Thursday, June 24, 2010

Thoughtful Thursday, a second Review of Constitution for a Future Country by Dr. Martin Bailey

Martin J. Bailey, Constitution for a Future Country, part Two

In Chapter Four, Dr. Baylor pointed out--as I have long felt--that when a new government was forming, the leaders were only given the U. S. Constitutions or the parliamentary system to serve as a guide. There has been no improvement in government for two hundred years. He recognizes that a country does not throw out its old Constitution and put in a new one just because logic or economic theory or public choice theory says this one is better. But when there is a situation like the collapse of the Soviet system in Eastern Europe or Afghanistan forming a new government, the leaders of the transition might ask for help looking for a better way.

Dr. Baylor wrote this book in his dying days to provide that help. It is my goal to provide this help also, but in the form of computer programs. We simulate things on the computer before we build them, whether it be the finite element analysis of a bridge resisting the forces of winds and the trucks riding upon them or the robustness of a electric grid as loads change and generators or alternative power sources upon them. The people who must ratify a constitution should be able to simulate it. Just as a pilot practices emergency moves such as an engine stall in a simulator, the people must practice dealing with budgeting during a depression, handling a natural disaster like Katrina. And the judicial system must be practiced as well. How would a one-state solution to the Palestinians and Jews in the Middle East deal with a Palestian Police Officer shooting an Orthodox Jew or the other way? A Law Enforcement class might enact a trial to learn criminal procedure. The people will first vote on a judicial code under a trial constitution. Then, they will have whatever election process that would include for judges. Then the judges and the jury, if their constitution so provides, will try moot cases. This would definitely include staged charged situation of one ethnic group shooting a member of the other. If they can't do it in a mock trial--is there any reason to believe they could accept the results when it happens for real. And we should do it in the more quotidian cases such as those that one might see in Judge Wapner's People's Court.)

As an economist, Dr. Bailey is very concerned that government expenditures are handled efficiently. And he starts with Lindahl taxes. Each possible group, doctors living in Wyoming, wealthy financiers living in tony Connecticut towns, coal miners in Apalachia, single people, married families, will be represented by random samples from their numbers. These will be chosen randomly, what Dr. Bailey refers to as a stratified sample. They will each propose a tax to fall on their group proportional to their marginal benefit. Dr. Bailey that each group can be divided into other groups. But each division would be based on some objective criteria, such as gender, race, occupation group, income or the like.

And taxes would be either based upon property or income and have a tax schedule. The taxes would be categorized by budget category. Thus, there might be a property tax on automobiles to fund the highway system. The goal is to get a near unanomous vote. Also, every two years, there should be the opportunity to vote for a minimal budget for basic public safety needs--equivalent to the partial shutdown of the government that were used during budget stalemates in some states.

As each funding proposal comes through, citizens vote their uninsured harm (VCG taxes) and also can purchase Thompson Insurance for monetary losses. Dr. Bailey proposes limits of about ten to twenty percent of income for these. This means there is no way for a citizen to express extreme concern-- for example a pro-lifer expressing extreme concern about legalized abortion, or a Native American expressing extreme concern about a mine on a sacred burial ground.

And Dr. Bailey proposes a complicated formula for legislative pay which includes a variety of incentives. (See below.) The first is at the start of the public good chain. If their estimate of Lindahl Dr. Bailey believes that legislators should be sequestered like juries in major cases. They should only get information in an organized way through formal hearings and not emotional impacts. More importantly, there would be no way to lobby legislators. Legislator's wealth would be replaced by a mutual fund weighted like theinvestments of their demographic groups. Thus, a physician representing his fellow physicians would sell their investments and be given a set of investments that matches what an average physician has. Cumulanis' Constitution (that's what Dr. Bailey calls his hypothetical State) specifies that legislators shall vote the amount of money they and their family would pay to put through or stop a certain legislature.

And Dr. Bailey believes in referenda, anyone including corporatins can put a referendum on the ballot if they pay the costss including evaluation. Dr. Bailey calls for impartial statisticians to estimate the possibility of referenda passing--I guess after polling. If the odds are ten percent ormore Obviously, there are various technical correction bills that are not controversial. The statistical groupo could find which ones have a 95% chance of passing and these could be grouped in a single up or down vote. He furthermore proposes that referenda be voted on twice, with the first vote just to see if there is interest and requires 25 per cent of the vote. If a legislature makes a proposal rejected by 75 per cent of the people shall have the costs of the ballot deducted from their incentive pay.

Of course legislators have important roles, including determining the size of ebverybody's taxes--although with his mechanisms less of a role than currently. But many other jobs including the election commissioners that administer the non-trivial software systems, the statisticians are critical. And, what about those making decisions about deep oil drilling equipment. Or those administering large contracts for the government.

Dr. Bailey realizes that the VCG mechanism although a Nash equilibrium is not immune to collusion. Cumulanis' constitution simply says that attempt to organize voters to misrepresent their harms that would defeat the nice economic properties of VCG taxes is a felony! Dr. Bailey notes that under the bill of Rights, it is perfectly legal to encourage voters to vote strategically, e. g. a citizen could take out adds encouraging Republicans to cross over and vote in the Democratic Party and vote to nominate an extremely liberal candidate so the Republican party candidate wins.

Dr. Bailey believes legislatures should be paid on a contractual basis with the voters who are sovereign. Thus, every bill should have measures of success. The education bill should state that 70% of the children shall read at grade level for example. The legislature making the education proposal would be responsible for contracting out the education function and monitoring it. If the education system got only 65%--then any citizen can sue them. "The criteria for standing admissibility of suits shall be identical to those for suits against private parties as specified by the laws of torts and contracts." Now, who would have the right to sue here. Would I as a taxpayer or simply a citizen who cared that kids get a good education or a professor who felt that I want students who know how to read and write in my class have the right to institute a suit? (The Supreme Court has restricted this right. Taxpayers do not have the right to pursue a generalized claim that their funds are being mispent. Parents of a particular ethnic group could not sue regarding giving tax exempt treatment to schools that discriminated against their children. And lastly individuals could not sue on behalf of animals under the Endangered Species Act. A generalized claim that the person might not see the animal when they are traveling is not sufficient.)

In the same article, Dr. Bailey proposes mechanisms to make budget estimates more accurate and realistic. Each tax schedule shall have an estimate of how much revenue it will bring in. (And he provides for macroeconomic downturns that are not the estimator's fault.) Legislators cold be sued when their budget estimates were simply incorrect--presumably discouraging the budget shenanigans we say at the state and federal level in the United States. (I have pointed out that there are ways of organizing the budgeting structure constitutionally without budget estimates. One specifies the tax schedule and whatever it brings in is what that government has. Also, one can specify an expense and the people who shall bear it. They compete on a goodness or badness basis before sortition jurors to determine who should pay it. For example, the car owners shall be required to pay for the highway expenses. Each goes before a tax sortition juror and pays a tax based upon how safe they drive, how much they needed to drive (those who lived on a farm out in the boonies might have no choice but to use their vehicle and the sortition jury would assign them a small share of the highway taxes. But someone who might use their vehicle when the Greyhound bus went where they needed to or who drived for vacations.)

One can also use approval voting to determine expenditures. That which 100% vote for gets funded first, then what 99% vote for, etc. The tax schedule brings in whatever it brings in. The things wanted by the most people gets funded first.

Thompson Insurance

A street project would improve the value of some people's property. It would lower the value of others. Every proposal would be associated with a Thompson insurance. The first parties could take out insurance against the proposal failing. The other parties would take out insurance against it passing. A neutral government body must offer this. Dr. Bailey cited work in the law and economics literature that insurance really doesn't work for intangibles such as pain and suffering. And a majority could keep proposing the same thing, bankrupting a minority. That is if the majority might keep proposing the mine on the ethnic group's grave field. The ethnic group would take out insurance against the bill passing, defeating it. However, they would eventually run out of money.

Thus, this really does not deal with the pro-life individual concerned about legalizing abortions or the pro-choice concerned about a proposal to restrict abortion. Dr. Bailey's constitution would have would have limits that would not allow a person to declare the severe harm for their ethical sensibilities. Dr. Bailey realizes this and he says that his mechanisms could not handle it. He says, "The performance of a country with our proposed constitution could be almost an arbitrary and capricious on this issue as the ... United States has been. That is a pity, and if the reader can think of a constitutional order that would arrive at sound policy on such issues more reliably than that proposed, please publish it." I have an idea--and will be posting it shortly here. I should also mention Dr. Bailey's concern about entry into war on spurious grounds. He mentioned the Gulf-of-Tonkin resolution that got the United States escalated in the Vietnam war and the less-disastrous Spanish American war. This book was published and Dr. Bailey passed away before the entry into IRAQ, a situation that has been compared. And Dr. Woodruff discussed the problem in the Greek invasion of Syracuse. system. (I proposed a solution of waiting to reward our statespeople and military leaders.)

Appendix -- Incentives for Legisltuares

Section Eleven includes detail for all legislators. Here are some of the formulas to give a flavor: "0.1 percent of the budget amount contained int he proposal plus thirty percent of the total declared insured and uninsured harm from non-adoption, net of the declared harm from adoption, relative to the next most valuable distinct and differeent proposed by another legilature, less five percent of the net inferiority of these proposals, relative to distinct and different alternatives of the ballot, for each population that on net would have supported an alternative proposal int he group, under the legislature's proposed taxes and accurate taxes for the alternative."

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