Tuesday, May 26, 2009

Sotomayor, Calabresi, and the Chief Justice at our moot court

Our 2006 moot court competiton at The George Washington University featured Chief Justice John Roberts, law & economics guru Judge Guido Calabresi, and Judge Sonia Sotomayor (now a nominee to serve with Roberts on our highest court), and was replayed today on C-SPAN. I saw this in person when I was at GWU -- it was fun to watch my fellow law students arguing with these seasoned judges about whether subliminal ads can be banned under the First Amendment. H/T to GWU Professor Orin Kerr.

Friday, May 22, 2009

Futarchy: an experiment we'd learn a great deal from, but please don't try it on me

Mencius Moldbug and Robin Hanson are debating Robin's intriguing idea of "futarchy", which has attracted many fans. The basic idea of futarchy is "when a betting market clearly estimates that a proposed policy would increase expected national welfare, that proposal becomes law."

Robin and Mencius both make some great points in this debate -- for example, Mencius observes that GDP and similar estimates of "national welfare" are poor criteria for decision-making, analogous to a corporation making decisions to maximize revenue instead of profits. GDP in the United States, for example, rose dramatically during World War II, but its standard of living was probably significantly lower for most people than in the Great Depression due to rationing, death, and other traumas of war.

But both Mencius and Robin have misconstrued or vaguely glossed over two of the biggest problems with zero-sum decision markets, especially when applied to government decisions. First an observation: all prediction markets are decision markets unless the resulting prediction is so useless that nobody ever makes a decision based on it or some government somehow bans all possible kinds of decisions based on those markets. The distinction Robin and Mencius make between the two serves to obfuscate those issues that are problems with real decision markets rather than with theoretical or play prediction markets. Two of the biggest problems are:

1. The problem of "morons' money", deemed by Mencius to be the money of some less-informed fraction of players who are disincentivized to play the zero-sum prediction game, actually means the money of anybody with information worse than the best player's information. Since it's a zero-sum game, and much less entertaining than sports betting, any money that is stupider than the average money has a disincentive to play -- in sharp contrast to normal positive-sum markets. But when the less-informed half of the players leave the market, we have a new half of the market that has a disincentive to play, and so on. There's only one person left for whom it would be rational to play, if there were any market left. Prediction markets can work in an experiment only because students of the professor or fans of the idea feel they have a duty to play, or want to signal to fans that they like the idea, or because there are a few people who, like the much larger population of sports bettors, find it genuinely entertaining and thus worth wasting some time and/or money on. Robin I believe has tacitly recognized this problem in his proposals to goose these markets with subsidies. But how big subsidies are needed? It's a high-risk market, so you need to guarantee a high rate of positive return to the average player to compensate for the risk if you want good information entering the market.

2. Moral hazard: As I stated, prediction markets are also decision markets. We're right now going through major economic problems that stem from neglect of moral hazard. Selling securities, insurance, or betting without the investors/bettors or their agents or regulators exercising due diligence and control creates pathological incentives for people to do things like, as we've seen in the mortgage market, give cheap loans to bad credit risks because there were a bunch of number-crunchers with woefully incomplete models buying or insuring these loans who didn't understanding that most kinds of markets create additional risk by creating moral hazard, that this moral hazard must be well controlled if the market is to work, and that controlling moral hazard is usually far from straightforward.

In these betting markets, which are decision markets, people inside and outside government will make their own decisions based on the market. Coercive decisions will have an especially pathological effect: they turn the zero-sum market into an overall negative-sum game. For example, a market predicting the death of someone can, as Tim May long ago observed, readily be used as an assassination market. That's why, for example, PAM, a since-abandoned effort by the U.S. Department of Defense to try out Robin's ideas for prediction markets, had a market for predicting the death of Yasser Arafat but not of George W. Bush. Since these are markets for government decisions, the decisions it drives will, like assassinations, be primarily coercive in nature, for example to wage war on country X or to tax one group of people in order to subsidize another. If the decisions resulting from such a market were voluntary, you could just go onto a voluntary market to satisfy your needs instead of bothering with deciding that government must make some decision and then betting on its outcome. Furthermore, Mencius, although waxing entirely too rude behind his pseudonymous mask, is probably quite right that these markets will reflect the demand for desired decisions far more than a "supply" of information about how to best make that decision: per (1.), there is little to no incentive to supply such information without huge subsidies to give the markets an overall positive rate of return comparable to other high-risk markets.

For example the market for "if the U.S. gives $20 billion to GM the U.S. GDP will rise by 1.1% or more [instead of the expected consensus by some group of economists of 1.0%]" will be dominated by GM, its unions, its dealers and suppliers, and so forth goosing it to a "probably true" prediction, not by people betting on the extremely uncertain, practically lost in the random noise, outcome of the proposition. If GM thinks it can sway the odds of a decision in its favor by 5% by, increasingly as the time for decision approaches, investing up to nearly $1 billion in the market, it will do so. GM has far more to gain by the gift of other people's money than arbitragers making risky bets with their own money have to gain from arbitraging the market back down to whatever they believe to be the true odds of the GDP rising 1.1%. If GM is banned directly from participating in the market, there are numerous other parties with similar stakes in the outcome and they can't all be banned. GM and its allies also have much to gain by lobbying the government to set up this kind of market for direct subsidies instead of futarchic markets for more generic decisions you might find more useful, such as a "remove the President if the GDP doesn't rise 1.1% or more" market. Futarchy thus becomes little more than an auction for government favors, like the time the Praetorian Guard auctioned off the emperorship to the highest bidder.

It would be interesting to try straightforward government-by-the-highest-bidder. We'd probably discover why historians have equated this kind of process with corruption, but it would be well worth the suffering of some hapless residents in some small county somewhere to try the experiment and learn from it. It would of course be interesting to try out futarchy in a similarly real but small scale, restricting the players as well as the victims of the market to our guinea pig jurisdiction since there are no big GM-subsidy stakes at play.

Of course, some would argue that we are living in this kind of experiment anyway, just under a blizzard of euphemisms instead of a straightforward honest auction. Others would argue that democratic voters bring no more information to governmental decisions than "moron money" would in these markets. I have no ready refutations for these arguments, but they don't prove futarchy is better than either what we have now or other possible alternative reforms.

In summary, fans of prediction markets in general, and futarchy in particular, need to actually specify how to deal with moral hazard, as insurance companies and their regulators have, rather than mysterious hand-waving about the supposed "several ways to deal with it", as well as to acknowledge the need to subsidize these markets and figure out how to fairly distribute these endowments.

Tuesday, May 19, 2009

What caused the birth of agriculture and the industrial revolution?

Robin Hanson asks, "what key features make this [human] growth groove possible?" -- two key events being the birth of agriculture and the industrial revolution. Commenter "gwern" is on the money in saying that (a) explaining why the IR happened when and where it did is hard, and (b) the explanation has to include something that China didn't have much sooner, which eliminates most of the usual explanations. I'd add that explaning the birth of agriculture is even harder -- we have vast amounts of historical data on the IR and only archaeological and comparative anthropological evidence about the birth of agriculture.

Indeed, the most important thing in explaing these two events is to be aware of enough facts from different fields, and have sufficient doses of skepticism and common sense, that you can eliminate the many theories that are popular but obviously, if you know enough such things, wrong. For example, be aware that hunter-gatherers were experts on botany and animal behavior. It's not plausible that the simple ideas that seeds can grow into plants that you can eat later, or that you can keep an animal tied or penned up and eat it later, were not discovered and known countless times during the c. 100,000 years between when our brains became modern-sized and agriculture developed. There has to have been some major barrier to benefitting from such obvious ideas to have kept agriculture from developing far sooner. I also don't find genetics plausible as a cause of agriculture, since agriculture ended up spreading to a number of human groups that had become genetically isolated long before the dawn of agriculture. (Genetic evolution caused by agriculture is another story -- Cochran and Harpending have some ideas very much worth thinking about). Also not plausible are climate explanations -- there were many local climates hospitable to agriculture throughout those 100,000 years -- just not necessarily at Mediterranean or higher lattitudes.

That said, going back to the IR there a number of likely-to-firm differences between China and Western Europe (or Great Britain in particular):

(1) Differences in political and legal culture. What differences, specifically, it's hard to say, because there is very little about, for example, Sung or Ming dynasty commercial law that has been translated into English: far too little to compare to English law in the 18th century, for example. We know some very general things, such as that Western Europe was (and still is) a far more legalistic culture than China. Also, we know that Western Europe (contrary to Gregory Clark's claim) radically changed its property law between the 16th and 19th centuries, from a feudal model of of hierarchy of tenures and bundled political property rights to a model based on old Roman law with flattened and purely economic ownership. There ensued movements such as the enclosure movement in England and an accompanying large increase in capital investments in land. But we don't know when or to what extent similar incentives to capital investment might have been present or missing in China.

(2) China never controlled the world's oceans and merchant marine, but the British just prior and during its IR did. If this explains the IR, then to explain our explanation (i.e. why did Britain come to control the world's ocean-going trade) we have to step back and solve the even more puzzling question of how a tiny country of fishing-folk and small-time crusaders, Portugal, and not an advanced superpower like China, was the first country to take over most of the world's oceanic trade routes (later to be beaten back by other Western European countries and eventually Great Britain).

(3) China had the printing press, but in contrast to Western Europe it did not lead to a rapid growth in literacy sustained over several centuries -- perhaps because of bureaucratic central control rather than the free-enterprise printing businesses that sprung up all over Western Europe, perhaps because the much greater number of symbols did not as efficiently lend itself to printing as the Roman alphabet, or a combination of these two factors.

(The Romans were not all good -- indeed they gave our culture something quite nasty which I will blog on in the near future).

Other interesting related phenomenon to explain, (and it would be nice per Occam's Razor if it was the same general explanation, but social life is rarely that simple) is why Japan industrialized well in advance of China and Britain was a few decades ahead of the rest of Western Europe during most of the 18th and the first half of the 19th century.

Robin: "If you wanted to attribute the industrial revolution to writing, you'd have to explain why there was a strong threshold effect, so that pre-1800 writing levels had weak growth rate effects, while post-1800 writing levels had strong effects."

Besides threshold effects, there could be delay effects: for example, the the rapid growth of books and literacy after the mid-15th century in Western Europe gave rise to a slow but accelerating series of innovations (most obviously scientific and technological advances, but perhaps also innovations in business or law), which in turn gave rise to the IR.

Thursday, May 14, 2009

Political property and the evolution of liberty

A "liberty" (Latin libertatis or freedom) in the king's courts of medieval Europe usually referred something very different than it refers to now. It referred to the right of someone to deprive some other people of some of their normal rights as law-abiding subjects. In other words, it referred to a political property, a specifically limited right to coerce some set of people, usually for law enforcement or military or other political purposes. This curious meaning, in some ways quite the opposite of our modern meaning, reflects the conundrum that one person may use some freedoms to deprive another person of their freedoms. To prevent this, these "positive" freedoms to coerce can be limited to procedural powers by which are enforced substantive laws that are generally non-coercive, i.e. that generally protect only "negative" rights. English-derived common law (i.e. law in Great Britain, the Commonwealth, the United States, etc.) since at least the sixteenth century has generally accomplished this, and as we shall see it has used the flexibility of vague phrases to evolve a variety of modern negative rights.

Medieval positive liberties that could be owned included the right of a lord to hang thieves caught red-handed in his territory, the right to hold a market and run a law-merchant court, to collect taxes for the king or for oneself, to be a privateer (i.e. a pirate legitimized under the king's laws), to conquer and run a foreign territory, and so on. There were many dozens of kinds of these political properties specified in thousands of property deeds, called charters. Charters often freely bundled real property (i.e. land) with a variety of political properties over territories matching the boundaries of the real property, but on occasion political properties could be unbundled from land, and specific kinds of political property could be combined with each other in a dizzying variety of ways. Political properties could be held by individuals (as in lords of the manor, counties Palatine, the proprietary American Colonies, and many other examples) or corporations (guilds, boroughs, cities like London and York, companies like the East India Company, the corporate American colonies, and so on).

Individually owned politcal properties were generally hereditary. The king exercised his own hereditary political property, called the Realm or the Crown, from which at least in theory all other political property rights had been originally granted. As the original grantor the king retained via his courts jurisdiction over disputes involving those coercive properties, via the extraordnary or prerogative writs. Most political property rights only involved certain narrow subsets of the royal political powers, while some (such as the county Palatine) were very broad, including all royal powers within the boundaries of the county subject only to the intrusion of the king's extraordinary writs.

In the foreign relations context, in the granting of powers of naval warfare, piracy, and colonization, political property was used for offense as much as for defense. In the domestic context, justice was meted out by these privately owned courts more often than injustice, but it should be observed that breaking free of the jurisdiction of the local lord in order to come under the jurisdiction of the king was, more than any other event, referred to as gaining one's "freedom". If you were the subject of a lord as well as, mostly indirectly, of the king, you were "unfree". If you were the subject of only the king and his ministers, you were "free". At least that is how the king's courts and ministers and any newspapermen that didn't want to be imprisoned for libel by the king's courts referred to it.

In their quest to usurp the political properties of the lords, boroughs, cities, and guilds to run their local courts, the king's courts used cases brought under the extraordinary writs to evolve a set of "liberties" with a different meaning: liberties the way most of us think of them, negative liberties that individuals held against these private law enforcers as subjects of the king, and thus justified removal of the cases to the king's courts. The definitions of various political properties increasingly included the procedures within which those rights to coerce had to be exercsed in order to protect the king's subjects from injustice. Thus we see, for example, over the sixteenth to eighteenth centuries the king's courts successively stripping guilds of various of their jurisdictional powers and thereby increasing the liberty of the individual to freely engage in their trade. To try to be consistent, the king's judges also often, though by no means always, respected these negative liberties themselves in order to justify by rules their usurpation of the positive liberties of rival private courts.

Many of the basic constitutional rights of individuals, for example of the rights enshrined in the U.S. Bill of Rights, descend from these efforts. The lex mercatoria evolved in the privately owned market courts of Western Europe. Much of this merchant law was later incorporated into the common law (the law of the king's courts) in Great Britain by merchant juries in the century leading up to the industrial revolution. At the same time, the king's courts gained a large degree of independence from both the king and the rising power of Parliament, forming a separation of powers between the executive, legislative, and judicial branches that was to be used as a model for the United States Constitution.

Lord Coke, Chief Justice of the king's court of Common Pleas under King James I in the early seventeenth century, declared in Dr. Bonham's Case that these common law rights could even limit the power of Parliament, but this argument came to be neglected by later courts. There has been longstanding debate over whether this argument of Coke's was a legally binding "holding" necessary to reach the verdict of the case or an unecessary "dictum" and thus not binding precedent. A similar doctrine was, however, revived in the United States based on interpreting broad statements in our Constitution such as "due process" in terms of rights derived from English common law in order to limit the powers of Congress and the President. The term "due process" comes from a series of charters that followed the Great Charter (Magna Carta). The phrase was considered largely synonymous with "the law of the land" that features in the Magna Carta, and referred to procedural rights, including the rights of political property and procedural limitations on those rights, that were considred the "common law" at that time. However the United States' courts' much later interpretation of the phrase has been far more creative and modern, including the oxymoronic phrase "substantive due process" under which rights to freedom of contract, school choice, birth control, and abortion, among other such negative personal rights, have been unearthed and applied to limit State and Federal legislative and executive powers. (More on the history of due process here). The modern British Parliament, on the other hand, is considered to have arbitrary sovereign powers, which can only be limited in certain cases by interpreting the language of its statutes in narrow ways to conform with the unwritten British constitution, i.e. its procedural common law traditions, but again with many creative modern flourishes.

In their efforts to limit locally coercive liberties by enhancing negative liberties, the king's courts fell short of consistency in some important ways. For example, a liberty of a corporation to enforce its regulations about a given subject matter (e.g. medicine, for a medical guild) in a given territory was often stripped from that corporation in a case involving a dispute between an individual and that corporation (e.g. somebody practicing medicine in the territory without permission of the guild), on the theory that "one should not be a judge in his own case." This is a very sound principle, and in the case of the guilds it led to the rise of free trade, but as the corporate barristers were quick to point out, the king's courts often did not apply this principle to themselves -- cases involving the king, which were many, remained in the king's courts. To some extent this was achieved by the independence of the king's courts, but it did not prevent these courts from gradually usurping the political property of the private courts and other privately held legal institutions and, with the generous help of Parliament and its own will to power, eventually extirpating them.

There is a detailed analysis of many English cases involving privately owned rights to hold courts and enforce laws, including Dr. Bonham's Case, in my paper Jurisdiction as Property.

Paradoxes resolved (mostly)

A paradox is usually just a good reductio ad absurdum, or what mathematicians call a proof by contradiction. The paradox serves to disprove one of its assumptions (or equivalently, if we "exclude the middle", to prove the opposite of one of its assumptions). Many intellectuals often overly complicate paradoxes, for the sake of entertainment or out of wishful thinking that the dubious assumption has not in fact been disproven. A paradox is only truly mysterious if more than one of the assumptions being used are truly mysterious, and thus we can't tell which assumption caused the contradiction. But usually it's more a case of obsfucation or wishful thinking than of genuine mystery. Many academics have a terrible habit of hiding or confusing their assumptions, and this allows wishful thinking to run rampant.

Newcomb's paradox

Chooser -- let's say that's you --- plays a game wherein you choose whether to open both boxes A and B or just B. For whatever odd reason -- Predictor is an omniscient diety, Predictor is running a very repeatable simulation of the Chooser's mind, time travel, the Predictor has repeatedly run the Chooser through this experiment before, etc. -- the Predictor already knows with very high probability what box(es) the Chooser will select. The first step in the game is that the Predictor makes his prediction. Then a trustworthy third party puts $1,000 into box A, and $1,000,000 into box B if the Predictor has predicted B only, otherwise nothing into box B. After these two steps are completed the Chooser selects which box(es) to open.

Here's the payoff matrix for Chooser:

Predicted choiceActual choicePayoff
A and BA and B$1,000
A and BB only$0
B onlyA and B$1,001,000
B onlyB only$1,000,000

What is Chooser's best strategy? According to game theory, A and B beats B-only by $1,000 whether the Predictor predicts A and B or just B. Therefore Chooser should choose to open both A and B.

But another strategy for Chooser is the following: The Chooser, knowing that the Predictor has very good information about his forthcoming choice and has mechanically acted on it, and thus is almost surely correct, eliminates those choices where the Predictor is wrong and chooses B-only over A and B because of the remaining two choices it has a higher payoff.

By following 2-player game theory, the expected value of Chooser's winnings is only a bit over $1,000, while by taking into account the high accuracy of the Predictor's prediction and maximizing expected value the expected value is a bit over $1,000,000.

The paradox dissappears if you stop assuming a game with two players. The Predictor does not have any stake in the outcome and is not a player. Indeed, we are told that Predictor will make no free choice at all, but will simply mechanically predict what Chooser will do. It's the Chooser's free will in the face of a mechanical but oddly well-informed Predictor. Chooser should not be misled by the payoff matrix into assuming this is a 2-player game, but should instead choose the best of the two choices of significant probability.

Fermi's Paradox

Enrico Fermi asked, if there are extraterrestrial civilizations, why haven't we seen them? No alien artifacts large or small on earth, nor anything visibly unnatural on the many millions of square kilometers of billion-year-old (or more) surface we've observed elsewhere in our solar system, nor any visible megastructures in our galaxy. Under Darwinian evolution life and civilization tends to spread to use as much energy and matter as it can. New volcanic islands and areas where life has been destroyed by volcanoes are quickly colonized by a very observable spread of plants that soon soak up a significant fraction of the incoming sunlight. Human civilizations have similarly in the blink of astronomical time spread all over our planet, leaving a number of highly visible artifacts such as the Great Wall of China, a dazzling display of lights on the night side of our planet, and in our atmosphere increased carbon dioxide and a potpouri of odd chemicals. Photosynthetic life has given our planet a bizarre oxygen atmosphere and turned our continents significantly darker. Even if an alien society somehow turned radically un-Darwinian and thus remained obsessively small and hidden, it would take just one "crazy hermit" to appear once in hundreds of millions of years to take off and replicate his crazy Darwinian verion of that civilization across the galaxy, building visible structures all over the galaxy to efficiently use stellar energy and recycle volatile elements.

The average star in our galaxy is about 10 billion years old; if it takes 5 billion years for life to appear and evolve into a civilization and 200 million years for the their descendants to spread across our galaxy (which only requires travel at a small fraction of the speed of light), the average civilization that has already emerged in our galaxy should have spread across it 2.3 billion years ago.

If they exist, or existed, evidence of this existence should be all over the galaxy, just as with the existence of life and civilization on earth. But we see no evidence that any advanced civilization has ever expanded into our solar system or any where else in our galaxy. Even worse, we see no evidence of artificiality in other galaxies. Artificial entities would severely change what we observe in the cosmos, but instead the millions of galaxies we've observed seem to look quite natural. This can be easily tested by studying data from our current telescopes. Unless we discover a significant proportion of galaxies that are oddly dim in the optical but bright in the infrared (or perhaps, if the alien machines are extremely clever and very miserly, in the microwave), indicating artificially efficient use of stellar energy, and oddly bright in the heavy element spectra and dim in the volatile elements spectra, indicating artifically efficient enclosure of the volatile elements (for efficient volatile recycling), we must conclude that the odds of finding a civilization in any given galaxy, and thus of another civilization in our own galaxy, are remote. Fermi's paradox simply proves its major assumption wrong: there are no little green men in our galaxy. Sorry to pop that good old sense of wonder.

It would be fun to listen in on a civilization from a distant galaxy, if we ever find one and if we ever figure out how to detect such faint signals. Imagine the Wikipedia of a billion-year-old civilization!

Kavka's toxin

Perhaps less easily resolved, because one of its assumptions is the vague and subjective idea of "intent", is the paradox of Gregory Kavka's toxin: you get $1 million put in your bank account at 9 AM if at 7 AM you intend to drink an extremely painful but not otherwise harmful toxin at 11 AM. The toxin basically causes you to live in sheer hell for 24 hours. You get to keep the million dollars whether you drink the toxin or not. Can you intend to do something that when the time comes would not be rational to do? Kavka says you can't -- that there is no way to win the $1 million. Turn off your alarm and sleep in.

My analysis is that the only ways to win the $1 million are through credible commitment or self-delusion. Thus the Wikipedia entry cites election-year political promises that would actually be too expensive to implement as an example of Kavka's toxin. Of course the political party only fools others (and perhaps themselves) into believing its intent. Standard election procedures, in which campaign promises are not legally binding, prevent credible commitment, so serious intent only could arise through self-delusion.

Thursday, May 07, 2009

Liar-resistant government

I have extensively explored the technological codification of certain aspects of law -- law that is "smart" as in "smart weapons". These could implement in digital protocol important parts of law that are now processed by the mind via legal language or through physical enforcement. My focus has been on smart contracts, smart property, and other such technological reifications of private law. Here I explore the dangerous territory of extending these ideas to public law, especially to governmental forms and legal procedures. Officials of a wide variety of governments have too often over the course of history covered up or falsified evidence, destroyed or forged public records, and introduced other lies into legal and political processes. We need to protect future legal procedures and other governmental operations from such abuses.

The canonical problem explored by computer scientists in designing these protocols, the Byzantine Generals Problem, is itself an exercise about liars in government.

This article focuses on technologically ensuring the veracity and execution of those steps of legal procedure which are capable of such enhancement (formalizeable or objective aspects which I call "dry", in contrast to the many inherently subjective and non-syntactical "wet" aspects of the law): securing chains of evidence, securing chains of command, securely recording and publicizing the ownership and transfer of property, and so on.

A set of ideas I have for procedural law, or "government" broadly defined, is that many of its dry steps might be based on Byzantine fault tolerance protocols along with cryptographic protocols that form tamper-evident structures such as unforgeable chains of evidence. I describe some of these and related protocols further here, here, and here, but I will describe the basic idea of Byzantine fault tolerance here.

The basic idea of a Byzantine fault tolerant protocol is that it is a highly distributed peer-to-peer protocol robust from a certain fraction or less of its participants lying about information originally observed or created by one or a small subset of them. The fraction varies based on various assumptions of the model, but common figures are 1/3 and 1/2 for information originating from one node assuming that node is truthful. If the fraction required for successful collusive lying is not achieved (and such an attack requires either informed negotiations occurring before this protocol step or negotiating the collusion in a single step, the latter possible to avoid by assuming fraud if messaging is abnormally delayed), the liars are detected and can be excluded from future participation in the network. In a less formal sense, Byzantine fault tolerant protocols are simply distributed, peer-to-peer networks with dense communications (in the least efficient but most secure versions, every node sends every bit of information to ever other node) in order to protect against minorities of colluding liars, and to detect and exclude any liars who have not reached the threshold of collusion and thus can be excluded from the network.

Byzantine fault tolerance protocols are not as strong as cryptographic protocols. They can also suffer from the sock puppet problem (also called in some literature the "Sybil" problem), in which one or a few liars control a much larger and sufficient fraction of network nodes, if the participants are not strongly identified as unique individuals. Thus where it is possible, we should augment these dense peer-to-peer protocols with or use instead stronger cryptographic schemes such as hashing and a variety of cryptographic signatures. If the Byzantine protocol is overcome by collusive liars in a way that cannot be detected before sufficient collusion occurs or prevented by cryptography, some outside manual "meta-protocol" is required to figure out who is lying and repair the network or create a new network containing the truthful state. For some kinds of communications, digital signatures and a chain of evidence based on cryptographic hash chains are a much stronger security against forgery. Byzantine protocols, with their imperfect detection and exclusion of liars, are to be relied on only where the lie is of a nature not amenable to prevention by cryptographic chains of evidence.

Sensors and effectors can be readily hooked up to these high-integrity networks. Cryptography can, for example, provide us an unforgeable chain of evidence from a security camera to our computer displays and an unforgeable return chain of command from our mice to a gun or a jail cell lock. Cryptography can also secure smart contracts with the local officials: a judge declares you bailable, said authorization being transmitted to your jail door. Your girlfriend fills out a web form which pays the bail bondsman with a credit card. The bondsman's computer debits her account and then puts up the digital bond, and the jail door opens. You're out and I don't get to date your kind-hearted girlfriend.

One popular piece of secure government that many people have worked on is secure voting.

Several years ago I sketched an important sub-protocol of liar-resistant government, namely secure property titles (or, more generally, secure public registries). Such titles could, of course, include titles to political as well as real, personal, and intellectual property, and physical security devices such as sensors and weapons could be controlled based on them. In addition to to the cryptographic integrity of the records themselves, the public title registry can follow any rules of transfer in at least a Byzantine failure resistant way. Normal title transfers, signed over by the former owner, would be cryptographically strong.

Besides the obvious real property titles, domain names, and so, on, these registries could securely record and transfer the shares of a corporation. Bit gold, my sketch of an electronic currency that minimally relies on trust in any one person or organization, achieves this minimal vulnerability by using secure property titles. Satoshi Nakamoto has implemented BitCoin which very similarly uses a dense Byzantine fault tolerant peer-to-peer network and and cryptographic hash chains to ensure the integrity of a currency.

Making a number of important legal and political functions liar-resistant is on the horizon, and bits and pieces of this task are already being implemented.