The Ethical Spectacle September 1995

Welfare and Block Grants

Federal government intervention, by setting national standards and enforcing cooperation, prevents many prisoner's dilemmas. A current example arises from Congress' decision to stop intervening in welfare decisions by converting a federal entitlement into block grants to the states.

Imagine that I am the governor of New York and you are the governor of New Jersey. Each of our states has a certain number of extremely poor and homeless people. Cooperation between us up until now has meant that our benefits to the poor in our respective states are pegged at about the same level. Thus no poor people in your state have an incentive to move to mine, and vice versa.

Along comes Congress and grants us much greater discretion to set the level of our benefits. We are now in an iterated prisoner's dilemma. If we desire to continue cooperating, we will keep the level of our benefits the same, though we no longer have to. However, the incentive just became very strong to defect. Defection means cutting the level of benefits my state offers, knowing yours will remain the same for now. As a result, many of the poor people in my state will move to yours .

Of course, you will now defect on the next round. You may restore the equilibrium by cutting your benefits to match mine, but why not retaliate by undercutting my benefits, so that the poor people in your state will now move to mine?

This has now become the variation on the prisoner's dilemma known as the game of chicken. Whichever of us is willing to see the poor die in the streets will win the series.

But wait! There are fifty states. All this means is that we are in a game with 50 players. The irreducible minimum of people who cannot work (or cannot find work) will be chased from state to state as each state defects by cutting benefits. Ultimately, there will be no place to go, and some or all of them will die.

This leads to another conclusion: The future has no shadow for politicians. In game terms, the shadow of the future does not exist, particularly for Congressmen, who do not expect to be around, or at least do not expect to be blamed, when the consequences of their defectionb become evident. And they are right, for the memory of the public is so short, and the capacity for blame even when it remembers, so slight, that a Richard Nixon or the Gordon Liddy he employed can become heroes again in a lifetime. Imagine, then, a world in which a retired Congressman could live in shame due to a bill he voted for thirty years before! That is the world we should have.

I talk every day to supporters of the Contract Republicans, similar to Bob Wilson, who have the following outlook when I ask about the fate of the helpless:

Which of these strikes you as the most honest answer?

Mr. Gingrich's references to private charity number among the most dishonest things he has said. How much did you contribute to charity this year? Private charity sets up another prisoner's dilemma. If you contribute and I do not, you pay for the burden alone. If neither of us contributes, someone dies. The federal government, by taxing us proportionally and funding welfare, enforces cooperation. The Contract Republicans are the party of defection and the sucker's payoff for he who cooperates.

That the helpless will die is the most honest answer. Most of the Contract Republicans must know this and it is fine with them, but they will not say it. I was in Texas recently, working with a lawyer who is involved in the Gramm campaign. He teased me about a recent New York court decision limiting the ability of Grand Central Station to chase out the homeless during the day. I asked him, "And once you have chased them out everywhere, where do they end up?"

He smiled--smirked--and said, "If I were Grand Benevolent Dictator of the Universe, I would put them all on an island in the Pacific. Once a week, planes would fly over and drop food. Also, guns, knives, marijuana and crack--let no-one say I'm not generous."

I asked, "How do you know who 'they' are?"

He smirked again, and answered: "As Grand Benevolent Dictator of the Universe, I would have no trouble telling who 'they' are."

I believe this perfectly cordial, middle-aged, devout family man and hard worker, devout Catholic and pillar of local society, spoke not only for himself but for Senators Gramm and Dole, Speaker Gingrich, Governor Wilson, and millions of Americans.

It is, by the way, remarkable, and not really a matter of importance to the game theoreticians, how often defection in the prisoner's dilemma causes someone's death: sometimes one or both players; sometimes innocent third parties.

Personally I believe in cooperation.