Category Archives: Politics

Trump is playing the wrong game

Trump seems to see negotiation as a game of chicken. This is how most people see negotiation, but it’s a naive view.

Sophisticated negotiators seek to avoid turning negotiations into games of chicken. They view this as a failure.

Why?

They avoid it because the optimal strategy in a game of chicken is to appear utterly reckless and irrational to your opponent.

In the classic “two cars driving towards the cliff, first to hit the breaks loses” game, the optimal strategy is to let your opponent see you knock back a bottle of whiskey before you get in your vehicle. (whether it’s real alcohol doesn’t matter, only the appearance).

In negotiating, when viewed as a game of chicken, the optimal strategy is to adopt an extreme position at the outset, such that the eventual compromise is tilted as much in your favor as possible.

So why avoid this? The problem is that this strategy requires that you misrepresent your actual views. Consequently, it will only work a few times before people get wise to it and adapt, which negates any advantage for you.

At the risk of laboring the point, it’s like playing poker and bluffing on every hand. Early in the game, this strategy will be quite effective, even against very sophisticated players. Witness Trump’s stunning success against sophisticated politicians in primaries and the general election. This apparent success convinced some fairly smart people that this is the correct strategy. After all, it got him to the Whitehouse, didn’t it? You can’t argue with success, can you?!

There is a much more severe problem. This strategy requires that you sacrifice your credibility. The ability to convince others of your sincerity is a critical persuasive tool, and at the end of the day, politics isn’t a game of chicken, it’s a game of persuasion.

There are actually very few true zero-sum games in politics, although unfortunately, it’s common for people to view political issues that way — it’s the reason for many of our problems.

In the language of game theory, most political questions are actually “iterated prisoner’s dilemmas.” Maximizing your benefit in an iterated prisoner’s dilemma requires trust between participants. Games of chicken destroy trust.

Most politicians have figured this out by the time they get anywhere near real power. Trump has become the most powerful politician in the world, apparently without learning this.

Model Bureaucrats

Back when I was 15ish, my school sent me to a “Model United Nations” in Dublin. This was the beginning of my decades-long distrust for bureaucrats.

I don’t think they sent me because I exhibited any particular interest in politics, I think it was because I wouldn’t shut-up in class, so naturally I might be well-suited to such an environment. I was Mexico’s ambassador, a country I knew next to nothing about at the time. That year it was Mexico’s turn to be on the Security Council.  I noticed that most of the other students seemed to view the UN as some kind of all-powerful genie, all they had to do was vote for something and, lo-and-behold, it would happen.

So I took particular pleasure in disagreeing with whichever idea seemed to be popular with the rest of the group.

There was one guy from Chicago, he seemed to be a very experienced model-UN participant. I imagined him flying around the world by private jet, from model-UN to model-UN, part of some kind of American model-UN “dream team”.

During one debate he gave an eloquent and widely-applauded speech compared India and Pakistan to two fighting children, and thus proposing that we resolve their decades-long conflict by taking away their “toys”, their nuclear arsenals.

I pointed out that comparing two nuclear-armed nations to squabbling children might not be an entirely apt analogy, it might even be a little patronising, and there may be some practical difficulties in depriving them of these “toys”. I was unanimously outvoted, the United Nations would disarm India and Pakistan.

Needless to say, I didn’t make many friends. There was a daily newsletter, mostly contributed to other student-attendees. One of them took the time to anonymously write an entire poem about me – comparing me (unflatteringly) to Mr. Bean. “Ode to Mexico on the Security Council”. Unfortunately the poem itself is lost to history.

The GOP’s war on healthcare ignores facts, and history

Carly Fiorina gave the GOP address this week, claiming that the task force which recently came up with recommendations about breast cancer screenings is a sign of things to come if health care reform is passed. She complains that the task force didn’t include an oncologist, a radiologist, or other cancer experts. What was Obama thinking?!

The only problem? This task force was set up last year under Bush, not by Obama! Of course she doesn’t mention this minor detail, can’t let the facts get in the way.

She goes on to peddle the whole scare tactic about government bureaucrats deciding who lives and who dies. Isn’t she aware that health insurance company bureaucrats do exactly this every day?

Doesn’t she realize that since breast cancer is a serious pre-existing condition, there is no way she’d be able to get individual coverage under today’s system if she had to change insurance providers today? 
Of course, she doesn’t have to worry too much about health insurance because she is a multi-millionaire, but most people aren’t.

The new reform bill is far from perfect, but the perfect should not be the enemy of the better. The fact that it will prevent insurance companies from denying coverage due to pre-existing conditions is reason enough to support it.

In 10 years when people look back on this, the GOP’s war on healthcare reform will look just as ridiculous as their war on Medicare in the 60s when they used all the same rhetoric about “socialized medicine”.

I’ll end with a quote, let me know if it sounds familiar:

“If you don’t stop Medicare and I don’t do it, one of these days you and I are going to spend our sunset years telling our children and our children’s children what it once was like in America when men were free” – Ronald Regan, 1961.

The free-market, more accurate than polls?

HubDub is a great company based in Edinburgh (where I used to live), who apply the principles of the free market to predicting the outcomes of news stories. I’ve had a good chat with them, and they say that their market tends to be spookily accurate. I’ve heard anecdotal evidence that when this type of market is applied to predicting when internal projects will be completed within Microsoft, they were universally more pessimistic, and more accurate, than the project manager’s estimates.

Here is the current prediction for who will win the US Presidential election, right now it has Obama winning (phew!). It will be interesting to look back and see how accurate it was in retrospect:

Matt Damon on Sarah Palin

I normally don’t look to actors for political insight, but I think Matt is spot on with this one. I could live with McCain as President, at least he’s no Bush, but Palin would be worse than Bush in almost every way. She is more of a religious-right ideologue (even Bush has come around somewhat to global warming, apparently she hasn’t). She has far less leadership experience than he did (Texas > Alaska), and my impression is that she has less foreign policy experience (which is hard).

A McCain Presidency would be a kick in the teeth, but a Palin Presidency is truly a frightening prospect and we can’t afford even the chance that it would happen.

Here is what Matt had to say:

[youtube=http://www.youtube.com/watch?v=C6urw_PWHYk&color1=0xb1b1b1&color2=0xcfcfcf&fs=1]

Speculation is good for the oil market, and good for America

Just listening to CNN, one of the talking heads listed speculation in the oil markets as one of the reasons for high oil prices, the implication being that the situation would be better without speculation.

Let’s be clear about what speculation is, it’s people buying oil today, betting that its price will increase in the future, and in doing so they make the price increase today.

I would argue that speculation is generally a good thing, because it tends to make the future happen sooner than it otherwise would.  In other words, speculation is capitalism’s foresight, it makes the markets try to predict the future, and adapt accordingly.

Of course, sometimes it can get out of control, where people start to speculate based on predictions that are themselves the result of speculation – as with various bubbles over the years, causing behavior that may be rational at the individual level be irrational at the group level.

In this case though, I think the high oil prices are likely to do what no amount of regulation would ever do in the US – which is to force people to find ways to use less oil, to force them to change their behavior.

Most people don’t like to be forced to do anything.  A change of career can mean retraining, and sometimes a pay-cut.  A change of location means a lot of effort and money to move your stuff, not to mention waving goodbye to your social circle (something I’m painfully familiar with).  A change in your company’s expenses can mean lower revenues until you figure out a way to compensate, and that may cost money.

Nonetheless, change is often necessary.  The alternative, which often involves protectionism or other forms of government manipulation of the market, tends to delay rather than prevent change and exaggerate the eventual trauma when it happens.  Look at the British miner’s strikes in the 80s for an example of this.

Speculation, on the other hand, will tend to force change earlier than it might otherwise occur, and often make it occur more gently.  In the US, the high oil prices already have the automobile manufacturers scramling to catch up with their Japanese and European counterparts in-terms of fuel efficiency, something that can only be a good thing for our long-term future.

She said what?

“My husband did not wrap up the nomination in 1992 until he won the California primary somewhere in the middle of June, right? We all remember Bobby Kennedy was assassinated in June in California. I don’t understand it,”

This was Clinton yesterday, explaining why she was still in the race.  What was she thinking?  Many, including their brother Ted, have drawn comparisons between Obama and John and Robert Kennedy, two inspirational and transformational candidates in their time, both assassinated.

At best, she was simply pointing out that Democratic primaries often extend into June, but why drop the “A-bomb” to make this simple point?  Is it conceivable that she was making some kind of argument about how she was less likely to be assassinated, and therefore would be be better candidate?  Did we just catch a brief glimpse into a darkly cynical political mind?

“That’s a nice Presidential candidate you have there, what a shame if something were to…. happen to him”

Incompentence of Clinton’s campaign

In a strategy session last year Hillary Clinton’s chief strategist Mark Penn confidently predicted that a win in California would put Clinton over the top by picking up 370 state delegates.

There was only one problem with this prediction: it could only happen if Clinton won 100% of the vote, a practical impossibility.  You see, as anyone that has followed a Democratic primary knows, delegates are allocated proportionally; it’s not “winner take all” like the GOP.  Amazingly it seems that Clinton’s chief strategist didn’t understand one of the most basic aspects of how Democrats choose their nominee, its amateur hour in the Clinton camp!

Even though I suspect someone pointed out his error to him at some point, Clinton’s strategy still seemed to be predicated on that elementary misunderstanding.  She focussed her efforts on the big states, while Obama spread his attention across all states, big and small.  Her strategy made sense in a winner-take-all system, but those weren’t the rules of the game she was playing.

This is why you now hear Clinton complaining “if we had the Republican system I’d be President right now”.  She lost in part because her strategy seemed to assume that the Democrats already used the Republican system!

Now, maybe you feel sympathy for her, losing because of this error, but I don’t.  One role of a primary is to test a candidate’s skills at running a large organization.  This is particularly important when the candidates are Senators, as opposed to Governors who (one assumes) already have this kind of experience.

A big part of a President’s job is choosing the right people for the most powerful roles in the United States.  If she can choose a chief strategist that doesn’t have a clue about the strategy of winning a democratic primary, what would that say about the people she would put in charge of our government should she be elected President?

The good news is that barring some kind of unanticipated calamity, Obama has won the primary, and from there I give him 3:1 odds on being the next US President.