Whats the greatest idea for helping us understand the future that fell victim to politics?
Political Decision Markets, where participants can put their money where their mouth is, have a proven capacity for collective intelligence. But a guy named Poindexter, Mr. TIA, killed our ability to see the future more clearly in his quest for power.
When he proposed a political futures market as an intelligence mechanism for predicting terrorist attacks, the idea flopped for several reasons: it proposed trading the least certain events, which could lead to market failure because markets would not be liquid; it offered the (unrealistic) prospect that terrorists would game the market to finance their operations; but mostly it failed because it was morally repugnant -- "I can't believe that anybody would seriously propose that we trade in death," said Tom Daschle.
We shouldn't, though, abandon the idea that markets can teach us more than risk and reward, that they can teach us where we are going and who we are. Markets can be applied to decisions of hope, not just fear. They can be used to regulate, as is the case of emissions trading, as well as inform regulators. We are culturally obsessed with markets, mostly for selfish reasons, and their illusory powers for personal benchmarking hold strong. But out of the selfish desire for gain, we can also gain an unselfish sense of collective wisdom. Iowa can predict the future, beyond politics.
Decision markets are enabling decentralization at scale for business. We make decisions in a social context, and make better decisions in groups. Markets are a model that infinitely scales. Markets are but one mechanism for emergent democracy, but shouldn't our political decision makers be informed by our emergent wisdom?
Ross Mayfield is the CEO of Socialtext, the leading provider of enterprise social software -- and will bet that things are changing for the better.
For the record, the Iowa market was completely wrong about the Democratic nomination. Heading into the first several primaries, it placed Howard Dean and even Wesley Clark far above Kerry.
Actually, the political futures market failed because Democrats in the Senate (and Sen. Dorgan and Wyden, in particular) were power-obsessed. (This is not to absolve Congressional Republicans, the Administration, nor DARPA leaders who were too weak to stand up for a worthwhile program.) The Senators established close oversight on the TIA program, including the futures market--Senator Wyden even passed an amendment that bore his name giving the Senate even more oversight authority. Prior to the market's cancellation, they requested and received a report outlining the market (including the proposal for taking bets on whether Israel would be attacked by chemical weapons) and approved its funding.
The real deal breaker seems to have been procedural--not the moral or technical aspects of the market itself. Senate Democrats feared Poindexter and the potential effect to civil liberties of the TIA programs. Accordingly, they established control over how TIA and its subcomponents, such as the market, were to be developed and deployed. When it came to their attention that limited testing was beginning on August 1, a perceived violation of their regulatory power, they went public with fabricated moral outrage.
I wrote an article detailing this timeline that I would be happy to email to any interested party.