Historians say we owe the industrial predominance of England over France to it, but fifty years earlier Jane Jacobs called it “unjust involuntary subsidies…fantastically wasteful of city economic assets.” Whatever you feel about eminent domain, the government taking of private land to avoid holdouts against development projects, you probably feel it strongly. Jointly with my colleagues Jerry Green, Scott Duke Kominers and Steven P. Lalley I am working to harness the latest ideas from economic theory and technology to find a solution that almost everyone can be happy with.
I first started thinking about eminent domain during the summer of 2007, when I lived in Rio de Janeiro, Brazil by the slopes of Rocinha, the enormous favela (slum) perched on hills with one of the world’s most beautiful views. I couldn’t understand why the slums remained there; couldn’t all of the residents be much better off if they were moved out of their poverty in exchange for a share of the enormous income that could be earned building luxury developments over that view? My wife, and later an expert on squatter settlements, Alisha Holland explained to me that the problem was the lack of eminent domain: given the crime in the favelas, Brazil’s elite would never move in until all squatters could be removed. But because the squatters lacked formal title to their land, no mechanism existed for compensating them and any effort to evict them would meet with violent political resistance. Sharing Alisha’s sympathy for the inhabitants, I wanted to find a solution that would work for everyone.
The basic problem was that if every resident was given a veto over the project, it would be impossible to ever carry it out, as there would always be some individual who could hold the whole process up. On the other hand, if the community were given no right to refuse the government, there would be no legitimacy to the action or projection of property rights. The natural solution is to allow the community of owners to take a vote on whether to accept an offer made to all of them.
However, such a vote can be very unfair. A developer might choose to strategically target 50% of the landholders that have small and low-value plots of lands, make them juicy offers and thereby get the land on the cheap. For a system to be fair, it would have to protect the interests of those who strongly oppose a deal. The transaction should only go through if, in total, it made the sellers better off.
To solve this problem, I devised a new voting system, called Quadratic Voting, in which individuals can buy additional votes on an issue at an increasing cost. One vote costs $12=$1, two votes cost $22=$4, three votes $32=$9, etc. This allows a minority strongly affected by a project to express its feelings, but only if the issue is extremely important to them. My work has shown this is the only rule that causes people to vote in proportion to how much the issue matters to them, thus ensuring that the sale will go through exactly when it benefits the sellers overall.
Obviously, a quadratic function isn’t easy for most people to grasp, any more than are the powerful algorithms underlying services like Uber. That’s where the power of technology to force people to understand only what is necessary and let computers do the rest comes in. A user interface represents the cost of influencing the choice visually with sliding bars, moving at an increasingly rapid pace as votes are cast. Beyond eminent domain, Quadratic Voting has a variety of other uses in cities and politics more broadly, allowing citizens to find compromises that allow them to have more say on the issues most important to them in exchange for letting their fellow citizens have their way on the issues more important to them.
By bringing the power of civic tech to some of the most contentions issues of local government, Microsoft is paving the way for the happier, wealthier, more harmonious and functional cities of tomorrow.
E. Glen Weyl is a Senior Researcher at Microsoft Research New York City, a Visiting Senior Research Scholar at the Yale Economics Department and Law School and an Alfred P. Sloan Research Fellow. He was valedictorian of his undergraduate class at Princeton in 2007 and received his PhD in economics also from Princeton a year later.