100% Democracy vs 51% Democracy

Technological democracy uses Tiebout sorting, crowdchoice, and the ledger of record to enable 100% of the population to consent – rather than just 51%.

• 20 min read
100% Democracy vs 51% Democracy

In 2021, the two most powerful forces in the United States of America are technology and democracy. Technology is what kept the US operational during COVID, and is arguably the only part of Western society that still functions. But democracy is still what legitimates the system, even given declining support, even after years of political chaos. Rather than thinking of these forces as necessarily opposed, can we fuse them together into something new...something that's not quite as naive as just "online voting"?

Let's call this concept technological democracy. The idea is to use Tiebout sorting, crowdchoice, and the ledger of record – each newly enabled by modern technology – as ways to protect individual rights, assert collective interests, and align upon universal facts. The result is a system that uses technology to achieve not just 51% consent of the governed every few years, but 100% consent of the governed on an ongoing basis. Rather than a system where 49% (or more) of the electorate periodically votes with their ballot against the current leader, we move to a system where 100% of the electorate affirmatively votes with their ballot, feet, and wallet for the current leader – or inexpensively migrates to one of many other jurisdictions.

To understand this, we need to introduce a few concepts.

  • The consent of the governed is the core of democracy. Consent is the core of democracy, as democracy gains its legitimacy from the express consent of the people. The current technology we use for this is an election, where people vote with their ballot. But the actual mechanics of any presidency or parliament are implementation details around the core concept of consent.
  • Voting with ballot, wallet, and feet. There are three kinds of votes: voting with your ballot in an election, voting with your wallet in the market, and voting with your feet as an emigrant. These are three different ways to give or withdraw consent. The US uses all three of these in the form of electoral democracy, capitalism, and immigration respectively. But the specific mix of ballot-, wallet-, and foot-voting can be tweaked.
  • Tiebout sorting. Modern technology has made it possible for individuals to find their optimal place to live and move there at low cost, thereby greatly increasing the efficacy of foot-voting and enabling a concept called Tiebout sorting.
  • Crowdchoice. Modern technology also allows something not contemplated in the original Tiebout model, which is that users can now organize online in network unions to collectively bargain with companies and states, using voice, wallet, and/or feet. We call the process of a crowd choosing the organization that gives them the best terms crowdchoice.
  • The Social Smart Contract. In a technological democracy, ongoing and affirmative consent is demonstrated by on-chain evidence. Specifically, citizens of a given polity sign an explicit social smart contract for a pre-agreed term to demonstrate their consent. When their term is up, they can either choose a new place to live or remain in their old one. Think of this as like the terms of service for a startup city, except (a) it's more like a Docusign than a click-through and (b) you'll want to read it in detail as it's the legal system you are committing to for a few years.
  • The Ledger of Record. Before signing a social smart contract, it is true that you need good sources of information to make informed decisions as a citizen about to who to vote for with your ballot, wallet, or feet. It is also true that legacy media and social media corporations are not disinterested providers of that information. An alternative paradigm is to build what we call the ledger of record, which is the set of all cryptographically signed feeds of on-chain data. The ledger of record will ultimately supplant the "paper of record" as the decentralized layer of facts that underpins all choices in a technological democracy.
  • Technology is reducing the barriers to exit. An under-appreciated consequence of remote work, social, mobile, cloud, virtual currency, and virtual reality is that they reduce the obligate ties to the land. If your friends, books, job, documents, cryptocurrency, and the like live online, you aren't as tied to one place.
  • COVID increases the need for states to recruit. Prior to COVID, hundreds of millions of immigrants moved internationally each year. COVID has made cities and states much more wary of mass immigration, and harmed their tourism revenue, but also increased their financial need for skilled immigration.
  • Technological democracy. If we put all these concepts together, the social and technical prerequisites for what we call technological democracy are in place. Technology is making it easier to find friendly jurisdictions as an individual or group, to move there, to collectively bargain with governments, and to demonstrate ongoing affirmative consent by signing a social smart contract. It allows us to move from 51% democracy to 100% democracy, where the social smart contract demonstrates 100% consent of the governed on-chain.

Let's go through these points in more detail.

Consensual government is a superset of democracy

The most important concept underpinning democracy is the idea of the "consent of the governed". The mechanics of an electoral college or parliament are secondary to evidence of consent to the social contract.

That consent can be given by ballot (by voting in an election), feet (by immigrating to a democracy), wallet (by buying an investor visa like an EB-5), or some combination thereof. The key is that people have opted in and given manifest, conscious consent.

Why? Because if enough people believe they have not consented to the current government, they may attempt extralegal tactics to gain power. Or they may emigrate. Indeed, given that the social contract is mostly an abstraction, the only way to really revoke consent is permanent emigration.

By focusing on consent as the core point, we realize that the design space for legitimate governments that reflect the manifest, ongoing consent of the governed is larger than one might think. Put another way, consensual government is a superset of what we currently call democracy. And the key ingredient here is consent, more than a particular form of government.

Voting with ballot, wallet, and feet

How do you quantify the consent of the governed?

Note first that something that calls itself a democracy may not actually retain the consent of the governed. If you could somehow carry out a representative poll of the Democratic People’s Republic of Korea, those who aren’t brainwashed would likely want to leave.  The point is that just calling oneself a "Democratic" republic doesn’t make you one.

So how then do you measure the consent of the governed, how do you quantify it? Well, there are three broad ways for individuals to vote for leaders or causes: voting with their ballots, wallet, or feet. If we slightly generalize this, it's voting with your vocabulary (voice), your money, or your body. We can group different ways of quantifying the consent of the governed under these categories.

Ballot voting

There are several ways to quantify voting with your voice or ballot.

Elections. This is the traditional way to measure the consent of the governed in a democracy. But one thing that seems important to point out is that since ~2016, large percentages of Americans have claimed that the previous election was not legitimate and that they did not consent. Indeed, this has been going on for some time, and is one of the big problems with what we will call 51% democracy: a system where only 51% of the electorate needs to consent to their current government, while the other 49% may have actively not consented to their current government. Is this the consent of the governed? Barely. Indeed, in the US system it could actually be less than 50% of the electorate outvoting the rest, due to the electoral college. So, let's just say that elections are one way of measuring the consent of the governed, but imperfect relative to a 100% democracy in which all citizens consented to the current leader.

Polls. Polling is a rough measure of legitimacy in between elections. However, national polls for the presidential election in the US failed pretty hard in 2016 and 2020. Surveys are still useful in other contexts, but political polling is become less useful as a reliable mechanism to demonstrate the consent of the governed.

Social media. You can post online, and you can like, upvote, and blog too. In a sense, Twitter specifically and social media more generally is a dystopian digital democracy. Everything is voted on, every minute of the day. Politicians use Twitter to canvas constituents, intellectuals use to to distribute ideas, ideologues use it to cancel enemies. But Twitter isn't a representative vote, nor is it a secret ballot. It's a plebiscite of the extremely online where you can be fired for a like or trolled by an army of bots.

Cryptographic voting. Elections, polls, and social media are three most common ways to quantifiably express your consent via voice today. But there are exotic new variants enabled by cryptographic voting. Specifically, if you had a functional proof-of-human, where you could cryptographically establish that someone posting online was a human rather than an AI or a Twitter bot, new vistas open up for the use of ballot-voting on the internet. You could do quadratic voting, which can provide better results than traditional voting, subject to the ability to defeat Sybil attacks. You could do liquid democracy, in which each person can vote with their voice for a representative and switch over time as they see fit, similar to Twitter's follow/unfollow mechanism[1].

Estonia has successfully implemented cryptographic voting with electronic ID cards, and as crypto hardware wallets become more popular we will see more of this.

Wallet voting

How do people use their wallets to vote for leaders and causes?

Political donations. This is the most obvious path. Simply write a check to your politician of choice. You'll get put on various lists but this is perfectly legal and indeed encouraged by politicians of all stripes.

Nonprofit donations. This is the second most obvious path. Again, write a check to support your cause of choice. Depending on the cause, you may even be praised publicly.

Media subscriptions. This is the least obvious, but probably the most effective. When people subscribe to a news outlet in a polarized era they are not just purchasing content. They are voting for – or against – an ideology. Put another way, they are paying to support the generation of content that supports their worldview and combats that of their political opponents.

Note that political donations probably do change the outcome of an election, or else people wouldn't do them. So in a real sense, it is not just legal but encouraged in America to vote with your wallet. The question is whether political and nonprofit donations are the most effective form of doing this.


Finally, how do people vote with their feet for or against leaders and causes?

Domestic migration. The main way to really revoke consent is permanent emigration. The U-Haul migration statistics show which states are gaining and losing population in the USA.

International emigration. On an international scale, more than 270M emigrants voted with their feet against their home countries in 2019 (see the UN statistics).  Note that the vast majority of these people were not well off by global standards, which empirically disproves the idea that foot-voting is only for the rich.

You can encompass phenomena like school choice and regulatory choice under this broad banner, even if they don't always include physically moving. For example, with school choice people are voting with your feet against one public school and for another. With regulatory choice, in the event there are multiple legal pathways to get something through, people will vote with their feet for the jurisdiction where the rules are more sensible and less onerous.

If there's variation in policy between jurisdictions, migration is another way of changing the law under which you live – as distinct from election. Importantly, law is a function of latitude and longitude, and mobile is making us more mobile. So it is becoming less expensive to change the law under which you live.

Tiebout sorting

This brings us to the idea of Tiebout sorting. Anytime you come up with a new idea, someone has often anticipated it by decades. Back in 1956, an economist named Charles Tiebout outlined a paradigm for allowing everyone to choose their own jurisdiction that satisfied their preferences. His model made several assumptions:

  1. Mobile consumers, who are free to choose where they live. There are no costs associated with moving.
  2. Complete information.
  3. Many communities to choose from.
  4. Commuting is not an issue.
  5. Public goods do not spill over in terms of benefits/costs from one community to the next.
  6. An optimal city size exists: economies of scale.
  7. Communities try to achieve "optimal size".
  8. Communities are rational and try to keep the public "bad" consumers away.
  9. Any differences in the fiscal attractiveness of a town will be capitalized into house prices. The price of any house reflects the cost (including local property taxes) and benefits (including local public goods) of living in that house.

Technology has made each of these assumptions come true. Let's go through them one by one, marking with a ✅ for when they have come true and a 🚧 for when they are still in process.

  1. Mobile consumers, who are free to choose where they live. There are no costs associated with moving. Smartphones have made it easy to move, social has reduced the cost of moving in terms of falling out of touch with friends, and search has made it easy to find where to move. The cost of moving keeps falling as bookshelves become Kindles, cars become Ubers, and rooms become Airbnbs – and work becomes remote. See the table from page 9 of this PDF from 2013.
  2. Complete information. Search engines like nomadlist.com and teleport.org have made it much easier to find where to move.
  3. Many communities to choose from. We're starting to see significant differences both between US states and between other countries and the US, due to sanctuary cities,  gun laws, and more countries taking paths that are independent from the US.
  4. Commuting is not an issue. Remote work has gone vertical with COVID.
  5. Public goods do not spill over in terms of benefits/costs from one community to the next. If we are building a network state, most services are being provided from the cloud (eg digital passport to enter rooms, digital currency to pay others). Google and Facebook's offices worldwide already illustrate something like this, where you just need to badge to get in. The fact that our email, cryptocurrency, files, and the like are all in the cloud and accessible via web browser shows this is feasible.
  6. 🚧 An optimal city size exists: economies of scale. This is less of a home run than the previous points, but the fact that cryptoeconomies have shown the concept of network defects exists indicates that diseconomies of scale exist. That is, beyond a certain scale communities experience disalignment.
  7. 🚧 Communities try to achieve "optimal size". See the previous point. There appear to be negative returns on scale beyond a certain size.
  8. 🚧 Communities are rational and try to keep the public "bad" consumers away. The key is that a network union, and a network state, will have application criteria. In this sense it'll be more like a company or university than a typical city or apartment complex. This will allow for people to be aligned behind common causes.
  9. 🚧 Any differences in the fiscal attractiveness of a town will be capitalized into house prices. The price of any house reflects the cost (including local property taxes) and benefits (including local public goods) of living in that house. This may be more feasible with digital real estate, and with crypto REITs for towns, where everyone owns a share of the town, rather than directly owning the land under their building.

Tiebout sorting is this incredible example of assuming a spherical cow...and then watching actual cows become spherical! The assumptions made were unrealistic and academic in 1956, a time when few could have envisioned remote work or the global internet, but most of them have been achieved today.

Tiebout sorting: where do I want to live?

In other words, as predicted in 2014, a crucial long-term consequence of ubiquitous smartphones is that Tiebout sorting is now feasible. More broadly, technology is making many related but previously impractical ideas like panarchy and polycentric law not just practical – but already extant at scale. Virtual reality enables panarchy, for example, and two competing cloud providers for taxi regulation (like Lyft and Uber) gives you de facto polycentric law.


Tiebout sorting assumes individual movement. But what if we could get groups of digital nomads to move together? The concept of a network union allows people to collectively bargain with corporations and governments alike. But a network union achieves its full power when it isn't just sessile, but mobile.

This is the idea behind crowdchoice is simple:

  • Take 1000 people capable of remote work with say $100,000 annual salaries, for a total of $100M in annual income ($100,000 x 1000).
  • Have them input their preferences in terms of weather, cost-of-living, walkability, and the like into a search engine like nomadlist.com or teleport.org.
  • Treat their aggregate preferences as a search query
  • Then order the jurisdictions of the world by their fit to those preferences.
  • Now choose a leader, which is relatively easy when the scale is only 1000 people. (The leader might have founded the community in the first place, and recruited everyone there, in which case the choice of leader is obvious).
  • Have that leader negotiate with cities and states to figure out whether a city would (say) legalize self-driving cars or reform their crypto policy in order to attract these 1000 people and their $100M/year of new tax base.
  • Note that group members sign a social smart contract with a $1000-Tesla-style binding deposit to prove they are committed to moving.

The leverage this crowd has is that they can negotiate as a group and then move en masse once committed to a jurisdiction: hence crowdchoice.

Crowdchoice is a new way of combining voting with your ballot, wallet, and feet. Select a leader and vote with your ballot as to which country you want to live in. Put down a deposit using your wallet. And then vote with your feet to move there.

Crowdchoice updates the ~400-year-old Westphalian nation state, because if it is fully adopted then nomadic people's primary loyalty will be to their network unions, with cities and countries becoming commoditized providers of natural resources and rule sets. The fact that citizens can leave will eventually discipline cities, just as the fact that customers can leave disciplines companies. Markets allow a choice in products, migration allows a choice in rules, and collective migration offers the ability to change rules.

Crowdchoice is also a critical waypoint on the path to startup cities, seasteads, and space colonies. That is: before one can reasonably get 10,000 people to move to a floating city in the middle of the ocean, let alone to Mars, one needs to be able to coordinate the move of 10,000 individuals to any location on the planet. Crowdchoice provides that intermediate step.

One question is: can everyone afford to move? As noted above, 272M people moved internationally in 2019, many of them quite poor by developing world standards. But a network union may recommend that every member keep a rainy day fund similar to Medisave, but for emigration rather than healthcare.

The Social Smart Contract

When you have 1000 people across international borders doing something as complicated as committing to move internationally together, you need some kind of binding framework. That's where the social smart contract comes in.

Briefly, it is now possible to sign a document on-chain and demonstrate evidence of that signature to any who would care to witness, without revealing anything else, using zero knowledge proofs. So you can prove on-chain that you have 1000 wallets that have each pledged $1000 in crypto. Indeed, that's what Vitalik did for ETH2:

With some approximation of proof-of-human, the blockchain allows us to turn the abstract idea of the "social contract" into a literal smart contract, which people sign on a periodic basis to remain within a network union – or any polity. It's conceptually similar in some ways to a clickthrough terms of service, but written as a Ricardian contract, and where a citizen actually needs to do something more akin to a formal Docusign than the blind clickthroughs common in current internet apps. (Though in crypto, the concept of signing, wiring, and depositing could all become the same thing).

In particular, a social smart contract can be used as evidence of ongoing consent. Each citizen holds their own private keys, and can publish anything on-chain without anyone else being able to censor or interfere. So if someone wants to leave the network union, or the city, you will see them withdraw their vote-with-voice-and-wallet on chain.

With these pieces in place, we start to give a sense of how we get to a 100% democracy, rather than a mere 51% democracy. A technological democracy, where every vote isn't just counted, it's individually checkable. This is similar to what the Estonians have already done, but on-chain.

Note that social smart contracts can be used to bind leaders as well. Right now we take for granted that you can vote for a candidate who makes a non-binding campaign promise. We forget how unusual this is. To say the least, if you ordered a chair on Amazon and got a potato, you wouldn't be happy with the company. It's not really a valid contract if the other side didn't deliver on what they promised when you voted for them.

The Ledger of Record

An important question then arises: how will 1000 people in distributed environments make intelligent decisions about where to move, without relying on centralized media and social media corporations that can censor them or misinform them?

This article sketches some of the ideas, as does this set of tweets. But briefly, the rise of crypto oracles means that a larger and larger set of facts can be established via argument from cryptography rather than argument from authority. Some examples:

  • A photo of the Brazilian fires tweeted by Macron, published in the NYT, and used to call for a war was found to be fake. A reverse image search showed the photographer had died in 2013, indicating that the photo was many years old.
  • A test drive of a Tesla was revealed to be fabricated to push a narrative, and the instrumental record revealed this to be false.
  • A story that purported to identify the "real" Satoshi Nakamoto was knocked down due to the absence of a digital signature.
  • DKIM signatures were used to validate the authenticity of Wikileaks emails.
  • Vitalik Buterin used an Ethereum blockhash to furnish proof-of-life when a false story came out that claimed he had died
  • A court in Hangzhou used an on-chain hash to show that the defendant in a patent case was not infringing upon the plaintiff and indeed had priority

In general, any fact that can be put into a news feed can be put on-chain. And any file's metadata can be put on-chain as well, including the author, timestamp, and so on. This can also be done for the code and data required to regenerate an academic PDF. Over time, this will mean the ability to import rather than simply cite previous papers.

If all papers and code and data are on-chain, we can start looking at truly permalinks, and truly open access. We can allow for pseudonymous publication with digital signatures, like Satoshi. And in this fashion we can start focusing on the number of independent replications over the number of citations.

Technology reduces the Barrier To Exit

When we think about the cost and efficacy of ballot-voting, wallet-voting, and foot-voting – of election, donation, and migration respectively – we notice something interesting.

  • With ballot-voting, as in an election, you have a very small chance of changing the law under which you live, but you also have a relatively low cost of voting (about half a day off). The chance of changing the outcome is not just the tiny chance of swinging the election (1/N), but then the subsequent probability that the candidate with non-binding campaign promises will actually deliver.
  • With wallet-voting, as in a (political) donation, you have a hard-to-quantify-but-likely-nonzero chance of changing the law under which you live, but you have a fairly high cost of voting ($2300 if you max out in the US, much more if you donate to a PAC).
  • With foot-voting, as in migration, you have a 100% chance of changing the law under which you live, but the cost is moderately high (in the thousands to low tens of thousands).

So, that's interesting. If we plotted (% chance to change the law under which you live) vs (cost of exercising that choice), we'd see that ballot-voting is near (0,0) (very low chance, and very low cost), wallet-voting is in the middle (small chance, medium cost), and foot-voting is in the upper right corner (high chance, but highest cost).

So, an interesting question is: can we reduce the cost of foot-voting while keeping the desirable property of a 100% chance of changing the law under which you live?

Crowdchoice and network unions help accomplish this. The act of collective bargaining with another state helps get concessions from an existing government. It adds a new dot on the map where you might not even have to move, because your network union can get the concessions digitally. So it starts moving the cost down of foot-voting down from the cost-to-move to the cost-to-join-a-network-union, which is far lower and comparable to the cost of voting.

Of course, the backup plan of actually being able to vote-with-your-feet should negotiations fail is quite important, so the network union will have to exercise crowdchoice with some probability. Still, the weighted combination of p(X) + (1-p)X starts to bring the cost down.

A second way to reduce the barrier to exit is with technology itself. See the table on page 9 of this PDF.

Technology is making us more mobile. See here for details.

That was from 2013. There's a talk from 2017 that discusses more of these technologies.

COVID increases the financial need for states to recruit

Many cities and states were going bankrupt even before the pandemic. COVID is going to speed that along. And while states always had some component of economic development, in terms of recruiting Boeing to South Carolina, Elon Musk's Gigafactory to Nevada, or Amazon HQ2 to Northern Virginia, we are now seeing states explicitly recruit individuals – as the mayor of Miami has been doing.

Major unknowns here include the vaccine deployment schedule and possible emergence of resistant variants, but a reasonably sure bet is that quarantine-induced two week delays will increase the proportion of semi-permanent international migration relative to international leisure travel.

In other words, there will be more digital recruitment of top talent that will produce years of income for your city or state to compensate for the sharp drop in tourism.

Technological Democracy

Putting these all together, we have a formula for technological democracy. An upgrade of democracy using modern technology that changes the mix of ballot-voting, wallet-voting, and foot-voting, such that any person can either use Tiebout sorting as an individual, or join a network union and use crowdchoice to collective bargain with governments.

Network unions use the ledger of record to make informed decisions about contentious facts in the presence of interference from social media and legacy media companies, and the concept of social smart contracts to create provable commitments from large numbers of individuals spread over many countries.

The result is a system that uses technology to achieve not just 51% consent of the governed every few years, but 100% consent of the governed on an ongoing basis. Just like you renew your contract with a SaaS provider, you periodically renew your social smart contract with your city provider. If you don't like the current legal system, you can move as an individual. If you really don't like it, you can join or organize a network union to move as a group.

Through technology, we protect the rights of the individual and the group by changing the mix of ballot-, wallet-, and foot-votes. The key concept is conceptualizing foot-voting as the strongest move by an individual, with wallet-voting and ballot-voting both intermediate steps rather than final tactics.

1 The obvious downside with too much liquid democracy is that this is our current reality. See this all-too-real “parody” from 2009, about a poll that allows pundits to pander to viewers in real-time. You likely want some friction or skin-in-the game to disincentivize switching votes too fast in a liquid democracy.

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