[MUSIC PLAYING]
HAL VARIAN: OK, I'm ready to
do the official introduction.
I'm Hal Varian and I'm
the chief economist here.
I think many of you know me.
Glenn Weyl is a
Principal Researcher
at Microsoft
Research New England,
and this year he's visiting Yale
University as a senior research
scholar and lecturer in
the economics department
and the law school, where
he teaches a joint economics
computer science course
called "Designing the Digital
Economy."
Glen is a townie.
He grew up in Palo Alto,
received his AB in economics
from Princeton, followed
by an MA and a PhD in 2008.
He then spent three years as
a Junior Fellow at the Harvard
Society Fellows, and three
years as an assistant professor
at the University of Chicago,
before joining Microsoft.
And over the period
from 2014 to 2018,
he's been a Sloan
Research Fellow.
And today he's here to
tell us about his book,
"Radical Markets, Uprooting
Capitalism and Democracy
for a Just Society."
Take it away.
GLEN WEYL: Thanks, Hal.
And thanks everyone for coming.
So this work is the culmination
of many years of careful policy
design research with Eric
Posner, but in the 10 minutes
I have to introduce
it, I think, rather
than going into the details
of all of the proposals
that we have, it's
best to just give you
a flavor of the
sort of broad idea
that we're trying to get across.
And I think that
that's best conveyed
by a thought experiment.
So I want you to,
for the moment,
suspend your practical
considerations
and come with me on a
journey of imagination,
to a fictive city that I'm
going to call Marketopia.
Marketopia is a
bit like Zootopia,
except rather than
being defined by having
a diverse group of mammals
that inhabit it, instead
Marketopia is defined
by the fact that all
the major private
property in Marketopia--
let's put aside personal effects
like heirlooms, and pets,
and so forth--
but all the land,
and the houses,
and the airplanes, and
so forth, is continually
up for auction to the
highest bidder, in a manner
somewhat similar to the
way that search terms
are for Google advertisements.
So basically,
whoever is currently
the highest bidder on
one of these pieces
of private property controls
it for the time being,
by making a rental payment
continually into a central pot
until someone else comes
along, and beats their price,
and takes over that
rental payment for control
of that asset.
And that's not just true of
private property in Marketopia.
In fact, many things that we
would usually consider to be
determined by collective
decision-making processes,
like the location of parks and
the politicians that govern
Marketopia, what sort of schools
they have, and what they teach,
and so forth--
these are also determined
by an auction process,
though rather than auctioning
them to the highest bidder,
we add up the total
willingness of everyone
to pay for different
alternatives,
and we implement the one that
people are willing in total
to pay the most for.
And all the money that's
raised by these auctions
is continually returned to
all the citizens of Marketopia
in equal shares, as
a social dividend,
or you might call it a
universal basic income.
Much as in Norway and
Alaska, when they auction off
oil rights, they
return the revenue
that they raise to the citizens.
Now when you hear this
idea of Marketopia,
it might sound like sort
of the most extreme version
of a free market
that you can imagine.
It's much crazier than
anything that, say,
Adam Smith could have
imagined, because it makes
you realize that even though
we live in a market society,
most things are not
available for liquid purchase
at any given point in time.
Most of the land on
the Google campus--
most of the stock
of Google, in fact--
not just the marginal units
of stock that are currently
on bid, but most of the
stock that all of you hold--
these aren't things
you could just
go out and buy at some
price at any point in time.
Those are instead controlled
by often-wealthy concentrated
interests, and if you wanted to
grab control of those assets,
you'd have to enter into
a long and drawn out
process of bargaining,
and probably
pay many times what the person
would be willing to accept,
because they'd get wind that
you'd want to buy that thing.
And so Marketopia is a far more
extreme, complete free market
than any society in history.
And that might lead you to
think, OK, so in Marketopia,
the wealthy are going to
dominate everything, right?
The wealthy are going
to be able to outbid
the prices that anyone
else is going to pay.
They're going to take
control of assets
and they're going to
use that to dominate
everyone else in society.
But then you have
to ask yourself,
what do you mean by the wealthy?
Well, a wealthy
person is someone
who has lots of assets, like
stocks, and bonds, and houses,
and land, and businesses.
But in Marketopia, there
is no private ownership
of those things.
All of those things
are continually
auctioned for the
public benefit.
In fact, Marketopia is actually
the most extreme version
of the sort of common ownership
advocated by people like Karl
Marx that you can imagine.
Much more extreme than
forms of socialism
that actually existed,
which ended up
in the control of those
assets by a concentrated
bureaucratic elite, that often
ended up tyrannizing over
the rest of the
population even more
intensely than the capitalists
that they claimed to replace.
In Marketopia, on
the other hand,
there is true common ownership,
because by construction,
all the value of all assets
flow equally to all citizens,
and by construction, every
citizen has an equal right
to compete for
control of assets.
This might seem like
a paradox, especially
to those of us who grew up in
the Cold War and post-Cold War
periods.
How can the most extreme form of
common ownership, of communism,
go along with the most
extreme form of a free market?
Well, while that might
seem like a paradox,
it's actually a
crucial part of what
was the central tradition
in a field called
political economy, that
gave birth to economics,
political science, sociology,
and many other fields
during the late 19th century.
And this idea called competitive
common ownership was especially
associated with the
work of this guy here.
And I wonder if
anyone recognizes him.
Who is that?
AUDIENCE: Henry George.
GLEN WEYL: Wow!
This is the first time
anyone has actually
managed to identify him.
AUDIENCE: [INAUDIBLE]
GLEN WEYL: Well, I'm glad
I came to the right place.
So you could probably repeat
the following things for me,
but Henry George was
the best-selling author
in the English language,
other than the Bible,
for about 30 years.
His book, "Progress
and Poverty,"
was the namesake of the
Progressive movement
in the United States.
He helped inspire the Chinese
nationalist revolution
and many other things.
He was an enormously
influential person,
and yet his ideas are largely
forgotten in the post-Cold War
era.
And the goal of this book is
to revive the tradition that
was represented by
Henry George and others,
like Leon Walras, many of the
founders of modern economics,
who believed that free
markets, true free markets,
and true socialism
went hand-in-hand.
To argue that, while these ideas
were forgotten in mainstream
culture, they continued
to be developed in a field
called mechanism design, which
won lots of Nobel prizes,
but was largely applied to
things like auctioning off
search words at companies
like Google and Facebook,
rather than to the big problems
of social organization.
And to show that we can,
based on this tradition,
have a new way of
organizing society
to address our most
pressing problems.
And the way that we do
that is by developing five
detailed, practical
policy proposals,
building off of this spirit,
that instantiate this idea
and address, we think, some
of the most pressing problems
of inequality, slow
growth, and social conflict
over political issues.
So what are those ideas?
The first, which is
most closely associated
with this auction
I was describing,
is the common ownership
self-assessed tax, in which
every owner of significant
private property
would self-assess the value of
that property at some value,
stand willing to sell the
property at that value,
and then pay a tax on
that self-assessed value.
So this would be a way of
implementing the auction
that I was describing,
without taking
all ownership into the public,
so that people would still
have some incentive
to make investments.
So people would still have an
incentive to make investments.
And at the same time,
all assets would
be liquidly available
for turnover
to a better potential use.
The second idea is
quadratic voting.
This is a system of
sort of auctioning,
but for collective
decision making
that would protect
minorities by allowing
them to express the greater
strength of their interest
in given issues
compared to majorities.
The way that it would work,
is that every citizen would
be endowed with a
budget of voice credits
that they could spend on
different politicians or issues
in a referenda that
are important to them,
and they could put more
votes on the issues that
were more important
to them, but according
to a very particular rule,
which is that the cost in voice
credits of influence
on any given issue
would be the square
of the number of votes
that you buy on that issue.
Third, we propose a new
system of migration,
in which immigration
would benefit,
rather than just the
immigrants and the capitalists
in the wealthy countries,
instead it would
it would benefit all
citizens, because rather
than large corporations
or governments
determining who was
admitted to the country,
instead individual citizens
would have the right
to sponsor visas for
migrants and to negotiate--
subject to some protections--
a share of the benefits
that the migrants received from
migrating to wealthy countries.
So that would allow for
massively increased migration,
but with the broad
support of the working
classes of wealthy countries.
Fourth, we argue that
antitrust policy is
an incredibly powerful
tool for maintaining
a competitive and
dynamic economy,
but that it has been
almost completely
unenforced in the two most
important areas in which market
power is accumulating
in our economy,
and therefore we've
been ignoring about 80%,
or maybe even 90%, of
the potential benefits
of antitrust.
Those two areas are that, first
of all, institutional investors
like Vanguard, State Street,
BlackRock, et cetera,
now control about a third of
the total corporate economy,
and are the four or five
largest shareholders of almost
every major corporation
straight across industries,
Google and Microsoft,
American Airlines and Delta.
And therefore, they
have no interest
in seeing these companies
compete with each other.
And we've seen rising
prices in close correlation
to the growing power
of these companies.
That's sort of the most
comprehensive market power
that's ever existed,
because it's
coordinated almost the entirety
of the corporate economy.
Another area that's been
almost completely neglected
by antitrust policy
has been the power
that companies have
over workers, rather
than over consumers.
Because if you think about a
typical consumption decision
you make, like what
type of water to drink,
there's probably 10 or 15
reasonable alternatives
you have.
Whereas if you think about a
job, what's your next best job
rather than working
at Google, it's
probably a way worse option.
And maybe you have
one other option,
but it's much less competitive
than is a typical product
market.
And yet there's literally never
been an antitrust merger case
that blocked a merger
because of the way
it reduced options for
employment for workers.
And finally, we argue that
the individual contributions
that people make to
the digital economy
should be treated as
essentially labor,
and that there should be
a labor movement of people
who are contributing that
data, to organize, to demand
a fair share of the value
created by their data
from companies like Google,
Facebook, and Microsoft.
Because increasingly,
people are worried
about artificial intelligence
taking people's jobs,
but as all of us here know, all
that artificial intelligence
is trained based on human data.
And it's, in fact, a lot more
like some sort of broadcasting
of our data than it is
just brilliant engineers
programming computers to
go and take people's jobs.
And so, if people
were more fairly
compensated for their
data, the digital economy
would be a source of economic
opportunity for people,
rather than an economic threat.
Now all these ideas
are quite radical.
All of them would require
fundamental changes
to our social institutions.
And while for each of these
chapters, we have concrete,
near-term, non-controversial
steps we can make in that
direction, we also know that
as a broad social philosophy,
no one would seriously consider
this if we weren't in a moment
of social crisis that
really, deeply required new
out-of-the-box thinking like
this to avoid potentially
catastrophic outcomes.
But I truly do believe we
are in a moment like that,
for three reasons.
One is growing inequality.
On the left here, we see a graph
of the share of national income
accruing to the top 1% and
the top 0.1% of the income
distribution, which has
doubled since the 1970s.
And at the same time, we've
seen a dramatic reduction
in the share of income accruing,
not just to lower income
workers, but to all
workers in total.
So the share of income
being paid out to labor,
as opposed to capital, has
fallen by 10% over this period.
Now you might think as, say,
Ronald Reagan or Margaret
Thatcher would have
argued, that that might
be worth it if that's the
price of a more dynamic, more
competitive, more
innovative economy.
But at the same time that we've
seen this declining share going
to labor, we've seen
an increasing power
of corporations to
exert monopoly power.
That is represented by
this orange line here.
I've taken the markup
that firms charge--
that is how much above
their marginal cost
they charge-- and I've
flipped it around,
so you can see how
closely it parallels
the decline in labor incomes.
So that strongly
suggests that, far
from us getting a more
competitive economy
by deregulating, cutting taxes,
and relaxing antitrust policy,
we've actually seen an
increasing growth of market
power that is actually reducing
growth rates in the economy,
as represented in
this graph here.
So what this shows
is growth rates
in different
wealthy countries in
the immediate post-war
period, and then
various periods thereafter.
And the period of the
last several decades
has had growth rates that
are, in the United States
about half, and in many
other wealthy countries
about a tenth, of what they
were in the immediate post-war
period.
This combination of stagnation
with growing inequality,
I think, has largely discredited
existing economic ideologies,
as coming out of
Reagan and Thatcher,
in the same way that the
combination of stagnation
and inflation during
the 1970s discredited
the previous
Keynesian orthodoxy.
And this stagnant
quality, as we label it,
and the discrediting of
existing economic ideologies
has also led to rising political
discontent and conflict.
Together with the fact that, I
think, political institutions--
not just economic technocracy,
but political technocracy--
is increasingly being
viewed as illegitimate,
there's growing conflicts
between minorities
and majorities, whether
over immigration,
ethnoracial conflict,
or over, say, things
like gun ownership,
religious minorities.
And yet the way that wealthy
countries have increasingly
resolved these issues has
been through the judiciary,
or through supranational
institutions,
in the case of the
European Union,
that lack of the
democratic legitimacy
needed for countries to
come to some reasonable way
of resolving this.
So there's an increasing feeling
that the economic policies
and the way that we
resolve political disputes
are illegitimate,
and that's leading
to the rise of populist
leaders, whether on the right,
like Trump or Brexit
movement, or on the left,
like Jeremy Corbyn in
the United Kingdom.
Given all this, I
think we increasingly
feel like the only
path out is these sort
of reactionary
populist movements
that don't really
offer an answer.
And so we feel
the responsibility
at this moment to
try to put forward
an alternative,
progressive path that
can harness the powers
of market and technology,
but to try to make a more equal,
prosperous, and politically
co-operative society.
And I hope that
you'll open your minds
to these radical possibilities,
given what we're facing.
And I'm looking forward to
chatting with all of you
and with Hal about it.
HAL VARIAN: All right, great.
Very interesting talk, and
let me raise a few objections
here and there, and see--
because I know that's
your favorite pastime,
is responding to
these objections.
You know, they say
a cynic believes
that everything has a price, but
an economist knows it's true.
So an interesting angle
there on that division--
this dividing things up, but
then letting people trade--
what do you do about ability?
Ability Is very tricky, because
suppose you're a great singer.
I love to hear you sing, but
it's very tiring for you.
You don't want to do it.
Can I outbid you, and
say yes, I bid him.
He wants to have a
quiet evening at home,
but I've got this
money I'm going
to pay him to go out and sing.
GLEN WEYL: That's
a great question.
We tackle that in the
conclusion of the book.
For the main part of the book,
we only allow for capital
to be allocated in this way.
And we think that, at least
in our present society,
that could address
much of the inequality,
though not all of the
inequality, that we face.
So we calculate that
with our reforms,
you could get down below
the levels of inequality
in the 1970s, and significantly
better than in Sweden
at present.
But obviously, there would then
be a shift towards inequalities
that are driven more by
ability, and away from those
driven by wealth,
And those would
have to be addressed
by future reforms.
And we speculate
in the direction
that you're describing, Hal,
but we don't have a proposal
that we're happy with actually
putting forward on that.
HAL VARIAN: Let me
suggest an article.
it was something I wrote.
It was my thesis actually
which was on fair division.
GLEN WEYL: I know
that work very well.
HAL VARIAN: OK,
well, then you know.
Because there were
a couple of ideas
there about how you might
deal with this issue
of either redefining
what would be fair
when there's differences
in ability, or, in fact,
going the very radical
plan of actually,
I could outbid you to
sing and you'd do it.
GLEN WEYL: Yeah, so I'm actually
very sympathetic to that idea,
but for a bunch of
practical reasons
we talk about in
the conclusion, we
don't think we have a proposal
that actually makes sense.
But at the philosophical
level, you'll
recognize your own writing in
what we say about that issue.
HAL VARIAN: And it's
also interesting,
because there is a
practical example.
There were apprenticeships.
So what happened in America--
I mean before there was
a United States, in fact,
back in the
pre-revolution days--
you could bring an immigrant in,
and the quid pro quo was they
worked for you for
seven years, and you
would teach them a trade.
And so this was viewed
as a very successful way
to provide education,
and skills, and so on.
GLEN WEYL: I wouldn't
say that too loudly,
because on the internet, when
we certainly weren't advocating
indentured servitude,
but we just
talked about our immigration
system, which is not indentured
servitude, we got the most crazy
reaction from social media.
So it's a sensitive subject.
HAL VARIAN: Yes, yes, I agree.
And it's also illegal, so--
GLEN WEYL: Yes.
HAL VARIAN: The
self-assessed tax.
That was kind of fun.
I first heard this idea from
Dick Zeckhauser many years ago.
And he claims that
the Greeks used this
for assessing to antiquities.
GLEN WEYL: Yeah,
we talked about it
in chapter one in some detail.
HAL VARIAN: And in fact, we
did something very much like it
for the top-level
domain names, when
we had this top-level
domain name auction.
So Microsoft and
Google, for example,
both might one .doc as a TLD,
and the way it was resolved is
you each write down your price.
The high bidder gets it
and pays the other bidder
the price that it bid.
So it's a kind of
interesting mechanism.
It's not, of course, perfect.
Any economist could
shoot some holes in it,
but it seemed to work
pretty well in practice.
Data as labor.
Well, we do that now.
We pay labellers of data.
We have just donated
9 million images
to the Open Image project.
We paid lots of people
around the world
to label that data
with the contents.
We did the same thing,
4.5 million YouTube videos
which we had people
label, and that
goes into the video project.
Consumer panels like Nielsen,
that's around all the time.
So there is a market
for getting people
to provide data labeling or
data of one sort or another.
So it's not unreasonably--
I mean, it's a pretty
big market, really.
GLEN WEYL: Yeah, I think
that the problem is
that the vast majority
of data we get,
we collect from
people who aren't
aware of the productivity
roles that it ends up playing.
And trying to engage
those people more
and paying them a bit
more for those people
who are in context, who can
provide additional value.
And in fact, Google
does a little bit
of that with the local
hosts and so forth.
But I think trying to make
people more broadly aware
of that, and trying to create
a structure where they would
get direct compensation
for improving
the quality of the
data they provide,
and be aware of the payments
they were getting for all
of their data, would
in the medium-term
create the
opportunity for people
to build greater human
capital, really, and contribute
more online.
HAL VARIAN: Well, there
is this question of what
the payment would look like.
If you take Facebook
as an example--
because I think you've
mentioned this--
Facebook had net
earnings of $10 billion,
and they claim there
are 2 billion users.
And that means $5.00
a year per user.
And Google has similar
numbers, of course.
So these work out
to pennies per day,
in terms of the
compensation for information
that people are providing.
And I would argue--
I certainly believe
for Facebook,
and I certainly
believe for Google
and also Facebook, of
course-- a lot of this data
is used to improve the product.
So people are
benefiting from it.
It's benefiting as a public
good, not as a private good,
but they get their
private benefit
from using better products.
GLEN WEYL: Absolutely.
I think that if we had more
targeted direct compensation
to people, we would get
larger product improvements.
I would dispute with
you a little bit
about some of the numbers.
I've done different
calculations than that exactly,
but yes, at the moment
things are relatively small,
I think, by any calculation.
But in a future where
artificial intelligence really
does come up to take
the role that investors
are pricing into your company
and into my company, it taking.
I think that if we don't find
a way to directly compensate
people for the
data contributions
that they're making,
that are fueling
those artificial
intelligence, we're
going to end up with a
lot of what I would call
fake unemployment, where
people are unemployed,
but not because they're
not contributing value,
just because the value
that they are contributing
isn't being counted
appropriately.
HAL VARIAN: If you'd look
at the web raters handbook--
I was just looking at
this a few days ago.
I know several people
here have looked at this.
We pay thousands of
people around the world
to answer questions
about page quality.
That is the labeling, that
then goes into determination
of the algorithms and
the machine learning,
that helps make the system work.
So there is a direct market
in paying people to label,
and we could do much
more of that, for sure.
But the question is, should
it be done through the product
improvement side of things,
or should it be done just
as a line item on the budget.
We're paying people to
rate or evaluate this
or label this material
in a way that helps
us design a superior product.
GLEN WEYL: And I think
that if more people were
aware of the contributions
that they're making
and were getting compensation
for it, you would--
I mean there are absolutely
markets as you're
describing for those labellers.
They are a little bit sidelined,
and the public image that is
portrayed is one in
which you don't--
HAL VARIAN: I know.
You're very right.
I mean nobody knows about this,
even though it's easy to check.
GLEN WEYL: Yeah.
I think putting that more center
stage and making more people
feel like they're
participating in it,
I think, would change the whole
feeling of using the internet,
in a way that I think would
be productive for our social
conversation around technology.
HAL VARIAN: Well, it is
interesting how many people
write reviews for Amazon,
or for Google, or for Yelp,
because people are volunteering
this information in many cases.
And I think you
might want to argue
that, well, the incremental
addition to that free service
is worth paying for.
And maybe it is, maybe it isn't.
Depends on how much
you're getting people
to contribute generously
of their time,
in terms of doing
these evaluations.
GLEN WEYL: Yeah,
well, that's a--
HAL VARIAN: Might be.
It's an empirical matter.
All right, I'm going to ask one
more question, and I apologize.
This is slightly technical.
Your chart on the inference
labor share and the markup,
I've actually been
working on that problem.
This is a paper by
Eeckhout and De Loecker
that you're referring to.
GLEN WEYL: Yeah, yeah, exactly.
HAL VARIAN: And
it's a little funny,
because remember, markup is
the price over marginal cost.
So the markup can go up
either by price going up
or by marginal cost going down.
And of course, we
think cost going down,
gee, that's a good thing.
Price going up,
that's a bad thing.
But of course by making--
by moving around these two
things you can change the--
level the ratio of
price to marginal cost.
So in fact, if you
take the formula
in that paper for
the markup, it's
also a formula
for marginal cost.
Just re-arrange the algorithm.
And if you go out and
do the calculation,
look at the same data-- or
the same sorts of data--
that they look at, you see
costs going way, way down.
You also see-- one last point--
you also see prices going down.
And the question
is, what's happening
is the marginal cost
is going down even
faster than the prices are going
down, so the gap is going up.
GLEN WEYL: Marginal costs
fell dramatically as well
during the post-war period.
And in fact, even more
dramatically, the productivity
went up more quickly.
My view is not everything
has been terrible
in the last few years.
That's not the point.
The point is that, if we don't
have social institutions that
reform and restrain
market power,
that keep up with the
progress of technology,
we'll fail to realize the
potential that we can have,
which requires
constantly breaking up
the sources of rigidity that
enter the economy as technology
advances.
And I think we did
that more effectively
in the immediate post-war period
along certain dimensions--
though not all
dimensions-- than we've
managed to do it since then.
So my argument is not everything
has just gotten worse.
Of course not.
We wouldn't have had economic
growth if that hadn't happened.
But that we haven't
managed to keep up
in the innovation of
our social institutions
with the innovation that we've
had on the technological side.
HAL VARIAN: So let me make one
other objection to the Eeckhout
De Loecker work.
Because I don't dispute
anything that you just said.
But if you look at that, the
surprising thing from other
contributors is, the same thing
has happened in pretty much
every industry-- that is,
labor share has gone down--
and pretty much
in every country.
So it seems very strange to
say, somewhere around 1980,
all these different
countries and all
these different industries
became less competitive.
It's much more
natural to say, well,
in the 1980s we had a
technological shock that
lowered costs pretty much across
all countries and pretty much
across all industries.
It's called the computer.
Micro-computer.
That's what we've done.
And we've seen this
technology work its way
through with some leaders--
that is, some companies that are
doing very well because they've
managed to reduce their costs
and improve their quality
by using this technology.
We've seen other
companies that haven't
done so well, because
they haven't done this
to the same extent.
So to me, the technological
hit that reduces marginal cost
is much more plausible
than the concentration
hit which increases prices.
GLEN WEYL: And
what I would say is
that we had those marginal
costs falling before for reasons
that were, in fact, more
powerful than the computer.
Air conditioning,
refrigeration, lots
of huge technological advances.
Except at that time,
we had policy makers
who were innovating, coming up
with things like the welfare
state, and antitrust
policies, and labor unions,
that were keeping
up with technology.
And in the 1980s,
we stopped trying
to keep up with the
innovations in social policy
that were necessary to
restrain market power
within the technology sector.
And that's the reason why we
suddenly saw those prices not
track as far down with marginal
costs as they should have done,
to maintain both maximum
productivity growth and--
so that's--
HAL VARIAN: But
the real debate--
the real question, I think
is, is this just difficult
to learn how to use and
adopt this technology?
When electricity came in, we
saw the same thing happen.
When steam came in,
we saw the same thing.
It just takes time for
this to work its way
through the systems,
so you would
expect some companies are
going to be more productive
than others, because
they've learned
to master the technology.
And two of those companies
are represented right here,
Microsoft and Google.
All right, that's
my debate, and I'm
sure you've got some more
ready questions coming.
Why don't we start here.
AUDIENCE: All right.
Thank you so much for coming
to speak, and thank you
for hosting and providing
a lively discussion.
My name's Stephen.
I have one question for you
on a subject that you actually
haven't really touched on yet,
which is the quadratic voting
piece.
Simply because I
think politics is sort
of the iceberg to all of this.
It's the underlying set of
problems to all of this.
And so I'm curious,
one, how does
that actually work, in terms of
how does one define the value
that each person is given?
Is it a static equal
value, or can you
buy more if you
have more income?
And two, if you're willing
to extend the conversation,
just how do you think the
globalization of finance
has impacted this decoupling
of productivity and wages
that has happened over the past
30 years, which has greatly
contributed to rising inequality
and many of the problems
that you're discussing
and thinking about today?
GLEN WEYL: On the first
point it would be not static.
It would be dynamic over time.
People would get voice credits.
They would get a flow of
voice credits the same way
that they get a flow
of a social dividend.
But it would be equal
across all people there.
Would be no opportunity to use
outside financial resources
to purchase more.
Unless in some much
more advanced society
when some of these other
ideas have been implemented
we have much greater
equality in which case
we might consider allowing
people at least at some rate
to purchase more credits.
In terms of the globalization
of finance, look,
I'm not 100% critical of what
happened with neoliberalism.
I think that there's been
a huge amount of growth
in the developing world,
and to a large extent, that
is attributable to the opening
up of the international system
to allow opportunities
to many more people.
Unfortunately, while we opened
up to other parts of the world,
I think our economy
domestically,
within the United States and
within other wealthy countries,
allowed in this greater market
power and, to some extent,
the external markets
were used as a wedge
to consolidate the
power of capital
within national boundaries.
And so I think we
need to rectify that,
because otherwise we're going
to get a populist backlash that
reacts to the fact that
things got better abroad
and they didn't get
so much better here,
and that feels
like something that
can be cured by xenophobia.
Which it can't, really, but you
see how people get that logic.
So we need to find a
better way to unite
the interests of people
within the country
and around the world.
AUDIENCE: What do you
think we can learn
from the political failures of
the followers of Henry George
and so on, insofar as
the land value tax,
the optimal policy they
were proposing at the time,
largely ran aground in the
Lloyd George budget in UK?
The House of Lords largely said,
this endangers our interests.
Here in California,
something like Prop 13,
which is largely the exact
opposite of an allocatively
efficient policy, is impossible
to get rid of, seemingly.
What do you think we can
learn from these failures
for creating better
policy in the future?
GLEN WEYL: I think a major
problem for Georgism,
fundamentally, was the failure
of the Chinese Revolution,
because it ended
up meaning that--
Sun Yat-sen, who was founder
of the Chinese Revolution,
basically had the same
relationship to George
that Lenin had to Marx.
And the problem was that
Lenin was much more ruthless.
He managed to-- the
Bolshevik Revolution managed
to survive and communism
spread, and that
became the leading
alternative to capitalism.
And so we got stuck
in a discourse
where everything was about
capitalism versus communism.
And so I think,
ultimately, if you
can have a comprehensive
ideology that
helps people rethink things,
like Milton Friedman did--
he really changed
the whole discourse--
I think that we can
have a path where people
understand and believe in that.
And I think he came
close in England.
I think you change a
few things and Georgism
would have been very
successful in England.
But I think that the
communist revolution was
a big part of what stopped it.
AUDIENCE: Hi.
Thanks for the talk.
Really interesting point
about the concentration
of assets in a few very large
asset managers, money managers.
My question is, where
does the political will
come from to sort of
go after these guys?
They control a lot--
and I guess this is
more broad, too--
they probably have captured
the Congress, they're lobbying.
They're incredibly strong
versus the very diffuse sense
among the populace
that, oh, it's probably
bad to have four companies
controlling the majority
of stock in the United States.
GLEN WEYL: First of all,
the most powerful basis
of the protection of capital
rents is free market rhetoric.
It's not just, or
even mainly, things
done in the dark back rooms.
Free market rhetoric
is something
that so many people in
this country believe in,
and if we can deny to the
capitalist monopolists
the use of free market
rhetoric, by saying
that true free markets
require radical reforms,
radical egalitarian
reforms, I think
we can change the political
dynamic around these things
significantly.
But second of all, you know,
it comes from young people.
It comes from students.
That's where-- that's how
Milton Friedman changed things
in the direction that
they went in the 1980s.
"Capitalism and Freedom" sold
terribly among academics,
initially, and it was very
unpopular in the press,
but students loved it.
And he had a coherent view,
and it applied to many things,
and he really changed the
whole political discourse
in the country.
So I do believe that
in the medium-term,
ideas clearly exposited
that try to directly connect
to the public can have a
huge effect on world history.
AUDIENCE: I'm a newbie to
economics and politics.
Recently, I watched Ray Dalio's
"How the Economy Works in 30
Minutes."
He talks about
borrowing and lending,
and he says because of
that, we have credit.
And it's human
nature that we tend
to borrow from the future, which
leads to some economic crises,
because of cycles.
So I'm just wondering,
in your ideal market,
will there be economic crises?
And if there are, will
there be differences in how
we address economic crises?
GLEN WEYL: I think that
that's a great question.
I can't say that I confidently
predict that there wouldn't
be crises in the world
that I'm describing,
but I think that they would
probably be less severe.
And the reason is
precisely what you just
said, which is that debt,
and the rigidities associated
with private property as well,
are a leading cause of what
happens during economic crises.
And In this world, there
would be far, far less debt,
because it would be much
less important to take
on debt to own assets, because
the value of all assets
would be greatly reduced.
People would be effectively
closer to renting assets,
and therefore many of the
sources of instability
that come from debt finance
would be much less severe.
AUDIENCE: Hey.
My question is, it seems to me
like perhaps some products are
not naturally amenable to
constant liquid exchange.
Like housing, for example.
I might want to live in a
particular place for decades
at a time.
And if I'm outbid on it,
and I don't want to leave,
then getting me to do
so requires violence.
Or, for example, physical
infrastructure, like trains.
It seems like there
would be an enormous cost
if the administration
of this infrastructure
were constantly changing hands.
So, I mean--
I think that that gives
you enough to reply to.
GLEN WEYL: Obviously, you
could maintain stability
in this world by
charging a higher price,
so that it's harder for someone
to take something from you.
Now in our present world, as
well, stability is costly.
Wealthy people, they live
in safe areas that aren't
hit by natural disasters.
They own their houses outright.
They usually don't rent,
et cetera, et cetera.
So they enjoy much
greater stability.
The poor, they rent or
they are underwater often
with their homes, either
figuratively or literally
sometimes, living in
very dangerous areas.
And so in this society, just
like in our present society,
stability is costly.
But the difference
in this society
is that everyone would
have an equal, or a far
closer to equal, basis to
pay for that stability,
as they desired it, than
in our present society,
because you would tax the
wealthy's demand for stability
at the cost of the opportunity
of the less well off.
Whereas in our
present society, they
can enjoy that stability
at no cost to themselves,
or a much more limited
cost to themselves.
AUDIENCE: Hi, it's me again.
I have lots of questions.
So with regard to both
the self-assessed tax
and the quadratic voting,
I'm sure the answers would
be slightly different, but
the question and problem
that I'm posing, I think,
aren't quite the same.
Which is, how would you
limit collusion and sort
of gaming of such a system,
in which individuals could,
on the self-assess tax side,
more or less set a price that
is above market, that
others could buy,
but low enough to
maintain a lower tax?
And then on the political side--
this happens in our
elections already,
people running spoiler
candidates in primaries,
or having some sort
of spoiler referendum
to try and split a vote.
How would you imagine that
could be protected against,
particularly when, if I were
to put my energy in one issue,
I would necessarily
be putting less energy
and voice into another?
GLEN WEYL: It's more
than I have time for,
to go into detail about
each one of the points,
in terms of collusion
and so forth.
But that's an absolutely
central thing to the book.
I definitely encourage
you to read the book.
But the short version is,
all those sorts of problems
exist in our present system.
They are dramatically
reduced, if not eliminated,
in the system that
I'm describing.
I'll just give you one example.
Right now, there's
the problem, when
you have an election, of a
spoiler candidate running
and possibly messing up
the main two candidates.
But maybe even worse,
there's the fact
that you can end up
with two candidates
that everyone despises,
but everyone votes for one
candidate to block
the other candidate.
That's, I think, an even worse
problem than the spoiler.
In this system, you can show
that that's not mathematically
possible, because
what happens is
that, because of the
quadratic nature of the cost,
if you really hate
Hillary Clinton,
you'll vote at least as much
against Hillary as you'll
vote in favor of
Trump, and vice versa.
And so that pushes
two candidates
that everyone hates
down to zero votes.
And so then that leads
other candidates to rise up,
so you don't end up with these
perverse strategic things,
where the two leading
candidates get
reinforced just to
beat the other one.
AUDIENCE: I'm sorry,
could you repeat that?
I don't--
GLEN WEYL: So if you have
two candidates, both of whom
are really hated
by the other side,
but no one really likes
them, then what happens
is that those candidates
get negative votes on them.
So they go down
to zero net votes.
And so anyone else
who is not despised
ends up becoming a
leading candidate.
And so you can prove that
that will lead to it never
being the case that you just
get a perverse thing of two
people that are really
disliked winning just
to beat the other one.
Yeah, back there.
You were waiting.
AUDIENCE: How do you think
blockchain technology relates
to the ideas in your book
or the research you've done?
GLEN WEYL: That's a
wonderful question.
Vitalik Buterin, who is
the founder of Ethereum,
just wrote a wonderful long
post about that, which I would
definitely recommend to you.
And he and I are writing
something together
that should come out this
week about the relationship.
But very briefly,
what I would say
is, the exact technological
relationship is complex
and it will evolve.
But philosophically, I think
they're very closely connected.
In particular, both are
trying to figure out
monetary, market
based, distributed,
decentralized systems for
ensuring through rules
of the game, rather than
through discretionary authority,
that we have a more egalitarian
distribution of economic power.
I think a major
weakness in blockchain
thus far has been that
it's focused primarily
on the cryptographic
protocols, rather
than on the substantive
rules implemented
by those cryptographic
protocols, and as a result,
some of the rules have
ended up giving power,
in fact, to oligarchic
groups, say, in China,
that end up controlling them.
So they don't really achieve the
goals that they're aiming at.
What they need is a
substantive set of rules,
to be implemented by those
cryptographic protocols,
so that they actually
instantiate their goals.
And that's precisely
what Buterin
tries to argue in this
piece, and that we're
arguing together.
So I think that there's a tight
unity of purpose between these,
though the actual technological
connection is something that's
going to need to develop in the
coming years, or months even.
I'm actually speaking at
the main Ethereum conference
on Saturday about exactly this.
Go ahead.
AUDIENCE: Just going back
to the previous question.
To be honest, I
think trying to apply
any rigorous mathematical
proof to the political system,
especially the American
political system,
is doomed to failure.
But I think one
question I would have,
in terms of implementation,
you mentioned
that this quadratic voting
system seems extremely radical.
What are the sort of baby
steps that you mentioned,
in terms of actually
trying to implement this,
especially in the US?
GLEN WEYL: Absolutely.
We don't have the
computer going,
but I can show you afterwards.
We have a nice user
interface, that
even for people who haven't
completed high school,
makes it very intuitive
to do quadratic voting.
And we've been using
that to do polling,
and we've gotten some very
interesting results, where
we were able to elicit
intensity of preference
much more reliably than you
can get from existing methods.
That's a good place to start.
But the next place that
we really want to go
is ratings, say, of ride-sharing
drivers or products online,
where you have this problem
of people often going
to extremes and a lot of sort
of trolling-type behavior.
And if you made
something costly,
and made there be real tradeoffs
for people that would budget
to upvote or downvote
things, I think
you could get much more
reliable and useful feedback
In a variety of circumstances.
AUDIENCE: But in terms of
actually putting into place
in American elections--
GLEN WEYL: My view is that
once you start using it
in some of these
commercial domains,
you gradually expand
them outwards.
As people get more used to
it in different domains,
there will be a
greater willingness
to experiment in other domains.
Blockchain is
another place where
I think that it's quite
likely that this will be used
in some reasonably near term.
And I think people will get
used to the technology-- it's
sort of like, e-government
happened to a large extent
because of all the
advances that were made
in the private sector, and
then those were imported
into the public sector.
So I expect something similar
would happen with this.
HAL VARIAN: We'll take
one more question.
You had the mic?
Go ahead.
AUDIENCE: Thank you for
sharing your ideas again.
I look forward to
reading the book.
You said that the primary
urgency of what you propose
is because there is
an impending doom,
almost, if we don't do something
about the current status quo.
But do you see this
Marketopia being implemented
without massive upheaval?
Because I think what
you're trying to suggest
is that we need to save
our society, almost.
But from the way I see it,
it seems like we almost
need to almost throw
away society in order
to implement this
without the oligarchs,
without the current
special interests,
basically taking control of
this or skewing in a way that,
basically, either ruins it or
prevents it from ever seeing
the light of day.
GLEN WEYL: I believe
that revolutions
are not always,
but almost always,
more destructive than
they are productive.
And on the other
hand, I do believe
in the power of
democracy and ideas,
if widely disseminated,
thoughtfully engaged
with, and widely understood.
I think public understanding
is the greatest accountability
against special
interest capture.
So I put my faith
in that, ultimately,
and I hope that young
people, including
some people in this
room, will build
on the transmission of different
aspects of these ideas,
so that we can keep the
broad public engaged
and keep the political
process accountable to that.
I think you saw with what
happened in the last year
or two, how much desire
there is for change,
and if that's channeled
in a direction that's
productive rather
than destructive,
I think that we
have an opportunity
to build a much better society,
like Franklin Delano Roosevelt,
I believe, did, rather
than just having
upheaval, a violent upheaval.
HAL VARIAN: OK, thank
you very much, Glen.
