Tuesday, March 1, 2016

Proprietary Cities vs Pragmatarian Cities

Reply to: Building Autonomous, For-Profit Cities by Mark Lutter

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I’d love to hear your thoughts on proprietary cities versus pragmatarian cities. A pragmatarian city is one where people can choose where their taxes go (FAQ).

From my perspective… being able to vote with your feet should always be an option. It’s a really great option to have! But I’m pretty sure that being able to vote with your taxes is an infinitely better option. The is because it would facilitate far more precise feedback… which would result in infinitely faster evolution of cities.

When you “exit” from a city… you don’t just select against the city’s harmful traits… you also select against the city’s beneficial traits. You essentially throw the baby out with the bath water. Your feedback is far too imprecise to be of much use. Foot voting is an extremely blunt instrument.

But with tax voting… you don’t have to exit your money from all of the city’s traits… you simply exit your money from the city’s most harmful traits. You have the option to starve the least beneficial traits and feed the most beneficial traits. The least beneficial traits will be quickly removed from the gene pool. Because tax voting is an extremely precise instrument, it’s a given that the composition of public traits will reflect the preferences of consumers just as much as the composition of private traits does.

We can think of Medium itself as a proprietary city. Clearly the owners of this website have an incentive to try and discern, and eliminate, the least beneficial traits. But when was the last time that the employees of Medium have personally asked for your feedback? And even if they ask for it… how can they properly weigh your answers? Maybe they ask you on a scale from 1 to 10? Hopefully I shouldn’t have to explain to you the problems with contingent valuation techniques.

It’s great that websites compete for consumers. But I’m pretty sure that it would be infinitely better if we could use our cash to precisely and accurately communicate what works and what doesn’t work. Well… technically speaking we can never use our cash to communicate what doesn’t work. We’re obviously not going to voluntarily spend our money on something that doesn’t work!

I might as well also point out that with private markets you can’t really spend your money on something that doesn’t exist. This sounds stupid obvious. But in a public market you certainly would be able to spend your money on something that doesn’t, but should, exist.

Actually… Wikipedia is kinda close to this concept. If you think that Wikipedia is missing an important entry… then you can simply create a “stub” for that entry. You’re essentially saying, “this entry doesn’t exist, but it should exist”. Anybody who agrees with you can allocate their time, effort and info to developing the stub that you created.

You would be able to do pretty much the same thing in a public market. If you think the world is missing an important product… say a flying car… then you can simply add it to the list. People would be able to allocate their taxes to this “stub”. The more money this stub received… the more resources that would be allocated to its development.

These “value signals” would of course be visible to everyone. So private entrepreneurs would certainly be able to respond to them as well.

I suppose it all boils down to the fact that nobody is omniscient. I’m not omniscient. I can’t know for a fact that you’re going to value this “story” (product) that I took the time and effort to create. So this allocation of my limited resource is just a guess. It’s entirely up to you, and anybody else who reads this, to decide whether my guess was good or bad.

What markets do is that they allow us to make infinitely more informed guesses. If Medium was a market… then, if you did value this product of mine, it would be stupid simple for you to use your cash to clearly communicate just how much you valued it. Would this help me read your mind? Yeah… kinda. But it’s not because I was somehow able to crawl inside your head… it’s simply because Medium made it stupid easy for you to make your mind more accessible. Not all of your mind of course… just the most relevant and important part of it… your valuation.

When everybody’s valuations are far more accessible… then everybody’s decisions will be far more valuable.

Medium makes it stupid easy to make our thoughts far more accessible… which is wonderful! Unfortunately, Medium really doesn’t make it stupid easy to make our valuations far more accessible. This is proof positive that people don’t understand how and why markets work.

You mentioned that you don’t have Peter Thiel’s resources to help fund a proprietary city. Unfortunately, neither do I! :( The good news is that we really don’t need Thiel’s resources to make a pragmatarian website! :D

The owner of the Ron Paul Forums is currently brainstorming what’s next for the liberty movement. As far as I can tell he wants to put together some sort of Wikipedia for liberty website. In any case… some sort of website with lots of pro-liberty information.

It sounds like a great project! Unfortunately, just like Medium, it’s not based on a solid understanding of how and why markets work. So I’m trying to remedy this… Foundational Knowledgebase — Work Product Content Parameters. If you agree that it’s a good idea for everybody’s valuations to be far more accessible… then you should sign up and chime in! But if you disagree… then I’m all ears.

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