Random stuff

It's the end of March and a FABULOUS day here in Fairfax. I'm finished with Metrics homework and going to try to spend a little time outdoors. Oh, btw, sorry the last article posted, contrary to its title, doesn't have anything to do with the Schliefen Plan.

Random economic thought for the day - I wonder how divorce affects economic growth.

Have a wonderful, God blessed, day!

Game theory and WWI - very briefly

Life = good. Grad school = busy. Church = wonderful. My family drove down for Easter weekend. It was super to have them here, even if that meant I didn't get to dance this weekend.

So I know the last couple posts have been kind of lengthy, but it’s another one of the papers I am writing for my discussion group. The economic (or somehow related) ideas keep coming, but most of them aren’t getting written down. Anyway, here’s this installment of “random thoughts with Nathan.”

Game Theory and the Schliefen Plan

Game theorists talk glibly about many applications of game theory; how humans, unconsciously, go through life applying game theoretic techniques to many choices we make. What interests me are the applications of game theory to international relations – particularly those of the “strong” flavor; war and armed conflict.

Many conflicts, both their origins and their continuance, can be analyzed using game theoretic methods, but one conflict in particular begs to be examined and promises to, through its examination, throw light on many other conflicts. The war, for such it is, that so readily lends itself to game theory is World War One, the Great War, the War to End All Wars.

Vastly, and unfairly, simplified, basic game theory runs thus: You, the rational individual, given the information you have, make the decision or series of decisions that will maximize your benefit given constant or certain expected action by the other relevant entities. Expectations of the other’s actions change as expectations of information and other circumstances change.

Europe at the beginning of World War One was a messy place, made so by the tangle of alliances and treaties that bound each nation to others. Mutual defense pacts pledged that if either nation A or B was attacked, the other would declare war on the aggressor. These treaties, pacts, and accords grew from the incessant warfare that had covered much of Europe, the logic ran that if there were enough interweaving alliances, no one would go to war with anyone. While a bane for the strategist and politician, these treaties are a boon to the game theorist, with each nation generally being expected to keep these treaties, lending a certain measure of predictability and stability to the behavior of the political and military mess.

These treaties at the beginning of the war can easily be seen as a method by which a nation would attempt to firmly commit to a course of action that, were circumstances ever actually warrant application of the treaty, would seem too not be in national interest, in the hopes of ensuring that such conditions never actually arose. In other words, nations committed to war under certain conditions, hoping that the reliable and very real threat of war would dissuade aggressor nations from attacking allies. Each European nation participated in these treaties with one or more other nations and often with one of the “great powers”, and each European nation expected every other nation to follow through on their treaty obligations. There was stability in this system of pledged mayhem, just as game theory predicts will happen when the commitments are believable and punishments severe enough. What no one expected was a shock from outside the system of mutual defense treaties to set a match to the powder keg.

A non-governmental group provided that match, and the assassination of the Archduke Austria provoked a chain reaction of regrettable, but predictable given how the European nations had pre-committed themselves, events. Briefly, Austria went to war with Serbia. Russia, allied with Serbia, prepared to go to war with Austria. Germany, Austria’s ally, warned the Russians to stand down, then prepared for war themselves. Germany’s only war plan was rigidly dependant on fighting both France and Russia at the same time, knocking France out of the war within six weeks so as to bring the entire German armed forces against the Russians before the Russians could fully mobilize. To quickly knock France out of the war required that Germany invade through Belgium, activating England’s mutual defense treaty with Belgium. Thus, every major power in Europe was embroiled in war, those that were required to fight by treaty and those that simply saw an opportunity to strengthen their position in Europe, acquire natural resources and prestige, or reinvigorate a dying empire (the Ottoman-Turks).

In an attempt to banish war from European soil, the nations instead ensured that, once war started, it would engulf the continent. If a nation not directly threatened with invasion and fairly near the beginning of the chain of events, say Russia or Germany, had instead done the game theoretically unthinkable, and cheated, the Great War would never have occurred and the world would be a very different place.

my quasi-necessary paper

Early March, and it's sunny and clear outside - warm enough not to need anything more than a light longsleeve shirt. If I could, I would be playing frisbee in this weather! So this weekend, with the studying for a major exam tomorrow, dancing, and church responsibilities, I made time to write a short piece on political possibility theory. Enjoy!

An introduction to the Overton Window

Of the many ideas and options that exist in the political world and in the minds of politicians, what determines which ideas become reality and which ideas remain banished to the political ether? Somewhere on the spectrum of ideas from the crushingly socialist, and therefore radical, to the breathtakingly libertarian, and therefore also radical, must exist a range of ideas that actually stand a chance of being successfully implemented in the current socio-political climate. The range on the spectrum of ideas in which a policy initiative can be considered politically and socially viable is called the Overton Window of Political Possibilities. Regardless of the economic validity of an idea and how fervent its supporters are, if the idea does not lie within this window of opportunity it simply will not happen.

Politicians are self-interested. Of this there has been little serious doubt since the general acceptance of public choice arguments. Lawmakers will not support an idea unless it receives sufficient public acclaim and acceptance so that backing the idea does, at the very least, not harm the politician. Public policy is judged not its merit, but on its political viability. This only makes sense given politicians’ interest in preserving their jobs, but is often lamented by advocates of any policy that seems doomed to languish in the political shadows. The key insight of the Overton Window theory is that ideas initially outside the range of the politically possible are brought within that range not by political lobbying, but by moving the ‘window’.

Think tanks, pundits, and those economists who engage in policy issues often seek to advance their agendas though direct interaction with politicians. This strategy is a misdirection of energies. In the words of the Mackinac Center for Public Policy; “However principled a politician may be, he or she can only accomplish those things which are within a narrow window of what is politically possible at the present time.” Granted, there are some actions that lie within the discretion of politicians, but instead of expending resources to influence things that cannot be changed, those same resources should be used to shift the Overton Window.

Shifting the Overton Window requires changing the public’s perception of a policy issue. Perspective must be changed so things formerly infeasible become inevitable, through interactions with the public, educating, speaking, providing written perspectives, and conducting sound research. It is towards these aims that many who wish to see policy implemented should orient their resources. By shifting the window of possibilities, policies can be brought into effect with fewer negative “adjustment effects” among the people and whatever unenforceable intent supported the desire to create the policy will be more likely to emerge in society.

One example of an application of the Overton Window is homeschooling. Not too many years ago homeschooling was illegal in many states, and frowned upon even when it was legal. My family still knows people who faced state legal action in Michigan because they dared homeschool their kids during a period of time in which the laws were unclear at best. Yet, in Michigan and every other state, through a mixture of political and popular action, the window of political possibilities was shifted. What was once considered outrageous is now common, and no significant door of educational or employment opportunity remains closed to homeschoolers.

Could Overton Window theory also be applied to concepts of the slippery slope? It is fascinating to dream of ways that could be found to let socio/political “gravity” do the work of enacting and reforming policy, yet the difficulty has always been to find a way to guide the weight of policy as it rolls downhill. However, integrating a concept of political possibilities and the theory of slippery slopes results in the idea that instead of trying to guide the “stone” of policy it would be more advantageous to “shape” the slope so that policy will be “slippery” in the direction you like. Instead of putting a priority on efforts to influence policy makers directly, economists and proponents of ideas should focus on the people of the polity in question. In this way will the most pervasive and lasting reforms be made.

Creativity and society.

Ok, so this is an essay I wrote last week just for the heck of it. After discussing it last night with several classmates I have realized that parts of it should be re-written and strengthened, but that hasn't happened yet. You know, econometrics homework and all. Enjoy.

CHILDHOOD TOYS AND SOCIETAL CREATIVITY

During my childhood, my parents’ backyard was a little boy’s dream. Full-sized playground swing set, a large maple tree that was perfect for building forts in, spruce trees that were perfect for climbing, a corner of the yard that was designated for digging, a sandbox, and a wooden fence that often doubled as a wild-west stockade. Through the imaginations of my younger brother and I, that backyard was transformed into virtually every imaginable place and time period, for virtually every situation. The many hours spent in imaginative play in our backyard, plus the encouragement of my parents to find better, yet still proper, ways of doing things, instilled in my siblings and I something that has and will continue to play a fundamentally important role in our lives. Creativity. One of the fundamental aspects of the human thought process, creativity allows flexibility and agility on the road to finding a better way, a different way, or sometimes even any way at all. Creativity is important for home life, business success, artistic expression, and political or social problem solving. Those societies that successfully enjoy the full richness of the individual’s powers of creativity are those societies that posses the social, educational, legal, and cultural conditions necessary to encourage and allow both the development and the expression of creativity. Though the power of creativity is hardwired into the brain of every child, it can be stifled, or, even more tragically, lost. Each of the four societal conditions above interacts with creativity in a different way and can substantially alter either the expression or development of the individual’s creative powers.

In a societal setting, individual creativity manifests itself in a variety of different forms. These forms are private creativity, social or public creativity, business creativity, and artistic creativity. Private creativity is that which is exercised around friends, at home, and in personal affairs. Social or public creativity is that which is used to develop solutions to public issues in a non-business sense. This type of creativity would be used in a neighborhood council, a church, a school board, or even in politics to solve observed problems. Artistic creativity is what most people think of when they hear the word “creative” – performing and writing music, painting, sculpture, acting, and writing. Business creativity is that power necessary to find innovative solutions to marketing, production, and entrepreneurial issues. Though all four types of creativity can be lost over time as children are raised in an institutional and cultural structure hostile to creative development, it is business and public creativity that are most susceptible to restrictions on their expression. Private and artistic creativity largely take place out of the public eye, unobserved, and thus can persist despite rigid, unyielding, and unimaginative social structures, but business and public creativity exist to work change in the public eye and are thus easily squelched, even unintentionally, by burdensome legal, social, and cultural conditions. It is these easily destroyed expressions of creativity in public and business practices that are vital for the long-term health of any economic system.

For years, my younger brother and I enjoyed nailing guns together from wood and playing with them. Though we each had our favorites, each time we began to run short of the necessary pieces to fabricate our next idea, out came the hammer and pliers as we tore apart those rifles that just did not meet the grade anymore. Just as wood scraps of the proper shape and size were in short supply for my brother and myself, at any given time certain resources and qualified people with the proper experience are scarce in the nation’s economy as well. Rather than require that these people and resources remain occupied in a non-benefit maximizing fashion, the structure of the market and society needs to be willing to let – nay, needs to encourage – the failure of those businesses that are not providing the maximum benefit to society. In this way, in addition to natural resource growth, resources are released and freed for new business ventures and ideas. If my brother and I had not been willing to dismantle those rifles that we enjoyed less than we expected to enjoy our next creation, none of the rifles that became our favorites would have been made – including the wooden rifle that still stands in a closet at my parents’ house. This is precisely what is needed to maintain a healthy economy – a certain amount of turmoil and motion.[1] Business ventures need the freedom to start and to fail; only in this way can any economy achieve the greatest chance of discovering those ideas that actually work. Creativity comes into play in developing new business ideas, new ways of doing things.

Conversely, the more the natural motion of the economic “tide” is distorted, either by restricting the expression of business creativity in the implementation of new ideas or by artificially supporting failed business ventures – thereby tying up resources, the more stagnant the economy will become; outdated, inefficient, and lacking real, meaningful, growth. To avoid this result social, cultural, and legal structures must exist which protect individual effort and investment without seeking to maintain the status quo. Governmental regulations are especially suspect in this, often burdening entrepreneurs with “red tape”, requirements, and punishments for being “too successful” that reduce the entrepreneur’s creative agility.

Public creativity is also subject to many of the same influences. Though the blame largely shifts from government regulatory structures to social and cultural institutions, all too often individuals are prohibited from using their public or social creativity to solve a problem simply because “it has never been done like that before” or some other such reason. The result is a host of ideas in government and public life that were workable or the best available at some point in the past but which now have been superseded and should be replaced.

In the words of F.A. Hayek, and applicable to both business and public creativity; “It is in the pursuit of man's aims of the moment that all the devices of civilization have to prove themselves; that the ineffective is discarded and the efficient handed on. And this is the point, but it is important to have as large of a selection of ideas and possibilities to be chosen from as possible.”[2] Only through allowing and encouraging the use of creative powers in public and business life can a large selection of diverse ideas be obtained for society to choose from. Though repressed creativity in these areas would be disastrous for an economy, far worse can happen.

Some social and regulatory factors can restrict the expression or utilization of creative powers to solve business, economic, and political problems, but other social factors can restrict or prohibit altogether the very development of creativity in the individual. It is this result that is far more damaging, because once an individual has grown up without creativity being a part of his or her life, it is extraordinarily difficult to develop that creativity regardless of how hospitable the legal, regulatory, social, and cultural conditions may be. Though creativity is hardwired into the mind of every child, it needs to be exercised. If society stifles expressions of creativity in business and society, creativity can survive for a while, but will perish in less than one generation as children are unable to observe creativity and the use of creative solutions in day-to-day life. Here the educational structure of a society comes into play. Along with the example provided by adults, education has an important role in nourishing the natural creative drive.

The education system – whatever form it takes – must both allow creativity and yet provide structure. It is completely true that creativity, unconstrained by appropriate restraints, is destructive. Simply allowing children to “creatively” avoid truly doing their schoolwork only teaches avoidance and poor work habits, but encouraging creative ways to find the proper solution, the right solution, now that, that is how education can truly help foster creativity in a society. This responsibility is not limited to primary and secondary education – colleges and universities also serve to enhance individuals’ creative powers through pushing them to find solutions to ever more difficult puzzles. Enhancing and training natural creative powers is vital to ensuring that those abilities will be available for future use in the economic and social realms.

One of the primary ends of creativity is to better society, all of society.[3] Towards this end, a full realization of the individual’s creative powers requires a legal structure that protects human and capital investment while not weighing entrepreneurs down and decreasing their social and business ‘agility’. Society and culture must encourage flexibility. Even more important, social and cultural factors must celebrate, allow, and encourage change. An acceptance to change encourages creativity by rewarding it and actually allowing the creative solution to be applied. Finally, children must be encouraged and allowed to be creative in play and education through their years of growth. Only in this way will children grow into adults who have creative solutions ingrained in their thought process for access later in life. Though social, cultural, legal, and educational institutions can greatly dampen creativity, they can also greatly enhance the same. Creativity is too precious a commodity, a resource, to be squandered and suppressed by those who believe they know best for society.[4] It was creativity that allowed me to see my parent’s backyard as a zoo, a battlefield, the Wild West, or frozen tundra. It is now creativity that allows me to find interesting and sometimes unique methods of solving the puzzles posed by the graduate school faculty. One day, it will be creativity that assists me in finding answers to economic and social issues for the betterment of those around me and myself. May we all never lose that creative spark that inhabited our childhood play.

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[1] Unseem, Churn, Baby, Churn

[2] Hayek, F.A. 1958. The Creative Powers of a Free Civilization

[3] Hayek, F.A. 1958. The Creative Powers of a Free Civilization

[4] Postrel, Virginia. The Future and Its Enemies