The Terror of Strategic Incoherence

At the hearings for Rex Tillerson and James Mattis last week, the incoming Secretaries of State and Defense had some things to say.  Most interestingly both endorsed a hard line on Russian adventurism diametrically opposite from President Trump’s vocal enthusiasm for Russia and Putin.  Does this mean that they will be edged aside in favor of Trump’s proposed US-Russia alignment, or conversely that they will be the “adults in the room” setting real policies.  I certainly don’t know, but the disconnect is frightening in itself.

The late Thomas Schelling conceived of war as a process of diplomatic bargaining.  By committing troops and suffering to a conflict, nations can assess by trial just how committed their adversaries are to their stated aims.  If country A pushes country B for a concession B does not want, A can escalate from polite negotiation all the way up to all-out war as a way of communicating to B just how important the concession is.  A would only escalate up to the point where it thinks B will back down.

Conflict happens and escalates when countries misjudge each other.  If an aggressor badly underestimates another’s commitment, that can lead to terrible conflicts.  A posture of strategic ambiguity – e.g., the Trump Administration’s mix of pro- and anti-Putin views – exacerbates this concern.  Foreign countries can choose to see whatever they want in the noise machine emanating from the White House.  Some adversaries might wrongly believe they can push further than they really can – and since no one knows what our real red lines are, it’s easy to imagine conflicts blowing out of control.

Why your city is bankrupt

Would you believe a story about municipal finance can be deeply disturbing? This one is – it’s the story of why Lafayette, Louisiana has no money and yours doesn’t either.  In short: the built infrastructure is so extensive that maintenance and upkeep have outstripped the tax base of the city.  The key passage (emphasis added):

All of the programs and incentives put in place by the federal and state governments to induce higher levels of growth by building more infrastructure has made the city of Lafayette functionally insolvent. Lafayette has collectively made more promises than it can keep and it’s not even close. If they operated on accrual accounting — where you account for your long term liabilities — instead of a cash basis — where you don’t — they would have been bankrupt decades ago. This is a pattern we see in every city we’ve examined. It is a byproduct of the American pattern of development we adopted everywhere after World War II.

As the authors point out, this is a merely human weakness due to temporal discounting – people are bad at accounting for the present value of future cash flows, whether the flows are income or expenses.    It also does a great job illustrating a key principle of institutional design – rules should be designed to beat human failings.

The idea that principals (e.g. local governments) are poorly incentivized to set their own decision rules is one of the better arguments against American-style federalism.  Governance arguments about federalism are rare, but much more convincing than traditionalist or consequentialist arguments.

Theories of politics are never good enough

I’ve recently been reading Restless Empire, concerning China’s foreign relations since 1750.  I’m not done, but it’s excellent.  It’s also a type of history I have generally not been exposed to in social science graduate school, in which historical case studies are generally fairly reduced-form and are aimed more narrowly at proving or disproving arguments about the nature of politics.  One of the things about reading richly textured history is that it can make arguments like, say, realism vs. idealism in geopolitics seem not just wrong, but beside the point.

The book does not easily lend itself to a school of thought on whether geopolitics are primarily driven by realism, idealism, or domestic politics.  I just finished the section on the 19th century, and one thing that is striking is the range of motivations for the major actors.  In starting the First Opium War, Britain was motivated by classic realist considerations in expanding their control of China.  China’s militant opposition to opium, however, which provided the pretext for the British response, was primarily driven by idealistic concerns about the corrosive impact of opium on the populace.

Later on, during the Chinese Civil War, China’s foreign relations were truly inseparable from domestic politics.  The main foreign patron of the Republic of China’s government in the 1920s and 1930s was the Soviet Union, and this relationship warmed and cooled based on the machinations for control of China between the Guomindang, the Communists, and the Soviets.  Eventually the Guomindang sought new foreign patrons in the United States – not due to changes in global geopolitics, but because the Soviets had taken the side of the Communists in the Chinese Civil War fomented by the GMD/Communist struggle for domestic control.

I’m grossly oversimplifying the history here, but that’s sort of my point.  Classifying the complex and ambiguous events of Chinese foreign policy as supporting any sort of Grand Theory of Geopolitics is obviously a silly exercise.  A given theory may explain the behavior of some or many actors but certainly not all actors at all times.  I think reading more history, particularly covering an extended period of time, is helpful for making social scientists better consider the scoping conditions over which social science theories are valid.

The Great Risk Shift and the Great Backlash

Individuals interact much more directly with “the market” than they did a few decades ago.  Individuals now assume more responsibility for their own retirement security.  Mobility has gone up, and Western workers compete in a much wider labor market – thanks to trade and immigration, a market that feels global in scope.  Healthcare is increasingly in the individuals’ hands – even the new “social welfare” program of the ACA is simply a framework for dumping individuals into a market.  The political scientist Jacob Hacker has termed this the “Great Risk Shift” – risk once borne by state and business being shifted to individuals.

There is, incidentally, evidence individuals are poorly suited to handling this risk.  The creators of the 401K recently expressed regret – people turned out to be worse retirement planners and portfolio managers than the professionals that once ran their pension plans.  The ACA perenially suffers from its complex nature – one of the main reasons for ACA premium hikes is that most consumer aren’t savvy enough to know their rates will go up much less if they get a new plan each year.  People are bad at making these decisions – and just as importantly, many reject the very idea.

Karl Polanyi’s The Great Transformation analyses the first great marketization of human life and the reaction it bred.  Markets were more efficient for producing goods, but alien to traditional human relationships, and the insecurity and chaos of the market scared people who sought security.  Waves of marketization (e.g., enclosure in England) were matched by vicious retaliation by the citizenry – peasant riots in early modern England, violent labor activism in turn-of-the-century America, etc.  Pushing citizens into the market system led citizens to fight back to protect their social system.

A Polanyian perspective suggests the modern era’s increasing marketization of human needs would breed an anti-market backlash. The backlash might not fit neatly into the market revolution’s paradigms, but could plausibly take the form of rabid opposition to free trade and immigration to blunt the power of the global labor market paired with support of guaranteed retirement security programs like Medicare and Social Security.  Polanyi, writing in 1944,  would have foreseen a socialist reaction.  But the counter-revolution might not wave a red flag – it might come wearing a red hat.

A Polanyian approach has no trouble explaining the wave of right-wing populism sweeping the West all at once, whereas quantitative political science has struggled to find the common cause.  I’d go so far as to suggest this might be the key text to making sense of the new era in politics.

Lessons Learned in 2016

2016 has been a beast of a year. It’s been often-humbling and I got a lot wrong.  I also learned a lot of new things and it’s always useful to hold yourself to account. So…what have we learned about the world?

  • Forecasting is overrated: Forecasting – in elections and in other fields – is accorded far too much status and attention for such a low-value-added activity.
  • Sound assumptions beat methodological sophistication: See above.
  • Expertise is overrated: See above.
  • History isn’t over: The great consensus on the shape and role of the Western state that reigned since the mid-1980s is dead.
  • Muddling through is underrated: The 2016 election showed that many seeming political crises can be resolved by simply ignoring them and moving on.  We will see if this is as true internationally as it was domestically, but we should view predictions of disaster very skeptically.
  • Social trust matters: A breakdown of trust in governing and mediating institutions (e.g., the media, political parties) was a necessary precondition to this election.  It is difficult to see how to break out of a low-trust equilibrium, and the social and political consequences are sobering.

What beliefs of mine turned out to be wrong this year?

  • Clinton would win the general: Obviously. I never believed this until Trump took off in the primary, and never thought it was a lock.  I still thought it was ~80% likely, and was surprised at the result.
  • Stories about Clinton’s email server would pass, and wouldn’t do permanent damage: I still don’t understand why this was the most-covered discrete political story of the year.  This is a good reminder of how little I – or the “experts” – really do understand about politics.
  • The internet is marginal to political behavior and outcomes: 2016 should disabuse us of this notion.
  • Probabilistic thinking is easy: Even people with statistical training easily fall into the traps of false certainty and artificially limited outcome spaces.

What I’ve learned professionally from my time on the campaign:

  • Social trust matters: A high-trust social environment is just as key to an organization as to society writ large, if not more so.
  • Group norms and rituals are underrated: See above.
  • People crave certainty: See “forecasting is overrated”.  False certainty is dangerous, but feels just as good as real certainty.
  • Replicable code matters: It’s worth investing time in good processes and especially in automation. They make you faster and less error-prone.
  • There are two big differences between a good analyst and a great analyst: empathy and chunking.  Empathy is underrated in the analyst toolbox, but is needed both to translate someone’s request into what they really need and to communicate your findings most effectively.  “Chunking” is breaking down a big thing into a set of smaller things – effective chunking allows an analyst to tackle new projects, figure out a timeline and list of tasks, and effectively asking for help and/or delegating with discrete chunks.  Good chunking also allows for more building and use of replicable code.
  • The biggest difference between good and bad leaders is caring. There are a lot of other skills that separate “good” from “great”. However, over and over again the difference I observed between effective leaders and ineffective ones was simply a serious desire to engage with the management aspects of the job – developing subordinates, delegating, and managing schedules/timelines/expectations.  As they say, 80% of success is showing up.

My resolutions for the next year:

  • Pay more attention: A senior leader told me simply that, “most people don’t pay much attention most of the time”.  This is a powerful insight.
  • Get involved locally: City council meetings, town halls, and so on.  The only way to combat low social trust is community involvement.
  • Less social media: Social media has a corrosive effect on social solidarity and clear thinking.
  • Read less economics and political science, more psychology, sociology and history: More varied mental frameworks for understanding individual and political behavior are helpful.  No discipline is a source of truth, but each has useful insights.
  • Write more: Nothing like writing down your thoughts to clarify and organize them.

Happy New Year to all – I hope you take the time to reflect on what you’ve learned and how you’ll approach the next year.

Issues drove the 2016 election

Yesterday I wrote about how issues don’t matter – today I’m going to write about why they do.  During the rise of Trump, one book was endlessly and ignorantly cited as a reason he “couldn’t” win and then just-as-ignorantly derided after he did.  This book, known by most as just a tagline, is The Party Decides.  The Party Decides is actually just part of a larger literature on intra-party politics known as the UCLA School, which I think actually explains the 2016 GOP primary quite well.

The key work in the tradition, “A Theory of Political Parties“, argues that the power-holders in political parties are organized “policy demanders” rather than elected officials.  These organized demanders exert their will by demanding that office-seekers hew to a policy line, and primaries are a process of different interest groups pitting their will against each other. In this light, Trump won the nomination by organizing a previously-unorganized group of anti-immigration activists, voters, and media personalities.  This was the most powerful organized group, beating out the smaller and splintered groups of economic and social conservatives.

It also addresses the question of why Trump did not suffer much in the general from the extreme stances he took to win the primary.  The authors hypothesize that non-activist voters in general elections do not pay much attention, do not perfectly assess politicians’ extremism, and don’t punish them for extremism:

The fact that voters only infrequently penalize this behavior reflects not approval, but rather the limited capacity of voters to discern extreme policy agendas for what they are.

In this light, Trump correctly gambled that his extreme behavior required to win the primary wouldn’t kill his general election chances.  The unusual media environment of this election, focused solely on the outrage-of-the-day, might have made the “policy blind spot” of swing voters even larger due to simply not hearing about Trump’s policy positions.  Post-election reports of focus groups, with moderate voters in shocked disbelief when informed of Trump’s stated positions, suggest this dynamic played a large role in helping moderates justify a vote for Trump.

Issues may not have been a major driver in the general election, but were the crucial differentiator in the primary and allowed Trump to consolidate control of the party with a sufficient plurality of voters.  Specifically, anti-immigration voters. Issues didn’t matter much to less-informed general election swing voters, which is why the conventional wisdom that Trump’s unpopular immigration stances would doom his general election bid proved false.

If nothing else, the election this cycle demonstrated that there are strong incentives for party activists to go for broke pressing their issue agenda in primaries rather than worrying so much about electability of candidates.

Issues didn’t drive the 2016 election

After 500 days on the campaign and an emotionally-dulled seven weeks of the aftermath, I’m finally ready to start thinking about politics again.  I’m less interested in “what happened”, which has both been thoroughly-explored and poorly-understood.  Instead I’m going to talk about an oddly under-explored question, which is “what exactly is a political opinion”?  We have a tremendous amount of issue-based polling on the 2016 election on questions like trade and immigration, and deciding how to think about it demands answering this question.  To first illustrate this, an example:

There was a fun finding during the early days of Russia’s invasion of Ukraine in 2014:  Americans favoring a more aggressive US response were least likely to be able to locate Ukraine on a map.  Leaving the substance aside, this shows that you can’t think of all of these opinions as really being the same.  If you’re a scholar of the USSR, your opinion to the question “what should America do in Ukraine?” likely reflects your pre-existing beliefs on the US-Russia relationship, Russian nationalism, the regime in Kiev, etc.  If the first time you’ve ever heard of Ukraine is in this survey, your answer reflects…very little, frankly, other than whatever loose associations came into your mind.  Less-informed voters’ attitudes could change on a dime – and I’d bet that if we did the same survey in late 2016, the correlations would run the opposite direction due to the pro-Russian swing in GOP attitudes.

All political views are like this – arrayed somewhere on a spectrum between a tightly-held belief informed by ideological commitments and pure verbal flatulence.  Each voter might have widely varying bundles of them, informed by their interests – e.g., a male Toledo small business owner might have really strong beliefs on OSHA regulation but pure verbal flatulence on abortion access issues, while a young woman working as a lawyer in Cleveland might be the opposite.  We would reasonably expect voters to have much more attachment on issues which they encounter on a daily basis, and to be much less attached to positions on issues which are abstract.  It is on these latter issues where we would expect more cue-following, where voters’ beliefs follow from what influential leaders are saying rather than driving the positions leaders take.

Russia-US relations remain an excellent example, demonstrated over and over this election season.  Historically, Republican voters were much more anti-Russia than Democratic voters and more likely to name it as a prominent threat.  But GOP voters’ attitudes on Russia and Putin swung dramatically more positive during this election season, driven by the vocal and frequent praise of both by party leader Donald Trump.  The causal effect here is fairly clear: elite rhetoric drove opinion on an issue where most voters lack firm attitudes.  However, we can reasonably expect the causal effect to go the opposite direction on issues like “cutting Social Security and Medicare” where the issue is immediate to many voters, and familiar and salient to virtually every voter.  Voters will have opinions on this issue that drive their reactions to politicians, rather than the other way around.

Voter behavior in 2016 is more comprehensible if you believe most issues are more like Russia than Social Security.  I believe this is particularly true in trade policy, where most voters have little to no awareness of the facts on the ground nor the relevant policy issues.  In this light, polls showing a strong Trump performance among anti-trade Midwestern Democrats doesn’t show the issue benefited him, but just the opposite, which is that he benefited the issue among demographics favorable to him.  Trump’s trade fixation never functioned as a policy plank. but provided a thinly-veiled mechanism to blame the ills of the nation on shadowy foreigners and exploit in-group defensive solidarity.  Incidentally, this suggests to me Democrats have precisely zero electoral ground to gain by adopting anti-trade policies, as they would adopt the policy without gaining the in-group messaging benefit.

Be extremely skeptical of interpretations of politics putting public views on issues in the driver’s seat.  This doesn’t matter just for considering 2016, but a great deal for considering how Democrats should look to the years ahead.