Sunday, April 29, 2012

How to avoid compromise

So Sebastian Mallaby comes up with the usual 'why don't they compromise' story in the FT (Forget euro woes – brace for taxmageddon - FT.com). The US is set to embrace fiscal chaos because of the likelihood that the November elections will maintain current legislative gridlock. If only the two sides would 'compromise'.

Rudimentary game theory would suggest that to compromise only makes sense if the other side is willing to give anything up. The Republicans have made it pretty clear that lower taxes for the only groups experiencing income growth is a non-negotiable condition for any deal. Oh, and don't let the government touch my Medicare.

Actually what the Republicans have managed to do is pretty clever. Imagine a centre-left and a centre-right party who need to 'compromise' for problems to be solved. How do you ensure the compromise benefits you? By adopting a more extreme position, and persuading the other side to agree to the mid-point between the two. That way you get more or less what you wanted, and the other side gets next to nothing out of the 'compromise'.

Compromise in the current US climate means that the Democrats sign up to the Republicans' ideal policy of 20 years ago. This strategy works for two reasons: first, the press doesn't call them on it, and people like Mallaby buy the 'why don't they compromise story'. Second, the Republicans have so many nutters in the party that they have a credible commitment to extremism, leading responsible Democrats to give up on the idea of any real compromise. You could throw in a third: the Democrats are themselves reliant on support from the super-rich, which further disinclines them to force the issue.

This is a strangely relativist type of politics. Policy reflects the mid-point between two positions, no matter how crazy they are. The fact is that the US has the most expensive healthcare in the advanced world and the lowest taxes, but Republicans insist that nothing should be done about either. That's your deficit. If the media refuse to address this, then disaster is the only possible outcome. The FT shouldn't be part of this.