Saturday, July 18, 2015

Democracy is a complicated business

In my recent post on Greece I was a bit cynical about the idea of public opinion but evidently I wasn't cynical enough.  But maybe cynical is the wrong word because democracy is hard.  How on earth are the Greek voters supposed to understand all the issues surrounding the acceptance of the EU deal?  I certainly don't.  I suspect that nobody actually has a good idea about it.

So Greeks just saw they that in retrospect their lives hadn't gone very well under the previous administration and so voted in someone else.  And if you're facing potential leaders whose performance you can't judge in detail then replacing them when things go badly is the only sure way to make sure they'll be interested in things going well for you.  That might not be fair to politicians who preside over bad times through circumstances outside their control but that's a relatively small price to pay.

Of course there are a good number of issues where it's easy for voters to tell what's going on.  Gay marriage for instance.  Shortly after a majority of Americans started to support it we saw many politicians quickly throw in their support for it too.  And don't judge them harshly!  Support for gay marriage correlates strongly with education and you'd expect politicians with advanced degrees to have mostly been in support of it before 2012 in the privacy of their heads.  I think I'd rather live in a country where more educated people hid their values and got elected and did an OK job on the complicated parts than a country that had more honest but less competent politicians.

Of course the danger of dishonest politicians is that they'll find some sneaky way to help their friends at the expense of electorate as a whole.  And that's certainly a valid fear as you can see from all the corn subsidies and taxi licencing regimes we've got.  People place too much emphasis on money and too little on public choice but they come to the same thing in the end.  But I think I'll still take the intelligent but slippery over the well intentioned but ignorant.  Look at the relative harm of prohibition versus all those corn subsidies.

But even smart and dedicated politicians don't know enough on their own to govern effectively.  Establishing a good upwards flow of information was a large part of why many kings established parliaments that would later bind them.  I wrote an earlier post a while back about why the problem of politicians mostly getting their information from self-interested sources.  I was talking about SOPA then but in the case of negotiations such as the one Greece was in with the rest of the EU or the one that the US is in creating the TPP the problem gets worse.

If you hope to do well in bargaining it's absolutely essential that you conceal things from the person you're bargaining with.  If I'm in negotiations with someone and they know the minimum price I'm willing to accept they can just offer that price.  Now, there are a lot of human factors pushing non-sociopaths towards being much nicer than that but the ceremony of modern diplomacy seems to insulate negotiators from those social pressures.  Maybe it's designed to do that.

But of course the need for secrecy opposes the need for open debate about what sort of deal we want.  As a negotiator you want input from people who will be effected but you don't want the terms you're considering to be leaked.  Ordinary citizens have concerns but there's no way to poll them without the issues you're considering being leaked.  Large corporations, however, have officers who are few enough in number that you can probably keep your intentions secret from the other negotiation teams even if you consult with the officers extensively.

I have no idea how to fix this problem.  Maybe just do trade policy unilaterally instead of via negotiation?  Most people think of tariffs as good if they're your own country's tariffs but expert opinion disagrees and unilaterally lowering tariffs doesn't require secret negotiations.  But of course given people's beliefs about tariffs that's hardly democratic and politicians have to worry about prospective beliefs about what will make them better off as well as their retrospective beliefs about whether their lives have gotten better.  And only some negotiations can be solved unilaterally anyways so really I've got little in terms of useful suggestions here.  I suppose we have to rely on the prospect of public outrage after negotiations are over to keep special interests in check.  If Disney loads up the TPP with juicy goodies for themselves and it gets voted down by the Senate then they'd have been better off having more modest aims.

There is one strategic advantage democracies have in negotiations.  I mentioned earlier that if your negotiating and somebody offers you a deal that's just barely better than nothing (or your BATNA in negotiations theory parlance) then the "rational" thing to do is to take it.  I put "rational" in quotes because if you're the sort of person to walk away from an inequitable deal and your opposite number knows this then maybe they won't be tempted to offer you an inequitable deal.  This is dangerous since it relies on everybody have a shared honest assessment of what an equitable deal would be but it can be very effective.  The structures of diplomacy can make it hard for negotiation teams to act this way.  Voters are pretty good at it, though.

And of course that's what the Greek referendum was about.  Except that public opinion polls show that the public of both Greece and the rest of the Eurozone are pretty fed up right now.  And the EU's BATNA was a lot better than the Greek's.  And given public approval of the deal Syriza was forced to take it looks like the Greek public understood all this, voted "no" to give the negotiators ammunition, and understood that they'd got the best deal they were going to.  Or they think the deal is better for them than it is but the issue is so complex that nobody really knows how good it is.

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