DSL comes, I go

Well, my DSL is installed and working, which is great, but I'm leaving for Miami, SLC, Maine, and New York. This has been a very light blogging summer :(.

This Slate piece predictably gets its analysis of the Pentagon's (now defunct) plan to create an exchange for terrorism predictions wrong but highlights man's inherent distrust of markets. I think the best line is

It's far easier to get inside the head of Sandy Weill (he wants to acquire more banks) than it is to plumb the Machiavellian depths of Yasser Arafat's mind. How can we expect rational people to make sound bets on minds that may be unsound?

The thing is we're doing that already except we're using experts sifting through files, not people placing bets. Suroweiki had a great piece on this in the New Yorker a while back (which I can no longer find) pointing out that making predictions through these sorts of markets is far more accurate than centralizing the process. Jane Galt worries about incentives, but assuming only a few hundred (thousand?) people trade on the system, and they are registered, it seems a risky way to cash in.

The plan's been shelved, btw, but I know private markets for bets exist, and I would guess that you can bet on terrorist events there. The Pentagon will probably partner with one of them.

Update Winterspeak readers EK and DR wrote in pointing to the old Sureweiki piece on decision markets. Thank you so much!

Waiting for Verizon

Grrrr. Still no DSL. I've had to resort to using the Yellow Pages to find things. How did people live before?

Online Group Coordination

I know this piece has been out for a while, but my home internet connection is still not up, and I want to write about it anyway.

I always find it a little tough to get through Clay's pieces (too much jargon) but it's almost always worthwhile. In this one he discusses how groups become their own worst enemies by 1) wandering off topic, 2) bonding over a common enemy, and 3) electing the most paranoid and aggressive individual as their leader. And while people think (thought?) that one of the Internet's benefits was bringing like minded groups of people together, it's not clear to me if this feature is, on balance, positive.

I just finished reading Losers by Michael Lewis, where he follows the various doomed Republican presidential campaigns in 1996. Some people don't like the US two party system because they feel it does not give them any real choices, but after reading about the crackpots on the edges of both Democrat and Republican parties, I'm very pleased they are on the fringe and I hope they stay there.

One last thread: Nobel prize-winning economist Ken Arrow (who spent a little time at U Chicago) demonstrated in his "Arrow's Impossibility theorem" that all voting systems are imperfect. This isn't "imperfect" as in "real life markets produce suboptimal results" are imperfect, it's a "any result from a vote is entirely a construct of the voting procedure." Chicago economist Dick Thaler puts it as a joke: "A woman walks into a deli that only serves beef and turkey sandwiches, so she orders a turkey. The man behind the counter discovers he has some ham left over, and asks the customer if she would like to change her order. She does, and orders a beef sandwich instead."

Lewis split the political world into "insiders" and "outsiders", insiders may belong to either party but are fundamentally committed to the system itself, while outsiders just want to tear the whole thing down and replace it with something better. Arrow teaches us that voting systems by their nature are flawed (technically, the term is "intransitive") so there is no better -- you just substitute one set of problems for another.

The thread that ties this all together is that the Internet, by lowering coordination costs, is raising the coordination abilities of outsiders to rival those of insiders, while polarizing and radicalized those same outsider groups. We're going to see more "Power to the People" and it is going to be ugly.

I think William Gibson wrote something along the same lines recently, but I have not been able to find it (if anyone has a link, please email it to me at zimran at winterspeak.com)

Given how conflict is so inherent to the system, I don't see any way out of it except taking more classes of decisions out of voting mechanisms and putting it in markets (with "good" defaults -- best of luck on agreeing on those).

Last fragment: it'll be interesting to see what happens to the Internet heavy Howard Dean campaign. Slate worries that Dean may lose control of his message to unofficial groups, but I think the real issue is if he will still be electable now he's decided to represent far-left outsiders united only in their hatred of Bush through a medium that polarizes and radicalizes. My guess is "no" and I cannot predict the knock on effects this will have on other Democratic candidates.

Blame Verizon

I'm back in Boston but I do not have an Internet connection. Verizon was meant to install my DSL line tomorrow, but now they say it won't be ready for another week. I'm not holding my breath and neither should any of you. But dude, what about that G5 huh?