Author Archive | Prof. John McGinnis (Northwestern), guest-blogging

Summing Up: The Urgent Need to Adapt Political Decision Making to Technological Acceleration

Reflecting on the vastness of time in which extraterrestrial life could have reached the earth, the physicist Enrico Fermi wondered, “Where are they?” One of the most plausible explanations of the absence of such extraterrestrial visits is also one of the most disquieting. It is intrinsic to the nature of intelligent life to expand knowledge over time and for its civilization to develop at an accelerating rate. But it may be also intrinsic to its nature to destroy that civilization as the rate of change exceeds its capacity to adapt to the challenges that this acceleration produces.

In my new book Accelerating Democracy; Transforming Governance Through Technology, I argue that one way to beat these possibly cosmic odds is to use technology to increase our capacity to make wise political decisions. Throughout human history individuals have invented new devices for human benefit. These inventions in turn alter the relations of people to one another, creating opportunity and need for better decision making. Thus, accumulating acts of individual genius often prompt humans to improve collective governance.

More information-rich forms of social governance are needed to solve problems technology itself creates. The technology that created agricultural surpluses made cities possible, generating new issues, like the mass disposal of human waste, requiring new social coordination. By accumulating wealth within a compact space, cities also attracted marauders, requiring new policies for defense.

But besides such specific problems, technological innovation generates more general difficulties for governance because such innovation renders the social environment more and more distant from that in which we were adapted to live. In the evolutionary era, humans inhabited small communities where members were related by sexual bonding or by blood to many other members. But as the polity moves from the tribe, to the city state, and then to the [...]

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Rights and Consequences

My blog post, “Experimenting in Same-Sex Marriage and Other Matters,” raised questions about the relation between rights and consequences. Some commentators thought I was arguing that constitutional rights should be curbed if they had some bad consequences.

I think this was based on misunderstanding of my position. It true that I think the determining what rights to grant in writing a Constitution should depend on a consideration of the consequences. But in a world in which individuals have limited knowledge, rights against the government are very useful once we have determined that their exercise leads to enduringly greater costs than benefits.

The supermajoritarian constitution making process in our nation is the best way to make that determination, as Michael Rappaport and I argue in our forthcoming book Originalism and the Good Constitution . We need such processes, because the appropriate full set of rights is not self-defining a priori.

The premise of my discussion of same-sex marriage was that this right could not be located in the original meaning of the Constitution. (I did not defend this premise, because my post was about empiricism, not constitutional interpretation). Many people argue nevertheless that the Supreme Court should grant such rights through “an evolutionary process,” in the words of Ted Olson. I disagree, because federalism provides us a better way of testing the course of evolution by allowing us to consider the consequences of granting a new right.

Lest this seems excessively abstract, let me note that previously sexual freedom has received a substantial aid from the operation of our federalist system. Citizens who felt oppressed by local sexual regulations migrated to more tolerant jurisdictions like New York and San Francisco. There they have publicized their life style, and used the media to make case that previous sexual inhibitions can be relaxed [...]

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Promoting Limited Government and More Informed Decision Making

Thanks so much to Ilya for his generous post on Accelerating Democracy. I see Ilya’s and my projects not as antagonistic but essentially complementary.

I share Ilya’s belief that more limited government is likely better government. I thus expect that that by providing more accurate information about policy results, more people will move over time to recognize the virtues of markets and limited government over centralized regulation in most instances. Ilya argues that limiting government will help citizens better update on information about policy by restricting the range of government programs to which they must pay attention. We may have a virtuous circle here.

I would also note that one of the most important recommendation in both our books is similar—the promotion of federalism in particular and decentralization in general. Decentralization can simultaneously promote experimentation and foot voting. Empiricists evaluate the results of policy through analysis but so do citizens by moving jurisdictions.

More generally we both want the political process to rely more on the market. Ilya focuses on federalism as a market for governance. I focus on information markets as a tool for guiding governance. Both build structures of governance on Hayek’s great insight that information is dispersed among many people.

I also agree with Ilya that because of rational ignorance in politics that information will make far less difference in people’s political decisions than in their personal decisions. That is a good argument for limited government and Ilya develops it superbly in his forthcoming book, Democracy and Political Ignorance . But precisely how limited government should be depends on the dangers of externalities that markets and other means of voluntary coordination cannot address. The costs and benefits of limitations are themselves empirical questions that may change depending on the technology of the time.

I think any [...]

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Combating Bias: More Reason to Favor Prediction Markets and Oppose Earmarks

The information delivered by new technologies about policy results will be more effective insofar as it changes people’s minds. But many people are biased. They hold to their preconceptions about the wisdom of policy, regardless of the new evidence presented. Thus, another urgent task for adapting to technological acceleration is to help democracy better update on the new information generated by our new technologies.

In my book Accelerating Democracy , I offer a variety of electoral reforms, like introducing top-two primaries, that make politicians more responsive to the electorate as a whole and thus cabin the effect of partisan bias. Here I discuss two more unusual reforms that would also facilitate democratic updating.

The first recommended reform for constraining bias is again prediction markets. In addition to injecting more information into collective decision making, prediction markets can help with bias. Cognitive scientists have shown that forcing individuals to consider the alternative is one way of combating bias. Conditional prediction markets—markets that predict consequences both in the event a policy is adopted and in the event it is not– by their very nature force the consideration of alternatives.

For example, a conditional market on a capital gains tax cut forces people to consider the alternative economic situations where a capital gains tax is cut and where it is not, thus forcing both proponents and opponents of capital gains tax cuts to confront the preferred policy world of the other and observe the predicted results. A market considering both conditions also prompts consideration in a relatively non-partisan context. The absence of partisan cues reduces bias.

The second reform is the permanent elimination of earmarks. Earmarks are the practice by which individual members of Congress target appropriations for their own district outside of any competitive process and or other neutral criteria. The usual [...]

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Prediction Markets and the Danger of Manipulation

The most frequent critique of my proposal to legalize prediction markets stemmed from fear of manipulation or gaming. A specific concern is that manipulators will choose to skew the markets at the time of some democratic event, such as a vote in Congress. For instance, those who stand to gain from a President’s stimulus package might bid up the conditional markets that show favorable economic indicators should the stimulus pass.

Even before evaluating how likely such manipulation is, it is important to avoid the Nirvana fallacy. In the absence of prediction markets, special interests and ideologues will try to manipulate legislative action by making arguments that falsely claim public benefits for legislation or falsely deny them. Prediction markets at least balance such influence by encouraging those whose motivation is accurately to predict policy consequences.

In any event, manipulation is unlikely to be successful even in the short term when other traders are aware of its dangers, because they will be particularly sensitive to the opportunities for countering manipulation and making a profit. Two economists, Robin Hanson and Ryan Oprea, have provided a formal model to show at those who are trying to manipulate the markets offer higher returns for those who are trying to make accurate predictions. Since manipulators are consciously trying to aim at the wrong price, they become “sheep” who attract “wolves” interested solely in accuracy.

Past experience in electoral markets also suggests that there are limits on the effectiveness of manipulation. Investors in political shares may have an incentive to bid up their candidates’ price in the hopes of skewing the election by persuading voters to get on the bandwagon of the winning candidate. But spikes in electoral prediction markets that presumably represent either manipulation or exuberance on behalf of a candidate are short-lived as counter traders [...]

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Experimenting in Same-Sex Marriage and Other Matters

We live in a golden age for empiricism. Pythagoras said the world is made up of numbers and that is the slogan of empiricists. But until this time of big data and exponential computer power, empiricism had an Achilles heel, because it lacked substantial processing capacity. Fortunately, the relentless increase in computational power and the mining of big data has eroded this constraint.

As a result, empiricism is on the rise throughout the social sciences. Because more can be done with data, more sophisticated tools are being invented to help distinguish correlation from causation. Empiricists now form a community that applies quite rigorous standards to assess the validity of their colleagues’ work.

The rise of empiricism has important implications for the shape of our politics. As I argue in Accelerating Democracy, the government should transform itself into a better tool for policy experiments, because more learning is possible. Information markets would also make empiricism more valuable because they make it easier to use past analysis to predict the future. Life is understood backwards but lived forwards, as Kierkegaard famously said.

The promise of better empiricism provides another reason for government decentralization, because sophisticated empiricism allows us to compare the results of different policies even in different jurisdictions. This renewed promise provides yet another reason for the Supreme Court, other things being equal, to enforce the enumerated powers against the federal government, permitting space for state experimentation.

Cutting back on substantive due process and other mechanisms for loose interpretation of the Fourteenth Amendment would also permit states to experiment with different bundles of rights. In an age where we can better gauge the effects of newly claimed rights, it becomes less justifiable for the Court to rely on its own intuitions to establish the content of rights outside those specified [...]

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Legalize Prediction Markets Now!

I do not want to shock readers of the blog, but Washington is a spin city where many politicians and pundits say a policy will deliver a set of results without really believing it. It would be very beneficial to counter this band of dissemblers with an army of people focused on the accuracy of policy results, particularly if evaluations can capture the attention of their fellow citizens. A technology that made the results of policy clearer could also energize the many people who are interested in promoting public goods like economic growth and better education but are genuinely uncertain what programs will deliver those goods.

Fortunately, we have today a technology that has such potential—information markets. These markets were big winners in last year’s elections. Many respected pundits forecast a Romney victory but information markets universally and correctly foretold Obama’s win. Indeed, on the day before the election, the vote share market run by the University of Iowa predicted the vote shares of both candidates more accurately than the consensus of opinion polls on Real Clear Politics.

This performance is not surprising, because markets gather dispersed information, encouraging citizens with knowledge to put their money where their mouth is. The resulting distillation of many minds is better than experts, because it includes experts and adds people who are willing to bet against the conventional wisdom.

We could use these same markets to predict the results of policy as well. For instance, each house of Congress should require that any legislation be made public ten days in advance of the vote. Markets can then be created to analyze the consequences of the legislation.

One market could be conditional on the fiscal proposal’s passage and people could bet on outcomes in the coming years, such as the economic growth rate and [...]

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Introducing My New Book, Accelerating Democracy

Relentless and accelerating technological change is the fundamental fact of our time. Your smartphone today is more than a thousand times powerful and a million times less expensive than all the computers at MIT in 1965. This exponential increase in computational power is continuing. It represents both a boon and a danger to society.

Such accelerating power creates ever greater scope for innovation, as more and more technologies are brought into the domain of computation and then partake of its exponential progress. But accelerating technology also will create dangers abroad (such as new weapons of mass destruction) and turbulence at home (such as the displacement of workers by machines). As a result, technological acceleration also demands better governance.

Fortunately, the computational revolution also supplies new tools to allow our political system to make smarter decisions. The key is to use the power of our new information technology to better assess past policy and predict the consequences of future policy. Information about the best policies is the master public good without which all other public goods cannot be well provided.

In the next posts I will describe how we can unleash specific legal technologies like prediction markets, empiricism, and dispersed media to help democracy make better decisions. But in the remainder of this post, let me make two larger points about the advantages of the synergies from these technologies and preempt one objection.

The new information technologies permit us to reject a top down model of the creation of social information. The usual idea of a technocracy depends on information handed down from above by experts and bureaucrats. But technologies like prediction markets permit knowledge to bubble up from below— from more dispersed sources through more competitive mechanisms, thereby sustaining a more decentralized structure of social discovery. We can have expertise [...]

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