On December 21, 2018, the U.S. Government officially entered a partial shutdown after Congress failed to pass seven of the twelve discretionary spending bills that would dictate discretionary spending for the 2019 fiscal year. This was not the first time the government entered a partial shutdown, but, at 35 days, it was the longest. 380,000 government employees were furloughed (temporarily dismissed from work) and another 420,000 employees were expected to work through the shutdown . Among the affected programs were airport security, national parks and museums, scientific research, public health, food inspections, food assistance, law enforcement, and criminal justice .
Why the shutdown? President Trump’s 2016 campaign relied heavily on strong anti-illegal immigration rhetoric, including almost incessant calls for a wall along the southern border. The funding for this wall caused the hang-up of budget negotiations.
Resolving a shutdown depends on the legislative and executive branches’ ability to cooperate and compromise on budget priorities. Unfortunately, competition, not cooperation, seems to be the predominant attribute of interactions between Democrats and Republicans today. To those of us on the outside, the endless back and forth between the parties can seem like nothing more than a game. Although it might come across as a trivializing comparison, with the well-being of American citizens on the line, examining the current budget crisis as a game can actually be quite informative. In fact, there is an entire branch of economics devoted to studying games. The findings of game theorists have been applied to some of the least trivial situations the world has seen: nuclear crises, hostage situations, million dollar business deals, and elections for public office.
Game theory examines the strategic decisions that players make in the context of a game that has rules, payoffs, and uncertainty about the decisions of other players. There are many different types of games, corresponding with different combinations of rules and payoffs and different levels of uncertainty. Some games are cooperative, where players can increase their payoffs by coordinating with the other player. Other games are competitive, where one player can only win if the other loses. The polarized rhetorical environment transformed the budget negotiations from a cooperative game into a competitive game. Democrats in the House of Representatives refused to pass an appropriations bill that included funding for the wall. The Republican-controlled Senate refused to pass any bills that the President wouldn’t sign, and Trump refused to sign a bill that wouldn’t fund the wall. Neither side could win unless the other side lost.
One of the most well known games studied in game theory is the game of chicken, made famous in Footloose (1984). In the movie, Ren and Chuck are each on tractors driving towards each other. The first person to jump off the tractor, for fear of colliding, loses the game. Chuck jumps at the last moment and his tractor tumbles off the edge of the road, leaving Ren, the protagonist, both victorious and unharmed . Of course, if neither Ren nor Chuck were to jump, they would collide and both would lose. If both jump, they neither win nor lose. Notice that Ren could not win without Chuck losing. In the game of chicken, the optimal strategy is to get the other player to back off so you don’t have to.
In our current political climate, where ideological polarization and party conflict are at an all-time high, budget negotiations closely resemble a game of chicken. In this particular iteration of the game, the players are the Democrats in the House of Representatives and President Trump. The payoff of both players can be measured in political points. The outcome of neither player backing down is suboptimal, i.e. the government is shutdown and 800,000 federal workers don’t get paid. If this outcome is suboptimal, why is it that, in the short run at least, it seems inevitable? This can be traced back to the conflict we see between the two parties. In the eyes of the politicians involved, “losing” to the opposing party carries higher costs than failing the American people by not compromising on a budget. The budget won’t be negotiated until the costs of failing the American people are greater than the costs of “losing” to the other party by making concessions to previously stated policy preferences.
Game theory doesn’t necessarily help us predict the outcome of a confrontation, but it can certainly help us identify barriers preventing cooperation. In the case of the 2019 federal budget, examining negotiations through a game theory lens helps us see that partisan victories and political points have are interfering with the well-being of Americans across the country.
Latest posts by Drew Wilson (see all)
- Everything You Need to Know About Maduro, Guaidó and Venezuela - March 12, 2019
- It’s All Fun and Games Until 800,000 People Aren’t Getting Paid - February 14, 2019
- Show Me the Money - December 10, 2018
- Empty Shelves and Empty Tables, Venezuelans Eat No More - November 14, 2018