The Volokh Conspiracy

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How to Spend a Trillion Dollars


Suppose that a government has a trillion dollars that it wishes to use to subsidize private spending toward some objective. For example, it might want to launch a massive campaign against the spread of COVID-19. There might be many ways to spend the money, on items large and small--say, research, education, salary for sick people who skip work, quarantine centers, ventilators, hand soap, and so on. The government could create a large administrative agency, writing rules about who is entitled to government checks and performing claim adjudication. But it would be challenging to scale such an agency even under the best of circumstances to handle processing of tens of millions of claims. The challenge is especially acute if we assume that the core goal is difficult to translate into rules, for example because a large number of factors are relevant to assessing the social utility of particular spending projects. If the process is to be governed by standards, there will be inconsistency based on who makes the decision.

In a new article, I describe and defend a novel approach that the government can use to distribute money at scale, without creation of a large bureaucracy and without enacting extensive rules. The paper provides applications focused on climate change rather than on COVID-19, but the approach can be applied to any massive governmental spending program. Here's how it would work: Anyone who claims to have contributed to the specified goal could file a claim. To discourage frivolous claims, a small fee might be applied. Rights to payment on claims could be sold. The government would commit to randomly select a small number of claims, say 1,000. An agency would then estimate social benefits produced for each of these claims, using panels of multiple decisionmakers and considering expert evidence where appropriate. It would then distribute the entire trillion dollars to the claims' owners, in proportion to the measurement of social value for the corresponding claims.

Because claims are transferable and only a tiny percentage of claims will be eligible for reimbursement, intermediaries would aggregate diverse portfolios of claims. This will allow intermediaries to bear the risk associated both with the random selection of only a small percentage of claims and with the unpredictability of the government's assessment of claims randomly selected. An intermediary will pay more for a claim that it expects will be worth more on average, if randomly selected for consideration. A claim is thus worth what it will fetch in the market. An individual or entity might perform actions to meet the government's objective and then create a claim, or it might sell a claim via a contract in which it promises the intermediary that it will invest the money provided by the intermediary in a particular way.

The principal virtue of the system is that it requires very little bureaucratic infrastructure, even if the government is distributing an enormous sum of money to a very large pool of claimants. All the government needs to do is randomly select a very small number of claims and perform adjudications where it estimates the associated social benefits. Moreover, the government need not create detailed rules. The adjudications can be based on a vague standard, such as "estimated social benefits in reducing the spread of COVID-19." Use of a standard means that there will be uncertainty, and this is the primary drawback of the system. But diversified intermediaries can bear the risk of that uncertainty relatively cheaply. Standards should be much more tolerable than in a typical administrative regime, because uncertainty will not impose risk on regulated individuals (who may offload the risk onto intermediaries), and because uncertainty will not increase adjudication costs (because the same number of claims will be adjudicated regardless of the total number filed). As usual, a standard avoids the overinclusiveness and underinclusiveness of rules, thus reducing the danger that funds will be spent inefficiently.

My claim is not that this system is necessarily better than traditional approaches to distributing government funds. My claim is simply that this is a new approach and that it might have advantages in certain contexts. Whether this makes sense for COVID-19 prevention or for any other application depends on how good a job one thinks the government can do with a more traditional, centralized system for spending money directly or choosing private projects to receive government money. This evaluation depends in part on whether one believes that the government can make its assessments relatively free of political considerations, and in part on how expensive it will be for the government to make these determinations. A more traditional system will be preferable when there are relatively few claims so achieving scale is not an issue, and when the purposes of the program can be efficiently translated into rules.

Emergency spending (whether of a trillion dollars or a mere eight billion) is potentially a good application of the market-based approach, because the government may not be equipped to make large numbers of high quality decisions extremely quickly. Eventually, government decisionmakers will need to evaluate spending in a few cases, and bad decisions ex post are possible. The system's performance, however, must be evaluated not based on the actual ex post valuations that the agency will produce, but on the market's ex ante expectations of these ex post valuations. Even if the agency is likely to make many errors ex post, the ex ante expectations might track social value reasonably well. The market process itself will impose costs, as intermediaries will seek to make a profit, but competition will tend to reduce these by driving up the amount that intermediaries offer. Because intermediaries do not need to provide due process, their costs of assessing claims may be less than the costs of relatively formal governmental adjudicative processes. Even if the government is slow, claimants will be able to receive payment quickly from intermediaries, instead of queuing while awaiting administrative determinations.

The law review article describes the functioning of the market and of the government agency in much more detail and responds to objections. I'll look at the comments for the strongest and most recurrent objections and will address these in a subsequent post.

NEXT: Forum Shopping is Rational

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  1. "Suppose that a government has a trillion dollars that it wishes to use to subsidize private spending toward some objective."

    That government should then come to it's senses and not spend the money. Subsidized 'private' spending is government spending.

    1. Yes. Government spending is evil because of the opportunity cost to those from whom it was taxed, because of the additional overhead in taxing and redistributing, and because government paychecks do not endow their recipients with magical wisdom; they are people just like any other, but with corrupting power all out of proportion, and will be very unlikely to spend it even half as wisely as private people.

      1. Yes, who needs roads, courts, and armies anyway?

        1. What % of the federal budget is roads, courts, and the military?

          1. About 20%. About nine tenths of which is on the military.

    2. The idea that government wants to subsidize spending to some objective is a misunderstanding. They want a plausible excuse to channel money to their supporters.

  2. Oy.... This sounds like.

    1. A lottery, not a way to promote investment
    2. A good way for a heck of a lot of corruption.
    3. A good way to waste a trillion dollars and create a rules-twisting system get the money.

    Let's address these.

    1. The "lottery". One of the items you want to do is encourage people to make investments to solve your cause. The issue is, even if there is great success at the cause (and great investment), there's no guarantee of any payoff. It's not even necessarily risk-proportionate. You could invest 100 billion dollars and have a vaccine for the coronavirus tomorrow...and get nothing back. Because of the Lotto system. Meanwhile, someone who says they "washed their hands daily" could be one of the 1000 chosen. Lotteries don't make for good investment.

    2. The lack of any rules, regulations, and whatnot on deciding the "social value" of such massive payouts is an invitation for corruption and kickbacks on a massive scale. Money corrupts. This much, without rules or regulations, but just "what I think is best socially"....would be a disaster.

    3. The true innovation would be in ways to scam the system. There's a reason tax prep is an an industry worth 11 billion a year. Because of people trying new and different ways to get every last cent back from Uncle Sam. With a trillion dollars in "free money"....the ways developed to screw the system would multiply exponentially, developing their own industry dedicating to maximizing the odds of getting as much of that trillion dollars, for as little input as possible. Invest a hundred billion dollars in a vaccine for the corona virus? That's only one chance, not worth it. Install a hundred thousand different hand sanitizing units, and submitting a claim for each one? Then submitting a second 100,000 claims for refilling them? That's a winning strategy. Even better? Submitting the third and 4th set of claims without actually doing the work. Alternative medicine? Even better, assuming you've got the "right" people on the panel.

    1. The problems you identify could only be addressed with an adjudication process having an established track record people and businesses could trust. Hence, the cold-start problem.

  3. What's a better way to spend a trillion dollars?

    1. Medical:
    a. Increase the number of Residency slots, nationwide, by 30%.
    What's uncommonly known is that one of the major limiting factors on doctors nationwide is the number of Residency slots in teaching hospitals. These are typically funded by the US government. By increasing the number of residency slots, the number of doctors nationwide will increase. This will ultimately lead to downward pressure on doctor salaries (with increased supply), and lower medical costs.
    b. Increase the number of government-offered scholarships for Medical school, with the provision that the doctors are then required to go to selected (high need) areas of the US after Residency for 5-10 years at a pre-stated salary.

    B. The awards program for Space innovation

    -This is a series of high reward prizes (starting at 100 million dollars, and going up to a hundred billion dollars) for key achievements by private space companies in the development of space travel, engineering, and power generation. These prizes include.

    A. Putting remote rovers on the moon
    B. Putting a man on the moon (and recovery)
    C. Successful mining and refinement of materials (1 kg iron) from materials in space
    D. Successful generation of solar power in space for transmission to earth.
    E. Assorted goals in between these.

    These prizes are dedicated to promoting private advancement of technology with a goal towards space manufacture and recovery of resources for ultimate use on Earth.

  4. What is the big difference between this and the bloated grant funding agencies the government already has like NIH and NSF? Other than the transfer and intermediary thing? Which is sort of already present anyway as grantees are usually members of organizations.

    1. This is after-the-fact vetting, not before-the-fact application-based vetting, followed by reviews.

      The NIH has a huge budget, but it's a pretty easy value case to make. It's big, but industry relies on their research both for it's foundational results, and because it trains up the scientists that will later work for the pharmaceutical industry.

      NSF has a pretty small budget. And you're not going to get basic research out of industry - their time horizon is wrong. Unless you're a big fan of eating your seed-corn, basic, fundamental research funding should be one of the core functions of government.

      1. "And you’re not going to get basic research out of industry – their time horizon is wrong. "

        This is generally inaccurate. There is plenty of basic research that goes on in Industry. Bell Labs is a classic example, having developed the transistor, radio astronomy, the photovoltaic cell, several programming languages and more. Industry is perfectly capable of basic research. And if you don't like that, you have Google's entire research arm today.

        On the other hand, if government throws billions of dollars in research funding at academic groups for basic research, you shouldn't be surprised if it looks like a lot of basic research is coming out of academic groups via government funding.

        1. I agree that industry is much better suited for research due to the profit impetus.

          The issue on the medical side though is medical research can't be left to normal economic/business theories (e.g. supply/demand, profit, etc.).

          It's the same why police and fire depts. are govt functions - they're not profitable enterprises but they are still necessary for a stable society.

          1. Medical research for the most part (there are selected exceptions) ALSO is easily handled by industry. And is for the most part. Private medical research brought you the cure for Hepatitis C, and what is essentially a "cure" for AIDS. According to the NEJM, the private sector accounts for 79% to 90% of pharmaceutical products. And is is...very profitable.

            One of the major differences between medical research and police/fire is the set versus escalating costs. Medical research costs a lot of money. But it doesn't cost proportionately more, the more people who obtain the cure. To use a crude example, Medical research is ~$1 Billion up front, then $10 per person covered. If you cover 100,000 people, it's $10,000 per person, or ~$1 Billion total. If you cover 1 million people, it's ~$1,000 per person, and ~$1.01 Billion total. If you cover 10 million people, it's now $1.1 Billion total.

            Police and Fire tend to have far less set costs, but scale directly with the people covered. IE, to cover each person, it's ~$1,000. So, to cover 100,000 people, it's 100 million dollars. To cover a million people, it's a billion dollars. To cover 10 million people, it's 10 billion dollars. And so on. That makes big difference.

            1. You keep citing applications.

              Even realizing that there is potential value in doing research in those areas relies upon a foundation of understanding that has no inherent value proposition.

              Industry isn't going to do that work.

              1. The issue is, I actually cite things, and you never do. You "say" you can cite things, yet never do. And when you're specifically asked to cite the things you supposedly can cite, you run away and abandon the conversation.

                So, this is the part where you run away, or blather about how "of course you can cite things"....or make another weak argument. But never give examples.

                1. Citing irrelevant things isn't like points in your favor or anything. I've laid out a logical argument. If you want to address it, bring either a logical counterargument or evidence contradicting my claim.

                  1. I did. Yesterday. You failed to respond. You've run away there, and made another weak argument here about how "industry won't do basic research" despite direct examples how they did.

                    1. Which comment? Because your examples look like applied research and serendipity. Which don't speak to my argument at all.

                      See also 'Commercial science, scientists’ values, and university biotechnology research agendas'

              2. And yet contrary to your claim, industry has a long history of funding research that has no immediately apparent value proposition. Industry researchers and, more importantly, their corporate bosses with the checkbooks understand the concept of product pipelines and serendipity. Sometimes that funding is direct, other times it's indirect. Sometimes it's more and sometimes it's less. But to say that it never happens or to imply that only government can do it is flat wrong.

                1. But basic research isn't a linear proposition. There is no pipeline.

                  Basic research doesn't just not have an immediate value proposition - it has no value proposition. There is no clearly defined path to some breakthrough, and certainly no path to application. The value case for a given basic research program has to be the value case for basic research generally. And that's not something private industry is into.

                  Certainly there are sometimes accidental breakthroughs that are unexpected during applied research, but industry's incentives make actual basic research a very rare thing. Nothing is so absolute as to never happen, but it's pretty rare and is very much the exception and not the rule.

                  If you want to build understanding, you can't look to markets.

        2. So you don't know the difference between basic research and applied research.

          1. There's a grey zone in between "pure" basic research and "pure" applied research. This includes many inventions that don't have a direct immediate commercial use (IE radio astronomy) or the transistor, which required a lot of theory development before it's practical application. Crispr/CAS9 is in the same area as a tool which was developed by academia. Not "pure" basic research, nor pure applied research.

            But if you want an example of "pure" basic research, the decoding of the Human Genome by Celera Genomics is an excellent example.

            1. You're incorrect on the application and development of transistors. It was already fairly well understood how they should work as a circuit element, given that they were attempts at solid-state replacements for triodes and Shockley gave the point-contact transistor a good theoretical treatment immediately after it was first created at Bell Labs (and some of it had been done in the 1920s by another physicist). The problem was in production: point-contact transistors suck to reliably make to a reliably good standard. Shockley's development of BJTs helped in that area but was still held back by the fact that we couldn't produce high-quality semiconductors at the time. Neither of these were theoretical problems, just production issues, and they still didn't prevent commercialization in transistor radios from 1954 on.

              1. The development of the transistor is a fascinating topic, and you're right that in the 1920's a patent had been filed for a field effect transistor by Lilienfeld (who never actually reduced his patent to practice). But the production issues you speak of required the development of new basic research into the new field of surface physics as well as further basic research into semiconductor theory. These weren't "just" production issues, but in depth issues and required further research to fix them.

                There's also a difference between "basic" research and "theory" that should be acknowledged.

    2. There are a few critical differences.

      1. Amount of funding.
      2. The "Lotto" system of deciding who gets money, rather than a merit based system. Which is very, very bad.
      3. The very loose criteria ("social value") on who gets how much funding, which is prone to abuse. Grants typically are at set values today. You're not going to see one R01 get a thousand dollars, and the other get a billion.
      4. The lack of oversight.
      5. The "after the fact" funding which makes it difficult to get things started for people with great ideas (but no funding). Combined with the Lotto, it's a recipe for failure.

  5. It seems there might be a "cold-start" problem. The intermediaries would spend a lot of money up front to set up shop. Without any guarantee of a return (or calculated probability of a return based on historical data), the market would be slow to form. However, the market seems to be the linchpin of the system. The government would be taking a big risk that a well functioning market would form.

    1. The consequence of a non-functioning market is that
      1. only one person participates
      2. the one person is awarded the $1 trillion dollars.
      3. the government just spent $1 trillion dollars to market an untested idea.

  6. Anyone who claims to have contributed to the specified goal could file a claim.

    What does "contributed" mean? Spent money? Or just made up something plausible sounding?

    1. I think

      An agency would then estimate social benefits produced for each of these claims

      implies that you have to have generated some output in terms of "social value" , as measured by the agency.

      "Social value" is, of course, a very slippery concept. But insofar as it conveys any kind of coherent meaning, it would seem to be measurable by.....profit. The more profit you make, all other things being equal, the more value the members of your society appear to be putting on your output.

      So we are being offered a bit of a paradox - in the ordinary course, those who tend to like the idea of the government spending a trillion dollars on something are typically those who feel that folk who make profits should be paying in to the Treasury, and the more so the more social value they provide (aka profit they make.) But here they are supposed to want to reverse the flow.

      I suppose the circle is squared by limiting the field of play for reversing the flow of money, to those cases where the would be providers of social value are let down by the market, in their hunt for profit, because they are providing non-excludable goods or services.

      All the same, we do have a system for granting such folk the "excludability profits" of non excludable services - intellectual property rights. Perhaps we should be looking more in that direction if we want the government to blow a trillion or two.

  7. According to the wonderful book The Dictator's Handbook, the political class would never do this as it does not benefit their political survival. Paying off/satisfying your "essentials" (your client group responsible for your power) is the prime motivator for policy and spending. Good governance is secondary to political survival and only happens when both align, which, sadly, is not too often.

    1. This is some terminal cynicism. Humans are not optimizing machines; altruism is a thing, even among the political class.

      Do you think that all government grants are just political payoffs? Because you're not allowed to profit off of a grant, so that seems pretty inefficient versus a contract if the incentive system you're positing spans the behavior-space.

      1. Sarcastr0, as you may have noticed already, marketing that kind of cynicism has become a notable industry on the political right. It goes right along with all their other efforts to discredit government, so they won't be held responsible if they ruin government on purpose.

        The principal consumers seem to be folks who have no clue how government actually works. It's useful to them, because amongst similarly naive peers, they can shut down debates simply by winning the bidding war to see who can present as the most cynical, least engaged person in the group.

        1. I don't really think this book is some sort of right-wing conserva-porn. It's from a couple of academic political scientists. One is Alastair Smith, "Bernhardt Denmark Chair of International Relations at New York University" the author is another NYU professor.

          Your terminal cynicism is now on display.

      2. Notice, I also included "satisfying". The authors premise is that broader the coalition of "essentials" the less direct corruption. So in a large democracy like ours, we would see less direction corruption than say some autocratic state like Iran. That being said, what we do see in democracies are policies that are objectively bad governance but are do so to satisfy particular essential groups. E.g. liberals "feel good" with a large welfare state because they believe they are helping the poor. Objectively intergenerational dependence isn't helping the poor. E.g. most Americans "feel good" with foreign aid because Americans are generally charitable, objectively foreign aid creates more harm and breeds more corruption in the countries it's intended to help. Yet we still do it unquestioningly.

        Which political client group would believe this sort of trillion dollar give away scheme is a good thing (whether it actually is or not)? Not many liberals, they want the people in government to more directly control things, not many conservatives they would say it is another trillion dollar boondoggle.

        No politician's political survival would benefit from this scheme, therefore none would be motivated to do it.

        1. This is dumb as hell. ‘I’m right so those that do things I disagree with are indulging in vice.’

          You also don’t know what liberals want. Government is a means to various ends, not an end in itself.

          1. What a stupid comment. Are you high? It doesn't even make sense. Send your complaints to the distinguished liberal authors whom examples I used and whose arguments I shared.

            You've been pretty emotional and pathetic lately, is everything alright?

            1. Objectively intergenerational dependence isn’t helping the poor

              Objectively is a giveaway here that you've confused your beliefs with universally understood facts. Most on the left don't believe that entitlements inevitably cause dependence. But you're so steeped in your zealotry you didn't even realize when you slipped from argument into just ipse dixiting your ideology.

              Thanks for the insults dressed up like concern. Things are going particularly well on a number of fronts lately.

              1. Too bad their beliefs don't square with the facts.

                The data say what the data say. Even when it hurts your feelings.

                1. You continue to conflate your idealogy with facts. Common among zealots.

                  Have some humility. Your 'universal truths' are not universally agreed with. Consider that this means you could be wrong.

                  And data is pretty bad at proving causation.

      3. Because you’re not allowed to profit off of a grant

        Que ?

        Who is "you" in this sentence ?

        1. Grant recipients. Usually institutions.

          Grants by their nature cannot include cost plus profit pricing or anything like that.

          1. If I'm understanding you rightly, your proposition that there is a category of government disbursements - "grants" - made to subsidise private expenditure, where the grant is limited to the amount disbursed. ie you can't receive a grant of $100 to subsidise exenditure of $80. Well, fine.

            What has that got to do with Sam's point ? Does a university not benefit from a grant of $5 million to subsidise its Engineering Department, or its Inca Poetry department or whatever ? Does a Professor not benefit from getting a grant to pursue her research project ?

            Sam's cynical point was that people in government are primarily interested in staying in government, and they do this by bribing supporters with other people's money. The fact that some supporters may receive a benefit in kind rather than as money income seems perfectly irrelevant to this point.

            One can certainly argue that politicians, some or perhaps even most of the time, find that their own genuinely held political objectives happen to align conveniently with the material interests of their supporters, and even that this is not accidental as beneficiaries of party B's policies will tend to gravitate towards support for Party B.

            But it's quite hard to believe that Sarcastro is unable to drum up a modicum of cynicism about, say, Republicans voting for fat miitary contracts that their defense industry donors benefit from. Or even about Republican enthusiasm for tax cuts.

            1. Cost matching, which it appears you are describing, is orthogonal from grants. Some grants have cost-matching, so do some contracts. Some don't.

              Grants are when the government spends money towards a public good, not for an item or service for it's own use. Science is a great example, since the outcome is papers published for all to read; the government retains no property right to them.

              The idea of grants as bribes is silly. Universities benefit from grants in that they like to publish things. Grants do not grow their endowment - they are in fact required to send in reports proving they broke even or less.

              If you want to say that because people like to do the work that government grants allow them to do, that means that grants are the sort of payoff Sam is arguing, then your argument becomes degenerate - all things the someone spends money on someone else will take the money to do/make. This does not mean all things are bribes.

              1. If you want to say that because people like to do the work that government grants allow them to do, that means that grants are the sort of payoff Sam is arguing, then your argument becomes degenerate – all things the someone spends money on someone else will take the money to do/make.

                I'm afraid everything after the hyphen is incomprehensible to me.

                But yes, people like to be subsidised to do the things they want to do, but can't afford to do without the subsidy. And people applying for such grants know perfectly well that their chances of getting a grant are much higher if they are likely to produce an answer the government likes, and unlikely to produce an answer the government doesn't like. Pipers, tunes etc.

                But on the more general point, you have heard of K Street, right ?

                1. Capitalism. What you're describing is capitalism.

                  'people like to be subsidised to do the things they want to do, but can’t afford to do without the subsidy' is just how labor works in a market economy.

                  As to grants being based on past performance, that's not actually possible. Grant selection in is done by blind peer review of the proposal to avoid that sort of thing.
                  It's also well afield of Gomper's silly thesis about government action all being essentially bribery.

                  1. Capitalism. What you’re describing is capitalism......‘people like to be subsidised to do the things they want to do, but can’t afford to do without the subsidy’ is just how labor works in a market economy.

                    No. Labor mostly works in a market economy by paying people to do things they wouldn't do unless you paid them. Relatively few people are in the happy position of being paid to do things they want to do anyway.

                    But if you do find someone doing something they don't want to do for $600 a week, and you offer them $1,000 a week to do something they do want to do, then you'd be a bit surprised if they weren't grateful to you wouldn't you ?

                    As to grants being based on past performance, that’s not actually possible. Grant selection in is done by blind peer review of the proposal to avoid that sort of thing.

                    Not blind to the research project being proposed though is it ? Good luck with your proposal to investigate the effect of clouds on climate, or the mysteries of mathematical accomplishment and population genetics 🙂

                    Scientific researchers do not construct their research to achieve negative results. They research things that they hope will reveal positive results, bringing them fame, glory, promotion - or at leat a published paper. So you know what a researcher is aiming at just by looking at what he proposes to research.

                2. Upon re-reading this comment, it appears you don't know much about the grant making enterprise in the government.

                  That's fine - I didn't know much about it till a few years ago. But then don't make assumptions about it and think they are true.

                  1. Correct. I know nothing at all about the grant making process in the government.

                    But I do know a little bit about human nature. And microeconomics, which, to the nearest decimal point, is much the same thing.

  8. Wouldn't investors want a massive risk premium on their claims? That is, the smaller the number of claims that get a share of the pot (relative to all viable claims), the more the whole thing looks like a lottery and the more it should attract a risk premium. Given the kind of setup you're talking about, the risk premium would eat up at least half of the reward.

    1. Agreed. Trying to calculate a premium would be an actuarial nightmare.

  9. Professor Abramowicz....Your proposal needs some work, but the market-based label you're using is promising.

    One, I don't think you are adequately accounting for human nature. Meaning, somebody has to decide where the money goes and somebody has to fund it. If you think the electorate (or 'investors' to borrow your terms) won't demand accountability for that...think again.

    Two, you really think the bureaucracy will go quietly into the night? LOL. I don't think so. The entrenched bureaucracy will resist.

    1. "The entrenched bureaucracy will resist."

      No they won't and actually they can't.

      "In 2018, the Trump administration fired the government’s entire pandemic response chain of command, including the White House management infrastructure."

      This is the problem with "Libertarians."


      Well until the planes crash and the apples are poisoned and the paint contains lead and the coronavirus kills and . . . .

      1. Your incoherence is...well...impressive.

  10. Huge pool of taxpayer money, limited, or no, bureaucracy to monitor and provide oversight, expert evidence during review of claims “when appropriate”? Sounds like a conservative dream.

  11. There are several big problems here:

    1) The biggest uncertainty here is that not matter how great your contribution is the government can always decide some other actions is even more beneficial and give them all your money. I fear that by the time the program pays out it will mostly pay out based on our moral approval of the action and political connections which will mean the free market will spend its efforts not in figuring out the best responses but in analyzing the eventual distribution process.

    2) The fact that many efforts won't be checked limits the payoff to large interventions unless I can split up my billion dollar contribution into a bunch of little contributions even when those don't make sense on their own (independently they might be worthless)

    3) There is no downside risk to bad solutions. If I gather together a bunch of scientists to research coronavirus I can probably count on getting a good chunk of that money if I develop a vaccine and my contribution is considered but the extra risk I impose on others by increasing social contact isn't really internalized (after the fact it will be ignored if I succeed). So this doesn't actually produce the best actions.

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