Shall we vote on values, but bet on beliefs?

Abstract

Democracies often fail to aggregate information, while speculative markets excel at this task. We consider a new form of governance, wherein voters would say what we want, but speculators would say how to get it. Elected representatives would oversee the after-the-fact measurement of national welfare, while market speculators would say which policies they expect to raise national welfare. Those who recommend policies that regressions suggest will raise GDP should be willing to endorse similar market advice. Using a qualitative engineering-style approach, we present three scenarios, consider thirty-three design issues, and finally a more specific design responding to those concerns.