Matt and Nick’s Declaration of Futility

Reason Magazine is promoting Matt Welch’s and Nick Gillespie’s new book, The Declaration of Independents: How Libertarian Politics Can Fix What’s Wrong With America. The premise of the book is built around wishful thinking, namely: why can’t politics be more like lifestyle consumerism.

Everywhere in America, the forces of digitization, innovation, and personalization are expanding our options and bettering the way we live. Everywhere, that is, except in our politics. There we are held hostage to an eighteenth century system, dominated by two political parties whose ever-more-polarized rhetorical positions mask a mutual interest in maintaining a stranglehold on power.

Matt and Nick claim a corrective mechanism that will break the two-party duopoly and make politics more like the expanded set of menu options one would have, in say, purchasing a smart phone. This corrective mechanism:

“The Disintermediating technology of the internet, coupled with the rise of political independents” creates a built-in corrective mechanism that now prevents the political duopoly from crushing expanded sets of political choice menu options. That’s the premise.

However, this premise is flawed in that it more or less simply ignores the duopoly model of Cournot Competition. Cournot Competition is a game of strategic substitutes, that is, a game where firms play strategies that mutually offset one another. This means that a strategy of Firm A is a strategic substitute of Firm B’s strategy if the more Firm A wants to do it’s strategy, the less Firm B wants do of it’s own. The converse is true regarding Firm B’s strategy being a strategic substitute of Firm A’s strategy.

Cournot Competition is not “perfect competition.” Cournot Competition leads to a result of higher prices and lower output. Disintermediation(i.e., in this context, “party bosses” don’t hand pick the candidates) and declining brand loyalty do not convert a Cournot Competition model into one approaching perfect competition. This can be empirically verified, in our political context, by noting Disintermediation and declining party identification have been ongoing trends for the past 40 years. Yet, these trends have had little effect on the Cournot behavior of the 2-party duopoly. If anything, these trends have coincided with the Cournot duopoly approaching more of a monopoly model.

The only “conversion mechanism” for Cournot –> Perfect competition is a reduction in the the barrier of entry. That is firms {A,B} –>{A1,A2,…An}. But this would require a major change in the rules of the system–in essence, the abolition of the plurality rule election system. And this would require the institutional underpinning of a major political reform movement, something completely out of scope for the Gillespie-Welch lifestyle voter.

Indeed, the plight of Gary Johnson, the ideal Gillespie-Welch “lifestyle politician,” illustrates the public goods problem of this voting block. Johnson does not spring from any institutional party infrastructure nor is he a product of any formal or informal institutional network. He is essentially a one-man show, someone who was elected governor as the result of a fluke. In a majority Democratic state, Johnson was able to overcome a weak GOP establishment to win the primary and then defeat a Dem Establishment Pol in a general election. But this doesn’t translate on the national scene. Johnson insists that his “resume” gives him a seat at the table. But it actually doesn’t. It reaffirms him to be a fluke, someone without any formal or informal institutional support. His “Our American Initiative” project didn’t build any genesis of a lifestyle voter political reform movement. Johnson, after being excluded from the recent NH GOP debate, is now making the rounds volunteering his new found disillusionment with “the system.”

In short, Gillespie-Welch’s new book is not a serious social science book. Rather, it’s mere journalistic wishful thinking. In this short critique I’ve pointed out that there is a serious public goods problem for the Gillespie-Welch voting block to radically change the system rules in order to shift a Cournot Competition model toward one more resembling perfect competition. Contra Gillespie-Welch, libertarianism is not merely an “adjective,” it is also a “noun,” meaning it has a historically well-developed political theory that is able to easily shoot down lazy premises.

Lastly, I would be remiss not to point out a delicious irony with respect to Gillespie-Welch’s lazy scholarship. In particular, I’m referring to their contention that this Gillespie-Welch voting block is a reactive product against the marginalization of the “venerable tradition in American politics of Jefferson/Thoreau/Goldwater.” Of course, in reality, Goldwater, or should I say, his “Shakespeare,” that is, Karl Hess, the one responsible for the penning the prose that made Goldwater Goldwater, killed off the myth of this “venerable tradition” himself with his essay, “The Death of Politics.” Published, of course, in Playboy Magazine, the original bible of the revolutionary lifestyle libertarian. Nick, Matt, read your bible…

18 thoughts on “Matt and Nick’s Declaration of Futility

  1. Great observations!

    I tried to get them to respond to a question I had trying to get to the heart of the challenge you outline. The two parties are increasingly polarized and, despite what they say, a large number of people are very happy with that polarization–and they are the ones more likely to vote! A more parliamentary system with more parties to choose from would probably be better for libertarians, but I suspect that the dead Constitution cult refuses to entertain the notion that our political system needs changing in order to better promote libertarian ideals.

    BTW, I’m formerly of Freedom Democrat. The website crashed, my life was busy, and now I’m slowly returning to the online world.

    • Just to note:

      I’m pointing out the problem with Matt-Nick’s thesis. Personally, I don’t think multi-parties would mean all that much in our context; besides I think that type of political reform suffers from an impossible collective action problem.

      I’ve adopted a position more along the lines of political entrepreneurship, relying on a political economy of leaks to fracture political classes.

      • My criticism of what they seem to be selling (my copy of their book just shipped) is that I think they are acting like there are hordes and hordes of Americans fed up with the two political parties ready to embrace a new way of thinking, like libertarianism. I think they ignore that a lot of Americans really are partisan and polarized. If they are frustrated with the political process it’s because our system of separate branches and checks and balances keeps their agenda from being passed into law.

        I think with multiple parties we’d have a better fit for the folks who aren’t happy with the existing two political parties, but they’d be a minority party that would always end up as the junior partner in a coalition, much like the Greens or Free Democrats in Germany. There wouldn’t be this giant centrist or libertarian party running things.

        Political entrepreneurship sounds like simply being an opportunist and basing your decisions on the situation at hand. Unless I’m missing something.

      • I got distracted with a new job, wasn’t feeling the type of spin I was trying to build at first at shoomakers, and then decided I wanted something that focused more specifically on my two interests: Virginia politics and liberaltarianism.

  2. Hey, man. I linked over from reason, and am somewhat sympathetic to anti-corporate liberaltarians, but in your fifth paragraph, “it’s” should be “its.” More substantively, the Cournot analogy, which admittedly took me a few reads, is off-putting at first, but then illustrative. Maybe a quick explanation — that the two-party system has so many artificial barriers to entry that it needs something akin to a trust busting — would help before the jargon.

    Take care.

    • Thanx for the comments…

      The typical protocol to follow is to hyperlink “jargon” to an explanatory article(e.g., wikipedia). However, I’ve found no one ever clicks on these links(from the stats), so I often omit them.

      Quick introductory explanations may or not be helpful in that they often may beg the question.

      Cheers…

  3. Please don’t misuse the Cournot model and game theory in this way. There is no good analogy between the Republican and Democratic parties and Cournot duopolists. What is the “output” of the parties and why do you think that we would be better off if we had more of it? Why would you think this “output” follows a strategic substitutes relationship?

    • Thanx for the comment…

      Of course, I dispute your claim that there “is no good analogy between the Republican and Democratic parties and Cournot duopolists.” The entire field of Public Choice is an economic analysis of political competition.

      In the Public Choice literature, Stigler’s “Economic Competition and Political Competition” is a good place to start.

      What is “output of the parties”

      Party Output(Q)=”party platforms and promises toward voters”

      “Why would you think this “output” follows a strategic substitutes relationship?’

      Because Cournot Duopoly is a game of strategic substitutes.

      Cheers…

      • Circular reasoning is not going to clear this up. If Party 1 produces “more” platforms and promises, why would Party 2 find its best response to promise less (which is what you require for strategic substitutes)? In fact, if you think promises and platforms are the parties’ duopoly outputs, then these would be classic strategic complements–the more you promise, the more I promise, in arms-race-like fashion.

        But the whole concept is not applicable here.

        1) There is no “price” for these “outputs” and the parties do not have an objective function of (promises*prices – costs). Votes are not payments that get multiplied by promises to generate revenue or power.

        2) The “inefficiency” of Cournot duopoly in Pareto terms is supposed to be output restriction–price greater than marginal cost in equilibrium with supra-marginal units that could offer gains from trade not being produced or sold. Yet if anything our existing parties make excessive spending promises relative to what is feasible or desirable.

        3) The public choice and rational-choice poli-sci literatures have a host of applicable formal models and results. Cournot duopoly by parties is not one of them.

  4. I wrote:

    Party Output(Q)=”party platforms and promises toward voters.”

    I’m specifically defining output, a la Stigler, as “operational public policy.” Voter preferences with regard to platform and promises are related to an overall policy schema and not to specific transfers or benefits.

    From Stigler’s paper, “Economic Competition and Political Competition”

    The “outcome” or product of political competition is public policy,legislative and executive and judicial. A voter wishes representatives only as agents,agents to procure and insure the policies the voter prefers. The policy the voter wishes is an actual operating policy: it is not the schedule of enacted personal income tax rates, or even this schedule suitably qualified with loopholes and peculiarities of income definition, but the levels of taxes ultimately collected, taking due account of the degree of vigilance of enforcement. Realized policy is inherently a quantitative notion. The content of policy is determined by appropriations, enforcement, the attitudes of bureaucrats and citizens (who enter enforcement also in the legal process), as well as by the so-called governing legislation.

    So, accepting Stigler’s definition, we can define the “output” as an operational public policy. Parties then will then choose an output(a policy) that maximizes the expected member gains for a given cost.

    To emphasize some key points:

    (i) Political Competition=competition between parties, in this instance
    (ii) Political products are not the same as economic products. The former are typically exclusive and the latter are not
    (iii) Despite (ii), Public Choice can still apply an economic analysis to political competition. An economic analysis will inform us why parties don’t simply attempt to maximize party membership and end up in a game of strategic compliments(an arms race) over transfers.

    So with conditions of party disintermediation and declining party identification, and assumed increases in libertarian preferences of voters, why is it that we cannot expect a full competitive equilibrium in the output that reflects these conditions(define this to be Gillespie/Welch Expectation)?

    Well, an economic analysis illuminates the reasons why.

    Your contention that Cournot Duopoly of parties is not generally part of the public choice literature is by and large correct. But why is it correct?

    (i) The Chicago school, of which Stigler was a part of, would move in a direction of efficient market in political competition
    (ii) The Virginia School(e.g., Tullock) didn’t define political competition the same way. Politicians are brokers or auctioneers bidding out economic rent to competing firms.

    The G/W Expectation relates to party competition. Therefore we can borrow from the Stigler definition, although we will not be burdened by later interpretations of efficient market.

    The 2 Party Competitive Duopoly is a best Cournot and at worst monopoly under collusion. Cournot is a game of strategic substitutes.

    Empirically, this shouldn’t be that controversial, particularly as it relates to “libertarian preferences.” The party out of power, that is the party that does not control the Executive Branch, is going to be more libertarian regarding limitations on executive power. Once that party regains power, it will change it’ s output(less libertarian). The party that was formerly in power but is now out of power will will become more libertarian.

    All you have to do is visit Glenn Greenwald to get a daily rant against the political classes that are playing a strategy of strategic substitutes.

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