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[[Category:Joe Miller]]
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{{DES | des = "The right to vote is a property right which is owned by the wrong people because it is non- transferable."  Ah yes, only the quality people who can afford to buy a franchise should vote, to improve the value of the US just like a corporation. | show=}}
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1 Summary
Untitled Proposal
Joe Miller josephmiller@protonmail.ch
December 1, 2015
The right to vote is a property right which is owned by the wrong people because it is non- transferable. If the right to vote were a more conventional asset, a Coasian Bargain would take place allowing the value of the United States and the property that it controls to rise, which will be reflected in the asset price of a fraction of ownership of the United States. The benefit of this change in governance is awarded to current United States citizens in a way that could get widespread popular support.
2 The Problems with Democratic Voting
Under the status-quo, voting rights are not tied to the benefits of being a citizen of a government; there is no personal benefit to voting for any public good (the value to you of voting correctly is low) and there is an opportunity cost in doing so (selfish votes might see higher expected benefit). This is exacerbated by the civic duty conception of voting and the fact that votes are distributed uniformly, giving equal voice to the informed and uninformed. In fact, the electoral process implies that the larger the pool of voters, the worse the incentives will be1 All of this makes for a perverse decision- making process: informing oneself about policy which is likely to increase societal welfare provides public benefit at a large personal cost, while the biases of the uninformed overwhelmingly drown out the voice of the informed, discouraging many from becoming more informed. Furthermore, blocs
1Elections are zero-sum: there is no difference between the outcome of a 10-90 election split and a 100-900 split. They are also binary: the chance of any person actually influencing the outcome depends on the chance of their vote breaking a tie. These facts together imply that reducing the number of voters is unambiguously good (new voters impose a negative externality).
For clarity, consider the following thought experiment: Eligibility to vote in each election has a further condition: depending on the outcome of a 10-sided die roll, only people with the correct ending digit of their social security numbers may vote. Under standard economic assumptions, this would dramatically improve the quality of the candidates elected, because as one of a tenth as many voters, the expected benefit to you of voting correctly has increased dramatically. Suddenly, a few people who would normally pull the lever for the candidate who voices support for the Make Everything Affordable Through Price Controls Act find it worthwhile to second-guess themselves and research the policy. Reducing the number of voters, even if not biasing towards any particular type of voter (thus, leaving the goals of the policies unchanged), leads to more informed voters (which the rationality assumption, and democratic political philosophy, allows us to conclude is ”good”). Conversely, increasing the number of participants past a point, in a zero-sum binary decision making process is unambiguously bad, on average.
For completeness, it can be argued that reducing the number of voters passed a point can be bad because of the variability of small sample sizes. This is true, but can be resolved by recasting the vote if the results are close, granting a higher effective sample size so the variability is more tolerable. Nevertheless, none of this is an issue when the fewer-voters effect is achieved through the proposed policy.
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of uninformed voters, facing miniscule opportunity cost in doing so, sell their votes on a secondary market for advertising and political spoils at far below their hypothetical market value.
3 Why this will Improve Voter Quality
Voting shares, as a tradeable asset, would have a market price tied to the value of the benefits granted by the share. Thus, under the proposed framework, any shareholder whose goal is to maximize the present value of a voting share in the government will have appropriate incentive to inform themselves about policy because any societal benefit will be capitalized into the price of their shares, rather than providing a dispersed benefit to third parties. Any voters attempting to award themselves privileged legislation (such that the benefit to them is less than the expected decline in the total capitalization of the shares) will face natural pushback and opposition by investors– the special-interest voters will be bought out, punishing corruption2. Further, the pool of voters will change, also improving voting quality. Voters who would normally (and rationally) sell their vote for campaign promises, entertaining advertisements, or emotional satisfaction will no longer do so. By allowing votes to be sold for cash, the usefulness and value of a vote will have risen considerably, and these voters can forfeit their voting rights to a politically savvy investor for a lump sum. People who want to invest in a voting share but who do not want to risk reducing the future value of their shares will not exercise their right to vote, in the same way that most owners of company stocks do not vote in shareholder elections. The same shareholders may also almost costlessly and automatically vote to mirror a large stakeholders votes (such as a policy think-tank) if they suspect legislative favoritism.
Lastly, prediction markets, the best known method of forecasting future events, can be anchored to the share price. Participants that bet on the price of a share conditional on a policy decision can be used to inform the majority shareholders on how to vote. By reducing the cost of voting for policies that increase expected share price to near-zero, any policy that benefits some more than it harms the share price of others, will be avoided at minimal personal cost.
At this point it should be clear that we can expect an increase in the quality of the voting public by redirecting the benefit of informed voting to the voters themselves, and by lowering the cost of informed voting by creating a reliable metric, share price, on which to measure policy outcomes. It may not yet be clear that high quality self-interested voters produce high quality general-interest laws. In the following, I’ll show how the incentives of the shareholders broadly align with the at- large benefits of the residents of the country. Although I dont have to convince nonvoters, it is important to argue that the quality of life of the resident nonvoters of the United States will be improved if the society is to remain stable. It is also reasonable to expect that residents will be the most well informed policy-makers and will at equilibrium own an outsized proportion of the voting shares. Given that shareholders will be indirectly deciding the laws of the country, they will inherit the massive revenue streams and transfer programs from taxpayers to beneficiaries. As wealth-seeking investors, these transfers will inevitably be redirected in the form of dividend payments to shareholders. Because rights to these payments are attached to a financial asset with a price, policies will be chosen on the basis of their effect on the net present value of the share. This is socially important, because it guarantees that current shareholders do not benefit on net from a policy that damages national income or jeopardizes future income, unlike current politicians who lose no support by shifting the costs of their policies to future residents and others without representation.
Like in any business, shareholders will prefer policies that maximize the summed benefit between
2On the flipside, any laws that benefit a bloc of voters more than they hurt the market capitalization of the rest of the shares (thus, adding value) will be accompanied by payoffs to the rest of the shareholders as higher dividend payments. This is a standard result and implies that public ownership of a corporation is incentive-compatible.
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the shareholders and the customers. The benefit to the customers will be vastly greater than it currently is (although not theoretically ideal).
The degree to which monopolistic profit-maximizing (inefficient) taxation by shareholders is possible is yet another carrot to entice current voters to favor this policy. Nevertheless, residents of the United States still have much to gain, so the plan is a significant pareto-improvement. To see that massive net gains can be attained, first consider the regulatory bodies that try to engage in consumer protection. The actions of the regulatory agencies are largely explained by rent-seeking behavior of the firms that they regulate. As examples, consider the enormously costly licensing laws that almost all professional organizations lobby for to reduce competition. No regulatory body or legislator has the knowledge, nor the incentive to know whether the concentrated benefit of the policies outweighs the dispersed cost. Shareholders, on the other hand, are paid to figure it out.
For the same reason that Walmart shareholders are inoculated against lobbying by Dell to en- courage Walmart to impose minimum computing standards on the computers they sell, shareholders of a government will not be bought out by firms that would individually benefit from reduced com- petition, unless the reduced competition would increase the total value provided by the bundle of services (such as by reducing consumer anxiety, if applicable).
Note also that it wont only be economic productivity that is increased. Social policies, to the extent that they raise or lower quality of life, will also be chosen and fine-tuned, down to the local level if beneficial, by shareholders. To see why, recognize that government income is also increased when customers, through immigration and population growth, bid up prices of property and land, which can be rented out (taxed) or sold outright for a lump-sum. The value of the property and the revenue it generates is dependent upon the quality of life of its residents. For a concrete example, note that Walt Disney World, a private resort city, provides its customers with its own security force, enforces its own laws, has its own infrastructure including garbage and sewage management systems and transportation, grows much of its own produce, and even has a sustainable tree farm in order to supply mature trees for expansions to the park or as replacements. Its security force and policies are balanced in their enforcement, very much unlike public policing, in order to attract and protect customers.
4 Analysis and Predictions
Although it is difficult to predict specific policy with any confidence, some general features can be regarded as likely. For example, taxes on labor and investment income likely result in reduced economic growth because they discourage investment and work, which reduces future income and the ability to generate correspondingly larger tax revenue. This prediction is partially supported by the observation that apartments rent out at flat rates that are not variable with income. Additionally, income taxes become difficult to verify without spending large amounts of money on enforcement, and impossible to impose on certain forms of commerce. Productivity, and thus, revenue, is typically maximized when inelastic goods are taxed.
Another possibility is that large swathes of land will be sold outright or managed by a government subsidiary. If, for example, New Hampshire is found to be ungovernable, savvy shareholders will not send in the armed forces to conquer them. Instead, they will allow them, or an entity that represents them, to buy their freedom outright. With the sale of their voting shares, or the transferal to a managing subsidiary, the cost to them will be minimal or negative. If their governance and quality of life is enhanced through allowing a few large entities to internalize public goods that the New Hampshirites produce, the appropriate restructuring will take place.
It is possible that delegation of governing duties to very local levels will result in an efficient enough outcome that the identity of the organization imposing the property taxes does not matter to the residents of the United States. It is unclear to me whether, in such a case, the shareholders
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will simply trade their shares for the complete ownership of their property. It may be the case that people paying a higher property tax will recognize that they receive less from the dividends of their shares than they pay in taxes. In such a case, if there is no public good being provided by the entity that owns the property, the value to the resident of owning the property will be higher than the value of the share. By selling the share and paying the difference out of pocket, the resident will buy the property.
It is also not clear to me what the ultimate level of taxation will be, nor who the ultimate owners of the shares will be. If the shareholders are foreign and own the entire country, they will charge profit-maximizing rates for land-ownership in the worst case (considering that they will tempt a tax-protest or reduce rates of growth if rates are too high). If land ownership by government is already splintered, competition between competing owners will drive tax rates down.
In either case, total wealth and quality of life of the residents will be vastly higher. If you are worried about the former worst case scenario, retain your voting share and sell it to the monopolist to extract your economic rent. Other people will do the same, and any would-be monopolist owner of the shares will have to buy out every single resident-shareholder for the privilege. If he does achieve this, or he can otherwise convince all resident-shareholders to move abroad to monopolize the land, he will only be able to do so at a price above which the net benefit of living in the US, relative to the alternatives is zero. This guarantees that under the worst-case scenario, the US will be, at worst, tied as the best country in the world for renters and residents. If other countries adopt similar policies and become competitive with the US, the cartel breaks and the monopolist will have to compete on price.
It appears that under all likely scenarios, this form of government will still be better than the current one.
5 Feasibility
Democracy is an unfortunate fact of nature. Advocating for policies that you think would im- prove societal welfare if they could only be enacted (tax reform, basic income, raising the voting age, campaign spending limits, Constitutional Convention) is uninteresting and ignorant of the problems of government. Investing time teaching people to become libertarian/conservative/progressive in order to lower their cost of researching the right policies is better, but also misses the point. If you truly think that governments can be run much better, tell people that youre willing to pay anyone who disagrees:
Our government should otherwise retain its current structure, but in the interest of expanding opportunity, allow citizens to own their voting rights, like they own the rest of their property.
To the many who aren’t politically savvy and know it, they will suddenly be able to forfeit their shareholding rights (a right that is worth almost nothing to them now) in a Coasian bargain and enjoy a wealth transfer that would otherwise not have occurred. Their only loss would be their ability to vote in future elections, a right that is bought and sold for cents on the dollar (my estimates put it at about 1 cent spent in competition for $8 of government revenue3), unless they repurchase voting shares. Their gain will be in the expanded opportunity available to them as customers of a government, and an appreciation in value of all of their capital that they do retain. If they are unwilling to sell their shares, they can simply retain their voting shares for the passive income they provide or to speculate on price appreciation. People who want to exercise their political beliefs can retain their rights and benefit from the improved quality of voters through appreciation
3The FEC reports about $7 billion was spent by all candidates at all levels of government in the 2012 campaigns in order to control about the $6 trillion of yearly government revenue.
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of their shares, and can buy more shares to amplify their voice. They can also participate in prediction markets through betting on conditional outcomes of policy and world events, anchored to the share price as a metric of success. Share price has the advantage of being less subject to political chicanery, a problem that Robin Hanson’s fascinating idea of Futarchy4 must come to terms with. Lastly, there is a rhetorical advantage to the proposal. Namely, if a detractor thinks this policy would be disadvantageous, he must think that property titles in voting are currently nearly optimally assigned. If so, he has nothing to worry about. Objections to this argument can be made, but they will appear to be (or are) special pleading.
6 Coase Theorem
Coase Theorem states that if transactions costs are small, the initial distribution of property titles doesn’t matter–the claims of ownership will be bought and sold, with titles ultimately held by the agent with the most valued use of the property. Thus, if person A’s business (valued at $1,000) and car ($50) were given to persons B and C respectively, a few trades would result in the ownership titles being sold back to person A with the approximate net effect only of A being $1050 poorer and B and C being $1,000 and $50 richer. The initial distribution of property titles dont matter in the sense that the gains to B and C exactly offset the loss to A.
The minor caveat: assuming A values the property $x more than B does, if the frictional transaction costs exceed $x, the trade will not take place. This is why the ”low transaction costs” assumption is important. Proceeding with the analogy to friction, if transaction costs are small, the ultimate arrangement of property titles is path-independent. Note that the value of the economic loss as a result of the reshuffling of titles to property is at most the total cost of transacting (e.g. legal costs, costs of negotiation, and others). If the economic loss (in lost productivity) were higher than the total cost of transacting, more trades could be made. If property titles are assigned arbitrarily and prevented from being traded (infinite transaction cost), the economic losses can be substantial.
 4Robin Hansons idea Futarchy proposes a prediction-market legislature, where democratic voting is used to decide upon the goals of policy (such as Is having a safety net for the bottom 20% more important than achieving ¿5% GDP growth?) and using prediction markets to predict which collection of policies would achieve the goal. The problem with this idea are twofold: first, it is not compatible with the current decision-making process of the US government–it cannot practically be implemented without widespread support, which is not likely to be attainable in a democracy. Second, it doesnt prevent gamesmanship of the governments metric of performance: if Joseph Stalin ran the USSR as a futarchy, the rational bet on policy is that which Joseph Stalin prefers because the government decides upon which metric to use to measure performance (their own).
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