Markets Are about Information, Not Incentives

If you spend any time on libertarian Twitter, you’ll hear endless praise for “incentive alignment”, “mechanism design” and of course the king of it all: “markets”.

For the most part, these genuinely interesting and complex ideas have basically been dumbed down to “pay people to do things”.

Consider Eli’s tweet about a “market” for Lunar Regolith:

Yes, it’s true that NASA is paying companies for soil, and it’s true that this “incentivizes” missions to the moon, but this is neither a market, nor NASA’s intention for the project.

As with any language debate, the question is “defined as X for what purpose”. So let me be more precise. NASA’s project is not a market, in the sense of markets as a mechanism for the efficient allocation of resources.

This is the view laid out by Ludwig von Mises’s foundational Economic Calculation in the Socialist Commonwealth, and Friedrich A. Hayek’s later Economics and Knowledge and The Use of Knowledge in Society which together form the basis of the economic calculation problem.

Quoting Hayek’s TUKS:
We cannot expect that this problem will be solved by first communicating all this knowledge to a central board which, after integrating all knowledge, issues its orders. We must solve it by some form of decentralization.

I fear that our theoretical habits of approaching the problem with the assumption of more or less perfect knowledge on the part of almost everyone has made us somewhat blind to the true function of the price mechanism…

Are any of these ideals fulfilled by NASA’s project?

Of course not. This is merely a central agency setting an arbitrary price determined by technocratic calculus. From a mechanism design perspective, it’s equivalent to a prize.

Except that  NASA’s project is not even an incentive. Eli neglected to mention this, but the actual price range set by NASA is just $15,000 to $25,000.

This is a tiny fraction of the millions or billions required for a mission. As a lower bound, a SpaceX launch costs $62 million and Jim Bridenstine (who announced the project and runs NASA) estimates a cost of $30 billion to develop a “sustainable presence on the moon”.

So no, NASA is not “incentivizing” missions to the moon, at least not in any meaningful sense.

If the Lunar Regolith project doesn’t aggregation information, and doesn’t provide an incentive, what’s it for?

From Jim’s remarks at the Secure World Foundation’s Summit for Space Sustainability.
What we’re trying to do is make sure that there is a norm of behavior that says that resources can be extracted and that we’re doing it in a way that is in compliance with the Outer Space Treaty,

And from the launch announcement:
The ability to conduct in-situ resources utilization (ISRU) will be incredibly important on Mars, which is why we must proceed with alacrity to develop techniques and gain experience with ISRU on the surface of the Moon.

If Eli had spent any time at all reading about this before shitposting on Twitter, it would be immediately obvious that NASA’s purpose is primarily in setting a regulatory precedent, not creating a market.

To his credit, Eli tacks this on as “bonus”:

But this strikes me as even more disturbing than a simple omission. The fact that he’s aware of the project’s role as regulatory precedent but not of that role’s relative importance suggests a kind of willful ignorance. Eli is so fixated on promoting the “market” narrative that he’ll reframe available evidence to support it.

More cynically, I wonder if our obsession with “bold polyglot intellectuals” is just a systematized abuse of Gell-Mann Amnesia.

You go on Twitter, you read someone’s tweet on a subject you know something about, and see that the author has no understanding of the facts. So you keep scrolling and read their tweets about cancel culture, space exploration and criminal justice reform, totally forgetting how wrong they were before.

In this sense, every tweet is an option with asymmetric returns. If you’re right, you cash out; if you’re wrong, everyone forgets and you lose nothing. The incentive is to ramp up variance, make bold claims in a variety of areas, and hope you’re right some of the time.

Unlike the regolith project, Twitter is an actual market for ideas, albeit one without a price.

Learning in Public in Real Time

Half my work hours are spent writing these posts. The other half are spent thinking about what the fuck I’m doing with my life.

It’s totally unclear to me if:

  • A) Writing a blog on the internet has any benefit for myself
  • B) Writing a blog on the internet has any benefit to society and
  • C) I have the capacity to become significant even within the realm of internet blogging.

As someone who has taken the easy road through life and received constant encouragement of various forms, it is painful to spend even a week on something in relative isolation. Of course, the vast majority of the feedback cycles I’ve been a part of have been totally artificial, but that doesn’t change the fact that they dominated my psychology for the last several decades.

So a huge drain on my time is spent wondering “how do I become a successful internet blogger”, but it is embarrassing to write anything on the subject while I am not yet successful. It is like being a skinny person writing about how to lift weights.

And yet I have read all the guides by successful people (The Art of Doing Science and Engineering, Principles of Effective Research, Alexey Guzey’s Productivity, Nadia’s Reimagining the Phd, The Idea Factory, The Dream Machine, Dealers of Lightning, various Walter Issacson books), and found them all completely useless, if not actively detrimental.

I attribute much of this uselessness to various biases:

  • Hindsight Bias: People believe, in retrospect, that there are clear causal relationships which may not actually exist.
  • Selection Bias: Successful people may undertake high-variance strategies, but we won’t know how many people did the same and failed.
  • Self-Serving Bias: People want to attribute their success to virtuous personality traits, like hard work and curiosity, but will leave out the gory details.

Not to mention, human memory is just generally garbage.

So embarrassment aside, I’ve decided to dedicate more time to journaling, and hope to create a real-time log of my experience. Worst case scenario, I fail miserably as a blogger, but will at least serve as a data point against selection bias.

Perhaps years from now when some successful blogger espouses the same strategies I document as the reason behind their success, I will be able to stand up bravely and say “No, that’s not a particularly good strategy, you’re just smarter than I am.”

On "Not voting as a form of protest"

The only way to write a substantial book is to lock yourself into a particular ideology, stop second guessing, and just work.

Accordingly, an author’s first words since their last major publication are those they have denied themselves. They are nearly sacred in their innocence, and with the urgency to be spoken ahead of every other thought left unexpressed.

So after 4 years writing her tour de force ode to community participation, it is refreshing but not shocking to read Nadia’s newest post on democratic abstinence.

It’s puzzling however, that Nadia ends by writing:
The reason I’m curious about this topic is because the idea of not voting seems to provoke a sort of digust [sic] and moral outrage that, say, democratic lotteries or liquid democracy, does not, even though these are arguably equally radical proposals.

The gigantic difference between abstention, lottery and liquidity is that only the first is at all attainable. If I meet someone who wants to implement an alternative voting scheme, no matter how radical, my reaction is not disgust or horror, it’s “good luck.”

Voting reform is famously slow, practically so because it tends to involve constitutional amendments, and theoretically so because every politician who could implement it has already benefited from the existing system.

In contrast, abstaining is something that anyone can do right now. In fact, it’s the default position if you simply decide to not do anything at all. It generates moral outrage because it’s an actual threat, not just a radical idea.

Perhaps something should take the place of politics as a better meaning-making structure, but I don’t have a good idea of how abstaining gets us there, or what change it provokes that qualifies it as a “civic engagement strategy”.

US voter turnout is already very low compared to other wealthy countries, and our elections are very close, and the logistics, somewhat questionable. If the idea is to further delegitimize the American presidency, it is difficult to understand how we could try any harder, or accomplish any more.