Politics is not rational

Hillary Clinton lost the presidential election because people are not rational. Except for racists and millionaires it would have been in the best interest of everyone to have voted for Clinton. But we are not rational, we do not always look at our best interests. Real humans are not homo economii.

That includes me. As a scientist it is my job to keep a cool head. I hope you will excuse me for thinking I do my job reasonably well. I like to see myself as rational, but naturally I am not, especially learning about the ultimatum game shocked my self-perception.

It is a very simple and pure economic game. Reducing a problem to its essence like this has the elegance my inner physicist loves. In the ultimatum game, two players must divide a sum of money. The first player has to propose a certain division. The second player can accept this division or reject it. If the offer is rejected both players do not receive any money. In its purest form, the experiment is played only once and anonymously with players that do not know each other.

Time for a short thinking pause: What would you do? How much would you offer as player one? Below which percentage would you reject the offer?


Initially, I wondered why economists would play this game. Surely player one would would offer 50/50 and player two would accept. But that was my irrational side and my missing economic eduction. A good economist would expect that player two would accept any non-zero offer: it is better to get something than nothing, and that thus player one will make the smallest possible offer. Reality is in between. Many people offer 50%, but many also do not. These offers below 50% are, however, also regularly rejected. Player two is apparently willing to hurt himself to punish unfair behavior. This game and many variations and similar games lead to the conclusion: humans are not purely selfish, but have a sense of fairness.

As a student of variability, for me the key aspect of the ultimatum game is its non-linearity. You either get something or nothing. In case of nonlinear processes, such as radiation flowing through clouds, variability is important. A smooth cloud field reflects more solar radiation than a bumpy cloud field with the same amount of water. The variability of the cloud water is important because the flow of radiation through clouds is a non-linear process.

By sometimes rejecting low offers, player two gets better offers from player one. This is especially clear when the game is played multiple times with the same players. In the beginning quite large offers are rejected to entice larger offers later in the game. How humans evolved a sense of fairness to be able to also benefit from this in one-off games is not yet understood. Fairness is surprising because a cartoon version of evolutionary theory would predict that altruism is only possible among kin. But the empirical evidence clearly shows that fairness belongs to being human. (Just like competition.)

---

Knowledge will come only if economics can be reoriented to the study of man as he is and the economic system as it actually exists.
Ronald Coase

---

Fairness is but one emotion that it not rational, not "productive". It offers some protection against unfairness, such as wages going lower and lower. Offering and accepting jobs are yes-no decisions under uncertainty for both parties. If there is one term that is often used in labor conflicts it is "unfair wages" or "unfair labor conditions". All the while economists wonder why unemployment is higher than the friction unemployment of rational actors and blame anything but their faulty assumptions.

Anger is also not productive, but fear of anger forces the haves to make better offers to the have-nots. Amok runs are not productive, mass shootings are not productive, suicide attacks are not productive. I would venture that independent of the proclaimed rationalizations, they signal a lack of justice and fairness.



The American election was also seen as unfair by many. The two parties had both selected historically unpopular candidates. Had the historically unpopular Trump not run, Clinton would have been the least popular candidate since polling started on this question. The main reason to vote was not to get other candidate.

With both candidates and parties so unpopular, with the historical unpopularity ratings of Congress and Washington the enormous partisan tribalism in America is surprising. The main pride of both tribes seems to be that they are at least not members of the other tribe. The lizard people have managed to pit the population against each other, while they loot the country and drag the world down. Do help me in the comments how "they" did this.



Many felt the election was a trap. In such a case one can expect irrational behavior. Or as Michael Moore elegantly said: Trump is the human Molotov cocktail they could throw through the window of the establishment. I am afraid the voters will find it was the window of their own house.

One mistake the Democratic establishment made in their support for Clinton was to expect rational behavior. They learned about economics and its political counterpart [[public choice theory]]. Both theories assume rational behavior. The Democrat establishment assumed that the working class had no other options than to vote for them because the Republicans would make their lives even worse.




Nic Smith, a self-described "white trash hillbilly from the holler" from coal country, on Trump voters: They are desperate to believe in something.

In a rational world the establishment would be right and player two would take the non-zero Clinton offer, in the real world people are fed up with begin treated unfairly and seeing inequality and corruption jointly grow for decades. In the real world having to choose the lesser evil, election after election, over and over again, makes it ever more likely the voters will sulk. That the Democrat establishment had just put up their middle finger to half of their party during the primaries likely also did not help putting people in a more rational mood.



Last year's presidential election was an extreme example, but a two-party system invariably mean that many people do not feel represented and are dissatisfied. [[A transferable vote]] would do a lot to fix this and gives the voters the possibility to vote for their candidate of choice without losing their vote.

A two-party system is also much more prone to corruption. A large part of the politicians will be in save districts and do not have to fear the wrath of their voters. Where the voters do have some choice, the corporations only have to convince politician D that they will also bribe politician R and both can do so with impunity.

A corrupt two-party system is not much better than a one-party system. In a representative democracy with more than two parties there would be real competition and the voters could vote for another politician.



What can we do to break this ultimatum game? The rhetoric and tribalism in America is unique. Humans are social animals and our group is important to us, but the US tribalism in beyond normal. For example, 34% of Trump voters being willing to say Trump's inauguration was the biggest ever is not normal.

Tribalism and emotions are not good for clear thinking and needs to be fought. The only thing we can change is how we act ourselves, we should try to reduce unnecessarily antagonizing people. When you have to say something bad about the corrupt Republican politicians in Washington make clear you mean them and do not use the term Republicans, which also means every single member of the group, most of whom also reject corruption.

I am only talking about who you address. Please stand your ground, there is no need to keep on moving our position in the direction of corrupt unreasonable politics. That only signals you do not believe in your ideas. If there is one thing frustrating about US politics it is weak corporate Democrats continually moving in the direction of ever more corrupt Republican politicians in the name of appeasement and in reality because they have the same donors.

Given the lack of a real choice one can also not blame the voters for every character error of their candidate and for all policies. For fashion icon Ken Bone the election was a choice between his personal benefit as coal worker and the greater good. Many Trump voters voted for Obama before. Some people say they voted Trump expecting him not to be able to execute his racist plans because they are unconstitutional. That may be a rationalization and for me Trump's overt racism would be a deal breaker, but not all of his voters are automatically bigots, even if many clearly are.

---

Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that.
Martin Luther King, Jr

---

Most people simply voted the party they always voted. There are people who have their health insurance via the Affordable Care Act who voted Republican and are likely to lose coverage. They thought the Republicans would not do something as barbaric as repealing the ACA without replacement. Thousand of people will die every year when that happens, but the repeal means that billionaires will have to pay less for healthcare and they own the Republican politicians, so I am less optimistic they will not do it.

Do not go around calling every Trump voter a personalized Donald Trump, make them an offer they cannot refuse. Especially the Democratic establishment should stop blaming everyone but themselves for not voting for their inevitable candidate. Rather than scolding their voters, they should make the left an offer they cannot refuse.

That offer would be a non-corrupt candidate. That would be an offer Democrat and Republican voters alike would find it hard to refuse. It is, unfortunately, the one compromise the Democratic establishment is least willing to make. The people in power are in power because they are good at selling out to corporations.

This video gives a good overview of the corruption in America and how it impacts normal people via politics and the media. Since corruption became worse the workers no longer shared in the increases in productivity and the politicians respond to the wishes of the donor class and not the working class. Readers from the USA may think political corruption is normal because it slowly and imperceptibly grew, but in its enormity it is not normal. It was much better before the 1970s it is much better in other advanced nations.



Fortunately several initiatives have sprung up after the Trump election debacle and after Sanders showing it is possible to campaign for the presidency without taking donor money. As an offspring of the Sanders campaign Our Revolution will run a large number of candidates under one political and organizational platform. Similar, but very clear in their wish to primary and get rid of corporate Democrats, are the Justice Democrats.

The non-partisan group Brand New Congress also wants to help (Tea Party) Republicans that do not accept money into Congress. I would love to see more of this on the Republican side. In Europe conservative parties are conservative, but not corrupt and not bat shit crazy. They are people you can have an adult conversation with and negotiate. They may prioritize the environment less, but do not childishly claim climate change does not exist. Getting non-corrupt Republicans into office may even be worth the time of US liberals.

The group 314 Action (inspired by π) work to get more Science, Technology, Engineering and Math (STEM) people into politics. If you love money and power, science is the weirdest career choice you can make. Thus I would expect the scientists that run for office to be mostly clean. The climate "debate" shows that nearly all climatologists are not touched by corporate corruption, while there are strong incentives for coal and oil companies to bribe them.

Let's work to end corporate rule, get the corporation out of politics and send them back to take care of the economy.


Following The Ninth: In The Footsteps of Beethoven's Final Symphony.

Tweet

Related reading

The big lesson of Trump's first 2 weeks: resistance works

The magazine Correspondent: This is how we can fight Donald Trump’s attack on democracy. Focuses on how to change the media, which has become more pressing in the Age of Trump

Chris Hedges: We Are All Deplorables. "My relatives in Maine are deplorables. I cannot write on their behalf. I can write in their defense. ... I see the Christian right as a serious threat to an open society. But I do not hate those who desperately cling to this emotional life raft"

Thomas Frank in The Guardian: How the Democrats could win again, if they wanted

CNN Money: U.S. inequality keeps getting uglier

David Roberts of Vox: Everything mattered: lessons from 2016's bizarre presidential election - WTF just happened?

Political Polarization in the American Public - How Increasing Ideological Uniformity and Partisan Antipathy Affect Politics, Compromise and Everyday Life

North Carolina is no longer classified as a democracy by Andrew Reynolds, Professor of Political Science at the University of North Carolina at Chapel Hill.

A law professor's warning: we are closer to oligopoly than at any point in 100 years. Economically. The political power of the corporations is also increasing

The first days inside Trump’s White House: Fury, tumult and a reboot. "Trump has been resentful, even furious, at what he views as the media’s failure to reflect the magnitude of his achievements, and he feels demoralized that the public’s perception of his presidency so far does not necessarily align with his own sense of accomplishment."

An important piece for poll nerds by Nate Silver: Why Polls Differ On Trump’s Popularity?

Variable Variability: The ultimatum game, a key experiment showing intrinsic fairness and altruism among strangers


* Photo at the top, Be Human, is by ModernDope and has a creative commons CC BY-SA 2.0 license.

Darwinian or Smithian competition

Econtalk recently held an interview with Robert Frank, author of the book "The Darwin Economy".
The most interesting part starts with the statement:

"I start with a prediction that I won't live to see whether it comes true or not: I predict that if we were to poll professional economists a century from now about who is the intellectual founder of the discipline, I say we'd get a majority responding by naming Charles Darwin, not Adam Smith. Smith, of course, would be the name out of 99% of economists if you asked the same question today. My claim behind that prediction is that in time, not next year, we'll recognize that Darwin's vision of the competitive process was just a lot more accurate and descriptive than Smith's was."

I think he is right, but am hopeful we do not have to wait an entire century.

The competition of Adam Smith is the competition between lion and gazelle. It makes both fast and strong. You could say, it also makes the group better of, on evolutionary time scales. Charles Darwin was aware that this is not always the case, competition between males can lead to aggressive and too strong males, competition between trees for the sun makes them tall (inefficient) and fragile (storm damage). In these cases collaboration between members of a species would make everyone better of.

The irony for economics, the study of how humans allocate their resources, is that humans are one of the most cooperative species on earth (we are strong reciprocators). You can see this everywhere, if you have an eye for it. You can see it in its most distilled form in economic games performed in laboratories, such as the ultimatum game and the common goods game.

Good ideas, motivation and economics

Steven Johnson recently wrote the book Where Good Ideas Come From: The Natural History Of Innovation. In this book he argues that good ideas mostly do not come as a sudden spark out of the blue, an epiphany, but rather grow slowly over time by combining ideas. His recommendation for finding good ideas is to create a diverse network with people with very different interests to increase the chance of seeing a new combination. The latter is similar to recommendations from creativity books to read broadly. Also personally, I like to read about a broad range of topics; reading just meteorology papers, it is highly unlikely that I will get an idea a colleague did not yet have. On the other hand, you do need to know your field to know what contribution is needed. Johnson also advices to write up your ideas and ideas of others and to discus them freely. Another advice from Johnson to organizations is to give employees the freedom to explore wild ideas in part of their time.

In the last chapter of the book and in an article for the New York Times, he answers the question why most good ideas come from amateurs and academics rather than solo entrepreneurs or private corporations. His answer is that the commercial guys are handicapped by keeping their ideas secret.

That may be part of the answer. Another is likely that people are not that much motivated by money when it comes to such complex cognitive tasks. As Daniel Pink explains in a talk at TED and in a beautifully made animation, offering people more money will increase their productivity for simple manual tasks. However, for tasks needing only a little cognitive skill people actually often perform worse if they are given a large monetary reward. Daniel Pinks equation: Motivation = autonomy + mastery + purpose.

Another indication that people are not solely motived by money, but also by concepts such as fairness comes from academic economics, from experimental micro-economics. The deviation from mainsteam economics (the neoclassical synthesis), with its concept of a homo economicus, who only cares about monetary gain, is beautifully distilled in a classic simple economic game, the ultimatum game.

In the ultimatum game, person A get to divide a sum of money. Person B has to agree with this division. If B doesn't, no one gets any money. When I first read about this game, I was wondering why it was interesting; people would simply split 50/50, wouldn't they. However, then it was explained that if B would be a good homo economicus, he would accept any offer, because it is better to receive something as getting nothing. Person A knows this and will only offer the smallest possible amount. As expected, reality looks very different. If Person A does not offer at least 30 to 40 percent, it is quite likely that B rejects the offer. Typically A offers 50 percent. This also happens if A and B do not know each other, if the game is only played once, and the results is similar in any culture or group. This game and many similar ones have led to the conclusion that humans have a innate sense of fairness.

This is a combination of three ideas. It is not yet sufficient to derive a new economic theory, but it might be a start. Do you have any ideas that together may make this network of ideas more fruitful?

Further reading

More posts on economics.

More posts on creativity.