Consensus not censorship

We’ve become obsessed over the past few years with the problem of misinformation. And for good reason. “Flood the zone with shit” is now standard operating procedure for a variety of interests and factions. Groups who pretend to be above that kind of thing let confirmation bias do the same work, elevating conjectures they find convenient to believe far beyond the evidentiary basis for believing them, and transmuting concurrence among prestigious groups whose biases are aligned into “authority” to which they demand deferrence. Casual information consumers become divided into two camps, the “do your own research” types who imagine, mistakenly, that they are capable of seeing through all this (and so succumb to their own confirmation bias), and those who more accurately understand that they cannot reliably distinguish truth from bullshit (and so opt out of democratic deliberation with a shrug, other than perhaps to vote for the candidates whose political party they distrust less).

“Combatting misinformation” has, understandably, become a prominent matter of public concern. I want to argue, however, that it’s the wrong approach. One way or another, trying to eliminate or suppress or deamplify misinformation amounts to a kind of censorship, It begs the question of who decides what qualifies as misinformation and why we should defer to their understanding of true and false, fact and fiction. If we all were comfortable that sources branded “Harvard” or “The Washington Post” or “CDC” were capable of doing the job, and that they would always “play it straight” with the public rather than triangulating interests of various stakeholders and insiders, then misinformation wouldn’t be a problem. We’d all happily defer to high quality information from trusted sources. Unfortunately but not incorrectly, we are now sharply divided over whether and when traditional authorities can be trusted, and over how much or little epistemological deferrence they merit. “Combating misinformation” as defined by these authorities amounts to letting sometimes untrustworthy and corrupt factions censor information that might be correct and important.

So, we are in a pickle. Our current information environment is dysfunctional. It divides and paralyzes us, and leaves us ill-informed. Our leaders, who are responsive to public opinion, make bad mistakes in order to flatter errors of constituents who have “done their own research” or who trust unworthy authorities. Suppressing misinformation could in theory lead to a correct consensus, but the very foundation of free-speech liberalism is that we have, in general, no certain basis for distinguishing information from misinformation, and therefore attempts to suppress “falsehood” are likely to repress important truths.

Free speech liberalism used to seem compatible with a functional society in a way that it now does not. Why is that? By virtue of the physical architecture of information, sources of broadly important information were much more centralized, prior to the emergence of the internet and social media. In the network television age, it was a free country, you could say whatever you want, you could publish subversive ‘zines and stuff. But unless and until your perspectives were adopted by some gatekeeper of centralized media, they would struggle to be relevant in any systemic and politically effective way. However, unlike in, say, contemporary Russia, the gatekeepers of traditional media were themselves fairly decentralized. There were three TV networks, plus many important newspapers and mass publishing houses, each marinating within some ungated local avant-garde. Politics and culture were genuinely contestable, to a degree. Meaningfully distinct publishers competed to form the mainstream. But they were mostly corporate actors with similar interests and vulnerabilities to state and advertiser pressure, and with a shared stake in maintaining something like the status quo. The struggle in that era was to get from margin to center, and that could never be a viewpoint neutral struggle.

Nevertheless, we had a functional polity in that era, with dissidence, yes, but also with broad consensus about what was true, false, and subject to reasonable contestation. As someone who often felt dissident, I can tell you that it sucked. Lots of important values and ideas got no meaningful hearing outside of very ghettoized information spaces. At the same time, it was a much more livable society beyond the frontiers of ones own dissidence. There was a lot one could get away with just taking for granted, as an individual trying to make sense of the world. Collectively, politically, we were a much more capable society, we had a stronger shared basis for action in the common good. The church of network television was consistent with an era of bipartisanship, and with experiments in policy—which were often mistaken, in part due to the narrow and blinkered information environment that framed them! But at least things could be tried, which is more than we can say for our polity at present.

We cannot, and I would not, go back to the church of network television. For all the confusion and outright nightmarishness of contemporary social media, I cannot help but score as a blessing the fact that a much wider range of voices can permissionlessly publish themselves over media capable of reaching large and influential audiences. However, the lesson we should retain from the equilibrium we have left behind is that a wild-west of free speech can coexist with a functional epistemological cohesion, if there are institutions via which a widely shared consensus can somehow rise above the din.

As Martin Gurri has pointed out, the internet can be understood as a kind of solvent of authority, and of the capacity of traditional institutions to sustain the trust that undergirds it. One way traditional authorities might counter that effect is by suppression and control, limiting the internet cacophony to a chorus reinforcing the messaging and goals of those authorities. That is the approach China and Russia have taken, and it has not been ineffective. “Combatting misinformation” can be understood as a variation of that approach, an adaptation of it to the formally liberal West. If internet forums can be persuaded to suppress as misinformation speech that is most at variance with traditional authorities, and to shape reach so that speech aligned with traditional authorities diffuses more quickly and more widely than alternative views, perhaps consensus around traditional authority can be sustained.

However, this approach brings two practical problems:

  1. It forfeits any opportunity to use the broader conversation as a means of informing and improving what becomes deemed authoritative. Our crisis of authority owes something to the cacophony of voices, sincere and disingenuous, that now outshout and dilute traditional authorities, but it also owes a great deal to the (reasonable!) perception that traditional authorities have performed poorly and so merit less deference. A soft censorship approach to restoring authority does nothing to remedy the sources of poor performance, while buried in the zone flooded with shit may be perspectives that are important and could contribute to wiser authority.

  2. Judging by the behavior of the Chinese and the Russians, soft censorship — encouraging important forums to suppress misinformation without actually banning it — may not be sufficient to restore consensus and then trust. "The Net interprets censorship as damage and routes around it,” John Gilmore famously wrote, and there is some truth to that. Relying upon suppression to sustain state authority creates a dynamic under which predictable challenges encourage ever more coercive and expansive restriction, abandoning free speech liberalism rather than saving it

Rather than suppress or censor, it would be better if we could build new institutions of consensus, whose authority would be based on stronger, more public, and more socially dispersed evidence than the institutions that are now flailing. This may sound naive, and it may prove impossible. But it seems to me we’ve done very little that could be accused of meaningfully trying.

I don’t have a silver bullet, of course. I don’t have anything more than half-baked ideas. But half-baked is better than not baked at all, or not even attempted. Let’s actually make a concerted, society-wide effort to design new forms of authority that would be more resilient to the cacophony of an open internet.

Some half-baked ideas:

  • We could dramatically expand our use of “citizens juries” or “deliberative minipublics” to help authoritatively resolve factual disputes. Much of the reason why traditional authorities are so distrusted is because publics and factions reasonably perceive them having particularities of interest that come unbidden with their roles and expertise. A Harvard professor may be more than qualified, may be “smart” enough, but if her interests and values are very different from yours, why should you accord any authority to her policy advice? The very expertise on which her claim to authority is based might well be used to snow you! We expect that politicians’ views will be colored by their electoral (or post-electoral) career interests, but jockeying for votes (or sinecures) and crafting policy well might call for very different choices. A citizens jury makes use of expertise (just like “expert witnesses” are called before legal juries), but vests the authority to make determinations in a “minipublic”, a group of citizens selected by lot, and so statistically likely to be representative of the public not-mini-at-all. Their role is to elicit evidence and probe experts, then deliberate directly and interpersonally in order to produce findings on behalf of the public at large. There are a lot of potential devils in details. If a competent prosecutor can get a grand jury to indict a ham sandwich, can we come up with procedures that genuinely empower the minipublic, rather than leaving it subject to manipulation and capture by its organizers? If participation in citizens juries is not compulsory (probably it should be!), will self-selection leave us with unrepresentative, and therefore unauthorative, minipublics? I don’t have answers to all of these questions, except to say that the more we try, the more likely we’ll learn how organize citizens juries effectively. I encourage you to read my friend Nicholas Gruen, and the wonderful Equality by Lot blog for more on the subject. (See also a recent piece by Michael McCarthy in Noema on using minipublics to make investment decisions.)

  • We could integrate the community college system much more deeply into the public epistemology side of academia, reducing the degree to which academic expertise is attached to the socially narrow class of elite research faculty. Community colleges should be a bidirectional bridge — helping communicate and explain current academic consensus to America’s plural communities via direct interaction with locally trusted experts, but also ensuring that the diverse experiences and perspectives of American communities are taken into account when forming academic consensus on policy-relevant questions, which necessarily touch upon values as well as potentially objective fact.

  • We could use “permissioned blockchains” (which involve no speculative financial tokens or environmentally destructive “mining”) ubiquitously in important institutions to notarize almost everything, generating public evidence of institutional history that would be difficult to hide, repudiate, or tamper with ex-post. This wouldn’t be an anticorruption panacea. Premeditatedly corrupt actors would try to circumvent a panoptic notary by falling back upon informal communication channels, the bureaucratic equivalent of turning off the bodycam. Or they might plan in advance paper trails of falsehoods, sequences of lies properly timestamped and notarized. But most corruption is not that smart, not that careful. In science class when I was a kid, I was taught that nothing should be crossed out in a lab notebook. Instead, mistakes should be struck through with a single line, permitting a reader to see both the mistake and the correction. This doesn’t prevent premeditated fraud, but it does reduce the temptation to “fix” or “fudge” things after the fact. Cryptographically attributing and notarizing everything as a matter of routine (which would not require making document contents universally public) strikes me as a similar structural encouragement of integrity.

In addition to reforms that might harden some forms of authority against the solvent of contemporary cacophony, there are reforms that might make the cacophony a bit less indiscriminately corrosive of even reliable information.

  • As Lee Drutman has described, a two-party electoral system creates incentives for each party to undermine the authority attached to information presented by officials of the other party, indifferent to the actual truthfulness or quality of the information undermined. Our system encourages partisans to tear down virtuous authority as readily as corruption and lies, indeed to confuse the former as the latter, if the institution whose authority might otherwise be enhanced is identified with the opposing party. Multiparty democracies have much less of this dynamic, as other parties are sometimes coalition partners as well as rivals, there is not a simple zero-sum game where one party’s success is everyone else’s disadvantage. A bit less radically, Jon Haidt, in his excellent article on how the internet has undone us, points to electoral reforms within our two party system that elevate candidates with cross-party appeal over more party-exclusive candidates to whom this zero-sum logic most applies.

  • We could try to reform the internet and social media structurally, in ways that don’t involve some superauthority making judgements about, then playing whack-a-mole with, putative disinformation. The contemporary internet’s encouragement of the divisive and salacious over less entertaining, more constructive speech plausibly has everything to do with most of that speech being hosted by gigantic businesses to whom accuracy or quality is a matter of indifference but emotional engagement drives activity and profit. I think we should seek an online civil society hosted by thousands or millions of smaller sites whose product is quality and curation for users rather than the eyeballs of users for advertisers. I’ve suggested before that we repeal or dramatically curtail Section 230 protections, to clip the wings of the current megaforums. We could pair this with content-neutral public subsidy to people who offer microforums which would actively curate and accept responsibility for the material they host.

  • As human beings, our understandings of the world are tangled up with our interests. Upton Sinclair’s man who can’t be got to understand what his salary depends on his not understanding is, to a first approximation, all of us. We develop sincere beliefs about the world that flatter, or at least are reconcilable with, the preconditions of our own well-being. People with very divergent interests will develop very divergent beliefs. A society that made greater use of social insurance, in which personal outcomes would vary somewhat less across individuals due to political choices, in which we really would be more "all in this together", would have an easier time finding epistemological consensus than one in which a person might make themselves unusually wealthy by accepting and promoting divergent beliefs. We'd have more consensus about climate change if there weren't influential groups of people who benefit materially by believing and arguing it is not a serious concern. If people in the fossil fuel industry only became somewhat better off rather than fabulously wealthy by persuading themselves and others climate change isn't real, we'd have less of such persuasion, and reach a functional consensus more easily. In general, there’d be less incentive to be a “grifter”, as many online influencers are accused of being, if we were a materially more equal society.

Maybe you like my specific suggestions. Maybe you don’t. Regardless, if we want to preserve liberal free speech in form, function, and spirit, we’ll have to develop new institutions for coming to authoritative consensus that rise above a now much louder din.

It’s a very urgent task. As I write, we collectively face a delicate crisis which, if mishandled, could lead to nuclear war, millions or billions dead, the end of modernity. It is not okay that the way we are thinking together is largely via TikTok, Twitter, YouTube, Facebook, MSNBC, and Fox News. These are low quality deliberative institutions.

As Aviv Ovadya put it in a conversation with Julia Galef

We're…living in a world now where, let's say stability isn't quite as quite where it was, where individuals can have far more influence on sort of the overall stability of the world and where you have a whole bunch of really tricky challenges up ahead within the next five to 20 years that could easily derail even a very, very well-functioning civilization. You're in this environment, and now you're making everyone dumber. You're making them less capable of handling it, both at an individual level and at a societal level.

You can think about this as, you’ve got your civilization driving its car down the road. And it's now starting to take LSD, and it's like seeing these hallucinations all over the place. And it's still trying to drive. There's going to be some level, some amount of LSD or some amount of like, of hallucination that you can still sort of drive without crashing. But there's going to be some level where you can't. We're just increasing that.

Hopefully we get lucky and muddle through our current crises. But we won’t get lucky forever. We have to develop the capacity to collectively speak, reason, and act together in ways that keep us free but also wise.

Update History:

  • 23-May-2022, 9:10 p.m. PDT: “…to render the clip the wings of the current megaforums.”
  • 23-Aug-2022, 12:oo p.m. EDT: “the ‘do you your own research’ types”; “…to people who host and curate offer microforums…”

The great game of global public goods provision

War is bad. Excuses should not be made for it. All sides should work to end this and every war as quickly as possible and shift to modes of bargaining and competition that are not profoundly destructive.

I. Cooperate to compete, compete to cooperate

We often think of competition and cooperation as opposites, but as Michael Frank Martin has pointed out, competition is very often just one way that we organize cooperation. The Baltimore Orioles and the New York Yankees compete vigorously, each team really wants to win, but the framework of competition itself is cooperatively maintained. If the Yankees could permanently dominate all challengers, the game would become boring and fans would bail. They would only “rule over the ashes”. In professional sports, vigorous competition is a positive sum game. Starting from a degree of balance, each team has strong incentives, a great deal to gain, from winning. But from a grander distance, all teams, and the world at large, depend upon maintaining balance and vigorous competition rather than allowing any team’s entrenchment as permanent victor.

Textbook economic competition is also a positive sum game, from the perspective of the world at large. Starting from a degree of balance, higher quality or more efficient production confers to winners abnormal profits, for a while, incentivizing the race. Competition by multiple firms to win these profits drives costs down and quality up for consumers. But when a single firm definitively wins, positive sum competition becomes negative sum stagnation as monopolists extract rents, directly via price or by imposition of more subtle costs on consumers and other stakeholders. In business unlike in sport, a definitive victor is perfectly content to permanently vanquish its rivals. But the rest of us see a positive-sum dynamic replaced with negative-sum exploitation. “Antitrust” is the (much too narrow) name we give to the socially essential function of maintaining economic competition, which is really a carefully structured form of cooperation. Just as sports leagues sometimes let losing teams get the first pick of new talent to help maintain balance, states must ensure among firms that new entrants and also-rans are never permanently out of the running, that in practice winners take turns. When balance is sustained, business competition can be a strikingly effective way to organize cooperation.

Not all competition can be reckoned a form of cooperation, however. War is competitive, but it is not cooperative. There is no positive sum aspect to war that would guide us collectively to encourage the practice indifferent to who wins or loses. On the contrary, it is a profoundly negative sum affair we correctly seek to discourage.

II. The world is lumpy

We are now living in a multipolar world. The moment when perhaps a consensus could have emerged around models of governance and international cooperation championed by “the West” has passed for the foreseeable future. China, in particular, is a peer power, confident in the effectiveness of its own quite different mode of governance, unwilling to defer to Western or especially American strictures. China, the United States, Europe, and other powers will compete for power and prestige.

The challenge before us is to structure that competition so that it is a positive sum form of cooperation, rather than a negative sum prescription for mutual isolation and military conflict.

A new cold war is a bad idea. We barely survived the old one. Even its echoes now threaten to see us off. Defining international competition as a contest between democracy and autocracy (from our side), or between common-good cooperativism versus corrosive, selfish liberalism (from theirs), is a terrible idea. We are not the good guys, they are not the bad guys, and vice versa. Singapore despite political illiberalism and, arguably, corrupt nepotism is in many respects an admirable polity, one that despite limited electora competition is extremely solicitous of citizen input and concern. Japan was a full-fledge member of the “free world” despite decades of single-party rule. China’s “autocracy” should be distinguished from Russia’s, in that it has delivered to its vast population remarkable improvements in human flourishing, despite ugly (from my perspective) restrictions on free expression, religious association, and political contestation. China’s treatment of the Uighurs is inexcusable. So was our invasion of Iraq. In practical terms, the response cannot be to try to extirpate regimes that do or have done bad things, but to work constructively to reduce the misbehavior, in large part by offering alternative means of addressing the perceived threats that provoke it. “Constructively” means not threatening or promoting regime change, however much and reasonably and sincerely we might hope for and desire it. Political change is the domestic choice of a polity. When we offer advice and criticism, we should do so overtly and respectfully for our counterparts to consider, accept or reject. Covert “foreign interference” is always weaponized by factions, often to immunize the worst aspects of the domestic establishment from useful critique. Would the Castros have been so long in power without our indefatiguable help?

This is hard for us. We are culturally primed to view international affairs in desperately moral terms. “Never again,” we say. How can we not cheer revolutions against oppressive regimes? Why shouldn’t we quietly help? When our military might prevent atrocity, is it really moral to refrain? But moral ideas cannot be divorced from their consequences and still remain moral. By the time we face a choice between atrocity or military intervention, we have already lost. Though there are important differences of degree, military intervention inevitably involves atrocity. Then, as we’ve seen in Iraq, Afghanisatan, Libya, the downstream consequences are often even worse.

“Never again” is harder work than a Hollywood movie. We will never live up to the phrase just by standing up to current or imminent evildoing. “Never again” means prevention, and prevention by its nature must be forward-looking rather than reactive. “Never again” is the work of a State Department much more than of a Department of Defense, and when the work is done well the public may never notice that it has been done at all.

But publics also have a role to play, I think perhaps the most important. Goodwill to all, joyful intercourse across national lines on a human-to-human basis, resisting the impulse to turn nationalities into, and treat nationals as, two-dimensional villains or heroes — these things are crucial to the cause of peace. Of course it's not enough, good fences make good neighbors, we'll need our militaries and balances of power and deterrence and all of that ugly game theory. Weakness can be provocative, war must always be costly. But hard power games are very brittle. Without the soft flesh of human affection, all that will be left is bones, all of our bones. Love really is the answer, or at least an essential part of it.

III. Public goods provision as an arena of competition

Great powers will compete, for power and prestige. If that competition is mostly military, the result will be catastrophe. But the strongest governments gain their power, and fundamentally the consent of the governed, by effective provision of public goods. Great powers provide global public goods: they contribute to public welfare beyond the borders of their own state. Those public goods include military security, but also trade arrangements, development assistance, food security, disaster assistance, education, technology, and more. One silver lining of the (miserable, terrifying) Cold War was that the United States understood, while it ran, the importance of competing in the provision of global public goods. During its “unipolar moment”, undisciplined by competition, the United States succumbed to the temptations of a monopolist and began to shirk, doing less and charging more for support of other countries, demanding that they “pull their weight”. China, on the other hand, has increasingly understood that provision of global public goods is a core dimension of power, hypercharging development of ports and infrastructure throughout the erstwhile nonaligned world with its belt and road initiative. Western critics argue over the terms of the loans by which China finances that development — is it really so generous?. But fundamentally things are being built, trade and employment are increasing, in places neglected by American grandees except as objects of pity and charity. The West’s famous development institutions — the World Bank, the IMF — have grown worse than sclerotic. With some justice, they are perceived as predatory servants of Western creditors rather than enablers of public goods provision that domestic governments can’t manage on their own.

During this pandemic period, the West by now on its own could have produced and distributed, or assisted very capable countries like India and, yes, China, to produce and distribute, its highest quality mRNA vaccines to all of the inhabitants of the planet willing to take it. The cost would have been high, in absolute dollar terms, but small relative to the overall cost of stabilizing our domestic economies over the period. On humanitarian grounds, but not just on humanitarian grounds, the opportunity we have lost by failing to do that is absolutely extraordinary. Now that we are in a military crisis, would India be quite so nonaligned if we had more generously supported its health and welfare, commercial and other formalities be damned? Is it possible, if we had transferred this technology (that they will learn within a year or two regardless) that China might not treat us with such cold hostility? Iran? That perhaps even Russia, led by the man it is led by, would have been moved to a less bellicose posture. Perhaps not! Counterfactuals are unknowable. But in the broad scheme of things, how much would it really have cost? And regardless of its effectiveness as a charm offensive, how many lives might it have saved? On both political and humanitarian grounds, it was a foolish bet not to take.

Competing to provide of global public goods is a positive-sum way that great powers can vie for power and prestige. It’s effective. Powers that openly provide public goods that notably improve the welfare of others gain influence and opportunity. If this sounds hazy and hippie-dippie, look at the world in its current divisions. Why is India, the world’s largest democracy, hesitant to condemn Russia for its invasion of Ukraine? Decades of cooperation and help, on security but not just, make a difference.

An irony of the United States during its unipolar period is that while consent of the governed is at the very heart of our ideological project domestically, in global affairs we've emphasized hard power, whether military or economic, rather than soft. But use of hard power is perceived as coercive and resented. Soft power is persuasion. It brings with it consent. Hard power is usually costly to exercise. Soft power, on the other hand, while is often free, as the people you would hope to influence choose to be helpful of their own free will. All durable and decent modes of authority rely much more heavily on the velvet glove than on the iron fist, even if hard metal must always exist buried at some level deep beneath. We broadly understand this with respect to domestic affairs. I submit that the same must be true of international affairs. International affairs are not in fact anarchic, except during tragic periods when architectures of cooperation break down. We are now witnessing the barest hint of what that might mean, and I hope we witness not a day more of it.

It is incumbent upon us all, in the United States, in China, in Europe, in Russia, to build an international system built upon respect rather than coercion. In a multipolar world, powers will compete. Overt, cordial, cooperative competition for influence and authority via the provision of global public goods allows great powers to compete in a way that serves humankind and sustains global peace. No power has a long-term interest in frequent bouts of military competition or economic blockade.

IV. Feed the world

Food security is a global public good and a humanitarian necessity. The war in Ukraine is threatening food security worldwide, especially in the Middle East and North Africa. As Matt Klein has pointed out, the United States, India, Europe, and China have the means to buffer that shock, if we cooperate competitively to make sure the world is fed and prevent the war from continuing indefinitely. We should share the goal of feeding the world, and cooperate to set up a framework under which we each compete to do the most.

No power will win that competition, and no power will lose, but each power will make genuine progress in gaining prestige and influence in the countries that they assist. The competition will be real. Its rewards can be very valuable going forward in undergirding patterns of future trade, choices about security arrangements, financial relationships, and influence broadly. Like a good sports league, we should try to work with our rivals to create conditions conducive to this form of competition continuing in perpetuity, without any power permanently dominating.

V. Conclusion

Nationalism and humility do not easily go together. But we are all deeply imperfect polities struggling to hold together internally in order to productively cooperate, and to prosper and protect our interests in the larger world. Military competition turns us all into cartoon jingoists spiraling towards catastrophe. Competing to help, and to influence by admirable example, leaves the world over which we are all competing better off, even as our share of it ebbs and flows over time. Better luck next season. There must always be a next season.

Update History:

  • 8-Jan-2022, 2:00 p.m. EDT: “Competing to provide of global public goods is a positive-sum way that great powers can compete vie for power and prestige.” (ht @tatere)
  • 14-Apr-2022, 1:40 p.m. PDT: “, while it ran,” (set off phrase with commas)

Stop the war

The devil is dancing again in Europe, and I fear he will kill us all. It is time to stop the war in Ukraine and arrive at a negotiated settlement. Now. Yesterday.

There was and is no question who was to blame for the decision to pursue a maximalist invasion of a sovereign neighbor. Vladimir Putin is the aggressor. Over the longer term the story may be complicated. Questions of how we came to find ourselves in the circumstances under which Putin made his horrible choice — over the past few years, since 2014, since the 1990s, since 1917 — are sharply contested. There are accounts that would center Putin’s nationalism and revanchist imperialism, and also accounts that hold choices of the United States and the broad West substantially to blame. I lack the background adjudicate those contesting stories. Even among experts working in good faith, I think there would be no consensus on the truth of these matters.

The present is much clearer. In the run-up to the war, I favored the threat of strong sanctions in hopes that it would deter the invasion. When this long telegraphed war began, I expected, as most observers expected, quick Russian domination. I feared that sanctions would be too weak, that a divided, corrupted, and commercially entangled West would fail to impose sufficient consequence for Putin’s horrible choice, as it had failed to following Putin’s annexation of Crimea and fomenting of separatists in 2014. Like so many Western observers, I viewed the situation through the lens of Munich, the infamous appeasement of Hitler widely blamed for inviting the catastrophe of World War II. Putin’s domination of Ukraine might not be avoidable, but then it must at least be costly. Even though sanctions are terrible, they should be strong since they are the only consequence available. If arming the Ukrainian government could increase the cost of the invasion, that action, also ugly, might be justifiable as well. The key objective was that Putin should not imagine that his aggression had come cheaply, or that further aggression would not be fiercely resisted.

Both war and sanctions have gone very differently than I expected. The sanctions, both as formal state action and informal isolation by risk averse or publicity sensitive firms, have been profound. After a wobbly start, public outrage pushed politicians and businesses to spare no effort or instrument that might harm the aggressor’s economy. Freezing the reserves of Russia’s Central Bank, an extraordinarily severe intervention that had not been widely discussed in the run-up to the invasion, went from an unlikely “what if” to a fait accompli in a matter of days. Major Western multinationals abandoned their commerce in Russia overnight. Firms foundational to modern international commerce, like the shipping giant Maersk, announced they would not serve Russia, so the imports Russians rely upon for ordinary life may become scarce. Russian planes were forbidden from most European and North American airspace, planes’ leases were canceled, Boeing and Airbus announced they would not supply parts to Russia, international ticketing networks quickly excluded Russia’s flagship Aeroflot. Civil aviation to and within the country may quickly be crippled.

With the help of arms from Western powers, the war also has not gone as expected. I cannot judge whether Ukrainians’ fierce resistance has truly turned the tide of the war, or delayed what remains militarily inevitable. But it has imposed huge costs, in materiel and in blood. The apparent errors and unpreparedness of the invaders have been a public humiliation of Russia’s armed forces.

The most important costs of the war have not, of course, been borne by Russia, but by the people of Ukraine, whose homes have been bombed, who have been forced to flee by the million, who are giving birth in basements to infants without diapers, hot water, formula. In the moral calculus of the war, the suffering Russia has imposed upon Ukraine far overshadows the costs Russia has borne on battlefields and in pocketbooks. But suffering does not salve suffering. It all just compounds. The suffering of a Ukrainian mother mourning a child caught in the shelling and a Russian mother mourning her conscript son who had no idea he was going to war feel very much the same. This war is hideous, a monstrosity, for everyone touched by it.

Before the war, it was right to be concerned that Russia would win its blood-soaked prize without paying a sufficient price to deter further aggression. That concern has been addressed. Russia has paid a high cost in blood already, and its citizens will pay an extraordinary cost in deprivation until the sanctions are reversed. Yet the focus of the Western world remains how to make it hurt more, both economically and militarily. That may be reasonable while the aggression continues. But we should all be very clear that the goal now is to stop the aggression and limit the suffering of all parties. In my view, the outside world is focused far too heavily on vicariously fighting an inspiring fight and far too little on ending the misery and negotiating a peace. The Ukrainian resistance has been inspiring. But don’t mistake an inspiring fight for a good fight. War is evil. With every battle won so much more is lost. Every soldier left to rot on the battlefield is an eternity of tears. This is not a football game. There is no glory.

Suffering is bad. It is remembered. Sometimes it is avenged. Peace is the essential foundation of human flourishing. But a cold peace is a fragile peace. That was the lesson of Versaille, and now it is also a lesson of the Cold War. After World War II, the victorious powers wisely constructed a warm peace in Europe. Arguably the greatest period of human flourishing in all of history was the result. We need a warm peace now, one that encompasses and reconciles Ukraine, Russia, and their neighbors. The worse the suffering, the longer it endures, the more difficult it will be to build a modus vivendi that serves us all.

I do not like Vladimir Putin. I wish death upon no one, but my preference would be he retire from power, perhaps live out his days like Idi Amin somewhere. But it makes no sense, it is profoundly a bad idea, to sustain the war in hopes some backlash provokes his departure. That is at best a speculative enterprise paid for in others’ blood and misery. It is also a very reckless gamble. L’etat, c’est moi is not an unusual sentiment among autocrats. The circumstance most likely to provoke nuclear war is existential threat to l’etat. It would be great, fantastic, if the Russian Federation undergoes an orderly succession of leadership. But that is their business, no one else’s, to encourage or impose. While Mr. Putin is Russia’s leader, we shall have to build a warm peace with the Russia that Mr. Putin leads. Isolating states whose leadership we dislike is a tried and true tactic of the United States, see Iran, North Korea, Venezuela, Cuba. These are not success stories. We engaged with China, from the 1990s until 2016. It didn’t become a liberal democracy, as many hoped, but we did enjoy a warm partnership during that period, before we adopted a more adversarial tone under the Trump administration. Our relationship with China was bad for us, economically. But that was because we failed to look after our own interests, despite having every necessary tool to do so. We should go back to building a warm partnership with China, but do a better job of looking after our economic interests. Building a warm peace with Russia does not preclude carefully attending to both states’ security interests. On the contrary, it is prerequisite.

It is extraordinarily reckless for Western powers to be abetting a conflict this destructive, this intimate, with a nuclear superpower. My son is eight years old. He is everything, the only thing. I am very unsure now that he will see his ninth. I agree that it was necessary, when Putin resolved to invade Ukraine, to make sure that the action would be costly, so he would not be emboldened to a new imperialism. That objective will be accomplished. It is time for the parties, Ukraine and Russia, along with the EU and United States, to negotiate a settlement that nobody loves but everyone can live with. Stop the atrocity, stop the bloodletting, stop this war. Now.

The real prisoners’ dilemma

The prisoners’ dilemma is our goto example for a sort of gigantic sigh. Everything these days, we say, is a "coordination problem”. In the prisoners' dilemma, a prosecutor separates two alleged collaborators in a crime, and demands that each confess. If one confesses and helps to prosecute the other, the snitch will be set free while the hold-out will be punished very severely. If neither confesses, they both get off with a slap on the risk. If both confess, they'll both be put away, but not for quite as long as if one had held out and got busted. The gigantic sigh is that even though the prisoners’ common interest would best be served by both agreeing to hold out, absent any ability to coordinate, the narrowly rational choice for each prisoner is to confess. If the other guy isn’t gonna confess, and I do, then I get off, which is better than a slap on the wrist. If the other guy is gonna confess, and I do too, that’s better than the very severe punishment I'd receive if I hold out and let the other guy's confession damn me. So the outcome is both prisoners confess and are put away, even though both would have been better off if they’d held their tongues. Sigh. Alas.

It seems like every bad thing can be described as a prisoners’ dilemma. We’d all be better off, for example, if the world didn’t warm into a post-apocalyptic hellscape. But each of us gains a lot from our own activities that spew carbon into the atmosphere, and the probability of post-apocalyptic hellscape is not meaningfully diminished by our individual abstentions. So, for each of us individually, the rational thing is to keep on spewing. So we all do that, and the result is collective catastrophe. Sigh. There are things the government could do that would really make our lives better. But for politicians of either political party, the benefit to the country of a popular good thing is diffuse relative to the electoral disadvantage they would experience if the good thing happened under the other party’s leadership. So for each party, the narrowly rational choice is to block good things while the other party leads. The equilibrium is gridlock, good things left undone, unnecessary misery for all. Sigh.

In the unlikely event, dear interfluidity reader, that it was not old hat to you, you probably bristled a bit at my account of the original prisoners’ dilemma. Yes, sure, from a very narrow perspective it might make sense for each prisoner to snitch. But if the prisoners know each other and will encounter one another again, the difference between getting off entirely and a slap on the risk probably wouldn’t be worth the blowback. Maybe the other guy is gonna put a shiv in my belly. Maybe I’ll just lose a friend. Either way might be enough to shift my choice. The canonical prisoners' dilemma seems artificial, implausible. Theoreticians have to clarify that the certain bad outcome they predict holds only in a “one-shot" game. In a more natural “repeated” or “iterated" game, the prisoners might well keep their mouths shut. And that points to the problem with the prisoners’ dilemma as an intuition pump.

Human beings are fantastic coordinators. Almost everything we do involves coordinating with others, often without any kind of explicit agreement to do so. In many situations we empathetically place ourselves in the position of strangers, and do the right thing by them even at cost to ourselves. Why do you clean up after yourself at a picnic table hidden in some unsurveilled grove? Where there might be large rewards to collective action, we have developed extraordinarily contingent and detailed tools — contract law, formal organizations, states — to coordinate effectively. The prisoners’ dilemma in its cliché telling smuggles in an assumption that noncoordination is the default, that our prisoners will behave like selfish atoms absent a formal bond. But that’s not how humans are. Coordination spurts from us like a mutant weed, intertwining our behavior with others as soon as we encounter them, even if only imaginatively.

But the prisoners’ dilemma story is not so unrealistic in its particular context. Prosecutors really can get prisoners to confess by setting up these kinds of games! But note the active voice. The dilemma doesn’t just happen. Prosecutors frame the situation. They isolate the prisoners. They suggest the other guy is going to “play ball” in order to impair the expectations any tacit coordination would rely upon.

In real life, the prisoners’ dilemma doesn’t result from some anodyne “coordination failure”. The real prisoners' dilemma is a setup. More charitably, we can understand it as a battle between competing teams of coordinators. Police and prosecutors coordinate to apprehend the alleged criminals, to divide them in spaces that prevents coordination through overt communication, to carefully manage the information to which they are exposed in order to shape their behavior towards the self-interested, isolated actors presumed by a one-shot prisoners' dilemma. The prisoners — before their apprehension, tacitly or overty; during their ordeal itself tacitly; by virtue of expectations they may have arranged for the future — strive to coordinate in order to avoid their mutual imprisonment. If they are actually innocent, hopefully protestation of innocence becomes a strong Schelling point to coordinate upon. (There is no guarantee of that. The conventional logic and expected equilibrium are not altered by actual innocence.)

Coordination rarely just "fails". Almost always, what we call coordination failure results from one group of potential coordinators being outcoordinated by another group, under circumstances where the two groups’ interests diverge. High quality coordination is the human default, but we very often coordinate with one another to frustrate rival groups' ability to coordinate, to create coordination failures, in order to more easily achieve our own goals. Police and prosecutors isolate and seek to undermine the trust between prisoners. Antitrust authorities seek to hinder and punish certain kinds of coordination between firms. Fossil fuel interests work to undermine any consensus surrounding the likely course of climate change, in order to prevent that from becoming a basis of coordination against their interest by other parties. Partisan gridlock and civic strife are financed by interests who see more threat than opportunity in an effective, active state. The flames are fanned by interests who see more opportunity than threat in replacing civil society with entertainment. Red tribe / blue tribe, woke / antiwoke — these are strategic outcomes, not emergent phenomena. We fail to “pull together” because factions are coordinating excellently to divide us.

I often encounter a sentiment, especially among tech types, that coordination failure is at the root of all evil. If only we had better tools, new coordination devices, the theory goes, a lot of social ills might be solved. I think that misdiagnoses the problem. “Coordination failure” is a blessing at least as often as it is a curse. I am in favor of the coordination failures that help keep product markets competitive. I am in favor of police and prosecutors outcoordinating organized criminals (although I want them to do so in a way that frustrates the coordination of the guilty without conspiring to put away the innocent). I am in favor of criminalizing coordination between judges with litigants. I am in favor of journalists and whistleblowers outcoordinating well organized regimes of government and corporate secrecy when information in the public interest is being concealed. There would be no political stability if the coordination equilibrium that is the bedrock of any government’s authority were very easy to coordinate out of to some next shiny thing.

The evils for which we hold “coordination failure” responsible are not attributable to some sad theorem of game theory. We could say instead that they are caused by bad actors — the fossil fuel interests that frustrate our ability to coordinate against global warming, the plutocrats who create incentives to entrench partisan gridlock. But that is I think too easy, and often counterproductive. The root problem is divergence of interest itself.

Obviously, in any polity or human community, there will always be some divergence of interest. No two humans' requirements or yearnings are perfectly alike. But in some polities, the welfare of the community as a whole overwhelms whatever differences of station jockeying among subgroups might yield. In our society, differences of outcome within are so great, and broad social improvement so implausible, that coordinating competitively over our place in the distribution seems more fruitful than coordinating cooperatively to improve the distribution.

Until we remedy that, expect a lot of “coordination failures”. In the real prisoners’ dilemma, we are all one another’s prisoners, and one another’s prosecutors. We have better things to do.

Dreams and kindness are all we have

In a piece arguing that things aren’t so bad in Europe, Simon Kuper concludes

Instead, in a new version of American exceptionalism, we should recognise the US as a special case, and make plans to cope should its democracy collapse.

Oh well. Living in exceptional America, I agree that we are in collapse. But what does that even mean? The self-regarding story that Democrats like to tell is more petulant than informative. Yes, it’s possible that Republicans will modify electoral institutions — including most dramatically the way Presidential electors are appointed — in ways intended to entrench their dominance. But they are only capable of doing so because Our Democracy is already so crippled. Most Americans aren’t all that alarmed about what we might lose, because most Americans don’t perceive ourselves as meaningfully enfranchised. Yes, we can vote and our votes are counted, but both parties arrange electoral institutions so their insiders and incumbents are protected. As Krystal Ball recently observed, despite “change election” after “change election” our political system seems unmoved, impervious, corrupt, dysfunctional. We are misgoverned, and voting the way we vote has become just a ritual within a stable equilibrium of misgovernance. If Democrats hope to run on saving that, well, good luck. Democracy is supposed to be a source of institutional legitimacy. But most Democrats do not consider the current Supreme Court legitimate, even if they acknowledge that its empanelment was procedurally within the bounds of the law. Most Republicans don’t consider President Biden legitimately or even lawfully elected. Under our current politics, would either party choose to “save” democracy in a manner that wouldn’t supercharge a legitimacy crisis from the other side? Democracy is supposed to inform state action, so that it is performed competently, in a manner that accounts for the interests of the entire citizenry. Ha. The American system of government is decentralized, chaotic, and open to influence. But none of that constitutes democracy.

We do still have a great deal left to lose. The United States is a poor democracy, but it is also very far from an authoritarian or totalitarian state. Democrats fear that under Republican domination, we will revert to some reincarnation of (old-school) Jim Crow, a brutal, genuinely authoritarian, caste system. That’s a serious fear, one I share. Republicans fear that under Democratic dominance, freedom of thought and expression will become eviscerated by obligations to hew carefully to ever changing orthodoxies, at pain of being banished from polite society, denied economic stability, and excluded from a public square manicured by patronizing “experts”. Even our bodies are not safe from Republicans, as they obviously mean to force women, trans men, and nonbinary people to endure the trauma of unwanted pregnancy and childbirth. Even our bodies are not safe from Democrats, as they have arrogated to themselves a capacity to force God-knows-what to be literally injected into your bloodstream when the experts say it’s for the best, or else lose your capacity to earn a living. Democrats now literally regulate how we breathe. With just a bit of charitable imagination, you can see that fears of authoritarian overreach are understandable of partisans on both sides of our political divide. Of course, we all weigh those risks differently, and come to very different conclusions about which side’s partisans are the greater threat. Wherever you land, it’s a bad scene.

That’s not why we’re in collapse, though. Our partisan battles burst in great splendor, these great and garish arguments over totalitarianism and oppression, but quietly beneath sits the simple fact of dysfunction. Our government is incapable. It does not act effectively in real time to meet the challenges that address our polity. In the small, it delivers tests and masks just as the plague wave subsides. In the large, it presides helplessly, even enthusiastically, over decades of decline, a decimation of the ecosystems of production that once rendered us capable of providing for ourselves. We can no longer even arrange efficient operation of the few ports through which we receive the production others now do on our behalf. We continue to maintain the strongest, most expensive, military in the world, but we’ve squandered the far more useful soft power by which we were once able to exercise positive-sum influence. We’ve performed so abominably in global affairs that aspiring powers now threaten the deepest red line of the postwar order we crafted, and our President literally shrugs. The best we can do is counsel (and hope) that it won’t work out for them.

Dysfunctional government is not new in the United States. Arguably the only period we’ve had really functional government was the Roosevelt administration and the early postwar decades. But we always muddled through, right? Yes, we did, but we won’t now. Technology matters. It has changed things. The world is a tightly coupled system in ways that it never was before. “Technolibertarianism” has always been an oxymoron, because as Marc Andreesen tells us, technology gives us superpowers. A world in which everyone has superpowers is a world in which everything we do creates externalities and demands regulation. Techolibertarianism succumbs to its internal contradictions and becomes Peter Thiel selling surveillance to the state and bankrolling strongmen to become buyers. A fast-paced, interconnected world magnifies the power of coordination. A polity that can organize and coordinate the new superpowers of its public can do remarkable, amazing things. A polity that cannot organize and regulate those powers invites vicious internal conflict and collective paralysis. Governance matters more than ever, more than anything now. But since the 1980s the United States has worked to fetter and dismantle the apparatus it once built to develop and coordinate of the capabilities of polity. A hypothetical God, “the market”, was supposed to take care of that, better than any human institution we might instate, superintend, and reform. We chose a golden calf to lead us.

Time and technology have raised the bar on what is required of a functional state. Ours is simply not up to the task. We are out of homeostasis. The systems that are supposed to ensure a functional internal stability cannot meet the challenges presented by current circumstances. That is the nature of our collapse.

So, what next? I sure don’t know. One of the first books on finance I read was The Misbehavior of Markets, by Benoit Mandelbrot and Richard Hudson. Financial markets are famously unpredictable, but we can characterize and discuss them in terms of statistical distributions. Classically, financial theory models returns as drawn from normal distributions. Mandelbrot and Hudson point out that while there are periods during which that may be a serviceable approximation, there are periods during which it is not. During “storms”, returns are better described as drawn from Cauchy distributions. I’ve graphed the densities of those two distributions, normal and Cauchy, below.

Normal and Cauchy PDFs, looking kind of similar

At first blush, they don’t look all that different. Both are bell-shaped curves, centered around a clear mode. The Cauchy distribution, plotted in red, just has somewhat fatter tails. Let’s draw the same distributions again, this time showing 95% confidence intervals around the mode.

Normal and Cauchy PDFs, with crazy different confidence intervals

While superficially the distributions look quite similar, I had to dramatically expand the graph to fit the Cauchy distribution’s confidence interval. Where 95% of the normal distribution’s draws are within ±1.96, on the Cauchy, events as far as ±12.7 fall within the 95% interval. With the normal distribution, you can expect a series of draws to converge, on average, to the mode. Not so with the Cauchy, for which no stable mean exists. Even on average, you can’t say what will happen.

I believe we are right now in a political storm, in the way that Mandelbrot and Hudson described financial storms. That is how I interpret “collapse”. If you ask me to predict how things will be in 2022 or 2024 or whenever, if I’m to provide a point estimate, a specific guess, I’d say be we muddle through and our institutional forms remain the same and broadly intact. That’s still the mode, the peak at the center of the distribution. But it is now much more likely than in ordinary periods that “something breaks”, that we deviate dramatically and land someplace that would not have been conceivable during tranquil, more normally distributed periods.

The Cauchy distribution is symmetrical. If we interpret positive deviations from the mode as good outcomes and negative deviations as bad, the two would be equally likely. Common sense suggests that’s an overly optimistic view of our social predicament. When deeply invested political arrangements rupture, intuitively that suggests pain as immediate cause, effect, or both. Nevertheless, I think there is at least the potential for opportunity in this crisis. Even if it’s not quite as stout as the lower tail, a fat upper tail exists, and we can make it fatter by dreaming in public.

Nothing is broken in the world without something else being born. Any creature’s death at the very least yields a corpse, which yields succor for some other’s hungry mouth, or soil upon which new life may grow. If we do slip the chain of our outworn institutions, perhaps it triggers civil war, famine, holocaust, or autocracy. But it is also possible that we jump to something hopeful, a revision of our constitutional order that is more capable, more democratic, both. As things go awry, the range of what’s possible grows wide, and where we land to a certain degree becomes just a Schelling point, a self-fulfilling prophecy, one possibility that somehow gains currency as the status quo loses its hold on our imagination and we grope to coordinate to something else. The cyberpunk of the 1980s largely foreshadowed our present dystopia. The solarpunk of today may portend some refuge from our catastrophe. Much of what I do as a writer is propose speculative blue-sky social arrangements, on the theory that with the passage of time or in a time of crisis things that once seemed ridiculous or unthinkable become possible, even inevitable. Please consider joining me. It’s fun! There has never been a better time to imagine and promote any of the huge variety of arrangements that would be more virtuous and functional than our own, but that for reasons of practicality and inertia seem unachievable. We need to build a portfolio of dreams, each one unlikely, but from which some few will perhaps draw us away from cataclysm and destruction as familiarities unravel.

If dreams can thicken the right-hand tail of our quasi-Cauchy future, then perhaps kindness can wither the leftward tentacle. In the circus that is our mediasphere, unkindness is rampant, celebrated, and remunerated. But even when, behind masks, we are deprived of the comfort of one anothers’ smiles, in person the humans are mostly shockingly kind and decent. Last summer, my family roadtripped back to California from the East Coast where we spent much of the pandemic, through the heart of Red America, and the humans were… lovely. People in South Dakota on motorbikes wearing MAGA merch stopping to offer to take a photo of the three of us on Needles Highway. When you juxtapose the shit people talk — lock him up, lock her up, let them die, send them back — against the presence of real humans sharing space, exchanging kindnesses, it makes you nauseous. No one who wishes to live should be let to die. We all belong, just where we are in the company of one another. Locking up anyone is at best sad necessity, justifiable only in the context of a system of accountability that meets a very high burden, that the incentives it creates or the harms it prevents outweigh the first-order miseries of punishment.

Unmediated, outside of the temptations of commerce, the humans are mostly remarkably good to one another. It’s people being awful that goes viral on the apps, but those videos are absurdly unrepresentative. When our imaginations and conversations are dominated by salacious, mediated events, we become tempted to override our own gentleness, to prosecute cruelties in the service of an imagined cause with little connection to actual humans here and now. The result is rarely just. If we do start killing one another en masse, the killers will be electric with self-righteousness. Don’t be. Be kind. That left tail of catastrophe is made of social and political currents that would thrill us with unkind virtues that are only viciousness in drag. Be kind.

This is my delayed, belated New Years post. Happy New Year. May this 2022, may our vast, unsettled future, bring us breathtaking and wonderful surprises.

Mass representative democracy

Among the kids, participatory direct democracy is often taken as the ideal to which democratic polities ought aspire. But at least in theory, the case for representative democracy is strong. Political decisions really matter. They should be made well. But they are hard. Whatever interests and values you hold dear, it takes a lot of work to inform and educate yourself enough to know what political choices would in fact best serve them. This work must be performed in the face of tsunamis of misinformation propounded by those serving interests and values that diverge from yours, but whose partisans are eager to co-opt you. Democracy-skeptical public choice theorists aren’t wrong when they say that most voters are (and ought to be) “rationally ignorant“.

The genius, in theory, of representative democracy is that voters hire specialists to do the information work for them. In a representative democracy, it is not really your job as an ordinary citizen to have a strong view about the details that actually get legislated, like how many tax brackets there should be and how the rates should be structured across them. Your job is one that you (and only you) are eminently well placed to perform — to know your own interests and values, and elect a person who reflects them. That person become a specialist who gets paid to do the work of translating those interests and values into political choices that give them real effect.

This is the standard case for representative democracy you probably learned in civics class. Yet at this point, most of us roll our eyes more than a little at it. I don’t feel remotely represented by my alleged representatives, to whom I have no personal connection and little affinity of values or interest. In the US House of Representatives, I am one of about 750,000 people that my “representative” allegedly represents. In my city, I elect a “supervisor” I have never met who allegedly represents the values and interests of 80,000 of my neighbors. It’s a bit ridiculous. More than a bit. A person who “represents” a population of tens of thousands of people whose only commonality is geography effectively represents no one at all. Elections impose constraints on politician behavior, sure. If you want to keep the gig, you can’t do whatever will offend some least-common-denominator id among your constituents. You must do what it takes to raise funds for the competitive advertising campaigns that “elections” become. The first constraint is “democratic”, but it constitutes so watered down a form of representation that it counts for very little. The second constraint is often antidemocratic, since global-dollar-weighted and local-population-weighted interests and values are in conflict quite often.

Within the guard rails set by these two constraints, what “representatives” do cannot straightforwardly be described as representation. Almost any choice a politician makes would give effect to the values and interests of some of their constituents but not others. Absent the universal information work representative democracy exists to absolve us of, most of us cannot even evaluate whether the choices our representatives make are likely to further or frustrate our interests. The social architecture of contemporary representative democracy is like a how-to manual for the so-called “iron law of oligarchy“. Our institutions immerse our “representatives” among a class of electeds, bureaucratic staff, and professional courtesans. The burdens of the job keep them segregated from the publics they purport to represent. In an organic, social sense, they become bound and accountable much more to their comrades-in-arms within the governing class than they could ever be to the amorphous, conflicted group they call constituents. An economist might describe all this as an “agency problem” but that’s not quite right. There’s not a coherent enough principal whose interests the agent can be said to betray.

Modern representative democracy is simply a system whose predictable result is governance by competing coalitions of insiders, who develop deep relationships and thick connections to one another, while the electorate they notionally serve becomes an inchoate, threatening demon that must be flattered and appeased. The values and interests insiders actually serve may be corrupt and self-serving, or they may be idealistic and selfless, but they cannot accurately be described as “representing” their constituents as a body. Constituents feel unrepresented, because they are. Popular pressure builds for flawed institutions of direct democracy — ballot initiatives, referenda — under which the information problems representative democracy exists to solve run riot, but at least it isn’t always the same fuckers calling all of the shots.

Direct democracy enfranchises the citizenry to decide upon matters of whose details and ramifications they are rationally ignorant, with predictably imperfect results. Contemporary representative democracy creates a corruptible class of specialist-coworkers, who develop their own values and interests and substitute them for the those of their constituents (whose actual values and interests are too diverse and conflicted to make their own strong claim). Is there anyway we could get something that combines the enfranchisement of direct democracy with the informed participation enabled by representation? Yes.

Imagine what an online direct democracy might look like. All of us would be the legislature. Obviously, we wouldn’t meet (or mostly pretend to meet) under a neo-Roman dome in some self-important provincial city. With a legislature of only a few hundred souls, attention must be very carefully allocated. In our current Congress, there’s a whole economy of scarce floor time. (“I yield the remainder of my time to my colleague”, you’ll hear them say.) If all of our legislators were permitted to speak as much as they would, deliberation would take too much time. In fact, most legislators never weigh in at all on most issues that in a broad sense come before the Congress. Congress organizes itself into committees (by arcane means, with corrupt effect), and most matters never make it through and past committees to consideration by the broader chambers. If we had a legislature of 250 million (roughly the voting-eligible population), obviously the vast majority of citizen-legislators’ proposals and bright ideas could not be put before all their citizen colleagues. If only 1% of citizen legislators were to make a proposal each year, we’d all have millions of proposals to evaluate. That’s untenable. So we’d have to design a kind of stochastic parliament, where people’s proposals would initially go to very tiny fractions of “the legislature”. These random samples would constitute ad hoc “committees”, and each citizen would be responsible for serious deliberation on the proposals that come before them in this way, but each participant would field only a modest number of such proposals. Following deliberation and potentially modification at this stage, these ad hoc committees would vote to promote or kill the proposal. If they promote, the same procedure would recur but with a larger sample, and less scope for deliberation and modification. The number of such proposals that could be promoted to higher levels of review would be limited and so competitively rationed: only those gathering the most support would gain scarce “slots” compelling the broad polity to review them. Finally, the tournament-winning, most promoted proposals would get plenary up or down votes, like a vote on the House floor.

You can imagine this kind of thing, but it would do little to address the problems we invented representative democracy to solve. To function well, our citizenry would have to be extraordinarily engaged and informed, and it would take up all of their time. It would be like permanent jury duty.

But what if we elected representatives to participate in this kind of mass-democracy framework? Instead of electing one per 800,000 or one per 80,000, what if we self-affiliated into groups of common interest of no more than, say, 1000 souls, for whom personal, physical “town meetings” could be regularly arranged? Obviously, not everyone would wish to attend all of these meetings, but everyone could if they wished. With no more than 1000 constituents, an elected could become at least acquainted with her full constituency. She could be accessible and available to them all. She could maintain direct relationships with a substantial fraction of the people she represents, and be motivated and held to account by those relationships, by gratitude and shame experienced personally rather than by abstract shifts in what some consultant claims the polls say.

Instead of a few hundred Congresspeople, we’d have 250,000 representatives whose full-time job it would be to stay and live among and interact with their constituents, and participate in the online legislature. There would be no Congressional offices in Washington, no risk of going native among colleagues who become much closer than constituents. At a municipal level, there would be no councilmen or supervisors at City Hall. In my San Francisco, there would be roughly 800 legislators and any of us who cared to would know our representative and interact with her as much or as little as we pleased.

This proposal recognizes that the hard part of being a representative, or at least what ought to be the hard part, is not fundraising, rising through committees, learning the personalities and peccadillos of influential colleagues so that you can “legislate effectively”. The hard part of being a representative is representing. The problem we should devote ourselves to is the challenge of making one person’s voice become a capable stand-in for many others’ necessarily absent. The legitimacy of our entire system of government depends upon this thin reed, the quality of the bond between elected and constituency. When that bond becomes as attenuated and deflected as it has under current institutions, “democracy” fails to confer very much legitimacy at all, or to be effective at serving the interests of the people on whose behalf it claims to rule.

This proposal recognizes also that human beings are best motivated and held accountable by direct relationships to other human beings. Pecuniary incentives are course-grained, and always susceptible to corruption. Career incentives — they’ll serve the people because they want to be reelected! — are wildly insufficient. The range of things a politician may do and still get reelected is wide, and can deviate a great deal from their constituents’ interests. Career incentives are easy for outsiders to game. If you serve constituencies that may not entirely be those you supposedly represent, there may be a gig on K Street or a place in the party bureaucracy for you. The foundational error of the neoliberal period was the conceit that aligning financial incentives to social goods was easy, so market success and contribution to social welfare could, to a first approximation, be equated. Market success, alas, in the market for political careers as much as cigarette sales, can be welfare destructive rather than socially valuable. The best work results from intrinsic devotion to excellence plus human relationships that help steer a person’s excellence towards ends that a community values. People need to be well paid not so financial incentives direct their work, but so that financial anxieties and ambitions don’t misdirect, eclipse, distort, occlude the fragile foundations of real human achievement. Our representatives should be paid well, and should serve and live among tangible human communities whose interests they know and experience through organic personal relationships.

So “expand the House” from 435 to, um, 250,000, and put it online. Obviously, this is an idea that can’t be put into immediate practice at a national level. We have a lot to learn before we’ll trust large-scale stochastic deliberative assemblies to resolve political questions with extraordinarily high stakes. However, it is a vision that we should be working towards. Whatever you think of “crypto”, one thing that proposals like this highlight is the need for extremely trustworthy networked computation infrastructures that are credibly neutral, that are not subject to the discretion of some party that owns or operates the machines. If you want to run a legislature over a network, there can’t be a company that manages the database that might potentially manipulate it. You need the system to produce very persuasive, public evidence of its integrity at all times. I don’t think public blockchains in anything like their contemporary forms will get us there, but they are working prototypes of this sort of trustworthy computation. They are also sites of experimentation in (rudimentary, badly flawed) online deliberative assemblies such as “DAOs“. There is plenty to hate about contemporary crypto, but in the midst of all the scam and speculation there are emerging fascinating “petrie dishes” for experimental democracy, to which it is worth paying some attention, and cheering useful innovation. Most of cryptoland is understandably but unfortunately cynical of representative models of democracy. But the usual alternative — “governance tokens” directly voted, like shares of stock in a traditional corporation — performs poorly. Token-voting is plutocratic by design, and outcomes tend to be dominated by insiders and activists while much larger “rationally ignorant” groups just “HODL” (hold) their tokens for speculative purposes without voting them. The interests of stakeholders who are not tokenholders get ignored entirey. (See Vitalik Buterin’s lengthy critique of “coin voting”.)

Legislation is, in computer lingo, a very stateful application. Online deliberative assemblies will need to keep precise track of large numbers of lengthy documents and particular revisions thereof, which cannot be done on contemporary blockchains at a reasonable cost and speed. But it would not be so difficult to repurpose some of the technologies that underlie contemporary crypto to build bespoke, city-scale legislatures that could be operated affordably and generate compelling evidence of their integrity. Cities should give “mass representative democracy” a try, soon. If you live in a city of any size, do you feel, today, like you are adequately represented in city government? If not, what hope do we have to make representative democracy work at a state or national scale? We are collectively, and correctly, coming to understand that we’ve never really had the kind of Our Democracy that talking heads on MSNBC are constantly telling us we must save. It’s time to roll up our sleeves and build institutions we’ll have reason to be less cynical about.

Update History:

  • 8-Jan-2022, 12:50 a.m. PST: “ballot initiatives, referenda — in under which the information problems representative democracy exists to solve run riot”; “whose actual values and interests are too diverse and conflicted”; “The range of things a politician can may do and still get reelected is quite wide , and can deviate a great deal from where their constituents’ interests might lie.”; “…in the market for political careers and as much as cigarette sales…”; “help steer a person’s excellence towards ends that a community values.”; “…to resolve political questions of with extraordinarily high stakes”; “…in (rudimentary, badly flawed) online deliberative assemblies such as ‘DAOs'”; “…it would not be so difficult to take repurpose some…”

Republican primaries

Friend-of-the-blog David Shor gets into trouble for two distinct reasons. One is “popularism”, which provokes arguments about how poll-driven and message-disciplined Democratic electoral politics ought to be. The other is simply prediction. Shor is a Cassandra. Here’s Ezra Klein characterizing his views:

Democrats are sleepwalking into catastrophe. Since 2019, [Shor has] been building something he calls “the power simulator.” It’s a model that predicts every House and Senate and presidential race between now and 2032 to try to map out the likeliest future for American politics. He’s been obsessively running and refining these simulations over the past two years. And they keep telling him the same thing.

We’re screwed in the Senate, he said. Only he didn’t say “screwed.”

In 2022, if Senate Democrats buck history and beat Republicans by four percentage points in the midterms, which would be a startling performance, they have about a 50-50 chance of holding the majority. If they win only 51 percent of the vote, they’ll likely lose a seat — and the Senate.

But it’s 2024 when Shor’s projected Senate Götterdämmerung really strikes. To see how bad the map is for Democrats, think back to 2018, when anti-Trump fury drove record turnout and handed the House gavel back to Nancy Pelosi. Senate Democrats saw the same huge surge of voters. Nationally, they won about 18 million more votes than Senate Republicans — and they still lost two seats. If 2024 is simply a normal year, in which Democrats win 51 percent of the two-party vote, Shor’s model projects a seven-seat loss, compared with where they are now.

Sit with that. Senate Democrats could win 51 percent of the two-party vote in the next two elections and end up with only 43 seats in the Senate.

I’m not a fan of “popularism”. I agree with Shor’s view that Democratic Party activists, particularly on social issues, constitute a weird, vanguardist community that often fails by placing its own concerns and unpopular remedies before serving the actual preferences of the demos. But public opinion polling is a bad tool, both because it measures whatever it purports to measure poorly, and because serving the demos requires a richer understanding of the public’s predicament than answers tossed off in response to decontextualized multiple choice questions. I think in practice polling is as likely to mislead as to help. Our political parties require sociological change. They cannot remain platoons of ideologues supported by plutocratic philanthropy, joined at the hip to canny lobbyists and dealmakers, and serve the public well. There is no technocratic quick fix to that. The parties have to change. Democrats are no worse than Republicans in this regard, but that won’t save them.

Though I often take issue with Shor’s prescriptions, there is no one in US politics I trust more on description. If David Shor thinks Democrats are “screwed… [o]nly he didn’t say screwed” in the Senate, I believe him. And I’m not alone. It’s pretty much a commonplace, when I talk to people involved in Democratic politics, that from 2023 on, for the forseeable future, Democrats will have little means of exercising political power at the national level. Of course Democrats should be careful not to let that be a self-fulfilling prophecy. Human affairs are unpredictable and pessimism can be hubris as much as optimism. But the possibility that the United States will be governed by Republicans or else entirely gridlocked for the next decade seems like one we should be thinking about and taking seriously.

Apocalypticism doesn’t constitute taking it seriously. A loud, small group of politically active Democrats may think that Trump is basically Hitler and the contemporary Republican Party is basically Trump, ergo Republican political power is the holocaust, what’s the point talking about rearranging deck chairs in a gas chamber? But if we are trying to describe the actual world, holocaust is a tail risk, not the modal scenario. Under Republican control as much as Democratic, the range of possible outcomes is large. A politicosocial formation that prides itself on being adult, mature, serious, and devoted to reason owes the world more care than “après nous le déluge”. It may or may not be true that government at the Federal level will be dominated by the Republican Party for the foreseeable future. We oughtn’t concede that, but can we plan for the contingency? If it happens, what would make the world a better place?

The Republican Party, like the Democratic Party, is a big tent, an awkward coalition. Not everyone is Marjorie Taylor Greene. Mitt Romney is a fucking plutocrat, but he also proposed a better child allowance than any Democrat did. The fortunes of MSNBC and Fox News may depend upon salacious culture wars, but the actual welfare of most human beings depends much more on the material choices our government will make. Eclipsed by all the circus there is a great deal of heterogeneity within both coalitions on those questions.

I don’t have the answer, but a clear point of leverage in our system is the primary process. There should be no jurisdiction in the country where there is not a basically decent person with good views on material questions on the Republican primary ballot. To be credible at all, to not be a “RINO”, that person will be disagreeable on a variety of issues. In most jurisdictions they will be some shade of pro-life. They will be LGBT quietist at best, advocates of “content of their character” race-blindness at best. But a person can be unusually supportive of labor without being a RINO. They can be a devoted antimonopolist without being a RINO. They can take climate change seriously. They can, like Romney, agree that families require and deserve material support since every child is and ought to be a mouth without a job.

We make idiots of ourselves if the finest distinction we can draw is between Democrat and Republican. If Shor’s analysis is right, we’ll need a lot of the better Republicans. We should be thinking about how to encourage them to join primary contests, and how to help them win.

Then, if you are a vote-blue-no-matter-who Democrat in a red or purple jurisdiction, you should register as a Republican so you can support the better candidate in the primary. Democrats will produce a candidate. (Please, Democrats. Produce a candidate.) There will be some-who-blue you’ll still vote for in the general. Regardless of what party ID you’ve registered under, you can enthusiastically support the candidate you prefer. Ticket splitting and cross-party voting are glorious traditions in American politics that are worth reviving.

But if you are a person of conscience, and if it is in fact probable that the US will be structurally tilted towards Republican rule for the foreseeable future, you are not proving your virtue by absenting yourself from the forums that will shape what Republican rule actually means. 2025 will come, not the apocalypse. A world not in fact ended will require strategic, constructive engagement. If we are serious and not merely partisan, we should be building effective ways to provide it under plausible foreseeable futures.

Update History:

  • 3-Jan-2022, 9:25 p.m. PST: “you can enthusiastically support the better candidate you prefer.”; “deserve material support, since”; “the range of possible outcomes, for the polity we share and for the world in which it is embedded, is large”

A loan is income plus basis

This week the Biden Administration briefly considered a “billionaire’s tax” on unrealized capital gains of the very wealthy. Something like this is clearly necessary. The very wealthy are the people it is crucial to tax, because one of the most important (badly lapsed) functions of taxation is to compress the wealth and income distribution. Civilized society does not survive outrageous dispersion of outcomes. But for now, the very wealthy are effectively immune to income taxation, because they can simply borrow against appreciating assets rather than sell them and realize what the tax code recognizes as income. Eventually loans must be repaid, and so some assets sold, but “step-up basis” means taxes deferred this way ’til death are never paid upon wealth that accumulates behind the veil of an asset.

Taxing unrealized gains is the most straightforward solution. Jesse Eisinger argues we shouldn’t consider it that unwieldy. But… it’s kind of unwieldy, and kind of ugly. In order to tax unrealized gains, we need to be able to quantify them. When zillionaires hold their wealth as publicly traded common stock, we can just mark it to market. But if we were to impose an unrealized gains tax, the rich would likely flee from price-transparent shares to more bespoke, less liquid assets. Who can know how much their value has appreciated? Taxing unrealized gains sets up an endless war over valuations between the wealthiest people in the world and the tax authority, exactly the kind of struggle tax authorities have historically surrendered.

Rather than an unrealized valuation tax, I’ve long been partial to the idea of treating use as collateral as a realization event. When Mr. Burns takes a loan, pledging assets marked in the contract at a value of 1.56 zillion dollars, tax the appreciation inherent in that 1.56-zillion-dollar valuation as income, and then set the cost basis of those assets to 1.56 zillion (so that if Burns does sell the assets some time in the future, he is not taxed twice on the same appreciation). I thought this was a novel idea, but the infinitely knowledgeable Carlos Mucha disabused me of that. We’ve been doing it in some contexts since the 1970s.

Still, there’d be a lot of wiggle room by which zillionaires could squirm free. Lenders might compete to offer low collateral marks. More straightforwardly, since zillionaires’ personal spending, however extravagant, cumulates only to a fraction of their overall wealth, they are creditworthy. They can simply ask their bankers for unsecured loans. No use of assets as collateral, no realization, no tax.

So here’s a simpler, more bulletproof idea. When a wealthy person takes a loan, they are electing that means of generating cashflow against the alternative of selling some assets and paying the capital gains tax. Let’s make those two ways to generate cashflow equivalent for tax purposes. How would we do that? Well, we’d tax loan proceeds as income, and increase the cost basis on the borrower’s asset portfolio by the amount of a loan.

Let’s try a concrete example. Mr. Burns owns shares of ZeroCarbon, Inc. worth 10 zillion dollars. He needs one zillion dollars to deck out his dungeon. Suppose he sells 12.5% of his holdings in ZCI. (He acquired the shares years ago, for basically nothing, when he founded the firm.) He realizes 1.25 zillion from the sale, but pays Uncle Sam 20%, or 0.25 zill, raising the cool $1Z. If, some time later, he decides to sell the rest, he’d realize $8.75Z more in gains, but pay $1.75Z in taxes, netting $7Z more, or a total of $8Z, as the tax man takes 20%.

Now suppose he borrows. Under our proposal, he pays 20% on the loan proceeds, so he has to borrow the same $1.25Z and pay the same $0.25Z if he want $1Z in cash flow. But we add $1.25Z to the cost basis of his remaining portfolio. If, after a while, he decides to sell out and retire to Cuba, he sells all $10Z worth, pays back the loan of $1.25Z, but only pays tax on ($10Z – $1.25Z =) $8.75Z, leaving a tax bill of $1.75Z. Whether he borrows or sells, he pays the same $0.25Z on the initial cash flow generation, and $1.75Z on the eventual liquidation. Borrowing is, for tax purposes, the same as selling (although Mr. Burns’ forward-looking risk and income are affected by the choice). [*]

In practice, we don’t have to worry about what portfolio assets we add basis to. Any personal loan would be taxed as income, but the borrower would be granted a tax asset that could be deducted from the proceeds of any future capital gain. These kinds of assets exist already. For example, if you take an overall loss on your investments in a year, you acquire a “carryforward”, a right to deduct the amount of that loss from the gains in future years. A loan would simply be treated as an event that generates both income and generic capital-gains basis.

This would close the billionaire’s loophole. But what would it do to regular people? When Marge takes a mortgage to buy a home, should she have to inflate the value of the loan to cover an income tax hit, and console herself with an offset against future capital gains that she doesn’t anticipate realizing any time soon? No, probably not. But that is easy to fix. Up to a lifetime limit of $X, a household should be able to elect the current status quo — borrowings go untaxed, but no tax asset is issued. Beyond $X of borrowing, the new tax accounting would become mandatory.

How big would $X have to be to hold normal people harmless under this new scheme? Not so high. Add the price of a middle-aged (not “starter”) home and a bunch of college debt. We’ll presume transactional credit card debt (ie paid off quickly and without interest) is excluded, and assume like $100K of revolving hell. For most of the country, that takes you to maybe $600K. (Note that you don’t need to worry about moves and new mortgages, because the homeowner can plough the proceeds from her last home into the new home to avoid unnecessary borrowing.) If, my dear unrepresentative reader, you think of people who go to expensive schools and get graduate degrees and become homeowners in high-priced metros, then we add those items up and we get to maybe $1.5M. So we could make the lifetime limit of untaxed borrowings like $2M, and 99% of not-super-rich people would lose nothing from this change. (We’d have to decide how much to raise the threshold over time to accommodate inflation, or resist raising it to help counter leveraged tuition and home-price appreciation.) For some people of ordinary means, this change would be a tax cut, because we would gain an option to be taxed at low rates on borrowed cash in low-income years, but deduct from future capital gains in high income years.

But for the super rich? They’d now be taxed on what we think of as income, on the money they take from the empires they build in order to spend and live. A $2M exemption would be a rounding error to them.

This proposal wouldn’t raise as much as taxing unrealized gains, if we imagine unrealized gains can be effectively taxed. Zillionaires typically borrow to spend far less than their assets appreciate. As long as step-up basis remains in place, the difference between what tycoons borrow over their lifetimes and the value of their assets at death would remain untaxed. However, at least the funds they take for personal use would be taxed in a clean, hard-to-contest way. And we can counter step-up basis a bit by insisting that as long as basis steps up with death, tax assets accrued from loans must disappear with it. A better tax regime would keep basis at actual cost through death and let tax assets pass to heirs. But if we are fudging in favor of rich families with the step up, there’s no reason why they should also be able to add past tax payments to that fictional appreciated basis. Whinings about families having to sell the farm to cover the tax bill would not apply. The taxes would already have been paid. Tax assets would simply disappear, nothing would have to be liquidiated to raise new cash.

Treat loans as income plus future basis. It’s a simple, clean way of taxing people who currently live extraordinarily well and contribute effectively nothing for it. I think it’s worth considering.

[*] I’m presuming loan proceeds are taxed at the same rate as capital gains income for this exercise. They could also be taxed as not-tax-advantaged ordinary income, in which case the effect of the change would be to encourage outright sales rather than leveling the playing field between selling and borrowing against appreciated assets.

Blame Hollywood

People blame Hollywoood for “coarsening the culture”, for drugs and violence, for normalizing sexual deviance, for terrible intellectual property law, for liberal or even socialist politics. But, as a general rule, the most powerful social effects of a thing often derive from what does not trigger our ideological allergies, from what slips through without irritation or objection. I think we’ve been harmed by a cliché we barely perceive, that we dismiss as banal if we notice it at all.

Hollywood’s theory of conflict is a heroic tale, good versus evil. But more than that is smuggled into the formula. The heroism takes the form of good guys crushing bad guys. Once the evildoers are killed, imprisoned, or otherwise neutralized, normalcy is restored, and that is the happy ending. Good follows from the elimination of evil, naturally, inevitably. Like a splinter, the bad need only be removed and the body will heal to a preordained shape whose correctness we can take for granted. Destruction is grit and heroism. Construction takes care of itself.

With its infamous “Mission Accomplished” in 2003, the Bush Administration was transparently reaching for this trope. The bad guys were crushed, so the credits could roll. The happy ending was upon us. Events, and then the Administration’s political opponents, quickly made a mockery of that presumption, but not of the cartoonish narrative framework, to which all factions in American politics are slavishly devoted. The problem was the bad guys had not, after all been crushed. They came back, and back again, like a Fast and Furious franchise. What remained, always, was to “complete the job” of defeating evildoers, despite how ridiculous that seems when you put it into words this way.

It’d be great if the Hollywood formula was just a technique by which cynical consultants manipulate plebes for approval and votes, with no one serious actually believing it. But this is Kool-Aid we have all drunk, a formula American politicians plainly believe, or at least govern as if they believe even when the plebes aren’t looking. The American public didn’t demand “debaathifation” in Iraq. Americans, after all, pride ourselves in frequent bathing, in stark opposition to places so perfidious no fries shall be named for them. No public groundswell compelled the Bush administration to expel the entire civil service of the newly conquered country from public life and condemn their ethnic group to marginal status. But debaathification was necessary, as a matter of “moral clarity”. Debaathification rhymed with denazification, and we had all grown up on Raiders of the Lost Ark and those newsreel-style World War II movies. The Baath were evil. They had to be purged, not included, not appeased, in the new Iraq. So we enjoyed sequel after sequel, ISIS for example, starring disaffected Iraqi sunnis. Justly excluded from political life, their careers destroyed, their interests dismissed in the new dispensation, they did not, as they ought to have, hide in squalor and devote themselves to mortifications. Instead they fought from without. Who could possibly have forseen it?

In Afghanistan, apparently, the Taliban early on sought a negotiated peace with the government we installed, requesting amnesty for prior leaders and participation in the new government. But the Taliban were terrorists, and we don’t negotiate with terrorists. Our Afghan partners sagely agreed to the peace, but Donald Rumsfeld — who, we must concede, was no stranger to John Wayne films — forced them to walk it back. The Taliban and their supporters were exiled from participation in government, chased by an army of nineteen-year-olds on a desperate mission to crush the terrorists, at risk of being SWAT-ed anytime by cynical local rivals who figured out that ours were arms they could direct. Eventually they regrouped and today they have turned our narrative framework right back on us.

In real life, bad guys don’t get crushed and disappear. After the “Mission Accomplished” banner is stowed in some dusty closet, all (nearly all) of the complicated humans, not good, not evil, will still be around, and they’ve all got to figure out some satisfactory manner by which to coexist peacefully. Or else they will not coexist peacefully.

It is worth contrasting Iraq and Afghanistan with the experience of Ireland. Sinn Féin, you may recall, was “the political wing of the IRA”, a terrorist organization. But an influential diaspora in the United States didn’t see it that way, and pointed out there was terror on the other side too. In American consciousness, providentially, it was not so clear who the good guys were and who should not be negotiated with but needed to be crushed. So, unusually, we refrained from fucking things up, and even helped encourage the parties negotiate a political settlement in which all sides, even the ones associated with terrorism (as I said, all sides) would be represented and included. When, unusually, we are unable to impose our Hollywood formula narrative on events, we do, occasionally, refrain from actively ruining things. We might even manage to play a modest constructive role.

Our Hollywood imaginations are not restricted to foreign affairs. The formula we applied so successfully in Iraq and Afghanistan we are working hard to apply at home. Both of the two political communities into which our electoral system divides us find it convenient to label the other as “fascists”, “authoritarians”. More in sorrow than in anger, perhaps, our side, the ones who are still sane, who carry the torch for our way of life, our values, Our Democracy, can no longer afford to appease these extremists. They must be extirpated, crushed, discredited. The Earth must be salted beneath their corpses.

Do we all see how dumb this is? We, the good guys (whichever flavor of good guy you belong to), believe in life, liberty, and the pusuit of happiness. They, those other people, are putting all of that at risk. So we will what? Kill, subjugate, imprison, “reeducate”, nearly half the country? Merely disenfranchise them and use a militarized state to crush the politics by other means governance without consent is sure to engender? Our Hollywood intuitions are pathetically stupid. The aftermath of victory is not a happy ending. It is hell on earth.

So stop rewarding at the box office of media grift and political contribution all these brave truth tellers who will fight against this latest outrage, who will not betray you, who will not yield. Of course, it’s no good either rewarding at the box office the “centrist” insiders and establishment smarter-than-thous who will always betray you, who have for decades and demand normfully you be mature enough to allow it to continue. Whether it’s #Resistance versus MAGA, or PMC elites vs outsiders, this framework of Defeating The Bad Guys is a mirage. Our intuitions are drawn nowhere but there, it is the only way our atrophied minds now understand our human affairs. Blame Hollywood.

The art of living well is modus vivendi. It is a practice of continual negotiation, stitching, construction. There is progress, but there is never final victory, no happy endings. You support your values not primarily by working political institutions to ensure your side wins, but by expanding communities that celebrate metavalues like pluralism and tolerance and integration, under which we all keep the blessing of one another’s company without surrendering our differences, however profound.

So many of us focus on political tactics — data-soaked electoralism, wonk insider activism, take-to-the-streets militancy — that can stand in tension with the work of expanding our political community. That doesn’t mean those tactics are bad or unimportant. The consequences of this moment’s legislative and electoral outcomes can be serious, and every decision is necessarily a battlefield. But over the long term, the shape of the social terrain will determine whether civilized outcomes are even possible. Tactical opportunities should be devoted to creating material and institutional conditions that reinforce the work of expanding community, rather than taking wins against implacable bad guys. At home and abroad, magnanimity and inclusion are the only bases for a realist nondystopian politics.

Update History:

  • 5-Sep-2021, 5:30 p.m. PDT: “wonk insider activism, take-to-the-streets militarism militancy
  • 11-Sep-2021, 12:25 p.m. PDT: “coursening coarsening” Thanks commenter Tom!

We’re already paying for it

In social democratic quarters of American political debate, it’s common to argue that we need to impose broad-based taxes. The social democracies of Europe not only tax a greater fraction of their GDPs than the United States, but they also rely more on taxes that hit middle-class and even poor households, like a value-added tax (VAT). If you promise, as both Joe Biden and Hillary Clinton did, not to raise taxes on anyone earning less than some high-ish income threshold, you won’t be able to finance really transformative programs like Medicare For All. You can think of that in conventional terms: You can’t tax enough dollars only from the top few percent of the population to cover the cost of generous benefits for everyone. Less conventionally and more accurately, you can point out that you’d have to tax the rich much more than the cost of benefits in order to make room for the increase in demand egalitarian benefits would provoke, because the top few percent weren’t spending their marginal dollars anyway (so taxing them away doesn’t change what they spend), but benefits distributed to the non-rich will quickly be spent, either by the state as benefits provider, or by recipients of cash benefits. You can’t “finance” — in the sense of neutralizing the pressure on real resources, and then inflation and interest rates — broad based benefits without broad based taxes.

That argument is true enough. But if we’re thinking in these terms, we should think a little bit about our definition of “taxes”. To the degree our goal in taxation is to make room for noninflationary expenditure by the state, what we are really after is what old-school Keynesians called leakages. One person’s spending is another person’s income, funds move in one direction, goods and services in the other, forming the famous “circular flow” of economics. A fixed aliquot of purchasing power might turn an economy forever, with stable prices, if all income was promptly spent. But in reality there are injections and leakages. Holding constant the productive capacity of the economy, if the state spends, that adds new money chasing the same goods and services, generating inflation. To counter that injection, the state can tax, which becomes a leakage of purchasing power, stabilizing prices.

However, another source of leakage is financial saving. If a person holds cash rather than spending it into another’s income, that will be disinflationary, or even deflationary, like a tax. (Depending on our definitions this “saving” might constitute “investment” in accounting terms, but it will not contribute to demand for either capital or consumer goods in the economy.) This effect underlies the main technique we use to fine-tune inflation. When the state wants to restrain prices, it intervenes to ensures that interest rates are high for financial savers, or equivalently that opportunity costs are high for spenders, which persuades actors in the economy to save more and spend less, calming the bid for real goods and services.

If we want to finance a large benefits program but offset the pressure it puts on prices and therefore the risk of inflation, one way we can do that is to not tax at all, but raise interest rates. It’s pretty clear that this can work in the short-term, but it’s a conceptually messy business, since high interest rates are usually bundled with injections of cash (from interest payments on government debt), which might contribute to pressure on prices over a longer term. Plus, there are financial complications, as real estate and longer-term financial assets reprice with interest rates, in ways that may be distributionally unjust when rates go down and destabilizing financially should rates go up too fast.

However, holding interest rates constant, there is another regularity we should understand about financial saving: People with big incomes do lots, lots more of it than people with small incomes. If you give Jeff Bezos an additional million dollars, that results in approximately zero new direct spending on consumption or capital goods by Jeff. Instead, he’ll devote the income to purchases of financial assets like stocks and bonds. The relationship between financial asset purchases and real expenditures by issuers or sellers of those assets is weak. Jeff’s stock buys may contribute to asset price appreciation, but they don’t much inspire investments that companies otherwise wouldn’t have made. Income to Jeff is a leakage, in an old-school Keynesian sense.

What we want from taxes, if what we are interested is financing programs without putting pressure on prices, is leakage. But the money that we pay to Jeff Bezos can deliver leakage pretty much as well as money taken by the tax man. In terms of financing programs, money we pay to Jeff is a near-perfect substitute for money we pay to the state. We can finance a social democratic benefits state from broad-based formal taxation, or we can just as well finance it via broad-based rent extraction by plutocrats. Call that the American VAT.

On the face of it, the United States collects taxes equal to just under a quarter of its GDP, while social democracies like Denmark or Norway collect taxes that amount to 40% to 50% of GDP. But how much do Americans pay once the plutocracy tax is taken into account? A recent study by Carter C. Price and Kathryn A. Edwards suggests that between 1975 and 2018, the share of taxable income paid to the top 1% grew by 13 percentage points, from 8% to 22%. Treating that additional income as our plutocracy tax, and naively summing it with the overt tax share of GDP, we get a total tax share of 38%, within spitting distance of Norway.

As a quantitative exercise, this is squishy and a bit bullshit. [*] The point here is not to claim, as a function of data and evidence to which you must defer, that there surely is demand leakage due to income inequality in the United States that creates fiscal space comparable to what the Nordics’ extensive tax systems engender more overtly. I don’t think we have the means to measure that, and would take with boulders of salt any work that claimed to. I make the weaker claim that a social-democracy sized demand leakage is within the plausible range of what contemporary inequality has wrought. We can be confident there is a great deal of slack. Tolerating interest rate rises towards a “normal” 4%-ish, we might be able to fund a full social democratic benefit state in the US without imposing a penny of new middle-class taxes. We don’t need to risk a VAT (which might in practice finance replacement of the progressive income tax, rather than new benefits). We can let weathervane politicians like Joe Biden and Hillary Clinton make their sweet promises without taking them as fatal blows to social democracy. When they ask us how we mean to pay for our programs, we can say we’ve already paid Jeff Bezos, thanks. If you want the money, you can take it from him.

There are a lot of things to hate about this political economy. Having plutocrats, rather than the state, effectively collect much of the tax base creates dormant antidemocratic quasigovernments. All those funds that the rich usually bank can, after all, be mobilized, in ways the real government, accountable however imperfectly to the broad public, would never approve. Proposals like those by Elizabeth Warren and Bernie Sanders for a high-net-worth wealth tax become essential, even though they play little role in “financing expenditure” in the sense of ensuring immediate fiscal space for government action. Over the long term, such taxes reduce the risk that ventures of the ambitious wealthy emerge at so large a scale they override the priorities of the public and force fiscal retrenchment.

Moreover, it’s not so great to have benefits dependent in some sense on continual rent extraction and upward income redistribution. I’d much rather we build a more equal society in which universal benefits are financed from overt, broad-based taxes that we are solidaristically proud to pay. But it may be that you can’t get there from here without some detours. The US mass public really is bearing the burden of a huge plutocracy tax. The dollars we are not paid by monopsony employers, the medical bills we face despite expensive “insurance” (or the care we eschew to avoid those bills), these are burdens on the American public as concrete and real as any new tax would be. A more conventional approach means layering, at least for some period, a social-democratic tax system on top of plutocratic rents an exhausted, precarious public is already supporting. It arguably makes sense to let plutocracy alone finance the benefits at first, then build out the tax side in sync with, and as a means of, tackling plutocracy, when the public understands the good things the taxes help them keep.

Whatever its role in creating fiscal space for social democracy, plutocracy ultimately has to go. In basic economic terms, it is too inefficient compared to straight-up taxation. We worry with income taxes about deadweight costs due to a supposed dampening of incentives to produce. Plutocracy provokes direct incentives to restrain production, because the rents upon which it relies are extracted at bottlenecks, where high prices can be demanded of customers or low prices can be imposed upon suppliers. Insufficient housing production supports real estate assets writ large. Consolidation of hospitals into chains, patent monopolies, and too few doctors all keep medicine lucrative by restricting supply. From chicken farmers to call centers, consolidated buyers impose low prices and terrible conditions on suppliers and workers, “earning” rents that textbooks say should be competed away by new entrants offering better terms.

Efficiency demands either robust competition or public options in order to vouchsafe price-elastic supply of goods and services throughout the economy. But in order to get there from here, we need a muscular, popular state. Plutocracy sews the seeds of its own destruction by creating fiscal space to build one through the very rents that it extracts. Let’s water the fields. ■

Update: Matt Bruenig points out that Norway is a bad comparator for the tax burden of a social democratic welfare state, because Norway’s government collects a great deal of nontax revenue from state-owned enterprises and sovereign wealth funds. This doesn’t much affect the point that its existing “plutocracy tax” could put the US pretty close to contemporary social democracies: Rather than “spitting distance of Norway” (2019 tax/gdp of 39.9%), I might have described 38% as not far from Finland (2019 tax/gdp 42.2%), and more than Iceland (36.1%). It also underscores the core point: there’s nothing special about taxes. To the degree Norway’s state-owned enterprises earn profits from Norway’s public that are then reinvested via social wealth funds in global portfolio assets, that is disinflationary in exactly the same way that private profits almost reinvested in global portfolio assets would be, creating space for (inflationary) social-democratic benefits provision. State ownership of those assets is decidedly better, from a social-democratic perspective, because it avoids both the political and fiscal risks that attend the private sector’s capacity to mobilize dormant wealth in ways that might threaten public goals going forward. But so long as it is not so mobilized (and not thought likely by financial market participants to be so mobilized), the profits extracted create fiscal space, regardless of who holds the resulting paper. The Norwegian state also earns profits from hydrocarbon sales to foreigners, which is disinflationary compared to letting hydrocarbon revenues become private sector domestic income to not only the wealthiest people (the cause of “Dutch Disease”), and by making it easier for Norway to support the exchange rate of its Krone and so restrain import prices.

[*] Taxable income is much lower than GDP; implicitly I’m assuming that the top one percent’s claims on production-not-taxed-as-personal-income grows at the same rate as their share of taxable income. This probably renders the our measure a sizable underestimate of the leakage, as we know that the rich accumulate compounding wealth whose taxation they avoid by not “realizing” the income through sales. On the other hand, I’m assuming all of the additional 1% share is a leakage of demand. Currently, the threshold for membership in the top 1% of incomes is about $530K. At that level, additional income mostly is demand leakage — households with that income are usually plowing marginal dollars into financial portfolio wealth — but less perfect a leakage than a payment to Jeff Bezos. Some fraction of the broad 1% will level-up their amenities rather than bank a financial surplus. More significantly, what I’m scoring as “plutocracy tax” income begins at the one percent’s 1975 share, not at the 2018 share where they end up, which in would have been around 217K in contemporary money, a level at which a marginal dollar in high cost, high income cities might well be significantly spent. On yet the other hand, there is tremendous income inequality within the top 1%, and to the degree the increase has gone disproportionately to the Bezoses, Gateses, Buffets, Dimons, Sacklers, Kochses, and Musks of the world, treating the 1% share as pure leakage will be closer to correct. Incomes have been rigged upwards across the board, households at the 90% do more financial saving than households at the 70% percentile, so using the only change in top 1% share will underestimate the drag. Even in 1975, income inequality in the Nordic social democracies was lower than in the United States, so relative to those comparators arguably Americans were paying a plutocracy tax even then, making it more likely we can afford to match Nordic benefits. But income inequality has risen a bit in Nordic social democracies since then, so maybe their contemporary tax share also hides a meaningful plutocracy tax, diminishing the US’ putative tax-free-fiscal-slack advantage.

Update History:

  • 22-Aug-2021, 4:55 p.m. PDT: Added bold update re: Matt Bruenig’s Norway critique. Also change link to source of 2019 tax revenues to direct OECD source.