt to at least develop systems better than what we have. If we open our minds to incremental tinkering, over and above the basic market-based systems in existence, we could engineer some quick society-wide improvements worldwide.
The five radical ideas are definitely radical. This reviewer has reservations against all of them. Yet, the book not only makes one think but also takes great strides in pointing new ways. For the record, let me briefly explain my one biggest problem with each of the suggestion below:
- A self-assessed tax system could massively increase the power of the wealthy and worsen inequality. Those with deep pockets could keep accumulating small pieces of land/capital at prices smallholders can barely sustain (given the taxes they need to pay). The big parties’ ability to scale-up after hoarding could intensify inequality substantially given the value they ascribe to any capital (post the scaling) is far more than what smallholders could ascribe on their utility and cashflow driven constraints.
- Quadratic voting: why quadratic? Why not some other system - say the power of 2.05 or power of 3 or logarithmic? One person, one vote has sound philosophical justifications. There might be hundreds of mathematical equations that give better preference representation, but why should society choose the quadratic function only?
- Individually sponsored immigration: The suggestion here is perhaps least radical and most effective. But more than for any other suggestion, this reviewer does not envision how any Western society could transition to a system that would suddenly allow immigration to expand nearly tenfold.
- Fund ownership issues: The best way to restrict monopolistic influences is the simplest - just use the caps! Size limits could solve many problems far quicker than other convoluted ways. If regulations prohibit fund companies from holding more than x% in any company, and y% in industry etc, the solution would be neater for everyone involved rather than other methods described here. Similarly, if individual annual income and/or wealth are capped, we may have quicker solutions for inequality. Those who feel that billionaires will stop providing value once they reach those levels by stopping work may have a tiny point, but marginal disutility from the richest non-working or non-consuming from the loss of additional wealth is likely far less than marginal gains for the rest.
- “Data unions”: Perhaps the most impractical of all discussed in the book. This reviewer cannot foresee how global community could spontaneously come up with such worldwide unions that have power to sit on a table against the tech giants.
All that said, the main point of the book is that we must begin thinking in different directions to get more out of the economic systems in existence before we run into serious societal and political crises. And, the author’s solutions - even if not perfect - are good starting points.
July 15, 2018
I'm not entirely convinced by any of the proposals, the writing sometimes bogs down, and despite containing more detail than the average popular book, some of the explanations feel quite handwavy. But this is tasty food for thought.
The proposals include:
* A 'common ownership self-assessed tax' (COST), which in its most radical form would be applied to all property. Owners would have to self-assess the value of everything they own, and would be taxed accordingly, at a rate that would vary according to the turnover rate of each type of asset. (Items that we expect the owner to hold for a long time would be taxed at relatively low rates; this is done to incentivise accurate assessments, but also has the side-benefit of making it relatively inexpensive to protect one's ownership of items with primarily sentimental value.) The catch is that you would have no choice but to sell your possessions to anyone willing to pay the values you assigned.
* Quadratic Voting (QV), in which voters would be granted 'voice credits' which they could distribute across elections (or referenda -- QV is supposed to be combined with direct democracy) based on the relative strength of their preferences. Voice credits are used to buy votes, and the price of a number of votes on a single decision is the square of that number. This non-linear structure encourages voters to express their opinions broadly rather than banking all of their votes for maximum influence on one or two issues, but still enables people to express the strength of their preferences and to have disproportionate influence over the issues that matter most to them.
* A more open international labour market, in which regular citizens of rich countries could sponsor migrant workers, taking some responsibility for their living conditions and conduct in exchange for a share of their income. (The authors call this a Visas Between Individuals Program, or VIP.) The idea is that this would improve economic opportunity for citizens of poor countries, spread the benefits of migrant labour across average people in host countries rather than concentrating them with business owners, and soften the ethnic/cultural/racial tensions that are most likely to arise when host country workers feel that they are being displaced. The idea is that host country citizens know the conditions on the ground, so they would be able to accurately assess the demand for certain types of workers, as well as making informed judgments about cultural fit. The authors predict that, as well as economically benefiting both the global poor and the poorer members of rich countries, their system would soften xenophobic attitudes in these countries, replacing hostility with benign condescenscion. This is not exactly a utopian vision, but would (if it worked) do more actual good than paying lip service to ideals of global equality while taking an out-of-sight out-of-mind approach in practice.
* Financial reforms, the details of which I can't remember. Part of the idea was to weaken institutional investors' control over entire industries, which has predictably anticompetitive effects. Seemed sensible but politically difficult.
* Creating an explicit market for the personal data that we currently give away for 'free' (i.e. in exchange for 'free' services) to the big tech companies. This chapter seemed kind of handwavy to me, and I don't really see a plausible path forward. The authors are big fans of Jaron Lanier, whose book I gave up on because it was frustratingly vague and contained at least one glaring error. I guess they must all have good ideas that I'm failing to grasp, but I wish these were communicated more precisely, along with answers to the obvious sceptical questions.
I'd say (on the basis of no relevant expertise) that the VIP is probably the most likely proposal to be useful in practice, though the details would be tricky and there are all sorts of ways it could go wrong. The COST and QV are the most interesting to me intellectually, but I have a lot of concerns about their likely pathologies. I made some notes on these, which I'll copy here with a few edits, because I don't have the energy to try to shape them into proper arguments right now. (Spoiler-tagged for being long and half-baked.)
Overall this book isn't everything I wanted, but I recommend it. It would be well suited to a book club or university tutorial, or anywhere else you'd have a chance to discuss it with other readers and perhaps drill down into the technical details.
The proposals include:
* A 'common ownership self-assessed tax' (COST), which in its most radical form would be applied to all property. Owners would have to self-assess the value of everything they own, and would be taxed accordingly, at a rate that would vary according to the turnover rate of each type of asset. (Items that we expect the owner to hold for a long time would be taxed at relatively low rates; this is done to incentivise accurate assessments, but also has the side-benefit of making it relatively inexpensive to protect one's ownership of items with primarily sentimental value.) The catch is that you would have no choice but to sell your possessions to anyone willing to pay the values you assigned.
* Quadratic Voting (QV), in which voters would be granted 'voice credits' which they could distribute across elections (or referenda -- QV is supposed to be combined with direct democracy) based on the relative strength of their preferences. Voice credits are used to buy votes, and the price of a number of votes on a single decision is the square of that number. This non-linear structure encourages voters to express their opinions broadly rather than banking all of their votes for maximum influence on one or two issues, but still enables people to express the strength of their preferences and to have disproportionate influence over the issues that matter most to them.
* A more open international labour market, in which regular citizens of rich countries could sponsor migrant workers, taking some responsibility for their living conditions and conduct in exchange for a share of their income. (The authors call this a Visas Between Individuals Program, or VIP.) The idea is that this would improve economic opportunity for citizens of poor countries, spread the benefits of migrant labour across average people in host countries rather than concentrating them with business owners, and soften the ethnic/cultural/racial tensions that are most likely to arise when host country workers feel that they are being displaced. The idea is that host country citizens know the conditions on the ground, so they would be able to accurately assess the demand for certain types of workers, as well as making informed judgments about cultural fit. The authors predict that, as well as economically benefiting both the global poor and the poorer members of rich countries, their system would soften xenophobic attitudes in these countries, replacing hostility with benign condescenscion. This is not exactly a utopian vision, but would (if it worked) do more actual good than paying lip service to ideals of global equality while taking an out-of-sight out-of-mind approach in practice.
* Financial reforms, the details of which I can't remember. Part of the idea was to weaken institutional investors' control over entire industries, which has predictably anticompetitive effects. Seemed sensible but politically difficult.
* Creating an explicit market for the personal data that we currently give away for 'free' (i.e. in exchange for 'free' services) to the big tech companies. This chapter seemed kind of handwavy to me, and I don't really see a plausible path forward. The authors are big fans of Jaron Lanier, whose book I gave up on because it was frustratingly vague and contained at least one glaring error. I guess they must all have good ideas that I'm failing to grasp, but I wish these were communicated more precisely, along with answers to the obvious sceptical questions.
I'd say (on the basis of no relevant expertise) that the VIP is probably the most likely proposal to be useful in practice, though the details would be tricky and there are all sorts of ways it could go wrong. The COST and QV are the most interesting to me intellectually, but I have a lot of concerns about their likely pathologies. I made some notes on these, which I'll copy here with a few edits, because I don't have the energy to try to shape them into proper arguments right now. (Spoiler-tagged for being long and half-baked.)
Overall this book isn't everything I wanted, but I recommend it. It would be well suited to a book club or university tutorial, or anywhere else you'd have a chance to discuss it with other readers and perhaps drill down into the technical details.
November 15, 2018
Economists are all familiar with Keynes' quip that "soon or late, it is ideas, not vested interests, which are dangerous for good or evil."
Keynes would probably have been surprised to discover that after the Second World War, the ideas of economists increasingly dealt with technical issues such as equilibrium concepts in game theory and representing increasing returns to scale in models of economic growth and international trade.
However, as Posner and Weyl point out, the great economists of the 18th and 19th century had plenty of radical and concrete ideas on how to reform society - a tradition that has all but disappeared from academic discourse.
With this book, Posner and Weyl aim to go back to the roots (the root of radical is radix, the Latin for, euh, root). The problem they want to address is what they call "stagnequality", the combination of stagnation with increasing inequality in the major developed countries. They are convinced that the root (well, right) cause of stagnequality is the increasing concentration of power amongst a limited number of firms. Their solution is not increased regulation but rather designing new markets that would tackle this concentration problem, redistribute power and incomes and improve incentives for economic efficiency.
They discuss five radical ideas: abolish private ownership of assets by putting all assets in some sort of ongoing auction (and, in the process, radically redesigning the taxation system); create markets for votes that would ensure that people would only vote for topics they genuinely care about: create a market that would allow private persons to sponsor international migration; redesign corporate governance so that institutional investors would not be allowed to reduce competition by investing in different firms in the same sector; and allowing people to appropriate the monetary value generated by the data they create in their on-line behaviour.
If these ideas sound crazy, it's because they are. However, the strong point of Posner and Weyl is that this is not just some gratuitous exercise. They have really thought through their argument, and actively anticipated most objections people could raise against their proposal. This is what makes the book so stimulating. It also makes it a very frustrating read: at the end of each chapter, you think that the idea is completely unrealistic, but all counterarguments you could come up with have been refuted.
This is definitely one of the most original and stimulating books in the social sciences that have been published in years. I have no idea whether any of these ideas will ever result in anything concrete (actually, I doubt it, as the implementation of these ideas would have to overcome very powerful vested interests) - but then, as the authors point out, almost all our current political and economic institutions once were radical ideas.
Keynes would probably have been surprised to discover that after the Second World War, the ideas of economists increasingly dealt with technical issues such as equilibrium concepts in game theory and representing increasing returns to scale in models of economic growth and international trade.
However, as Posner and Weyl point out, the great economists of the 18th and 19th century had plenty of radical and concrete ideas on how to reform society - a tradition that has all but disappeared from academic discourse.
With this book, Posner and Weyl aim to go back to the roots (the root of radical is radix, the Latin for, euh, root). The problem they want to address is what they call "stagnequality", the combination of stagnation with increasing inequality in the major developed countries. They are convinced that the root (well, right) cause of stagnequality is the increasing concentration of power amongst a limited number of firms. Their solution is not increased regulation but rather designing new markets that would tackle this concentration problem, redistribute power and incomes and improve incentives for economic efficiency.
They discuss five radical ideas: abolish private ownership of assets by putting all assets in some sort of ongoing auction (and, in the process, radically redesigning the taxation system); create markets for votes that would ensure that people would only vote for topics they genuinely care about: create a market that would allow private persons to sponsor international migration; redesign corporate governance so that institutional investors would not be allowed to reduce competition by investing in different firms in the same sector; and allowing people to appropriate the monetary value generated by the data they create in their on-line behaviour.
If these ideas sound crazy, it's because they are. However, the strong point of Posner and Weyl is that this is not just some gratuitous exercise. They have really thought through their argument, and actively anticipated most objections people could raise against their proposal. This is what makes the book so stimulating. It also makes it a very frustrating read: at the end of each chapter, you think that the idea is completely unrealistic, but all counterarguments you could come up with have been refuted.
This is definitely one of the most original and stimulating books in the social sciences that have been published in years. I have no idea whether any of these ideas will ever result in anything concrete (actually, I doubt it, as the implementation of these ideas would have to overcome very powerful vested interests) - but then, as the authors point out, almost all our current political and economic institutions once were radical ideas.
January 7, 2019
A book on economic theory and mechanism design may not be for everyone. But the authors of Radical Markets have done an impressive job representing their ideas with just enough economic history and explanation of incentives that the book will appeal to anyone who is curious about how we can tweak our society to improve the way it works.
As the authors point out, markets and property rights are human constructs. Both have limits in usefulness and also limits imposed by laws on how far they reach. The latter type of limit is often put in place to avoid negative dynamics - market failures, where fairness and utility are likely to be eroded. The fresh thinking that Posner and Weyl present in their book is to define rules for some of the areas of economic activity that present challenges to present-day societies. They argue that by introducing market economics to some of those areas that are today managed by policy would improve outcomes. In other areas, by radically altering assumptions underpinning current markets, we could create novel mechanisms for exchange that would address current market shortcomings.
While the ideas on property rights, migration, voting and other topics may require unsurmountable political will to implement in the next few years, or even decades, the type of thinking represented in the book is a sublime example of letting go of sacred assumptions and asking what we could achieve if we wanted to improve society. In other areas, taking action appears almost urgent. The book summarizes research into monopoly rents extracted via fund manager ownership across a sector. Current laws may even support taking action but would cause a major disruption.
This is a bit like Freakonomics, but extrapolated into normative territory.
As the authors point out, markets and property rights are human constructs. Both have limits in usefulness and also limits imposed by laws on how far they reach. The latter type of limit is often put in place to avoid negative dynamics - market failures, where fairness and utility are likely to be eroded. The fresh thinking that Posner and Weyl present in their book is to define rules for some of the areas of economic activity that present challenges to present-day societies. They argue that by introducing market economics to some of those areas that are today managed by policy would improve outcomes. In other areas, by radically altering assumptions underpinning current markets, we could create novel mechanisms for exchange that would address current market shortcomings.
While the ideas on property rights, migration, voting and other topics may require unsurmountable political will to implement in the next few years, or even decades, the type of thinking represented in the book is a sublime example of letting go of sacred assumptions and asking what we could achieve if we wanted to improve society. In other areas, taking action appears almost urgent. The book summarizes research into monopoly rents extracted via fund manager ownership across a sector. Current laws may even support taking action but would cause a major disruption.
This is a bit like Freakonomics, but extrapolated into normative territory.
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