Prisoner’s Dilemmas: XXII- Anti-Discrimination Laws

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Professor Bryan Caplan makes some impressive observations in his 2020 essay The Anti-Jerk Law. Caplan uses the hypothetical example of an Anti-Jerk law to emphasize the fallacies of anti-discrimination laws. At their core, both the fabricated example of the Anti-Jerk law and current discrimination laws suffer from numerous flaws. Instances of discrimination are not clear-cut, much like how your boss is a jerk is subject to interpretation. But if juries are predisposed to sympathize with instances of discrimination or the censure of a mean boss, this may “… lower the de facto burden of proof…” in ligation cases. More importantly, firms might be less apt to hire individuals that can make discrimination claims. Resulting in more indirect discrimination, creating a cobra effect. Laws and policies; designed to reduce discrimination, increasing discrimination.

Effectively, anti-discrimination laws are prone to create Prisoner’s Dilemmas. Why? Employers and Employees(ethnic minorities, religious minorities, transgender people, homosexuals, women) are predisposed to work against one another. Firms are ligation adverse and seek to avoid lawsuits costs and bad publicity. On the other hand, minority employees (emboldened by anti-discrimination regulations) have laws incentivizing them to pursue maximum damages for any perceived incident of discrimination. It is evident that both incentive structures are at odds and will cause both parties to choose to defect (using the vernacular of game theory) rather than cooperate.

The Calculations:

The above scenario is a zero-sum game; due to neither party wanting to compromise and the perception of winner-take-all dynamics. To numerically determine that this scenario is a Prisoner’s Dilemma, we must validate that the situation satisfies the two conditions expressed by Nordstrom; 1.) T>R>P>S and 2.) (T+S)/2<R.

Defining The Variable:

· Reward For Mutual Cooperation: R =.5

The value of .5 has been assigned for the gains of cooperation because the values expressed are predicated on a significant potential stance of discrimination ligation. The firm could take a chance on a risky employee and an employee could tolerate mild forms of discrimination (insensitive jokes, run-of-the-mill micro-aggressions) and not sue. Functioning as an archetypal compromise, neither party is pleased with the arrangement but still better than non-cooperation. 

· Punishment for Defection: P =0

There is little to no proper punishment for defection. For the hiring company, it is difficult/ nearly impossible to prove that they choose the 20-something, recent college graduate, male over a riskier job application (from an anti-discrimination standpoint). There is virtually no actual punishment despite the formal parameters of discrimination laws. For the employee, since the social norms are aligned with anti-discrimination legislation, the social costs for suing are low (but there might be monetary costs associated with legal action which are difficult to quantify. 

· Temptation to Defection: T=1

The firm has a lot to lose by hiring an employee with a high probability of suing them; the employee has a lot to gain in situations of discrimination.

· Sucker’s Payoff: S=-1

Both parties can lose a lot if the other does not compromise. 

Condition 1:

· T>R>P>S

· 1> .5> 0 > -1

Condition 2:

· (T+S)/2<R

· (1+-1)/2 <.5

· (0)/2 <.5

· 0 < .5

Prima facie, it does seem as if numerically and qualitatively that anti-discrimination laws are inclined to create Prisoner’s Dilemmas.

Bootleggers & Baptists- LV-Gun Control

***Special thanks to Dylan, proprietor of the Onlookers blog! He pointed out a few typos and the necessary edits have been made.

Check out his blog (Click Here).

Few issues in the current political scene are as divisive as the Second Amendment; as articulated in the SCOTUS case District of Columbia v. Heller (2008), an individual right. Anytime a mass shooting occurs or restrictions are purposed, gun rights advocates tend to double down. After all, regulating firearms is a prisoner’s dilemma in which neither side of the aisle is interested in making any concessions. Prima facie, it does seem that guns have become increasingly regulated over the years. Potentially vindicating the slippery slope logic expressed by Second Amendment proponents. The fear of prohibitively strict gun regulations or outright bans weighs on the minds of gun owners. A point substantiated by the fact that 59 % of polled gun owners indicated that gun control advocates desire to outlaw private ownership of firearms. Many gun enthusiasts view this right as sacrosanct and a vital component of living in a free society.

Number of Mass Shootings in the United States 1982-2022. Courtesy of Statista.

How do the reactionary sentiments of slow and grinding decline to an outright gun grab correlate with patterns in gun sales? There does seem to be a connection between precipitating events and increases in transactions related to procuring firearms (including background checks). Analogous to how macroeconomic events impact trading on the stock market, the prospect of regulation after events such as mass shootings results in abnormally high gun sales. For example, gun sales in California soared by 168 % between 1996-2015. 50 % of all mass shootings within the past 50 years transpired after 2000.  20 % of the mass shootings in this timeframe occurred within the past five years.

Gun control proposals; are often formulated in the wake of a mass shooting; there does seem to be at least a superficial correlation between mass shootings, gun control proposals, and gun sales. But, are politicians and political activists concerned with decreasing the number of guns in the hands of the citizenry shooting themselves in the foot? It is inherently human for people to purchase large quantities of a commodity facing a ban. A clear example of this was before JFK enacted the Cuban Trade Embargo; he stocked up on his favorite brand of Cuban cigars. It isn’t outlandish to believe that gun owners would seek to stock up on accessories, ammunition, and firearms after a mass killing or the announcement of gun control legislation. In effect, this would encourage people to obtain more guns. Rendering the bluster of tough-on-guns rhetoric to being counterproductive. Unwittingly, when politicians like Beto O’Rourke are telling us that he is coming after our AR-15s he’s saying “.. Everyone run to the gun shop now!..”. O’Rourke is blinded by political gamesmanship; he overlooks that his firebrand comments have only created a cobra effect; people panic and buy more guns.

If progressive politicians are inadvertently increasing the number of guns owned by the American public, who benefits from gun-grab-mania? Gun store owners. In applying the logic of Bruce Yandle’s Bootleggers and Baptists (1983) model, it becomes clear that gun control advocates are indirectly helping the proprietors of gun stores. By sending all of their patrons into a frenzy, the moral arguments of the anti-gun crowd end up drumming up more business for gun vendors. While neither party is intentionally working together and does not even share the same goals, they have a synergistic relationship. Beto is waving the flag of the gun shops without even knowing it.

Success By Default is Not Truly Success

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In terms of formulating effective rules, one needs to have a panoramic understanding of the potential consequences. Even the downstream outcomes are not easily foreseen. Providing some validation of F.A. Hayek’s notion of the Pretense of Knowledge. No one person, organization, or collection of governing institutions has all of the information required to plan for every scenario. Making it foolhardy to enact inflexible rules that operate as if the definite outcomes can be methodically calculated. Treading down the path of the socialist calculation debate is fruitless as the refutations on both sides of the aisle have already been exhausted. The fall of the Soviet Union alone should serve as a historical anecdote of the fallacy of planned economies.

It should be noted that information asymmetries and unforeseeable outcomes are a natural consequence of having limited information. Explaining phenomena such as cobra effects, because certain repercussions cannot be known until it is too late. These distorted outcomes as the result of flawed rules can happen on a much smaller scale than that of the national economy or a country’s legal system. Something as mundane as a birthdate cutoff to participate in youth hockey can spur some surprise inequities in the trajectory of young hockey players. This example springing from the pages of Malcolm Gladwell’s 2008 book Outliers gives us some keen insights into the potential for implicit flaws in rule formulation. Gladwell details the observations of psychologist Roger Barnsley (p.22-23) upon perusing the program of the Canadian national youth hockey championship. Barnsley noticed that the majority of the players had birthdays ranging between January and March. Is it possible that there is a certain qualitative factor distinguishing children with birthdays earlier on in the year? If we examine the zodiac symbols of those born in January and February there are characteristics that are conducive to success. However, there is little scientific merit to astrology anyhow. Barnsley had another explanation for this discrepancy between Canadian Hockey players born in January versus July. 

Barnsley astutely directs us towards the factor of birthday cutoffs for eligibility to play youth hockey in Canada. This fact was substantiated when Barnsley discovered that roughly 40 percent of all elite hockey players were born between January-March, 30 percent between April-June (p.23) Demonstrating the role of the individual player’s birthday in determining success. Having a January first cutoff, privileged prospective players born in the earlier months of the year (p.24). The main difference being that the boys born in earlier months were more physically mature. In turn, received more attention from the coaches lending this dynamic to an early delineation between talented and untalented players (p.25). Due to the difference in age eligibility cutoffs in American youth football and basketball leagues, they did not exhibit the same distortions in the distribution of talent (p.26). Engendering a Matthew Effect or what is otherwise known as an accumulative advantage. Adam Smith even points to the concept of accumulative advantage in The Wealth of NationsExplaining how in a sense the poor pay the price for the poor decisions of their forefathers. 

Many proponents of meritocratic social arrangements may scoff at the idea of making rules that are fair. However, if the rules are providing a lopsided advantage to one group, are the results truly the result of superior performance or the distortion created by the rules? Few would ever view the occurrence of instances of regulatory capture or rent-seeking as a triumph of free-market competition. Rather just the opposite, it is an example of interest groups bending the rules to suit their own needs. Careful consideration needs to be made in how we set and enforce rules to avoid distorted effects that handsomely benefit a few and harm a great many. Gladwell succinctly sums up this point very eloquently: 

“Because we cling to the idea that success is a simple function of individual merit and that the world in which we all group up and then we choose to write society don’t matter at all.” (p.33)

While variables such as luck, talent, ingenuity, and hard work can all have a role in success, we cannot forget that how the rules are written can also have an inseparable impact on outcomes. Even rules that are inadvertently written in a manner to favor one group over another without consideration of merit is a flawed rule. Marred by an unforeseeable blind spot that nevertheless has generated distorted outcomes. These outcomes are not truly the byproduct of talent or work ethic but by technicalities that create illusory perceptions of actual skill.