Matt's Thoughts In Between - Issue #16

Down with capitalism, up with markets?

I talked last week about the need for more radical liberal ideas and promptly came across a new book, Radical Markets, by Eric Posner and Glen Weyl. This excellent Econtalk podcast with Weyl provides a good summary. The authors argue that a lot of the problems that people have with capitalism are actually problems of market design - and the solution is not fewer or more regulated markets, but more and better designed ones.

Lest this seem like standard libertarianism by the back door, their first example is a radical Georgist-inspired property tax. Owners would set any value they liked for their property and then would be taxed a percentage of that figure annually - but they would also have to sell the property if they received an offer at that price (which creates a disincentive to lowball). This would, Posner and Wehl argue, ensure resources were put to their most valuable uses. They also suggest that even a relatively low tax like this could be used to fund a universal basic income, which we discussed last week. There's lots more where that came from.

There are some good reviews by Robin Hanson and, interestingly, Vitalik Buterin, one of the founders of Ethereum. He's particularly intrigued by how some of these ideas intersect with smart contracts and decentralised institutions. My main critique is that a lot of these new markets would impose a heavy cognitive load - but perhaps combined with Albert Wenger's idea of the "right to be represented by a bot", that's a solvable problem. At minimum, it's highly engaging, and I recommend the book (or at least a preview) as a fun way to challenge and update your mental models.

Economic struggle, culture wars

The Resolution Foundation has a new well-argued and data-rich post on the predictors of the Brexit vote. It's UK-centric, but more broadly relevant. It points to many of the factors that have been discussed before - low pay, change in (but not the level of) immigration, university education - but does a good job of showing how these are mediated by broader economic conditions and how that might change.

My initial reaction was that the article underplays the "cultural divide" angle relative to economic factors, but on reflection the two are highly intertwined. The same is true across the Atlantic. The WSJ has an interesting profile this week on James Davison Hunter, the sociologist who coined the term "culture wars" 30 years ago. Hunter makes the point that the modern (US) culture war ignited in a period of mass prosperity, "when nothing else is at stake" - but that subsequent economic struggles, especially those experienced very differently on either side of a cultural divide, exacerbate matters.

Unfortunately healing the divide is probably less electorally advantageous than stoking it. Neither Resolution nor Hunter have anything terribly optimistic to say, but at least neither go as far as this (rather alarmist) New Yorker piece from last year, that resurfaced this week, that posits a 35% chance of civil war in the US in the next 15 years...

GDPR and the global regulatory state

Has there ever been a new regulation that has so entered the popular consciousness as GDPR? Or even one enshrined in memes?

It does seem, though, that GDPR represents a watershed in global governance - and a striking example of the reach and power of the EU. All companies now face the regulatory opposite of "Most Favored Nation" provisions: in a world of GDPR perhaps it makes sense to treat all customer data in the way you treat the Most Stringently Restricted - i.e. that of EU citizens. The consequence, as the Washington Post notes, is that the EU is now Silicon Valley's most important regulator (Though note how WashPo is dealing with it themselves...)

It's fascinating from a geopolitical perspective, but it's far from clear whether any regulator, still less the EU, is well equipped to create regulations that have such global impact and unintended (at least by the EU...) consequences.

Quick links

No median wage crisis at Facebook. How much do people make in tech? A lot, it seems.
The gender gap in education. The long term consequences of this phenomenon are under-discussed. Bonus: how much difference should we expect biological sex differences to make?
Open Source intelligence. It's remarkable what is achievable in "secret" intelligence with nothing more than an internet connection.
Is "reinforcement learning in the wild" real? Great, skeptical thread.
We don't know what we know. The replication crisis in psychology continues. The marshmallow test is the latest to fall.

Your feedback

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Until next week,

Matt