[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.