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The Panacea for the West = Digital Democratic Markets

Why Britain is Broken and How to Fix It.

Today’s political zeitgeist can be summed up in two words: exasperated bewilderment. Why does nothing work? Why has everything broken down at once? Is it all connected? And if so, how do you fix it? Is there an existential answer to the crisis enfolding Broken Britain and Western Civilisation?

Well there is; and it can all be explained with a three-line drawing:

What you are looking at is an n-curve. Almost everything conceivable is an n-curve. Eating is an n-curve. Eating is good for you, but as you eat more, the nutritional benefits diminish and eventually turn negative, meaning you get fatter and sicker.

The Financial Crisis was the product of n-curves. Access to credit is a good thing up to a point; then it becomes a very bad thing. Further, banks became dysfunctional because they got too big. Industrial scale is also an n-curve. Banks need some scale to diversify their loan books and to cover their regulatory and IT costs. It is not economic for a bank to have five customers. But after a point, diseconomies of scale kick in and banks become too complex. The sorry saga of NatWest (formerly the ill-fated RBS) is a case in point.

Humans find n-curves conceptually difficult. That’s because the first experience of an n-curve does not look like an n-curve at all. It looks like a straight line up and up forever. For evolutionary reasons, human brains are designed to extrapolate straight lines. That’s why we have a habit of taking good things too far.

Experience, Expectation and Reality. What you first experience, what you expect, and what you get:

And it is these dastardly n-curves that explain why our PPE-at-Oxford elites have failed so catastrophically. Post-war political academics were at the foot of a lot of n-curves. They saw that having some NHS and welfare state was better than having none. They saw that some globalisation was better too. In the decades after the war, the European Community was a resounding success. Clearly some European integration was good; as were human rights and minority protections. And they saw (thanks to America’s Jewish émigrés and Europe’s post war reconstruction) that some immigration was beneficial. Higher education brought prosperity and social mobility, as did access to debt. While scaled up industrialised mass-production promised yet more everlasting growth.

Unsurprisingly, these 20th century thinkers believed they had stumbled on a beeline to utopia. If some of these things were better than none, then more and more and more of them would be better still. So this is what they taught the Sunaks, the Blairs, the Camerons and the Trusses.

In other words, the post-war academic generation hardwired our elites into thinking you cannot have too much of a good (neoliberal) thing. The Götterdämmerung of Western hegemony can be summarised as taking brilliant post-war ideas too far.

So if that is the disease, then what is the medicine? The answer is not to doggedly carry on down the other side of the n-curve - as our elites seem hell-bent on doing – until our prosperity, quality of life, and culture are annihilated. Nor is it to torch the entire post-war order, ban migration, shut down the NHS and turn on minorities.

The answer is to find the top of the n-curves – the point where the quantity of things like immigration, higher education and globalisation bestow optimal benefits on citizens.

This is tricky because n-curves are dynamic. For example, the optimal amount of immigration will vary over time depending on factors like housing, demographics, employment and social cohesion. Sometimes we will need a lot, and other times little or none. The same goes for NHS spending, higher education, or indeed anything else.

How do you find an optimal answer to a dynamic situation? The best answer, as Adam Smith famously posited, is open markets. However, pace Smith, a market does not have to be about money. This is crucial. A referendum or a general election is a market for ideas. The only difference is the currency is votes. Betting is a market for sourcing accurate predictions. Ratings apps like Tripadvisor or Trustpilot are markets for opinions.

To find the optimal point of an n-curve, you need different markets depending on the problem you are trying to solve. An economic supply-demand equilibrium (like the price of oranges) is best solved by a financial market. A local issue can be best solved by local democracy, national issues by national democracy, and party issues by party democracy.

It is astounding how successful democratic solutions can be. Switzerland is the world’s only direct democracy. The average Swiss citizen votes on about a dozen local and national issues a year. Switzerland has no cost of living crisis. The average Swiss is twice as rich as the average Brit and the country ranks number one in the world for quality of life, freedom, political stability, innovation and infrastructure. Moreover it has world-leading healthcare, and the lowest levels of crime and corruption. Unlike every other democracy, Switzerland maintains extremely high levels of trust in its politicians, institutions and democracy itself.

Like free markets, Swiss direct democracy is amazing at keeping society positioned on the top of those n-curves. For any aspiring society, it is now Switzerland and not America that represents the shining city on a hill.

Switzerland may look like the panacea, but there is the opportunity to do even better. The phones in our pockets have the potential to find the best answer to every social and political problem we face. Instead of watching cat videos or posting holiday snaps, we could use them to fix everything.

Take the immigration omnishambles. It makes voters hopping mad that our elites have been tone-deaf for twenty years. They cannot even accept responsibility; with blame bounced like a basketball between the Home Office, the Treasury, the Prime Minister, the legal profession and the Migration Advisory Committee.

Migration affects every one of us in myriad ways. It is a social and economic issue. No single person or committee can incorporate all those factors. Thus the best answer is a universal vote. Registered voters could go on their phones once a year and set the net migration number on sliding scale from, say, -0.5m to +0.5m. The government then takes the average and implements it through a real-time auction of visas and citizenship, using pricing algorithms to maximise the economic benefit.

Most answers to n-curves are like this: a hybrid concatenation of democratic, financial and data-driven markets. Take higher education. How might you fix it? Perhaps you let the rich pay through the nose to study for sheer pleasure. You use the profits (plus endowments) to fund access for the tiny umber of truly academically brilliant students.

The bulk of the system could be funded by a National Insurance style employer tax. Employers could determine how big the tax is and the quantum of the pot; and what courses to fund. Thus you have a higher education market that redistributes wealth, funds the modicum of academic genius that society requires, and lets employers pay for and stipulate the qualifications they need.

Crucially, Artificial Intelligence can act like a market by turning the currency of big data into answers that no human can conceive of. Instead of handing vast Covid authority to dunces and dullards like Matt Hancock and the Sage Committee, AI could have scraped real-time data from the myriad Covid experiments going on all round the world, examined the social and economic costs and optimised the response while improving in real time. After all, every country and every state was trying different things and recording the results. It seems extraordinary for example that we did not realise that masks were useless till a year after the whole fiasco ended!

Further, AI is amazing at spotting early warning signs, such as trending issues or subtle shifts in public opinion. I am convinced that Up-voted comments at the bottom of articles are the most politically insightful resource in existence. They capture the anonymous, snap judgements of people bothered enough to read an article and peruse the comments. This perfectly mimics cognitive pathways in the voting booth, and captures those sufficiently engaged to actually vote. If you read the comments on the bottom of nationalist-friendly newspapers you would have realised the SNP was losing the room (especially on trans rights) 18 months before the whole thing blew up. Ditto Small boats. Ditto Net Zero. Ditto Brexit. The metropolitan media get all the attention but they are a complete red herring. It’s the comments that matter. Anyone who scraped the data from up-voted comments would have a crystal ball and could not help but win a landslide. The best consumer companies already do this. That is how they know what their customers want before their customers do!

Tripadvisor is yet another digital market mechanism perfectly suited to revolutionising public service quality, just as it has transformed British hospitality. All you need is an app that allows anyone to rate any public service, and attach financial consequences to those ratings. That would provide real time feedback, motivation and decentralised governance across the entire public sector. One can scarcely imagine the panic at HMRC, the Bank of England or the BBC if taxpayers called the tune!

This is the natural extension of free market capitalism. Free Markets were revolutionary because they offered a transparent, efficient and dynamic alternative to the declinism of stale committees and central planners. The mistake of the free market Thatcherites was not their belief in free markets; it was that the only market they understood was in financial terms. Hence, Thatcher is viewed as an economic success and a social failure. But as we have seen, the currency of markets does not have to be money. It can be votes, opinions, ideas, ratings, bytes of data, or anything else. Indeed, if you look at the history of markets, currencies can be anything where there is a shared belief in the currency’s value.

Perhaps you could call this Thatcherism 2.0. But it is so much bigger. This is the apogee of Western thought: the synthesis of democracy, free markets and technology: an arc of civilisation that fuses Ancient Athens to Enlightenment Edinburgh to High-tech California.

With our society divided like never before, here is a way to reunite and reconnect community and nation. An open market in search of an answer is inherently cohesive in the same way that a farmers market, a crowd-sourcing network, or a Swiss Referendum brings a community together. You have shared beliefs, a shared currency and shared contributions in a shared search for an answer. This is tribalism not based on race, religion or gender, but on those invested in finding an answer. That renders today’s identity politics and wokery redundant. A market that is open to all those whom it concerns is already a perfect example of Equality, Diversity and Inclusivity.

This is not a small idea. It is the complete upending of Politics. Our elites and leaders have no good answers. The answers lie with us. Economics and politics should no longer consist of elite-on-elite debates or stale committees ruminating in ivory towers. In the new politics, the job is not to find an answer, but tofind the system that finds the answer.

To anyone over thirty this may sound like a brave new world, but to the digital generation it is intuitive. Surveys have found a stark generational dichotomy between young and old. The young are happy to entrust their savings or the piloting of their cars to robots. Older people want to do it for themselves. To young people versed in coding, algorithms and AI, you don’t need to answer impossible questions; you just need to design a system that answers the question better than a human or committee ever could.

Today’s politics is an anachronism – a centuries’ long pitched battle of egos advancing and retreating across the same muddy field. Finding the system to find the answer is a Youth Movement. Every Tory activist is having kittens over the fact that as the average Conservative voter gets older, they will die out like dinosaurs. Well here’s the answer: Thatcherism 2.0 is an extension of what young voters already do every day on ChatGPT, Tripadvisor, Tinder, Nutmeg and Ebay. Don’t patronise me with your answer, engage me in a system that finds the answer.

Moreover, that system is addictive. Integrated democracy is a heady cocktail of social networking, power and attention. Who could resist? The curveball answer to safeguarding democracy against the tyranny of minorities is to make it as addictive as gambling or cocaine. The notion of turning addiction into a positive social contribution is the ultimate Enlightenment finale – more David Hume than Hume himself could have conceived of!

The existential crisis confronting the right is forcing some to ask big questions. Onward UK has launched its Future of Conservatism Project, Policy Exchange has a new head of Political Economy, while others are calling for a political Manhattan Project to work on radical solutions. Gradually and ineluctably they will come face to face with a paradox:

The future of conservatism is the end of conservatism, and indeed the end of politics.

The Panacea for the west
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