This is a collection of independent suggestions for new economic and financial enterprises to improve efficiency.
Macro Markets and Financial Security
The first is by Athanasoulis, Shiller & van Wincoop.
It suggests spreading risks by citizens of one country buying shares in the GDP of other countries.
They sell their own country short at the same time thus zeroing the hedging cost.
At first I spotted a moral hazard akin to an officer of a company selling his own company short.
This gives him an incentive to damage the company he is responsible for benefiting.
The citizen, as voter, should vote to increase the well being of his country.
There is a compensating benefit, I think.
The distributed selection of which countries to invest in puts pressure on such countries to select efficient policies—just as buying stock pressures companies to shape up.
Indeed the current malaise of the dollar is an indication that as bad as US fiscal policy is now, foreigners do not find better places to invest.
I am unclear how lack of investment forces a democracy to shape up.
We are about to find out, I fear.
This seems sort of like a system where citizens of one country influence the behavior of other countries by something sort of like voting.
I need to understand how this relates to democracy.
This section by Tabarrok is predicated on controlling access to genetic tests.
It presumes buying insurance before the test.
He argues that tests are complex and thus controllable.
I suspect that progress in gene sequencing will outpace progress in setting up institutions such as he suggests.
What about tests available in foreign countries—even mail order tests?
Also the known genetics of one’s parents leads to adverse selection.