World War I and the Era of Bounded Rationality

I just finished listening to a Great Courses lecture series about World War I by Prof. Vejas G. Liulevicius of the University of Tennessee.  The course is a great learning experience. Understanding the tragic miscalculations of World War I is necessary to understanding the history of government, management and economics during the last century, including the expansion of state power and the rejection of classical liberalism on behalf of state activism, which is necessarily militaristic despite ideologically motivated claims to the contrary.  

 March and Simon’s concept of bounded or cognitive limits on rationality, which is usually applied to business strategy, is omnipresent in the history of World War I.   Bounded rationality, or the physical, financial, and mental constraints on rational choice,  is tightened with respect to the larger-scale decisions of government.  

Many aspects of the Great War suggest  a sharp expansion in the importance of cognitive limits on rationality.  These include the mistaken enthusiasm of the August Madness, i.e., the international public enthusiasm about the war when it first began; the difficulty of strategic and tactical adjustment to the technology of mechanized warfare; the resultant failure of many of the military strategies such as at the Battles of Verdun, Gallipoli, and the Spring Offensive; the Germans’ secretive propaganda efforts, which led to the stab in the back theory (itself reflecting limited rationality); the Germans’ strategic miscalculation with respect to the harshness  of the the Brest-Litovsk treaty with Russia, which led to the Allies' greater harshness at Versailles; both the reasoning for starting the war (leading to the termination of the Empires, which had seen the war as a means of expansion) and the Allies’ treaties, which led to the next war; and the naïve post-war idealism of both Lenin and Wilson. 

I would conclude that the Great War was a comedy of errors, except that few narratives are as tragic, and few have made me more pessimistic about the human condition.

What Is to Be Done?

I just sent this email to an acquaintance who lives in my county and who asks what is to be done:

The conservative movement hasn’t been successful, and the Republican Party has proven itself to be an enemy of liberty much like the Democratic.   One stumbling block is public opinion.  It is not unlike the fall of Rome.  By the first or second century few people living in Rome had any understanding of the republican form of government. They had immigrated there from the conquered provinces, and if they chose to remain in Rome often it was often because of the welfare benefits that Augustus and his successors had developed (bread and circus: free grain, free entertainment, free food).   

America has increasingly become a nation of beggars and welfare cheats; there is little understanding of Jeffersonian individualism, especially among those educated in New York’s and similar public schools; increasingly, Americans are motivated by lust for subsidies and handouts. This starts at the top--on Wall Street.  If the public was comfortable with the bailout and with the monetary policies that have been pursued since ‘08, there is no limit to how much wealth transfer they will accept. 

This is not the America of Jefferson,  of Grover Cleveland, or even of Franklin Roosevelt.  I do not think there is much hope for democratic change.  Secession, nullification, or a breaking off of freedom-loving Americans in a new polity are possible paths, but they can’t be executed now.   Relocation to another country is feasible now, and I am planning at least a partial relocation.  

To do more, there will need to be a further breakdown in federal power.  That might occur as the dollar falls to ever lower levels and America finds that the federal government is not sustainable. That might happen within our lifetimes.  I’m sorry to say it, but there needs to be more chaos before anything important can happen.  Rather than waste time with political activity, it might be more useful to spend your time educating yourself, building a game plan, and winning over others to a vision of an alternative.  There is no point in defending an American system that already has disappeared.  

Tea Party Commitment Tactics

The Tea Party is showing greater guts and glory than I anticipated.  But we are in the first inning and the score is 4 to 3 in the Republicrats' favor.  We have elected candidates, taken control of the House and stopped the spending bill, but the the Republicrats passed the health care act, buried Ron Paul's audit-the-Fed bill, passed the pork-laden tax bill, and still push for candidates like Rick Lazio.

It is going to be an uphill battle.

One way to view the battle is as a negotiation.  The Tea Party is negotiating with the Republicrats, the two-headed hydra of the Democrats and Lazio Republicans.  This negotiation is win-lose, which implies a negotiation style that experts call "distributive."  It is distributive because the Democrats and the big government Republicans are thieves, and in the prevention of theft the Tea Party deprives the Rick Lazios, the Democratic Party and the interest groups that support them of their stolen wealth.  There is no gain to  the Republicrats from freedom except over many decades.  The six-figure-income school teacher and the eight-figure-income investment banker see little value in liberty because their out-sized, stolen pay checks are far more valuable to them in their ignorance and greed. 

Distributive bargaining requires hard bargaining. It involves bluffs; gambits; opening offers; counter-offers and manipulative tactics. One of the key ploys in distributive negotiation is commitment.  Roy J. Lewicki, David M. Saunders, and Bruce Barry (LSB) write textbooks on negotiation, and Essentials of Negotiation is the smaller version of their book .   They point out that by making a commitment the negotiator signals what the final action will be if negotiations fail.  The other side often views commitments as threats. Commitments can involve if-then statements with a high degree of specificity.  "If the health care act is not repealed, then we will vote for an alternative party," for instance.

Commitments contain the risk of fixing a position that might change with circumstances or additional information. In a political movement, such a situation is common.  Tea Parties need to combine a degree of flexibility with their commitments.  But we are far from worrying about a change in the fundamental circumstances facing the nation.  The United States is in decline because of the federal, state and local governments; the special interests; and the two political parties.  Steps to reverse the decline would include repeal of law and regulation such as the health care act; elimination of the Supreme Court's legislative powers; abolition of various government agencies such as the Departments of Education and Energy; and the abolition of the Fed, which would be the single biggest step toward rationalization of the American economy.

LSB write (I'm keying off pages 46 to 49 of their textbook) that commitments involve finality; specificity; and consequences.  Public statements enhance the commitment's potency.  Tactics to enhance the strength of commitments would include alliances with outside bases (e.g., alliances among various political movements); emphasizing commitment verbally; and making preparations to carry out a threat.  One can visualize two nations in a conflict. Should one begin mobilizing its army, the meaning is clear.  Demonstrations are a form of mobilization.  Civil disobedience is an effective tactic that will move public opinion in the TP's favor and carries enough of a hint of the possibility of further steps to make a point.

The Tea Party needs to continually refresh its commitment to the interests that underlie its positions.  These interests are liberty and the prevention of the sick violence inherent in socialism.