Economics

California’s Multiplayer Version of Chicken

When seeking understanding of some perplexing political development, I often find illumination by considering the elementary tenets of game theory, as set forth in such works as The Rise and Decline of Nations, The Strategy of Conflict, Prisoner’s Dilemma, and The Complexity of Cooperation.

Sure enough, it looks like everyone in California is playing a multiplayer version of chicken, sometimes characterized as “someone around here better be reasonable, and it is certainly not going to be me.”

All the parties must recognize that the state has severe problems, but no one seems to be taking any responsibility for addressing them. Thus the Silicon Valley barons protected their investments in “green” technology by spending millions to defeat the effort to suspend the job-killing CO2 caps, the public employee unions refused to budge an inch on anything, and the state re-elected a senator who supports turning the Central Valley into a desert for the sake of the Delta Smelt. As J.E. Dyer said yesterday on Hot Air, “the winning margin for Jerry Brown came from a tight coalition of victim- and ethnic-politics organizations, welfare organizers and their clients, academics, public policy advocates, service-employee and teacher unions, and dilettantes from the entertainment and tech industries.  Their top priorities are welfarism, across-the-board preferences, union benefits, and policy initiatives that create sinecures in government employment, as well as generating new rent-seeking opportunities in environmentalism, health care, and energy.

As oft-noted, the way to win a two-car game of chicken is to take off your steering wheel and throw it out the window, thus showing the other player that you are committed to win or die. In California, it looks like many cars are racing toward each other, and all have thrown their steering wheels out the window, which should produce a result entertaining only to owners of scrap yards.

Of course, all of California’s interests may be conspiring to play the “someone around here better be reasonable, and it is certainly not going to be us” game against the rest of the nation, counting on the federal government to be too responsible to allow economic disaster to engulf the state. So one of the early acts of the new Congress should be to throw the federal steering wheel out the window, ensuring that there will be no bailout of California.

It simply must be done, because otherwise too many other states will run the same game, and jeopardize the nation itself as each state competes to become more irresponsible then every other state so it can grab a larger share of the fiscal commons.

Comments are closed.