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Health Alert | The Hobbesian Jungle, Part II

Following Thomas Hobbes, in a previous Alert we described the Hobbesian Jungle as a place where life was "solitary, poor, nasty, brutish and short." In such a place there is no law, no property rights and no commonly accepted ethical principles. When people act on their own immediate self-interest in such a world, they plunder each other whenever opportunity arises.

Hobbes imagined a way out: a Leviathan (or government) large enough to impose its will on everyone else and force them to live in a civil manner. The problem with that idea is that political relationships in a Hobbesian world would be no more stable than any other relationships. Political bonds would be created and dissolved just as rapidly as all other bonds.

Why is this important in the modern era? Because too many people take stable relationships with other human beings for granted - not realizing that political stability hangs on a fragile thread. What we are witnessing right now in Congress is a re-creation of the Hobbesian Jungle - where coalitions form and dissolve; where today's friend may be tomorrow's enemy; and where the only thing enduring is the desire to plunder.

   Anything Goes

But first things first. It was Kenneth Arrow who exposed the problem of political instability in the modern era with his analysis of the paradox of voting. The problem extends way beyond voting, however, so I am going to describe it in a slightly different way.

Imagine three people (A, B and C) stranded on a desert island. Any two of them can always combine to impose their will on a third. Now suppose one day they discover a pirate's lair with a treasure chest containing 100 pieces of gold. These coins are of no immediate use on the island, but of considerable value if the three are ever rescued. So who will own what share of the bounty?

A 1/3, 1/3, 1/3 split seems fair, but there is nothing compelling fairness here. As against a 1/3, 1/3, 1/3 split, A and B can divide the pie 1/2, 1/2 and leave C with nothing. Clearly 1/2 is better than 1/3. But then C can go to B and propose 49/51, leaving A with nothing. Since 51 is better than 50, B is inclined to accept the offer. Afterward, A can go back to C and offer 45/55. Since 55 is better than 49 to C, he is inclined to go along with the new offer. The opportunities to redistribute and make two people better off never end.

Bottom line: Among self-interested people who will always accept any deal that comes along so long as it's better than the status quo, there is no possibility of a stable distribution of income. And if government is the institution that creates ownership rights and protects them (in our example, two people imposing their will on a third), there is no possibility of a stable government in a Hobbesian world.

In the previous Alert we showed that experimental economics has revealed how our ancestors probably solved this problem. Most people (although to varying degrees) are hard-wired with a sense of fairness that stops them from behaving as Hobbesian Jungle actors. I believe this inclination also explains why we observe political stability that would otherwise be inexplicable in the modern world.

In 1972, presidential candidate George McGovern offered every adult American $1,000 (a "demogrant") as part of his presidential campaign. Fortunately, McGovern lost the election in a landslide. I say fortunately, because if political candidates could successfully buy voters with arbitrary redistributions, our political system would become hopelessly unstable.

Now before you take too much solace in that consider four ominous facts.

 

  1. Perception is everything. On close analysis, Congress is engaging in arbitrary redistributions every time it meets. But this is not how Congress is normally perceived. Politicians go to great lengths to justify their actions as contributing to the "general welfare" and they are helped in this regard by the reporting practices of the mainstream media.
  2. The legislature is the closest thing in our society to a genuine Hobbesian Jungle. More so even than the neighborhood of criminal gangs. Suppose you and I are representatives and I agree to "sell" my vote to you on a measure you favor for no other reason than your gift to me of something I value (a vote for a measure I favor). Now suppose you keep your part of the bargain, after which I renege. What can you do about it?

    There is no contract law governing vote trading in Congress. No court to which you can turn to get justice. You really can't even publicly complain - since our agreement was almost certainly unethical and probably criminal. So what goes on in the legislature every day (the buying and selling of votes) is not governed by any law, any court, any agreed on ethical standards or any Hobbesian Leviathan. To make matters worse, there are big payoffs from predatory behavior.

    Harry Truman is reported to have said, "If you want a friend you can trust in Washington, get a dog." Think about the implications of that statement. No one would ever say that about Main Street and (even with recent scandals) probably not even Wall Street - where trust and trustworthiness are essential to the functioning of a market economy.
  3. Retaliation is natural. Experimental economics has confirmed that when people are mistreated it is natural to retaliate. We will punish the unfair actor even if we must endure personal sacrifice to do so. Rioting is an extreme example. Suicide bombing is even more extreme.
  4. Everyone is a potential Hobbesian Jungle actor. I'm not sure there have been any experiments to determine this, but it seems likely that if we are surrounded by Hobbesians, we too will become Hobbesian. That is, if all our offers to cooperate are rejected and if everyone else is acting in predatory ways, we too will become predatory.

 

If perception is everything, then the more overt the predatory behavior, the more destabilizing it potentially is. My casual impression is that during President Obama's reign, Washington is getting more and more Hobbesian and is perceived that way. In game theory terms, the Obama administration has all the characteristics of a Machiavellian player - someone who will defect and engage in predatory behavior at the drop of a hat. The catch phrase in Washington these days is, "If you're not at the table, you're likely to be the lunch." Truth is, you can easily be the lunch, even if you are at the table.

During the passage of ObamaCare, there was not even a pretense of any fairness principle at work. The Obama administration spent months in behind-closed-doors meetings with many of the large health insurance companies, working out the details of ObamaCare. Yet even as these talks were underway, the administration asked citizens all over the country to send the White House their worst insurance company horror stories. The administration and congressional leaders then used these stories to villainize the entire health insurance industry (even as the companies continued to try to negotiate in good faith!).

Barack Obama took almost $1 million from Goldman Sachs employees during the election, then portrayed Goldman as evil Wall Street bankers when there was advantage in doing so. He took equally large contributions from BP, the oil company most onboard with the administration's plans to combat global warming. Yet when there was advantage in doing so, the administration began attacking it as an evil oil company concerned only with its own profits.

The administration encouraged Arlen Specter to switch parties - giving the Democrats a filibuster-proof majority that was then able to pass ObamaCare. Later, when Specter faltered as he approached the finish line in the Pennsylvania Democratic primary, the administration refused to help him as he watched victory slip away.

The extent to which the administration accepts favors and then sacrifices the giver might even have surprised Thomas Hobbes

John_GoodmanJohn C. Goodman is president and CEO of the National Center for Policy Analysis. The Wall Street Journal and the National Journal, among other publications, have called him the "Father of Health Savings Accounts," and the Media Research Center credits him, along with former Sen. Phil Gramm and columnist Bill Kristol with playing the pivotal role in the defeat of the Clinton Administration's plan to overhaul the U.S. health care system. He is also the Kellye Wright Fellow in health care. The mission of the Wright Fellowship is to promote a more patient-centered, consumer-driven health care system.

Dr. Goodman's health policy blog is the only right-of-center health care blog on the Internet. It is the only place where pro-free enterprise, private sector solutions to health care problems are routinely examined and debated by top health policy experts throughout the country-conservative, moderate and liberal.

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