Daron Acemoglu and Simon Johnson's Plan to Save Our Republic

Daron Acemoglu and Simon Johnson's recent Foreign Policy article has the grand title "It's Time to Found a New Republic." Let's take a look at what they propose. I'll give my reactions.

Avoiding Internet Monopolies

Daron and Simon worry that big tech firms will establish long-lasting monopolies by their control of data. The suggestion of having users own their own data seems a good one:

The conventional commercial doctrine is that data are proprietary to the companies that collect them. This needs to change profoundly and completely since the playing field can only be leveled by making data available to all potential competitors. One way of achieving this is to ensure data belong to the people who generate the information, i.e., to individuals who drive cars, surf the internet, and buy goods.

I briefly worried that it would be hard to pay for free services if users weren't giving up data. But users giving companies the use of their data for the period of time they use the services should still be a substantial inducement to provide internet services. In other words, the internet companies would be renting the data rather than owning it. Or at a minimum, they would get non-exclusive access to the information. The user would have the right to share the information with another company. There are two possible rules: the website the user was using must erase the information if it stops providing the service, or the website the user was using may stop providing the service if the user shares the information with the new company. There are many possibilities that could work.

Free Higher Education

Daron and Simon have a view of higher education similar to the one I lay out in "The Coming Transformation of Education: Degrees Won’t Matter Anymore, Skills Will." They write:

Making high-quality education free for everyone would be a step in the right direction in this context. Technology can help with this, including through all kinds of on-line instruction. Loading up on student debt does not really help anyone — or our nation — prepare for what comes next in the world economy.

My take in "The Coming Transformation of Education: Degrees Won’t Matter Anymore, Skills Will" is this:

The road ahead is clear: the potential in each student can be unlocked by combining the power of computers, software, and the internet with the human touch of a teacher-as-coach to motivate that student to work hard at learning. Technology brings several elements to the equation:

customized lessons adapted to each student’s individual learning style at a cost that won’t break the bank
lectures from some of the most talented instructors in the world (such as this course in financial asset pricing by the impressive John Cochrane and many other economics classes by Tyler Cowen and Alex Tabarrok)
the kind of software motivational tricks that make it so hard for kids to pull away from video games
flexibility for students to learn at their own pace.

But since motivation—the desire to learn—is so important, a human teacher to act as coach is also crucial. In particular, without a coach, the flexibility for students to learn at their own pace can be a two-edged sword, because it makes it easy to procrastinate.

In the end, none of this will be hard. The technology and content for that technology are already good and rapidly improving. And although it is a bit much to expect someone to be both a great and inspirational coach and to be at the cutting edge of an academic field, the number of great athletic coaches and trainers at all levels indicates that, on its own, being an inspirational coach is not that rare. Being an inspirational coach in an academic setting is not quite the same thing, but I am willing to bet that it, too, is blessedly common. By having the cutting-edge knowledge from the best scientists and savants in the world built into software and delivered in online lectures, all a community college has to do to deliver a world-class education is to hire teachers who know how to motivate students.

As long as a community college education costs only as much to provide as it does now, it is not a big stretch to think that a community college education could be subsidized enough to be effectively free in the future. With the combination of technology and community college instructors as coaches, students will be able to learn a lot from free higher education. There would continue to be many elite, expensive schools that students would attend for reasons that go beyond academic and professional learning, but for those willing to settle for an excellent education academically and professionally, college would be free.

Reducing Labor Taxation

Daron and Simon want to shift taxation from labor to capital:

The economy needs a fundamental restructuring of the tax code to lower the taxation on labor and remove all of the subsidies to machines so that the playing field is leveled for labor.

I don't see capital as undertaxed. But it would be good to shift labor taxation more toward situations in which people tend to have low labor supply elasticities and to have some wage subsidies at the bottom. Prime-age first-earners in a family can be taxed more heavily. Those old enough to think about retiring, secondary earners in a family, and those who just might be able to make it onto the disability roles should have their labor income taxed more lightly. And we should either get rid of cash, or tax very lightly those at the bottom of the income distribution who might be tempted to get paid in cash and not report the income.

Monitoring Government Officials

Corruption and semi-corruption are big problems. Technology can help. Daron and Simon write:

Money calls the shots in Washington not just because of campaign financing, but because of lobbying and the broader influence industry. Lobbies have traditionally been much harder to regulate, because much of their work is performed behind closed doors (as opposed to campaign financing, which is more clearly visible). The only way of neutralizing the effects of lobbies is by creating greater transparency.

In this, technology can help. Artificial intelligence and big data analytics can be used to track everything that happens in the political sphere — automatically raising flags when they detect frequent meetings with certain networks of individuals or excessive amount of resources being expended relative to what is normal or regarded as acceptable. Crucially, this information will not be collected and guarded by a government agency, but will be made available to the entire public.

All elected politicians and their aides will need to agree to forgo a substantial amount of privacy in their public lives in order for this system to work. Some people may, as a result, choose not to subject themselves to this transparency and decline to go into the realm of public policy. But do you really want shadowy characters controlling the nation’s future?

For some time, I have been thinking along similar lines, as you can see from this Twitter discussion with Matt Stambaugh. Here is the way I am thinking about dealing with lobbying now:

Draw a sharp line between government officials and those who are not government officials.
Strict conflict-of-interest rules apply to government officials as now.
Government officials can talk freely to other government officials about policy, including discussions behind closed doors, but ...
... any communication between government officials and those who are not government officials about policy must be totally public. If in person, video must be recorded and immediately posted to a public, searchable website. If by phone, audio must be recorded and immediately posted to a public, searchable website. If by email, the email must be immediately posted to a public, searchable website.
Mechanisms are provided to keep the identities of those outside government anonymous, but only to the extent their identities are also anonymous to the government official. Ideally, there would be some way to verify the truth of whatever partial identification is given—for example, "I am a constituent in your district."
Government officials are not even allowed to talk about policy with family members who are not government official without recording that conversation and making it public.
Diplomatic discussions with government officials in other countries would count as a discussion among government officials.

Certain accommodations would have to be made. There would need to be scope for government information gathering that did not count as a policy discussion. Some policy discussion between government officials and those who are not government officials might be classified; these would not be made fully public, but only public to those (including journalists) who could qualify for the necessary level of clearance. Systems would need to be set up to insure that enough people had the necessary level of clearance that these contacts between government officials and those outside of government could be appropriately monitored. Former government officials might be especially valuable monitors in such cases.

I hope others are trying to think how to better monitor lobbying along these lines. I don't doubt that the details can be improved over what I am suggesting above. But it is important to not allow huge loopholes through which something like the lobbying status quo can be continued.

Nonpartisan Redistricting

Daron and Simon share my view that nonpartisan redistricting is crucial to improve US politics. They write:

Gerrymandering — changing the boundaries around congressional districts to ensure a particular outcome — makes a mockery of democracy. It reduces representativeness and thus exacerbates the political fault lines. Technology can help here as well. A constitutional amendment could easily require a fair and automatic redrawing of boundaries as population shifts, where the parameters of how such redistricting will take place are specified in advance and transparently to avoid the temptation for political manipulation.

I have three posts that touch on nonpartisan redistricting:

I am less optimistic than Daron and Simon that a purely technical solution is possible, though formal mathematical and statistical tests to judge proposals are a key part of nonpartisan redistricting. The key is to take redistricting decisions out of the hands of the politicians themselves.

Overall, working toward nonpartisan redistricting is a worthy area for activism for people who want to make a difference.

Fine-Tuning the Degree of Independence of the Civil Service and Judiciary

I favor more accountability of the civil service and judiciary to the political arms of government than do Daron and Simon. I don't disagree with this passage:

Another important step for strengthening our democracy is a constitutional amendment to increase the independence of the judiciary and the civil service, removing the power of the president to appoint judges (except Supreme Court justices) and prosecutors, and strengthening the role of career civil servants.

But there should be a continued inquiry into exactly how much independence is right for each agency and each type of situation. This is an important area of institutional design. Daron and Simon point to several specific types of situations where a greater degree of independence is needed than now:

For example, not only can the president remove prosecutors who may be investigating those close to the administration, but the political appointment process often paves the way to secret settlements agreements with powerful people and organizations — and judges bless these deals. Elections for judges and prosecutors is not a better solution either.

Like Daron and Simon, I worry about the effects of elections for judges and prosecutors.

Conclusion

Daron and Simon's suggestions are mostly reasonable. See if you can do even better!