The rise of populism and increasing inequality have led to widespread questioning of democracy and capitalism. Glen Weyl, a political economist and Principal Researcher at Microsoft, along with legal scholar Eric Posner, published a book called ‘Radical Markets’. Radical Markets explores how restructuring property rights and voting systems could lead to more efficient markets and a more just society. Glen joined us to discuss the book and why the blockchain space is a fertile testbed to explore these radical new ideas.
Topics we discussed in this episode
- Why blockchain is on a trajectory to exacerbate inequality and fail at improving the world
- Why property should be seen as a monopolistic institution
- How property rights create inefficient markets
- The radical idea of transforming property rights via a Common Ownership Self-Assessed Tax (COST)
- How the one-person-one-vote system contributed to the crisis of democracy
- How quadratic voting works and leads to fairer outcomes
- Whether or not buying of votes should be allowed in QV
- His work with Vitalik and radical markets experiments in blockchain
- Toptal: Simplify your hiring process & access the best blockchain talent . Get a $1,000 credit on your first hire at toptal.com/epicenter.
Brian Fabian Crain: I’m here today with Glenn Weyl. He is a Political Economist and he is a Principal Research at the Microsoft Research, and also visiting Research Scholar at Princeton. So he did his PhD in Economics at Princeton, University of Chicago as a Professor and now he is Assistant Professor and now he’s at Princeton. He has also written a book called Radical Markets together with Eric Posner. And so we’re going to speak quite a bit about Radical Markets to have some interesting ideas that overlap with the blockchain space and he is recently also started dabbling in the blockchain space and some of these as these, his ideas of being applied here.
Brian Fabian Crain: So just before we get started, I want to ask you, okay, so you’re an economist and you said political economist, you would call yourself. And I think that’s also a theme that comes up a little bit in the book this contrast between maybe some of the traditional way that economics was applied or thought about in today’s. Can you explain like what’s a political economist and how is it different from an economist?
Glen Weyl: Well, before there was economics which didn’t really exist as a field until the late 19th Century, there’s a field call political economy. But political economy gave birth not just to economics but to sociology, political science, many contemporary fields. And it’s that tradition of broad and bold social thinking, Karl Marx was a political economist. Someone named Henry George who I really admire was a political economist and John Stuart Mill was political economist. And he was just not a philosophy as he was a modern economist. So it’s that tradition of not focusing on just the narrow preview of what’s considered to be one contemporary field but trying to take seriously the broad problems of society and all their dimensions that has increasingly become important to my work and I want to reclaim that tradition.
Brian Fabian Crain: Now, how has your academic work lead to the work on Radical Markets?
Glen Weyl: I was a pretty standard economist early in my career, very early in my career before I really thrived and got my PhD. I was working on some quite ambitious projects, one about applying machine learning to economics, one about the way in which financial speculation could be harmful to the economy. And I got discouraged by colleagues from pursuing this. I ended up pursuing much more standard things, especially things related to price theory which is something which you as University of Chicago graduate probably got familiar with. And it turned out that those things that were meant more ambitious that I was pursuing have ended up becoming huge movements within the discipline of economics.
And this other stuff was fine and nice and solid and I’m proud of it but it really didn’t add up to that much. And around that same time I started coming up with these ideas of quadratic voting and other things. And together, they really offered a pretty comprehensive vision of how to design a better society. And that was very exciting for me. But I realized that while that was a very exciting vision, the economics profession wasn’t really a perfect vehicle for getting those ideas out there. Maybe eventually people would come around to being interested in accepting them but the format of the standard journals and so forth wasn’t really into that sort of practical path breaking type ideas.
And so I ended up realizing at the same time that the world was going into a real crisis with 2016, with all the rise of populism, RoxEd, what was going to on in the United States, I started to feel that on the one hand, things didn’t fit so well with the economics profession. And on the other hand the world desperately needed some vision to respond to all these events, some positive, progressive, pro-market, pro-technology solution to the problems of inequality and populism and so forth. And so that’s the reason I ended up writing the book, was this combination of sort of frustration with the standard channels and on the other hand what seems so clear in terms of the world’s need for a more path breaking vision.
Brian Fabian Crain: Great. Now, you used the term Radical Markets and sometimes in the book or I think in the book you said as well, you know, in capitals as this term. But one of the things that I struggled a little bit is that it felt to me that there was sort of vague, creative market based original approaches to solving a range of different problems in the book. So there’s things about property, immigration and we’re going to speak about some of those. But I struggled a little bit to see how, what is the overall coherent thing that unites them? So can you define what are Radical Markets sort of in a general way?
Glen Weyl: So Radical Markets are markets that on the one hand are much more complete, free and open than existing markets but the same time we associate typically markets within equality and often with political conflict. And these are markets that at the same time is being much more complete, free markets are radically egalitarian and radically inclusive. And we would argue it can address a lot of the political conflicts that we’ve been having. So we mean radical in a variety of different senses, it’s both tied to historical tradition, called the radicals that united egalitarianism with something more like what modern libertarianism is. But we also mean the fact that it would fundamentally change society and that would change it in sort of the way that many people on the left envision but that it would do it through market mechanisms.
So it’s a combination of these different meanings and of these different political forces.
Brian Fabian Crain: Okay. Now, let’s try to make it a little bit linked to a blockchain. So what has your exposure to this been? How long have you been interested in that or following that?
Glen Weyl: Well, not very long. It really came out of Vitalik Buterin about eight months ago, Tweeting about what of the ideas that went into the book. And then after that I offered to send him a copy of the book and he read it and he sent me about 20 pages of comments on it. And then he ended up writing about it and that’s created the link between these communities. But the way I’ve come to see things, is frankly I’m not a huge blockchain enthusiast. I don’t necessarily think that as a technology per se it’s going to succeed. I mean, there’s a lot of questions there. But I think that there is a social movement around it which is in some sense more important and more fundamental and more exciting than the technology or the speculation around the technology itself.
And that movement to me is, one that is based on an idea that we need to make power as defused and equally held within society as possible. And that technology and market mechanisms can play a critical role in achieving that goal. That’s something I firmly believe in and I think if anything, the problem is that the blockchain world has not clearly articulated what that society needs to look like. It’s more like a technology that points a bit in that direction but precisely what it means or what it would look like is very vague. And Radical Markets even though it wasn’t conceived of as for the blockchain world, I think it can be thought of as an attempt to describe in some detail precisely what the world of sort of decentralized market driven equality could look like.
Brian Fabian Crain: Okay, great. Maybe you can expand a little bit on, and so you think that blockchain like a skeptical blockchains exceeding like how do you look at blockchains exceeding what would that mean and how do think it will fail?
Glen Weyl: So I think the things that I worry about most in the blockchain space is that the goal of blockchain is decentralization. Now, decentralization requires not just that you have a bunch of nodes running but that they actually be independent of each other. And that in turn requires a certain amount of equality. There have been many, many societies that have started with some principle of decentralization that have ended up incredibly dominated by an oligarchic elite, the internet in its original design was that way. The Russian economy, when they privatized after communism gave everyone an equal number of shares to all the companies and very quickly things got under the control of a very few.
So in order to understand whether a system is not just decentralized but sustainably decentralized, you have to look at and analyze the effects of the rules of that system using economic theory and political science and so forth. And the problem is there are so many leading indicators within the blockchain space that the system is headed towards oligarchy rather than towards true decentralization. So I think that while the goal of the decentralized system is extremely admirable, the actual designs that exist at present aren’t pointing in that way. Another example I would give is if you think of something like the central land which is a virtual world where people own territory and they wanted to decentralized control of it, well that’s a good aim but what’s in fact end up happening is a lot of speculators have brought up a lot of the land.
And now it’s going to be under the control really of a few people who are dominating the whole system. So unless you actually design new rules, just the desire to make something decentralized is not sufficient. You actually need a design of a social system which inherently promotes decentralization. Within the public chains, the problem is that the existing system formalizes property. That’s the whole idea of it. It formalizes ownership, right? That’s what a blockchain does. But it does not formalize people. It’s based on anonymity, it’s based on pseudonymity. So there is no notion of an individual person. In any system that formalizes ownership and property but does not formalize people will inherently tend to serve capital, an ownership rather than people.
And so, and in fact that’s precisely what we’ve seen happening. If you look at the inequality within a theory and a few that as the microcosm of the world, could guarantee you that it’s more unequal than any society in the world. So it’s supposed to be serving decentralization, in fact, it’s serving a huge amount of centralization of power. Now, that doesn’t mean it has to but at present that’s what’s happening.
Brian Fabian Crain: Okay. That is an extremely eloquent, I think, criticism of blockchain and I’m going to say I think it is very awkward too. In my own estimation, actually there is a fundamental prerequisite to building blockchain systems that are more egalitarian and that have less inequality. And that is having, you know, this is concept in the blockchain end of self-solving identity, like that people have individual identities and they are like on forward to go clear identities but that they’re controlled by the people themselves as supposed like issued by state. And that seems to be a fundamental prerequisite to creating something like that. And I think that would also be a fundamental prerequisite for having without it eroding.
Glen Weyl: I completely agree with what you’re saying and I think that that is one of the most fundamental issues, though it’s not the only fundamental issue that is a problem for existing blockchain environments. I mean, another fundamental issue is that they’re existing on current system of voting or of property redistribution or I mean, there’s a variety of problems. But I do think the identity problem is one of the most fundamental ones.
Brian Fabian Crain: Yeah. Okay, well, let’s speak a bit about this idea of new book of property being monopoly. Can you explain what you mean with that?
Glen Weyl: So if you own a large plot of land in the center of a very important city, no one else can get access to that land unless you consent. You could sit on that land and hoard it and let it increase in value and never do anything with it and still make a huge return on it. This is true not just of land, this is true of spectrum. Right now we’re probably reaching our audience over WiFi but at least in the United States much of the spectrum that WiFi could run on is controlled by a bunch of the television and radio stations that used to come over the air, that almost no one listens to anymore, those get in the way of new technologies and new development.
Everyone recognizes that in some sense, intellectual property is a form of monopoly. But why just intellectual property, any scarce out asset that isn’t perfectly replicable is a form of monopoly. And in fact all of that intellectual property is, is sort of owning a part of the idea space whereas real property owning a part of the real world. And the individual ownership over these things, the failure of them to be allocated by competitive bidding, the fact that you have to go and negotiate with someone who is going to seek profit or even just be lazy and refuse to engage in a transaction with someone who can use it better, those all are impediments not just to economic development but also to equal access to opportunities and resources for various numbers of society.
Brian Fabian Crain: So one of these issues that you see is let’s say, I have a plot of land, I am rich, right, I don’t need to use it in particular way and I can just sit on that and maybe somebody else could do so much more productively and there is this situation where that very often doesn’t happen.
Glen Weyl: Yeah, it gets stuck.
Brian Fabian Crain: Yeah. Now, maybe one point here, so you’ve mentioned generally this is true for property but it seems like maybe it’s not true for all property. I mean, what about say something like gold or tangible commodities like wheat or what about shares of a publicly traded company like Apple, like this so many shares, so me, having some shares, that’s no monopoly, is it?
Glen Weyl: Well, I think that’s correct. There is no monopoly over an individual share but there can be monopolies over large numbers of shares. And in fact there can easily be a monopoly over wheat, there has been monopolies over wheat in many countries at many times. So there, the issue is not the monopoly over the individual shares. The problem is for example if you want to buy the whole company which requires buying a plot of shares, typically, when a company gets bought off the markets, the purchaser pays 30, 40, 50% premium in the stock price, that’s effectively the monopoly price that’s being charged by the current owners in total for the purchase of that company.
Brian Fabian Crain: And so what are the negative effects of these monopoly characteristics of property?
Glen Weyl: It leads to tremendous underuse of land. I’m actually talking tomorrow to starter called City Builder which tries to use machine learning to estimate where were the value of various collections of land in city be if you could get them altogether and redevelop them, even holding fixed zoning rules. And a typical value of that for a reasonably large chunk of land in the city is about three times. So what that indicates is that much of the land in the world is dramatically underutilized, the spectrums and other great example, there’s huge amounts of spectrum that are being used for over the air, television and radio that could be used for WiFi, 5G, et cetera.
And in many countries like Singapore and Israel where they have had a more flexible system, they’ve been able to adapt those new technologies. In the US, we have very low quality of those services because we’re stuck in this rigid old-fashioned system because of these monopoly power.
Brian Fabian Crain: And so the solution that you guys proposed to this is called COST. So Common Ownership Self-Assessed Tax, can you explain what’s the core idea of COST?
Glen Weyl: So idea of COST is that everyone would have to self-assess the value of any significant private property that they have. Most private property is actually held by businesses, so this mostly applied to businesses. These businesses with self-assess the value of their assets. They would have to pay a tax on that self-assessed value but they’d also have to stand ready to sell that asset to anyone willing to pay that price.
Brian Fabian Crain: To give an example, right, so let’s say I own a house. Let’s assume I own a house and now I think, okay, this house is probably worth $500,000. So then the idea would be, okay, there’s some percentage and I do this for all of the property I have, and then including let’s say my computer, my computer is worth of $1500 or something like that and then on all of that you take some percentage, I don’t know, I think you mentioned 7% in the book. And then I have to pay that as a tax, right? So I have to pay that, let’s say on that house, 500 times seven, about $35,000 a year on that computer I have to pay something and on all of that I have to pay this tax. But anyone could come and say, okay, actually I’m going to pay you 500. So if, I don’t know, 500 and 1000, or 500,000 and at that price I have to sell it.
Glen Weyl: And then the proceeds of that sale would go to you.
Brian Fabian Crain: Yeah, the proceeds of that sale would go to me, yeah. So of course I think a lot of people would be, if you look at the example of real estate, and a lot of people have maybe, they have lived in the house for certain number of years, they used to living there. The idea that now anyone could come in and say, okay, you’ve assessed the value of this property of that, I’m going to take it. That’s probably a horrifying idea or do you not see the massive downsides to this idea?
Glen Weyl: No, I think that that’s mostly misunderstanding. I think that for anyone but rich people, what you described is precisely the opposite of what would occur under the system. At present, most people except for the very wealthy have a mortgage on their house or their renters, very, very few people on the house outright. So they face very significant risks of their house being taken away from them if they have any risks or anything like that that they face in their life. In the world that I’m describing, this tax, about 7% or so on assets would raise nothing, come not just to eliminate all other taxes and corporations all, taxes on a property, all that sort of stuff, but also to pay every family of four in the United States, the $24,000 a year social dividend.
At those rates, the amount that it would cost a citizen to maintain her assets for a typical citizen would be about $1500 if she priced them at market rates. If she priced them at 10 times market rates, she’d still receive a net $10,000 social dividend. So for almost everyone in the world except for the very wealthy, this would dramatically increase the stability they have in their lives, not reduce it. What it does is, tax stability of the wealthy and the property owners so that other people are able to afford that.
Brian Fabian Crain: Yeah, okay. And so then let’s use some examples. So we’ve talked about the house. I mean, I can see that on, for many people, sure, it could provide financial stability. And I mean in the way, what you’re also describing is, it’s almost like a basic income not a social dividend, right?
Glen Weyl: Right.
Brian Fabian Crain: But, so Vitalik, for example, he wrote the post about Radical Markets and he made the example of like My Ether Wallet, right? So you have like a domain name which is associated with cryptocurrency wallet that many people use. So there’s a lot of money being flown to that. And My Ether Wallet isn’t like huge business and they don’t make a gigantic amount of revenues. So they may only be able to pay a fairly low number of facts but somebody could come and maliciously, and say, okay, I’m going to pay that amount, take over the domain and then for example put up my malwares. Do you think this is, well, how would you address this under COST?
Glen Weyl: Well, I think the first thing to recognize is that there are a huge number of cases in which what you’re describing is already happening in the reverse. People are buying up in trolling demands and no one ever has a chance to get access to them in first place. So there is like we always, it’s always true for market economist that whenever you move towards more of a market system, you have protectionist instance. You say, oh there is good thing that’s already here, let’s make sure we protect that thing. But if you don’t think that the present system, the rigid system is blocking all sorts of innovation right now. So that’s really the situation and yes, there could be cases where there is someone who is very, very eloquent for some reason and they can afford things.
But on average, people who own property are not poor downtrodden, et cetera. The average owners of property especially on theorem are the extremely wealthy and powerful. And any system that redistributes that more evenly so that more people are able to access the system and have more opportunities is overwhelmingly on average going to benefit ordinary people and not the concentrated owners of property. It’s always been the strategy of the capitalist class to make everyone think about the tiny things that they possess and cling very hard to those things in order to stop them from realizing how much more is held by the very wealthy.
Brian Fabian Crain: That is great. You seem to be a true revolutionary.
Glen Weyl: There is a line in the Internationale which is the International Socialist Anthem in the modern US lyrics or English lyrics where it says, don’t cling so hard to your possessions for you have nothing if you have no rights.
Brian Fabian Crain: Yeah, okay. Okay, fantastic. One of the thoughts that also came to my mind, so in this COST system, right, I have to self-assess this tax and all the property and then in this tax, so of course that does create a certain incentive to just hold cash, right? Like if I have lots of cash then I don’t get tax on that cash, and so I can kind of, you know, avoid the tax, you think that’s a desirable outcome because it means that people wouldn’t sort of monopolize the property?
Glen Weyl: You do tax cash.
Brian Fabian Crain: You’d tax cash as well?
Glen Weyl: Yeah. Well, another way of putting that is you can just have an inflation of 7% a year.
Brian Fabian Crain: Yeah, which is much less than today of course.
Glen Weyl: Much more than today.
Brian Fabian Crain: Well, if you’re speaking about price inflation or a monetary supply inflation?
Glen Weyl: Price inflation. If you have price inflation of 7% a year, that’s like equivalent to putting a cost on money. And by the way, that doesn’t happen anyways. The reason why what you’re describing doesn’t happen is that people can’t on net moving the cash. There’s no only so much cash out there, right? So what actually happens is the price of all assets falls to the level where you’re just as happy to hold cash and the other asset. So while I would apply it to cash as well, it’s not important because you don’t actually leave people to on not moving internet moving to cash. There’s only so much cash to have. So really what happens is the prices of assets fall until it accounts for all the tax payments you have to make.
Brian Fabian Crain: Yeah, so how well do you think this is suited, COST is suited to digital property?
Glen Weyl: I think it’s best suited to digital property at present because most of the digital property is not an absolute private property. It’s an administrative property. So it’s much easier to experiment with things and people are much less sort of tied to it in a strong sense. And so it provides an excellent area for experimentation, the same way the blockchain world more broadly provides an excellent area for experimentation on many different things. So I think that that’s where it’s likely to be applied most to present. We gave the example of My Ether Wallet and this domain addresses, I think that’s a great application. Another really interesting one proposed by Simon Dela Rouviere was a million dollar homepage which is like a website where everyone owns one pixel and can choose what it looks like and it’s sort of a collaborative design environment.
A COST will be very useful there, it was if there were someone who is recalcitrantly doing something stupid with one pixel and you could buy out that area to redevelop. The central land is another really interesting area for applying that spectrum as I mentioned is a leading application. So I think that it is precisely the descriptions you were giving in terms of digital assets where I expect this to be used first in most heavily.
Brian Fabian Crain: Yeah. And of course, it’s important to distinguish here that, let’s say if we talk to something about Bitcoin, right? Call them, you know, if you look at the traditional sort of flaws of your many Bitcoiners, and the idea is that you have this asset which cannot be confiscated by anyone, cannot be touched by anyone, this sort of beyond the reach of government. That’s like a cool thing that people like about Bitcoin, right? So they wouldn’t be able, actually implementing COST would be extremely difficult.
Glen Weyl: I don’t think so. You can build it in to the algorithm itself. So you don’t want governments or central authorities involved in this process. That I completely agree with. But there’s no reason why you can’t build it into the code.
Brian Fabian Crain: Sure, yeah. I mean, so on Bitcoin, they were never built that into code. So I think that’s why like let’s say having that would be very difficult because also a government implementing it would have a chance enforcing it. But let’s say if you started a new chain, let’s say something at the central land, then you may well have to go first do see the benefit of this and do want to implement it. So I agree that in those kind of your network level rules actually enforcing a COST would be very, very simple.
Glen Weyl: Yeah.
Brian Fabian Crain: So are there any interesting projects working on this right now?
Glen Weyl: Yes, right, there’s a number of interesting projects. There are some people thinking about applying it in commercial real estate. There are some people who are thinking about applying it in sort of co-working or accelerator spaces where there’s a very dynamic need for space over time because some startup succeed and some fail and so forth. Those are some of the larger scale physical world applications, but within blockchain there are a huge number of really interesting applications. There’s a lot of thought about central land. They don’t know exactly where they are but they’re very seriously thinking about applying it to the 15% of property that they have reserved within the central land.
There are tokens that Andrew Miller has been building then incorporate it into the code. There are projects that’s trying to do this, yeah, for a homepage, for sponsorship, that’s another segment of Dela Rouviere idea, sponsorship of musicians like patron type thing where there would be an exclusive patron and they would harbor their price that right and so forth. So there are a number of super interesting projects in the space right now.
Brian Fabian Crain: Just to add one here so actually the first time, not even the first time, I’ve heard a lot of your book is from a friend who is from a company called Pricing Collapse into building this cosmo firm side chain. And they were at that time, I don’t know if that’s still the plan thinking of using basically a COST like system to auction off the slots to validate, right? They have bigger number of kind of like mining notes in a way of validating notes and they would use this system for allocating them.
Glen Weyl: Yeah, I’ve heard many schemes that are like that, yeah.
Brian Fabian Crain: Yeah. And I think that’s a very good fit. I think there are some other ones, I think, especially if you talk about like existing property rights where I think the political opposition would be, it would be very hard to implement stuff.
Glen Weyl: Well, look, it’s very hard to implement stuff right now when it’s very unfamiliar. But if first we start in blockchain world and people learn about it and they see how useful it is and how much it improves things, it could just gradually grow. And those societies might be the most successful societies, it becomes a key part of blockchain and blockchain does become really important to the world. Other people might adapt it because it’s their only way for them to survive and compete and thrive and because they also see that it’s much fairer and more productive system.
Brian Fabian Crain: So do you see any major open questions regarding COST?
Glen Weyl: There are tons. How to deal with bundling? So we propose allowing people to put together or take a part property as they want. There’s so many complicated issues around that. There’s many issues around what tax rates your charge for different types of assets and how finely did it define that. That’s super interesting. There are really interesting questions about how long you have to surrender an asset and how you define that by asset type. Really, almost everything around the COST is kind of open right now. It’s really a very new idea.
Brian Fabian Crain: Okay, great. Now, let’s speak about the other idea that I think probably has the most application in the blockchain space which is that idea of quadratic voting. Or maybe before we go into quadratic voting, you can outline what are the big issues with voting systems today and especially those traditional voting systems where, you know, there is, let’s say all the US citizens and each person has one vote.
Glen Weyl: Yeah. So the standard one person one vote system is fundamentally not something that any of us really believe in if you reflect on it even though we’re taught at in school. We know that majorities will tend to oppress minorities under the one person one vote system. And so we have constitutional rights to defend minorities. But then what that ends up meaning in practice is that judges decide tons of things. These central unelected authorities who have whatever personal views they have and they’re deciding in so many things in our society because we don’t trust democracy, because one person one vote oppresses minorities.
So what I want is a system where rather than relying on these central discretionary authorities, we can allow minorities to have the right to protect themselves to say no, this issue is really important to me, don’t prevent me from marrying, don’t take away my guns, don’t prevent me from going to schools with people of another race, et cetera.
Brian Fabian Crain: And so can you outline how quadratic voting works?
Glen Weyl: So the idea is that every citizen receives an equal budget of voice credits and they can spend these credits on influencing issues according to the principle that the cost of a certain number of votes on an issue is the square of the number of votes you get on it. So it becomes increasingly expensive to express very strong opinion. This discourages people from just being extremist for no reason even if they don’t really care about the issue but at the same time it allows people to express a very strong opinion if they feel that one.
Brian Fabian Crain: Yeah, so let me use an example to illustrate this. So let’s say I have two credits, right, you have two credits, and those election like referendum A which is maybe should gay marriage be allowed or not and this should guns be allowed or not? And I can spend one on each, right, and then I have basically one vote on each. But I could also spend two on one and then I basically get the square-root of two, right, so 1.4 votes in that one. So I feel like very strongly about one, I’d say okay, I don’t care so much about like gun rights but like gay marriage is very important, so I’m going to spend my entire credits on that and so I get more votes. But actually it sort of flattens out, right, so you’re with emotional number of votes I get additional are decreasing very rapidly.
Glen Weyl: Right, exactly.
Brian Fabian Crain: So you mentioned minority rights, the way I guess it would protect minority rights would be like, okay, so they feel very strongly about a particular issue and they can use a lot of their credits there and then basically say not vote on other stuff.
Glen Weyl: Right.
Brian Fabian Crain: So do you see that as an issue that about, say, minorities would have to use up much of their credits to protecting them on some issues and then wouldn’t have a say in other stuff?
Glen Weyl: Well, look, the truth is that for the most part everyone is a minority on some issue. So the real question is are we making the right trade-offs and compromises in society where each of us gives up things that are less important to us or things that are more important to us. If we’re going to live together as a society, we need some way of resolving issues where we don’t each get our way on everything. So yes, if you’re a minority on say, racial issues, you’ll end up hang maybe more on those issues but you may be in the majority on issues related to gun ownership. And you may be in the majority in your religion and you may be in the majority on your preferences on economic policy. But then other people would be in the minority on those issues. You see what I’m saying?
And so that is the trades that we make. We don’t all get to just because we are in a minority on something control everything in the society. That wouldn’t be at all democratic. Instead, we get a chance on things that are critically important to us to weigh in, in exchange drawing other people to do that on things that are most important to them.
Brian Fabian Crain: So I think on this high level, I actually think that quadratic voting seems pretty like unobjectionable to me and like strictly better than the current voting system. Where it gets interesting and much more controversial is when you bring in the idea like the ability to buy votes, right? So let’s say I can go and I can go to you and say I want to get a vote. So instead of having two votes now I have three votes, right, and I’ll pay you. So what do you think of the pros and cons of allowing the trading of votes in quadratic voting?
Glen Weyl: Well, the con is really that it would give far disproportionate power to the wealthy and that is not something that we support. So that’s why we don’t propose using that for quadratic voting any time in the near term. However, in the long term it has the benefit of allowing people to express the things that are most important to them not just in comparison to other social issues but in absolute term, in saying, no, I care in general about things in the public sphere more than you do. Maybe you’re more involved in your community and so forth. So by allowing people to express it in some external money that’s not just related to other collective decisions, you allow people maybe who are persistently in the minority or people who just are very interested in politics to weigh in more broader, you allow for the trade the more you get an accurate reading of how important things are to view.
But that is only acceptable once we have a far more equal society which is something that for example the cost could help bring about.
Brian Fabian Crain: Yeah, okay. Do you think one argument in favor of having this explicit vote buying potentially is that if you can actually enforce that let’s say I want to cast 1000 votes and I have to pay then that quadratic cost of 1000 votes, and that would be very, very expensive. So even though wealthy people could disproportionately influence elections, that it would have to do so at an extraordinary cost. And of course …
Glen Weyl: Well, and beyond that, you know, there’s even ways of dealing with it. If you actually know what people’s incomes are, it’s not a problem to this money because you can make the cost of them buying votes, actually proportional to their income. So you would pay for one vote 1% of your income, for two votes 4% of your income, something like that. Then it wouldn’t be disproportionately weighed towards the wealthy but that requires some verification of people’s income level that’s external to the system.
Brian Fabian Crain: Right. Okay, fascinating. Now, of course when we think of this applying, so now this translates a little bit to the blockchains, right? And then voting and on chain governance has been a topic. We’ve done, I don’t know, dozens of podcasts about, right? It’s a very often discussed topic. And I think there are lots of expectations around it, many new projects are implementing different voting systems. And I think on the one hand we have this extreme hope and expectation and on the other hand there are also concerns. So Vitalik or you know, there are some people in the theorem space, Vitalik and Vlad Zamfir, being two of them who are skeptic around this, and of course oligarchy is one issue, right? Because in general blockchain we have one, the paradigm is often one coin, one vote and the even if you did have quadratic, like so how do you see this translate again to a blockchain course?
Glen Weyl: Well, look, I understand Vlad and Vitalik’s skepticism about voting because of venture gain ability of the whole bunch of concerns. But I think there’s one incredibly important thing to keep in mind. If we are going to say no, we can’t trust voting, we should also say no, we can’t trust absolutely private property ownership. There is an idea in the blockchain world that private property claims are totally immutable whereas, votes don’t exist at all. And that I think is fundamentally imbalanced and it’s the reason why wealth is coming to dominate this world. You cannot have a reasonably balanced economy where there is private property ownership that’s absolute and there’s no democratic check on that process.
So I’m happy to say, look, private property shouldn’t be so absolute and neither should voting. That can make sense. But until we loosen the hold of private property, we absolutely need to have some sort of democratic mechanism in the government because otherwise everything wind up being dominated by those who control the most wealth.
Brian Fabian Crain: Yeah. I mean, I guess that is really sort of the argument against voting on the blockchain is that we don’t actually have technically better systems than having basically one coin one vote and all of other unseen circumventable so that then it may go even more into the direction that you fear, right, that you have this oligarchy system.
Glen Weyl: That’s why we desperately need the identity solution we were talking of about upfront.
Brian Fabian Crain: Yeah. Now, do you see any adaption of quadratic voting or experimentation of this in the blockchain space at this moment?
Glen Weyl: Yes, we see much more of that than we do even for the COST. That’s probably the largest area of experimentation at the present moment. There is a huge number of people using it for things like you were saying, actually voting on validators for various things, not necessarily side chains but related things, maybe private chains, permission change, things like that. There is a bunch of use of quadratic voting even for doing validation itself, those points that are thinking about that if they can have an identity solution or if it does more permission structure to it. There, quadratic voting is being used to manage content duration within a variety of blockchain community. So quadratic voting is really been the most influential of the ideas within the blockchain community for sure.
Brian Fabian Crain: And in general those experiments, do they tie quadratic voting with some identity system or they only have some kind of identity system and lay it on top or do you also see …
Glen Weyl: Yeah, they have to. There’s no system that has made the mistake of trying, as far as I know, that has made the mistake of trying to use quadratic voting in a permission less way that wouldn’t work or you know, that’s right. Permission less is fine but there needs to be some identity solution. It could be an external authority, it could be some self-sovereign identity, it could be, I mean, there’s a variety of potential solutions but it has to be way with some real identity solution that’s verifiable.
Brian Fabian Crain: So if you look at the COST as an example, COST is let’s say if you are capitalist and you probably wouldn’t like COST, if you have a lot of assets. So you would probably be against it. But if you, let’s say, you’re an American citizen, you can’t really opt out because the cost of moving somewhere else, I mean, you could but it’s very high, right? So you may as well or many would duplicate and say, okay, I accept it because this is just a part now of being let’s say US citizen. But in the blockchain space, there tends to be much more to thinking that, okay, we can just force the chain or these many different chains and I can kind of go to whatever chain I want to. So there’s much more flexibility in avoiding particular kind of regulatory regimes, regulatory regimes being like network level rules that you want.
So that seems to be like an attention a very different approach, do you see that attention as well?
Glen Weyl: Well, look, I don’t think so. Another, I don’t, because the reason is that the only possibility of using blockchain or any of these technologies, in order to avoid regulation is if there are other people who believe in it and support it. Everything in these systems, all of the money that’s been made in speculation is parasitic on people who genuinely believe the system is a better way to do things. And so I don’t think it’s true that people can use these systems if people genuinely become convinced that they are not serving the public interest as a way to undermine that, because other people need to be using it and willing to accept it and trust it. And if they think it’s dominated by people who are powerful and corrupt. They’re not going to use it and they’ll instead use and believe in and raise the value of systems that serve the broad public.
I think blockchain would not have succeeded, had not people not believe in the idealistic vision of the decentralized world. It’s not only reliant on wealth. It is reliant on people. It’s just that it’s not built into the system directly in a formal way.
Brian Fabian Crain: So you mentioned in the beginning, you talked a little bit about your skepticism of blockchain at the same time there’s a lot of experimentation out going on the few ideas. So like you still overall like this skepticism about the oligarchic tendencies over way or like, whether it’s kind of be like you have hoped of how it would turn out?
Glen Weyl: I mean, look, my feeling is that the system needs at the technical level the overcoming number of fundamental flaws very rapidly in order to avoid imploding in some way or another. And I think that’s very unlikely to happen. That being said, so I expect that, you know, the value will go down either on 95, 99% sometime in the coming years. That being said, I think that out of it will come a lot of really powerful ideas and experiments and things we’d learn from, that’s what happens with many babbles. So I both am optimistic on the long term contribution that blockchain thinking will make to changing the world and pessimistic on the specific platforms and technologies unless they manage to adapt very quickly.
Brian Fabian Crain: Yeah, can you speak about those fundamental flaws, taking the flaws in?
Glen Weyl: So the fundamental flaws I see are the lack of identity, the lack of scalability, the lack of governance, the lack of real applications that have valued its external to some sort of babble mentality. And the fact that the technology is not really like especially that extreme redundancy of its vote into it is not really necessary or sufficient for most of the goals of decentralization that it reports to be associated with. It’s not sufficient because of all the reasons we just talked about and it’s not necessary because large chains that aren’t completely global or redundant are going to be the best, most secure solution for most applications. So for all those reasons, I think that there’s just like a huge number of witnesses in the current framework relative to its goals and so forth but I love the spirit.
Brian Fabian Crain: Okay, great. Yeah, I mean, of course I think many in the blockchain space would agree with you that those issues exist. But still I speak for almost everyone that the optimism would far outweigh and the expectation of those will be resolved and then there’s enormous opportunity and potential.
Glen Weyl: But that just seems extremely implausible to me in the near term. The amount of progress is actually even made on resolving those issues relative to the fact that there are so many risk factors that could be a huge shock to the system. Like some government really trying to go after it, like the world having global recession that causes panic in some form that could go in any direction relative to the blockchain world. I mean, there’s just so many things that could potentially disrupt the system. There are so much value that’s invested in it. There is so little applicability. I mean, you think about the internet 10 years after the internet was created and, you know, what applications it had versus the applications in “Web 3.0”.
So I’m not saying that something good won’t come out of this. I said it would. But the notion that there’s going to be enough that’s going to come out of it soon enough to justify the huge trouble around it seems extremely unlikely be.
Brian Fabian Crain: What do you think the reason is for that? Do you think it’s just not a great technology or is there some other reasons for it?
Glen Weyl: Well, I think there are huge weaknesses in the technology that need to be resolved. And let’s not say it’s not an interesting potential technology but, you know, from the first work on the personal computer in the 1960s, it took 15 years before you actually had something that anyone wanted to use. And the technology just needs a lot more work and I don’t think that babble, even though it stimulated a lot of enthusiasm has been that productive and actually resolving the underlying technological issues.
Brian Fabian Crain: So are there some other areas of technology that you think are more promising and potentially have bigger positive impact on the world in the next decade?
Glen Weyl: No. I actually am very optimistic about the stuff around the blockchain world in terms of the potential impact they can have. I just don’t think that it’s going to be fast enough or sufficient to sustain sort of evaluations that are on existing chains.
Brian Fabian Crain: Yeah. So you are and I think it’s important, right. Okay, so let’s say one is greatly optimistic about blockchain like maybe one was great optimistic about personal computer, one point but it just takes a really long time to get to a point where it’s really useful and it’s going to have its positive impact. But I guess another position could be blockchain is like fundamentally driving to some sort of oligarchy system. It’s not the right approach. We need a very different approach but you’re falling in the first time not the second time.
Glen Weyl: Well, I mean, I guess it depends on what features you think are fundamental in the blockchain. If you think that pseudonymity and anonymity are fundamental in the blockchain, which I think some people do, then I would say no, that’s going to lead to oligarchy, that’s a disaster. If you think that absolute immutability of most things, it’s fundamental at the blockchain, you know, that is completely inconsistent with having both privacy and identity. So clearly that’s not going to be sustainable in the long term for most things that go on. So those are fundamental features that I think many people would identify with the system that I don’t think are sustainable, is decentralization and you know, the notion of some protocol of walls that we all agreed to rather than some discretionary authority being in charge, is that here to stay? Absolutely, I think that seriously. So it depends what you mean blockchain.
Brian Fabian Crain: Okay, great. Now, what’s your own focus on in the next years around Radical Markets and implementing that? Like how are you approaching this?
Glen Weyl: So basically, I’m spending about 50% of my time writing, coming up with new ideas, Vitalik and I are working on a whitepaper right now that I think is the most ambitious thing that I’ve done in this area. It really is a coherent vision that ties together the cost and the harbor group tax into a system of funding decentralized self-organizing communities. So I think that’s going to be really cool and very important for the blockchain space. I’m doing things related to that. I’m working on different auctions and so forth, then on the book, so forth. So on the side of the actual organizing in the movement, we’re creating a conference and we have four different tracks in that conference and I’m working on supporting all of those tracks. There’s arts and communications, there is ideas and research, there’s entrepreneurship and technology and there’s activism and government.
And what I’m doing in each of these areas to support in addition to working with the people who are running those tracks and so forth is different. I’m helping to create unions for the state of labor union idea that’s in the book. I’m helping to talk to governments and so forth. I’m consulting for startups or blockchain projects that are trying to do stuff and working with large companies that want to do stuff around the blockchain, around Radical Markets. I’m helping talk to artists and to journalists and to other people who want to write about this. And I am of course doing all this writing and research. So I’m really trying to help support this huge movement that really started around this ideas.
Brian Fabian Crain: Well, that’s fantastic. I wasn’t aware that there was this kind of movement already going on. So you mentioned the conference. When is that conference taking place?
Glen Weyl: Probably early March but it’s possible I have to push back early April.
Brian Fabian Crain: Okay, great.
Glen Weyl: It’s going to be called Radical xChange. So it’s like Radical Change but also Radical xChange like in Radical Markets and that there will be a radical exchange of ideas.
Brian Fabian Crain: Okay, very good title. So if people want to learn about it, get involved, is there, besides reading the book, is there something else where people can or how can they get involved in this community?
Glen Weyl: I think that the best way is soon there will be a website up around this but the best way is if you go in the Radical Markets website, there’s a contact list, Avital Balwit and Charlie Thompson are on there, and they’re helping me organize things in the interim until we get something more permanent going. So it would be best to get in touch with them.
Brian Fabian Crain: Okay, great. Well, thanks so much, Glen for joining us. I’m super excited to see how Radical Markets idea are going to be implemented in blockchain and in the wide world. So yeah, thanks so much for your work and for joining us today.
Glen Weyl: Thanks.