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Saturday, April 10, 2010

Minimax and sophomoric politics

A fundamental problem with our modern congress, troubling to both liberals and conservatives, is the corruption of the legislative process by monied interests and the attendant evils of crony capitalism. The conservative perspective is that this corruption is a consequence of congress's excess of power and its strong incentives to legislate favors for business interests in return for campaign contributions. The purpose of this post is to explore, in a naive manner, the root of this difficulty, and to formulate a framework for analyzing the problem. Our conclusion is that the fundamental conservative principles that (i) government legislation should restrict individual freedom as little as possible and (ii) should adhere to constitutional strictures, needs to be supplemented by a third principle, which unfortunately, will be as difficult to realize as the first two. We call this third principle the minimax principle.

Legislation which is narrowly focused and legislation which picks winners and losers is particularly likely to be motivated by or to stimulate campaign donations. The conservative perspective is that the government should generally not be in the business of picking winners and losers, but it is difficult to imagine any legislation which avoids doing so. Hence, at best our goal should be to minimize this problem.

The mathematical framework for considering such a problem cannot truly apply to any messy real world human endeavor, but it suggests tests for determining the reasonableness of legislation from a fiscally conservative viewpoint. The procedure that comes to mind is the minimax process, familiar from linear algebra.

Consider a piece of proposed legislation. Presumably it is possible to articulate the goal of the legislation. Given the goal, the fiscal conservative will want to minimize implicit restrictions on liberty and free enterprise caused by the legislation and also, of course, he wishes to minimize the cost of the legislation. Next he will wish to maximize the category of entities benefitted by the legislation. For example, if the purpose of the legislation is to boost employment, then why focus on Detroit auto workers versus Southern auto workers? Why focus on auto workers versus airplane manufacturers, etc. There should be a compelling reason for restricting to one of these subcategories. Of course there may not be enough money to fund all programs that fit into the desired category. So, perhaps the goal is modified and some element of the legislation is removed to economize. After removing part of the legislation, the natural category of affected entities may increase again, and we iterate the process. Either the process terminates with acceptable legislation or its scope blows up and becomes unworkable. To summarize, we view legislation as flawed if the beneficiaries of the legislation constitute a smaller group than the broadest group that naturally falls within the goals of the legislation.

The current solution to unaffordable natural scope is to fund those entities which lead to the most campaign donations. Perhaps the correct answer is that if such a minimax process never leads to an affordable answer, the legislation should be abandoned. Any such legislation is too particularistic to be worth pursuing. Important national goals such as the construction of interstate highways that one may wish to develop over many years as funds become available are not excluded by this scheme. One simply specifies the criteria used to prioritize the order in which the roads are built.

Perhaps the minimax principle is not readily amenable to the sausage factory world of legislation, but it provides one more axis for evaluating the quality of legislation.

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