Wednesday, July 13, 2011

Who’s Calling Whose Bluff?

Always desperate to find something to write about, denizens of the blogosphere have a hard time resisting the temptation to over-estimate the import of the day’s events. Consider the “contingency plan” Mitch McConnell presented yesterday if the debt-ceiling negotiations break down. Within minutes, liberal bloggers were giddily celebrating McConnell’s abject surrender, while conservatives were reeling from yet another betrayal by the Republican establishment. If you ask me, both sides need to take a deep breath.

Jonathan Chait, for example, compares McConnell to a player folding his cards in a high-stakes two-handed poker game because he lacks the nerve to find out whether his opponent is bluffing (my emphasis):
“Yesterday morning, Mitch McConnell gave away a key tell when he said he had a contingency plan to ensure the debt ceiling gets lifted. Today he showed his hand and it's a fold. The plan announced by McConnell today is highly, and intentionally, convoluted, but the details don't really matter. The essence of it is to abandon efforts to force policy concessions in return for lifting the debt ceiling, and instead set up a bunch of show votes to embarrass the Democrats. In other words, it's a reversion to the old status quo, before President Obama and the Congressional Republicans turned the debt ceiling vote into a high stakes hostage crisis.
Notice the respects in which Chait’s poker analogy is leading him astray. It doesn't even work in its own terms. Any seasoned poker player comes to the table with the intention of playing multiple hands. His readiness to fold his cards on a single hand doesn’t tell us much about how many chips he still has to play and whether he’s likely to leave the table at the end of the night ahead of the game. It may be that player who succeeded in bluffing his way through a single hand had no choice because he had so few chips left that he couldn’t afford to wait for better cards. McConnell is nothing if not a seasoned player of political poker.

A better analogy for Chait’s purposes would be a game of chicken in which the contestants are driving toward each other at breakneck speed. Each contestant’s most preferred outcome is that he keeps driving straight while the other swerves to secure their mutual safety. But they each prefer being the chicken to a head-on collision, and mutual swerving to being the chicken. Under those assumptions, the winner will be the contestant with the lower aversion to risk—that’s why they call the game “chicken.”  In the present case, a default on public obligations with all of its catastrophic economic and political ramifications is the head-on collision.

Granted, when you apply this analogy, McConnell and the Republicans he speaks for end up being the chickens. But so what? Chicken and negotiations are both contests of wills.  But, being a zero-sum game, chicken is otherwise nothing like a negotiation aimed at securing a mutually advantageous outcome.  Moreover, the chicken analogy suffers from the same disability as the poker analogy—it fudges the difference between an iterative game and one that consists in a single play. One of the best reasons a driver can have for throwing a game of chicken is that he thinks he has better games to play.

Put strained analogies aside for a moment and think about how negotiations work. The negotiators come to the table, not to avert Armageddon, but because they see a prospect of finite mutual advantage relative to the status quo. But they’re not indifferent about which member of the class of mutually advantageous possibilities ends up being the negotiated outcome. That’s what they’re bargaining over. The best single indication of their relative bargaining power is their respective readiness to walk away from the table if they don’t get their way.  The negotiators' comparative readiness to carry on without an agreement sets the parameters of the class of possible negotiated solutions. All other things being equal, the negotiator who finds the status quo more tolerable is likely to do better in any ensuing negotiation.

Consider in this light Chait’s observation that the McConnell plan represents “a reversion to the old status quo, before President Obama and the Congressional Republicans turned the debt ceiling vote into a high stakes hostage crisis.” Leave aside the respect in which that’s not quite correct—the McConnell deal requires Obama to come up with $2.5 trillion dollars worth of budget cuts in exchange for raising the debt ceiling $2.5 trillion over the next year or at least explain to voters exactly why he’s chosen not to do something that he's now pretending is one of his highest priorities. McConnell’s still showing Obama and the rest of us that he’s ready to have Republicans stand by the budgetary priorities they’ve already revealed by voting for the Ryan budget and let Obama keep sole ownership of a dreadful economy.

Moreover, McConnell’s plan obliges Obama to reveal what his budgetary priorities really are. That’s something, you’ll recall, that he and Democrats have been conspicuously disinclined to do for the last two years either because they couldn't agree among themselves what their priorities should be or have decided that their real priorities are likely to be unpopular.  That might explain why Democrats are suddenly more insistent than Republicans about not passing up the opportunity to get a big budget deal done. 

I guess I must be a little slow. Can someone explain to me again why it's so obvious that Obama’s the guy calling the other guy’s bluff?

1 comment:

Mean Voter said...

I have to agree with you Ron. I think Jonathan Chait is wrong when he says that the details to McConnell's plan don't really matter. They DO matter for precisely the reasons you say.

You can agree to fold if you have something better up your sleeve. I think of a classic pool hustler, where the hustler pretends to be a worse player with the intent of luring someone of probably lesser skill into gambling for even higher stakes. McConnell is no slouch and Obama seems to be out of his league.

Whatever McConnell's intentions are, I think your analogy of chicken is correct.

It's kind of scary to think that our elected leaders are playing a game of chicken with our future.