Prisoner’s Dilemmas XXI: (Part A): The Fiasco on the Vineyard

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The Martha’s Vineyard Immigrant debacle encapsulates the hideous nature of contemporary politics. It is a saga that depicts partisanship, hypocrisy, and lack of concern for effective policy. Both conservatives and the quixotic-minded and progressive residents of Martha’s Vineyard are responsible for this situation.

The controversy began when Republican Governor Ron DeSantis (using tax dollarsflew 50 migrants to the left-leaning tourist island of Martha’s Vineyard. The coordinator of the island’s homeless shelter has publicly expressed that their facility does not have the resources to provide services for the new arrivals. Even stating that the influx of migrants will exacerbate the current housing crisis. Economist Tyler Cowen addresses the scarcity of affordable housing on the island in his latest OP-ED piece:

“…Real estate is very expensive. And the island is strictly zoned, making it hard to build a lot of dense, low-cost housing…

Wages there are below the Massachusetts average, and living expenses are prohibitively expensive. Those realities stem from decisions about land use made by the island’s population. (I am OK with such community-supported zoning restrictions when they apply to very limited local areas, such as Martha’s Vineyard, and there are many options to look elsewhere. The problem arises when they start infesting a larger part of the U.S., as they have.)..”

Stringent zoning ordinances and below-average wages are a recipe for a housing crisis. In 2012, the average home was valued at “..$535,000 but average Islander could afford only $310,000..”.The cost of housing is prohibitive even for U.S. citizens residing on the island, never mind impoverished immigrants looking for better opportunities.

It is difficult to refute that this situation fits within the definition of a Prisoner’s Dilemma because two defecting coalitions made the scenario worse by not compromising. If anything, this occurrence might be a multifaceted Prisoner’s Dilemma; DeSantis owning the Libs isn’t the only game contributing to Martha’s Vineyard fiasco. The progressive islanders have conflicting desires politically, they effectively have had an intra-temporal Prisoner’s Dilemma with themselves. This is where Tyler Cowen’s observation, but the community’s hypocrisy regarding income inequality, comes into play. Because the island’s residents vocally support progressive policies in the name of economic justice. But concurrently, favor zoning ordinances that restrict the supply of homes and artificially inflate the cost of housing.

The model for Validating the Intra-institutional Prisoner’s Dilemma

Applying the model used by Nordstrom to validate Prisoner’s Dilemmas:

Condition 1:

The temptation to Defect (2= Signifies implementing both favorable zoning and left-wing economic policies)> Reward for Cooperation (1= The island recognizes the opportunity cost and amends its zoning laws; only one of the preferred policies is implemented)> Punishment For Defection (0= The majority of residents do not see that both policies cancel each other out)> Sucker’s Payoff (-1= The costs of creating political division by not favoring both varieties of policies).

T(2)> R(1)> P(0)> S(-1).

Condition 2:

(T+S)/2<R

(2+-1)/2 <1 ; (1)/2<1; .5 < 1

Even though the Fiasco on The Vineyard does numerically match the two conditions for a prisoner’s dilemma, this application of the PD incentives dynamic was creative. Game Theory purists might claim that it is erroneous to apply this lens so abstractly. However, the attributes of this intra-coalitional game do look like a cooperative game superficially. But the fact that local government and the constituents are attempting to balance conflicting interests. This situation may even validate Peter Clark’s Paradox of Implicit Logrolling (2021); however, there may be other factors at play. Per the public choice literature on rational ignorance, voters still select policies and elected officials even though they face severe information asymmetries. 

The DeSantis versus Martha’s Vineyard game will be reviewed in part B.

Bootleggers & Baptist- LIX: California Fast-Food Bill (Did Someone Say Automation?).

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The advocates of worker rights have always been in a precarious position; reforms often do not align with the interests of employers. This is an enduring pattern that supporters of California Assembly Bill 275 need to consider. Most initiatives for economic equality tend to be more moralistic than practical and do not account for how firms will respond to such measures. Depending on how establishments defined in the bill as Fast-Food Restaurants (only the larger companies with 100 + stores) adjust to the requirements set by AB 275.

The law aims to establish a governor-appointed council (comprised of workers, union representatives, etc.) that reviews and amends workplace standards and wages. Even boasting a requirement where any measures would need signatures from 10,000  (consent of the governed?) fast food workers employed in California to move forward. On the surface, this new bill sounds like it will provide reforms that will improve the lives of millions of workers struggling to make ends meet on a low salary. However, the lofty aspirations of AB 275 may have the exact opposite effect.

When analyzed from the framework of Bruce Yandle’s Bootleggers & Baptists (1983) theory of coalitions, it is easy to see the fast-food workers as the proverbial Bootleggers. But such an assumption is flat-out erroneous; the hourly employees at the local Jack In The Box are the ones who will pay the price for this new labor reform.

Prima Facie, it sounds like the hourly fast-food employees of California make out like bandits. The prospect of escaping penury wages and making $22/hour. Then there is the bonus of having a voice in shaping the regulation that will impact your work life. These benefits will be short-lived; because the titans of the drive-thru will eventually respond to the monetary and transaction costs of fulfilling these new legal mandates. Few (if any) companies in any sector of business can whether a significant increase in labor costs ( there is a potential for labor costs to increase by 60 %). Depending on how large the increase in worker compensation becomes, menu prices stand to increase by 22 %. (p.7). Some may speculate that firms such as Mcdonald’s would benefit from passing along labor costs to the consumers at higher prices; there is a strong likelihood that patrons may just opt for cheaper or higher quality alternatives. There is also an increase in transaction costs because of the additional layers of complexity added to the relations between the management of franchise owners and hourly employees. AB 275 may discourage smaller regional fast-casual restaurants from expanding to avoid the onerous conditions of this new law.

Ultimately, our Bootleggers, the established fast-food eateries will gain from decreased labor costs. How? These firms will decide to automate operations and benefit from long terms savings in not having to pay salaries and benefits or cope with the loss in productivity from theft or employee absence. Only increasing the minimum wage is enough to drive many firms to reduce costs. Creating a price floor is a price control that causes disruption throughout the market. Because businesses will attempt to avoid the artificial increase in labor costs. For the workers that are lucky enough to keep their jobs, certain nonmonetary forms of compensation disappear (p.10-11); no more free coffee in the breakroom.

Bootleggers & Baptists-LVIII: The War on Whipped Cream Dispensers

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Efforts to shield the public from the negative externalities and pharmacological effects of drugs have been unavailing. One example of this has been the dismal failure of the decades-long War on Drugs spearheaded by President Nixon. Most of these fruitless measures go up in smoke since they attempt to suppress human nature; we like to feel pleasure ( hence why neurotransmitter receptors exist) and the desire for money. As long as both characteristics remain true, the drug war will never prevail.

The languishing policies pushing for a “drug-free” America are not limited to the federal level of government.  60 % of all states prohibit recreational Marijuana sales. Despite that, Cannabis is believed to impose fewer social costs than hard drugs. Considering the powers conferred to the states under the Tenth Amendment, there is still plenty of room for lower levels governments to enact ineffectual drug laws [1].

One recent example of this was Legislation (S.2819-A) a bill sponsored by New York Senator; Joseph Addabbo, Jr. S.2819-A, requiring an individual purchasing a “whipped cream charger” to be 21 years old. The restricted device depicted in the laws as being “.. steel cylinder or 5 cartridges filled with nitrous oxide (N2O) that is used as a whipping 6 agent in a whipped cream dispenser…”. However, there are several issues with this legislation. First (minor issue), the bill lacked clarity. Several stores and NY-based news outlets stoked public confusion by declaring that these age requirements applied to cans of aerosolized whipped cream ( e.g. Reddi Wip). From the perspective of the Bootleggers and Baptists (1983) model of coalitions, makers of non-aerosolized whipped cream (Cool Whip)may have temporarily made out like bandits. However, once this misinterpretation of the law is cleared up, these temporary and meager gains will fizzle out. The Kraft Foods corporation is far from being the biggest beneficiary of this new law, especially considering how whatever the organization gained was negligible.

The true Bootlegger in this scenario would be Addabbo himself. This law will have a minuscule impact on public health and safety, but by being the lead advocate, the senator fosters a positive public image. The fact that S.2819-A will be virtually ineffectual is the most notable shortcoming of this law. Inhalant abuse only comprises a small percentage of all drug use in the United States. It was exceedingly difficult to find specific data on inhalant abuse in the state of New York, but we can always extrapolate from national data. This would only be untenable if New York (specifically Queens) had an outrageous epidemic of young people huffing nitrous oxide.

Here are some numbers:

  • 0.9% of Americans 12+ years old have reported abusing inhalants in the past year.
  • Only 4.8 % of eighth graders, 2.0 % of tenth graders, and 1.8% of twelfth graders reported using inhalants in the past year.
  • In 2015,  97.3 % of teenagers (ages 12-17) did not use volatile vapors/industrial chemicals or other solvents to get intoxicated.
  • 1.8 % of individuals who reported having a major depressive episode in 2022; admitted to using inhalants (12 + years old).

Unless an overwhelming number of young Americans abusing inhalants happen to be residing in Addabbo’s district, it is difficult to see why there is such an exigent need to remedy the issue of youth inhalant use. If anything, he merely reached for the low-hanging fruit; regulating a legal product is far easier than mustering the resources to combat a thriving black market. He avoids jumping through the hoops of justifying the expenditures for drug-related taskforce and all the associated red tape. Simply, slap a fine on the vendors who do not comply. For Addabbo to grapple with the opioid crisis that most likely impacts his district would require more tax dollars and coordination with multiple levels of government and agencies (after all the heroin and fentanyl supply chain is international). The kind senator gets to sidestep all this mess and still look like a hero.

Footnotes:

  1. This statement is not a critique of Federalism but a pointed observation of flawed policies implemented by individual state governments.

Terrorism as a Factor of Production in a Coup

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The subtle differences between various forms of political violence makes it easy to confuse and conflate these categories. The Politics of Violence: Revolution in the Modern World (1968), cites Brian Crozier  as asserting that “… terrorism is a weapon of the weak..” (p.33). There may be veracity to this statement since creating an atmosphere of fear and unrest requires fewer resources than an actual coup d’état. A complete government takeover is likely to fail (p.82); due to onerous coordination costs. However, is it reasonable to separate terror from a coup? Temporally, terrorism campaigns could be an antecedent to a full-on takeover by an aspiring political faction.

It is feasible to see terrorism as a higher order good in the political entrepreneurship (p.143) of a coup d’état. Terror alone will not provide a subversive faction with global domination. However, “… countries may be more vulnerable to coups if they have weak political institutions and lack informal institutions that could support resistance against a regime that itself came to power by staging a coup..” (p.5). Terrorist tactics could weaken faith in the existing regime and even persuade the citizenry to support the more capable insurgent faction.

Much of this is subject to institutional scale; utilizing terrorism to cajole a constituency in a tiny banana republic to abandon the current regime is far easier than forming a global caliphate. The topic of scale becomes pronounced when we consider the costs of communication, organization, and reaching consensus on the direction of the political movement. In terms of networking, the costs of striking consensus increase with the size of the take over/ terror plot; as participating actors not only have to consent to the terms of the political action but also contend with “..local power struggles..” (p.621). Reasonably, if terrorism is fraught with organizational costs, a government takeover is much more costly. Although terrorism by design, aims to wear down the enemy (p. 20), it is not farfetched to assume that it could be a long-term strategy for effectively implementing an extralegal regime change Especially, when Palestinians have used terror tactics to advance their aspirations in the territorial expansion (p.32). It would not be outlandish to extrapolate this phenomenon to government takeovers.

If the dissenting organization is to use terrorism as an effective implement in staging a regime overthrow, the coalition needs to be successful. In the event of foiled terror plots, the group losses support among would-be citizens (p.9). Whether it is a legitimate political campaign, an uprising, or a marketing campaign for a consumer product, bad publicity stalls success. Much how recalls have a deleterious effect on the success of companies producing consumer products, failure on the part of terrorists has a similar effect. Reducing the perception of legitimacy and political clout, making it more difficult for citizens to accept the governance of the new regime.

The Third Condition For Log-Rolling to Occur

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In a recent blog post, professor Bryan Caplan suggests that bipartisan log-rolling (vote trading) is frequently untenable on wedge issues. Since there is a high degree of polarization in the climate of American politics, winning on contentious political topics that have clear ideological divisions (e.g. abortion and gun control is a zero-sum exchange. Not towing the party line of these policies is tantamount to political suicide for elected officials. Dr. Caplan does provide two conditions under which log-rolling is likely to occur:

“….First, when the two sides, protestations notwithstanding, share similar principles and don’t disagree very much. Like the budget. Or any ultra-boring issue, like fisheries or snow removal. This is what most democratic log-rolling comes down to.

Second, to avert large, sudden deteriorations. The polity will forgive you for passing up endless opportunities to make the country richer or safer. But if life quickly gets much worse, even the most silver-tongued demagogues struggle to keep holding the reins of state…”

Professor Caplan is a very astute and innovative Public Choice scholar, but he ignores a potential third condition under which vote trading may transpire; intrapersonal vote exchange. This example of vote trading is a form of implicit log-rolling (p.101), where policies are entrenched in a specific political party’s platform. By voting for a candidate affiliated with a coalition, the voter must accept all of the planks in the campaign platform, as we cannot cherry-pick the policies an individual candidate or party advocates.

 Because of this, we must engage in some degree of policy preference ranking. Potentially, engendering an intrapersonal collective action problem, if a voter favors gun rights ( a conservative position) and open-borders immigration ( a liberal policy), odds are they effectively choose one over the other when voting for the president or another variety of political representatives ( a tradeoff). The policy or sets of policies the voter prefers more; will be the deciding factor. If Jim is a proponent of lax gun laws and lenient immigration laws; but votes for a conservative candidate, we can only surmise he values gun rights more than free immigration. In this scenario, Jim engaged in log-rolling with himself.

The most common form of intrapersonal vote trading is when people contour all of their policy preferences to the platform of a political party. The likelihood that every diehard Republic sincerely agrees with the party on every issue is exceedingly small, but most partisan political participants don’t even allow themselves to question their political beliefs. These individuals exchange any disagreements with their party of choice for the designated status as a loyal member of the political faction. An excellent example of this is former Reaganites supporting the presidency and 2020 candidacy of Donald Trump. Regan was the American king of Neoliberal trade policy; Trump echoes the paleoconservative concerns for globalization. We could provide a convoluted explanation for this discrepancy, but such gymnastics would be superfluous. It is much more probable that these individuals tailored their policy preferences to fit an evolving Republican party than they had a sincere paradigm shift. 

Bootleggers & Baptists: LVII: The Downfall of Georgetown Cupcakes (Damn Health Inspector)

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Many believe that food saf­­­ety measures are necessary for promoting public health. We do not consider these desiderata as conferring a benefit to competing eateries. The renowned Washington D.C. bakery Georgetown Cupcake was shut down due to several health code violations. For a licensing issue, mouse dropping, and mold on consumable items. It is easy to become disgusted by these findings; there are several questions we need to answer. Outside of the cost of internalizing the externalities of a food-borne illness outbreak; (estimated at a scale of “…$4,000 for a single outbreak in which 5 people..” and 1.9 million for a single outbreak in which 250 per person). Even if no patrons become ill after consuming baked goods from Georgetown Cupcake, they still stand to lose business from the bad publicity alone.

While most people wallow in the grotesque of such hygienic incompetency of this bakery, it is easy to lose sight of the covert beneficiaries of their misfortune. One man’s loss is another’s gain. Per Superpages, there are at least thirty bakeries of the high esteem in the Georgetown section of Washington D.C. At a minimum, there at least thirty Bootleggers stand to gain from the bakery’s momentary lapse in cleanliness. It would be rational to apply Bruce Yandle’s framework of Bootleggers and Baptist (1983) coalitions to this situation. While the Washington D.C. metro health inspectors emerge as the white knights shielding the public from deleterious dining options, their published findings effectively divert business to other food vendors. Who wants to eat at a restaurant where there are rat feces everywhere? Many of the giddy Bootleggers may not be as squeaky clean as they seem. Since budgets for health inspections have decreased most restaurants are only inspected annually. There is a correlation between the number of health evaluations and instances of outbreaks of food poisoning originating in restaurants. Georgetown Cupcakes may have gotten the short end of the stick this time; next time, one of their callous competitors may pay the price.

Prisoner’s Dilemmas- XX: City Council Cartels

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Anyone who has observed the chaos of local politics has seen the Machiavellian dynamics of a municipal committee elected by the town. The best example is seated on the town council. The incentive structure of the council members; is driven by the fact that their position is secured or eliminated by the will of the people. Setting up the classical variables for any Public Choice analysis, as the council members tailor their platforms and rhetoric to the voter preferences. If the same council members are either reelected or run unopposed, there is the incentive to form a coalition with the other recurring council men, formulating an informal agreement to have each other’s back. Effectively creating a cartelization since the other sitting council members have consented to support your policy prescriptions and justify your controversies. Per Katz and Mair (2018):

“…The mainstream parties, and most minor parties as well, have effectively formed a cartel, through which they protect their interests in ways that sap the capacity of their erstwhile principal—the electorate—actually to control the parties that are supposed to be the agents of the electorate. While the appearance of competition is preserved, in terms of political substance it has become spectacle (p.7)…”

By forming tight bonds and backing the rest of the elected officials on the council, each works to consolidate the power within this single unit of governance. Forming an impermeable oligarchy that the voters cannot vote out office due to a lack of policy competition. Analogous to an economic cartel, where consenting producers all fix prices in unison, all politicians “fix policy” to conform to the rest of the representatives on the council. This keeps external influences out of the fold, enabling all to retain their seats if they play ball. Much like all participants in an economic cartel enjoy larger profit margins, if no one reneges.

Hypothetically, let’s say there are four council members; one of the incumbents decides to resign mid-term. The replacement candidate is an insurgent candidate, breaking the unanimity among the colluding council members. This loosens the relational foundation among the incumbents; we start to see instances of defection among them. What was once complete accord among the old boys club quickly devolves into a prisoner’s dilemma. It is important to remember that cartels seldom are sustainable indefinitely. Eventually, the temptation of one party to undercut the rest of the colluding companies will cause them to defect (Tullock, 1985, p. 1076). For example, one particularly narcissistic council member may claim responsibility for policy reforms that his other cohorts co-sponsored. This type of behavior only undercuts the contributions of the others, leading them to undermine this arrogant council member. The cadre of incumbents suffer from the eroded trust. The newer member with innovative policy prescriptions; only proceeds to dimmish the creditability of the old boys club.

The Economics of Protesting

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Michael Huemer’s substack post Political Activism: What’s the Point, raises some intriguing inquiries regarding the actual utility of participating in political demonstrations. Much like other forms of collective action, the contributions of individual actors will have virtually no impact on the outcome. This parallels the dynamics of another notable form of collective action in politics, voting. If you divided your individual by the sum of all other votes, the aptitude of your single vote altering the results is exceedingly minuscule (p. Bohanon & Cott, 2002, p.592). But it is far more cumbersome to measure the influence of individual activists in comparison to single voters. Professor Huemer goes beyond the pure futility of the efforts of a single protester; and suggests that effectual change could not be the main force driving participation as people value their “..own welfare hundreds or thousands of times more than the welfare of strangers..”. It is more likely that people gain more from networking, personal ideological motives, and rights to virtue signal more than their concern for others being equal to their welfare.

However, he lists Dr. Martin Luther King and Rosa Parks as being exceptions to the drop-in-the-pan theory of effective activism. Both individuals are far different from the average protestor holding a sign at a demonstration. King and Parks undertook the costs of distributing communication and organizing activistic events. In theory, we could perceive them as being political entrepreneurs. A political entrepreneur per Public Choice scholar Randall G. Holcombe defines as:

“…Political entrepreneurship occurs when an individual observes and acts on a political profit opportunity. As with market entrepreneurship, entrepreneurial actions require, first, that a profit opportunity exists, second, that someone is alert enough to spot the opportunity and recognize the opportunity for profit, and third, that the individual is willing to act on the opportunity once it is spotted…” (p.143).

While civil rights advocacy did benefit people beyond King and Parks, they were still able to garner reputations as civil rights leaders. In effect, establish careers. Neither activistic leader would be able to have gained a following if there was not a demand for equality under the law. Mimicking the demand for a product or service in private markets. Regardless of our normative perception of civil rights, they both capitalized on the opportunity for social change. Analogous to how an economic entrepreneur fulfills a need in the consumer market. It is not necessarily morally objectionable that King and Parks benefitted from acting as political leaders since the changes they advocated for did achieve betterment from these societal advances. It would be wrong to classify these efforts as rent-seeking.

A high-profile activist such as Dr. King may act entrepreneurially in protest efforts, what about the rest of the demonstrators supporting King’s activist events? There is a certain amount of free-riding transpiring as this individual did not have to incur the coordination costs of planning the protest. Sure the costs of time and effort are present for even the lower-effort protestors, but King has already reduced the transaction costs of communication and coordination. Because these other demonstrators forfeited these enormous planning costs and the institutional risk, it only stands to reason that these other protestors are not even a footnote in history. Big risk equals big rewards. Dr. King paid the ultimate risk-cost for his political advocacy when he was assassinated. Few of King’s followers had to take on the costs of marching by side him. If anything his penchant for drawing like-minded followers exemplifies how he operated like a corporation for political activism. His ability to dimmish transaction costs for many protestors mirrors what corporate employers do for their employees. Corporations lower the transaction costs of employees finding clients needing service, typically on a large scale. A juggernaut; in the sphere of political protests like King effectively connects members of the same political movement in a superior manner to lesser community organizers. It is evident that without a strong unifying force, the collective action process fails and imposes costs on those less talented organizers that still opt to protest.

Friday Feature Film- Anthony Bourdain: Parts Unknown (Singapore)

Prima facie, Singapore seems like an idyllic “Nanny State” nation, with the absence of the abject penury that we typically see under tyrannical regimes. However, is the veneer of safety and cleanliness worth relinquishing individual rights? If so, can such a society be sustainable long term? Can the state-sanctioned orderly nature of Singapore endure the trials and tribulations of the next century? Only time will tell, but to quote the Robert Frost poem, “Nothing Gold Can Stay”.

Conspiracy Theories- The Lazy Man’s Cult

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The literature (p.93-94) paralleling conspiracy theory culture with the social dynamics of religious cults is starting to accumulate. In the post-factual world, there has been an explosion in the amount of research and commentary surrounding the psychological and sociological implications of conspiracy-mongering political sects such as the alt-right and QAnon. Outside of the grand edicts of Alex Jones being profane (non-spiritual in nature), there is another notable difference between the microcosm of conspiracy land and a religious cult; commitment costs. 

In theory, a fan of conspiracy theory media can participate in this sphere without paying a dime (outside of the cost of electricity and monthly bills for internet access). Sure, our good friend Alex might be slinging some bogus supplements, but there is no requirement to purchase any Infowars products. Anyone with internet access can still access his web-based content. In contrast, a religious cult not only lays claim to all your earthly possessions and assets, the leader expects that future earnings are directed to the “church’s” coffers.

 Beyond the differences in direct monetary costs, there are also drastic disparities in the nonmonetary costs of participation. In the conspiracy community, there is a large spectrum of various commitment preferences; no formal obligations to increase your level of commitment. The range goes from sitting consuming conspiracy media and frequenting conspiracy Reddit pages; even partaking in political activism predicated on conspiracy theories. Even if you are under the spell of the false prophet peddling tin-foil hat tomfoolery, there is still a degree of choice. To be a member of a religious cult, the costs of participation are extraordinarily high, and there is no gray area. A prospective member is fully obligated, or they are out. They must give up or share (their spouse or sexual partner), job, family, friends, hobbies, and contact with the external world. Alex Jones nor David Icke are not pressuring people to cut all ties with family to worship in their bugout bunker in rural South Dakota. 

Essentially, conspiracy theories are opium dreams for the lost and disillusioned, like religious cults. But subscribing to conspiracy theories is the lazy man’s version of being a cult member. The commitment expectations and financial costs are much lower. Theoretically, a conspiracy theory adherent can live normally; hold down a square job, and raise a family. However, once they are off the clock, then their double life begins. 

Prisoner’s Dilemmas-XIX: Labor Negotiations & Strikes

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For now, President Biden was able to pump the breaks on the railroad strikes. Biden appointed arbitrators to negotiate mutually agreeable recommended revisions to the current labor contracts. This action kept “..115,000 rail workers on the job..” and narrowly side-stepped work stoppages from occurring on Monday (July 18th). In a time of preexisting supply-chain constraints, labor disputes would only exacerbate matters (the best real example would be the situation in the UK).

The dynamics of organized labor have a long history of being contentious, and striking is their secret weapon in gaining leverage at the collective bargaining table. If a policy does not contour to union interests, the relationship between the government and the labor movement devolves into a standoff. Since both factions have competing goals, this negotiation process is a Prisoner’s Dilemma. Lawmakers tailored policies to the preferences of the majority (union members only make up 13% of the US labor force). Also, in the anti-union camp, management possesses a fiduciary responsibility to enforce policies that are advantageous for the firm. 

These sets of incentives are opposed to the interests of the unions. Organized labor aims for higher wages, better benefits, more safety measures, and other generous forms of compensating differential. These new desired measures may be more costly for the firm or adversely impact consumers with higher prices or a lower grade of customer service (inefficiency). The demands of the labor unions tend to concentrate the benefits and impose costs on the rest of the economy. Even in sectors that are only tangentially connected to the industry where the workers are on the brink of striking. When their proposals are ignored or rules they dislike come into play, they defect by halting production and picketing. 

How neither party can reach a consensus generates Pareto-inefficient outcomes; should be self-evident. Because employers and policymakers might not want to cooperate or even meet the unions in the middle, they are defecting. In turn, the unions initiate strikes which create product scarcity, production bottlenecks, and higher prices. The ripple effects of the lack of agreement will hurt every economic actor in the market.