Next Generation Democracy Overview

Wikis, Web 2.0, etc I think have the potential to fundamentally transform the way we are governed and radically reshape political philosophy. Not since the days of Locke, Hobbes, Rousseau etc do we have the opportunity and the tools to address the many short comings of democratic society, especially the domination of special interests and lobbyists.

As Churchill once commented "democracy is the worst form of government, but it is better than any other type of government we have ever tried." Democracy 2.0 represents an opportunity to redress the many short comings of the worst possible government we have -democracy as we know it today.

However, participative democracy through a million wikis and a million blogs does not necessarily constitute better government or democracy. While there is unquestionable value in crowd sourcing and participative democracy, humans in general are not rationale creatures. There have been several good economic studies lately demonstrating the irrational economic behaviour of most humans. The reality is that most people vote first with their wallet, then their feet, sometimes with their heart, but rarely with their mind. But computer assisted Democracy 2.0 tools working in analogous way how Google provides much better search results based on actual hits by user rather than humans tagging the data may point to a better way. "Futarchy" is a good example of such an approach.

One of the fundamental questions that must be asked is why do governments exist in the form that they do today? As Francis Fukuyama and Paul Kennedy have identified in their respective books "End of History" and "Preparing for the 21st Century" governments around the world have evolved largely into a tripartite structure horizontally - legislative, executive and judicial and a vertical structure of geographically based municipal, state/provincial and federal jurisdictions. Do these divisions make sense, especially in the later case of overlapping and competing services from municipal, provincial and federal jurisdictions?

The famous Nobel prize winner Coase, asked the same question with respect to businesses - why do they exist? Why don't we have individual contracts for services with each employee, instead of large corporate bureaucracies? He discovered that "transaction costs" were the biggest factor which necessitated the creation of bureaucracies. In some lines of businesses like construction - lots of small contracts with suppliers and trades makes a lot of sense and is the most efficient way of doing business. But in most white collar businesses, the cost of transaction of doing everything through contracts becomes extremely costly. It is easy to specify a contract to install 1000 sheets of drywall - but it is another matter entirely to draw up a contract to process and follow up with 1000 customer purchase orders. That is why it is easier to hire someone to do this type of work, rather than negotiating a contract.

But Wikinomics, enterprise 2.0, Web 2.0 and SOA has the potential to simply many traditional white collar jobs and allow for outsourcing and reduce the transaction costs of contracting for services rather than hiring staff. The big impact of Wikinomics will be to dramatically change the corporate bureaucratic culture as we know it today. The 200,000 person Fortune 500 corporation is a remnant of the 20th century. Instead, as we already seeing today, companies will outsource many of their non-core functions and focus on what they do best. This will introduce a new age of profitability, productivity and long term growth - in which I believe we are just starting to see the early signs.

So what does this have to do with Next Generation Democracy?

I believe governments exist in the form they do today because of the high transaction costs of providing their services in any other way. In the 20th century there was no other practical, cost effective, way of delivering services such as defense, education, health care, social services, dog licenses, etc etc. True contracting has been tried from time to time, (e.g.
mercenaries) but it usually has failed because of a misalignment of objectives.

So Next Generation Democracy, using the new tools of Web 2.0 allows us to ask some fundamental questions:

1. Why can't governments compete for my services? Is this fixed hierarchy of municipal, provincial and federal governments necessary? Why not let governments of any strata issue vouchers for services and let "me" the consumer decide who is best at delivering those services. Perhaps federal governments would be better a funding and delivering research or driver's licenses? Maybe municipal governments should look after health care, etc etc

2. Governments always claim that taxes are "our" money, yet few of us feel any direct connection between our taxes and the services we receive. With today's computers and networks citizens could be provided with individual accounts and track how their individual taxes are spent and disbursed. They may even be allowed to prioritize the areas of spending within their individual tax accounts. Ultimately through their individual tax account, is how citizens can be allowed to vote with their wallets (which is generally more reliable then their brains) on the services that they deem most important to them.

3. Why not neighbourhood or personalized democracy? With these tools maybe my neighbours and I can elect to beautify our neighbourhood using our tax dollars or accumulated value in our homes. We could elect to put flower boxes in front of every home, cobblestone the street, install fiber to each house, etc etc. This would not only beautify the neighbourhood but would significantly increase the value of our homes.

4. Finally can we use the Internet to allow citizens vote through their behaviour rather than their sometimes counter intuitive thinking?

Monday, March 30, 2009

The Logic of Collective Action

Mancur Olson wrote “The Logic of Collective Action” to try to analyze how real-world voting systems get coopted by interest groups, etc. Arrow was trying to see if any voting procedure could be counted on to yield “rational” results, as that term was understood at the time. Arrow was (in effect) one or two steps up the “abstraction/theory/academic” scale as compared to Olson.

Judgment Under Uncertainty: Heuristics and Biases

by Daniel Kahneman, Paul Slovic, Amos Tversky - 1982 - 574 pages

In the political sphere, Graham Allison's Book ESSENCE OF DECISION, based on an earlier article in the American Political Science Review, identifed 2 alternatives models to "rational decision-making" which he called Model II (based on organizational behavior) and Model III (based on political analysis pioneered by Richard Neustadt). (I was Allison's research assistant and Neustadt was chair of my dissertation committee.)

All of these yield extremely interesting differences in both prediction and prescription vis-a-vis "economic/rational" decision-making.

Monday, March 9, 2009

What people can learn from how animals make collective decisions

[A good article from the Economist. Some excerpts -- BSA]
Decisions, decisions

Feb 13th 2009
From The Economist print edition
What people can learn from how social animals make collective decisions

Mary Evans

DICTATORS and authoritarians will disagree, but democracies work better. It has long been held that decisions made collectively by large groups of people are more likely to turn out to be accurate than decisions made by individuals. The idea goes back to the “jury theorem” of Nicolas de Condorcet, an 18th-century French philosopher who was one of the first to apply mathematics to the social sciences. Now it is becoming clear that group decisions are also extremely valuable for the success of social animals, such as ants, bees, birds and dolphins. And those animals may have a thing or two to teach people about collective decision-making.

Animals that live in groups make two sorts of choices: consensus decisions in which the group makes a single collective choice, as when house-hunting rock ants decide where to settle; and combined decisions, such as the allocation of jobs among worker bees.

Condorcet’s theory describes consensus decisions, outlining how democratic decisions tend to outperform dictatorial ones. If each member of a jury has only partial information, the majority decision is more likely to be correct than a decision arrived at by an individual juror. Moreover, the probability of a correct decision increases with the size of the jury. But things become more complicated when information is shared before a vote is taken. People then have to evaluate the information before making a collective decision. This is what bees do, and they do it rather well, according to Christian List of the London School of Economics, who has studied group decision-making in humans and animals along with Larissa Conradt of the University of Sussex, in England.
The runaway queen

In a study reported in a special issue of the Philosophical Transactions of the Royal Society B, researchers led by Dr List looked at colonies of honeybees (Apis mellifera), which in late spring or early summer divide once they reach a certain size. The queen goes off with about two-thirds of the worker bees to live in a new home leaving a daughter queen in the nest with the remaining worker bees. Among the bees that depart are scouts that search for the new nest site and report back using a waggle dance to advertise suitable locations. The longer the dance, the better the site. After a while, other scouts start to visit the sites advertised by their compatriots and, on their return, also perform more waggle dances. The process eventually leads to a consensus on the best site and the swarm migrates. The decision is remarkably reliable, with the bees choosing the best site even when there are only small differences between two alternatives.

But exactly how do bees reach such a robust consensus? To find out, Dr List and his colleagues made a computer model of the decision-making process. By tinkering around with it they found that computerised bees that were very good at finding nesting sites but did not share their information dramatically slowed down the migration, leaving the swarm homeless and vulnerable. Conversely, computerised bees that blindly followed the waggle dances of others without first checking whether the site was, in fact, as advertised, led to a swift but mistaken decision. The researchers concluded that the ability of bees to identify quickly the best site depends on the interplay of bees’ interdependence in communicating the whereabouts of the best site and their independence in confirming this information.

This is something members of the European Parliament should think about. In the same journal, Simon Hix, also of the London School of Economics, and his colleagues examined their voting and concluded that, as might be expected, it was along party-political lines even though the incentives to do so were far less than at national parliaments. Dr Hix and his colleagues reckon that European parliamentarians share the collection of information but, unlike the honeybees, they do not necessarily progress to investigating the issues for themselves before taking a vote.

There is danger in blindly following the party line, a danger that the honeybees seem to avoid. Condorcet’s theory fails to consider whether there is an inbuilt bias among a group that comes together to consider a problem. This “groupthink” occurs when people copy one another. According to Dr List: “The swarm manages to block and prevent the kind of groupthink that can bedevil good decision making.” Dr List adds that people demonstrate this kind of bad decision-making when investors pile into a stock and others follow, creating a bubble for which there is no good reason.

Another form of groupthink occurs when people are either isolated from crucial sources of information or dominated by other members of the group, some of whom may have malevolent intent. This too has now been demonstrated in animals. José Halloy of the Free University of Brussels used robotic cockroaches to subvert the behaviour of living cockroaches and control their decision-making process. In his experiment, reported in an earlier issue of Science, the artificial bugs were introduced to the real ones and soon became sufficiently socially integrated that they were perceived as equals. By manipulating the robots, which were in the minority, he was able to persuade the cockroaches to choose an inappropriate shelter—even one which they had rejected before being infiltrated by machines. Could this form the basis of a new way of catching them?

The way animals make collective decisions can be complex. Nigel Franks of the University of Bristol, in England, and his colleagues studied how a species of ants called Temnothorax albipennis establish a new nest. In the Royal Society journal they report how the insects mitigate the disadvantages of making a swift choice. If the ants’ existing nest becomes threatened, the insects send out scouts to seek a new one. How quickly they accomplish this transfer depends not only on how soon the ants agree on the best available site but also on how quickly they can migrate there. When a suitable place is identified, the scouts begin to lead other scouts, which had remained behind to guard the old nest, to the new site. The problem is that if the decision is reached rapidly, as it might have to be in an emergency, then relatively few scouts know the route. It would then take much longer to train all the scouts needed to achieve the transfer, which involves carrying the queen, the workers and the brood to the new nest.

Dr Franks and his colleagues identified a type of behaviour called “reverse tandem runs” that makes the process more efficient. During the carrying phase of migration, the scouts lead other scouts back along the quickest route to the old nest so that more scouts become familiar with the route. Thus the dynamics of collective decision-making are closely entwined with the implementation of these decisions. How this might pertain to choices that people might make is, as yet, unclear. But it does indicate the importance of recruiting active leaders to a cause because, as the ants and bees have discovered, the most important thing about collective decision-making is to get others to follow.