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  • [MUSIC PLAYING]

  • HAL VARIAN: OK, I'm ready to do the official introduction.

  • I'm Hal Varian and I'm the chief economist here.

  • I think many of you know me.

  • Glenn Weyl is a Principal Researcher

  • at Microsoft Research New England,

  • and this year he's visiting Yale University as a senior research

  • scholar and lecturer in the economics department

  • and the law school, where he teaches a joint economics

  • computer science course called "Designing the Digital

  • Economy."

  • Glen is a townie.

  • He grew up in Palo Alto, received his AB in economics

  • from Princeton, followed by an MA and a PhD in 2008.

  • He then spent three years as a Junior Fellow at the Harvard

  • Society Fellows, and three years as an assistant professor

  • at the University of Chicago, before joining Microsoft.

  • And over the period from 2014 to 2018,

  • he's been a Sloan Research Fellow.

  • And today he's here to tell us about his book,

  • "Radical Markets, Uprooting Capitalism and Democracy

  • for a Just Society."

  • Take it away.

  • GLEN WEYL: Thanks, Hal.

  • And thanks everyone for coming.

  • So this work is the culmination of many years of careful policy

  • design research with Eric Posner, but in the 10 minutes

  • I have to introduce it, I think, rather

  • than going into the details of all of the proposals

  • that we have, it's best to just give you

  • a flavor of the sort of broad idea

  • that we're trying to get across.

  • And I think that that's best conveyed

  • by a thought experiment.

  • So I want you to, for the moment,

  • suspend your practical considerations

  • and come with me on a journey of imagination,

  • to a fictive city that I'm going to call Marketopia.

  • Marketopia is a bit like Zootopia,

  • except rather than being defined by having

  • a diverse group of mammals that inhabit it, instead

  • Marketopia is defined by the fact that all

  • the major private property in Marketopia--

  • let's put aside personal effects like heirlooms, and pets,

  • and so forth--

  • but all the land, and the houses,

  • and the airplanes, and so forth, is continually

  • up for auction to the highest bidder, in a manner

  • somewhat similar to the way that search terms

  • are for Google advertisements.

  • So basically, whoever is currently

  • the highest bidder on one of these pieces

  • of private property controls it for the time being,

  • by making a rental payment continually into a central pot

  • until someone else comes along, and beats their price,

  • and takes over that rental payment for control

  • of that asset.

  • And that's not just true of private property in Marketopia.

  • In fact, many things that we would usually consider to be

  • determined by collective decision-making processes,

  • like the location of parks and the politicians that govern

  • Marketopia, what sort of schools they have, and what they teach,

  • and so forth--

  • these are also determined by an auction process,

  • though rather than auctioning them to the highest bidder,

  • we add up the total willingness of everyone

  • to pay for different alternatives,

  • and we implement the one that people are willing in total

  • to pay the most for.

  • And all the money that's raised by these auctions

  • is continually returned to all the citizens of Marketopia

  • in equal shares, as a social dividend,

  • or you might call it a universal basic income.

  • Much as in Norway and Alaska, when they auction off

  • oil rights, they return the revenue

  • that they raise to the citizens.

  • Now when you hear this idea of Marketopia,

  • it might sound like sort of the most extreme version

  • of a free market that you can imagine.

  • It's much crazier than anything that, say,

  • Adam Smith could have imagined, because it makes

  • you realize that even though we live in a market society,

  • most things are not available for liquid purchase

  • at any given point in time.

  • Most of the land on the Google campus--

  • most of the stock of Google, in fact--

  • not just the marginal units of stock that are currently

  • on bid, but most of the stock that all of you hold--

  • these aren't things you could just

  • go out and buy at some price at any point in time.

  • Those are instead controlled by often-wealthy concentrated

  • interests, and if you wanted to grab control of those assets,

  • you'd have to enter into a long and drawn out

  • process of bargaining, and probably

  • pay many times what the person would be willing to accept,

  • because they'd get wind that you'd want to buy that thing.

  • And so Marketopia is a far more extreme, complete free market

  • than any society in history.

  • And that might lead you to think, OK, so in Marketopia,

  • the wealthy are going to dominate everything, right?

  • The wealthy are going to be able to outbid

  • the prices that anyone else is going to pay.

  • They're going to take control of assets

  • and they're going to use that to dominate

  • everyone else in society.

  • But then you have to ask yourself,

  • what do you mean by the wealthy?

  • Well, a wealthy person is someone

  • who has lots of assets, like stocks, and bonds, and houses,

  • and land, and businesses.

  • But in Marketopia, there is no private ownership

  • of those things.

  • All of those things are continually

  • auctioned for the public benefit.

  • In fact, Marketopia is actually the most extreme version

  • of the sort of common ownership advocated by people like Karl

  • Marx that you can imagine.

  • Much more extreme than forms of socialism

  • that actually existed, which ended up

  • in the control of those assets by a concentrated

  • bureaucratic elite, that often ended up tyrannizing over

  • the rest of the population even more

  • intensely than the capitalists that they claimed to replace.

  • In Marketopia, on the other hand,

  • there is true common ownership, because by construction,

  • all the value of all assets flow equally to all citizens,

  • and by construction, every citizen has an equal right

  • to compete for control of assets.

  • This might seem like a paradox, especially

  • to those of us who grew up in the Cold War and post-Cold War

  • periods.

  • How can the most extreme form of common ownership, of communism,

  • go along with the most extreme form of a free market?

  • Well, while that might seem like a paradox,

  • it's actually a crucial part of what

  • was the central tradition in a field called

  • political economy, that gave birth to economics,

  • political science, sociology, and many other fields

  • during the late 19th century.

  • And this idea called competitive common ownership was especially

  • associated with the work of this guy here.

  • And I wonder if anyone recognizes him.

  • Who is that?

  • AUDIENCE: Henry George.

  • GLEN WEYL: Wow!

  • This is the first time anyone has actually

  • managed to identify him.

  • AUDIENCE: [INAUDIBLE]

  • GLEN WEYL: Well, I'm glad I came to the right place.

  • So you could probably repeat the following things for me,

  • but Henry George was the best-selling author

  • in the English language, other than the Bible,

  • for about 30 years.

  • His book, "Progress and Poverty,"

  • was the namesake of the Progressive movement

  • in the United States.

  • He helped inspire the Chinese nationalist revolution

  • and many other things.

  • He was an enormously influential person,

  • and yet his ideas are largely forgotten in the post-Cold War

  • era.

  • And the goal of this book is to revive the tradition that

  • was represented by Henry George and others,

  • like Leon Walras, many of the founders of modern economics,

  • who believed that free markets, true free markets,

  • and true socialism went hand-in-hand.

  • To argue that, while these ideas were forgotten in mainstream

  • culture, they continued to be developed in a field

  • called mechanism design, which won lots of Nobel prizes,

  • but was largely applied to things like auctioning off

  • search words at companies like Google and Facebook,

  • rather than to the big problems of social organization.

  • And to show that we can, based on this tradition,

  • have a new way of organizing society

  • to address our most pressing problems.

  • And the way that we do that is by developing five

  • detailed, practical policy proposals,

  • building off of this spirit, that instantiate this idea

  • and address, we think, some of the most pressing problems

  • of inequality, slow growth, and social conflict

  • over political issues.

  • So what are those ideas?

  • The first, which is most closely associated

  • with this auction I was describing,

  • is the common ownership self-assessed tax, in which

  • every owner of significant private property

  • would self-assess the value of that property at some value,

  • stand willing to sell the property at that value,

  • and then pay a tax on that self-assessed value.

  • So this would be a way of implementing the auction

  • that I was describing, without taking

  • all ownership into the public, so that people would still

  • have some incentive to make investments.

  • So people would still have an incentive to make investments.

  • And at the same time, all assets would

  • be liquidly available for turnover

  • to a better potential use.

  • The second idea is quadratic voting.

  • This is a system of sort of auctioning,

  • but for collective decision making

  • that would protect minorities by allowing

  • them to express the greater strength of their interest

  • in given issues compared to majorities.

  • The way that it would work, is that every citizen would

  • be endowed with a budget of voice credits

  • that they could spend on different politicians or issues

  • in a referenda that are important to them,

  • and they could put more votes on the issues that

  • were more important to them, but according

  • to a very particular rule, which is that the cost in voice

  • credits of influence on any given issue

  • would be the square of the number of votes

  • that you buy on that issue.

  • Third, we propose a new system of migration,

  • in which immigration would benefit,

  • rather than just the immigrants and the capitalists

  • in the wealthy countries, instead it would

  • it would benefit all citizens, because rather

  • than large corporations or governments

  • determining who was admitted to the country,

  • instead individual citizens would have the right

  • to sponsor visas for migrants and to negotiate--

  • subject to some protections-- a share of the benefits

  • that the migrants received from migrating to wealthy countries.

  • So that would allow for massively increased migration,

  • but with the broad support of the working

  • classes of wealthy countries.

  • Fourth, we argue that antitrust policy is

  • an incredibly powerful tool for maintaining

  • a competitive and dynamic economy,

  • but that it has been almost completely

  • unenforced in the two most important areas in which market

  • power is accumulating in our economy,

  • and therefore we've been ignoring about 80%,

  • or maybe even 90%, of the potential benefits

  • of antitrust.

  • Those two areas are that, first of all, institutional investors

  • like Vanguard, State Street, BlackRock, et cetera,

  • now control about a third of the total corporate economy,

  • and are the four or five largest shareholders of almost

  • every major corporation straight across industries,

  • Google and Microsoft, American Airlines and Delta.

  • And therefore, they have no interest

  • in seeing these companies compete with each other.

  • And we've seen rising prices in close correlation

  • to the growing power of these companies.

  • That's sort of the most comprehensive market power

  • that's ever existed, because it's

  • coordinated almost the entirety of the corporate economy.

  • Another area that's been almost completely neglected

  • by antitrust policy has been the power

  • that companies have over workers, rather

  • than over consumers.

  • Because if you think about a typical consumption decision

  • you make, like what type of water to drink,

  • there's probably 10 or 15 reasonable alternatives

  • you have.

  • Whereas if you think about a job, what's your next best job

  • rather than working at Google, it's

  • probably a way worse option.

  • And maybe you have one other option,

  • but it's much less competitive than is a typical product

  • market.

  • And yet there's literally never been an antitrust merger case

  • that blocked a merger because of the way

  • it reduced options for employment for workers.

  • And finally, we argue that the individual contributions

  • that people make to the digital economy

  • should be treated as essentially labor,

  • and that there should be a labor movement of people

  • who are contributing that data, to organize, to demand

  • a fair share of the value created by their data

  • from companies like Google, Facebook, and Microsoft.

  • Because increasingly, people are worried

  • about artificial intelligence taking people's jobs,

  • but as all of us here know, all that artificial intelligence

  • is trained based on human data.

  • And it's, in fact, a lot more like some sort of broadcasting

  • of our data than it is just brilliant engineers

  • programming computers to go and take people's jobs.

  • And so, if people were more fairly

  • compensated for their data, the digital economy

  • would be a source of economic opportunity for people,

  • rather than an economic threat.

  • Now all these ideas are quite radical.

  • All of them would require fundamental changes

  • to our social institutions.

  • And while for each of these chapters, we have concrete,

  • near-term, non-controversial steps we can make in that

  • direction, we also know that as a broad social philosophy,

  • no one would seriously consider this if we weren't in a moment

  • of social crisis that really, deeply required new

  • out-of-the-box thinking like this to avoid potentially

  • catastrophic outcomes.

  • But I truly do believe we are in a moment like that,

  • for three reasons.

  • One is growing inequality.

  • On the left here, we see a graph of the share of national income

  • accruing to the top 1% and the top 0.1% of the income

  • distribution, which has doubled since the 1970s.

  • And at the same time, we've seen a dramatic reduction

  • in the share of income accruing, not just to lower income

  • workers, but to all workers in total.

  • So the share of income being paid out to labor,

  • as opposed to capital, has fallen by 10% over this period.

  • Now you might think as, say, Ronald Reagan or Margaret

  • Thatcher would have argued, that that might

  • be worth it if that's the price of a more dynamic, more

  • competitive, more innovative economy.

  • But at the same time that we've seen this declining share going

  • to labor, we've seen an increasing power

  • of corporations to exert monopoly power.

  • That is represented by this orange line here.

  • I've taken the markup that firms charge--

  • that is how much above their marginal cost

  • they charge-- and I've flipped it around,

  • so you can see how closely it parallels

  • the decline in labor incomes.

  • So that strongly suggests that, far

  • from us getting a more competitive economy

  • by deregulating, cutting taxes, and relaxing antitrust policy,

  • we've actually seen an increasing growth of market

  • power that is actually reducing growth rates in the economy,

  • as represented in this graph here.

  • So what this shows is growth rates

  • in different wealthy countries in

  • the immediate post-war period, and then

  • various periods thereafter.

  • And the period of the last several decades

  • has had growth rates that are, in the United States

  • about half, and in many other wealthy countries

  • about a tenth, of what they were in the immediate post-war

  • period.

  • This combination of stagnation with growing inequality,

  • I think, has largely discredited existing economic ideologies,

  • as coming out of Reagan and Thatcher,

  • in the same way that the combination of stagnation

  • and inflation during the 1970s discredited

  • the previous Keynesian orthodoxy.

  • And this stagnant quality, as we label it,

  • and the discrediting of existing economic ideologies

  • has also led to rising political discontent and conflict.

  • Together with the fact that, I think, political institutions--

  • not just economic technocracy, but political technocracy--

  • is increasingly being viewed as illegitimate,

  • there's growing conflicts between minorities

  • and majorities, whether over immigration,

  • ethnoracial conflict, or over, say, things

  • like gun ownership, religious minorities.

  • And yet the way that wealthy countries have increasingly

  • resolved these issues has been through the judiciary,

  • or through supranational institutions,

  • in the case of the European Union,

  • that lack of the democratic legitimacy

  • needed for countries to come to some reasonable way

  • of resolving this.

  • So there's an increasing feeling that the economic policies

  • and the way that we resolve political disputes

  • are illegitimate, and that's leading

  • to the rise of populist leaders, whether on the right,

  • like Trump or Brexit movement, or on the left,

  • like Jeremy Corbyn in the United Kingdom.

  • Given all this, I think we increasingly

  • feel like the only path out is these sort

  • of reactionary populist movements

  • that don't really offer an answer.

  • And so we feel the responsibility

  • at this moment to try to put forward

  • an alternative, progressive path that

  • can harness the powers of market and technology,

  • but to try to make a more equal, prosperous, and politically

  • co-operative society.

  • And I hope that you'll open your minds

  • to these radical possibilities, given what we're facing.

  • And I'm looking forward to chatting with all of you

  • and with Hal about it.

  • HAL VARIAN: All right, great.

  • Very interesting talk, and let me raise a few objections

  • here and there, and see--

  • because I know that's your favorite pastime,

  • is responding to these objections.

  • You know, they say a cynic believes

  • that everything has a price, but an economist knows it's true.

  • So an interesting angle there on that division--

  • this dividing things up, but then letting people trade--

  • what do you do about ability?

  • Ability Is very tricky, because suppose you're a great singer.

  • I love to hear you sing, but it's very tiring for you.

  • You don't want to do it.

  • Can I outbid you, and say yes, I bid him.

  • He wants to have a quiet evening at home,

  • but I've got this money I'm going

  • to pay him to go out and sing.

  • GLEN WEYL: That's a great question.

  • We tackle that in the conclusion of the book.

  • For the main part of the book, we only allow for capital

  • to be allocated in this way.

  • And we think that, at least in our present society,

  • that could address much of the inequality,

  • though not all of the inequality, that we face.

  • So we calculate that with our reforms,

  • you could get down below the levels of inequality

  • in the 1970s, and significantly better than in Sweden

  • at present.

  • But obviously, there would then be a shift towards inequalities

  • that are driven more by ability, and away from those

  • driven by wealth, And those would

  • have to be addressed by future reforms.

  • And we speculate in the direction

  • that you're describing, Hal, but we don't have a proposal

  • that we're happy with actually putting forward on that.

  • HAL VARIAN: Let me suggest an article.

  • it was something I wrote.

  • It was my thesis actually which was on fair division.

  • GLEN WEYL: I know that work very well.

  • HAL VARIAN: OK, well, then you know.

  • Because there were a couple of ideas

  • there about how you might deal with this issue

  • of either redefining what would be fair

  • when there's differences in ability, or, in fact,

  • going the very radical plan of actually,

  • I could outbid you to sing and you'd do it.

  • GLEN WEYL: Yeah, so I'm actually very sympathetic to that idea,

  • but for a bunch of practical reasons

  • we talk about in the conclusion, we

  • don't think we have a proposal that actually makes sense.

  • But at the philosophical level, you'll

  • recognize your own writing in what we say about that issue.

  • HAL VARIAN: And it's also interesting,

  • because there is a practical example.

  • There were apprenticeships.

  • So what happened in America--

  • I mean before there was a United States, in fact,

  • back in the pre-revolution days--

  • you could bring an immigrant in, and the quid pro quo was they

  • worked for you for seven years, and you

  • would teach them a trade.

  • And so this was viewed as a very successful way

  • to provide education, and skills, and so on.

  • GLEN WEYL: I wouldn't say that too loudly,

  • because on the internet, when we certainly weren't advocating

  • indentured servitude, but we just

  • talked about our immigration system, which is not indentured

  • servitude, we got the most crazy reaction from social media.

  • So it's a sensitive subject.

  • HAL VARIAN: Yes, yes, I agree.

  • And it's also illegal, so--

  • GLEN WEYL: Yes.

  • HAL VARIAN: The self-assessed tax.

  • That was kind of fun.

  • I first heard this idea from Dick Zeckhauser many years ago.

  • And he claims that the Greeks used this

  • for assessing to antiquities.

  • GLEN WEYL: Yeah, we talked about it

  • in chapter one in some detail.

  • HAL VARIAN: And in fact, we did something very much like it

  • for the top-level domain names, when

  • we had this top-level domain name auction.

  • So Microsoft and Google, for example,

  • both might one .doc as a TLD, and the way it was resolved is

  • you each write down your price.

  • The high bidder gets it and pays the other bidder

  • the price that it bid.

  • So it's a kind of interesting mechanism.

  • It's not, of course, perfect.

  • Any economist could shoot some holes in it,

  • but it seemed to work pretty well in practice.

  • Data as labor.

  • Well, we do that now.

  • We pay labellers of data.

  • We have just donated 9 million images

  • to the Open Image project.

  • We paid lots of people around the world

  • to label that data with the contents.

  • We did the same thing, 4.5 million YouTube videos

  • which we had people label, and that

  • goes into the video project.

  • Consumer panels like Nielsen, that's around all the time.

  • So there is a market for getting people

  • to provide data labeling or data of one sort or another.

  • So it's not unreasonably--

  • I mean, it's a pretty big market, really.

  • GLEN WEYL: Yeah, I think that the problem is

  • that the vast majority of data we get,

  • we collect from people who aren't

  • aware of the productivity roles that it ends up playing.

  • And trying to engage those people more

  • and paying them a bit more for those people

  • who are in context, who can provide additional value.

  • And in fact, Google does a little bit

  • of that with the local hosts and so forth.

  • But I think trying to make people more broadly aware

  • of that, and trying to create a structure where they would

  • get direct compensation for improving

  • the quality of the data they provide,

  • and be aware of the payments they were getting for all

  • of their data, would in the medium-term

  • create the opportunity for people

  • to build greater human capital, really, and contribute

  • more online.

  • HAL VARIAN: Well, there is this question of what

  • the payment would look like.

  • If you take Facebook as an example--

  • because I think you've mentioned this--

  • Facebook had net earnings of $10 billion,

  • and they claim there are 2 billion users.

  • And that means $5.00 a year per user.

  • And Google has similar numbers, of course.

  • So these work out to pennies per day,

  • in terms of the compensation for information

  • that people are providing.

  • And I would argue--

  • I certainly believe for Facebook,

  • and I certainly believe for Google

  • and also Facebook, of course-- a lot of this data

  • is used to improve the product.

  • So people are benefiting from it.

  • It's benefiting as a public good, not as a private good,

  • but they get their private benefit

  • from using better products.

  • GLEN WEYL: Absolutely.

  • I think that if we had more targeted direct compensation

  • to people, we would get larger product improvements.

  • I would dispute with you a little bit

  • about some of the numbers.

  • I've done different calculations than that exactly,

  • but yes, at the moment things are relatively small,

  • I think, by any calculation.

  • But in a future where artificial intelligence really

  • does come up to take the role that investors

  • are pricing into your company and into my company, it taking.

  • I think that if we don't find a way to directly compensate

  • people for the data contributions

  • that they're making, that are fueling

  • those artificial intelligence, we're

  • going to end up with a lot of what I would call

  • fake unemployment, where people are unemployed,

  • but not because they're not contributing value,

  • just because the value that they are contributing

  • isn't being counted appropriately.

  • HAL VARIAN: If you'd look at the web raters handbook--

  • I was just looking at this a few days ago.

  • I know several people here have looked at this.

  • We pay thousands of people around the world

  • to answer questions about page quality.

  • That is the labeling, that then goes into determination

  • of the algorithms and the machine learning,

  • that helps make the system work.

  • So there is a direct market in paying people to label,

  • and we could do much more of that, for sure.

  • But the question is, should it be done through the product

  • improvement side of things, or should it be done just

  • as a line item on the budget.

  • We're paying people to rate or evaluate this

  • or label this material in a way that helps

  • us design a superior product.

  • GLEN WEYL: And I think that if more people were

  • aware of the contributions that they're making

  • and were getting compensation for it, you would--

  • I mean there are absolutely markets as you're

  • describing for those labellers.

  • They are a little bit sidelined, and the public image that is

  • portrayed is one in which you don't--

  • HAL VARIAN: I know.

  • You're very right.

  • I mean nobody knows about this, even though it's easy to check.

  • GLEN WEYL: Yeah.

  • I think putting that more center stage and making more people

  • feel like they're participating in it,

  • I think, would change the whole feeling of using the internet,

  • in a way that I think would be productive for our social

  • conversation around technology.

  • HAL VARIAN: Well, it is interesting how many people

  • write reviews for Amazon, or for Google, or for Yelp,

  • because people are volunteering this information in many cases.

  • And I think you might want to argue

  • that, well, the incremental addition to that free service

  • is worth paying for.

  • And maybe it is, maybe it isn't.

  • Depends on how much you're getting people

  • to contribute generously of their time,

  • in terms of doing these evaluations.

  • GLEN WEYL: Yeah, well, that's a--

  • HAL VARIAN: Might be.

  • It's an empirical matter.

  • All right, I'm going to ask one more question, and I apologize.

  • This is slightly technical.

  • Your chart on the inference labor share and the markup,

  • I've actually been working on that problem.

  • This is a paper by Eeckhout and De Loecker

  • that you're referring to.

  • GLEN WEYL: Yeah, yeah, exactly.

  • HAL VARIAN: And it's a little funny,

  • because remember, markup is the price over marginal cost.

  • So the markup can go up either by price going up

  • or by marginal cost going down.

  • And of course, we think cost going down,

  • gee, that's a good thing.

  • Price going up, that's a bad thing.

  • But of course by making--

  • by moving around these two things you can change the--

  • level the ratio of price to marginal cost.

  • So in fact, if you take the formula

  • in that paper for the markup, it's

  • also a formula for marginal cost.

  • Just re-arrange the algorithm.

  • And if you go out and do the calculation,

  • look at the same data-- or the same sorts of data--

  • that they look at, you see costs going way, way down.

  • You also see-- one last point--

  • you also see prices going down.

  • And the question is, what's happening

  • is the marginal cost is going down even

  • faster than the prices are going down, so the gap is going up.

  • GLEN WEYL: Marginal costs fell dramatically as well

  • during the post-war period.

  • And in fact, even more dramatically, the productivity

  • went up more quickly.

  • My view is not everything has been terrible

  • in the last few years.

  • That's not the point.

  • The point is that, if we don't have social institutions that

  • reform and restrain market power,

  • that keep up with the progress of technology,

  • we'll fail to realize the potential that we can have,

  • which requires constantly breaking up

  • the sources of rigidity that enter the economy as technology

  • advances.

  • And I think we did that more effectively

  • in the immediate post-war period along certain dimensions--

  • though not all dimensions-- than we've

  • managed to do it since then.

  • So my argument is not everything has just gotten worse.

  • Of course not.

  • We wouldn't have had economic growth if that hadn't happened.

  • But that we haven't managed to keep up

  • in the innovation of our social institutions

  • with the innovation that we've had on the technological side.

  • HAL VARIAN: So let me make one other objection to the Eeckhout

  • De Loecker work.

  • Because I don't dispute anything that you just said.

  • But if you look at that, the surprising thing from other

  • contributors is, the same thing has happened in pretty much

  • every industry-- that is, labor share has gone down--

  • and pretty much in every country.

  • So it seems very strange to say, somewhere around 1980,

  • all these different countries and all

  • these different industries became less competitive.

  • It's much more natural to say, well,

  • in the 1980s we had a technological shock that

  • lowered costs pretty much across all countries and pretty much

  • across all industries.

  • It's called the computer.

  • Micro-computer.

  • That's what we've done.

  • And we've seen this technology work its way

  • through with some leaders--

  • that is, some companies that are doing very well because they've

  • managed to reduce their costs and improve their quality

  • by using this technology.

  • We've seen other companies that haven't

  • done so well, because they haven't done this

  • to the same extent.

  • So to me, the technological hit that reduces marginal cost

  • is much more plausible than the concentration

  • hit which increases prices.

  • GLEN WEYL: And what I would say is

  • that we had those marginal costs falling before for reasons

  • that were, in fact, more powerful than the computer.

  • Air conditioning, refrigeration, lots

  • of huge technological advances.

  • Except at that time, we had policy makers

  • who were innovating, coming up with things like the welfare

  • state, and antitrust policies, and labor unions,

  • that were keeping up with technology.

  • And in the 1980s, we stopped trying

  • to keep up with the innovations in social policy

  • that were necessary to restrain market power

  • within the technology sector.

  • And that's the reason why we suddenly saw those prices not

  • track as far down with marginal costs as they should have done,

  • to maintain both maximum productivity growth and--

  • so that's--

  • HAL VARIAN: But the real debate--

  • the real question, I think is, is this just difficult

  • to learn how to use and adopt this technology?

  • When electricity came in, we saw the same thing happen.

  • When steam came in, we saw the same thing.

  • It just takes time for this to work its way

  • through the systems, so you would

  • expect some companies are going to be more productive

  • than others, because they've learned

  • to master the technology.

  • And two of those companies are represented right here,

  • Microsoft and Google.

  • All right, that's my debate, and I'm

  • sure you've got some more ready questions coming.

  • Why don't we start here.

  • AUDIENCE: All right.

  • Thank you so much for coming to speak, and thank you

  • for hosting and providing a lively discussion.

  • My name's Stephen.

  • I have one question for you on a subject that you actually

  • haven't really touched on yet, which is the quadratic voting

  • piece.

  • Simply because I think politics is sort

  • of the iceberg to all of this.

  • It's the underlying set of problems to all of this.

  • And so I'm curious, one, how does

  • that actually work, in terms of how does one define the value

  • that each person is given?

  • Is it a static equal value, or can you

  • buy more if you have more income?

  • And two, if you're willing to extend the conversation,

  • just how do you think the globalization of finance

  • has impacted this decoupling of productivity and wages

  • that has happened over the past 30 years, which has greatly

  • contributed to rising inequality and many of the problems

  • that you're discussing and thinking about today?

  • GLEN WEYL: On the first point it would be not static.

  • It would be dynamic over time.

  • People would get voice credits.

  • They would get a flow of voice credits the same way

  • that they get a flow of a social dividend.

  • But it would be equal across all people there.

  • Would be no opportunity to use outside financial resources

  • to purchase more.

  • Unless in some much more advanced society

  • when some of these other ideas have been implemented

  • we have much greater equality in which case

  • we might consider allowing people at least at some rate

  • to purchase more credits.

  • In terms of the globalization of finance, look,

  • I'm not 100% critical of what happened with neoliberalism.

  • I think that there's been a huge amount of growth

  • in the developing world, and to a large extent, that

  • is attributable to the opening up of the international system

  • to allow opportunities to many more people.

  • Unfortunately, while we opened up to other parts of the world,

  • I think our economy domestically,

  • within the United States and within other wealthy countries,

  • allowed in this greater market power and, to some extent,

  • the external markets were used as a wedge

  • to consolidate the power of capital

  • within national boundaries.

  • And so I think we need to rectify that,

  • because otherwise we're going to get a populist backlash that

  • reacts to the fact that things got better abroad

  • and they didn't get so much better here,

  • and that feels like something that

  • can be cured by xenophobia.

  • Which it can't, really, but you see how people get that logic.

  • So we need to find a better way to unite

  • the interests of people within the country

  • and around the world.

  • AUDIENCE: What do you think we can learn

  • from the political failures of the followers of Henry George

  • and so on, insofar as the land value tax,

  • the optimal policy they were proposing at the time,

  • largely ran aground in the Lloyd George budget in UK?

  • The House of Lords largely said, this endangers our interests.

  • Here in California, something like Prop 13,

  • which is largely the exact opposite of an allocatively

  • efficient policy, is impossible to get rid of, seemingly.

  • What do you think we can learn from these failures

  • for creating better policy in the future?

  • GLEN WEYL: I think a major problem for Georgism,

  • fundamentally, was the failure of the Chinese Revolution,

  • because it ended up meaning that--

  • Sun Yat-sen, who was founder of the Chinese Revolution,

  • basically had the same relationship to George

  • that Lenin had to Marx.

  • And the problem was that Lenin was much more ruthless.

  • He managed to-- the Bolshevik Revolution managed

  • to survive and communism spread, and that

  • became the leading alternative to capitalism.

  • And so we got stuck in a discourse

  • where everything was about capitalism versus communism.

  • And so I think, ultimately, if you

  • can have a comprehensive ideology that

  • helps people rethink things, like Milton Friedman did--

  • he really changed the whole discourse--

  • I think that we can have a path where people

  • understand and believe in that.

  • And I think he came close in England.

  • I think you change a few things and Georgism

  • would have been very successful in England.

  • But I think that the communist revolution was

  • a big part of what stopped it.

  • AUDIENCE: Hi.

  • Thanks for the talk.

  • Really interesting point about the concentration

  • of assets in a few very large asset managers, money managers.

  • My question is, where does the political will

  • come from to sort of go after these guys?

  • They control a lot--

  • and I guess this is more broad, too--

  • they probably have captured the Congress, they're lobbying.

  • They're incredibly strong versus the very diffuse sense

  • among the populace that, oh, it's probably

  • bad to have four companies controlling the majority

  • of stock in the United States.

  • GLEN WEYL: First of all, the most powerful basis

  • of the protection of capital rents is free market rhetoric.

  • It's not just, or even mainly, things

  • done in the dark back rooms.

  • Free market rhetoric is something

  • that so many people in this country believe in,

  • and if we can deny to the capitalist monopolists

  • the use of free market rhetoric, by saying

  • that true free markets require radical reforms,

  • radical egalitarian reforms, I think

  • we can change the political dynamic around these things

  • significantly.

  • But second of all, you know, it comes from young people.

  • It comes from students.

  • That's where-- that's how Milton Friedman changed things

  • in the direction that they went in the 1980s.

  • "Capitalism and Freedom" sold terribly among academics,

  • initially, and it was very unpopular in the press,

  • but students loved it.

  • And he had a coherent view, and it applied to many things,

  • and he really changed the whole political discourse

  • in the country.

  • So I do believe that in the medium-term,

  • ideas clearly exposited that try to directly connect

  • to the public can have a huge effect on world history.

  • AUDIENCE: I'm a newbie to economics and politics.

  • Recently, I watched Ray Dalio's "How the Economy Works in 30

  • Minutes."

  • He talks about borrowing and lending,

  • and he says because of that, we have credit.

  • And it's human nature that we tend

  • to borrow from the future, which leads to some economic crises,

  • because of cycles.

  • So I'm just wondering, in your ideal market,

  • will there be economic crises?

  • And if there are, will there be differences in how

  • we address economic crises?

  • GLEN WEYL: I think that that's a great question.

  • I can't say that I confidently predict that there wouldn't

  • be crises in the world that I'm describing,

  • but I think that they would probably be less severe.

  • And the reason is precisely what you just

  • said, which is that debt, and the rigidities associated

  • with private property as well, are a leading cause of what

  • happens during economic crises.

  • And In this world, there would be far, far less debt,

  • because it would be much less important to take

  • on debt to own assets, because the value of all assets

  • would be greatly reduced.

  • People would be effectively closer to renting assets,

  • and therefore many of the sources of instability

  • that come from debt finance would be much less severe.

  • AUDIENCE: Hey.

  • My question is, it seems to me like perhaps some products are

  • not naturally amenable to constant liquid exchange.

  • Like housing, for example.

  • I might want to live in a particular place for decades

  • at a time.

  • And if I'm outbid on it, and I don't want to leave,

  • then getting me to do so requires violence.

  • Or, for example, physical infrastructure, like trains.

  • It seems like there would be an enormous cost

  • if the administration of this infrastructure

  • were constantly changing hands.

  • So, I mean--

  • I think that that gives you enough to reply to.

  • GLEN WEYL: Obviously, you could maintain stability

  • in this world by charging a higher price,

  • so that it's harder for someone to take something from you.

  • Now in our present world, as well, stability is costly.

  • Wealthy people, they live in safe areas that aren't

  • hit by natural disasters.

  • They own their houses outright.

  • They usually don't rent, et cetera, et cetera.

  • So they enjoy much greater stability.

  • The poor, they rent or they are underwater often

  • with their homes, either figuratively or literally

  • sometimes, living in very dangerous areas.

  • And so in this society, just like in our present society,

  • stability is costly.

  • But the difference in this society

  • is that everyone would have an equal, or a far

  • closer to equal, basis to pay for that stability,

  • as they desired it, than in our present society,

  • because you would tax the wealthy's demand for stability

  • at the cost of the opportunity of the less well off.

  • Whereas in our present society, they

  • can enjoy that stability at no cost to themselves,

  • or a much more limited cost to themselves.

  • AUDIENCE: Hi, it's me again.

  • I have lots of questions.

  • So with regard to both the self-assessed tax

  • and the quadratic voting, I'm sure the answers would

  • be slightly different, but the question and problem

  • that I'm posing, I think, aren't quite the same.

  • Which is, how would you limit collusion and sort

  • of gaming of such a system, in which individuals could,

  • on the self-assess tax side, more or less set a price that

  • is above market, that others could buy,

  • but low enough to maintain a lower tax?

  • And then on the political side--

  • this happens in our elections already,

  • people running spoiler candidates in primaries,

  • or having some sort of spoiler referendum

  • to try and split a vote.

  • How would you imagine that could be protected against,

  • particularly when, if I were to put my energy in one issue,

  • I would necessarily be putting less energy

  • and voice into another?

  • GLEN WEYL: It's more than I have time for,

  • to go into detail about each one of the points,

  • in terms of collusion and so forth.

  • But that's an absolutely central thing to the book.

  • I definitely encourage you to read the book.

  • But the short version is, all those sorts of problems

  • exist in our present system.

  • They are dramatically reduced, if not eliminated,

  • in the system that I'm describing.

  • I'll just give you one example.

  • Right now, there's the problem, when

  • you have an election, of a spoiler candidate running

  • and possibly messing up the main two candidates.

  • But maybe even worse, there's the fact

  • that you can end up with two candidates

  • that everyone despises, but everyone votes for one

  • candidate to block the other candidate.

  • That's, I think, an even worse problem than the spoiler.

  • In this system, you can show that that's not mathematically

  • possible, because what happens is

  • that, because of the quadratic nature of the cost,

  • if you really hate Hillary Clinton,

  • you'll vote at least as much against Hillary as you'll

  • vote in favor of Trump, and vice versa.

  • And so that pushes two candidates

  • that everyone hates down to zero votes.

  • And so then that leads other candidates to rise up,

  • so you don't end up with these perverse strategic things,

  • where the two leading candidates get

  • reinforced just to beat the other one.

  • AUDIENCE: I'm sorry, could you repeat that?

  • I don't--

  • GLEN WEYL: So if you have two candidates, both of whom

  • are really hated by the other side,

  • but no one really likes them, then what happens

  • is that those candidates get negative votes on them.

  • So they go down to zero net votes.

  • And so anyone else who is not despised

  • ends up becoming a leading candidate.

  • And so you can prove that that will lead to it never

  • being the case that you just get a perverse thing of two

  • people that are really disliked winning just

  • to beat the other one.

  • Yeah, back there.

  • You were waiting.

  • AUDIENCE: How do you think blockchain technology relates

  • to the ideas in your book or the research you've done?

  • GLEN WEYL: That's a wonderful question.

  • Vitalik Buterin, who is the founder of Ethereum,

  • just wrote a wonderful long post about that, which I would

  • definitely recommend to you.

  • And he and I are writing something together

  • that should come out this week about the relationship.

  • But very briefly, what I would say

  • is, the exact technological relationship is complex

  • and it will evolve.

  • But philosophically, I think they're very closely connected.

  • In particular, both are trying to figure out

  • monetary, market based, distributed,

  • decentralized systems for ensuring through rules

  • of the game, rather than through discretionary authority,

  • that we have a more egalitarian distribution of economic power.

  • I think a major weakness in blockchain

  • thus far has been that it's focused primarily

  • on the cryptographic protocols, rather

  • than on the substantive rules implemented

  • by those cryptographic protocols, and as a result,

  • some of the rules have ended up giving power,

  • in fact, to oligarchic groups, say, in China,

  • that end up controlling them.

  • So they don't really achieve the goals that they're aiming at.

  • What they need is a substantive set of rules,

  • to be implemented by those cryptographic protocols,

  • so that they actually instantiate their goals.

  • And that's precisely what Buterin

  • tries to argue in this piece, and that we're

  • arguing together.

  • So I think that there's a tight unity of purpose between these,

  • though the actual technological connection is something that's

  • going to need to develop in the coming years, or months even.

  • I'm actually speaking at the main Ethereum conference

  • on Saturday about exactly this.

  • Go ahead.

  • AUDIENCE: Just going back to the previous question.

  • To be honest, I think trying to apply

  • any rigorous mathematical proof to the political system,

  • especially the American political system,

  • is doomed to failure.

  • But I think one question I would have,

  • in terms of implementation, you mentioned

  • that this quadratic voting system seems extremely radical.

  • What are the sort of baby steps that you mentioned,

  • in terms of actually trying to implement this,

  • especially in the US?

  • GLEN WEYL: Absolutely.

  • We don't have the computer going,

  • but I can show you afterwards.

  • We have a nice user interface, that

  • even for people who haven't completed high school,

  • makes it very intuitive to do quadratic voting.

  • And we've been using that to do polling,

  • and we've gotten some very interesting results, where

  • we were able to elicit intensity of preference

  • much more reliably than you can get from existing methods.

  • That's a good place to start.

  • But the next place that we really want to go

  • is ratings, say, of ride-sharing drivers or products online,

  • where you have this problem of people often going

  • to extremes and a lot of sort of trolling-type behavior.

  • And if you made something costly,

  • and made there be real tradeoffs for people that would budget

  • to upvote or downvote things, I think

  • you could get much more reliable and useful feedback

  • In a variety of circumstances.

  • AUDIENCE: But in terms of actually putting into place

  • in American elections--

  • GLEN WEYL: My view is that once you start using it

  • in some of these commercial domains,

  • you gradually expand them outwards.

  • As people get more used to it in different domains,

  • there will be a greater willingness

  • to experiment in other domains.

  • Blockchain is another place where

  • I think that it's quite likely that this will be used

  • in some reasonably near term.

  • And I think people will get used to the technology-- it's

  • sort of like, e-government happened to a large extent

  • because of all the advances that were made

  • in the private sector, and then those were imported

  • into the public sector.

  • So I expect something similar would happen with this.

  • HAL VARIAN: We'll take one more question.

  • You had the mic?

  • Go ahead.

  • AUDIENCE: Thank you for sharing your ideas again.

  • I look forward to reading the book.

  • You said that the primary urgency of what you propose

  • is because there is an impending doom,

  • almost, if we don't do something about the current status quo.

  • But do you see this Marketopia being implemented

  • without massive upheaval?

  • Because I think what you're trying to suggest

  • is that we need to save our society, almost.

  • But from the way I see it, it seems like we almost

  • need to almost throw away society in order

  • to implement this without the oligarchs,

  • without the current special interests,

  • basically taking control of this or skewing in a way that,

  • basically, either ruins it or prevents it from ever seeing

  • the light of day.

  • GLEN WEYL: I believe that revolutions

  • are not always, but almost always,

  • more destructive than they are productive.

  • And on the other hand, I do believe

  • in the power of democracy and ideas,

  • if widely disseminated, thoughtfully engaged

  • with, and widely understood.

  • I think public understanding is the greatest accountability

  • against special interest capture.

  • So I put my faith in that, ultimately,

  • and I hope that young people, including

  • some people in this room, will build

  • on the transmission of different aspects of these ideas,

  • so that we can keep the broad public engaged

  • and keep the political process accountable to that.

  • I think you saw with what happened in the last year

  • or two, how much desire there is for change,

  • and if that's channeled in a direction that's

  • productive rather than destructive,

  • I think that we have an opportunity

  • to build a much better society, like Franklin Delano Roosevelt,

  • I believe, did, rather than just having

  • upheaval, a violent upheaval.

  • HAL VARIAN: OK, thank you very much, Glen.

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