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When to tax excess margins

Comments at interfluidity are always great, and the previous post was no exception. I want to quickly address some critiques by commenters, and make clear something that was perhaps not so clear in the prior post:

As commenter Effem points out, taxing margins in the way I’ve proposed is similar to imposing a price control, except that it won’t leave goods priced into shortage (as long as the tax above the price threshold is not 100%). The simplest way to understand it is as an exercise of government-coordinated monopsony power to counter the monopoly power that enables firms to profit from imposing scarcity and raising prices. It’s only an appropriate remedy in this case.

Commenter Somebody offers the very straightforward argument that high prices contribute to supply by bringing higher-priced production on line, which taxing price rises should discourage. If a commodity is being competitively produced such that lower cost sources are fully exploited, preventing price rises would indeed impair supply. But if lower cost sources are not being exploited because an oligopoly industry prefers to profit from scarcity instead, it’s more efficient to eliminate the oligopoly rents and get the cheap production online then to hope price rises bring new entrants into more resource-intensive forms of production. To use the commenter’s example, we don’t want to tap Canadian tar oil sands while cheaper sources of oil remain available but unexploited by producer choice. If industry incumbents are intentionally limiting supply, letting prices rise would only bring out this supply if it would provoke competition by new entrants somehow immune to the barriers preventing exploitation of the more accessible sources.

What if, however, a commodity may occasionally be able to command very high margins, but over a full cycle, its price is very volatile and often below average cost? Then clipping high margins may render the commodity entirely uneconomical to exploit. This is Effem’s concern. One way to deal with this is to let the industry consolidate during downturns, and then let it extract oligopoly rents, so that good times cover the bad. But that is not a great approach. It distributes costs unpredictably, and an industry monopolistic enough to make this work may not confine itself to pricing in a normal rate of profit over the full cycle. Another way to manage this is to incentivize storage when the commodity is cheap that can be mobilized when the commodity is dear to blunt the cycle. Futures markets are supposed to do this to a degree: “spiky” commodities tend to go into backwardization, representing a negative cost of storage net of a convenience yield. But obviously futures markets and the storage they incentivize have not been sufficient to prevent destabilizing swings in the price of oil. For really important commodities, state interventions like the Strategic Petroleum Reserve should probably be expanded. But storage can only be a buffer, sufficiently sharp volatility will break it. And there are services that cannot be stored also subject to high fixed costs and feast/famine cycles, like airlines. These industries are always a regulatory challenge: If you manage to create textbook levels of competition, price falls to marginal cost, which in ordinary times with flush capacity means price does not cover average cost, and everybody goes bankrupt. If you let the industry consolidate into pricing power, it grows predatory, and uses prior cycles’ bankruptcies to launder progressively higher scarcity rents. Laissez-faire simply does not work for industries like this. The solution, broadly, is to subsidize these industries through famine, while clipping the potential scarcity rents in good times by, e.g. taxing unusual margins. We just subsidized the airlines in famine. Now, they seem to be enjoying scarcity rents, and are not overly urgent about expanding capacity. We need to routinize a full-cycle theory that serves the broad public, rather than our current practice under which industries panic us into bailouts during rough patches, then enjoy scarcity rents during recoveries.

On Twitter, @InquisitiveUrsa suggests using a price collar around forward commitments to encourage petroleum supply. The state could promise to purchase very large quantities of crude to refill and expand the strategic petroleum, promising to pay at least, say, $80 per barrel but requiring a commitment to sell for no more than say $100 per barrel from domestic suppliers. This is a great example of a full-cycle stabilization approach, rather than a half-cycle panicked subsidy or ad hoc price intervention. (I would prefer pairing the committed price floor with an excess margins tax, to eliminate a screw-the-government-we’ll-take-our-scarcity-rents revolt by industry.)

Commenter Brett worries that taxing excess margins would be bad for innovation. There are a bunch of cases to think about there. Innovation can yield high margins in three ways: (1) A market is broadly competitive, but a first-mover enjoys temporary pricing power during the lag time between the introduction of the innovation and when competitors are able to efficiently reproduce it; (2) A market is intentionally uncompetitive because we have used patent, copyright, or other so-called “intellectual property rights” to grant an innovator the capacity to price at high margins; and (3) no formal intellectual property right protects an innovator but network effects or some other barrier to competition vouchsafes persistent pricing power to one or a few key players. Case (1) is the least problematic. High margins won on new products for which there are no obvious barriers to competition should be celebrated, and certainly not taxed. As time passes, competition should discernibly come to reign in prices and margins. If that does not happen, we may eventually consider it an example of case (3). But we should give the innovator the benefit of the doubt for some time. With respect to case (2), as Dean Baker has pointed out, we are already talking about taxes. Intellectual property rights amount to a grant to private parties to use the coercive power of the state in order to receive what are effectively excise taxes on particular goods and services that otherwise would be provided more cheaply. This is intended as a reward to innovation, though I think that intellectual property rentiers have expanded it into an overly costly and poorly targeted incentive to innovate. Rather than layering a new tax on persistent excess margins derived from a thicket of IP rights and an army of lawyers, perhaps it would be better just to pare back the IP rights and let competition compress the margins. But in our fallen world, perhaps restructuring and optimizing legal arrangements rabidly defended by powerful interests just won’t happen. In which case, taxing persistent excess margins might be a good backstop, letting innovators fully enjoy their intended monopoly for a some period, but creating hazard for those who don’t let up over the long terms intellectual property lobbyists and lawyers are now able to extend exclusivity. Under case (3), where network effects or some other intractable barrier prevents competition over a long term regardless of our collective choice to reward or not to reward the innovator, one way or another of course we should reign in the pricing power and excess margin. That may involve taxing it, or regulating more directly to ensure “natural monopolies” are managed in the public interest. The permanent winner-take-all network effects that have let Facebook, Google, Amazon, and Apple so thoroughly dominate have been terrible, not good, for innovation.

Longtime commenter benign brodwicz argues excess profits should be transferred to firm workers, rather than taxed. The Whitehouse / Warren proposal would have the tax dividended to individuals, which I think is a fine idea (though a hard sell in an inflationary moment, and unfortunately with a phase-out by income). I don’t think transferring scarcity rents to firm workers is a great idea. The transfers would partially substitute for salary, and the result would be worker interests more strongly aligned with shareholders’ to pursue and exploit monopoly.

Taxing persistent excess margins is in the same family as antitrust regulation. It’s a regulatory idea that in application has to be tailored to the particulars of an industry. In some industries, competition works fine, high margins are transient rewards to innovation until competitors catch up, and nothing should be done. But much of our economy is now concentrated or captured by conglomerations of various sorts who squeeze. It is time to squeeze back. Fundamentally, what we want is a regulatory regime that discourages firms and investors from aspiring to monopoly or tacit cartel. We want firms to understand that even if they achieve persistent monopoly rents, they won’t be able to keep them. Just as it is in the interest of the New York Yankees that their league be regulated so not even they can permanently dominate, we want firms in industries to work proactively with regulators to ensure continuing competition. They should understand the alternative will not be a lucrative stagnation but real risk of expropriation.

Update History:

  • 8-Jun-2023, 5:15 p.m. EEST: “and users uses prior cycles’ bankruptcy bankruptcies to launder progressively higher scarcity rents”; “Rather than layering a new tax on persistent excess margins”

Tax excess margins

With prices of commodities like oil soaring, there have been calls for a so-called “windfall-profits tax” from people like Sheldon Whitehouse and Elizabeth Warren. Matt Yglesias brings up the usual objection: If prices are soaring, it’s because producers aren’t producing enough to satisfy demand. Further taxing profits, the story goes, would only blunt incentives to produce, and so would be counterproductive. Yglesias suggests imposing a tax designed to be “inframarginal”, that would tax profits at levels beneath those producers are pretty sure to generate, but leave higher levels of profit untouched to preserve incentives to produce. I agree with Josh Barro that for a variety of reasons, this proposal is “too clever by half”. It would be hard to get right, especially considering how the precedent it sets would be perceived over a longer timeframe.

Nevertheless, it is good that Yglesias moves beyond the neoliberal reflex to assume taxes must always reduce incentives to produce. In theory, a reliably inframarginal tax wouldn’t affect those incentives at all. But we can do even better than that! We can design a profit tax that actually improves incentives to produce!

Holding the cost of goods sold constant, firms have two broad strategies to increase profits: They can increase the quantity of goods that they sell, or they can increase the price. Shareholders may be pleased either way, but the rest of us have a preference for the first strategy. We would like firms to seek profits by increasing production at moderate prices, rather than imposing scarcity and charging high prices. If markets were subject to textbook competition, firms could never choose the second strategy. One firm’s scarce production at high prices would become other firms’ opportunity to expand quantity and market share. But in concentrated industries, or say, an industry dominated by an international cartel and a few large producers, firms may tacitly coordinate to choose the second strategy. Call it “capital discipline”.

When competition does not prevent firms from resorting to scarcity and pricing power, a tax can. The key is not to tax profits per se, but profit margins. Then firms are free to be as profitable as they want to be, if they increase the quantity they produce and sell at customary margins. But if they try to shirk producing and just raise prices, the gravy gets taken away.

You wouldn’t want to tax accounting-derived profit margins. Firms would just raise prices anyway, and find ways to pad costs to keep margins low. But for commodities like oil, we know how expensive oil has to be for even high-cost producers, like US-based frackers, to turn a decent profit on each barrel of oil sold. So all we have to do to penalize the scarcity strategy is tax revenue collected at a fair margin above that price. Suppose the all-in cost to frackers per barrel produced is $80/barrel. We simply impose a tax on revenue above $100/barrel. Once the price of oil rises to this level, it does no good for producers if the price jumps even higher, to $120 or $140. The state takes the extra $20 or $40 away. The only way, then, to increase profits is to sell more barrels, or produce them more efficiently. And that is the incentive structure we want. Rather than blunting incentives to produce, taxing excess margin restores the incentives that, in a textbook economy, competition would provide. The same approach could be applied to refiners’ “crack spreads”. (See David Dayen.)

Not all of our politicians are idiots. If you read the details of the Whitehouse/Warren proposal, it is structured largely this way. It would tax 50% of the difference between current prices and prices known to be profitable for producers during an earlier period. It’s designed to hold producers harmless, if they increase quantities, but reduce the benefit they receive from a higher price. It even exempts smaller producers, to encourage competition to do the work and obviate the tax.

There’s no reason to get too clever by half. Sure, as you’d expect from Elizabeth Warren, a so-called “windfall-profit tax” (that is really an excess margins tax) has a populist stick-it-to-the-price-gougers vibe. But it is also a well designed levy from a technocratic perspective that would enhance incentives to produce when competition is insufficient to discourage industries from seeking scarcity rents. If such taxes are imposed regularly, the threat of them would reduce the incentives for industries to consolidate in the first place. Taxing persistent excess margins is in the sweet spot where good politics and good policy intersect. We should do more of it.

Update: See also “When to tax excess margins” for more, and for responses to common criticisms of this proposal.


Postscript regarding climate change: I am terrified of climate change. It feels perverse to be writing about fossil fuels as an ordinary commodity whose quantity of production at lowest possible cost we should seek to maximize. Over as short a term as possible, we would like fossil fuels not to be produced at all, to be left in the ground. But I broadly agree with Matt Yglesias that, as a practical, political matter, kneecapping supply is a bad approach to this end. The material pain that unusually high energy prices produce, unless mitigated by some sweetener (like a carbon dividend), provokes backlash that undermines political coalitions serious about climate. High fossil fuel prices not due to an overt tax make the people who work to sabotage climate solutions richer and more powerful. These political circumstances may change, perhaps very soon unfortunately, as each summer is deadlier and more frightening than the last. But for the moment, high fossil fuel prices provoke political reaction more effectively than they promote desirable efficiencies. As long as this remains true, the key to weaning ourselves must be to render fossil fuels expensive relative to carbon-neutral alternatives, rather than in absolute terms. That is, we need to drive down the perceived cost of substituting efficiencies or alternative energy sources so that reduced use of fossil fuels is not painful. This is a political rather than ethical claim. From an ethical perspective, we ought to be willing to tolerate large standard-of-living sacrifices (and the redistributions that would be necessary not to starve people) in order to preserve a habitable planet. Politically, however, we are not there yet, so we must invent spoonfuls of sugar to help the medicine go down.

Update History:

  • 15-Oct-2022, 2:35 p.m. EDT: Add bold update about followup post.

No peace, no justice

“No justice, no peace” is a chant commonly heard at protests. The meaning is that there can be no social peace until the injustices being protested are addressed. And there is truth in that. Social arrangements widely perceived as unjust will and should make it difficult to keep the social peace.

But the converse is also true, “no peace, no justice”. There is no justice in the heat of conflict. Nearly every act in a violent conflict is a perpetration of injustice. Even in nonviolent political contestation, when it is hot, the imperative to act in ways partisans believe will advance the cause often overwhelms concerns about justice. Whatever harm some controversy provokes to the people who happen to find themselves in the spotlight becomes secondary to the role of the event in the broader dispute, the ways that partisans can make use of it, weaponize it. That is all quite the opposite of justice.

If you say you stand for justice, you must also stand for some path to social peace. Partisans on all sides of our contemporary disputes seem to have forgotten this. However our controversies shake out, we will all have to live together. If you essentialize partisans on the other side of your disputes as implacable, evil, you leave no hope whatsoever for justice or for peace. In a society that we share, unless you mean to expel or incarcerate or kill large groups of people (in which case you are neither for peace nor for justice), your politics must create space for redemption, cooptation, reconciliation. If your politics does not envision and work towards a decent outcome for your “enemies” as well as your allies, the cause you serve is not just.

On the cultural right, people who essentialize race and assume that demographics are destiny, and so must become the battleground on which political disputes are fought, serve the cause of neither peace nor justice. Demographic difference is inescapable without recourse to atrocity. The turn-of-the-millennium triumphalism of Democratic partisans based on demographics trends was both morally bankrupt and empirically dumb. US history is a recurring story of the identity and politics of various groups changing as they transform from outsider new immigrants to more comfortably American identities. Democrats have belatedly realized that they cannot pocket “Latinx” voters, who can and will often vote Republican. Unfortunately, the bad intuitions of the discredited “emerging Democratic majority” have transmogrified into “replacement theory” on the right, still empirically wrong but even more socially vicious.

On the cultural left, the essentialization of “whiteness” or “white supremacy” as an evil, almost supernatural, force inextricably bound up in the DNA of the United States but that must be “dismantled” similarly leaves no room for peace, and so no room for justice. If the United States is irredeemably white supremicist, then dismantling white supremacy means dismantling the United States. Insurrection was a bad idea on January 6, 2021, and it remains so today. If you claim that “whiteness is a disease”, your plain language leaves little room for full and equal inclusion of people who think of themselves as white in the better society you hope to build, and so sabotages any hope of social peace, and therefore any hope of social justice. People are people. Our humanity transcends demography and so too must our politics. The United States does indeed have a long and shameful history of white supremacy, but it also has a long, imperfect, history of struggling to overcome race-based caste and resentment, from the Civil War to the Civil Rights Movement to George Floyd protests and the contemporary foibles of corporate HR. If, as Aleksandr Solzhenitsyn wrote, “the line dividing good and evil cuts through the heart of every human being” then it surely has not conveniently set itself to one side or the other of giant nations of human beings. Even the United States can, perhaps, be redeemed.

But there is no redemption, and no virtue, in warfare or atrocity. To seek justice, we must also seek peace. The frameworks, theories, words we use to envisage, evangelize, enact a better future are not handed down to us by God or nature or empirical sciences. We create these ideas, we devise, choose, and develop them. I beg you, when you build your theories, remember that you must include a hopeful future for everyone, even the people who for the moment you may imagine are “on the other side”. It is your work to persuade them, not to destroy them. “A defense of your convictions should never require or permit cruelty,” writes David French. There are no devils in this world, only humans. Both justice and peace demand that all us humans live and thrive and love together.

Sweetening a peace

I. Introduction

In the West, there’s a debate between those who think the Ukraine war should simply be vigorously supported until Ukraine wins a decisive military victory and Russia is further weakened, and those like me, who think that some kind of a peace should be arranged immediately, with remaining conflicting claims and aims to be resolved through negotiation. It is not really an answer to say the Ukranians should decide. Of course they, and Russia, ultimately do decide. But those decisions cannot help but be affected by the views of partners whose support is essential now and will become the basis of Ukraine’s reconstruction, whether or not provision of support is made explicitly contingent. One way or another, “the West” is and will be involved in decisions that surround resolving to fight or seeking a peace.

Those of us who’d like to see an urgent settlement are immediately presented with a pretty damning question: How much of their country are the Ukrainians supposed to give up for your peace? On deontological grounds, the answer should be “none” — Ukraine is entitled to all of its internationally recognized territory, including Crimea. On consequentialist grounds, settling for nothing less than a certain, immediate recovery of everything might mean years of destruction, bloodshed, and impoverishment, would risk a broader, even more terrible war, and might not ever succeed. Before the Bucha atrocities were known, and before the Russian cruiser Moskva was sunk, Ukraine and Russia seemed close to terms for some kind of peace that “set aside” certain territorial questions, or maybe would defer them to some distant referendum. A compromise between consequentialism and deontology was on the table. But Ukrainian outrage and the wounded pride of Russia’s military apparently put an end to those talks.

II. Not Munich, not anymore

I don’t have an answer to the question of what Ukraine should or shouldn’t accept to avoid the carnage of continuing war. I do strongly believe that the interest of the West, and indeed of all the world, is in the shortest conflict possible. Crimea 2014 may have been Munich, but Ukraine 2022 will not be. Far from grabbing territory on the cheap, any territorial gains they achieve will be minimal, and won at a high cost in blood, materiel, and prestige. Rather than preventing a broader mobilization by antagonistic powers, Russia has guaranteed one, as the Eastern flank of NATO will now be heavily militarized. This war may leave Russia aggrieved or ruthlessly determined for revenge, but it will not be emboldened by a belief that it can invade neighbors cheaply and escape consequences for aggression. It is continued grievance, not ebullient confidence, that might render Russia a danger following a peace.

The West’s interest, then, should be to seek a peace that is good for Ukraine and diminishes Russian grievance and isolation. US Secretary of Defense Austin emphasized in remarks diminishment of capacity, but without diminishment of grievance that is at best a short-sighted. Russia is a large, resource-rich, nuclear power, with trade and military relationships that continue throughout the world. We’ve not been able to isolate North Korea enough to prevent dangerous militarization. Over even a medium term, we won’t be able to prevent a determined Russia from rearming. As we reach for World War analogies, it’s Versailles much more than Munich that should trouble us now.

III. Acknowledge multipolarity

Russia ought not be permitted to “win” in the sense of amputating much of Ukraine, but it ought not be defeated in a manner that leaves it isolated, aggrieved, and vengeful. Are there ways this war could end that would leave Ukraine whole but Russia in some sense satisfied and reintegrable into Europe?

I think that there are. There’s an opportunity in the fact that, from Russia’s very public perspective, this war is as much about punching back at a putatively domineering West as it is about achieving goals within Ukraine. I do not think Russia’s complaints about its own treatment by the West are particularly justified. Western powers were quite conciliatory towards Russia, until its 2014 annexation of Crimea and fomenting of separatism in Eastern Ukraine. Remember the 2009 “reset”?

Russia, however, perceives itself as a great power, and it is fair to say that Western powers did not treat it as one. We simply ignored Russian objections to military operations in Serbia, Iraq, and Libya. We had “statesmen” publicly dismiss Russia as a “gas station masquerading as a country”.

To a large extent, this war seems to be motivated by Russia’s desire to be recognized as at least an equal of the nations that have insulted and ignored it, especially the United States. (Go back and read your Fukuyama!) Recognition as an equal is something we can give in a peace settlement while betraying no territory or value.

Russian media accidentally published a weird, triumphalist statement a few days after the war began, written on the assumption that Russia would have achieved a rapid and complete victory. The statement concludes:

A multipolar world has finally become a reality… China and India, Latin America and Africa, the Islamic world and Southeast Asia – no one believes that the West leads the world order, much less sets the rules of the game. Russia has not only challenged the West, it has shown that the era of Western global domination can be considered completely and finally over.

The new world will be built by all civilizations and centers of power, naturally, together with the West (united or not) – but not on its terms and not according to its rules.

There is nothing objectionable in the idea that all must work together and have a hand in ordering the world. “The West”, and the United States, should openly and publicly welcome that. We have sometimes flouted them in practice, unfortunately, but those ideas formed the basis for the rules-based order and multilateral institutions we strived to craft after World War II.

There are and perhaps always will be real power differentials in the world, so some states will in practice have more sway than others. Russia, for example, has a military presence in Syria protecting port access to the Mediterranean that it craves. Very few countries have any sort of arrangement like that. When there is a civil dispute in Kazakhstan, Russia intervenes, but not vice versa.

De facto power is unequally distributed, a circumstance that Russia, the United States, and other powerful states, take advantage of. But at a normative level, we want to be a world of equals, all of whom work together to define our collective future. And at a practical level, we should all seek to create a more equal world, but one that extends the security that has been enjoyed by only a portion of the world to inhabitants of all nations, rather than one that extends insecurity to all.

A settlement with Russia could include a statement signed by, say, the American President and the leader of NATO affirming that the “world will be built by all civilizations and centers of power, naturally, together with the West (united or not) – but not on its terms and not according to its rules.” Russia might not have succeeded at its territorial aims, but it would have struck a blow against The Man, while the cost to Western powers would be simply to affirm aspirations that we all share.

IV. Recommit to the UN

More concretely, we could use the Ukraine settlement to acknowledge that the era of unilateralism in addressing global security challenges has proved a failure, and we must recommit to a multilateralism centered around a UN process. That process must be reformed to be more accountable, and less afflicted by the paralysis that provoked the United States and NATO to circumvent it in the first place. The catastrophic consequences of interventions in Iraq, Libya, and Afghanistan, as well as Syria and Ukraine, have proven that letting independent powers or “coalitions of the willing” freelance global security invites accidents, abuses, and disputes. But the conditions that left the world helpless to prevent the catastrophes of Rwanda and Bosnia, not to mention the conflicts in Ethiopia and Yemen today, must also be addressed. [*]

V. Mutual regime change

I am absolutely opposed to “regime change” as an ambition of foreign policy. How a polity is to be governed is a matter for its own citizens to decide. However effective or poor a state’s institutions might be at enabling and ensuring consent of the governed, perceived foreign aggression or interference in the process provokes reactionary nationalism that may entrench a bad government and excuse its repression. It seeds mistrust and division that badly damages civil society. Even when it is “successful”, it rarely produces a government with enough legitimacy to govern well. Who is to govern Russia and how is for the Russians to work out.

Unfortunately, given the perception in the West now of Putin as a dangerous and aggressive dictator, it strikes me as unlikely that sanctions will be reversed while he remains Russia’s leader. Sanctions will not yield regime change, any more than they have in Iran or North Korea, and it will be very difficult to reintegrate Russia as a neighbor and friend while Putin remains in power. But a permanent “fortress Russia”, like a North Korea on steriods, is a terrible outcome, for Russia and for the world.

I think people in Russia quietly understand this dilemma. Perhaps even Mr. Putin himself does. But surrendering to a demand of regime change by hostile foreign powers is a humiliation, politically unthinkable.

What if, however, a settlement were to require mutual regime change? It would be very simple. What if Russia’s President Putin, Ukraine’s President Zelenskiy, and perhaps even America’s President Biden all agreed not to stand for a further term of office? That would be a kind of mutual recognition that existing leadership failed to preserve the peace and good relations, and a very terrible catastrophe occurred on their watch. It would constitute a remarkable act of statesmanship by each President. For democracies like Ukraine and the United States, regime change is regularized in the form of term-limited elections. Russia would, by its institutions formal and informal, work out its own succession.

There would be a risk that Putin would choose his own successor, perhaps a person still under his effective control. But there would also be a strong national interest in choosing a new government not so abhorrent to Russia’s neighbors that ending the country’s forced isolation remains impossible. A new government in Russia would be a true reset, a new hope for a warm peace rather than a cold war on the Eurasian continent, “from Lisbon to Vladivostok”. And that, according to former President Dmitry Medvedev, was one of Russia’s objectives in the war.

VI. Sanctions relief

The most straightforward sweetener of all is sanctions relief. Putin allegedly discounted the threat of sanctions in his decision to go to war, because he views Western powers as so implacably hostile that whatever sanctions his invasion might provoke would eventually have been imposed in any case. There was then little to lose in “striking first”.

I would like to see the West prove his thesis of permanent hostility wrong, and quickly reopen to Russia when a settlement is reached. If there is a change of government, failing to do so would unhelpfully validate Putin’s paranoia. For some period of time, the West will probably maintain controls on exports of dual-use technology to Russia, but as relations normalize and improved, hopefully those too can be loosened.

VII. An extended hand

In general, I think it is critical that Western leaders remind the Russian public that we will not hold a grudge against the people for their leader’s awful choice. We must express hope and optimism that Russians can become full fledged members of a Europe, a Eurasia, whole and at peace. This is a moment where love must temper judgment.

Whatever complicity you want to attribute to ordinary Russians for their failure to stop their leaders or their acquiescence to a ginned-up chauvinism, preventing or disrupting this war — under conditions of great risk and repression, when Vladimir Putin was resolved to prosecute it — would have been an extraordinary challenge. Given the risk, the degree of public protest and dissent has been astonishing. Perhaps there is room to offer the Russian public some credit for that. It would be a good outcome if nearly all Russians look back to this time and see themselves as having quietly been objectors, regardless of whether or not you think that is true.

VIII. Embrace Ukraine

Sweetening a peace is not just for Russia, but especially for Ukraine. Ukraine is the country being bombed and shelled and shot, whose people have been displaced and so much worse. Peace itself will be a profound reward for Ukraine. But with any settlement that is not complete and total victory, the sweetness will be tinged with the bitterness of terrible injustice and loss. Ukraine’s friends and partners should help ensure the most delicious peace possible for the country. Ukraine’s accession to the EU should be accelerated, and that should only be the beginning.

IX. Marshall plans

Europe and the United States should jointly provide extraordinary investment in Ukraine’s reconstruction, a new Marshall Plan. No doubt this investment will be expensive, but Ukraine is owed the support for its role and extraordinary valor in protecting the Europe’s postwar order.

If there is new leadership in Russia, a Marshall Plan should be undertaken there as well. The value of preventing the emergence of a vast, hypernuclear North Korea would far exceed the cost of the investment, as it did with Germany after World War II. Russia is a state beset with the “resource curse”, the infamous phenomenon whereby resource rich countries prove liable to corruption and difficult to govern well. It would be wonderful if a new investment program for Russia would look to neighbor Norway, among the most successful countries in the world at managing resource wealth for the benefit of its citizens.

X. Conclusion

All of this may sound difficult and unlikely, perhaps absurdly idealistic. But please consider the alternatives. Perhaps Russia’s nuclear saber rattling is just that, and there is no great medium-term threat. I am far, far from comfortable with that risk, but let’s say. What does a world look like over time in which Russia remains aggrieved and isolated, however badly it is beaten in this war? If North Korea and Iran can’t be coercively prevented from rearming over time, can Russia be? In an angry, isolated, still nuclear Russia, can we be confident that some even madder regime won’t emerge? Perhaps the best case scenario is that Russia becomes more comfortably, less bitterly, enmeshed in a reasonably rational, China-led bloc. But is that really likely? And can we do no better than a new cold war, with China and Russia on the other side, as our iffy very best-case scenario?

This war must come to an end quickly not just because every day it continues means death and destruction in Ukraine and risk to human life on all the planet. The war must come to an end quickly because we must start the work of building a future that is hopeful both for Ukraine and for Russia, upon which a hopeful future for the entire world depends. The longer and more bitterly the war drags on, the harder it will be to create that future.

Let’s work to end the war now, and build a durable prosperous peace, for Europe, the Americas, and also for Asia, Africa, the Indo-Pacific. We will always have our rivalries, but we can work together to make them constructive rivalries. We can no longer afford major war, between existing large powers, or with emerging powers like Iran. We cannot keep sleepwalking through history in habitual hostility, until something breaks that threatens all of our lives. We are too powerful to be so reckless and survive. Instead, let’s all survive, and thrive, in peace.


[*] A simple reform would be to impose obligations along with the right to veto upon permanent members of the Security Council. When the Security Council would have approved some action but for one or several permanent members’ veto, the power(s) that exercised the veto would become obliged to take a leadership role in ensuring a humane resolution of the crisis at issue diplomatically, without Council-authorized action. An independent inspector would simultaneously be convened, staffed by appointees of nations that would have acted, to report on and evaluate the vetoers’ diplomatic efforts. The intent of this would be to force vetoing powers at the Security Council if they act to shield their friends (Israel for the US, Serbia for Russia, etc.) to take some responsibility for their friends’ actions after the shielding. Another perhaps overdue reform might be to add a special joint permanent membership for India and Pakistan, so that when those two powers are agreed (and only then), they too have veto power. The world’s most populous nation should be a permanent member. But elevating post-partition India alone would empower one side of ongoing conflicts, for which maintaining some balance at the level of global diplomacy remains important.

Update History:

  • 17-May-2022, 1:40 p.m. PDT: “It is continued grievance, not ebullient confidence, that might render Russia a continuing danger following a peace.” Fix extent of blockquote, which mistakenly incorporated a paragraph of my text.

Love — universal, unilateral, unconditional, urgent

Love is a practical matter. It is the most practical matter. If we do not love, if we do not let love condition our actual behavior, both expressive and material, I fear that we will not survive.

The war in Ukraine is an atrocity. It must end, quickly. There are and have been many other wars, and they too are atrocities that it is to our shame, and my shame, to have tolerated them too distantly. Nevertheless, for all of these conflicts, love is not the answer alone, but it is essential to any durable answer.

In my world as constructed by social media, I see a lot of self-righteous hatred. War becomes permission to hate. Sometimes, it even makes a virtue of hatred, even recasts basic sympathy and affection for the human beings who constitute “the enemy” as betrayal, even treason. That is understandable, more than forgivable, among people under direct assault. It is not virtue even for them, but an excusable vice. For those with the luxury of distance, I think it is less excusable. I am not here to stand in judgment, it is not mine to excuse or not excuse. From what I find in my own heart, my own mind, I know you cannot possibly be worse than me. I only ask that you consider these words as you decide how you will be in this world we all share.

For a war to end before its combatants are completely exhausted, both parties must perceive something valuable, something desirable, in the future post-war. For Russia, as for Ukraine, there ought to be a world to gain. Because the world, in fact, is full of curious, sociable, loving people, and these partitions created by war, or even by smouldering political hostility, are scars upon the heart we all share. Russians should perceive, because it is true, that if these hostilities are overcome there is fellowship in the world more than open to receive them. Iranians should perceive that, Houthis, Americans, Germans, Saudis, Chinese, Tigray, Palestinians, Israelis, everyone.

This is not a claim about policy, or about details of economic engagement. Sanctions, the “economic weapon”, like war create a chasm, and their use should be minimized. But the claim here is not that peace, by enabling liberal free trade, makes everybody rich. Economic collaboration can and should be mutually enriching and so a material form of love. But trade and capital flows if misregulated can also yield coercive labor arrangements, unjust redistributions of wealth, unbalanced movements of activity and opportunity. Countries can and should regulate the terms of their trade, should see to their own and their citizens’ material interests, precisely to ensure that economic collaboration is in fact mutually and broadly beneficial, and therefore a form of love.

Similarly, this is not a claim about “splinternets” or different countries’ approaches to managing cross-border communication. As with economic collaboration, states have a right to regulate communications infrastructure in the service of social and political stability. You and I might prefer liberal democratic free speech norms to be reflected and protected in every form of mass and electronic communication. But not all states are liberal democracies. And even liberal democracies are currently finding it challenging to reconcile an expansive liberalism with the degree of stability necessary to sustain basic well being in a new technological environment. I hope we get better at it. Other polities will make different choices, and that is their prerogative. However, we can all hope for, and work to create conditions that enable, as much permeability and openness as possible, in order to promote interaction and culture and other expressions of love, consistent with states’ legitimate concerns about social stability.

We might see deficiencies, even practices that are deeply abhorrent to our values, in other states. But states are sovereign in a plural world. The people of a state, not outsiders, bear the consequences of revolution or repression. We should hope that beneficial change comes peacefully and gently, in other states as in our own. We can help other states to improve, but only if we do so openly, respectfully, on terms those states accept and allow. Often the best help we can offer is our own example. When our own example is not so compelling, we are unfortunately ill placed to help.

Love is unconditional. It is universal. States have policies, which we may find agreeable or terrible. But we are all impoverished, and endangered, if we let critique of policy or political leadership spill over into disdain for or diminishment of publics. We can always find reasons to hate. Citizens of every country are in some sense complicit in the worst behavior of their states, and no states are innocent of reprehensible behavior. We must love one another anyway. No individuals are free of sin. We must love one another anyway.

Judgment is necessary, but judgment without love is a dangerous vice. It gives us license to harm, punish, coerce, and hate while pretending to do justice. Judgment then becomes a dagger garbed in a costume of virtue. Love must be prior to judgment, and as much as is possible, the consequences of judgment should be inflected with and tempered by love, for victims, for the judged, and for everyone. We seek justice for war crimes, but if a consequence of insisting upon pursuing those crimes is prolonging the war and ensuring more bloodshed and atrocity, is that really justice?

Love is not a commodity in trade. It need not be exchanged. It is beneficial to the lover and the loved regardless of whether it is reciprocated. If we are judging before loving, we are doing a poor job of both. There are people who seem terrible, to us or in general. We must love them, even unilaterally. There are states that do genuinely horrible things. We must love the people even of those states. Love is hard, and it is not a replacement for the practical institutions, from gentle critique to courts to armies, by which we all help regulate one anothers’ behavior. But we must love first, or our regulation will become oppression or carnage.

We must, we must, we must, I say. And who am I, dear reader, to command you, to tell you how you should, how you must, be? I am just a person. These are just my words, offered with respect, offered with love. We are living through difficult and dangerous times. It is my view, just my opinion, that unless we put love before the passions of self righteousness, they may be more difficult and dangerous yet.

Every human has a smile to offer. I love you.

Let’s work together, with love in our hearts, to find and to build a just and durable peace. Quickly.


See also: David French on compassion.

Goodwill to all, and that includes China

I have no social science by which I can back this up, nothing that would qualify as “evidence”, no “receipts”. But I think that goodwill is an important force in human affairs, at individual, group, and national levels. I think it is a virtue in an ethical sense and wise as a practical matter to offer and seek to elicit goodwill.

Machiavelli famously wrote in The Prince:

…it is much safer to be feared than loved, when, of the two, either must be dispensed with. Because this is to be asserted in general of men, that they are ungrateful, fickle, false, cowardly, covetous, and as long as you succeed they are yours entirely; they will offer you their blood, property, life, and children, as is said above, when the need is far distant; but when it approaches they turn against you. And that prince who, relying entirely on their promises, has neglected other precautions, is ruined; because friendships that are obtained by payments, and not by greatness or nobility of mind, may indeed be earned, but they are not secured, and in time of need cannot be relied upon; and men have less scruple in offending one who is beloved than one who is feared, for love is preserved by the link of obligation which, owing to the baseness of men, is broken at every opportunity for their advantage; but fear preserves you by a dread of punishment which never fails.

As usually quoted, the excerpt omits the words that come immediately before:

[W]hether it be better to be loved than feared or feared than loved? It may be answered that one should wish to be both, but, because it is difficult to unite them in one person…

It is not as difficult in a nation, as in one person, to unite both fear and love. That the military of a country is strong and therefore fearsome does not preclude friendly relations with other countries, whether peer or weaker powers. Indeed, in many contexts, what is in a certain sense fear becomes sublimated into a less caustic attribute, respect, which can be mutual. The logic of ordinary deterrence — perhaps others are stronger than we are, but our will and capacity to defend ourselves is sufficient to deter would-be adventurers from imagining some transgression would be painless — is supportive of mutual respect and goodwill. Riffing on Niccolo, love itself cannot endure when opportunity and advantage tempt our counterparts to break the links that bind us. Love and respect, and therefore to a certain degree fear, are complements not substitutes.

I am terrified by the collapse of goodwill between great powers at the current moment. All I can say about the war in Ukraine is that our priority should be to achieve the most minimal terms all parties can live with so that politics can revert to less terrible means. People who perceive opportunity in war are shortsighted.

Beyond this war — we must pray there is a beyond this war — the collapse of goodwill between the United States and China since 2016 has been a catastrophe. As Scott Sumner very effectively points out, while there’s lots to dislike about China’s government, it is the United States that started the current cold war. We lashed out in hostility, blaming China for what in fact were our own poor choices. We should not have allowed, even encouraged, so much of our industrial base to migrate to China, and we certainly ought to work to restore what we have lost. But we had plenty of policy tools that could have prevented the destructive aspects of the “China shock”. We chose not to use them, because we got high on our own supply of a cartoonishly simplistic neoliberal globalization. Free markets and comparative advantage would lead to interdependence, peace, and prosperity. Any attempt by states to manage the process was “protectionism”. However terrible the effects upon domestic publics, they were to be endured. The market knew best, utopia was close at hand, just around the corner after some “trade adjustment”. We failed to look after our own interests, while other governments did look after theirs and so profited from some of our lapses. Durable goodwill depends upon parties setting and enforcing their own boundaries.

We should not revert to 2015 policy in hopes of recovering a relationship of goodwill with China. 2015 policy wasn’t working for us. But we should absolutely, as soon as possible, eliminate all bilateral tariffs against China. Country-specific tariffs are a terrible tool, because they provoke ill-will. They single out a particular country as a bad actor, and discriminate against its goods. There is no reason to do that! When we are concerned about our trade balance — which we absolutely should be, the insouciance towards international balance of the neoliberal period was sheer idiocy — we should intervene in the capital account, taxing purchases of our debt by foreign entities of any nation, on nondiscriminatory terms, and/or interest payments on our debt to foreign entities. By doing so, we can make unbalanced trade as bad a deal as necessary to achieve whatever balance of payments we deem desirable. I have made this case before (I call it “capital account protectionism”). In their magisterial Trade Wars are Class Wars, Matt Klein and Michael Pettis suggest capital controls as one approach the US might use to manage its imbalance (though they suggest accommodating imbalance by expanding public investment rather than private debt might have been an even better approach, a case I’ve made as well).

For the purposes of this essay, the crucial point is that we have more than sufficient tools that are nondiscriminatory across nations to manage our economic and trade concerns. In order to ensure minimal labor standards and prevent forced labor in our supply chains, we can create regulations and a certification bureaucracy (ideally multilateral) to enforce them uniformly, rather than call out some countries but not others for human rights abuses. When there are domains, such as communications infrastructure, that for national security reasons we insist should be produced domestically, we can regulate to require that, without calling other countries’ manufacturers spies or puppets of their state (whether they are or not). Rather than “friendshoring”, as Janet Yellen recently suggested, we should just make geographic diversification of our supply chains a matter of national interest. There’s no need to divide the world into more and less unfriendlies. The fact that some semiconductors are sole-sourced from earthquake and typhoon-prone Pacific rim nations would be a problem even if there weren’t geopolitical terrors laid on top of natural vulnerabilities.

Matt Stoller has a piece today which emphasizes the dangers more than the opportunities of China’s economic ambitions:

In May of 2020, the Chinese Communist Party (CCP) declared its economic strategy, using the phrase “dual circulation.” Dual circulation meant fostering a domestic productive apparatus that is independent of foreign technology and finance, while making sure the rest of the world is dependent on Chinese control of key supply chains, whether it’s shipping, railroad construction, electric batteries, or solar panels. Chinese ‘grand economic strategy,’ in other words, is to operate as a giant monopoly on which the rest of the world must rely.

I’m sure this is right. But don’t we, and shouldn’t we, do the same? That is to say, for the same reasons all countries should maintain some degree of military deterrence of invasion, all countries should seek an “autarky option” that may be expensive to exercise, but that in extremis can be exercised in order to limit foreign powers’ ability to coerce them via trade dependencies. Given the international interdependence required to support modern life, most countries will find it impossible to make reversion to autarky cheap. Which is good, because the traditional liberal case for commerce as a foundation of peaceful coprosperity remains strong, as long as the trade occurs mostly on equitable rather than coercive terms. But occasionally, national sovereignty requires defying trade partners, and enduring what costs they impose, as food self-sufficient Iceland demonstrated during the financial crisis or (much less positively) Russia is demonstrating now.

So the first of China’s dual circulations seems like a good aspiration for all countries (albeit more achievable for large countries, or blocs like the EU, than for small states). The second circulation, the ambition to foster dependence of trade partners, ideally to become a monopolist in critical sectors, is not so nice. But it is hardly a Chinese invention. The country that has most frequently and successfully “weaponized interdependence”, as Henry Farrell and Abraham Newman put it, is the United States with its extraterritorial monopoly over the US dollar financial system. In global affairs as in business, I don’t think it’s plausible to demand that ambitious players unilaterally desist from seeking monopoly. Monopoly, with the coercive power it affords over others, is agreeable. Just as states have to be responsible for military deterrence and managing their trade balance, they must ensure domestic or diverse sourcing of important goods. The US should strive to reduce its dependence on Chinese manufactures, just as China should seek to reduce its dependence on US aviation, not because trade in these things is bad, but because for trade in these things to be good, it must occur on noncoercive terms. Sustainable trade relationships are continually voluntary and mutually beneficial.

The United States has no need to impose discriminatory bilateral tariffs, or to adopt a hostile rhetorical posture against China, or any other country for that matter. We have to tools necessary to see to our own interests, and should seek a warm peace and friendship with the people of every country. China does some terrible things. What it is doing with the Uyghurs is horrid, indefensible. But rhetorical hostility does the Uyghurs no good, and we have no effective means of coercing China to change its policy. The best we can do is try to persuade its leaders that there are better ways of addressing whatever problems they think they are addressing. We are more capable of persuasion and assistance as friends than as adversaries. At the moment, and not unusually, we’re using the issue just to snow ourselves. Our current posture of hostility towards China derives from trade disputes and military rivalry in the Asia Pacific, but we imbue it with moral weight by attributing it to human rights and autocracy, even though we overlooked those concerns, from Tiananmen to Tibet, for decades when our elites perceived the trade relationship as more profitable than threatening.

The current hostility between the US and China is mutual. There is no guarantee that any change of posture on our part would lead to a warm reception on theirs. But goodwill, properly understood, is free. It should be offered unilaterally, whether reciprocated eventually or not. Expressing goodwill does not mean sacrificing ones interests. Indeed, it was failing to look after our own interests that led to the recent collapse of the goodwill. Goodwill does mean, rhetorically, expressing warmth, a desire for peace and fruitful intercourse. It means working diplomatically, assiduously and proactively, to find ways of reconciling our interests where they diverge, rather than relying solely on mutual deterrence. It means encouraging interaction at a cultural and personal level, rather than treating foreign nationals presumptively as spies. It means love unconditional, to all the humans of all the nations, at the same time as we do the hard and necessary work of attending to our own interests. It means persuading, but not coercing, others that there might be something decent in our perspectives and values, while remaining open to what’s good in the perspectives and values that they offer to us. Goodwill is not weakness or naiveté. Our foreign policy should offer and seek to cultivate goodwill, sincerely, ostentatiously, and without apology.

Update History:

  • 27-Apr-2022, 10:10 p.m. PDT: “That the military of a country is strong and therefore fearful fearsome does not preclude” (Thanks @keunwoo!)
  • 2-May-2022, 10:15 a.m. PDT: “Janey Janet Yellin” (Thanks commenter Zack!); “…most countries will find it impossible to make reversion to autarky cheap,. Which is good, because…”
  • 17-May-2022, 7:55 p.m. PDT: “Janet YellinYellen” (Thanks commenter Zack again!)

Consensus not censorship

We’ve become obsessed over the past few years with the problem of misinformation. And for good reason. “Flood the zone with shit” is now standard operating procedure for a variety of interests and factions. Groups who pretend to be above that kind of thing let confirmation bias do the same work, elevating conjectures they find convenient to believe far beyond the evidentiary basis for believing them, and transmuting concurrence among prestigious groups whose biases are aligned into “authority” to which they demand deferrence. Casual information consumers become divided into two camps, the “do your own research” types who imagine, mistakenly, that they are capable of seeing through all this (and so succumb to their own confirmation bias), and those who more accurately understand that they cannot reliably distinguish truth from bullshit (and so opt out of democratic deliberation with a shrug, other than perhaps to vote for the candidates whose political party they distrust less).

“Combatting misinformation” has, understandably, become a prominent matter of public concern. I want to argue, however, that it’s the wrong approach. One way or another, trying to eliminate or suppress or deamplify misinformation amounts to a kind of censorship, It begs the question of who decides what qualifies as misinformation and why we should defer to their understanding of true and false, fact and fiction. If we all were comfortable that sources branded “Harvard” or “The Washington Post” or “CDC” were capable of doing the job, and that they would always “play it straight” with the public rather than triangulating interests of various stakeholders and insiders, then misinformation wouldn’t be a problem. We’d all happily defer to high quality information from trusted sources. Unfortunately but not incorrectly, we are now sharply divided over whether and when traditional authorities can be trusted, and over how much or little epistemological deferrence they merit. “Combating misinformation” as defined by these authorities amounts to letting sometimes untrustworthy and corrupt factions censor information that might be correct and important.

So, we are in a pickle. Our current information environment is dysfunctional. It divides and paralyzes us, and leaves us ill-informed. Our leaders, who are responsive to public opinion, make bad mistakes in order to flatter errors of constituents who have “done their own research” or who trust unworthy authorities. Suppressing misinformation could in theory lead to a correct consensus, but the very foundation of free-speech liberalism is that we have, in general, no certain basis for distinguishing information from misinformation, and therefore attempts to suppress “falsehood” are likely to repress important truths.

Free speech liberalism used to seem compatible with a functional society in a way that it now does not. Why is that? By virtue of the physical architecture of information, sources of broadly important information were much more centralized, prior to the emergence of the internet and social media. In the network television age, it was a free country, you could say whatever you want, you could publish subversive ‘zines and stuff. But unless and until your perspectives were adopted by some gatekeeper of centralized media, they would struggle to be relevant in any systemic and politically effective way. However, unlike in, say, contemporary Russia, the gatekeepers of traditional media were themselves fairly decentralized. There were three TV networks, plus many important newspapers and mass publishing houses, each marinating within some ungated local avant-garde. Politics and culture were genuinely contestable, to a degree. Meaningfully distinct publishers competed to form the mainstream. But they were mostly corporate actors with similar interests and vulnerabilities to state and advertiser pressure, and with a shared stake in maintaining something like the status quo. The struggle in that era was to get from margin to center, and that could never be a viewpoint neutral struggle.

Nevertheless, we had a functional polity in that era, with dissidence, yes, but also with broad consensus about what was true, false, and subject to reasonable contestation. As someone who often felt dissident, I can tell you that it sucked. Lots of important values and ideas got no meaningful hearing outside of very ghettoized information spaces. At the same time, it was a much more livable society beyond the frontiers of ones own dissidence. There was a lot one could get away with just taking for granted, as an individual trying to make sense of the world. Collectively, politically, we were a much more capable society, we had a stronger shared basis for action in the common good. The church of network television was consistent with an era of bipartisanship, and with experiments in policy—which were often mistaken, in part due to the narrow and blinkered information environment that framed them! But at least things could be tried, which is more than we can say for our polity at present.

We cannot, and I would not, go back to the church of network television. For all the confusion and outright nightmarishness of contemporary social media, I cannot help but score as a blessing the fact that a much wider range of voices can permissionlessly publish themselves over media capable of reaching large and influential audiences. However, the lesson we should retain from the equilibrium we have left behind is that a wild-west of free speech can coexist with a functional epistemological cohesion, if there are institutions via which a widely shared consensus can somehow rise above the din.

As Martin Gurri has pointed out, the internet can be understood as a kind of solvent of authority, and of the capacity of traditional institutions to sustain the trust that undergirds it. One way traditional authorities might counter that effect is by suppression and control, limiting the internet cacophony to a chorus reinforcing the messaging and goals of those authorities. That is the approach China and Russia have taken, and it has not been ineffective. “Combatting misinformation” can be understood as a variation of that approach, an adaptation of it to the formally liberal West. If internet forums can be persuaded to suppress as misinformation speech that is most at variance with traditional authorities, and to shape reach so that speech aligned with traditional authorities diffuses more quickly and more widely than alternative views, perhaps consensus around traditional authority can be sustained.

However, this approach brings two practical problems:

  1. It forfeits any opportunity to use the broader conversation as a means of informing and improving what becomes deemed authoritative. Our crisis of authority owes something to the cacophony of voices, sincere and disingenuous, that now outshout and dilute traditional authorities, but it also owes a great deal to the (reasonable!) perception that traditional authorities have performed poorly and so merit less deference. A soft censorship approach to restoring authority does nothing to remedy the sources of poor performance, while buried in the zone flooded with shit may be perspectives that are important and could contribute to wiser authority.

  2. Judging by the behavior of the Chinese and the Russians, soft censorship — encouraging important forums to suppress misinformation without actually banning it — may not be sufficient to restore consensus and then trust. "The Net interprets censorship as damage and routes around it,” John Gilmore famously wrote, and there is some truth to that. Relying upon suppression to sustain state authority creates a dynamic under which predictable challenges encourage ever more coercive and expansive restriction, abandoning free speech liberalism rather than saving it

Rather than suppress or censor, it would be better if we could build new institutions of consensus, whose authority would be based on stronger, more public, and more socially dispersed evidence than the institutions that are now flailing. This may sound naive, and it may prove impossible. But it seems to me we’ve done very little that could be accused of meaningfully trying.

I don’t have a silver bullet, of course. I don’t have anything more than half-baked ideas. But half-baked is better than not baked at all, or not even attempted. Let’s actually make a concerted, society-wide effort to design new forms of authority that would be more resilient to the cacophony of an open internet.

Some half-baked ideas:

  • We could dramatically expand our use of “citizens juries” or “deliberative minipublics” to help authoritatively resolve factual disputes. Much of the reason why traditional authorities are so distrusted is because publics and factions reasonably perceive them having particularities of interest that come unbidden with their roles and expertise. A Harvard professor may be more than qualified, may be “smart” enough, but if her interests and values are very different from yours, why should you accord any authority to her policy advice? The very expertise on which her claim to authority is based might well be used to snow you! We expect that politicians’ views will be colored by their electoral (or post-electoral) career interests, but jockeying for votes (or sinecures) and crafting policy well might call for very different choices. A citizens jury makes use of expertise (just like “expert witnesses” are called before legal juries), but vests the authority to make determinations in a “minipublic”, a group of citizens selected by lot, and so statistically likely to be representative of the public not-mini-at-all. Their role is to elicit evidence and probe experts, then deliberate directly and interpersonally in order to produce findings on behalf of the public at large. There are a lot of potential devils in details. If a competent prosecutor can get a grand jury to indict a ham sandwich, can we come up with procedures that genuinely empower the minipublic, rather than leaving it subject to manipulation and capture by its organizers? If participation in citizens juries is not compulsory (probably it should be!), will self-selection leave us with unrepresentative, and therefore unauthorative, minipublics? I don’t have answers to all of these questions, except to say that the more we try, the more likely we’ll learn how organize citizens juries effectively. I encourage you to read my friend Nicholas Gruen, and the wonderful Equality by Lot blog for more on the subject. (See also a recent piece by Michael McCarthy in Noema on using minipublics to make investment decisions.)

  • We could integrate the community college system much more deeply into the public epistemology side of academia, reducing the degree to which academic expertise is attached to the socially narrow class of elite research faculty. Community colleges should be a bidirectional bridge — helping communicate and explain current academic consensus to America’s plural communities via direct interaction with locally trusted experts, but also ensuring that the diverse experiences and perspectives of American communities are taken into account when forming academic consensus on policy-relevant questions, which necessarily touch upon values as well as potentially objective fact.

  • We could use “permissioned blockchains” (which involve no speculative financial tokens or environmentally destructive “mining”) ubiquitously in important institutions to notarize almost everything, generating public evidence of institutional history that would be difficult to hide, repudiate, or tamper with ex-post. This wouldn’t be an anticorruption panacea. Premeditatedly corrupt actors would try to circumvent a panoptic notary by falling back upon informal communication channels, the bureaucratic equivalent of turning off the bodycam. Or they might plan in advance paper trails of falsehoods, sequences of lies properly timestamped and notarized. But most corruption is not that smart, not that careful. In science class when I was a kid, I was taught that nothing should be crossed out in a lab notebook. Instead, mistakes should be struck through with a single line, permitting a reader to see both the mistake and the correction. This doesn’t prevent premeditated fraud, but it does reduce the temptation to “fix” or “fudge” things after the fact. Cryptographically attributing and notarizing everything as a matter of routine (which would not require making document contents universally public) strikes me as a similar structural encouragement of integrity.

In addition to reforms that might harden some forms of authority against the solvent of contemporary cacophony, there are reforms that might make the cacophony a bit less indiscriminately corrosive of even reliable information.

  • As Lee Drutman has described, a two-party electoral system creates incentives for each party to undermine the authority attached to information presented by officials of the other party, indifferent to the actual truthfulness or quality of the information undermined. Our system encourages partisans to tear down virtuous authority as readily as corruption and lies, indeed to confuse the former as the latter, if the institution whose authority might otherwise be enhanced is identified with the opposing party. Multiparty democracies have much less of this dynamic, as other parties are sometimes coalition partners as well as rivals, there is not a simple zero-sum game where one party’s success is everyone else’s disadvantage. A bit less radically, Jon Haidt, in his excellent article on how the internet has undone us, points to electoral reforms within our two party system that elevate candidates with cross-party appeal over more party-exclusive candidates to whom this zero-sum logic most applies.

  • We could try to reform the internet and social media structurally, in ways that don’t involve some superauthority making judgements about, then playing whack-a-mole with, putative disinformation. The contemporary internet’s encouragement of the divisive and salacious over less entertaining, more constructive speech plausibly has everything to do with most of that speech being hosted by gigantic businesses to whom accuracy or quality is a matter of indifference but emotional engagement drives activity and profit. I think we should seek an online civil society hosted by thousands or millions of smaller sites whose product is quality and curation for users rather than the eyeballs of users for advertisers. I’ve suggested before that we repeal or dramatically curtail Section 230 protections, to clip the wings of the current megaforums. We could pair this with content-neutral public subsidy to people who offer microforums which would actively curate and accept responsibility for the material they host.

  • As human beings, our understandings of the world are tangled up with our interests. Upton Sinclair’s man who can’t be got to understand what his salary depends on his not understanding is, to a first approximation, all of us. We develop sincere beliefs about the world that flatter, or at least are reconcilable with, the preconditions of our own well-being. People with very divergent interests will develop very divergent beliefs. A society that made greater use of social insurance, in which personal outcomes would vary somewhat less across individuals due to political choices, in which we really would be more "all in this together", would have an easier time finding epistemological consensus than one in which a person might make themselves unusually wealthy by accepting and promoting divergent beliefs. We'd have more consensus about climate change if there weren't influential groups of people who benefit materially by believing and arguing it is not a serious concern. If people in the fossil fuel industry only became somewhat better off rather than fabulously wealthy by persuading themselves and others climate change isn't real, we'd have less of such persuasion, and reach a functional consensus more easily. In general, there’d be less incentive to be a “grifter”, as many online influencers are accused of being, if we were a materially more equal society.

Maybe you like my specific suggestions. Maybe you don’t. Regardless, if we want to preserve liberal free speech in form, function, and spirit, we’ll have to develop new institutions for coming to authoritative consensus that rise above a now much louder din.

It’s a very urgent task. As I write, we collectively face a delicate crisis which, if mishandled, could lead to nuclear war, millions or billions dead, the end of modernity. It is not okay that the way we are thinking together is largely via TikTok, Twitter, YouTube, Facebook, MSNBC, and Fox News. These are low quality deliberative institutions.

As Aviv Ovadya put it in a conversation with Julia Galef

We're…living in a world now where, let's say stability isn't quite as quite where it was, where individuals can have far more influence on sort of the overall stability of the world and where you have a whole bunch of really tricky challenges up ahead within the next five to 20 years that could easily derail even a very, very well-functioning civilization. You're in this environment, and now you're making everyone dumber. You're making them less capable of handling it, both at an individual level and at a societal level.

You can think about this as, you’ve got your civilization driving its car down the road. And it's now starting to take LSD, and it's like seeing these hallucinations all over the place. And it's still trying to drive. There's going to be some level, some amount of LSD or some amount of like, of hallucination that you can still sort of drive without crashing. But there's going to be some level where you can't. We're just increasing that.

Hopefully we get lucky and muddle through our current crises. But we won’t get lucky forever. We have to develop the capacity to collectively speak, reason, and act together in ways that keep us free but also wise.

Update History:

  • 23-May-2022, 9:10 p.m. PDT: “…to render the clip the wings of the current megaforums.”
  • 23-Aug-2022, 12:oo p.m. EDT: “the ‘do you your own research’ types”; “…to people who host and curate offer microforums…”

The great game of global public goods provision

War is bad. Excuses should not be made for it. All sides should work to end this and every war as quickly as possible and shift to modes of bargaining and competition that are not profoundly destructive.

I. Cooperate to compete, compete to cooperate

We often think of competition and cooperation as opposites, but as Michael Frank Martin has pointed out, competition is very often just one way that we organize cooperation. The Baltimore Orioles and the New York Yankees compete vigorously, each team really wants to win, but the framework of competition itself is cooperatively maintained. If the Yankees could permanently dominate all challengers, the game would become boring and fans would bail. They would only “rule over the ashes”. In professional sports, vigorous competition is a positive sum game. Starting from a degree of balance, each team has strong incentives, a great deal to gain, from winning. But from a grander distance, all teams, and the world at large, depend upon maintaining balance and vigorous competition rather than allowing any team’s entrenchment as permanent victor.

Textbook economic competition is also a positive sum game, from the perspective of the world at large. Starting from a degree of balance, higher quality or more efficient production confers to winners abnormal profits, for a while, incentivizing the race. Competition by multiple firms to win these profits drives costs down and quality up for consumers. But when a single firm definitively wins, positive sum competition becomes negative sum stagnation as monopolists extract rents, directly via price or by imposition of more subtle costs on consumers and other stakeholders. In business unlike in sport, a definitive victor is perfectly content to permanently vanquish its rivals. But the rest of us see a positive-sum dynamic replaced with negative-sum exploitation. “Antitrust” is the (much too narrow) name we give to the socially essential function of maintaining economic competition, which is really a carefully structured form of cooperation. Just as sports leagues sometimes let losing teams get the first pick of new talent to help maintain balance, states must ensure among firms that new entrants and also-rans are never permanently out of the running, that in practice winners take turns. When balance is sustained, business competition can be a strikingly effective way to organize cooperation.

Not all competition can be reckoned a form of cooperation, however. War is competitive, but it is not cooperative. There is no positive sum aspect to war that would guide us collectively to encourage the practice indifferent to who wins or loses. On the contrary, it is a profoundly negative sum affair we correctly seek to discourage.

II. The world is lumpy

We are now living in a multipolar world. The moment when perhaps a consensus could have emerged around models of governance and international cooperation championed by “the West” has passed for the foreseeable future. China, in particular, is a peer power, confident in the effectiveness of its own quite different mode of governance, unwilling to defer to Western or especially American strictures. China, the United States, Europe, and other powers will compete for power and prestige.

The challenge before us is to structure that competition so that it is a positive sum form of cooperation, rather than a negative sum prescription for mutual isolation and military conflict.

A new cold war is a bad idea. We barely survived the old one. Even its echoes now threaten to see us off. Defining international competition as a contest between democracy and autocracy (from our side), or between common-good cooperativism versus corrosive, selfish liberalism (from theirs), is a terrible idea. We are not the good guys, they are not the bad guys, and vice versa. Singapore despite political illiberalism and, arguably, corrupt nepotism is in many respects an admirable polity, one that despite limited electora competition is extremely solicitous of citizen input and concern. Japan was a full-fledge member of the “free world” despite decades of single-party rule. China’s “autocracy” should be distinguished from Russia’s, in that it has delivered to its vast population remarkable improvements in human flourishing, despite ugly (from my perspective) restrictions on free expression, religious association, and political contestation. China’s treatment of the Uighurs is inexcusable. So was our invasion of Iraq. In practical terms, the response cannot be to try to extirpate regimes that do or have done bad things, but to work constructively to reduce the misbehavior, in large part by offering alternative means of addressing the perceived threats that provoke it. “Constructively” means not threatening or promoting regime change, however much and reasonably and sincerely we might hope for and desire it. Political change is the domestic choice of a polity. When we offer advice and criticism, we should do so overtly and respectfully for our counterparts to consider, accept or reject. Covert “foreign interference” is always weaponized by factions, often to immunize the worst aspects of the domestic establishment from useful critique. Would the Castros have been so long in power without our indefatiguable help?

This is hard for us. We are culturally primed to view international affairs in desperately moral terms. “Never again,” we say. How can we not cheer revolutions against oppressive regimes? Why shouldn’t we quietly help? When our military might prevent atrocity, is it really moral to refrain? But moral ideas cannot be divorced from their consequences and still remain moral. By the time we face a choice between atrocity or military intervention, we have already lost. Though there are important differences of degree, military intervention inevitably involves atrocity. Then, as we’ve seen in Iraq, Afghanisatan, Libya, the downstream consequences are often even worse.

“Never again” is harder work than a Hollywood movie. We will never live up to the phrase just by standing up to current or imminent evildoing. “Never again” means prevention, and prevention by its nature must be forward-looking rather than reactive. “Never again” is the work of a State Department much more than of a Department of Defense, and when the work is done well the public may never notice that it has been done at all.

But publics also have a role to play, I think perhaps the most important. Goodwill to all, joyful intercourse across national lines on a human-to-human basis, resisting the impulse to turn nationalities into, and treat nationals as, two-dimensional villains or heroes — these things are crucial to the cause of peace. Of course it's not enough, good fences make good neighbors, we'll need our militaries and balances of power and deterrence and all of that ugly game theory. Weakness can be provocative, war must always be costly. But hard power games are very brittle. Without the soft flesh of human affection, all that will be left is bones, all of our bones. Love really is the answer, or at least an essential part of it.

III. Public goods provision as an arena of competition

Great powers will compete, for power and prestige. If that competition is mostly military, the result will be catastrophe. But the strongest governments gain their power, and fundamentally the consent of the governed, by effective provision of public goods. Great powers provide global public goods: they contribute to public welfare beyond the borders of their own state. Those public goods include military security, but also trade arrangements, development assistance, food security, disaster assistance, education, technology, and more. One silver lining of the (miserable, terrifying) Cold War was that the United States understood, while it ran, the importance of competing in the provision of global public goods. During its “unipolar moment”, undisciplined by competition, the United States succumbed to the temptations of a monopolist and began to shirk, doing less and charging more for support of other countries, demanding that they “pull their weight”. China, on the other hand, has increasingly understood that provision of global public goods is a core dimension of power, hypercharging development of ports and infrastructure throughout the erstwhile nonaligned world with its belt and road initiative. Western critics argue over the terms of the loans by which China finances that development — is it really so generous?. But fundamentally things are being built, trade and employment are increasing, in places neglected by American grandees except as objects of pity and charity. The West’s famous development institutions — the World Bank, the IMF — have grown worse than sclerotic. With some justice, they are perceived as predatory servants of Western creditors rather than enablers of public goods provision that domestic governments can’t manage on their own.

During this pandemic period, the West by now on its own could have produced and distributed, or assisted very capable countries like India and, yes, China, to produce and distribute, its highest quality mRNA vaccines to all of the inhabitants of the planet willing to take it. The cost would have been high, in absolute dollar terms, but small relative to the overall cost of stabilizing our domestic economies over the period. On humanitarian grounds, but not just on humanitarian grounds, the opportunity we have lost by failing to do that is absolutely extraordinary. Now that we are in a military crisis, would India be quite so nonaligned if we had more generously supported its health and welfare, commercial and other formalities be damned? Is it possible, if we had transferred this technology (that they will learn within a year or two regardless) that China might not treat us with such cold hostility? Iran? That perhaps even Russia, led by the man it is led by, would have been moved to a less bellicose posture. Perhaps not! Counterfactuals are unknowable. But in the broad scheme of things, how much would it really have cost? And regardless of its effectiveness as a charm offensive, how many lives might it have saved? On both political and humanitarian grounds, it was a foolish bet not to take.

Competing to provide of global public goods is a positive-sum way that great powers can vie for power and prestige. It’s effective. Powers that openly provide public goods that notably improve the welfare of others gain influence and opportunity. If this sounds hazy and hippie-dippie, look at the world in its current divisions. Why is India, the world’s largest democracy, hesitant to condemn Russia for its invasion of Ukraine? Decades of cooperation and help, on security but not just, make a difference.

An irony of the United States during its unipolar period is that while consent of the governed is at the very heart of our ideological project domestically, in global affairs we've emphasized hard power, whether military or economic, rather than soft. But use of hard power is perceived as coercive and resented. Soft power is persuasion. It brings with it consent. Hard power is usually costly to exercise. Soft power, on the other hand, while is often free, as the people you would hope to influence choose to be helpful of their own free will. All durable and decent modes of authority rely much more heavily on the velvet glove than on the iron fist, even if hard metal must always exist buried at some level deep beneath. We broadly understand this with respect to domestic affairs. I submit that the same must be true of international affairs. International affairs are not in fact anarchic, except during tragic periods when architectures of cooperation break down. We are now witnessing the barest hint of what that might mean, and I hope we witness not a day more of it.

It is incumbent upon us all, in the United States, in China, in Europe, in Russia, to build an international system built upon respect rather than coercion. In a multipolar world, powers will compete. Overt, cordial, cooperative competition for influence and authority via the provision of global public goods allows great powers to compete in a way that serves humankind and sustains global peace. No power has a long-term interest in frequent bouts of military competition or economic blockade.

IV. Feed the world

Food security is a global public good and a humanitarian necessity. The war in Ukraine is threatening food security worldwide, especially in the Middle East and North Africa. As Matt Klein has pointed out, the United States, India, Europe, and China have the means to buffer that shock, if we cooperate competitively to make sure the world is fed and prevent the war from continuing indefinitely. We should share the goal of feeding the world, and cooperate to set up a framework under which we each compete to do the most.

No power will win that competition, and no power will lose, but each power will make genuine progress in gaining prestige and influence in the countries that they assist. The competition will be real. Its rewards can be very valuable going forward in undergirding patterns of future trade, choices about security arrangements, financial relationships, and influence broadly. Like a good sports league, we should try to work with our rivals to create conditions conducive to this form of competition continuing in perpetuity, without any power permanently dominating.

V. Conclusion

Nationalism and humility do not easily go together. But we are all deeply imperfect polities struggling to hold together internally in order to productively cooperate, and to prosper and protect our interests in the larger world. Military competition turns us all into cartoon jingoists spiraling towards catastrophe. Competing to help, and to influence by admirable example, leaves the world over which we are all competing better off, even as our share of it ebbs and flows over time. Better luck next season. There must always be a next season.

Update History:

  • 8-Jan-2022, 2:00 p.m. EDT: “Competing to provide of global public goods is a positive-sum way that great powers can compete vie for power and prestige.” (ht @tatere)
  • 14-Apr-2022, 1:40 p.m. PDT: “, while it ran,” (set off phrase with commas)

Stop the war

The devil is dancing again in Europe, and I fear he will kill us all. It is time to stop the war in Ukraine and arrive at a negotiated settlement. Now. Yesterday.

There was and is no question who was to blame for the decision to pursue a maximalist invasion of a sovereign neighbor. Vladimir Putin is the aggressor. Over the longer term the story may be complicated. Questions of how we came to find ourselves in the circumstances under which Putin made his horrible choice — over the past few years, since 2014, since the 1990s, since 1917 — are sharply contested. There are accounts that would center Putin’s nationalism and revanchist imperialism, and also accounts that hold choices of the United States and the broad West substantially to blame. I lack the background adjudicate those contesting stories. Even among experts working in good faith, I think there would be no consensus on the truth of these matters.

The present is much clearer. In the run-up to the war, I favored the threat of strong sanctions in hopes that it would deter the invasion. When this long telegraphed war began, I expected, as most observers expected, quick Russian domination. I feared that sanctions would be too weak, that a divided, corrupted, and commercially entangled West would fail to impose sufficient consequence for Putin’s horrible choice, as it had failed to following Putin’s annexation of Crimea and fomenting of separatists in 2014. Like so many Western observers, I viewed the situation through the lens of Munich, the infamous appeasement of Hitler widely blamed for inviting the catastrophe of World War II. Putin’s domination of Ukraine might not be avoidable, but then it must at least be costly. Even though sanctions are terrible, they should be strong since they are the only consequence available. If arming the Ukrainian government could increase the cost of the invasion, that action, also ugly, might be justifiable as well. The key objective was that Putin should not imagine that his aggression had come cheaply, or that further aggression would not be fiercely resisted.

Both war and sanctions have gone very differently than I expected. The sanctions, both as formal state action and informal isolation by risk averse or publicity sensitive firms, have been profound. After a wobbly start, public outrage pushed politicians and businesses to spare no effort or instrument that might harm the aggressor’s economy. Freezing the reserves of Russia’s Central Bank, an extraordinarily severe intervention that had not been widely discussed in the run-up to the invasion, went from an unlikely “what if” to a fait accompli in a matter of days. Major Western multinationals abandoned their commerce in Russia overnight. Firms foundational to modern international commerce, like the shipping giant Maersk, announced they would not serve Russia, so the imports Russians rely upon for ordinary life may become scarce. Russian planes were forbidden from most European and North American airspace, planes’ leases were canceled, Boeing and Airbus announced they would not supply parts to Russia, international ticketing networks quickly excluded Russia’s flagship Aeroflot. Civil aviation to and within the country may quickly be crippled.

With the help of arms from Western powers, the war also has not gone as expected. I cannot judge whether Ukrainians’ fierce resistance has truly turned the tide of the war, or delayed what remains militarily inevitable. But it has imposed huge costs, in materiel and in blood. The apparent errors and unpreparedness of the invaders have been a public humiliation of Russia’s armed forces.

The most important costs of the war have not, of course, been borne by Russia, but by the people of Ukraine, whose homes have been bombed, who have been forced to flee by the million, who are giving birth in basements to infants without diapers, hot water, formula. In the moral calculus of the war, the suffering Russia has imposed upon Ukraine far overshadows the costs Russia has borne on battlefields and in pocketbooks. But suffering does not salve suffering. It all just compounds. The suffering of a Ukrainian mother mourning a child caught in the shelling and a Russian mother mourning her conscript son who had no idea he was going to war feel very much the same. This war is hideous, a monstrosity, for everyone touched by it.

Before the war, it was right to be concerned that Russia would win its blood-soaked prize without paying a sufficient price to deter further aggression. That concern has been addressed. Russia has paid a high cost in blood already, and its citizens will pay an extraordinary cost in deprivation until the sanctions are reversed. Yet the focus of the Western world remains how to make it hurt more, both economically and militarily. That may be reasonable while the aggression continues. But we should all be very clear that the goal now is to stop the aggression and limit the suffering of all parties. In my view, the outside world is focused far too heavily on vicariously fighting an inspiring fight and far too little on ending the misery and negotiating a peace. The Ukrainian resistance has been inspiring. But don’t mistake an inspiring fight for a good fight. War is evil. With every battle won so much more is lost. Every soldier left to rot on the battlefield is an eternity of tears. This is not a football game. There is no glory.

Suffering is bad. It is remembered. Sometimes it is avenged. Peace is the essential foundation of human flourishing. But a cold peace is a fragile peace. That was the lesson of Versaille, and now it is also a lesson of the Cold War. After World War II, the victorious powers wisely constructed a warm peace in Europe. Arguably the greatest period of human flourishing in all of history was the result. We need a warm peace now, one that encompasses and reconciles Ukraine, Russia, and their neighbors. The worse the suffering, the longer it endures, the more difficult it will be to build a modus vivendi that serves us all.

I do not like Vladimir Putin. I wish death upon no one, but my preference would be he retire from power, perhaps live out his days like Idi Amin somewhere. But it makes no sense, it is profoundly a bad idea, to sustain the war in hopes some backlash provokes his departure. That is at best a speculative enterprise paid for in others’ blood and misery. It is also a very reckless gamble. L’etat, c’est moi is not an unusual sentiment among autocrats. The circumstance most likely to provoke nuclear war is existential threat to l’etat. It would be great, fantastic, if the Russian Federation undergoes an orderly succession of leadership. But that is their business, no one else’s, to encourage or impose. While Mr. Putin is Russia’s leader, we shall have to build a warm peace with the Russia that Mr. Putin leads. Isolating states whose leadership we dislike is a tried and true tactic of the United States, see Iran, North Korea, Venezuela, Cuba. These are not success stories. We engaged with China, from the 1990s until 2016. It didn’t become a liberal democracy, as many hoped, but we did enjoy a warm partnership during that period, before we adopted a more adversarial tone under the Trump administration. Our relationship with China was bad for us, economically. But that was because we failed to look after our own interests, despite having every necessary tool to do so. We should go back to building a warm partnership with China, but do a better job of looking after our economic interests. Building a warm peace with Russia does not preclude carefully attending to both states’ security interests. On the contrary, it is prerequisite.

It is extraordinarily reckless for Western powers to be abetting a conflict this destructive, this intimate, with a nuclear superpower. My son is eight years old. He is everything, the only thing. I am very unsure now that he will see his ninth. I agree that it was necessary, when Putin resolved to invade Ukraine, to make sure that the action would be costly, so he would not be emboldened to a new imperialism. That objective will be accomplished. It is time for the parties, Ukraine and Russia, along with the EU and United States, to negotiate a settlement that nobody loves but everyone can live with. Stop the atrocity, stop the bloodletting, stop this war. Now.

The real prisoners’ dilemma

The prisoners’ dilemma is our goto example for a sort of gigantic sigh. Everything these days, we say, is a "coordination problem”. In the prisoners' dilemma, a prosecutor separates two alleged collaborators in a crime, and demands that each confess. If one confesses and helps to prosecute the other, the snitch will be set free while the hold-out will be punished very severely. If neither confesses, they both get off with a slap on the risk. If both confess, they'll both be put away, but not for quite as long as if one had held out and got busted. The gigantic sigh is that even though the prisoners’ common interest would best be served by both agreeing to hold out, absent any ability to coordinate, the narrowly rational choice for each prisoner is to confess. If the other guy isn’t gonna confess, and I do, then I get off, which is better than a slap on the wrist. If the other guy is gonna confess, and I do too, that’s better than the very severe punishment I'd receive if I hold out and let the other guy's confession damn me. So the outcome is both prisoners confess and are put away, even though both would have been better off if they’d held their tongues. Sigh. Alas.

It seems like every bad thing can be described as a prisoners’ dilemma. We’d all be better off, for example, if the world didn’t warm into a post-apocalyptic hellscape. But each of us gains a lot from our own activities that spew carbon into the atmosphere, and the probability of post-apocalyptic hellscape is not meaningfully diminished by our individual abstentions. So, for each of us individually, the rational thing is to keep on spewing. So we all do that, and the result is collective catastrophe. Sigh. There are things the government could do that would really make our lives better. But for politicians of either political party, the benefit to the country of a popular good thing is diffuse relative to the electoral disadvantage they would experience if the good thing happened under the other party’s leadership. So for each party, the narrowly rational choice is to block good things while the other party leads. The equilibrium is gridlock, good things left undone, unnecessary misery for all. Sigh.

In the unlikely event, dear interfluidity reader, that it was not old hat to you, you probably bristled a bit at my account of the original prisoners’ dilemma. Yes, sure, from a very narrow perspective it might make sense for each prisoner to snitch. But if the prisoners know each other and will encounter one another again, the difference between getting off entirely and a slap on the risk probably wouldn’t be worth the blowback. Maybe the other guy is gonna put a shiv in my belly. Maybe I’ll just lose a friend. Either way might be enough to shift my choice. The canonical prisoners' dilemma seems artificial, implausible. Theoreticians have to clarify that the certain bad outcome they predict holds only in a “one-shot" game. In a more natural “repeated” or “iterated" game, the prisoners might well keep their mouths shut. And that points to the problem with the prisoners’ dilemma as an intuition pump.

Human beings are fantastic coordinators. Almost everything we do involves coordinating with others, often without any kind of explicit agreement to do so. In many situations we empathetically place ourselves in the position of strangers, and do the right thing by them even at cost to ourselves. Why do you clean up after yourself at a picnic table hidden in some unsurveilled grove? Where there might be large rewards to collective action, we have developed extraordinarily contingent and detailed tools — contract law, formal organizations, states — to coordinate effectively. The prisoners’ dilemma in its cliché telling smuggles in an assumption that noncoordination is the default, that our prisoners will behave like selfish atoms absent a formal bond. But that’s not how humans are. Coordination spurts from us like a mutant weed, intertwining our behavior with others as soon as we encounter them, even if only imaginatively.

But the prisoners’ dilemma story is not so unrealistic in its particular context. Prosecutors really can get prisoners to confess by setting up these kinds of games! But note the active voice. The dilemma doesn’t just happen. Prosecutors frame the situation. They isolate the prisoners. They suggest the other guy is going to “play ball” in order to impair the expectations any tacit coordination would rely upon.

In real life, the prisoners’ dilemma doesn’t result from some anodyne “coordination failure”. The real prisoners' dilemma is a setup. More charitably, we can understand it as a battle between competing teams of coordinators. Police and prosecutors coordinate to apprehend the alleged criminals, to divide them in spaces that prevents coordination through overt communication, to carefully manage the information to which they are exposed in order to shape their behavior towards the self-interested, isolated actors presumed by a one-shot prisoners' dilemma. The prisoners — before their apprehension, tacitly or overty; during their ordeal itself tacitly; by virtue of expectations they may have arranged for the future — strive to coordinate in order to avoid their mutual imprisonment. If they are actually innocent, hopefully protestation of innocence becomes a strong Schelling point to coordinate upon. (There is no guarantee of that. The conventional logic and expected equilibrium are not altered by actual innocence.)

Coordination rarely just "fails". Almost always, what we call coordination failure results from one group of potential coordinators being outcoordinated by another group, under circumstances where the two groups’ interests diverge. High quality coordination is the human default, but we very often coordinate with one another to frustrate rival groups' ability to coordinate, to create coordination failures, in order to more easily achieve our own goals. Police and prosecutors isolate and seek to undermine the trust between prisoners. Antitrust authorities seek to hinder and punish certain kinds of coordination between firms. Fossil fuel interests work to undermine any consensus surrounding the likely course of climate change, in order to prevent that from becoming a basis of coordination against their interest by other parties. Partisan gridlock and civic strife are financed by interests who see more threat than opportunity in an effective, active state. The flames are fanned by interests who see more opportunity than threat in replacing civil society with entertainment. Red tribe / blue tribe, woke / antiwoke — these are strategic outcomes, not emergent phenomena. We fail to “pull together” because factions are coordinating excellently to divide us.

I often encounter a sentiment, especially among tech types, that coordination failure is at the root of all evil. If only we had better tools, new coordination devices, the theory goes, a lot of social ills might be solved. I think that misdiagnoses the problem. “Coordination failure” is a blessing at least as often as it is a curse. I am in favor of the coordination failures that help keep product markets competitive. I am in favor of police and prosecutors outcoordinating organized criminals (although I want them to do so in a way that frustrates the coordination of the guilty without conspiring to put away the innocent). I am in favor of criminalizing coordination between judges with litigants. I am in favor of journalists and whistleblowers outcoordinating well organized regimes of government and corporate secrecy when information in the public interest is being concealed. There would be no political stability if the coordination equilibrium that is the bedrock of any government’s authority were very easy to coordinate out of to some next shiny thing.

The evils for which we hold “coordination failure” responsible are not attributable to some sad theorem of game theory. We could say instead that they are caused by bad actors — the fossil fuel interests that frustrate our ability to coordinate against global warming, the plutocrats who create incentives to entrench partisan gridlock. But that is I think too easy, and often counterproductive. The root problem is divergence of interest itself.

Obviously, in any polity or human community, there will always be some divergence of interest. No two humans' requirements or yearnings are perfectly alike. But in some polities, the welfare of the community as a whole overwhelms whatever differences of station jockeying among subgroups might yield. In our society, differences of outcome within are so great, and broad social improvement so implausible, that coordinating competitively over our place in the distribution seems more fruitful than coordinating cooperatively to improve the distribution.

Until we remedy that, expect a lot of “coordination failures”. In the real prisoners’ dilemma, we are all one another’s prisoners, and one another’s prosecutors. We have better things to do.