Value Competition

For the Moral Equivalence of Business and Politics

There are some major similarities between business and politics in affluent, democratic societies such as the U.S., Germany, Japan, etc.:

1.   Both systems harness the energies of self-seeking, self-promoting entrepreneurial actors to social benefit, both overall and in many, though hardly all, individual cases;

2.   Both systems rely centrally on competition to create social benefit and to restrain the evils that would follow from a single unchecked power center or economic center;

3.   Both systems rely centrally on teams that join together to compete with other teams;

4.   Both systems rely heavily not only on egoistic calculation but also on social emotions such as empathy, competitiveness, shame, and  vengefulness;

5.   A considerable number of people feel imposed upon by one or both systems, and view one or both of them as outside themselves; a comparatively small proportion of the population views themselves as successful entrepreneurs within either system; a very small proportion views themselves as successful entrepreneurs within both systems.

Each one of these major similarities is attended by lesser but interesting differences:

1.  The manner in which individual and social interest are aligned (the invisible hand) and misaligned (market failure) is better understood in business than in politics—economics is substantially better developed than political science; the self-seeking, entrepreneurial political type tends both toward more narcissism and more emotionally-infused idealism than the cooler, more pecuniarily motivated self-seeking, entrepreneurial business type;

2.  Competition in politics compared to competition in business is limited by the underlying fact that government involves a monopoly of force; the basic form of competition in politics between parties and within parties is duopolistic, pitting the center-left against the center-right, while competition in business arrives a much more diverse array of forms--this difference likely stems from the basic fact just noted that politics is a struggle to attain control of the violence monopoly (here again the less developed state of theory in political science compared to economic theory is interesting); political competitors generally differentiate themselves with more universalistic, value-laden appeals than business competitors do;

3.  The competing team institutions in business—notably corporations—are much more clearly structured and better established than political parties and other teams in politics; on the other hand, the overarching or monopoly institutions in government/politics—the courts, legislatures, etc.—are much more clearly structured and better established than trade associations and other overarching, monopoly institutions in business.

4.  Business and the pecuniary motive foster egoistic calculation on behalf of the individual and the firm, and in doing so damp down to some degree on social emotions like competitiveness, vengefulness, empathy, and shame, which are less checked in politics.

5.  Although highly localized political systems like the U.S. are a partial exception, a considerably smaller proportion of the population is engaged as entrepreneurial politicians than as entrepreneurial businesspeople; on the other hand, a fairly large proportion of the population is somewhat detached from business by virtue of working for government or the nonprofit sector, while nearly every adult is a potential voter and potential political participant; successful entrepreneurs in business are considerably more tilted toward the high end in their incomes than successful entrepreneurs in politics are, while successful entrepreneurs in politics are somewhat more tilted toward the high end in their educational backgrounds, and are considerably more tilted toward being highly renowned both positively and negatively, than successful entrepreneurs in business are.

From this array of similarities and matching differences, one can certainly tease out moral distinctions in favor of one domain or the other.  None of them seem especially convincing, though.  Even if one is inclined to give the social utility palm to business over politics if one has to choose—as I would—the two sectors’ deeply intertwined nature, the larger size of the business sector—which has quite a bit to do with its greater utility but does not seem to me a good basis to regard it as worthier--and the greater concentration of the more idealistic, inspiring social emotions as well as the somewhat unpleasant or very unpleasant social emotions in the political sector make the relative moral status of the two sectors a pick ‘em proposition in my view. 

A postscript: Neither of the two sectors, for all the very considerable positive value that both have, feels to me at all like something to center one’s deepest faith on.  The heroic view of business in Ayn Rand and the heroic view of politics in Sheldon Wolin both miss the mark.   It is the case, I think, that a plausible Enlightenment faith needs to engage business and politics sympathetically rather than to detach itself from these central, and in my view basically good, modern social realities.  But a good Enlightenment faith also needs to be apart from both business and its competing corporations and from politics and its warring ideologies.   

How Organizations and Employees outside Top Management Could Compete Management Wages Down

What would it take for a broader, more competitive market for top-level managers to arise in which shareholders pay less than they now have to for top managerial talent?   Here, the social egalitarianism and selective altruism frameworks point in different directions. 

First, social egalitarianism: If one can persuade the shareholders that one is willing to work for less not because one is a worse manager but because one values a relative position perk--the giant corner office, ultra-attentive staff, etc.--that is cheaper from the shareholders' perspective than stock options and other monetary rewards, one is a good candidate to supplant a socially egalitarian top management that expects to get paid its market wage.  The practical problem with this approach is considerable, though.  The very concern for relative as opposed to absolute position that makes one credible in one's willingness to be paid less may very well be taken as a signal that one cares not about absolute return to shareholders but about some other metric, such as the relative size of one's firm, that is not the right one from the perspective of shareholders.  You are credible as a manager who is willing to be paid less, but not as a manager who is equally committed to raising the value of the firm's shares.   

Now, selective altruism: The counsel here is that outside firms or inside lower-level managers to be credible as replacements for the incumbents must have a very substantial degree of altruism toward the shareholders...[to be continued...reaching stop]

One way to learn from the Gita

[riding on the bus to visit my parents...feel like a brief break from working on the Society for Business Ethics matrix project paper due 3/15 that the last post is about...feeling a certain enthusiastic spirit at the moment that doesn't work too well for that basically cool-spirited paper..so, here goes...]

I am a non-Hindu who is a loyal Unitarian-Universalist.  At the same time, I have something of a missionary's enthusiasm for the Bhagavad Gita.  It seems to me to be a full peer of the Garden of Eden story and the Crucifixion and Resurrection story in its power, and the vastly lesser knowledge of it by people in my country seems to me something that should change.

Perhaps the story is best appreciated by people like me if it is told not only in its original version but also in a way that suggests how it can be received by someone like me...the Gita's story of Arjuna's unwillingness to fight and Krishna's remonstrances to him, potent as it is, is embedded in a cultural pattern that is profoundly distant from that of the modern West...Arjuna's reluctance to fight is articulated not in terms of a universal objection to killing, or of an overarching "we are all equal" ethics, but rather of a specific objection to killing kin.  No matter how bad the foes are--and Arjuna has no doubt, at least none that he expresses, about the superiority of his Pandava side over the greedy opposing side commanded by Dhritirashtra--they are still kin, and killing them will disorder the laws of caste.   Similarly, Krishna's admonitions to Arjuna are couched not in the universalist lexicon of a moral duty that applies to all, but rather in terms of a particular duty that lies upon Arjuna as a member of the warrior caste, the commander of his army, and a warrior of singular power--"The Scorcher of Foes".

So how to cast Arjuna's deep self-doubt and Krishna's advice to him--Fight, for the Self, as opposed to the body that is born to die, is imperishable; Fight, for there is in truth neither a Slayer nor a Slain--in a contemporary cultural context?  

Here is one way that resonates for me...I believe that others can recast the Gita in their own way to make it live for them...

The reluctant warrior-politician-businessperson-spouse, etc: "I do not want to fight.  I do not trust myself, for I see inside myself hatred and anger that makes me judge myself and makes me doubt that I am any better than the side I fight.  I do not want to fight.  I am too afraid of what may happen if the other side prevails and the burden of failure lies upon me, for it would be a terrible thing if the other side were to win and I were to be the bringer of that catastrophe.  I do not want to fight.  It is wrong to fight.  I should walk in the ways of peace in all the days of my life."

The guide: "Fight. The causes you cherish and the causes the other cherishes are alike impermanent and corporeal, just as you and the other are.  They are the causes of a day or a millennium, born to die.  What lives forever is the idea of you and the other and the idea of your cause and the cause of the other locked together eternally in harmonious struggle.  Fight, for that idea is imperishable.  The husk of your body and your cause is only that.  Fight, for there is neither a slayer nor a slain."

Relative Position and Manager-Shareholder Relations

Under Robert Frank's model of relative position, people have concerns not only about their own salaries, bonuses, stock options, and other forms of monetary and psychic returns to themselves.  They also care about their economic and psychic returns relative to others; in other words, they have competitive preferences.   The striking real-world result of competitive preferences in Frank's telling is pay compression, in which a minority of highly productive employees earn considerably less than their marginal product and the broad majority of less productive employees earn somewhat more.   Because they value a position at the top of a hierarchy of status, respect, and recognition, highly productive employees are willing to sacrifice a large amount of salary.  For their part, less productive employees demand compensation to occupy a lower position in the hierarchy.   Compressed pay scales, in which a research university faculty member who is say one hundred times more productive in her contributions to knowledge than a less-productive and equally senior colleague but only earns say 25% more than that colleague, are the rule, Frank contends, in private-sector as well as public sector organizations.

The idea I want to explore here is extending Frank's model from the employee-employee context to the manager-shareholder context, and to managerial compensation in particular.  The first basic point is the following: Managers who are highly motivated by status, recognition, respect, and hierarchy--as manifested in, e.g., a large corner office, a large number of reports, and deference from everyone, including shareholders--are managers who according to Frank's model can be made to work for cheap.  They are compensated largely by status, not by money, and work for less, perhaps far less, than their market wage.  By comparison, managers who are indifferent to status and relative position--e.g., those who are fine with being CEO while sitting in a cheap plastic chair and who see themselves as deferring to customers, employees, and shareholders rather than the other way around--are going to command something closer to their market wage.   They are not interested in being kowtowed to; given that lack of interest, shareholders have to pay them market wage or something approaching it.

A Disappointing Russell Shorto Article, and a Suggestion for a More Interesting One

Based in particular on a very nice article he did in the NYT magazine a while back on birth rates in different countries, I have very high expectations for Russell Shorto. Given that, I was disappointed by his recent NYT mag article on Greece. The article, though fair enough on its own terms--I'm sure lots of Greek businesses, such as the construction business doing work for the government that employed the story's central figure, have indeed gone under--struck me as Hamlet without the Prince of Denmark.

My sense is that the 64K question for Greece (and Portugal, Spain, Italy, and France) is whether to change a system in which the dominant group of employees consists of managers and workers in the private sector and government who have a very high degree of job security. A country in which most of the best people are locked into a highly protected, relatively stationary order is perhaps not a country whose prospects are good compared to countries such as the United States.  Here, a highly protected job market, though it prevails for government employment, does not characterize the private sector in the way that it does in southern Europe.

The issue of a dominant sector of employees that protects itself at the expense of others in the country and of social dynamism--as opposed to an apparently related but quite different issue as to whether Greeks are simply more laid back than Germans--did not surface in Shorto's piece. He would be extremely well qualified to write a piece that treats that issue, regardless of his underlying position on the normative issue of junking the high job security system for the private and public elites of southern Europe.

Just as Shorto's birth rates article wound up using the Nordic countries, with their combination of a big welfare state and high birth rates, as a nice qualifier to a US-centered "don't run too big a government if you want people to have kids" line, he might write a piece on the job security issue that uses the same Nordic countries as a possible counter to a line that a security system for the managerial and employee elite is a serious drain on dynamism. My sense is that higher level private sector employees are not protected in Sweden, Denmark, etc. in the way they are in Greece, Italy, etc., but I'm not sure at all about that--am writing now away from a connection.*  But even after satisfying my curiosity on that point with a net search, I'd be highly interested in reading a future Shorto comparative analysis of the job security and social dynamism issue.  A nice starting point for that article would be an NYT piece the other day comparing the bustling scene in a border town on the more flexible German side of the Rhine with the ossified, high unemployment scene in the counterpart town on the French side.



*Wified-in while waiting to testify on tenure reform in Trenton--checking on job security in the private sector in Scandinavia...looks as though Sweden has a less flexible approach and Denmark has a more flexible one...this is a tricky issue to research because the reality of whether there is an inflexible labor system of high job security lies in the details of whether poor employees can successfully avoid discharge through a hearing process...the NJEA (teacher's union) rep here in Trenton is now advocating for poison pill "due process" changes to the tenure bill that would if applied in a certain way kill the efficacy of reform and keep the current NJ system in which it is virtually impossible to get rid of teachers no matter how incompetent.  (My sense is that the current system also operates in that way for govt employees in in general in NJ and elsewhere in the US.  Teachers are a current flashpoint, but the bigger issue is that an important part of the US, the govt sector, operates in the same way that a broader part of Greece, Italy, etc., does.)

The Value of Going Big

Sometimes having two big issues to deal with can lead to healthier outcomes than dealing with just one. The classic example I learned about from reading one of my intellectual heroes, Seymour Martin Lipset, involves Switzerland, which is divided by language and also by religion. Fortunately, those cleavages cut across one another rather than reinforce one another, since many German-speakers are Catholic and many others are Protestant, with the same being true of French speakers. The result is that Switzerland with its two major cross-cutting cleavages is less polarized than societies with one dominant cleavage, such as Belgium with its French-Flemish language cleavage or Nigeria with its Muslim North-Christian South religious divide.

This came home to me in thinking about what I believe are the two most emotionally powerful--if not necessarily the most important--educational issues in my community: academic placement and labor relations between the Board and the teacher's union. The first is a prominent issue in the school board election I'm now running in. The second is not, and I've previously thought that it should stay out of the limelight. But I'm rethinking that position now, guided by the idea that addressing two big hairy issues together can sometimes be healthier and more effective than dealing with just one.

I believe the labor relations issue and the academic placement issue in my school system are good examples of cross-cutting cleavages, in that for many of us one's position on one issue does not readily predict one's position on the other. Accordingly, I'm hopeful that thinking of them together may lead to some unfreezing of polarized positions that is hard to accomplish when considering either issue by itself.

On both issues, I think the way forward is through a more flexible, choice-oriented system that recognizes different values and the limitations of a "one best way" approach. On academic placement going forward, I believe in parents/students in our high school having a choice between a largely deleveled option and an leveled option like the current system, but with effective choice of levels within that system. On labor relations, my thoughts are more tentative--and the issue is much more sensitive for any individual such as myself to express an opinion on, given labor law, the role of the Board on which I serve as management, and the need for all of us to listen rather than to be rooted in our preconceptions--but I am attracted to the idea of a choice system in which teachers in public school districts could opt for something like the current public school standard arrangement or for a different arrangement or arrangements, including one or more arrangements with different hours from the conventional school day and school year.

If the academic placement and labor relations issues are discussed in isolation, I believe the intensity of the emotions on both sides makes it all too easy to view a choice-based approach as simply a way of supporting one side or another in the intense debates on that particular issue. If they are thought about together, my sense is that it is easier to consider a choice-based framework on its merits. More generally, it may make it possible to have a thawing of iced-in, defensive attitudes that can all too readily rule us when a single charged issue is considered in isolation.

 

 

Reflections on an Unread [Now Semi-Read] Article

Read Jonah Lehrer's piece in the New Yorker on the kerfuffle between E.O. Wilson and his co-authors in a recent math-laden article in Nature (unread by me) and the defenders of Hamilton's inclusive fitness model of altruism  formerly espoused by Wilson himself...was profoundly impressed by Wilson's readiness as an 82-year old to reexamine and revise his assumptions...

I'm strongly with Wilson in wanting an alternative to approaches such as Hamilton's that focus too narrowly on kinship (and also to approaches such as Trivers' that focus too narrowly on reciprocity).   I believe that altruism in the form of taking into account at least some of the payoffs of others as well as one's own payoffs is a reality for many humans and nonhumans in situations involving strangers and one-shot games.  Given that prior belief, I think there is real value to an approach to modeling altruism that explains how at least some kinds of it can be an evolutionarily stable strategy in situations involving non-relatives and one-shot interactions.

But allowing that I haven't read the Wilson, Nowak, Tamita article, I'm quite doubtful that their high-tech approach is the way forward for biologists.  I think the way forward will instead involve a low-techThomas Schelling-Robert Frank inspired understanding of the ways in which selective altruism can be helpful to the altruist in leadership and trust games that are as or more important in the real world than prisoner's dilemmas in which altruism, selective or otherwise, is harmful or at best unhelpful.

....

[Decided I should at least skim the Nature article...checking it out...]

I skimmed the article...I'm still doubtful, not because of the story (defensible nests/strong groupishness/altruism), which seems good (not that I would know either way), but because the story seems to be cast in prisoner's dilemma terms...if so, the mainstream defenders of inclusive fitness/reciprocity, etc. can always make the standard rejoinder that as well as altruists may do with other altruists they will not do well with egoists absent the ability to identify and punish them...the way to get out of this box I think is to tell a story that decenters the Prisoner's Dilemma in favor of coordination/leadership/assurance games in which certain types of altruists take egoists to the cleaners in a one-shot game rather than the other way around...

 

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A Self-Correction on Game Names

Since 2010, I’ve classified symmetrical 2 x 2 games into four categories: Harmony games, Trust games, Cooperation games, and Leadership games.   That terminology is reflected in any number of posts on this blog, as well in other matrix-based work I’ve done.

I’m still very good with Leadership, but now have a quibble about Trust and bigger problems with Cooperation and Harmony.

The idea that hit me earlier today and that led to my sense I’ve got some of the names wrong: Games can/should be labeled on the basis of the attribute on the part of one or both of the players that is efficacious in optimizing in the game.

Applying the idea to the four basic types of games:

Leadership is a good term for the class of games such as Battle of the Sexes in which the best or equal best outcome is achieved through leadership by one player that is respected b y the other player.

Trust is an all right but less than best term for a class of games such as Stag Hunt in which the best outcome is achieved though one player being able to assure the other that he/she will play the jointly maximizing strategy that is best for both players.   Trust can be reasonably taken to imply a reciprocity that is not necessary for the optimal outcome in these games, in which only one player need assure the other of his or her intentions.   Assurance gets at that unilateral concept better than trust, and is hence a somewhat better label  for these games.

Cooperation with its highly generic, imprecise associations now strikes me as a weak and overly general term to apply to a class of games consisting of the Prisoner’s Dilemma and one version of Chicken.  In the PD and the relevant type of Chicken, the distinctive game property is that altruism on the part of both players solves the game cleanly.  Absent mutual altruism, these games are very tough ones.  The term for these games that now seems right to me is thus Altruism, or—to be more precise if also clunky about it—Mutual Altruism. 

Finally, Harmony seems like a weak way to describe the games in which the dominant strategy for egoists results in the jointly best outcome.   Simply put, the attribute that works to solve these games is Egoism.  (Note: Altruism fails to work well in a number of them, though it does solve a number.)   Hence, I would call these games Egoism games.

So, the new tetrarchy of labels for games: Egoism, Altruism, Assurance, and Leadership.

We’ll see how long this typology lasts :)*

*Maybe not too long...it occurs to me that using Egoism and Altruism as names for games creates an issue.  In a few easy games both altruism and egoism solve the game; calling all these games egoism games involves an arguable bias in favor of that attribute.  We could call those games Rationality games to indicate that either egoistic or altruistic calculation works to solves these games.  In that case, the tetrarchy becomes a pentarchy, with Rationality added to the other four qualities that solve games.  That seems right, foir now :)

Reflections on an Unread Book

Off to board for PDX in a half hour...the comment the other week on Charles Murray is still on my mind...Murray has an exceptional gift for provocation, and the theme of his new one--the moral collapse of the white American working class over the last fifty years--indeed provokes me, even or perhaps especially since I haven't read it...

One reaction/thought embodied in a pompous title I just drafted for this post and then scratched: A Dream of a Better Future for a Distressed Working Class: Politics as the New Opium of the People and Why That's a Good Thing.

The thought: Instead of banging on about decline and decay, we need to think about what can give a renewed purpose to the lives of people in the American working class. 

I completely respect the claim--I take it this is M's own normative position--that if the American elite starts affirming the socially conservative values by which it lives that that affirmation might help the working class.  The elite believes, and the people follow.

Fair enough--but I just don't think that claim corresponds to a big part of social reality in which non-elites need to define themselves against elite ideology rather than simply adopting it.

Thus my line: Just as the recession of certain elites from religious belief centuries ago opened up space for a popular embrace of religion that helped people down the socioeconomic ladder at one stage in history, a recession of certain elites from political belief now could open up space for a working class embrace of politics.

Currently American elites dominate the ranks of true believers of both red and blue stripes.  I am highly hopeful that if that became much less true, the prospects for working class people in our country would become much better.  If blue faith and red faith became the heartland properties of people in the lower ranks of our society instead of those at the top, the worrisome features of contemporary working class life would have a much better chance of turning around than under our current regime.  Or so it seems this morning at Newark airport :)

 

 

Mixed Nash continued

Following up on the four-person game analyzed in the previous post...

Memo to self: If the Pascal-Bentham-Whitman-Nash type that optimizes in two-player games and holds its own against egoists is a truly groovy type, it should also optimize and be an evolutionarily stable type in the four-player game in which you play either 2 or 10 and get either $2 or $10 except that if all four choose 10 no one gets anything.

As a two-person game, this is a leadership game, and I'm morally sure (that is, I think I know but don't really know) that P-B-W-N will optimize because the game is similar enough to ones I have analyzed.

As a four-player game...well, I haven't really thought about multi-player games for P-B-W-N purposes, basically because the tech gets out of my league...

A note or two...the .928 probability of playing 10 that is mixed Nash for four egoists is decidedly suboptimal...a little SAT-style plug-in suggests that the optimal level of playing 10 is somewhere between .5 and .75...so P-B-W-N if it is an optimizing type in the 4-player game should play 10 at that lower level...to meet the criterion of being an evolutionarily stable strategy, it should also be resistant to egoism...

I'm genuinely interested (i.e., no moral certainty here) as to whether P-B-W-N is optimizing and an ESS in the 4-player game...a to-do for when some time opens up after getting my SBE paper for 3/1 done...