California Free Press

Economist Kenneth Arrow, Nobel Laureate, Dead at 95

by John Lawrence

Was Arrow's Impossibility Theorem an Endorsement of Free Market Capitalism?

Kenneth Arrow, Nobel prize winning economist, passed away February 21, 2017 at the age of 95 at his home near Stanford University where he was Professor Emeritus. He was the youngest person ever to win the Nobel prize. Dr. Arrow made many academic contributions, but chief among them was his Impossibility Theorem. It is an example in my opinion of the over mathematization of the social sciences. As such it is absolutely elegant and correct as a mathematical theorem, but it's implications on a practical level, that capitalist economics and representative government are the best a society can do, even Arrow would not defend in later life. In fact he suggested at the age of 90 that further research would come up with ways to work around his system if not to discredit it altogether. However, the damage had already been done. Capitalism, as evidenced by his nephew, Larry Summers, was exalted and welfare economists and political reformers were stopped in their tracks.

Larry Summers is an economist and President Emeritus of Harvard University. He served as the 71st Secretary of the Treasury for President Clinton and the Director of the National Economic Council for President Obama. He was the one who pushed Clinton for deregulation of the Glass-Steagall Act which led directly to the 2008 financial meltdown. When he was President of Harvard, he gained notoriety for a sexist remark in a 2005 speech in which he suggested that the under-representation of women in science and engineering could be due to a "different availability of aptitude at the high end," and less to patterns of discrimination and socialization. Summers evidently took his uncle's Impossibility Theorem to heart and championed free market capitalism. An encomium to his uncle can be found here.

Plurality Voting Holds in Most US Elections

Dr. Arrow said in an interview in 2012:

“I think the answer is you have to ask, in effect, which ones get closest to this combination? And we have to then begin to look at what actual votes are. The real way we do this is to apply some rule and to take elections and apply different methods and see what violates these conditions as little as possible. Remember all we’re saying is there could be a [violation]. We’re not saying you’re always getting a violation of these rules.”

What Arrow was saying is that there are other political and economic systems that, while not perfect according to his criteria, were nevertheless possibly better than what we have today. In fact Arrow decried the pitfalls of winner-take-all (plurality) voting which does satisfy his criteria. It chooses one winner out of a number of candidates and is the method used in almost all US elections including the election for President.

Arrow had this to say about plurality voting:

“I think plurality voting leads to very unsatisfactory solutions in a number of cases. Now, there is a problem which certainly my social choice theorem didn’t address and a lot of discussions don’t address about elections, which is the long-run implications of an electoral system on parties.

“Partly, if you have a plurality system, you’re kind of driven to a two-party system. If a party splits, both factions lose because they’re less likely to get a plurality. So there’s some pressure to create two-party systems.

“Now some people have argued that two-party systems are a good idea. And others say no. It stifles innovation. It stifles real contest. New ideas are suppressed in a two-party system. I’m inclined to the latter view that if there really are a number of political positions, it’s better they be raised explicitly.

“The plurality system chokes off free entry. In other words, in the economic world we’re accustomed to the virtues of free entry. We don’t want a small number of corporations to be dominant. We favor the idea of new firms entering in order to compete to bring in new ideas, to bring in new products.

“Well, the same way in the political field. We should be encouraging free entry, I think, in order to have new political ideas come in. And they may flourish. They may fade. That’s what you want, them to be available.

“So I’m inclined that the plurality system will choke off by encouraging, the two-party system will choke off new entry. So I’m really inclined to feel that we don’t want plurality as a voting system. It’s likely to be very stifling."

Social Choice: Mathematics Meets the Social Sciences

Social choice is an esoteric, abstruse and specialized subject generally only of interest to the academic community and then only to those interested in political or economic science. In this article I will try to simplify the concepts and point out how they could be applicable in developing more democratic political and economic systems. In 1951, Kenneth Arrow published his book, Social Choice and Individual Values, in which he claimed that the amalgamation of individual choices whether in a political system (voting, for example) or in an economic system (consumer choice, for example) to form an overall social choice (such as the winner of an election, for example) was impossible if you postulated a simple set of (supposedly) rational and ethical criteria. As Arrow stated in the first sentence of his book, "In a capitalist democracy there are essentially two methods by which social choices can be made: voting, typically used to make 'political' decisions, and the market mechanism, typically used to make 'economic' decisions." He goes on to say, “The methods of voting and the market … are methods of amalgamating the tastes of many individuals in the making of social choices.” They are similar in that both involve collective choice among a limited range of alternatives.

Arrow than went on to make a lengthy mathematical analysis, at the culmination of which he asserted that social choice was impossible. This has come to be known as Arrow's Impossibility Theorem. For this and other work in a distinguished career, Arrow won the Nobel prize in economics in 1972. The fact that social choice was apparently impossible put the kibosh on any further work in this field and led to much despair among voting theorists and welfare economists. If there is no rational way to make social decisions based on the amalgamation of individual ones, not only welfare economics but any hope for economic democracy is ruled out. Also democratic voting systems other than majority rule in first-past-the-post (plurality), one member districts are ruled out. The dichotomy between political and economic systems remains with the implication being that representative democracy and capitalist economics are the best systems that can be attained. Amartya Sen in his Nobel Prize acceptance speech said, "Two centuries after the flowering of the ambitions of social rationality, in Enlightenment thinking and in the writings of the theorists of the French Revolution, the subject seemed to be inescapably doomed."

Getting Down to the Nitty Gritty

Let's take a look at Arrow's analysis. As a simple example let's take a voting system in which there are three candidates: A, B and C and three voters: 1, 2 and 3. Arrow postulates that each voter will rank the candidates in order of preference ^i.e. A is preferred to B is preferred to C would be indicated ABC. One of Arrow's criteria is that for every possible arrangement of voter preferences there should be a unique social choice consisting of one and only one ranking, for example, ABC.

So what about the case when voter 1 votes ABC, voter 2 votes BCA and voter 3 votes CAB? If we let ABC be the social choice, we notice that two out of three voters preferred C to A so that can't be it. Likewise for BCA and CAB. This phenomena is called the paradox of voting and was discovered by the Marquis de Condorcet in the 1700s. Arrow could have stopped right there and said that social choice was impossible according to his terms, but he didn't. He went on to mathematicize the heck out of the problem reaping much credit in the process. The stopped progress in social theory is at least partly due to the fact that no one has been able to come up with a more elegant mathematical analysis!

But wait a minute. Is Arrow's set-up of the problem even realistic? I say it's not. Arrow demands that a social choice be a complete ordering such as ABC. That's neither realistic nor necessary. For multiple candidates and multiple winners, all that's necessary is to know which ones are in the winning set, not their order. For instance, if A, B, C and D are candidates, and the outcome produces two winners rather than one, the only necessary information is which two winners, not their ordering. If A and B are both winners such as in a two member district, for example, we don't need to know if A is preferred to B or vice versa.

Proportional Representation is a voting system for choosing multiple winners and has been around for years. Whereas first-past-the-post (plurality), single member districts lead to a two party system, Proportional Representation induces a multi-party Congress or Parliament in accordance with the percentage of votes received by the party. While a big improvement over majority rule, proportional representation has no theoretically optimal underpinning.

Arrow states: "In the theory of consumer's choice, each alternative would be a commodity bundle; ... ; in welfare economics, each alternative would be a distribution of commodities and labor requirements." It is clear that in consumer's choice, the collective choice mechanism would narrow down the possible number of commodity bundles to a "limited range of alternatives" in which case there would be no need to order each alternative in the "limited range." Consumers would just choose the commodity bundle that represented their highest preference.

So Arrow's fundamental assumptions were somewhat arbitrary to say the least. But other academics were so impressed with his mathematical prowess that they gave him the Nobel Prize. And evidently Arrow, rather than continuing work which might have shown the limitations of his Impossibility Theorem, was content to sit on his laurels and be a respected professor at Stanford University, a conservative enclave if there ever was one. (Truth in advertising: I'm a graduate of Stanford University.)

Economic Democracy, Co-ops and Shift Scheduling

As for welfare economics, there are also implications of social choice for economic democracy. We envision cooperative enterprises in which worker/owners freely choose their shift and pay preferences from the totality of possibilities in accordance with a social choice mechanism which maximizes collective satisfaction among all worker/owners. Today already shift scheduling software is available for nurses on a first come, first served basis. In a profit making environment the scheduling software is more about reducing overtime costs and costs in general than it is about maximizing shift satisfaction among employees, but that would change in an employee owned enterprise.

Arrow assumes that all information will be gathered from the voters or worker/consumers in the form of rankings (A is preferred to B is preferred to C etc). However, there is another form of indicating preferences over candidates and that is ratings. A citizen can indicate preferences by rating candidates on a scale consisting of real numbers between zero and one or minus one and plus one. The scale itself is arbitrary. Then the social choice is made by adding up the numbers for each candidate over all individual choosers. This is called utilitarian voting. Clearly, this method will yield consistent and rational results. It is also called range voting or score voting which was reinvented by Warren D. Smith. Utilitarianism as a philosophy was invented by Jeremy Bentham and John Stuart Mill, 19th century English philosophers, who defined their system as "the greatest good for the greatest number."

Two guys, Brams and Fishburn, came up with a method of voting called approval voting. They said just give every candidate you approve of a one and all others a zero and then tally up the votes. The candidate with the highest number of votes was declared the winner. The problem is how do you choose which candidates to approve in an optimal manner?

I have had a lot of animosity towards Arrow in my lifetime because of his Impossibility Theorem. I have a website dedicated to proving him wrong. Why didn't he go on to study what was possible even if it wasn't perfect according to his seemingly rational (but not really) criteria? There must be a workaround or a compromise for surely nothing is really impossible. But how dare I or anyone else criticize such a formidable mathematical analysis? Well, I do. Did the conditions he set up doom his theoretical outcome to failure? I think so. Did Arrow stop there because he was an apologist for the capitalist system and the traditional US method of voting? Did he bask in the approval of free market capitalists who liked nothing better than for someone to prove theoretically that any system other than capitalism was fatally flawed? I think so. Did he gain brownie points because he supposedly proved that the American political system rested on a firm theoretical footing while parliamentary democracy did not? You bet.

Ah well, may he rest in peace and may other economists and political scientists not be stymied by his overly mathematical but soulless result. As it turns out Arrow's conditions don't have much to do with the real world. His analysis represents a theoretical result which amounts to proving how many angels can dance on the head of a pin. I guess the Nobel committee was impressed by such mathematical legerdemain.

What the World Needs Now? - More Cooperation or More Competition?

by John Lawrence

When I was a graduate student at UCSD in the midst of the anti-war movement, protesting the war in Vietnam, I went to the library and pondered what would make the world a better place, what could I do to contribute something that might make war less likely and peace time activity more likely. I concluded that more cooperation was needed. More ways to resolve conflicts big and small. For example, democratic voting systems resolve conflicts in such a way that solutions are found that are acceptable to all parties for the most part. I took it for granted that institutions that provided for more cooperation and less competition were more desirable. I thought that this was what the Enlightenment was all about. My heroes were the Enlightenment superstars: Jeremy Bentham, John Stuart Mill, Rousseau, Diderot, Voltaire, John Locke.

As I sat there and went through the stacks, I discovered another field and another set of superstars. Social choice has a long history going back to the French Enlightenment philosophers, the Marquis de Condorcet and Jean-Charles de Borda, and even further back than that. One of the 19th century superstars in this field was none other than the Rev. C. L. Dodgson otherwise known as Lewis Carroll, the author of Alice in Wonderland. These guys came up with voting systems which are essential to democracy and are essential to the whole notion of cooperation and conflict resolution. The most recent work in this field was by Kenneth Arrow who published a book Social Choice and Individual Values in the 1950s which attempted to generalize conflict resolution in society in both the political and economic spheres. Arrow concluded that this was impossible and came up with his famous Impossibility Theorem which was a generalization using sophisticated mathematics of the paradox of voting that was known to Condorcet hundreds of years ago. Therefore, Arrow concluded democracy was impossible and any economic system other than capitalism was impossible too. Hmmm, I thought, this is obviously a cop-out because some political and economic systems are more desirable than others and Arrow has done nothing except to throw cold water on any framework that could consider these. I took it as my self-assigned task to prove that Arrow was wrong, that social choice is possible. My work can be found on the website Social Choice and Beyond.

My latest work is "Politonomics: A Meta-Theory Encompassing Political and Economic Decision Making." This is from the Abstract:

In “Social Choice and Individual Values,” Kenneth Arrow said , “In a capitalist democracy there are essentially two methods by which social choices can be made: voting, typically used to make ‘political’ decisions, and the market mechanism, typically used to make ‘economic’ decisions.” This paper resolves that dichotomy by developing a meta-theory from which can be derived methods for both political and economic decision making. This theory overcomes Arrow’s Impossibility Theorem in which he postulates that social choice is impossible and compensates for strategic voting, an undesirable aspect of decision making according to Gibbard and Satterthwaite. Thus the politonomics meta-theory spawns both political and economic systems which are indeed possible and which cannot be gamed. In a typical voting system the outcome of an election among several candidates results in one realized outcome – the winner of the election - which applies to all voters. In a typical economic system, a consumer may choose among a variety of possible baskets of consumer items and work programs with the result that multiple realized outcomes are possible with a unique or quasi-unique outcome for each worker/consumer. As the number of possible realized outcomes of a political-economic decision making process increases, the process becomes more economic and less political in nature and vice versa. We show that as the number of possible realized outcomes increases, voter/consumer/worker satisfaction or utility increases both individually and collectively.

I never considered, as I sat there pondering, that there would be people who would argue that what the world needed was not more cooperation but more competition, but, as I sit here today, I realize that the whole conservative right wing is in favor of just that. They want not more cooperation in either the political or economic realm but more competition believing that only winners should prevail and human progress is only possible when you give free reign to those among us who are the most talented, intelligent and ambitious. They believe that competition will result in the strongest among us winning just as Nietzsche believed that a good war hallows every cause. Their ethic is that the naturally gifted elite should prevail, and they are not concerned about what happens to the rest of us or of who is trampled in the process. This is also the philosophy of Ayn Rand as espoused in her novels Atlas Shrugged and The Fountainhead.

The debate today about increasing inequality in the world has to do with the prevalent conservative belief that only the strong should survive and be promoted and that freedom should preclude equality as a value. The rich should get more tax breaks because they are the true instigators of human progress and should be catered to at every turn. Perhaps a few crumbs will trickle down to the rest of us. This kind of thinking is counter to the Enlightenment and is fast returning us to a neo-Dark Age. No more is human progress to be measured in reduction of poverty and extension of basic services like health care to everyone. It is to be measured in terms of the great advances to human civilization like iPads, iPods and iPhones. People who are capable of coming up with these advances should be cut every break and none of the billions of dollars they make should be transferred by government to the least of these among us like the homeless, the poverty-stricken and the destitute because, well, they are the least among us, not the best among us who should be given every break.

Nevertheless, I remain in the camp of those who think that more cooperation in the political and economic spheres will do more for human progress than more competititon. I also have spent about 40 years in my spare time trying to prove that Arrow was wrong, that social choice is not impossible and that democracy in both the political and economic spheres is not only possible but desirable. This has a lot to do with voting systems, democratic institutions and constitutions but also with cooperative economic systems in which freedom is seen not as the freedom to make money at other people's expense (the losers in the competitive struggle) but the freedom to work as much or as little as one chooses and in accordance with one's preferences as much as possible. Freedom from work is for many people just as desirable a goal as the freedom to make billions of dollars, and wealthy people who don't have to work would be the first to tell you that. Economic democracy in my view is more desirable than cutthroat capitalism, and can be practiced not only at the national level, but at the enterprise level in the form of co-ops like the Mondragon Corporation.

Marx's famous definition of the "good society" was "from each according to his ability, to each according to his needs." This of course was perverted in defining communism as a society where all the wealth created by those who had a lot of talent and ability as well as a strong work ethic combined with those who had not so much in those categories would be thrown into a pot and then divided up in equal portions and handed out by the government. Such need not be the case in achieving the "good society." The "needs" part is pretty basic and could probably be accomplished with abouit 10% of the wealth that exists in the world today. Most people can provide for their own needs - no transfer necessary. There are some who cannot and to transfer a small part of the wealth of the wealthy to provide for their basic needs seems to me to be no more than humane. That still leaves the vast amount of wealth in the hands of the wealthy. In other words if you total up how much it would cost to provide for all the basic needs of everyone in the world and tote up how much wealth there exists in the world, it would take a fraction of all that wealth to provide the basic needs for everyone who cannot provide for their basic needs themselves who turn out to be mainly children, seniors and handicapped (whether physically or mentally) people.

A recent documentary by German TV station Deutsche Welle pointed out that half the world's production of food is wasted because super markets only want perfect vegetables and ones with slight blemishes are thrown out even though they are perfectly edible. Shelves need to be fully stocked with bread right up till closing hours even though any bread left over at the end of day will be thrown out as "day old." All the food that is thrown out by advanced nations is enough to feed all the world's hungry three times over although no governments or other institutions, much less the supermarkets themselves, seem to be interested in organizing that effort. This is what I mean by the fact that the basic needs of all the world's people could be satisfied without subtracting much if anything from the world's wealthy although a lot of them would admit they do not need incomes of millions of dollars a day like the Fortune 400 billionaires have.

Another documentary noted that Finnish school children have the highest test scores in the world despite the fact that they have one of the world's shortest school days with 15 minutes intermissions between classes during which time they are encouraged to go outdoors and play. All grades have large amounts of music, art and self-defined projects. They don't teach to the test. They are concerned with the development of each student as an overall human being not just as some super competitive cog in a nationally competitive machine. The Chinese on the other hand have the opposite approach demanding that children learn by rote methods and extra hours in school and at study. The Finnish schools are all public and everyone is accepted into every class. There are no advanced classes or tracking of students into lesser classes if they are not among the elite intellectually. Everyone is thrown in together; yet they have the best outcomes of any country in the world on standardized international tests. Egalitariansim seems to gain the best results.

An egalitarian ethic in which the concern is for the development of the whole human being rather than a promotion of just those who have superior abilities in accordance with a competitive ethic seems to me to be the most humanitarian way to treat both children and adults. The 1948 Universal Declaration of Human Rights already provides for most of the "from each according to their abilities, to each according to their needs" ethic. It calls for free health care which most advanced socierties, with the exception of the United States, already provide. It calls for free education and other public institutions and covers most basic human needs including food and shelter.

Here are Articles 25 and 26:

Article 25.

• (1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
• (2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.

Article 26.

• (1) Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit.
• (2) Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of peace.
• (3) Parents have a prior right to choose the kind of education that shall be given to their children.

All the basic needs of everyone on the planet could be provided for without subtracting much of the wealth of the rich since most people can provide for at least their basic needs without any transfer of wealth whatsover being necessary. Interestingly, the US among other nations does provide food security for the poor through its food stamps program. And of course seniors are provided for through Medicare, Medicaid and Social Security, programs which conservative free marketers are anxious to change or eliminate.

I am with the Enlightenment thinkers especially the English utilitarians like Jeremy Bentham and John Stuart Mill who thought about the happiness of society as a whole and concluded that everyone counted, not only the ones with exceptional talent, ability and other admirable qualities. A society should be judged by how it treats "the least of these my brethren" which is the core and essence of Jesus' teachings but, sad to say, not the core and essence of Christianity as it exists in the world today. Perhaps we should start thinking about an alternative constitution for the US which has the world's oldest constitution (236 years old!) while being the world's youngest advanced nation. Other societies including most European societies while being older than the US have newer constitutions. As far-sighted as the Founding Fathers were, a new and updated constitution incorporating not only political but also economic rights along the lines of the UN Declaration of Human Rights would do much to right the wrongs and shortcomings of present day America and the world.

A Conservative Idea I Actually Like

by John Lawrence

There's not much that comes out of conservative mouths these days that I find agreeable. However, Republican Governor of Indiana Mitch Daniels, in his rebuttal to President Obama's State of the Union Speech, mentioned an idea for saving the government money which I heartedly (I won't say whole- heartedly) endorse. He said:

"There is a second item on our national must-do list: we must unite to save the safety net. Medicare and Social Security have served us well, and that must continue. But after half and three quarters of a century respectively, it’s not surprising that they need some repairs. We can preserve them unchanged and untouched for those now in or near retirement, but we must fashion a new, affordable safety net so future Americans are protected, too.

“Decades ago, for instance, we could afford to send millionaires pension checks and pay medical bills for even the wealthiest among us. Now, we can’t, so the dollars we have should be devoted to those who need them most.  [ed. note: Amen!]

...

"It’s absolutely so that everyone should contribute to our national recovery, including of course the most affluent among us. ... The better course is to stop sending the wealthy benefits they do not need, and stop providing them so many tax preferences that distort our economy and do little or nothing to foster growth."

First I should add that there is $2.5 trillion in the Social Security Trust Fund so it is not exactly in dire need of reform and also eliminating the cap on income on which people pay Social Security and Medicare taxes will bring in additional money. Medicare, on the other hand, is in dire need of reform, but increasing the amount on which the rich pay into the system in Medicare taxes will help to fix that.

But why do liberals, like Thom Hartmann, disagree with the sentiment "to stop sending the wealthy benefits they do not need"? By Hartmann's convoluted logic we must continue to make payments to the rich just so they won't eliminate payments to the poor and middle class. Thom Hartmann says that this would be the "camel's nose under the tent" for those who want to destroy Social Security and Medicare. His logic is the same as those who say we must give tax breaks to big corporations just so they will continue to provide jobs. Means testing according to him will give Republicans all the leeway they need to eliminate Social Security and Medicare altogether. Bullshit! They don't need the pretext of "means testing" to accomplish that. Hartmann doesn't realize that all social programs in the US are under attack by the right wing and the only thing standing in the way of their entire elimination is the determination of the middle class and Democratic politicians to fight for their continuance and even expansion.

 

So liberals will resist even a rational idea for reform because it might lead to the complete destruction of these venerable programs? Let me tell you something. Their nose is already under the tent. They don't need this pretext for wanting to destroy Social Security and Medicare. Why they have already boldly proposed privatizing both of these programs. Check out Paul Ryan's plan, "The Path to Prosperity" (for the rich). For liberals or progressives to oppose a rational idea just because it comes from someone that I for one disagree with on everything else he is trying to do, like destroying unions in the state of Indiana, is utter irrational nonsense. It goes under the same principal of not giving subsidies and tax breaks to highly profitable corporations like the oil companies.

President Obama is proposing an alternative minimum tax for millionaires. Why not apply this alternative minimum tax to corporations? Why should Exxon and GE actually get back taxpayer dollars and pay absolutely nothing in? There should be an alternative minimum tax for them too. By the same token senior citizens who have retirement incomes in the $100,000. range or higher don't need another $1000. a month in social security benefits. The money would be better spent by giving it to people whose only retirement income is social security and whose social security income places them below the poverty line. If you are getting $10,000. a month in retirement income, you don't need another $1000. a month in Social Security. It's absolutely ridiculous. By the same token, you don't need Medicare either. You're perfectly capable of buying a gold plated private health insurance policy which the rich would probably do anyway since the finest doctors (unfortunately) do not even accept Medicare patients.

To take a truly conservative approach to government spending is to make everyone (including corporations which according to the Supreme Court are people) pay their fair share and to not receive government benefits which they don't deserve. By definition they don't deserve government benefits if they are fantastically wealthy in the first place although the rich have hired lobbyists whose main goal is to provide them with government benefits at the expense of the poor and middle class. This has turned the goal of reducing government spending on its head. According to them (in defiance of the hypocritical words that come out of their mouths) there is no government spending so large that goes to the wealthy that should be eliminated. Their goal is to shower government benefits on the rich while denying them to the poor. That's why there is so much inequality in the US - because they have been actively promoting it regardless of the hypocritical words they say. They are only for reducing the size of government when it comes to reducing government programs and subsidies which benefit the poor and middle class.

The top 1% of Americans own 40% of the nation's wealth. The bottom 80% own 7%. The top 1% take home 24% of the nation's income. In 1976 they took home just 9%. Their share of national income has almost tripled in just over 30 years. How was this accomplished? Not by hard work, but by incessant lobbying to change laws that benefit the rich like the 1999 Financial Services Modernization Act and the Commodities Futures Modernization Act of 2000 that overthrew Glass-Steagall leading to the merger of commercial and investment banks, unregulated derivatives, credit default swaps, collateralized debt obligations and all the other paraphernalia of the financialization and globalization of the US economy. Leveraged buyout artists or vulture capitalists like Mitt Romney can give $100,000,000. to each of his five sons without paying any gift tax while ordinary middle class folks pay taxes through the nose. On Romney's income of $21 million last year, for which he did no work to earn it, he paid less than 14% in taxes while most middle class folks are taxed in the 30% range. Romney also paid practically nothing in Social Security or FICA taxes. If he had paid FICA taxes on all his income, this would have helped to bail out Social Security and Medicare right there.

Capital gains is how the rich make their money and they are taxed right now at half the rate that the middle class is taxed. Here is the history:

In the 1970s under President Carter capital gains were taxed at 40%. In the 1980s under President Reagan they were lowered to 20% and under George W Bush they were lowered to 15%. All this was done under the noses of the middle class while they were sleeping or watching football on television. What me worry? Meanwhile lobbyists for the rich were hard and persistently at work. It's pretty clear that Democratic Presidents have raised capital gains taxes while Republican Presidents have lowered them.

A true conservative would want to conserve the safety net while insuring that the rich pay their fair share. Instead all they talk about is lowering taxes (primarily on the rich) while eliminating government programs which primarily benefit the poor and middle class. If they want to reduce the size of government a good place to start would be to reduce the size of the bloated military-industrial complex. Presdident Obama is already striking a populist tone with his talk about an "alternative minimum tax"  on millionaires while Defense Secretary Leon Panetta is busy ending wars and reducing the size of the military-industrial complex. They should follow up by embracing Social Security and Medicare reform and by reducing or eliminating payouts of all kinds to the rich. They should also enact a Financial Transactions Tax to be used for debt reduction so that the banks can pay back their fair share to the taxpayers who bailed them out.

The Future Commonwealth

by John Lawrence

I stumbled on a book a long time ago at a used book store with the title, "The Quest for Utopia," by Glen Negley and J. Max Patrick, copyright 1952. The subtitle was "An Anthology of Imaginary Societies." It is basically a collection of wrtings by nineteenth century utopists describing societies which they believe might exist some time in the future. A lot of these descriptions are fanciful and based on notions which, in my opinion, are pretty far-fetched like the notion that all human beings are basically good people and that they will all behave properly given the right conditions. I don't believe that any society predicated on the fact that good behavior will somehow be universally achieved is realistic.

Other utopias, however, are not only realistic but contain germs of ideas which could be manifested in reality. Some of these ideas have in fact already been implemented. Such a one is "The Future Commonwealth" by Albert Chavannes (1836-1903), a Swiss immigrant to the US. Chavannes became a successful businessman and devoted his last years to writing. In 1894 he established a lumber company in Knoxville, Tennessee of which his grandson became owner. The grandson, Edward Chavannes, also became Mayor of Knoxville. Albert wrote "The Future Commonwealth" in 1892. What is interesting about this tract is not that it is an all encompassing description of a society which could be implemented in toto, but that it contains many good ideas which could be implemented in any society and some that have already been implemented in certain societies.

Chavannes was in the tradition of the English utilitarians and believed that whatever promoted the general welfare would also promote personal happiness. Contrast this with the current prevailing notion in the US today that whatever promotes individual freedom promotes the general welfare - just the opposite. Chavannes writes, "We consider the distribution of products the most important question, and that its correct solution offers the best prospect of increasing human happiness. The rich have more than they can enjoy, while the poor have less. We made our new Commonwealth the great Capitalist, and thus prevented the undue accumulation of wealth in private hands.

"There is the whole secret of it. Cooperation on a large scale, not practised by a few, for the advantage of a few, as it exists among you, but carried by the Commonwealth, for the advantage of the whole population, for the rich as well as for the poor, for the women as well as for the men."

Chavannes goes on to say that his utopia is not "simply a Socialistic settlement, where the state controls everything" and is not antithetical to the "free and independent citizens " of the US. He reassures the reader that his utopia has not abridged personal freedom.

"We ... have entrusted the Commonwealth with the accumulation and use of a portion of our capital for the benefit of the people, while you only entrust your government with the spending of such capital as you raise by unequal taxation, or by borrowing from the wealthy class, thus increasing the burdens of the producers by compelling them to pay interest on the money your government spends."

Here Chavannes has put his finger on the difference between the US model and the models of many other countries of the world. The US government is run on debt or taxation instead of on the principle of capital generation and accumulation. Other countries such as Norway, for example, have Sovereign Wealth Funds which generate capital which is then distributed to the people in the form of old age pensions. Norway's government takes 50% of the monies derived from its natural resources, oil, for example, and uses it on behalf of its citizens to offset taxes and to supply social benefits such as social security. The US gives away its natural resources to private corporations which then accrue all the profits for themselves. The US then has to borrow money from other nations' Sovereign Wealth Funds and has become the world's largest debtor nation. The only way the US can pay its own way is to raise taxes which it has an aversion to doing. So while other countries accumulate wealth which not only provides for social programs but is also used to offset taxes, the US neither accumulates wealth as a nation nor raises taxes thereby going increasingly into debt.

Tom Friedman on Meet the Press, Sunday March 14 contrasted the efficiency of the Chinese government with the American:

Tom Friedman thinks Democracy is becoming a hindrance.

The media is wringing it’s hands over the political climate. It’s always sunny when Democrats get their way. The forecast is for stormy weather. All this opposition and people in the street, it’s not a good thing.

Tom Friedman was on Meet the Press today with Tom Brokaw and David Brooks. He thinks we’d be better off if we were more like the Chinese government.

Brokaw: Tom, are we at a kind of turning point in America in terms of being able to make this a functioning country again or are we dysfunctional?

Friedman: This is what worries me that I’ve been saying for a while there is only one thing worse than one party autocracy, the Chinese form of government, and that’s one party democracy. In china if the leadership can get around to an enlightened decision, it can order it from the top down. Here, when you have one party democracy, one party ruling, basically and the other party basically saying “no”, every solution is suboptimal. When your chief competitor can produce optimal and you can only produce suboptimal! Because what happens whether it’s health care or the energy bill, votes 1 through 50 cost a lot; votes 50 to 59 cost you a fortune and 60, his name is Ben Nelson. By the time you made those compromises you wind up with the description out of the health care bill, which is this Rube Goldberg contraption, I hope it passes but I can’t tell you I think it’s optimal.

It’s so much easier to get things done when there’s no opposition, no one to say “no”. Of course to achieve that you have to round up and imprison or kill dissidents and impose censorship. As long as something optimal comes out of it once in awhile, say universal health care, it’s well worth it or so the thinking goes in some circles. History is well acquainted with optimal solutions from unopposed governments.

So even Tom Friedman, the arch proponent of globalism, thinks the Chinese model is winning out over the American model, and he didn't even mention the fact that China has a Sovereign Wealth Fund that is accumulating monies as the American government pays interest on its debt owed largely to China.

Chavannes had the difference between the "socialist" economies of western Europe and the laissez-faire capitalism of the US pegged. On the one hand the socialist governments are in the business of accumulating monies which can then offset both taxes and social programs. On the other the US government is in the business of beggaring itself because it gives away profitable revenue sources to private interests.

Chavannes goes on:

"Whatever costs money to maintain, as the streets and the parks, the police and the fire departmen, etc., is placed in the hands of the government, and the people are taxed for its support, while those enterprises which offer oppoprtunities to make money, as the supply of light and water, the life and fire insurance companies, are allowed to fall into the hands of corporations and individuals. We are so far Socialists as to keep in the possession of the people many valuable privileges which you give away to men who use them for private benefit."

Chavannes goes on to outline the various profitable enterprises that the government controls , but makes clear that there is still plenty of room for private enterprise to flourish. The point here is that not only is the government well funded in order to provide the things that private enterprise won't like maintaining and improving infrastructure, but does so without taxing the people so low taxes,  improved infrastructure and social benefits go hand in hand.

Chavannes also makes a major point about apprenticeship programs in his utopia which is a subject we will go into on a future post.

Why I Deserve the Nobel Prize

It may seem somewhat arrogant and egotistical to write a blog about why I deserve the Nobel Prize. However, I will make my case as follows. In the nineteenth century the English utilitarians, Jeremy Bentham and John Stuart Mill, posited that society should be organized according to utility theory, the essence of which was the greatest possible good for the greatest possible number. It was assumed that everyone could measure his or her own personal utility for various options, and those individual utilities could be amalgamated to come up with an overall social utility. This work has been carried on to the present day by those trying to find an alternative to GDP, namely the Greatest Happiness Principal or Sarkozy's recent commission to come up with a better way to measure societal well-being than current methods.

In the 1950s Kenneth Arrow attempted to carry the English utilitarian political and economic theory to the next stage by mathematizing utility theory. He changed the name to social choice theory. Social choice theory encompassed both voting theory and economic theory. However, Arrow only succeeded in proving, supposedly, that social choice was impossible. In other words no one could come up with a social theory based on the greatest possible good for the greatest possible number. This gave capitalists a huge sigh of relief because it was considered to be a theoretical endorsement of capitalism. Also it reinforced the idea that direct democracy was impossible giving encouragement to the idea that representative democracy was the best you could do. For this Arrow received the Nobel prize for essentially proving that socialism or economic democracy and direct political democracy were both impossible. Arrow's Impossibility Theorem became famous. Conservatives were overjoyed.

But some pointed out that Arrow's Impossibility Theorem meant that solutions were impossible only in certain cases. In many other cases it was actually possible to find a solution. Therefore, Arrow's Impossibility Theorem only meant that a soloution was not possible in every case. Others pointed out that the Borda voting method came up with a solution in every case, and also that Arrow's analysis only applied to rank order preferences. Preferences that were indicated by real numbers on the real number axis (a measure of utilities over various options) also were exempt from Arrow's Impossibility Theorem. So then additional work was necessary in order to discredit the possibility that direct democracy and economic democracy were less than desirable. That work culminated with Gibbard and Satterthwaite who proved that any social system that was not impossible according to Arrow's Theorem was subject to being manipulated or gamed. Some individuals could strategize their inputs to the system in order to gain an unfair advantage over other participants. This again delegitimized the notion that direct democracy or economic democracy constituted viable alternatives to capitalism and representative democracy.

Recent work by Warren Smith has shown a method for optimal strategizing or gaming the system whether or not you have knowledge of how others will vote. His work is for voting systems based on a voting method called range voting which is essentially a formalization of the English utilitarians' idea of personal utility. I came up with the idea of range voting independently of Warren but I will give him the credit for it. Warren and I have both pointed out that range voting escapes Arrow's Impossibility Theorem, and I have pointed out that, by an extension, it escapes Gibbard and Satterthaite's proof that every social choice system is manipulable. This is easy to see if we take Warren's proof for the optimal way for an individual to strategize and just let the system itself apply that to every individual. Since it is up to the system to amalgamate all individual inputs, part of that process would be to make every input an optimally strategized input thus denying any unfair advantage to any individual and maximizing the potential of every individual input whether that input be a political vote or an economic alternative. I call this method Range-Approval Hybrid voting and it can be applied to economic systems as well.

Therefore, both Arrow's Impossibility Theorem and the Gibbard-Satterthwaite Manipulability Theorem have been overcome, and each participating individual can be assured that he or she can express his or her true utilities whether political or economic and no other individual can game the system in such a way as to gain an unfair advantage. Any individual who tries to game the system will either come out worse off or at least will not come out better off. Then the resultant social choice or utility will represent the best possible solution for a system that is unmanipulable and can't be gamed. There is a price to pay, however, in that a better solution might be found if it were assumed that everyone were completely honest in their expression of personal utility, but that price is relatively small in order to guarantee a stable system.

So the age old quest for a social system based on individual and social uitility has been found despite the fact that Arrow proved such a quest impossible and Gibbard and Satterthwaite proved that any system that escaped Arrow's Impossibility Theorem could be gamed. This opens up new vistas (previously thought to be closed) for forms of societal organization based on cooperation and promises to reduce conflicts and limited choices available under present poltical and economic systems. If Arrow received the Nobel Prize for proving that human progress was impossible in this realm, I deserve one for proving that that avenue of human progress is indeed still open.

Here are the links to Range Voting and Social Choice and Beyond for additional background.

Arrow's Impossibility Theorem Doesn't Apply to Economics Case

Social Choice is a field that studies how to make choices that apply to the whole society based on individual preferences. Here is an example which contradicts Arrow's Impossibility Theorem which claims that social choices are impossible.

 

Consider Arrow’s example on p. 27 of  Social Choice and Individual Values where he shows a deficiency of the Borda count:

“CONDITION 3: Let R₁, •• " R_n and R/, .. " R_n^' be two sets of individual orderings and let C(S) and C'(S) be the corresponding social choice func­tions. If, for all individuals i and all x and y in a given environment S, x R_i Y if and only if x R/ y, then C(S) and C'(S) are the same (independ­ence of irrelevant alternatives).

The reasonableness of this condition can be seen by consideration of the possible results in a method of choice which does not satisfy Condi­tion 3, the rank-order method of voting frequently used in clubs. With a finite number of candidates, let each individual rank all the candidates, i.e., designate his first-choice candidate, second-choice candidate, etc. Let preassigned weights be given to the first, second, etc., choices, the higher weight to the higher choice, and then let the candidate with the highest weighted sum of votes be elected. In particular, suppose that there are three voters and four candidates, x, y ,z, and w. Let the weights for the first, second, third, and fourth choices be 4, 3, 2, and 1, respectively. Suppose that individuals 1 and 2 rank the candidates in the order x, y, z and w, while individual 3 ranks them in the order z, w, x, and y. Under the given electoral system, x is chosen. Then, certainly, if y is deleted from the ranks of the candidates, the system applied to the remaining candidates should yield the same result, espe­cially since, in this case, y is inferior to x according to the tastes of every individual; but, if y is in fact deleted, the indicated. electoral system would yield a tie between x and z.”

 

However, if you use a corresponding economic example, there is no such problem.

Let x be 1 unit of work eg 1 hour at task X.

Let y be 1 unit of work eg 1 hour at task Y.

Let  z be 1 unit of work eg 1 hour at task Z.

Let w be 1 unit of work eg 1 hour at task W.

Let’s stipulate that each individual must work the same number of hours.

The general idea is to assign the tasks in such a way as to maximize social utility where utility is defined as sum over individual utilities and individual utility is defined as 4 x (time spent on most preferred task) + 3 x (time spent on second most preferred task) etc. ^ie a general Borda ranking. Let individuals 1 and 2 have the preference ranking xyzw and individual 3 have the ranking zwxy.

Since 1 and 2 have the same preferences, we let them spend half their time on their first preference x and half their time on their second preference y. Let 3 do z since it’s his first choice. That leaves w. Let each individual do one third of w. Then the individual utility for 1 and 2 is (½)x4 + (½)x3 + (1/3)x(1) = 3 and (5/6). The individual utility for 3 is 4x1 + 3(1/3) = 5. Social utility is 12 and (2/3). The maximum possible utility is 16.

Now, if task y is deleted as in Arrow’s example, we have the preferences for 1 and 2 as xzw and 3 as zwx. Now let 1 and 2 each do (½)x and (½)w and 3 do all of z. Each person does 1 hour of work. Total possible utility = 12. For 1 and 2, utility = (1/2)x3 + (1/2)x1 = 2.Utility for 3 = 3. Total utility = 7. Alternatively, let 1 and 2 do (½)x and (1/4)w and (1/4)z. Utility = 3x(1/2) + 2x(1/4) + 1x(1/4) = 9/4 = 2 and (1/4). Let 3 do (1/2)z and (1/2)w. Utility = 3x(1/2) + 2x(1/2) = 5/2 = 2 and ½. Total utility = 7.

The  point is that eliminating y does not upset  the work schedules in the same way that it upsets political  rankings because the work can be divided among the workers in many possible ways. Hence Arrow’s Impossibility Theorem doesn’t apply. See Social Choice and Beyond for more.

 

Social Choice Based Economic System Utilizing Range Voting

It has been shown that range voting offers a way out of Arrow's Impossibility Theorem. Arrow's Impossibility Theorem only applies to rank order voting methods and not point value methods. According to Arrow's book, "Social Choice and Individual Values," the field of social choice includes economic systems as well as voting systems. Since he thought social choice was impossible, no further discussion regarding economic systems was necessary. The assumed impossibility of social choice based economic systems was considered by some to be a theoretical endorsement of capitalism. However, Arrow had this to say about potential economic systems based on social choice, and since they are not as impossible as once was assumed, the topic is open for reconsideration:

THE ORDERING OF SOCIAL STATES

In the present study the objects of choice are social states. The most precise definition of a social state would be a complete description of the amount of each type of commodity in the hands of each individual, the amount of labor to be supplied by each individual, the amount of each productive resource invested in each type of productive activity, and the amounts of various types of collective activity, such as municipal services, diplomacy and its continuation by other means, and the erection of statues to famous men. It is assumed that each individual in the community has a definite ordering of all conceivable social states, in terms of their desirability to him. It is not assumed here that an individual's attitude toward different social states is determined exclusively by the commodity bundles which accrue to his lot under each. It is simply assumed that the individual orders all social states by whatever standards he deems relevant. A member of Veblen's leisure class might order the states solely on the criterion of his relative income standing in each; a believer in the equality of man might order them in accordance with some measure of income equality.

We will consider a potential economic system which abstracts from the general social choice model which Arrow considers but is related to it. We submit that it is a form of economic democracy in that it's based on range voting. We consider only a very simplified, hypothetical system which is impractical without the many ramifications necessary in the real world. However, it is necessary for the sake of analysis to abstract from many real world ramifications in order to get at the basic structure. In particular we consider an individually based system in which an "individual's attitude toward different social states is determined exclusively by the commodity bundles which accrue to his lot under each." We also simplify each commodity bundle so that it contains only "a complete description of the amount of each type of commodity in the hands of each individual [and] the amount of labor to be supplied by each individual." "[T]he amount of each productive resource invested in each type of productive activity" is determined by consumer demand as specified by the aggregate commodity bundles off all individuals. Furthermore, each individual submits an input regarding only his or her own work-consumption schedules, and not those he or she desires for other individuals. Finally, collective activity is abstracted from so that each possible social state represents the aggregate of the individual inputs regarding only their own work/consumption.

Each individual rates his or her preferred individual state on a scale such as [0-9] or [0-99], for instance, in accordance with range voting procedures. The social state is then determined in such a way as to maximize social welfare or utility as measured by the summation of ratings over individual states such that the following condition is met. In each possible social state, the work to be performed shall be exactly what is necessary to produce the commodities to be consumed. In other words supply of commodities shall be equal to demand for those commodities as specified by the ratings of individuals over all possible work-commodity bundles. For instance, individual A might rate a work-commodity bundle in which he performed 20 hours per week of dentistry (assuming he's qualified as a dentist) in return for a copious amount of goods and services a 99. He might also specify a rating of 50 for a work-commodity bundle requiring 30 hours work per week and a less copious amount of goods and services. He then might assign a 1 to a bundle requiring 60 hours work per week in return for a meager amount of goods and services.

THE ROLE OF MONEY IN A SOCIAL CHOICE ECONOMY

No real economic system could exist without money as a medium of exchange. It's just impractical to think that individuals would accept a system in which they were assigned a certain amount of work in return for a certain commodity bundle even if that maximized social utility. Therefore, work performed must be paid for in money and not by an "in kind" commodity basket. The commodity basket can be translated into monetary terms by pricing it such that the money received by each individual for his or her work exactly pays for it.  Pricing in such a system could be undertaken as follows. Pick some basic, simple and ubiquitous commodity and price it at 1 unit. (The units could be dollars, euros, pounds etc.) Then other consumer items could be priced in terms of that basic commodity considering the quantity and quality of labor and the quantity and quality of materials and other resources involved. For instance, a tube of toothpaste might be priced at 1 unit. Based on this, a particlular kind of automobile might then be priced at 20,000 units. Ideally, the aggregate amount of money dispensed by the system would be just sufficient to buy the aggregate amount of production as specified by aggregate consumer demand according to the the sum total of commodity bundles. Therefore, money supply would equal money demand, and there would be no inflation. Aggregate income could be computed in such a way that the amount of money in circulation would just be sufficient to buy all the consumer goods and services demanded according to the social state which maximizes social utility.

The social choice would then involve an assigment of work and income to each individual. It would be assumed that an individual's work preferences could be quite general involving different kinds of work and different hourly schedules. In general, an individual could do any type of work he or she was qualified for, and, at the lower end of the job spectrum, almost everyone would be qualified whereas at the upper end, only those with highly specialized training might be qualified. In general people would be qualified to do more than one type of work and would be free to submit more than one hourly schedule. Work weeks need not be standardized but could be individualized in accordance with worker demands. Since individuals might not spend their income exactly in accordance with the commodity bundle they submitted with the corresponding work schedule, aggregate consumption would have to be tracked and adjusted so that there is little or no over or underproduction.

Periodically, individual inputs regarding work-commodity bundles could be resubmitted, the social choice recomputed and adjustments made accordingly. Ideally, supply would equal demand both for work and commodities so that there would be no over or underemployment and no surplus or scarcity of commodities.

THE ROLE OF GOVERNMENT

Fundamentally, the role of government would be to gather information from individuals, compute the social choice, disburse information to individuals informing them of their work-commodity schedules and monetary income (the one that maximized social utility), and oversee and track the production and consumption process making adjustments for the fact that actual consumer demand might not be the same as specified consumer demand. The production units could be either publicly or privately owned. Individual work schedules could be combined to construct a production unit so that production units might represent the collaborative work efforts of many individuals and production output for the enterprise might represent enough commodities to fill many consumer commodity baskets. Individual or enterprise inputs might include capital or other resources as well as labor.

The government would have to employ the services of massive supercomputers to do all the computation necessary. Information collection and work-commodity bundle assigments would be centralized. Work schedule and consumer demands would be decentralized and individualized. Assigments would be flexible and subject to change both for work schedules and commodity bundle consumption schedules. The government could track changes in worker-consumer activity and make real time changes in production/consumption. The government might grant every citizen at least a minimum income for which could be purchased a minimum commodity bundle. A minimum amount of labor might also be required. Likewise, maximum work and/or consumer demands might be limited.

CONCLUSION

A social choice based economic system that utiilizes range voting has been described. Such a system would represent a highly simplified form of economic democracy. Individual work-commodity bundles would be preference rated in accordance with range voting and an amount of money associated with each. The system would then compute that social state which maximized social utility as the aggregate of individual utilites subject to the condition that production equal consumption. The system would also compute the pricing of consumption items and the amount of money to be distributed to each individual in return for the work and or capital resouces input by that individual. Money would just be a medium of exchange, and the total amount of money generated at any particular time would just be sufficient to buy the amount of production generated as specified by the social state which maximized social utility. Individual work-consumption assignments could be updated periodically or, perhaps, in real time in accordance with individual demands. Ideally, there would be no shortages or surpluses of commodities or labor and supply would equal demand. If priced correctly, supply would also equal demand in the money supply so there would be no inflation or deflation. There would be no unemployment by definition because exactly the amount of labor needed for production and no more would be required, and this would be distributed equitably by the maximizing of utility as a result of range voting.

A Districtless Congress

The US is divided up into political districts. Each voter gets to vote for one member of the House of Representatives and two members of the Senate in this bicameral national assembly. There are 435 voting members of the House so there are 435 congressional districts. The member from your district supposedly represents your interests, but none of the others do. In the Senate the political districts are the states. There are 100 senators, two from each state. The two senators from your state supposedly represent your interests but none of the other 98 do. So 1/435 or 0.22% of the members of the house represent your interests, and 2/100 or 2% of the members of the senate represent your interests.

This is a pathetic situation, and it's even worse if you did not vote for any of the congressman or senators who supposedly represent you. Say you're a Democrat and the congressman elected from your district (whom you didn't vote for) is a Republican. Then arguably you have no representation at all in the House. The same could be said of the Senate if you didn't vote for either of the senators who actually got elected. In other countries where they use other methods for making up the national assembly or congress like, for example, proportional representation, the percentage of the members representing each voter's interests is much higher. For example, if 28% of the electorate (including you) voted for the Green Party, then 28% of the seats in the national assembly would be Green Party members.

In a districtless congress each voter would vote for each representative, and each representaive would represent the interests of all voters. For example, if there are 300 seats in the congress and 500 candidates running for those seats there would be 500!/(300!)(200!) possible congresses or ways that this congress could be made up. In theory each voter could list each possible congress in order of his/her preferences, and then all the voters' specifications could be amalgamated to get the one congress that best represented the electorate as a whole. The problem is that it would be impractical for each voter to study the qualifications of each candidate and then come up with a list of all possible congresses. It would be too much work. However, there are ways to expedite this process as explained in more detail here. If each voter just listed the candidates (instead of the congresses) in order of preference, this list could be translated by software into an ordered list of congresses. Furthermore, the list of candidates could be simplified by using the recommend- ations of the voter's political party or other trusted experts in part or in whole. A customized list could be generated by taking eclectic recommend- ations cafeteria style. Or there could be different lists available to the voter depending on the voter's profile related to his/her political objectives. A simple questionnaire given to the voter could generate a list according to the voter's predilections. There are a lot of different ways any particular voter's list could be generated with the voter having complete control and the final say.

One way of amalgamating the list information is by range voting. Using this method each possible congress would be given a numerical rating, and the ratings for each congress would be added up over all the individual voters to determine the winner - the one with the highest overall social rating. There is no need to rank the possible congresses in order over the entire electorate since only the top rated one would be chosen. Therefore, Kenneth Arrow's model for social choice and his impossibility results as presented in Social Choice and Individual Values are invalid.  In fact Arrow's model which calls for a full social ranking doesn't apply to most political as well as most economic situations. The only thing it seems to apply to is combining judges' rankings in Olympic figure skating where it is important to know not only first place but also second and third. In political and economic situations it's necessary only to know the top rated or first place result.

Fractal Voting

Fractal Voting (FV) is a voting method I developed. It is one of a class of utilitarian methods similar to range voting (RV) in some respects. Other utilitarian methods are approval voting (AV) and Evaluative Voting (EV). RV, AV and EV are all special cases of FV. Utilitarian voting methods involve a ranking of candidates or alternatives from most preferred to least preferred. In general there are two types of rankings: ordinal and cardinal. Ordinal ranking involves a list such as ABCD where the position of the letter, for example, indicates its preference ranking in this case A is preferred to B is preferred to C etc. Cardinal ranking also indicates how much A is preferred to B and how much B is preferred to C etc. This "how much" is also referred to as preference intensity. With utilitarian methods  numbers are usually asssigned to the candidates and the differences between the numerical rankings of two candidates indicate the preference intensity. One of the differences between FV and RV is that voters don't assign numbers to the candidates but indicate  preference intensities graphically.

Fractal Voting consists of a graphical user interface (GUI) or we could call it a graphical voter (GVI) interface (we will use the terms voter and user interchangably) and underlying software which translates the voter's preferences into numerical values which can then be used to sum up the votes for  each candidate and  determine the winner. Range Voting involves a system defined scale such as 0-99, 0-9 etc. The voter assigns a number contained in this scale to each candidate, and then the numbers are summed for each candidate to determine the winner. With Fractal the voter determines the scale and the scale can be more finely determined or less finely determined in different segments as the voter wishes. For example, if the voter wants to differentiate among candidates near the top of the scale more finely, he or she can subdivide that portion of the scale more finely in order to make these distinctions. The fineness of the scale is called the sensitivity level.  The sensitivity level, in general, will differ for each voter depending on how finely a voter can distinguish between two candidates or alternatives. This concept can be generalized to include fine distinctions between tastes or smells for example. A person might be asked to distinguish and rank several wines. Some people would be able to distinguish them very finely and others would only be able to make rough distinctions, say between good and bad. With RV, the system defines the sensitivity level which is the same for all voters. RV with a scale 0-99 has a higher sensitivity level than RV with a scale 0-9 and allows finer distinctions among candidates to be made. For example, candidates A and B might each be given ratings of 5 with RV (0-9) but given ratings of 51 and 57 with range (0-99). So finer distinctions can be made the more levels are available. 

With Fractal, the user or voter has complete control over the sensitivity which is variable over the whole scale. For instance, at the beginning of the voting process, the first thing a voter would do is to choose the number of levels he or she would like to start out with. This might be just two - good and bad. So there would be two "buckets" if you will, the good bucket and the bad bucket. All candidates in the good bucket would be indistinguishable from or indifferent to each other. However, before choosing the number of levels or buckets, the voter would first choose their most preferred or favorite candidate or candidates and least preferred candidate or candidates. Then all others would be relative to those. So initially a screen would be presented to the voters with two buckets - one for most preferred and one for least preferred. The voter would drag appropriate candidates onto these buckets from a list arbitrarily located on the right side of the screen. Then the voter would choose how many buckets or levels to start with. Please note that, if the voter chose 100 buckets and didn't go any deeper or finer than that in terms of sensitivity level, the voting method would be the same as RV. After the initial choice of number of buckets, that number of buckets appears on the screen as well as the buckets at either end denoting most preferred and least preferred. Now the voter drags other candidates from the list onto the buckets. Then the voter has the option of clicking on any one of the buckets and further subdividing this segment of the  scale. Let's say that the voter started with 10 buckets, and, in all but one bucket, there is only one candidate. In one bucket there are 4 candidates. The voter may choose to click on that bucket and then choose to subdivide that bucket alone into, for instance, 4 finer levels. These buckets then appear on the screen along with the list of the candidates who were in the original bucket. The voter then drags candidates from this list onto one of the buckets that represent subdividions of the original bucket. This process can be repeated indefinitely leading to finer and finer distinctions. When the voter is satisfied he or she can terminate the process and submit his or her vote.

The final vote can be printed out as a paper ballot showing an overall scale subdivided as the voter has indicated and all candidates listed in order of preference, preference intensity and fineness of distinction or sensitivity. The underlying software can be implemented in terms of a push down stack where the first word in the stack contains the number of words in the stack. Initially, this would be 2 for most preferred and least preferred. These words might contain the numbers 1 and 0, respectively. As the voter adds levels or buckets, words are added to the stack.  The stack would be popped up to the level where the voter indicates that he or she wishes to add levels, and then the number of levels added that the voter has indicated. For instance, if the voter initially wants to order candidates just in terms of good and bad (a binary decision), two words would be added to the stack between the words corresponding to least preferred and most preferred. One might contain the number 1/4 (corresponding to the mid-point of the "bad" bucket) and one might contain 3/4 (corresponding to the mid-point of the "good" bucket). Continuing on in this way, the buckets are each defined in terms of a numerical value in a process that is totally transparent to the voter who just has to deal with a simple GUI and repeat the same process over and over to as many levels as he or she wishes. Then each candidate is associated with a pointer that points to the appropriate numerical value in the stack.

Since the process is the same for the voter no matter how deeply he wishes to proceed in terms of sensitivity level, we call this method Fractal Voting. Think of it as branches on a tree some of which are subdivided into smaller branches which are further subdivided and so on. At each stage the voter performs the same steps so the process is simple and intuitive for the voter.  This is the essence of the fractal process: no matter what the depth, the procedure is the same. At completion each candidate will be asssociated with a pointer which represents his numerical rank. The pointer will point to a word in the stack which will contain a value between 0 and 1 which represents the intensity  of that rank. Note that, unlike RV, the voter never has to assign numerical values to candidates making the provess simpler and more intuitive akin to punching a hole on a ballot or putting a check mark next to a candidate. When all voters have submitted their ballots, the numerical values associated with each candidate are summed and the one(s) with the highest value win(s).

The advantages of Fractal over Range are the following:

1) There are no "partial strength" votes. A partial strength vote is submitted in Range when a voter does not pin his most (least) preferred candidates to the limits of the range.

2) The voter has a simpler and more intuitive while at the same time more sophisticated interface which allows him or her more options in the voting procedure.

3) The voter can choose his or her own sensitivity level and can continue to refine this as the voting process continues.

4) The voter can go into detail selectively in those parts of the overall ranking that concern him or her while doing a rough ranking in other parts of the overall scale.

5) The voter need not be concerned with numbers at all, but only with a visual on-screen representation of the preference rankings and intensities.

Fractal Voting lends itself to delegable proxies since various parts of the tree could be designated and filled in by trusted parties who have pre-voted and whose results are only a mouse click away. For instance, the voter could select certain candidates, indicate he wished to make a proxy vote and then select Ted Kennedy from a list of proxies. Then these candidates would be added to the screen in exactly the way that Ted Kennedy had previously indicated he would vote. This method would lend itself either to touch screen or computer screen voting. Security of the vote could be guaranteed by different methods, but this is really a separate issue. Issuance of a paper ballot and receipt would be a start.

In summary Fractal Voting is a generalization of AV, EV and RV and a voter could choose to vote in any of these styles if so desired. It is a utilitarian voting method since the placing of each candidate on a line in order of preference ranking and intensity reveals the voter's utility for each candidate in some sense. Social utility could be measured for each candidate by simply adding up the numerical values asssociated with that candidate in the stack over all voters. This would not represent a social utility in an absolute sense but in a relative sense. The voter is allowed to make either fine or rough distinctions among the candidates according to his or her sensitivity levels and/or knowledge of the candidates, and also to rely on the advice of trusted experts who have studied the issues and/or candidates more closely. Both the GUI and the underlying software are easily implemented.

Arrow's Take on the "Ordering of Social States"

The following quote is taken from "Social Choice and Individual Values" by Kenneth Arrow, pp. 17-18. This represents Arrow's conception of an economic system rather than a political or voting system. Please notice that Arrow requires each individual to submit his preferences regarding not only his own work and consumption preferences but also his preferences regarding everyone else's work and consumption thus making this system totally impractical and unviable. He calls ordering everyone else's work and consumption "ordering according to values" while just ordering preferences regarding one's own work and consumption "ordering according to tastes." In this economic system one could submit preferences that one's enemies should work 80 hours a week for starvation wages and one's friends and cronies should get CEO salaries for doing practically nothing! One could submit preferences that one's self and friends should get $7 - $10 million a year for attending parties as Paris Hilton does!

Any viable economic system would only require that each individual submit preferences regarding one's own preferred patterns of work and consumption, but this would depart from the model Arrow uses for proving that social choice is impossible. The part about each individual specifying preferences regarding "collective activities" is completely viable. These are such things as public parks, public libraries, public education and, in most advanced countries other than the US, public health care. The individual would also submit preferences regarding how much he personally would be willing to pay as his part for such activities. This is commonly known as taxation. While Arrow goes on and on about tastes and values, he elaborates very little about "collective activites" which could be a valid part of an individual's preference specifications.

An economic system based on amalgamating data from each individual and treating each individual equally would be a form of economic democracy. Also it may escape Arrow's proof that social choice is impossible because it departs from his model by virtue of the fact that each individual does not submit preferences about social states but only about his own personal and social consumption and willingness to work to support such consumption. Thus an analysis of the viability of this model might show that it is not impossible given a set of "rational and ethical criteria" (not necessarily the same set as Arrow uses to prove social choice impossible).

The following is the quote from Arrow:

THE ORDERING OF SOCIAL STATES In the present study the objects of choice are social states. The most precise definition of a social state would be a complete description of the amount of each type of commodity in the hands of each individual, the amount of labor to be supplied by each individual, the amount of each productive resource invested in each type of productive activity, and the amounts of various types of collective activity, such as municipal services, diplomacy and its continuation by other means, and the erection of statues to famous men. It is assumed that each individual in the community has a definite ordering of all conceivable social states, in terms of their desirability to him. It is not assumed here that an individual's attitude toward different social states is determined exclusively by the commodity bundles which accrue to his lot under each. It is simply assumed that the individual orders all social states by whatever standards he deems relevant. A member of Veblen's leisure class might order the states solely on the criterion of his relative income standing in each; a believer in the equality of man might order them in accordance with some measure of income equality. Indeed, since, as mentioned above, some of the components of the social state, considered as a vector, are collective activities, purely individualistic assumptions are useless in analyzing such problems as the division of the national income between public and private expenditure. The present notation permits perfect generality in this respect . Needless to say, this generality is not without its price. More information would be available for analysis if the generality were restricted by a prior knowledge of the nature of individual orderings of social states. This problem will be touched on again. In general, there will, then, be a difference between the ordering of social states according to the direct consumption of the individual and the ordering when the individual adds his general standards of equity (or perhaps his standards of pecuniary emulation).14 We may refer to the former ordering as reflecting the tastes of the individual and the latter as reflecting his values. The distinction between the two is by no means clear-cut. An individual with esthetic feelings certainly derives pleasure from his neighbor's having a well-tended lawn. Under the system of a free market, such feelings play no direct part in social choice; yet psychologically they differ only slightly from the pleasure in one's own lawn. Intuitively, of course, we feel that not all the possible preferences which an individual might have ought to count; his preferences for matters which are "none of his business" should be irrelevant. Without challenging this view, I should like to emphasize that the decision as to which preferences are relevant and which are not is itself a value judgment and cannot be settled on an a priori basis. From a formal point of view, one cannot distinguish between an individual's dislike for having his grounds ruined by factory smoke and his extreme distaste for the existence of heathenism in Central Africa. There are probably not a few individuals in this country who would regard the former feeling as irrelevant for social policy and the latter as relevant, though the majority would probably reverse the judgment. I merely wish to emphasize here that we must look at the entire system of values, including values about values, in seeking for a truly general theory of social welfare. It is the ordering according to values which takes into account all the desires of the individual, including the highly important socializing desires, and which is primarily relevant for the achievement of a social maximum. The market mechanism, however, takes into account only the ordering according to tastes. This distinction is the analogue, on the side of consumption, of the divergence between social and private costs in production developed by Professor Pigou.15 14. This distinction has been stressed to the author by M. Friedman, The University of Chicago. 15. A. C. Pigou, The Economics of Welfare, London: Macmillan and Co., 1920, Part II, Chapter VI. For the analogy, see Samuelson, op. cit., p. 224; Reder, op. cit., pp. 64-67; G. Tintner, "A Note on Welfare Economics," Econometrica, Vol. 14, January, 1946, pp. 69-78.

Range Voting

A little known or discussed fact of life in the US is that, while we are a younger nation than most European countries, our constitution and our voting system is older than any of theirs. Why? Because they have updated their constitutions and/or voting systems while ours have remained static since their inception over 200 years ago. While other countries have taken the pragmatic view that upgrading (taking into account advances in voting theory) might be a good idea, our voting system along with all other aspects of our constitution (not to mention our economic system) might as well have been set in stone. To even question their continued validity or possible improvement is considered by some to be unpatriotic.

Our voting system is called plurality voting. This means that only one candidate out of however many are running for office is chosen by each individual voter, and then the votes are tallied and the one with the most votes wins providing he or she has a sizable enough percentage of the total votes cast. Otherwise there's a runoff. The literature is full of the pitfalls of this method of voting. Suffice it to say it practically eliminates more than two parties. Another disadvantage of our political system is that the US is divided up into districts with each district returning one representative to the bicameral House while each state returns two Senators to the Senate. So each voter is represented in Congress by only three people: one member of the House and two Senators. That's a very small proportion of the total number of lawmakers when you consider that there are 435 Congressmen and women in the House and 100 Senators. 3 out of 535? 0.5%? How does that make you feel, voters, to know that less than 1% of the lawmakers in Washington represent you or that you had anything to do with electing them? In addition there are the problems of the Electoral College (the President is not elected by a direct vote of the public) and gerrymandering which is an artificial way of dividing up political districts in such a way that favors one party or another. Of course, the party in power gets to do this in order to guarantee itself as many seats in perpetuity as possible. A more sensible way to choose a President is by a majority of all the votes cast eliminating the Electoral College altogether, and a more sensible way of choosing legislators would be a system in which each voters gets a chance to vote for more than three legislators.  

Fortunately, voting theorists have not been inactive. There are at least three methods which promise to be an improvement over the current state of affairs vying for the hearts and minds of the public - at least some members of the public, the cognoscenti, who have bothered to consider such things: range voting (RV - not to be confused with those behemoth gas guzzlers), instant runoff voting (IRV) and approval voting (AV). Each method has its supporters, defenders, detractors, protagonists, antagonists and critics. Approval voting is simple enough. Instead of voting for one out of however many candidates are running, you vote for all the  candidates you approve of. Instead of marking the ballot once in each race, you mark it multiple times. Obviously, it wouldn't make sense to mark it for every candidate who is running although I'm sure there are many who would. IRV is more complicated, but you can Google it and find out more than you really wanted to know. That leaves range voting.

You are already familiar with it as this is the method used to score Olympic athletes. You would rate each candidate on a scale from 1 to 10 or 0 to 20 or -99 to +99. The actual limits to the range are somewhat arbitrary as long as each voter can assign ratings over the same range. Then you tote up the score for each candidate and the one with the most points wins. Or you can take the average and the one with the highest average wins. There is one refinement, however, with reference to the above linked website. You do not have to actually vote for each candidate. If there are 100 running and you actually rate only 50 filling in an X for the remaining fifty, then the average is computed by dividing the total (over all voters) votes cast for a candidate divided by the sum of all the voters who actually cast a vote for that candidate (Xs excluded). A candidate needs a quorum of votes to win where a quorum is defined as half the total points of the highest point getter. So, theoretically, a candidate with half the total points of the highest total point getter could win the election if sufficiently few voters actually voted for him or her while sufficiently many voters put down an X for him or her. This seems to introduce a certain amount of arbitrariness to the method, but, obviously, something would have to be done to prevent a candidate whom only a handful of voters voted for (all presumably giving him the highest score) from winning. An alternative way of handling this situation would be to just use total point scores forcing each voter to make a decision regarding each candidate. For candidates unfamiliar to any particular voter, that voter could use a proxy rating. A proxy rating would be provided by an expert of the voter's own political persuasion or someone trusted by the voter who is familiar with the candidate. It could be a rating provided by the voter's political party. Without having done an extensive analysis, this seems somewhat less arbitrary to me. 

Donald Saari is a proponent of the Borda count. Steven Brams is a proponent of Approval Voting and Warren D Smith is a proponent of Range Voting. I also independently came up with a version of range voting which I called the Lawrence Count. Due to the serendipity of the internet, someone perusing my website, Social Choice and Beyond, brought to my attention that, unbeknownst to me at the time, there exists a major website promoting and expounding on a similar voting method. Thus are like-minded people all over the world brought into contact with one another thanks to the world wide web! This is truly amazing! As I said on my webpage: "The Lawrence Count is a modified Borda Count which seems so obvious that maybe someone has already discovered it. If so, I relinquish the name and any claim to being its progenitor." So I will change my webpage to indicate that I'm no longer pretentious enough to name something after myself especially if someone else has already discovered it. By the way Warren D Smith doesn't claim to have discovered it either so  I guess it was too obvious for anyone to have discovered it, and Smith claims that actually the ants and honey bees discovered it.

The three gentlemen named above go round and round trying to prove that their method is the best and showing the pitfalls of all the others. My opinion is that approval voting is a step above plurality voting but is too simple to take into account the range of expression a voter may wish to demonstrate. It's as if Olympic ice skaters were either approved or disapproved by the judges and then their scores computed. Would you be satisfied with that? The Borda count is too rigid. It has the anomaly that, if one candidate drops out of the race, point values must be reassigned with the result that someone could win who previously was ranked last. Range Voting, in my opinion, is a modified Borda count in that the underlying grid remains constant whether or not candidates enter or drop out of the election. Point values remain the same except for some strategic considerations which, again in my opinion, the voter has a right to take into consideration. There is maximum expressivenesss in that the voter not only gets to rank the candidates but also gets to indicate to an extent how much he or she favors one over another. If each voter gives his or her most favored candidate the highest possible score and his least favored the lowest posssible, then he or she will be getting the most strategic value out of his or her vote. If there is one candidate who is so horrible compared to all the others in the mind of a particular voter, it would not only be honest but strategically advantageous to give the horrible candidate a zero and all others the highest possible rating. Likewise, if there is one candidate who is far and away the most superior compared to the other candidates, it would be honest and strategic to give that candidate the highest rating and all others a zero. Another point is that the point spread from lowest to highest score (say 1 to 99) need only be as great as the sensitivity of the most sensitive voter where sensitivity is defined as the most perceptive voter's ability to make a one point distinction between two candidates. Presumably some voter would be able to rate some candidate in a meaningful way as a 53 and another as a 54, for example.

One reason for the lack of agreement regarding voting methods is Arrow's Impossibility Theorem which states in general terms that there is no democratic voting system which obeys certain rational and ethical criteria. This has given rise to the field of social choice theory. Not everyone would agree with Arrow's choice of rational and ethical criteria but, be that as it may, in over 60 years no one has been able to show that Arrow didn't know what he was talking about. So even if in some sense democratic voting systems are impossible, elections are still held and some voting methods are definitely better than others, and, even though there is no general agreement, there is still hope that we will be able to do better in the future than we have done in the past. Hope springs eternal!

Choice

A recent book, The Paradox of Choice, by Barry Schwartz, argues that, as choices proliferate, people are less satisfied overall. He says that we would be better off and more satisfied if we had fewer choices. I think his analysis is fairly shallow and he misses the mark. A lot of the book is "filler" which one has come to expect from a best seller. This book claims to have been a "Business Week Top Ten Book of the Year." His book is long on pseudo-psychological psycho-babble and short on the analysis of social conditions such as advertising which distort the whole process of choosing and turn many choices into phony or false choices which benefit only the seller, not really the consumer.

A social system such as preferensism which is an outgrowth of social choice is predicated on the assumption that increased freedom is associated with increased choices, and, I would argue, that increased choices are increasingly satisfying provided that the choices are real and not distorted by advertising. In addition, there are methods and techniques (hardly mentioned by Barry Schwartz) for dealing with what might seem like a bewidering array of choices. For example, before I purchase a CD, I read reviews (hopefully more than one) to see what the critics have to say about the music. I know from experience that I'm particularly interested in only one genre of music so that eliminates a large number of choices that I don't even have to consider right there. Consumer Reports as well as a number of online services such as epinions rate and rank different products, and there are price comparison wesites such as shopping.com that do price comparisons.

Therefore, I feel there are intelligent ways of making a decision as to which product or service one wishes to consume which make the process rewarding if not enjoyable. The only depressing thing to me is having my programming interrupted by TV and radio advertising. That, not the number of choices available, is what is truly depressing. Schwartz walks into a store and notes that there are "285 varieties of cookies," "40 options for toothpaste" etc. Unfortunately, he never gets beyond a rather psychological analysis as to why there are such a bewildering number of options and are any of the options any good? I have been on a quest to find plain white toothpaste like used to be on store shelves when each manufacturer was represented by only one variety of toothpaste. Although there are 40 varieties of toothpaste, I have not been able to locate on the store shelves just plain white toothpaste. The question is why? I think the answer has to do with (of all things) the marketing clout of the large toothpaste producing corporations. Crest and Colgate are the two largest and they have the most varieties of toothpaste taking up the most shelf space real estate in the supermarket. Inside the boxes, which tout the different varieties, the toothpaste is remarkably similar. For the most part it is all an aqua color which leads me to believe that the only significant difference among the different varieties is the packaging.

Now the supermarket will not devote a large amount of shelf space to just one variety of toothpaste. For a company to dominate the supermarket shelves, they have to produce what seemingly is a large number of different kinds of toothpaste. The only problem is they're not really all that different. So these choices are false choices. They're not really giving consumers a large number of choices at all, just attempting to dominate supermarket real estate, and evidently, the supermarkets are happy to go along with this deception.

Another problem in the "bewildering array of choices" that Schawarz notices is that in many cases hardly any of them are of high quality. I've noticed time and again a product, that I had been a regular purchaser of because I really liked the product, disappearing from store shelves only to be replaced by a similar but less desirable product. Why do you suppose this is and how does this affect Schwartz' rather depressing analysis that more choices produce less satisfaction? My analysis is that the store manager only wants to devote shelf space to products for which there are the highest profit margins. Therefore, a lower quality product which costs less to produce may have a higher profit margin than a high quality product whose ingredients cost more. Such a product may have a lower profit margin. And through advertising, corporations can increase demand for low quality products which have high profit margins. This is why independent testing and rating agencies are so important. Expert opinion and criticism can defeat the purpose of advertising which is to increase corporate profit margins, not to educate or inform the consumer, let alone provide him or her with a quality product.

Companies which put out a high quality product can take market share from companies who have established a "brand" but continue to market the lowest quality the consumer will buy. Take coffee, for instance. The coffee industry has known for years that there are two kinds of coffee beans: the low quality and cheaper Robustico and the higher quality and more expensive Arabica. Naturally they sold the lower quality coffee and made hefty profits for years. Then along came Starbucks and their goal was to deliver a superior product. They, therefore, used the higher quality and more expensive ingredients. Their profit margin per cup might have been lower, but they gained enormous market share because consumers, once they had been exposed to a superior product, came to be willing to spend more to get an excellent cup of coffee rather than the swill they had been used to. The same thing could be said for bread. People who were fortunate enough to travel to Europe where the quality of bread and coffee was superior saw the opportunity for emulating those operations and establishing high quality niche markets.

So I think Mr. Schwarz totally misses the mark. Instead of an analysis of the false choices that are so depressing, he tells us that more choice in general is depressing. His agent must have told him to include the psycho-babble in order to sell books. But it's basically bullshit. Most people that are at all sophisticated or experienced make choices based on their experience and rely on expert opinions from knowledgable sources. Smart people today can avail themselves of resources widely available on the web to make choices. There are quality comparison sites and price comparison sites. Instead of giving an intelligent method for culling the bad choices and narrrowing down to the good quality choices, Mr. Schwarz just says that we should have fewer choices in general and then we would be better off. I disagree. I think we are better off when we have an increasing number of high quality choices.

In a society based on preferensism, choice is fundamental. A citizen has to make choices which are both political and economic in nature. The educational system in any society needs to teach people how to make intelligent choices. For instance, in a political system in which all candidates for the Senate are voted on by all voters instead of just voting on a district by district basis, obviously there would be many more choices to consider than if one were just voting for one senator from one district. Such a system could still make sense and increase the freedom of each citizen if citizens allowed themselves to be guided in making choices the way they are guided by critics and experts in making consumer choices. A party or publication might make recommendations based on their way of thinking and each voter might take the recommendations of the party or publication they felt an affinity with.

There are other ways to make choice manageable in a preferensist society or one based on individual and social choice. A good review of some of these ideas can be found here.

Arrow's R Notation

Arrow's R Notation

In the arcane world of social choice, a man by the name of Kenneth Arrow looms large. In 1951 he published a book, "Social Choice and Individual Values," in which he supposedly proved that social choice is impossible. But what is social choice? Let us say we have a society composed of N individuals numbered 1,2,3, ... . Those individuals have to order a set of M alternatives with their most preferred alternative being their first choice etc. Let's indicate the alternatives as a, b, c, ... . Then a social welfare function accepts the individual orderings as inputs and produces as output the social ordering which is an ordering of the alternatives that applies to the whole society.

If individual 1 prefers a to b, we write aP1b. If society prefers a to b, we write aPb. So far so good. But we also want to provide for the case in which an individual is indifferent between a and b. We write this aI1b and aIb, respectively. Arrow's analysis then combines these two relationships into a relationship he denotes as R which means "prefers or is indifferent to" so aR1b means individual 1 prefers a to b or is indifferent between a and b. Arrow's rationale for this is the following: "Instead of working with two relations, it will be slightly more convenient to use a single relation, 'preferred or indifferent.'" (p. 12) (emphasis added)

Arrow then goes on to postulate two axioms. Axiom 1 states that either xRy or yRx and he notes that this does not exclude the possibility that both xRy AND yRx. Axiom 2 has to do with transitivity which will not concern us here. Again Arrow states (p. 13): "Axioms 1 and 2 do not exclude the possibility that for some distinct x and y, both xRy and yRx. A strong ordering on the other hand, [one with only preferences and without indifferences] is a ranking in which no ties are possible." This is blatant nonsense. One could have half the population with xPy and half with yPx [strong orderings] and that certainly would represent a tie so a tie is possible. What Arrow is implying without coming out and saying it directly is that in his world a tie between two alternatives is to be represented as a social indifference. This is completely arbitrary and limits his entire analysis.

One must assume that in Arrow's world each individual will submit his input in terms of R. That is individual 1 would submit aR1b, aR1c etc. until all pairwise comparisons have been made. For now we will go along with Arrow's demand that only pairwise comparisons need to be submitted. It can be assumed that individuals are not permitted to submit a comparison using the indifference relation since then what would be the purpose of introducing R to make the analysis "slightly more convenient." The whole idea of "slightly more convenient" is to reduce the number of relations from 2 (P and I) to 1 (R). However, Arrow proposes (without saying so) to use the I relation in the social choice to cover the case of a tie. Therefore, the social choice could be aRb, bRa or aIb.

Now the idea of the social welfare function (or of any function for that matter) is to connect each element of the domain (consisting of all possible combinations of individual choices) to an element of the range (consisting of all possible social choices). There are a great number of possible functions. Each function will hook up elements of the domain with elements of the range differently. The important thing is that each possible element of the domain is hooked up to one and only one element of the range. Arrow implies that any element of the domain that represents a tie (such as half the population having aRb and half having bRa) should be hooked up with the range element aIb. Respectfully, I disagree with this approach for the following reason: the half of the population that has aRb could actually prefer a to b (no one is indifferent), and the half of the population that has bRa could actually prefer b to a. That represents a tie to be sure, but society is hardly indifferent between the two alternatives. Arrow has confused a tie with an indifference! By so doing he has guaranteed that his analysis will yield the result that no social choice is possible.

Secondly, I would like to point out that individual information is lost when an individual submits his input as aR1b or "I prefer a to b or I'm indifferent between a and b." The system does not know which, and this introduces ambiguity at the outset. Not only that, but say an individual is indifferent between a and b. He has two ways to express it! He can submit either aR1b or bR1a. The resulting analysis becomes meaningless as the system knows not how many of the individual aRb's represent indifferences and how many of them represent preferences. Ditto for the individual bRa's! There can be no meaningful social welfare function given these kinds of inputs.

Therefore, I suggest that Arrow's approach is not acceptable and that his conclusion that social choice is impossible is invalid. A more rigorous approach is necessary involving the possibility of ties between orderings as elements of the range.

Here's a link to a blog which quotes from my website Social Choice and Beyond:  Solving the Tyranny of Choice.

Arrow's R Notation Continued

We promised to do an examination of Arrow's R notation to resolve the differences between my friend, Ben at Oxford, and myself. Ben contended that R was only a "representation device." (See Comments.) After delving into this subject I would both agree and disagree. Arrow says on p. 12 of “Social Choice and Individual Values”: “Preference and indifference are relations between alternatives. Instead of working with two relations, it will be slightly more convenient to use a single relation. ‘preferred or indifferent.’ The statement ‘x is preferred or indifferent to y’ will be symbolized by xRy. The letter R, by itself, will be the name of the relation and will stand for a knowledge of all pairs such that xRy.” [emphasis added]

So R is both a representation device (when it stands alone) and a logical relation when it stands between two letters representing alternatives. A relation of the form aPbPcIdPf... (where a,b,c... stand for alternatives; P stands for preference and I stands for indifference) makes perfect sense since the logical relationships are clear. However, a relation of the form aRbRcRdRf... makes no sense since one must know the truth values of aRb and bRa, aRc and cRa, aRd and dRa etc. etc.

We have assumed that Arrow’s intent was to maintain a 1-1 relationship between P and I, on the one hand, and R on the other so that individual voters would submit their ballots in terms of P and I. These ballots could then be translated to terms of R as long as one knew both xRy and yRx. The dichotomy between the two notations is that one only need know xPy, yPx or xIy since they are all mutually exclusive. If you know that xPy is true, for example, you need not know the truth values of xIy or yPx. However, you do need to know the truth values for both xRy and yRx in order to maintain the 1-1 relationship between R and {P,I}.

We think that it is more transparent and less confusing to use the P and I notation instead of the R notation . Arrow’s use of the R notation because it is, according to him, “slightly more convenient,” turns out to be more cumbersome and more confusing. The same proofs could be done using P and I instead of  R. The in-depth analysis of this conumdrum continues here.

Arrow's R Notation

In the arcane world of social  choice, a man by the name of Kenneth Arrow looms large. In 1951 he published a book, "Social Choice and Individual Values," in which he supposedly proved that social choice is impossible. But what is social choice? Let us say we have a society composed of N individuals numbered 1,2,3, ... . Those individuals have to order a set of M alternatives with their most preferred alternative being their first choice etc. Let's indicate the alternatives as a, b, c, ... . Then a social welfare function accepts the individual orderings as inputs and produces as output the social ordering which is an ordering of the alternatives that applies to the whole society.

If individual 1 prefers a to b, we write aP1b. If society prefers a to b, we write aPb. So far so good. But we also want to provide for the case in which an individual is indifferent between a and b. We write this aI1b and aIb, respectively. Arrow's analysis then combines these two relationships into a relationship he denotes as R which means "prefers or is indifferent to" so aR1b means individual 1 prefers a to b or is indifferent between a and b. Arrow's rationale for this is the following: "Instead of working with two relations, it will be slightly more convenient to use a single relation, 'preferred or indifferent.'" (p. 12) (emphasis added)

Arrow then goes on to postulate two axioms. Axiom 1 states that either xRy or yRx and he notes that this does not exclude the possibility that both xRy AND yRx. Axiom 2 has to do with transitivity which will not concern us here. Again Arrow states (p. 13): "Axioms 1 and 2 do not exclude the possibility that for some distinct x and y, both xRy and yRx. A strong ordering on the other hand, [one with only preferences and without indifferences] is a ranking in which no ties are possible." This is blatant nonsense. One could have half the population with xPy and half with yPx [strong orderings] and that certainly would represent a tie so a tie is possible. What Arrow is implying without coming out and saying it directly is that in his world a tie between two alternatives is to be represented as a social indifference. This is completely arbitrary and limits his entire analysis.

One must assume that in Arrow's world each individual will submit his input in terms of R. That is individual 1 would submit aR1b, aR1c etc. until all pairwise comparisons have been made. For now we will go along with Arrow's demand that only pairwise comparisons need to be submitted. It can be assumed that individuals are not permitted to submit a comparison using the indifference relation since then what would be the purpose of introducing R to make the analysis "slightly more convenient." The whole idea of "slightly more convenient" is to reduce the number of relations from 2 (P and I) to 1 (R). However, Arrow proposes (without saying so) to use the I relation in the social choice to cover the case of a tie. Therefore, the social choice could be aRb, bRa or aIb.

Now the idea of the social welfare function (or of any function for that matter) is to connect each element of the domain (consisting of all possible combinations of individual choices) to an element of the range (consisting of all possible social choices). There are a great number of possible functions. Each function will hook up elements of the domain with elements of the range differently. The important thing is that each possible element of the domain is hooked up to one and only one element of the range. Arrow implies that any element of the domain that represents a tie (such as half the population having aRb and half having bRa) should be hooked up with the range element aIb. Respectfully, I disagree with this approach for the following reason: the half of the population that has aRb could actually prefer a to b (no one is indifferent), and the half of the population that has bRa could actually prefer b to a. That represents a tie to be sure, but society is hardly indifferent between the two alternatives. Arrow has confused a tie with an indifference! By so doing he has guaranteed that his analysis will yield the result that no social choice is possible.

Secondly, I would like to point out that individual information is lost when an individual submits his input as aR1b or "I prefer a to b or I'm indifferent between a and b." The system does not know which, and this introduces ambiguity at the outset. Not only that, but say an individual is indifferent between a and b. He has two ways to express it! He can submit either aR1b or bR1a. The resulting analysis becomes meaningless as the system knows not how many of the individual aRb's represent indifferences and how many of them represent preferences. Ditto for the individual bRa's! There can be no meaningful social welfare function given these kinds of inputs.

Therefore, I suggest that Arrow's approach is not acceptable and that his conclusion that social choice is impossible is invalid. A more rigorous approach is necessary involving the possibility of ties between orderings as elements of the range. One possibility of dealing with these ties is to randomly choose among them which I think my friend, Ben, at Oxford is considering as a doctoral these.

For more on this subject, please see my website Social Choice and Beyond.

What I Learned from General Rosecrans

One of my distant relatives, William S. Rosecrans, was a General in the American Civil War. My Grandmother's maiden name was Rosenkrans, but one branch of the family changed the spelling of the name to "Rosecrans" supposedly so it "wouldn't sound so German." I found all this out from a book I got out of the UCSD library entitled something like "Rosecrans: The Edge of Glory." After graduating from West Point before the Civil War, Rosecrans became a General and a rival of Ulysses S. Grant. After not showing up for a battle where the two of them were supposed to fight together, Grant was criticized by Rosecrans and the two of them became lifelong enemies.

Rosecrans was ordered to go behind Confederate lines in Tennessee where the Confederates massed their troops against him. Rosecrans' requests for reinforcements and more supplies were ignored by a power structure that had taken sides in favor of Grant. Consequently, he got his butt kicked at the Battle of Chickamauga. What I learned from him though, which I think is one of life's most important lessons, is that as Rosecrans' options diminished, he always took the best option that was available at any point in time. I think this is what a rational person does. At any point one has a set of available options. This set is time-varying. The set may be augmented with better options or it may be diminished with the good options vanishing. The important thing is to always take the best option even as the available options are getting worse. This is precisely what Rosecrans did!

After he lost the Battle of Chickamauga, he was sent to the Boonies in Missouri or somewhere for the duration of the war, a sort of demotion, on orders signed by none other than U. S. Grant, his nemesis. After the war, Rosecrans moved to California where he had a 14,000 acre ranch in Redondo Beach. Still a major thoroughfare, Rosecrans Blvd. is now located in the heart of LA. Rosecrans was involved in various railroad and mining ventures in Mexico and elsewhere. He was twice elected to Congress. When U.S. Grant went broke after his term as President, Rosecrans rose from the floor of Congress to speak against providing him with a pension.

Garfield was Rosecrans' friend, and, when he was President and under other friendly Presidents, Rosecrans was named Ambassador to Mexico and Secretary of the Treasury. A military installation in San Diego was named Fort Rosecrans and Rosecrans Blvd. is still a major street in San Diego as well as LA. The U.S. Grant Hotel in San Diego was built by one of Grant's sons or grandsons so the Civil War presence of these two rivals exists side by side in this great city.

Rosecrans's various ventures were none too successful, and he cut a rather sad figure at Civil War reunions, apparently never having recovered from his loss at Chickamauga and criticism that was directed at him for leaving the field of battle, a fact that still is in dispute, although Rosecrans had his defenders as well as detractors. General Thomas, on the other hand, became known as the "Rock of Chickamauga" for holding his part of the line as the rest collapsed. I think the book was entitled "The Edge of Glory" since Rosecrans came so close to being the winning Civil War General. His skills were probably superior to Grant's. However, "politics" and Rosecrans' tendency to criticize his superiors combined to convey the glory on Grant not Rosecrans.

What does this have to do with Preferensism and Social Choice? The basis of these fields is the individual's forming a preference list over a set of options ranking his preferences from top to bottom or from first to last. It would seem fundamental that this set is time varying although this basic fact is the cause of Arrow proving that Social Choice is impossible. However, as I've said before, "the difficult we do right away, the impossible will take a little longer." For why I think Social Choice is possible, please see my website, Social Choice and Beyond.

Arrow's Impossibility Theorem

In his book Social Choice and Individual Values Arrow supposedly proves that it is impossible to take a group of individual preference profiles and amalgamate them to form a social preference profile or social choice. Each individual profile would consist of the ordering of, for instance, 10 alternatives in order of preference from first to last, and the social profile would consist of the same alternatives in some order from first to last. Of course, the number of alternatives is arbitrary. Now first of all this is an artifical problem. In the real world voting situation we would be concerned about selecting one winner given individual preference profiles as inputs - not an ordering. In the economic problem, we would be concerned about assigning individual outcomes given individual preference profiles where each item to be ranked would consist of a work - consumption bundle. That is each preference would be an amount an individual would be willing to work in exchange for that bundle of consumption items indicated in that preference. In general most individuals would probably want to work less and consume more and that would be indicated in their ranking of various work - consumption bundles.

Well, neither of these situations represent the model that Arrow used to prove social choice is impossible. Secondly, any actual social choice rule had to meet Arrow's 5 Conditions at least one of which is completely arbitrary. Anyone could set up their own group of conditions and demand that a rational social choice rule must meet them. The suspect condition is Condition 3 - Independence of Irrelevant Alternatives. Basically this demands that, if there were 10 candidates, for instance, and 100 voters, and the voters all ranked the candidates in order of preference, and then one candidate died, the social choice rule should be able to cross out the dead candidate's name in each individual list and the result would be the same as if you crossed out the dead candidate's name in the original social choice profile. Of course, if everyone just revoted on the new candidate list, this problem would cease to exist.

And actually this is what we propose in preferensism: a continual revoting. Let me say right off the bat that this wouldn't be possible without the technology of computers we have today in the year 2006. I assume that everyone has access to a PC and a secure account, and then the data is processed by a centralized computer to come up with the social choice. For instance, let's consider the economic situation. Everyone inputs their data consisting of work and consumption preferences. Now we assume that each individual can change his or her mind as often as he or she wishes. That is data inputs can vary in real time. Some individuals might change their input on a daily basis. Others might be satisfied with the same input for a lengthy period of time. At each instant, the centralized computer (the one that is figuring out the social choice which consists of work assignments and consumption bundles for all individuals) comes up with a social choice which maximizes utility or "happiness" based on giving each individual as close to his first preference as possible while considering each individual equally. That is no one gets special consideration in determining the social outcome. For this scenario, Arrow's Impossibility Theorem is entirely irrelevant. Why? Because there are never any irrelevant alternatives. Why? because there is a continual revoting, and, by definition, you can only have an irrelevant alternative when some alternative has been eliminated from the alternative set and then the social choice is made with the original individual input data but with a changed alternative set.

Another thing to consider is that each individual does not even know the full set of alternatives because each individual is concerned only with his or her individual work-consumption preferences and not his or her neighbor's. So the central computer has to take all this data and integrate it not only in a coherent way (the totality of work assignments produce all the requisite consumption bundles) but also in a way as to maximize utility. Is this fair? Yes, because each individual's input is given the same consideration. Furthermore, if there are more ways than one to maximize utility, preferensism picks the one that reduces a measure of inequality over the whole society.

Therefore the central computer takes the individual inputs, considers all possible work assignments and corresponding consumption bundles, figures the social utility for each assigment based on how close to first preference each individual achieves and then chooses that set of assigments that maximizes social utility and with that constraint minimizes inequality. For instance, if there are 11 alternatives and an individual gets his first choice, we could say his individual utility is 1. If he gets assigned his last place preference we could say his utility is 0. Second place would be an individual utility of 0.9 etc. The central computer would seek to maximize utility over all individuals or for society as a whole. In this scheme could someone end up very dissatisfied? Yes, if he or she were assigned an outcome which represented his or her last choice or a choice near the last choice. It's a logical possibility. In practice, as long as there is a large set of available alternatives, it should be possible to work things out so that everyone gets close to the top end of his or her preference list.

For more on this please see my website Social Choice and Beyond