We’re All To Blame For The Shutdown

At its strategic core, the partial government shutdown — soon to enter a record-breaking 22nd day — is a breakdown of bargaining: two sides, no solution in sight. President Trump and congressional Democrats are engaged in the latest battle of a game that economists have studied for decades. If politicians can’t end the stalemate, surely game theorists can. OK, they can’t. But they can help identify what’s gone wrong, and you and I may be part of the problem.

Let’s start with the basics about what bargaining really is: the allocation of a scarce resource and the setting of a price.

In regular, everyday, one-on-one bargaining, it’s beneficial to act more intransigent than you really are. Suppose you’re trying to sell me a used car, which happens to be worth exactly $1,000 to both of us. While we stand alone on the lot, I’ll say smart, strategic things like, “I’ll pay $800 for this hunk of junk and not a penny more.” And you’ll say smart, strategic things like, “I won’t part with this beauty for any less than $1,200.” And so on we dance around that $1,000 number, eventually arriving at some agreed-upon price at which point I’ll pay you and drive home in my new used car. In traditional game theory models, we’ll always make some deal.

Political bargaining is different: There’s an audience. Voters are watching.

That fact — the existence of observers — upends the incentive structure that was in place when we were bargaining alone on that car lot. Rather than try to appear intransigent, now the bargainers have an incentive to try to appear reasonable — because many voters like reasonable politicians.

The voters alter the bargainers’ incentives because the voters get to decide important things that the bargainers care about — approval ratings, whether the bargainers get re-elected, etc. The political scientists Tim Groseclose and Nolan McCarty, for example, captured this situation in a paper called “The Politics of Blame: Bargaining Before an Audience.” They write that certain otherwise puzzling political outcomes can be explained by “bargainers’ attempts to appeal to an outside audience.”

Those authors pointed to two examples that challenged the standard models: Slobodan Milosevic’s decision to release American prisoners in 1999, before peace negotiations had even begun, and a 1992 decision by a Democratic Congress to pass a bill they were sure President George H. W. Bush would veto. Both situations, they argue, could be explained by an obvious fact: A third-party, an audience, was watching.

More specifically to the shutdown, political bargainers might want to make proposals that appear reasonable to the audience of voters but that they know their counterpart won’t accept. Groseclose told me that politicians want to be able to make statements like, “Look at this reasonable policy I proposed! And he rejected it! This guy must be a terrible person.”

The existence of an audience, in other words, can be what creates breakdowns in bargaining. The shutdown, clearly, is our fault. (Kidding! Mostly.)

Similarly, politicians may also playact tough when voters are watching — many voters tend to like this, too. (Reasonable and tough — the delicate political ideal.) But it also may lead to breakdowns, and shutdowns. “Why do voters want this kind of toughness? It’s something like resolve. We just like tough guys, Clint Eastwood or whatever,” John Patty, a political scientist at Emory University, told me.

President Trump, a credited author of “The Art of the Deal,” campaigned as an accomplished dealmaker. That’s debated. But, even if it’s true, maybe he’s used to the wrong kind of deals. Groseclose thinks Trump hasn’t learned how to bargain politically yet. Regarding the shutdown, Groseclose said, “I think his instincts from one-on-one bargaining kicked in, and he’s just going to play hardball.” Patty noted that Trump’s apparent love of performing in front of a camera only exacerbates the likelihood of a breakdown.

The different incentives when an audience is watching have counterintuitive implications that extend beyond analyzing a shutdown. Consider government transparency, or so-called “sunshine laws.” These have benefits, but they may also have downsides: By introducing an audience to the dealmaking of government, we also introduce new possibilities for breakdown — by pandering to or performing for that audience, the bargainers may fail to reach a deal. Similar arguments were made for the secrecy of the proceedings of the 1787 Constitutional Convention; the public didn’t see anything of the Constitution until after the convention had concluded. If Trump and the Democratic leadership could be truly alone in a room, or even a car lot, perhaps the outcome would be quite different.

But in Washington, D.C., today, chock full of cameras and reporters, bargaining continues to fail, and the federal government remains partially shut down. Trump has to think about his political base — he campaigned on building a border wall and Republican voters are overwhelmingly in favor of the wall. Democrats have to think about their voters, who are overwhelmingly against the wall. (The wall is net unpopular with independents and Americans overall.) So a pressing question: Is there a smart, strategic, game-theorist-approved way to back down and start the government back up again?

Patty thought the DACA-for-the-wall deal would be a logical end — one that both parties could defend to certain observers. And while his model doesn’t address the question explicitly, Groseclose suspected that after bargaining has failed and the government has remained shut down for a certain amount of time, the audience of voters, you and I, would learn all they were going to learn about the reasonableness of the politicians. And then, at long last, the politicians would shut up and agree.

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