Building New Institutions

There are two ways to understand RadicalxChange. The first way is a series of clever mechanism design proposals which force you to rethink some of your assumptions, but are of limited real-world impact. The second way is a of rethinking traditional institutions and property rights, of which the five proposals in the book are only taste of what’s to come.

Mechanism design can lead to numerous marginal improvements in governance and productivity. For example, the spectrum auction, first written about by Coase in 1959, was implemented by the United States in 1994. The US Treasury has raised over $60 billion from auctions, not to mention the spectrum itself being allocated to its highest valued use. This is an important governance innovation coming from theory which has made our lives better.

However, while important, spectrum auction was ultimately an extension of the existing governing framework of the United States. It is little known beyond wonkish circles. RadicalxChange is different. While inspired by mechanism design, the application is wider and deeper. RadicalxChange challenges foundational notions of our social order, asking how we can design a more just and fair society. For example, the Harberger tax offers an alternative to freehold property, a fundamental building block of modern society. The question is no longer how to improve the existing system, but instead how to redesign it.

One way to understand RadicalxChange is as an evolution from the UCLA school of economics. Armen Alchian and Harold Demzetz developed a theory of property rights in which property is not a moral imperative, but a technology which humans develop to reduce transaction costs. Humans develop different forms of property in different contexts as mechanisms for aligning incentives, internalizing externalities.

Native Americans, for example, did not develop ownership of land until the value of beaver pelts became sufficiently high to justify defining and defending property. Without ownership of the land where beavers lived, they would have been overhunted. The norm of property, which emerged without central direction, ensured an alignment of incentives such that the Native Americans would leave sufficient beavers to hunt next year.

RadicalxChange takes property as technology a step further, asking how we can design property in a manner to create human flourishing. With such promise, however, comes peril. Rapid social change often leads to wide scale social unrest. The French Revolution demonstrates the dangers of unconstrained social change.

The risk of social unrest makes it important to have testable, scalable, radical social policies. Think about what it takes to implement an idea like the Harberger tax. Even a relatively low risk environment with little change of spillover, spectrum markets, for example, would take a tremendous amount of work. Implementing the Harberger tax for residential housing is several orders of magnitude more difficult.

Such challenges, however, do not mean the ideas in RadicalxChange are not feasible. It means that approaching these ideas need to be done carefully. In my day job as Executive Director of the Center for Innovative Governance Research, I work to create the ecosystem for charter cities, new cities with a blank slate in commercial law. Building a charter city requires developing a new jurisdiction and administration from the ground up. Charter cities make it possible to test new sets of policies which otherwise might be infeasible to implement on a national level.

The ideas in RadicalxChange are similar. Quadratic voting, for example, can be tested in municipalities and cities, before scaling it nationally. A charter city might do a randomized controlled trial for a Harberger tax. Countries like the UAE have high rates of foreign-born workers due to different migration regimes than western Democracies, providing real world case-studies for radical immigration proposals. Once an idea is tested, it can be scaled such that a wider population is able to benefit.

Glen Weyl has been expanding on the ideas of RadicalxChange, collaborating with folks outside of academic economics like Ethereum Foundation’s Vitalik Buterin. Alex Tabarrok of Marginal Revolution calls the paper “quite amazing and a quantum leap in public-goods mechanism-design not seen since the Vickrey-Clarke-Groves mechanism of the 1970s.” However, Glen cannot be the only source of ideas; building a sustainable movement requires a robust conversation. There is a call for papers for the March conference in Detroit.

RadicalxChange is about more than just ideas. It’s also about action. We must figure out how to implement the ideas. As Lead of the Activism and Government Track I am helping to coordinate a network of doers. We’re bringing together government officials, politicians, and advocates who are implementing the ideas of RadicalxChange as I write. Our goal is to create a network which allows for the learning and transmission of best practices in implementing the ideas of RadicalxChange. We hope to see you at the conference.