This system suffers from the same political economy problems that democracies have. For example, if I am a corn producer in the USA, I have a strong incentive to spend lots of money lobbying and contributing to political campaigns to ensure a strong protectionist policy for sugar. It ensures that my corn is purchased and used for corn syrup, and that Brazilian sugar cane doesn't destroy my market.<p>The good from this policy is concentrated on the corn producers, and the harm is spread diffusely across all people who consume sweets. If I am an average consumer of sweets, I see little benefit fighting this policy today, since it will only change the price of a soda by a few cents.<p>Under a "Futarchy", the corn lobby can spend lots of money to "predict" that a sugar tariff will make the country better. They might even believe it, but I will have little incentive to vote with my wallet against such a policy, since the harm will be diffuse and extremely difficult to conclusively pick out from the noise using econometric techniques. Result: a strong tariff, which almost all economists agree is a bad policy. [1]<p>Just because Futarchy is vulnerable to some of the same problems as democracy as practiced in the USA doesn't mean it is a bad system, but I fail to see how it is functionally different than a plutocracy. [2]<p>The problem with prediction markets is that they are only accurate in so much as one's incentive to "waste" money producing an incorrect prediction is smaller than the amount of money to be made by having that incorrect prediction.<p>Hanging all law off of the results of prediction markets creates HUGE incentives for me to game the prediction markets, then extract rents elsewhere in the economy to more than recoup my investment.<p>[1] <a href="https://en.wikipedia.org/wiki/Tariff" rel="nofollow">https://en.wikipedia.org/wiki/Tariff</a><p>[2] <a href="https://en.wikipedia.org/wiki/Plutocracy" rel="nofollow">https://en.wikipedia.org/wiki/Plutocracy</a><p>(Edited for grammar, citations).
The failure mode of all voting system with central control is that the elite take over the most important part of the system: what is actually voted on. This will happen in a futarchy just as it happens in democracy. The end result will be, I'd predict, indistinguishable.<p>Only societies without strong centralization and with incentives on the elites that stand opposed to collusion have the promise to evade what happens to democracies. An example is that which prevailed for a fair time in Medieval Iceland, but there are few others: the opening society of the US gave way to growing centralization pretty quickly, and the original vision didn't last much past two generations. There were not strong enough incentives to prevent collusion of the elites against the masses.
How is GDP a measure of wealth?<p>It's a measure of how much money is spent back and forth and not much else.<p>Some consider this money moving to be "progress" but it actually only highlights how many problems a society's people are willing to pay in order to solve.<p>The medical industry is a classic example of this. People are suffering and paying an arm and a leg for cures and treatment. GDP reflects the money aspect of this while ignoring the human aspect.
I've searched your PDF and did not find the keywords from Voting Paradoxes and Combinatrics [0]. What are your thoughts on this subject?<p>[0] <a href="http://www.youtube.com/watch?v=LFjApWH8R9c" rel="nofollow">http://www.youtube.com/watch?v=LFjApWH8R9c</a><p>A speech by Noga Alon [1], Baumritter Professor of Mathematics and Computer Science, Tel Aviv University<p>[1] <a href="http://www.tau.ac.il/~nogaa/" rel="nofollow">http://www.tau.ac.il/~nogaa/</a>
This is similar to, although one step removed from, the anarcho-capitalist proposal in David Friedman's 1973 book The Machinery of Freedom [0]. In this proposed society, monopoly government is replaced completely by a market for <i>everything</i> that government currently does, including law production, law enforcement, arbitration (courts), roads and infrastructure, and even "national" defense. I'm admittedly a big fan of Friedman's proposal, and I wonder what supposed advantage this futarchy provides over Friedman's proposal. There's a decent 20 minutes illustrated summary video on YouTube [1].<p>[0] <a href="http://www.daviddfriedman.com/The_Machinery_of_Freedom_.pdf" rel="nofollow">http://www.daviddfriedman.com/The_Machinery_of_Freedom_.pdf</a><p>[1] <a href="http://www.youtube.com/watch?v=jTYkdEU_B4o" rel="nofollow">http://www.youtube.com/watch?v=jTYkdEU_B4o</a>
Quote from the article:<p><i>Futarchy seems promising if we accept the following three assumptions:<p>Democracies fail largely by not aggregating available information.</i><p>And we don't even need to go any further, because assumption #1 is wrong in two ways:<p>(1) Democracies fail because people have conflicting goals, not just conflicting beliefs about how to reach goals. Even people who have all the same factual beliefs can still have inconsistent goals. That is a problem in any system that requires everyone to adopt common goals in order to set policy.<p>(2) The "information" that would need to be aggregated doesn't exist anyway. Hanson assumes that there is <i>some</i> policy that, if imposed on everyone, would work; he never considers the possibility that the real problem is that assumption--that the root problem is the very act of imposing policies on everyone, not the particular policies that get imposed.
<i>Instead, much of the difference seems to be that the poor nations (many of which are democracies) are those that more often adopted dumb policies, policies which hurt most everyone in the nation.</i><p>This is taken as obvious, but I don't find it so. There are many things that are not attributable to tangible national assets, but that can nonetheless change its course: things such as historical accident of where a particular thing was invented, actions of other nations, natural disasters, etc. I see every reason to think that this sort of thing is responsible for wealth disparity, moreso than repeated adoption of "dumb" policies.
This leads to a system where people will vote only on the issues that affects them, which is a core principle of the panocracy system [1].
The problem with futarchy is that if the betting works with money, it will ultimately lead to a plutocracy.
But this could be avoided if there would be some form of "voting credits", so that every citizen has a ceratin credits to bet per year/month/...
The winning bets could then be paid out in money.<p>[1]: <a href="http://en.panokratie.net/" rel="nofollow">http://en.panokratie.net/</a>
I like this idea, but I don't know how it would handle multiple conflicting goals. Hansen gives a sample goal of improving the economy, but what if you also want to protect the environment, take care of your old and sick, maintain a strong defense, educate your children, etc?<p>I suppose you could weight them by importance (based on score voting maybe), have people bet on each policy's effect on every goal, and apply an optimization algorithm to the whole thing to get policy decisions, but not many people would understand and trust the system.
> Elected representatives would formally define and manage an after-the-fact measurement of national welfare<p>The paper scuttles itself in the first paragraph.