Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Glen Weyl: Radical Markets – Uprooting Capitalism and Democracy for a Just Society

Episode Date: September 5, 2018

The rise of populism and increasing inequality have led to widespread questioning of democracy and capitalism. Glen Weyl, a political economist and Principal Researcher at Microsoft, along with legal scholar Eric Posner, published a book called ‘Radical Markets’. Radical Markets explores how restructuring property rights and voting systems could lead to more efficient markets and a more just society. Glen joined us to discuss the book and why the blockchain space is a fertile testbed to explore these radical new ideas. Topics covered in this episode: Why blockchain is on a trajectory to exacerbate inequality and fail at improving the world Why property should be seen as a monopolistic institution How property rights create inefficient markets The radical idea of transforming property rights via a Common Ownership Self-Assessed Tax (COST) How the one-person-one-vote system contributed to the crisis of democracy How quadratic voting works and leads to fairer outcomes Whether or not buying of votes should be allowed in QV His work with Vitalik and radical markets experiments in blockchain Episode links: Radical Markets Glen Weyl Website Property is Only Another Name for Monopoly (2017) On Radical Markets - Vitalik Buterin Book Review Liberation Through Radical Decentralization – Post by Vitalik & Glen This economist wants to abolish private property using blockchain | Wired Thank you to our sponsors for their support: Simplify your hiring process & access the best blockchain talent . Get a $1,000 credit on your first hire at toptal.com/epicenter. This episode is hosted by Brian Fabian Crain. Show notes and listening options: epicenter.tv/251

This is Epicenter, Episode 251 with guest Glenn Weil. This episode of Epicenter is brought to you by TopTal. TopTal is addressing the talent shortage in the blockchain space, connecting companies of all sizes with the world's best blockchain engineers. If you're looking to scale your team, check out toftal.com slash Epicenter. Hello and welcome to Epicenter, the show which talks about the projects, technologies, and startups driving decentralization, and the global blockchain revolution. My name is Brian Farman-Krain, and I'm here to do.

today with Glenn Whale. He is a political economist and he's a principal researcher at Microsoft Research and also visiting research scholar at Princeton. So he's been, he did his PhD in economics at Princeton, was at the University of Chicago as a professor and now is assistant professor now is at Princeton. He's also written a book called Radical Markets together with Eric Posner. And so we're going to speak quite a bit about radical markets. There's some interesting ideas that overlap with the blockchain space. And he's recently also started dabbling in the blockchain space and there's some of these ideas of being applied here.

So yeah, thanks so much for joining us today, Glenn. My pleasure. So just before you got started, you know, I ask you, okay, so you're an economist and he said no, political economist, you would call yourself. And I think that's also a theme that comes up a little bit in the book, this contrast between maybe some of the traditional way that economics was applied or thought about in today's. Can you explain like what's a political

economist and how is it different from an economist? Well, before there was economics, which didn't really exist as a field until the late 19th century, there was a field called political economy. But political economy gave birth not just to economics, but to sociology, political science, many contemporary fields. And it's that tradition of broad and bold social thinking. Carl Marx was a political economist. Someone named Henry George, who I really admire, was a political economist. John Stuart Mill was a political economist, and he was as much a philosopher as he was a modern economist. So it's that tradition of not focusing on just the narrow purview of what's considered to be one contemporary field, but trying to be.

trying to take seriously the broad problems of society and all their dimensions that has increasingly become important to my work. And I want to reclaim that tradition. Fantastic. And that's great. Yeah. I mean, I say economics as well as an undergrad and in grad school a bit. And this is one of the things that I miss in a way, right, that you would read things about like, let's say, Mises or Adam Smith and all those things. And then they're not taught at all in economic context. Yeah. Absolutely. Now, how has your academic work evolved and how did that lead to the work on radical markets?

So I was a pretty standard economist early in my career. Very early in my career, before I really, before I even got my PhD, I was working on some quite ambitious projects, one about applying machine learning to economics, one about the way in which financial speculation could be harmful to the economy. and I got discouraged by colleagues from pursuing these. I ended up pursuing much more standard things, especially things related to price theory, which is something which you as a University of Chicago graduate

probably got familiar with. And it turned out that those things that were more ambitious that I was pursuing have ended up becoming huge movements within the discipline of economics. And this other stuff, you know, was fine and nice and solid, and I'm proud of it, but it really didn't add up to that much. And around that same time, I started coming up with these ideas of quadratic voting and other things. And together, they really offered a pretty comprehensive vision of how to design a better society.

And that was very exciting for me. but I realized that while that was a very exciting vision, the economics profession wasn't really a perfect vehicle for getting those ideas out there. Maybe eventually people would come around to being interested in accepting them, but the format of the standard journals and so forth wasn't really into that sort of practical pathprivile. breaking type ideas. And so I ended up realizing at the same time that the world was going into a real

crisis. You know, with 2016, with all the rise of populism, Brexit, what was going on in the United States, I started to feel that on the one hand, things didn't fit so well with the economics profession. And on the other hand, the world desperately needed some vision to respond to all these events, some positive, progressive, pro-market, pro-technology solution to the problems of inequality and populism and so forth. And so that's the reason I ended up writing the book, was this combination of sort of frustration with the standard channels. And on the other hand, what seems so clear in terms of the world's need for a more path-breaking vision. Great. Now, use the term radical market.

and sometimes in the book, or I think in book it's used as, you know, in capitals as this term. But one of the things that I struggled a little bit is that it felt to me that there was sort of, you know, very creative, market-based original approaches to solving a range of different problems in the book. So there's things about property, immigration, like, and we're going to speak about some of those. But I struggle a little bit to see how, you know, what is the overall coherent thing that's, that unites them. So can you define what are radical markets sort of in a general way? So radical markets are markets that on the one hand are much more complete, free and open than existing markets. But at the same time, we associate typically markets with inequality,

and often with political conflict. And these are markets that at the same time as being much more complete free markets are radically egalitarian and radically inclusive. And we would argue, can address a lot of the political conflicts that we've been having.

So we mean radical in a variety of different senses. It's both a tie to a historical tradition called the radicals that united egalitarianism with something more like what modern libertarianism is. But we also mean the fact that it would fundamentally change society and that it would change it in sort of the way that many people on the left envision, but that it would do it through market mechanisms. So it's a combination of these different meanings

and of these different political forces. Okay, now let's try to make, a little bit of a link to blockchain. So what has your exposure to this been? How long have you been interested in that or following that? Well, not very long. It really came out of Vitalik Boudarin about eight months ago, tweeting about one of the ideas that went into the book.

And then after that, I offered to send him a copy of the book, and he read it, and he sent me about 20 pages of comments on it. And then he ended up writing about it. and that's created a link between these communities. But, you know, the way I've come to see things is, frankly, I'm not a huge blockchain enthusiast. I don't necessarily think that as a technology per se, it's going to succeed.

I mean, there's a lot of questions there. But I think that there is a social movement around it, which is in some sense, more important and more fundamental and more exciting than the technology or the speculation around the technology itself. And that movement to me is one that is based on an idea that we need to make power as diffuse and equally held within society as possible. And that technology and market mechanisms can play a critical role in achieving that goal. that's something I firmly believe in.

And I think if anything, the problem is that the blockchain world has not clearly articulated what that society needs to look like. It's more like a technology that points a bit in that direction, but precisely what it means or what it would look like is very vague. And radical markets, even though it wasn't conceived of as for the blockchain world, I think can be thought of as an attempt to describe in some detail precisely. what the world of sort of decentralized, market-driven equality could look like. Okay, great.

Maybe you can expand a little bit on it. So you think that a blockchain, like you're skeptical, blockchain succeeding. Like, how do you look at blockchain succeeding? What would that mean? And how do you think it will fail? So I think the things that I worry about most in the blockchain space, is that the goal of blockchain is decentralization. Now, decentralization requires not just that you have a bunch of nodes running,

but that they actually be independent of each other. And that in turn requires a certain amount of equality. There have been many, many societies that have seen, started with some principle of decentralization that have ended up incredibly dominated by an oligarchic elite the internet in its original design was that way the um russian economy when they privatized after communism gave everyone an equal number of shares to all the companies and very quickly things got under the control of a very few so in order to understand whether a system is not just decentralized, but sustainably decentralized, you have to look at and analyze the effects

of the rules of that system using economic theory and political science and so forth. And the problem is there are so many leading indicators within the blockchain space that the system is headed towards oligarchy rather than towards true decentralization. So I think that while the goal of a decentralized system is extremely admirable, the actual designs that exist at present aren't pointing in that way. Another example I would give is if you think of something like Decentraland, which is a virtual world where people own territory and they wanted to decentralize control of it, well, that's a good aim. but what's in fact ended up happening is a lot of speculators have bought up a lot of the land. And now it's going to be under the control really of a few people who are dominating the whole system. So unless you actually design new rules, just the desire to make something decentralized is not sufficient.

You actually need a design of a social system which inherently promotes decentralization. Within the public chains, the problem is that the existing system formalizes property. That's the whole idea of it. it formalizes ownership, right? That's what a blockchain does. But it does not formalize people. It's based on anonymity. It's based on pseudonymity.

So there is no notion of an individual person. And any system that formalizes ownership and property, but does not formalize people, will inherently tend to serve capital and ownership rather than people. And so, and in fact, that's precisely what we've seen happening. If you looked at the inequality within Ethereum, if you've got it as a microcosm

of the world, I could guarantee you that it's more unequal than any society in the world. So it's supposed to be serving decentralization. In fact, it's serving a huge amount of centralization of power. Now, that doesn't mean it has to, but at present, that's what's happening. Okay.

No, that is extremely eloquent, I think, criticism of blockchain. And I must say, I think it is very accurate, too. In my own estimation, actually, there is a fundamental prerequisite to building blockchain systems that are more egalitarian and that have, you know, less inequality. And that is having, you know, this is concept in the blockchain and of self-s sovereign identity, right, that people have individual identities and they are like unfortunate,

clear identities, but that they're controlled by the people themselves as opposed to like issued by a state. And that seems to be a fundamental prerequisite to creating something. like that. And I think that would also be a fundamental prerequisite for having quadratic voting. I completely agree with what you're saying. And I think that that is one of the most fundamental issues, though it's not the only fundamental issue that is a problem for existing blockchain environments. I mean, another fundamental issue is that there exists no current system of voting or of property redistribution. There's a variety of problems. But I do think the identity problem is one of the most fundamental ones.

Yeah, yeah. Okay, well, let's speak a bit about this idea in your book of property being monopoly. Can you explain what you mean with that? So if you own a large plot of land in the center of a very important city, no one else can get access to that land unless you consent.

You could sit on that land and hoard it and let it increase in value and never do anything with it and still make a huge return on it. This is true not just of land, this is true of spectrum. Right now we're probably reaching our audience

over Wi-Fi, but at least in the United States, much of the spectrum that Wi-Fi could run on is controlled by a bunch of the television and radio stations that used to come over the air that almost no one listens to anymore, those get in the way of new technologies and new development. Everyone recognizes that in some sense intellectual property is a form of monopoly. But why just intellectual property?

Any scarce asset that isn't perfectly replicable is a form of monopoly. And in fact, all that intellectual property is is sort of owning a part of the idea space, whereas real property is owning a part of the real world. And the individual ownership over these things, the failure of them to be allocated by competitive bidding, the fact that you have to go to negotiate with someone who's going to seek profit or even just be lazy and refuse to engage in a transaction with someone who can use it better, those all are impediments, not just economic development, but also to equal access to opportunities and resources for various members of society. So one of these issues that you see is, let's say I have a plot of land.

I am rich, right? I don't need to use it in particular way. And I can just sit on that. And maybe somebody else could use it much more productively. And there's this situation where that very often doesn't happen. Yeah, it gets stuck. Yeah. Now, maybe one point here.

So you mentioned generally this is true for property, but it seems like maybe it's not true for all property. I mean, what about, let's say, something like gold or fungible commodities like wheat, or what about shares of a publicly traded company like Apple, right? There's so many shares. So me having some shares, that's no monopoly, is it? Well, I think that's correct.

There's no monopoly over an individual share. But there can be monopolies over large numbers of shares. And in fact, there can easily be a monopoly over wheat. There have been monopolies over wheat in many countries and many times. So there the issue is not the monopoly over the individual shares. The problem is, for example, if you want to buy the whole company, which requires buying up lots of shares, typically when a company gets bought off the markets, the purchaser pays a 30, 40, 50% premium in the stock price.

That's effectively the monopoly price that's being charged by the current owners in total for the purchase of that company. And so what are the negative effects of this monopoly characteristics of property? It leads to tremendous underuse of land. I'm actually talking tomorrow to a startup called city builder, which tries to use machine learning to estimate what would the value of various collections of land in a city be if you could get them all together and redevelop them, even holding fixed zoning rules. And a typical value of that for a reasonably

large chunk of land in a city is about three times. So what that indicates is that much of the land in the world is dramatically underutilized. The spectrum is another great example. There's huge amounts of spectrum that are being used for over-the-air television and radio that could be used for Wi-Fi, 5G, et cetera. And in many countries like Singapore and Israel, where they have had a more flexible system, they've been able to adopt those new technologies in the U.S. We have very low quality of those services because we're stuck in this rigid, old-fashioned system because of these monopoly power. So the solution that you guys proposed to this is called cost. So common ownership, self-assessed tax. Can you explain what's the

core idea of cost. The idea of cost is that everyone would have to self-assess the value of any significant private property they have. Most private property is actually held by businesses, so this mostly applies to businesses. But these businesses would self-assess the value of their assets. They would have to pay a tax on that self-assessed value, but they'd also have to stand ready to sell that asset to anyone willing to pay that price. To give an example, right. So let's say I own a house. Let's assume I own a house. And now I think, okay, this house is probably worth 500,000. So then the idea would be, okay, there's some percentage of, and I do this for all of the property I have. And then including you, let's say, my computer, my computers worth $1,500 or something like that. And then on all of that, you take some percentage. I don't know. I think you mentioned 7% maybe in the book. And then I have to pay that as a tax, right? So I have to pay. let's say on that house, 500 times 7, right 35,000 a year, on that computer, have to pay something, and all of that I have to pay this tax.

But anyone could come and say, okay, actually, I'm going to pay you 500. So, I don't know, 501,000 or 500,000, and at that price, I have to sell it. And then the proceeds of that sale would go to you. Yeah, the proceeds of that sale would go to me. Yeah, yeah. So, of course, I think a lot of people, would be, if you look at the example of real estate, a lot of people, maybe they've lived in the house

for a certain number of years, they're used to living there. The idea that now anyone could come in and say, okay, you've assessed the value of this property with that. I'm going to take it. That's probably a horrifying idea. Do you not see the massive downsides to this idea? No, I think that that's mostly a misunderstanding.

I think that for anyone but rich people, what you described is precisely the opposite of what would occur under the system. At present, most people, except for the very wealthy, have a mortgage on their house or their renters. Very, very few people own their house outright. So they face very significant risks of their house being taken away from them

if they are unable to, if they have any risks or anything like that that they face in their life. In the world that I'm describing, this tax, about 7% or so on assets, would raise enough income, not just to eliminate all other taxes on corporations, all taxes on property, all that sort of stuff, but also to pay every family of four in the United States a $24,000 a year

social dividend. At those rates, the amount that it would cost a citizen to maintain her assets for a typical citizen would be about $1,000.5 if she priced them at market rates. If she priced them at 10 times market rates, she'd still receive a net $10,000 social dividend. So, um, for almost everyone in the world, except for the very wealthy, this would dramatically increase the stability they have in their lives, not reduce it. What it does is tax the stability of the wealthy and the property owners so that other people are able to afford that.

Yeah, okay, okay. So let's use some examples. So we've talked about the house. I mean, I can see that, you know, for many people, sure, it could provide financial stability. And I mean, in a way, what you're also describing is it's almost like a basic income social dividend. Right. But so Vitalik, for example, he wrote a post about radical markets and he made the example of like my ether wallet.

Right. So you have like a domain name, which is associated with a cryptocurrency wallet that many people use. So there's a lot of money being flowing through that. And my ether wallet isn't like a huge business. And they don't make a gigantic amount of revenue. so they may only be able to pay a fairly low number of facts, but somebody could come maliciously and say, okay, I'm going to pay that amount, take over the domain,

and then, for example, put up my malware or something like that. Do you think this is, like, how would you address this under a cost? Well, I think the first thing to recognize is that there are a huge number of cases in which what you're describing is already happening in reverse. People are buying up and trolling domains and no one ever has a chance to get access to them in the first place.

So there's, like, we always, it's always true for market economies that you, whenever you move towards more of a market system, you have protectionist instincts. You say, oh, there's this good thing that's already here. Let's make sure we protect that thing.

But you don't think that the present system, the rigid system, is blocking all sorts of innovation right now. So that's really the situation. And yes, there could be cases where there's someone who's very, very illiquid for some reason and they can't afford things. But on average, people who own property are not poor, downtrodden, etc. The average owners of property, especially on Ethereum, are the extremely wealthy and powerful. And any system that redistributes that more evenly so that more people are able to access the system and have more opportunities is overwhelmingly on average going to benefit ordinary people and not the concentrated owners of property. It's always been the strategy of the

capitalist class to make everyone think about the tiny things that they possess and cling very hard to those things in order to stop them from realizing how much more is held by the very wealthy. That is great. Do you seem to be a true revolutionary? There's a line in the international, there's a line in the international socialist anthem and the modern U.S. lyrics, or English lyrics where it says, don't cling so hard to your possessions for you have nothing if you have no rights. Yeah. Okay. Okay. Fantastic. One of the thoughts that also came to my mind, so in this cost system, right, we have to now, I have to self-assess this tax on all the property and then pay this tax.

So of course, that does create a certain incentive to just hold cash, right? Like if I have lots of cash, then I don't get taxed on that cash. And so I can kind of, you know, avoid the tax. Do you think that's a desirable outcome because it means that people wouldn't sort of monologue? To tax cash. You do tax cash. You tax cash as well. Yeah.

Well, another way of putting that is you can just have an inflation of 7% a year. Yeah, which is much less than today, of course. Much more than today. Well, are you speaking about price inflation or a monetary supply inflation? Price inflation. If you have price inflation of 7% a year, that's like equivalent to putting a cost on money. You could like mandate the price inflation. By the way, that doesn't happen anyways.

The reason why what you're describing doesn't happen is that people can't on net move into cash. There's only so much cash out there, right? So what actually happens is the price of all assets falls to the level where you're just as happy to hold cash and the other asset. So while I would apply it to cash as well, it's not important because you don't actually lead people to on net move into cash. There's only so much cash to be had. So really what happens is the prices of assets fall until it accounts for all the tax payments you'll have to make. Yeah. So how well do you think this is suited, a cost is suited to digital property? I think it's best suited to digital property at present because most digital property is not an absolute private property.

It's a administrative property. So it's much easier to experiment with things. And people are much less sort of tied to it in a strong sense. And so it provides an excellent area for experimentation. the same way that the blockchain world more broadly provides an excellent area for experimentation on many different things. So I think that that's where it's likely to be applied most at present. You gave the example of my ether wallet and these domain addresses.

I think that's a great application. Another really interesting one proposed by Simon de la Rouvier was a million dollar homepage, which is like a website where everyone owns one pixel and can choose what it looks like and it's sort of a collaborative design environment, A cost would be very useful there as if there was someone who is recalcitrantly doing something stupid with one pixel, you could buy out that area to redevelop. Decentral land is another really interesting area for applying this.

Spectrum, as I mentioned, is a leading application. So I think that it is precisely the descriptions you're giving in terms of digital assets where I expect this to be used first and most heavily. Yeah. And of course, it's important to distinguish here that, let's say if you talk to something like Bitcoin, right, probably, you know, if you look at the traditional sort of philosophy of many Bitcoiners, then the idea of that you have this asset which cannot be confiscated by anyone, cannot be touched by anyone, is sort of beyond the reach of government. That's like a core thing that people like about Bitcoin, right? So there you wouldn't really be able, actually implementing a cost would be extremely difficult. I don't think so. You can, build it into the algorithm itself. So you don't want governments or central authorities involved in this process. That I completely agree with. But there's no reason why you can't build it into the code. Sure, yeah.

I mean, that's... So on Bitcoin, they will never build that into the code. So I think that's why, like, let's say having it there would be very difficult because also a government implementing it would have a challenge enforcing it. But let's say if you started a new chain, let's say something like DeCentraland, then you may well have that the developers do see the benefit of this

and do want to implement it. So I agree that in those kind of your network level rules, actually enforcing a cost would be very simple. So are there any interesting projects working on this right now? Yeah, so there's a number of interesting projects.

There's some people thinking about applying it in commercial real estate. There's some people thinking about applying it in sort of co-working or accelerator spaces, where there's a very dynamic need for space over time because some startups succeed and some fail and so forth. Those are some of the larger scale physical world applications. But within blockchain, there are a huge number of really interesting applications.

There's a lot of thought about it in Decentral Land. I don't know exactly where they are, but they're very seriously thinking about applying it to the 50s, of property that they've reserved within DeCentral Land. There are tokens that Andrew Miller has been building that incorporated into the code. There are projects trying to do this, yeah, for a homepage, for sponsorship. There's another same in de Lou Rivier idea, sponsorship of musicians like Patreon type thing where there would be an exclusive patron and they would Harbiger price that right.

and so forth. So there are a number of super interesting projects in the space right now. Just add one here. So actually the first time, it might have been the first time I heard about your book is from a friend who founded a company called Parsiq Labs and they're building this plasma Ethereum side chain. And they were at the time, I don't know if that's still the plan thinking of using basically a cost like system to auction off the, slots to validate, right? They would have a particular number of kind of like mining notes in a way, or validating notes,

and they would use this system for allocating them. Yeah, I've heard many schemes that are like that. Yeah. Yeah. And I think that's a very good fit. I think there's some other ones, I think especially if you talk about like existing property rights where I think the political opposition would be,

it would be very hard to implement stuff. Well, look, it's very hard to implement stuff. right now when it's very unfamiliar. But if first we start in blockchain world and people learn about it and they see how useful it is and how much it improves things, it could just gradually grow. And those societies might be the most successful societies. If it becomes a key part of blockchain and blockchain does become really important to the world, other people might adopt it because it's their only way for them to survive and compete

and thrive and because they also see that it's a much fairer and more productive system. Have you ever considered that one of the biggest factors holding back growth in the blockchain industry is the lack of talented available developers? By some estimates, there are up to 14 job openings for every single blockchain developer in the world. That's where TopTal comes in. TopTal is a global network of talent in business, technology, and design. And they pick their members by selecting only the top 3% of applicants. When you work with TopTal, you're getting the Krem de la Krem.

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company can work with your new hire for a no-risk trial period and you pay only if you're satisfied. So simplify your hiring process and access the world's best blockchain talent. For a limited time, Epicenter listeners are eligible for a $1,000 credit after the first $2,000 paid towards their first hire. To learn more, go to toptow.com slash epicenter, and we'd like to thank Toptel for the support. Do you see any major open questions regarding cost? Oh, there are tons. How to deal with bundling. So we propose allowing people to put together or take apart property as they want. There's so many complicated issues around that. There's many issues around what tax rates you charge for different types of assets and how finely did a define that. That's super interesting.

There are really interesting questions about how long you have to surrender an asset and how you define that by asset type. Really, almost everything around the cost is kind of open right now. It's really a very new idea. Okay, great. Now, let's speak about the other idea that I think probably has most applications in the blockchain space, which is a credratic voting. But maybe before we go into quadratic voting, you can outline what are the big issues

with voting systems today, and especially, those traditional voting systems where, you know, there's, let's say, all the U.S. citizens and each person has one vote. Yeah. Yeah. So the standard one-person, one-vote system is fundamentally not something that any of us really believe in, if you reflect on it, even though we're taught it in school. We know that majorities will tend to oppress minorities under the one-person-one vote system. and so we have constitutional rights to defend minorities. But then what that ends up meaning in practice is that judges decide tons of things,

these central unelected authorities who have whatever personal views they have end up just deciding on so many things in our society because we don't trust democracy, because one person, one vote, oppresses minorities. So what I want is a system we are rather than relying on these central discretionary authorities, we can allow minorities to have the right to protect themselves to say, no, this issue is really important to me.

Don't prevent me from marrying. Don't take away my guns. Don't prevent me from going to schools with people of another race, et cetera. And so can you outline how quadratic voting works? So the idea is that every citizen receives an equal budget. of voice credits and they can spend these credits on influencing issues according to the principle that the cost of a certain number of votes on an issue is the square of the number of votes you get on it so it becomes increasingly expensive to express very strong opinions this

discourages people from just being extremists for no reason even if they don't really care about the issue but at the same time it allows people to express a very strong opinion if they if they feel that way Yeah, so let me use an example to illustrate this. So let's say I have two credits, right? You have two credits. And there is election like referendum A, which is maybe should gay marriage be allowed or not. And then there's should guns be allowed or not.

And I can spend, you know, one on each, right? And then I have basically one vote on each. But I could also spend two on one. And then I basically get the square root of two, right? so 1.4 votes on that one. So if I feel like very strongly about one, I can say, okay, I don't care so much about like gun rights, but like gay marriage is very important.

So I'm going to spend my entire credits on that. And so I get more votes. But actually the sort of, you know, it flattens out, right? So the martial number of votes I get additionally are decreasing very rapidly. Right, exactly. So you mentioned minority rights. the way I guess it would protect minority rights would be like, okay, so they feel very strongly about a particular issue and they can use a lot of their credits there and then basically say

not vote on other stuff. Right. So do you see that as an issue that, let's say, minorities would have to use up much of their credits to, you know, protecting them on some issues and then wouldn't have a say in other stuff? Well, look, the truth is that for the the most part, everyone is a minority on some issue. So the real question is, are we making the right trade-offs and compromises in society where each of us gives up things that are less important to us for things that are more important to us? If we're going to live together as a society, we need some way of resolving issues where we don't each get our way on everything. So yes, if you're a minority on, say, racial issues, you'll end up paying maybe more on those issues,

but you may be in the majority on issues related to gun ownership, and you may be in the majority in your religion, and you may be in the majority on your preferences on economic policy. But then other people will be in the minority. on those issues. You see what I'm saying? And so that is the trades that we make. We don't all get to just because we are in a minority on something, control everything in a society. That wouldn't be at all democratic. Instead, we, you know, get a chance on things that are critically important to us to weigh in in exchange for allowing other people to do that on things that are

most important to them. So I think on this high level, I actually think it's quadratic voting seems pretty like unobjectable to me and like strictly better than the current voting system. Where it gets interesting and much more controversial is when you bring in the idea of like the ability to buy votes, right? So let's say I can go and I can go to you and say I want to get a vote. So instead of having two votes, now I have three votes, right? And I pay you. So what do you think are the pros and cons of of allowing? the trading of votes in quadratic voting?

Well, the con is really that it would give far disproportionate power to the wealthy, and that is not something that we support. So that's why we don't propose using that for quadratic voting anytime in the near term. However, in the long term, it has the benefit of allowing people to express the things that are most important to them, not just in comparison to other social issues, but in absolute terms, in saying, no, I care in general about things in the public sphere more than you do. Maybe you're more involved in your community and so forth. So by allowing people to express it in some external money that's not just related to other

collective decisions, you allow people maybe who are persistently in the minority, or people who just are very interested in politics to weigh in more. The broader you allow for the trade, the more you get an accurate reading of how important things are to people. But that is only acceptable once we have a far more equal society, which is something that, for example, the cost could help bring about. Yeah. Okay.

Okay. I mean, I do think one argument in favor of having, you know, this explicit vote buying potentially, is that if you can actually enforce that, let's say, I want to cast a thousand votes and I have to pay that quadratic cost of a thousand votes, then that would be very, very expensive. So even though wealthy people could disproportionately influence elections, they would have to do so at an extraordinary cost. Well, and beyond that, you know, there's even ways of dealing with it. If you actually know what people's incomes are, it's not a problem to use money.

because you can make the cost of them buying votes actually proportional to their income. So you would pay for one vote, 1% of your income, for 2 votes, 4% of your income, something like that. Then it wouldn't be disproportionately weighted towards the wealthy, but that requires some verification

of people's income level that's external to the system. Right, right. Okay, fascinating. Now, of course, when we think of this applying, so now this translates a little bit to the blockchain space, right? And then voting and on-chain governance has been a topic

we've done, I don't know, dozens of podcasts about, right? It's a very often discussed topic. And I think there's a lot of expectations around it. Many new projects are implementing different voting systems. And I think on the one hand, we have this extreme hope and expectation. And on the other hand, there are also concerns. So, Vitalik, you know, there are some people in the Ethereum space, Vitalik and Vlad Samphir being two of them

were skeptical around this. And of course, oligarchy is one issue, right? Because in general, in blockchain, we have, you know, the paradigm is often one coin, one vote. And then even if you did have quadratic, like, so how do you see this translating into a blockchain contest? Well, look, I understand Vlad and Vitalik's skepticism

about voting because of potential gamability of a whole bunch of concerns. But I think there's one incredibly important thing to keep in mind. If we are going to say, no, we can't trust voting, we should also say, no, we can't trust absolute private property ownership. There's an idea in the blockchain world that private property claims are totally immutable, whereas votes are not, don't exist at all. And that, I think, is fundamentally imbalanced and is the reason why we, we're not, we don't exist at all.

and is the reason why wealth is coming to dominate this world. You cannot have a reasonably balanced economy where there is private property ownership that's absolute and there's no democratic check on that process. So I'm happy to say, look, private property shouldn't be so absolute and neither should voting. That can make sense. But until we loosen the hold of private property,

we absolutely need to have some sort of democratic mechanism to govern it because otherwise everything will end up being dominated by those who control the most well. Yeah, I mean, I guess that that is really sort of the argument against voting on the blockchain is that we don't actually have technically better systems than having basically one coin, one vote, and all of other ones seem circumventable, so that then it may go even more in the direction that you fear, right, that you have this oligarchic system. But that's why we desperately need the idea. identity solution we were talking up about up front.

Yeah, yeah. Now, do you see any adoption of quadratic voting or experimentation with this in the blockchain space at this point? Yes, we see much more of that than we do even for the cost. That's probably the largest area of experimentation at the present moment. There's a huge number of people using it for things like you were saying, actually voting on validators for various things, not necessarily side chains, but. but related things, maybe private chains, permission chains, things like that.

There's a bunch of use of quadratic voting, even for doing validation itself. There's coins that are thinking about that if they can have an identity solution or if it has a more permission structure to it. Their quadratic voting is being used to manage content curation within a variety of blockchain communities. So quadratic voting has really been the most influential of the ideas within the blockchain community, for sure. In general, those experiments, do they tie quadratic voting with some identity system, or they already have some kind of identity system and layer that on top?

Yeah, they have to. They have to. There's no system that has made the mistake of trying, as far as I know, that has made the mistake of trying to use quadratic voting in a permissionless way that wouldn't work. Or, you know, sorry, permissionless is fine, but there needs to be some identity solution. It could be an external authority. It could be some self-sovereign identity. It could be, I mean, there's a variety of potential solutions, but it has to be with some real identity solution that's verifiable. So if you look at the cost as an example, cost is, as a, let's say if you're a capitalist,

then you probably wouldn't like cost if you have a lot of assets. So you would probably be against it. But if you, let's say you're an American citizen, you can't really opt out because, you know, the cost of moving somewhere else, I mean, you could, but it's very high, right? So you may as well, many would put up with it and say, okay, I accept it because this is just a part now of being,

let's say, you as citizen. But in the blockchain space, there tends to be much more to thinking that, okay, we can just fork the chain or there's many different chains and I can kind of go to whatever chain I want to. So there's much more flexibility in avoiding particular kind of regulatory regimes, regulatory regimes being like network level rules that you want. So that seems to me like a tension or a very different approach. Do you see that attention as well?

Look, look, I don't think so. No, I don't. Because the reason is that the only possibility of using blockchain or, any of these technologies in order to avoid regulation is if there are other people who believe in it and support it. Everything in these systems, all the money that's been made in speculation, is parasitic on people who genuinely believe that the system is a better way to do things. And so I don't think it's true that people can use these systems if people genuinely become convinced that they're not serving the public interest as a way to undermine that.

Because other people need to be using it and willing to accept it and trust it. And if they think it's dominated by people who are powerful and corrupt, they're not going to use it. And they'll instead use and believe in and raise the value of systems that serve the broad public. I think, you know, blockchain would not have succeeded had not people not believed in the idealistic vision of a decentralized world.

It's not only reliant on wealth. It is reliant on people. It's just that that's not built into the system directly in a formal way. So you mentioned the beginning we talked a little bit about your skepticism of blockchain. At the same time, there's a lot of experimentation now going on

with your ideas. So like you're still overall, all the skepticism about the oligarchic tendencies over the way? Or like how, would it kind of like you hope? I mean, look, look, my feeling is that the system needs at a technical level to overcome a number of fundamental flaws very rapidly in order to avoid imploding in some way or another. And I think that's very unlikely to happen. That being said, so I expect that, you know, the value will go down, I don't know, 95, 95, 90,

9% sometime in the coming years. That being said, I think that out of it will come a lot of really powerful ideas and experiments and things we learn from. That's what happens with many bubbles. So I both am optimistic on the long-term contribution

that blockchain thinking will make to change in the world and pessimistic on the specific platforms and technologies unless they manage to adapt very quickly. Yeah, can you speak about those fundamental flaws, technical flaws you see? So the fundamental flaws I see are the lack of identity, the lack of scalability, the lack of governance, the lack of real applications that have value that's external to some sort of bubble mentality. And the fact that the technology is not really, like, especially the, extreme redundancy that's built into it is not really necessary or sufficient for most of the

goals of decentralization that it purports to be associated with. It's not sufficient because of all the reasons we just talked about. And it's not necessary because large, you know, chains that aren't completely global or redundant are going to be the best most secure solution for most, you know, applications. So for all those reasons, I think that there's just like a huge number of weaknesses in the current framework relative to its goals and so forth. But I love the spirit.

Okay, great. Yeah, I mean, of course, I think many in the blockchain space would agree with you that, you know, those issues exist. But still, I think, being for almost everyone, the optimism would far away and the expectation that those would be resolved and then there's this enormous opportunity and... But that seems, I mean, look, that just seems extremely implausible to me in the near term.

The amount of progress that's actually been made on resolving those issues relative to the fact that there are so many risk factors that could be a huge shock to the system, like some government really trying to go after it, like the world having a global recession that causes panic in some form that could go in any direction relative to the blockchain world. I mean, there's just so many things that could potentially disrupt the system. There's so much value that's been vested in it. There's so little applicability. I mean, you think about the internet 10 years after the internet was created and, you know,

what applications it had versus the applications in, quote, web 3.0. So I'm not saying that something good won't come out of this. I said it would. But the notion that there's going to be enough that's going to come out of it soon enough to justify the huge bubble around it seems extremely unlikely to me. What do you think the reason is for that? Do you think it's just not a great technology? Or is there some other reasons for it?

Well, I think there's huge weaknesses in the technology that need to be resolved. And that's not to say it's not an interesting potential technology. But, you know, from the first work on the personal computer in the 1960s, it took 15. years before you actually had something that anyone wanted to use. And, you know, the technology just needs a lot more work. And I don't think that the bubble, even though it's stimulated a lot of enthusiasm, has been that productive in actually resolving the underlying technological issues. So are there some other areas of technology that you think are more promising

and potentially have, you know, bigger positive impact on the world in the next decade? No, I actually am very optimistic about the stuff around the blockchain world in terms of the potential impact it can have. I just don't think that it's going to be fast enough or sufficient to sustain the sorts of valuations that are on existing chains. Yeah. So you are, I think it's important, right? Okay, so let's say one is greatly optimistic about blockchain. like maybe one was greatly optimistic about a personal computer at one point, but it just takes a really long time to get to a point where it's really useful

and it's going to have this positive impact. But I guess another position could be, blockchain is like fundamentally driving to some sort of oligarchic system. It's not the right approach. We need a very different approach. But you're falling in the first camp, not the second. Well, I mean, I guess it depends on what features you think are fundamental to blockchain. If you think that pseudonymity and anonymity are fundamental to blockchain, which I think some people do,

then I would say, no, that's going to lead to oligarchy. That's a disaster. If you think that absolute immutability of most things is fundamental to blockchain, you know, that is completely inconsistent with having both privacy and identity. So clearly, that's not going to be sustainable in the long term for most things. that go on. So those are fundamental features that I think many people would identify with the system that I don't think are sustainable. Is decentralization? And, you know, the notion of some protocol of rules that we all agree to rather than some discretionary authority being in charge,

is that here to stay? Absolutely. I think that's here to stay. So it depends what you mean by blockchain. Okay, great. Now, what's your own focus on in the next years around radical markets and implementing that? Like, how are you approaching this? So basically, I'm spending about 50% of my time writing, coming up with new ideas. Vitalik and I are working on a white paper right now that I think is the most ambitious thing that I've done in this area. It really has a coherent vision that ties together the cost and the Harbaker tax into a system of funding decentralized self-organizing communities. So I think that's going to be really cool and very important for the blockchain space.

So I'm doing things related to that. I'm working on different auctions and so forth. Then with about and on the book and so forth. So on the on the side of the actual organizing and the movement, we're creating a conference and we have. have four different tracks in that conference, and I'm working on supporting all of those tracks. There's arts and communications. There's ideas in research. There's entrepreneurship and technology, and there's activism and government. And what I'm doing in each of those areas to support,

in addition to working with the people who are running those tracks and so forth is different. I'm helping to create unions for the state of labor union idea that's in the book. I'm helping to talk to governments and so forth. I'm... consulting for startups or blockchain projects that are trying to do stuff and working with large companies that want to do stuff around blockchain around radical markets. I'm helping talk to artists and and to journalists and to other people who want to write about this and I'm of course doing all this writing and research. So I'm really trying to help support this huge movement that's really started around these ideas. Well, that's fantastic. I wasn't aware that they were

this kind of movement already going on. So you mentioned a conference. When is that conference taking place? Probably early March, but it's possible we'll have to push it back to early April. Okay, okay, great. It's going to be called radical X change, radical, lowercase X capital change. So it's like radical change, but also radical exchange, like, you know, radical markets and that there will be a radical exchange of ideas.

Okay, very good title. So if people want to learn more about it, get involved, is there, besides reading a book, is there something else where people can, or how can they get involved in this community? I think that the best way is, soon there will be a website up around this, but the best way is if you go on the radical markets website, there's a contact list. Avatal Balwit and Charlie Thompson are on there,

and they're helping me organize things in the interim until we get something more permanent going. So it would be best to get in touch with them. Okay, great. Well, thanks so much, Glenn, for joining us. I'm super excited to see how radical markets had it are going to be implemented in blockchain and in the wider world. So, yeah, thanks so much for your work and for joining us today.

Thanks. And of course, thanks so much for our listener for once again joining. So we put out episodes of Episner every week. You can subscribe to it on iTunes, SoundCloud, or any other podcast application. And of course, you can watch the videos on YouTube.com slash episode of Bitcoin. So, yeah, thanks so much. And we look forward to being back next week.