Demagogues’ Dilemma

January 29, 2011

In his State of the Union message President Obama once again called for compromise and bipartisanship.   He is really asking the two parties to act irrationally.

The term irrational is not too strong.  Suppose that Republicans and Democrats both recognize that there is an important issue for which a policy shift would be unpopular with an important constituency but good for the country.  Examples that might arguably fall into this category are, cuts to the military budget, disengagement from South Korea, or reduced financial and military support for Israel, Egypt, and the Saudi regime. 

Each side knows that if it advocates the policy shift, the other side can demagogue the issue.  That is, the opposition can appeal to the constituency that supports the status quo, and can mobilize a public relations campaign that will benefit them and damage the party proposing the new policy. 

Both parties might (and nearly always do) make an agreement not to demagogue the issue, but should they fulfill their promise or default.  An idealist would say without hesitation, that they should keep their word and put their country above their party.  However a modern Machiavellian, a political realist, would say that while the idealist’s moral assertion may be true, the fact remains that for the two parties, fulfilling their promise to one another is not rational.  

The following table summarizes the possible strategies, the resulting outcomes, and how those outcomes serve the interests of the parties’ and the country.  Note that the best outcome for either party is to cheat, but both parties have a good option, which is to cooperate.  However, for the country there is only one positive outcome, where both parties keep their promise and cooperate.

Us Them Outcome for the Parties Preference for the Parties Impact for the Country
Default Fulfill We play them for a sucker Best Negative
Fulfill Fulfill We, benefit, they benefit Good Positive
Default Default Neither party benefits. Bad Negative
Fulfill Default They play us for a sucker Worst Negative

Will the parties choose the option that is good for them and best for the country?   That is unlikely because cooperating would be irrational.  We can easily see why by considering the parties’ reasoning process.

A Republican might reason as follows. 

Suppose that the Democrats fulfill their agreement; then I benefit most by playing them for a sucker and demagoging the issue.  I will wait until they take a position, and then jump on them.  I will be breaking my word, but if I do not take advantage of them, they will gain strength and lead the country to ruin.   At any rate, they have it coming.

Suppose that the Democrats demagogue the issue.  Then if I do not, they will play me for a sucker. 

A Democrat can argue in exactly the same way.  Defaulting on their agreement and playing partisan politics is the rational choice regardless of whether the other party intends to fulfill or default on its agreement.  This sort of situation is called a Prisoners’ Dilemma and it has been studied by Game Theorists (people who study strategic decision making), by economists, and by political scientists.   The logic is inescapable and the outcome is unlovely.

The problem is that by seeking to gain the best outcome and avoid the worst outcome, both sides also avoid the second best outcome and have to settle for the next to worst outcome.  The country too is badly served by the parties’ rational behavior.   The parties’ destructive competition makes the system inefficient.

In a Prisoners’ Dilemma situation there are three means of avoiding the bad (inefficient) outcome:

  • Repeated play, which opens the possibility of negative retaliation for cheating (i.e. the other party may stop cooperating).
  • Enforceable Contracts (assuming that the provisions are verifiable and that there is an enforcement mechanism, such as a government with a court system).
  • A credible threat of positive retaliation (e.g. the other party may beat you senseless).

Obama (who may be one of the smartest and most calculating presidents in American history), certainly knows that bipartisan cooperation is irrational and that the Republican Party is not likely to be irrationally trusting.  Furthermore, we can assume that Obama’s interests are the same as the country, because the wisdom of the nation’s policy during his presidency will determine his place in history.  

Which of the above three means can Obama’s use?  Repeated play is possible only in the Senate and only to the degree that Senators are not idealistic.  There is no possibility of enforceable contracts between the political parties.  Only the possibility of retaliation can operate and that is only possible to the degree that one party is so much more powerful that it can force the other party to compromise.   So long as neither party is clearly dominant, cooperation remains irrational, and destructive competition remains easy to rationalize. 

We can assume that Obama knows all of the above.  It follows that his calls for bipartisan cooperation are merely a necessary public relations tactic.  Our best guess must be that he is pursuing his only sensible course of action, which is to aim for political dominance in the 2012 election.

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