Posted tagged ‘fiscal cliff’

Finite and Infinite Games: How Politics Fits In

January 11, 2013

It has been insightful reading news articles and political commentary as 2012 came to an end. There was relief with the brief reprise from the political drama. Then there were individual politicians holding press conferences with posturing, grandstanding, criticisms and promises that next time the results will be more to his wanting. This was generally followed by the disturbingly continued use of yesterday’s news today as justification for political election plans years from now.

I was surprised to find most news articles in these fevered days before the automatic funding cuts placed focus on the coinciding expiring tax cuts and not sequestration itself. The latter is the far larger problem but its impact on the constituency is less direct than the then pending tax increase.

Perhaps because it is a significantly more complicated, politically charged issue, it just makes a more difficult, rare story. Perhaps this is the nature of politics, but to me it has the feeling of another poorly-scripted reality television show.

(Are you feeling lost in what sequestration is? The State of Arizona’s Department of Education contracted for an excellent summary on that here http://www.azed.gov/no-child-left-behind/files/2012/07/sequestration-cheat-sheet.pdf)

My question: If we made such little progress over the preceding 15 months, even with a bi-partisan committee formed to address the matter, what will be done differently in the next two months to avoid repeat of December 31. I do not see public reactions from politicians encouraging or desiring this. That is disturbing to me. Today’s colloquialism describing this is “to kick the can down the road” to describe the constant state of delaying the tough decisions.

I am suddenly reminded of “Finite and Infinite Games” by James Carse.  In his book, finite games are those governed by an agreed upon set of rules and have a defined beginning and end.  The rules cannot be changed and the object of the game is to win.  The outcome of the game is not known beforehand.  An example would be a football game.  The players and spectators know the rules, but no one knows for certain which team will emerge victorious.  Games do not have to be games or sports in the traditional sense and can be fun or serious.  War, for example, is a finite game played until one side concedes victory to the other.

Conversely, in an infinite game the goal is the keep the game in play.  Hence the rules must change if they will bring the game to an end.  It is a game without a defined beginning or end.  The philosophical example in his book is life.  The book then continues on to provide other lenses to view the world that, while not contradictory to this writing, would generate unnecessary clutter.

As I watch college football Bowl Games I contrast them with politics.  Interestingly, politics seems to be morphing into an infinite game.  Politicians, regardless of ideology, seem to prolong their time in office by avoiding the difficult questions for fear of failing re-election.

This exposes a critical flaw in American government.  What is the career path of a politician?  What does a 45-year-old politician do after holding elected office for only a single or a few terms?  There is not a compelling incentive for politicians to leave and there can be a sharp penalty for leaving voluntarily or involuntarily through a failed reelection campaign.

This introduces career politicians who act not in the finite game of a term but rather as the infinite game of maintaining political careers.  This conflict of interest between politicians and American citizens drive politicians to avoid difficult conversations and accountability.  These are both aspects of a finite game and run contrary to the career politician’s interest of an infinite game.

This maladaptation of the political process in not in the spirit of the Philidelphia Convention which drafted the US Constitution.  As history tells us, this was not a document created by unanimity.  The divides were startling and only 39 of the 55 delegates signed the final document.  Yet decisions were made in the interests of the country that were not to the complete satisfaction of all.  All of this happened in less than four months, between May 25 and September 17, 1787.  I cringe in dismay that the current Congress, irrespective of political party, could not accomplish a fraction of such a dramatic feat.

An interesting twist is that the finite games of political terms provide the necessary conditions to inspire action today.  For they inhibit procrastination and self-serving delays with a limited time for action before one’s replacement arrives.  This continual renewal is needed to protect perhaps the most important infinite game: freedom.

Conflict of Interest: Do Congressmen’s Compensation Exceed the $250,000 Being Discussed For Tax Cut Renewal?

December 29, 2012

Today’s financial cliff drama and sound bytes focuses on the amount of annual income below which the current tax rate is not increased.

Income levels of $250,000, $400,000 and $1million have been floated around.  My question is: do our Congressmen have a conflict of interest given their annual compensation of at least $174,000?  Per a January 2012 Congressional Research Service report:

“Since January 1, 2009, the compensation for most Representatives and Senators has been $174,000. Compensation for the Speaker of the House is $223,500, while the President pro tempore of the Senate and the majority and minority leaders in the House and Senate receive a salary of $193,400.1

I wonder what is the average annual income for a Congressman?  Those that are married are probably filing jointly with a spouse so that income is included as well as is any other revenue from business interests.  There may be other income sources from investments (The median net worth for a Congressmen – $878,500 for Democrats, $957,500 for Republicans – far exceeds the country’s medium household net worth of $96,000 in 2009.2)

That at least some members of Congress jointly file federal income taxes each year in excess of $250,000 is not an unreasonable hypothesis.  It appears there is an actual or perceived conflict of interest among Congressmen on this matter as they debate an income level of $250,000 vs. $400,000.  As a responsible constituency, we are compelled to ask: “Who specifically is benefiting?” and “Is that a meaningful percentage of Congress?”  These have the appearance of having ramifications beyond “the interests of small business owners.”

This takes on a new perception when the US poverty level for 2011 is defined as total family yearly income of <$22,350 (for a family of four)3  and the average median household income in the United States from 2007-2011 was $52,762.4.  This begs the question, if we pay our politicians more than three times the medium household income in the country and we get the dysfunctional results we have today, how do we change compensation to reflect the value received by the US people?  Just as the commercial sector cannot always police themselves and requests outside intervention, Congress’s recent actions suggests its members cannot responsibly govern themselves.  Given the country’s financial stress, the politician’s themselves should share the financial burden and should renew the tax cuts on incomes below $250,000.

References

1. Burdnick Ida A, Congressional Research Service Report for Congress (4 January 2012), Congressional Salaries and Allowances. Page 1.  Retrieved from: http://library.clerk.house.gov/reference-files/112_20120104.pdf

2. Luhby, Tami, The One Percenters In Congress (8 May 2012) CNN Money.  Retrieved from: http://money.cnn.com/2012/05/08/news/economy/congress-net-worth/index.htm

3. U.S. Department of Health & Human Services (20 January 2011). Annual Update of the HHS Poverty Guidelines (Federal Registry Notice). Retrieved from http://aspe.hhs.gov/poverty/11fedreg.shtml

4. U.S Census Bureau, People Quick Facts (2011).  Retrieved from: http://quickfacts.census.gov/qfd/states/00000.html

What is an “Entitlement Program?” – Part One Social Security

December 1, 2012

The term “entitlements” is being throw around to encompass a broad swath of federal spending.   So I have a few simple questions for politicians and urge you to ask and answer them as well:

  • What are entitlements / entitlement programs?
  • What specific programs are entitlements?
  • Is Social Security considered an entitlement program?
  • Is Medicare considered an entitlement program?
  • Is unemployment compensation an entitlement program?

I am concerned that many people passionately voice opinions without  understanding the history or purpose of the programs.   Politicians making unconstructive inflammatory remarks are counterproductive to pragmatic solutions.  Learn more about the history of social security at:  https://www.socialsecurity.gov/history/

Social Security is essentially a government forced savings plan and is not “free” to the beneficiary. Individuals pay a specific percentage of income with the explicit promise of receiving a defined amount back based upon what is contributed.  The difference between what is put in and what is taken out is not “free” but rather a return on what is essentially a pension.  Congress’s misfeasance by “borrowing” from the Social Security Trust thus underfunding the pension liabilities is not a program flaw but rather a management one.

I urge you to review the history of Social Security above as a primer to this multiple part series.  We need to be educated and have this as an open conversation not one driven by fear or misinformation.  The more contentious the issue, the more we need to return to base truth.