WEB DESK: It’s a while now that Pakistani media is bustling with a cacophony of pieces of advice for politicians by drawing parallels to failed Turkish coup. Some point similarities to support politicians while many consider it totally irrelevant to the state of affairs in Pakistan.
I thought our poor politicians and citizens must be apprehensive in this scenario as the choices for learning are being restricted to Turkey. They really need diverse perspectives to understand the current political crisis going on and the options to develop appropriate strategies. And it seems to me that the diversity of perspectives and scenarios in the social world cannot be better explained but with economic theories and an assortment of melodies. It’s commonly remarked, “Economists never agree on something” and that every musician plays a distinct melody. This implies a range of choices and comparisons. I’ll try to present some theoretical and practical choices for Pakistani politicians, by drawing cursory insights from economics and a case of musicians’ dilemma in New York’s Central Park along with implicit indications to players involved in the political situation of the country.
A piece titled, “At Strawberry Fields, Feuding Musicians Give Peace a Chance” appeared on May 31, 2016, in New York Times. The article illustrates how a place known as Strawberry Fields in the Central Park of New York City has been an attractive space since 1985 for street guitarists playing a few “Beetles” tunes in the memory of John Lennon.
However, after 2013, the musicians started to spoil the place by terrifying and precluding each other to perform. Unsurprisingly, police had to intervene every time when the unruly situation went bitter which evaporated the musicians’ good will and returns. However, the article reported that recently they formed rules among themselves to play by turn and respect the rules that brought peace and business back for them.
Interestingly, famous economist N. Gregory Mankiw posted the same article on his blog and wrote the title as follows; “Elinor Ostrom in the News (Sort of)”. Let me introduce Elinor Ostrom briefly. Elinor Ostrom, the only woman to win Nobel Prize in Economics, was a political scientist but her work was at the intersection of economics and politics. She contributed that self-governance or voluntarily rule-making by local communities/actors can avoid a collapse of natural ecosystems, referred as “tragedy of commons”. She emphasised that when multiple actors are involved in self-interested behaviour to use limited resource pool leading to collective resource exhaustion, the best thing is to organise themselves and ensure sustainability and collective gains. With this background, readers can understand that musicians applied the self-governance concept and resolved the differences which resulted in a win-win game for themselves and their audience.
So, the first lesson for politicians is to behave nicely, for collective gains just like the musicians did. Second, that economic theory can be applied beyond economic issues such as self-governance adoption by musicians. Politicians may form internal rules of the game and/or a broader political alliance to avoid chaos, enhance mutual gains and improve societal welfare.
Readers may be thinking that Ostrom’s self-governance concept may not be even known to musicians and they may have resolved the conflict with their own institution and experiential learning. Yes, it seems true. But economists rely on famous (yet widely critiqued) argument of Nobel Prize winner Economist Milton Freidman ie “as if”. He illustrated the idea in 1953 with an example of a billiard player who does not know geometry of shots he plays but even then he makes decisions “as if he knew the complicated mathematical formulas that would give the optimum directions of travel, could estimate accurately by eye the angles, etc, …… and could then make the balls travel in the direction indicated by the formulas.
Some knowledge of “Game Theory”-a sub-discipline of economics that deals with understanding and devising strategies for interaction in both competition and cooperation-may prove beneficial for politicians. Internationally-as well-game theory has been applied to understand political conundrums within and across the countries. Many applications of game theory have gotten popularity in public life, eg, an abstract case of who will jump to save all when a boat is sinking and even more importantly the case of Cuban Missile Crisis.
Installation of Russian nuclear missiles in Cuba brought Washington and Moscow to the brink of a direct conflict in 1962. In short, initially, both wanted to stick to their standpoints but through back channel communication both withdrew simultaneously from rigid stances which averted the possibility of a severe clash. Game theorists emphasize the importance of communication between players in such situation otherwise non-cooperation turns out disadvantageous for both. The current deadlock between ruling and opposition parties may also be considered a typical case of “the game of chicken”. In simple words, it’s a situation when one of the colliding party has to diverge otherwise both will crash.
Politicians should invite a few Economists (Game Theorists) to learn some game theory and its application to the current political situation. On the other hand, if it is known publically, people may perceive it as a self-serving move by the politicians to trick the people instead of really delivering what was required. This situation, then, can turn into one of the popular dilemmas; Principal-Agent problem when agents (politicians) start pursuing self-interest instead of serving the principal (citizens) whom they represent or act for.
A somewhat similar phenomenon is explained by Nobel Prize Winning Economists George Akerlof and Robert Shiller in the case of a modern market economy in their book, “Phishing for Phools: The Economics of Manipulation and Deception”. They have cited examples how some businesses trick the consumers. I believe such account can also be compiled between politicians and voters.
Let me also clarify that better understanding of game theory by one party does not necessarily guarantee maximum payoffs (return) for him/her. It’s indeed a framework to analyze a prevailing situation or devising alternative scenarios when two parties have intertwined payoffs (returns) eg elections, wars, auctions among others. Economists, particularly, rely on assumptions and abstraction to understand and explain a phenomenon which may not be exactly applicable in the real world as people behave (generally) differently than what economists assume in their models. Behavioral Economist Richard Thaler argues, human beings often make decisions irrationally (misbehave unlike most of the agents in economic theories). He also poses a challenge to “as if” argument by saying that every one of us is not an expert billiard player. Most of us play shots which seldom take the ball into billiard pockets as we cannot or don’t want to carry out mathematical calculations in our heads. Back to the application of game theory, I read a story of a Yale University’s Game Theorist who relied on his better understanding of game theory to settle fare with a taxi driver untilthey reached the destination.
The most likely scenario was that taxi driver would be on the disadvantaged side after reaching the destination; however, as both parties failed to reach a consensus the driver pushed the game theorist back into the car and dropped him off where the journey started. The driver didn’t care about his loss in order to make the passenger worse off, in other words, he didn’t behave rationally unlike economic models. Another lesson is here; politicians will have to be careful about such players within their ranks and also should not be much optimistic about knowledge of “Game Theory” as saviors for them.
I’ve explained pros and cons of potential choices by politicians but cannot tell what “the” right path is for them. That’s how good economists conclude their policy prescriptions and leave the policy makers and citizens perplexed with expressions such as “on the other hand” and “conditional prediction”.
(The writer is a public policy researcher and practitioner. He tweets @naveediftikhar1)