Politics

Commons and Transaction Costs

Posted by Peter on December 23, 2008
Posted in: Economics, Freedom.

Mike Linksvayer describes a good perspective on why it’s important to have most information in a commons rather than restricted by copyright.
Most economists have a strong bias toward assuming transaction costs are unimportant. Coase has fought this. It sure looks to me like the Coase Theorem ought to be understood as demonstrating that one of the most important tasks for economists is to improve our understanding of how to reduce transaction costs. Economists have invested too much in models which depend on transaction costs being insignificant to easily be persuaded to adopt such a different focus.

Lessig’s book The Future of Ideas: The Fate of the Commons in a Connected World describes why having some commons can be as valuable as having some resources protected by secure property rights, and why it matters for science and technology. But his argument style is designed for ordinary political debates, and doesn’t provide the breadth or power that a good economist would produce when attempting to reform economics.

I have little idea whether Creative Commons will put additional money to good use, but the value of its goals should not be overlooked.

Chinese Stock Risks

Posted by Peter on December 11, 2008
Posted in: China, Investing.

There are lots of small Chinese companies trading on U.S. stock exchanges that look at first glance to be ridiculously underpriced. One reason for the low prices are that it’s harder than you might expect to enforce U.S. law on Chinese companies that have few or no assets in the U.S.

The most blatant example I’ve seen is Eternal Technologies Group Inc, which has ignored a judgment in a lawsuit that seems minor compared to the cash the company reports having, with the result that a receiver has been appointed who is likely to collect some money in ways that badly hurt stockholders who bought before the lawsuit.
Another hint at how little the company cares about stockholders (at least those in the U.S.) is the careless way their press releases are written: “5. Radification of the elecrion of the auditors” (they managed to spell election correctly on the prior line, so it’s not simple ignorance).

I’ve noticed problems with other U.S. traded Chinese companies that leave me uncertain which of them can be trusted. I’ve been trading stocks listed on the Hong Kong Stock Exchange a fair amount, and haven’t noticed any similar problems there. I presume the stronger cultural and/or legal ties are more effective than anything that can be accomplished by U.S. law.

Intrade versus FiveThirtyEight

Posted by Peter on November 6, 2008
Posted in: Idea Futures, U.S. Politics. Tagged: , .

A number of people have compared the final forecasts for the election (e.g. this), but I’m more interested in longer term forecasting, so I’m comparing the state-by-state predictions of Intrade and FiveThirtyEight on the dates for which I saved FiveThirtyEight data a month or more before the election.

Here is a table of states where Intrade disagreed with FiveThirtyEight on one of the first four dates for which I saved FiveThirtyEight data or where they were both wrong on July 24. The numbers are probability of a Democrat winning the state’s electoral votes, with the Intrade forecast first and the FiveThirtyEight forecast second.

State 2008-07-24 2008-08-22 2008-09-14 2008-10-01
CO 71/68 60/53 54.5/46 67.5/84
FL 42/29 34.5/28 30/14 55.2/70
IN 38/26 34.1/15 20/11 38/51
MO 50/26 32.9/13 22.1/11 42.5/48
NC 30/22 25/21 14/7 51/50
NV 51.2/49 49/45 44.9/32 55/66
OH 65/53 50/38 40/29 53.5/68
VA 60.5/50 52.3/36 42/22 59/79

On July 24, both sites predicted Florida, Indiana, and North Carolina wrong. FiveThirtyEight got Indiana right on Oct 1 when Intrade was still wrong, but Intrade got North Carolina right on that date (just barely) while FiveThirtyEight rated it a toss-up.
Intrade got Nevada right on July 24 (just barely) while FiveThirtyEight got it wrong (just barely).
For Virginia, Intrade was right in July and August while FiveThirtyEight was undecided and then wrong.
FiveThirtyEight got Colorado wrong on September 14, but Intrade didn’t.
FiveThirtyEight got Ohio wrong on August 22, while Intrade got it right.
Intrade rated Missouri a toss-up on July 24, while FiveThirtyEight got it right.

On September 14, FiveThirtyEight was fooled by McCain’s post convention bounce by a larger margin than Intrade, but by Oct 1 FiveThirtyEight was more confident about correcting those errors.
For states that were not closely contested, there were numerous examples where Intrade prices where closer to 50 than FiveThirtyEight. It’s likely that this represents long-shot bias on Intrade.

In sum, Intrade made slightly better forecasts for the closely contested states through at least mid September, but after that FiveThirtyEight was at least as good and more decisive. Except for Intrade’s Missouri forecast on July 24, the errors seem largely due to underestimating the effects of economic problems – errors which were also widespread in most forecasts for other things affected by the recession.

In the senate races, I didn’t save FiveThirtyEight forecasts from before November 1. It looks like both Intrade and FiveThirtyEight made similar errors on the Alaska and Minnesota races.
[Update on 2009-01-13: contrary to initial reports, they apparently got the Alaska and Minnesota races right, although there’s still some doubt about Minnesota.]

On the other hand, Intrade had been fairly consistently (but not confidently) saying since early July that California’s Proposition 8 (banning same-sex marriage) would be defeated. Pollsters as a group did a somewhat better job there by issuing conflicting reports.

None of the above for president

Posted by Peter on October 21, 2008
Posted in: U.S. Politics.

I had been half-heartedly planning the past few months to vote for Libertarian presidential candidate Bob Barr. I had previously considered voting for Obama when it looked like he would make an important difference in the Iraq war, but it now looks like the Iraqi government will persuade the U.S. to leave soon enough for that difference not to matter. If I lived in a swing state and the election was close, I might persuade myself that Obama’s personality and intelligence make him more qualified, but my track record for evaluating politicians that way is sufficiently unimpressive that I ought to be uncertain whether I’ve been fooled by his eloquence.
Voting Libertarian is normally the best way to encourage whoever wins to adopt a better policy, but this time it’s unclear whether that would send the message “I want more unprincipled opportunists”. Barr’s past support for the war on some drugs and his current mixed opinions on that subject are damaging the Libertarian party’s reputation.
The final straw that has convinced me not to vote for him is in this New Yorker piece:

For Barr, the terrorist attacks of September 11, 2001, and the subsequent expansion of executive power under President Bush, were a political turning point. “I went through Reagan National after 9/11, and saw guardsmen with automatic weapons,” he told me. “It dawned on me that we’ve entered a whole new world. It may have made other passengers feel more secure, but it made me feel dramatically less free.”

An NRA director saying the presence of armed men is a threat to freedom? There’s no shortage of dishonest pretenses of security that directly interfere with the average passenger. I haven’t heard any indication that armed guardsmen in airports do anything to innocent people. I saw more armed soldiers in the Zurich airport in the late 1980s than I saw in U.S. airports, and I’m fairly sure they didn’t erode Swiss freedom.
This is sufficiently bizarre as to suggest he can’t keep track of which ideology he believes today.
Not to mention this older report where he seems to specifically say Reagan National should have armed guardsmen.

Seasteading08

Posted by Peter on October 14, 2008
Posted in: Freedom. Tagged: , .

The first Seasteading conference went rather well. It got a good turnout of intelligent people, in spite of being on a weekday (they didn’t plan far enough ahead to find a good weekend spot).
I was somewhat disappointed by the time spent on the basic motivations behind seasteading (do people come to this kind of conference without understanding the motivations?), and I wanted to focus more on a serious analysis of how close the business plans are to being a good investment.
One interesting idea that was briefly mentioned is unmanned farms, herded by small robotic boats. If you’re willing to lose farms to an occasional storm, that drastically cuts costs. But when I imagine the cheapest possible farms, it seems the plants would get significant salt spray, which drastically limits the types of crops which will thrive.
The most interesting subject was Ephemerisle. Before the conference I had been wondering whether it would be interesting enough that I would want to attend. The conference convinced me that it will attract the kind of people I like, and that there will be some interesting technical challenges. Since my very rusty knowledge of sailing seems to leave me better informed than most seasteaders about some of those challenges, I will want to provide some help with the planning. It’s still too poorly thought out for me to feel confident that it will be done safely, but it can probably be planned well enough to be safe under most conditions (and hopefully people will be prepared to cancel it if unusual winds make it look unsafe).
The location seems very uncertain, and will have some important impacts on the risks. During the conference, the tentative plan seemed to be a few miles of the southern California coast, but afterward I got some indications that the plan had changed to the San Francisco bay, which would be a good deal easier but which would do less to promote any long-term vision.

Intrade Notes

Posted by Peter on September 7, 2008
Posted in: Idea Futures, U.S. Politics. Tagged: , , .

To deter any suspicion that the comparisons I plan to make between Intrade’s predictions and polls are comparisons I selected to make Intrade look good, I’m announcing now that I intend to use FiveThirtyEight.com as the primary poll aggregator. I intend to pay attention to predictions that are more long-term than I focused in 2004, so the comparison I’ll attach the most importance to will be based on the first snapshot I took of FiveThirtyEight.com’s state by state projections, which was on July 24.

Also, as of last week, one of the Presidential Decision Markets that I’m subsidizing, DEM.PRES-OIL.FUTURES, has attracted enough trading (I suspect from one large trader) to make me reasonably confident that it’s showing the effects of trader opinion rather than the effects of my automated market maker (saying that oil futures will drop if the Democratic candidate wins, and rise if he loses).

Let Their People Come

Posted by Peter on August 21, 2008
Posted in: Book Reviews, Economics, Freedom. Tagged: , .

Book Review: Let Their People Come: Breaking the Gridlock on Global Labor Mobility by Lant Pritchett.
This book is primarily written for economists and academics in related fields, but most of it can be understood by an average person.
I was a little hesitant to read this book because I suspected it would do little more than reinforce my existing beliefs. There were certainly parts of the book that I would have been better off skipping for that reason.
But one important effect of the book was to convince me that the effects on the poor of migration to wealthier countries is so large compared to things like “foreign aid” and free trade that anyone trying to help the poor by influencing government policies shouldn’t spend any time thinking about how to improve “foreign aid” or trade barriers.
I’ve long been wondering how to respond to remarks such as Jimmy Carter’s ‘We are the stingiest nation of all’ based the U.S.’s low “foreign aid” to GDP ratio. Pointing out that “foreign aid” is mostly wasted or even harmful requires too much analysis of lots of not-too-strong evidence. Pritchett shows that the wealth affects of allowing the poor to work in rich countries should dominate any measure of how those rich countries treat the poor. By that measure, adjusting for country size, the U.S. ranks better than countries in the EU, but is embarrassingly callous compared to the United Arab Emirates, Kuwait, and Jordan.
The book addresses both moral and selfish arguments for restricting immigration. It treats the selfish arguments (even those based on myths) as problems that can’t be overcome, but which can be reduced via compromises. These pragmatic parts of the book are too ordinary to be worth much.
The sections about moral arguments are more powerful. He clearly demonstrates a large blind spot in the moral vision of those who think they’re opposed to all discrimination but who aren’t offended by discrimination on the basis of the nationality a person was assigned at birth. But he exaggerates when he claims that nationality is the only exception to a widely agreed on outrage at discrimination based on “condition of birth”. Discrimination based on date of birth still gets wide support (e.g. the drinking age). And if you’re born as a conjoined twin, don’t expect much protection from surgery that looks about as moral as brain surgery designed to cure a child’s homosexuality should.
Perhaps this book is one small step toward creating a movement with a slogan such as “Tear down that kinder, gentler Berlin wall!”.

How to spend $10 trillion

Posted by Peter on July 24, 2008
Posted in: Life, the Universe, and Everything, Politics. Tagged: , , , , .

This post is a response to a challenge on Overcoming Bias to spend $10 trillion sensibly.
Here’s my proposed allocation (spending to be spread out over 10-20 years):

  • $5 trillion on drug patent buyouts and prizes for new drugs put in the public domain, with the prizes mostly allocated in proportion to the quality adjusted life years attributable to the drug.
  • $1 trillion on establishing a few dozen separate clusters of seasteads and on facilitating migration of people from poor/oppressive countries by rewarding jurisdictions in proportion to the number of immigrants they accept from poorer / less free regions. (I’m guessing that most of those rewards will go to seasteads, many of which will be created by other people partly in hopes of getting some of these rewards).

    This would also have a side affect of significantly reducing the harm that humans might experience due to global warming or an ice age, since ocean climates have less extreme temperatures, seasteads will probably not depend on rainfall to grow food, and can move somewhat to locations with better temperatures.
  • $1 trillion on improving political systems, mostly through prizes that bear some resemblance to The Mo Ibrahim Prize for Achievement in African Leadership (but not limited to democratically elected leaders and not limited to Africa). If the top 100 or so politicians in about 100 countries are eligible, I could set the average reward at about $100 million per person. Of course, nowhere near all of them will qualify, so a fair amount will be left over for those not yet in office.
  • $0.5 trillion on subsidizing trading on prediction markets that are designed to enable futarchy. This level of subsidy is far enough from anything that has been tried that there’s no way to guess whether this is a wasteful level.
  • $1 trillion existential risks
    Some unknown fraction of this would go to persuading people not to work on AGI without providing arguments that they will produce a safe goal system for any AI they create. Once I’m satisfied that the risks associated with AI are under control, much of the remaining money will go toward establishing societies in the asteroid belt and then outside the solar system.
  • $0.5 trillion on communications / computing hardware for everyone who can’t currently afford that.
  • $1 trillion I’d save for ideas I think of later.

I’m not counting a bunch of other projects that would use up less than $100 billion since they’re small enough to fit in the rounding errors of the ones I’ve counted (the Methuselah Mouse prize, desalinization and other water purification technologies, developing nanotech, preparing for the risks of nanotech, uploading, cryonics, nature preserves, etc).

Cultural Difference

Posted by Peter on June 19, 2008
Posted in: Politics.

Cultural Difference
From a book called Apples are from Kazakhstan, a conversation in which the author reacts to a trendy Almaty restaurant’s nostalgic depiction of Lenin and Stalin:

“It’s inconceivable to think of a Nazi beer cellar in Berlin hung with swastikas, with the waiters dressed up as SS officers handing out postcards of Goebbels, and a bust of ‘Uncle Adolf’ in the corner.”
“They don’t have a place like that?” my friend asked