prior probability

Hola! I am attending a workshop on Adam Smith for young Latin American scholars, and my favorite paper by far was one on “The Meanings of the Word ‘Trade'” by Leonardo André Paes Müller. His paper brought back memories of my favorite paper at the Adam Smith conference in Madison, Wisconsin in 2021: Sarah Skwire’s paper “As If: Clueless about the Invisible Hand.” (See here and here.) Below are two slides from Paes Müller’s talk:

This Chilean band combines rock music with traditional Chilean folk songs. Their name “Los Bunkers” pays tribute to their musical idols: The Beatles, The Kinks, Los Jokers, and Los Sonnys. (For an overview of the Chilean rock scene, see here.)

I will be travelling “down under” to Santiago de Chile later today to attend a “Young Latin American Scholars Workshop on Adam Smith” (see here), so I will be blogging more sporadically, if at all, in the days ahead.

Following up on my previous post, I want to explain as succinctly and cogently as possible why the so-called “effective altruism” movement is the biggest con since the Chicago Black Sox scandal of 1919. Put aside the fact that this movement cult has become the 21st-century equivalent of Rudyard Kipling’s “White Man’s Burden.” Even if we define “effective altruism” in the vaguest and most favorable light as “applying evidence and reason to finding the best ways to improve the world” (see here, for example), the reason why effective altruism is bullshit is because we already know–at least since the publication of The Wealth of Nations in 1776–what are the most effective ways of reducing poverty and improving living standards: the classical liberal principles of property rights and individual liberty, or in the immortal words of Adam Smith: “Little else is required to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things.” Change my mind.

I just finished reading David Edmonds’s excellent biography of Derek Parfit (pictured below). My general takeaway from Edmonds is that Parfit’s willingness to embrace “effective altruism” (an intellectually bankrupt movement led by naïve or corrupt do-gooders of which I shall have more to say soon) will end up tarnishing the Oxford philosopher’s legacy. Be that as it may, two of my favorite sentences in the book appear on the bottom of page 328. The first sentence states: “Parfit, helpfully, had a folder on his computer in which he dropped all the files that could be useful for posthumous publications.”

The second sentence, however, reads: “Less helpfully, it is empty.”

Below is an another excerpt from my work-in-progress “Outer Space Auctions“; once again, I have placed my scholarly citations below the fold:

Several nation-states have begun to recognize property rights in outer space via national law, including the USA,[1] Luxembourg,[2] the United Arab Emirates,[3] and Japan.[4] None of these national laws, however, establish property rights in orbits or in launch rights. Here, I will propose a market in space launch licenses and in space orbits.

Under existing U.S. law, if a private firm like SpaceX wants to launch a satellite into orbit from the United States, it must first obtain licenses from at least two government agencies: the Federal Aviation Administration (FAA), and the Federal Communications Commission (FCC). The FAA exercises authority over the launching and re-entry of commercial space vehicles. As a result, any private company that wants to launch a rocket or other kind of spacecraft from the United States into outer space must obtain a launch license from the FAA–specifically, from the FAA’s Office of Commercial Space Transportation.[5] What criteria does the FAA use to grant or deny these launch licenses? To get a launch license, the applicant must prove that it is able to take financial responsibility if the launch goes wrong and that the launch won’t threaten U.S. national security, but this regulatory process is slow, costly, and cumbersome: it can take up to six months to get a launch license from the FAA.[6]

In addition to the FAA’s jurisdiction over rocket launches, the FCC has jurisdiction over the orbits of communication satellites launched from the United States. Although the FCC was originally established by Congress in 1934 to regulate wire and radio communications,[7] today the FCC has become the primary space regulator of the U.S. commercial space industry.[8] This expansion of the FCC’s jurisdiction into outer space is based on the fact that satellites are like flying radio antennas, or in the eloquent words of one observer: “If you’re putting anything in space–be it a communications satellite, a weather satellite, even a human being–you’re going to be communicating with it.”[9] Among other things, the FCC “parcels out orbital altitudes to ensure that constellations of satellites in non-geostationary orbit do not collide or cause interference with each other”[10] The FCC allocates these orbits not only to prevent satellites from bumping into one another, but also to avoid signal interference in outer space.

So, why doesn’t either the FCC or FAA conduct “orbit auctions” or “launch auctions”, i.e. why doesn’t the FCC sell orbits or the FAA sell launch rights or orbit rights to the highest bidder, instead of giving away these licenses for free? A historical precedent for orbit auctions is the Omnibus Budget Reconciliation Act of 1993 (OBRA-93).[11] Among other things, OBRA-93 gave the FCC the legal authority to use auctions to allocate property rights in the electromagnetic spectrum. Subsequently, Congress expanded the FCC’s auction authority when it enacted the Balanced Budget Act of 1997. Based on these legislative precedents, perhaps the current Congress could enact similar legislation authorizing the FCC or FAA, or both, to conduct orbit and launch auctions.

So, how would a “launch auction” or “orbit auction” work? The type of auction that most people are familiar with is the “first-price sealed-bid auction” in which all bidders simultaneously submit secret bids, i.e. no bidder knows how much the other auction participants have bid. The sealed bids are then opened on a certain date, and the person with the highest bid (or second-highest bid in the case of a “second-price auction”) is declared the winner. This is not, however, the method used by the FCC to allocate broadband spectrum licenses. Instead, the FCC uses a method proposed by economists Paul Milgrom and Robert Wilson called the “simultaneous ascending auction” or “simultaneous multiple-round auction.” [For more, see this excellent summary/presentation by Madhumitha Harishankar.]

In brief, two of the main differences between the traditional auction format and the FCC format is that the sealed-bid auction usually involves just one round of bidding. In the simultaneous ascending auction, by contrast, there are multiple rounds of bidding, and all bidders are allowed to revise their bids after each round. (Bidders are even allowed to withdraw from the auction after each round.) The highest bids are announced to all the bidders after each round of bidding, and these rounds will continue to occur until no new bids take place. At that point (no new bids), the licenses are sold to the highest bidders. The simple simultaneous ascending auction format described here has many desirable properties.[12] So, why doesn’t the FCC or FAA, or both, use some variation of the simultaneous ascending auction to allocate orbit or launch licenses, especially for the new generation of mega-constellation satellites?