Episode 182 - Focal Points and Written Constitutions
Max talks about a concept in game theory called a Focal Point. Also, looking at US history, talks about ways in which written constitutions can succeed or fail.
Links
Game Theory Book: Strategies and Games
Business Insider: Cori Bush plans Bill to Expel GOP Lawmakers
Wikiquote: James Trafficant
Reagan: Trust but Verify
Related Episodes
Episode 176 with Gene Epstein on Economics and Governance
Episode 126 on Designing Electoral Systems
Episode 108 on changing Corporate Board Structure
Transcript
You're listening to The Local Maximum Episode 182.
Time to expand your perspective. Welcome to The Local Maximum. Now here's your host, Max Sklar.
Max Sklar: Welcome, everyone. Welcome. You have reached another Local Maximum. Right now, we're gonna start with a little bit of a story. You're gonna have to use your imagination. Imagine that you are invited onto a game show by some mischievous game show host, and they give you this task. It's one of those games where you get out in the real world, kind of a scavenger hunt type things but not really.
Here's what you have to do: You have to be at a certain place in your town, in whatever town you're in, whatever town you live in. You have to go to a certain place in town tomorrow at noon. Actually, you can go anywhere in town. Anywhere that you want. But here's the thing: You know that there's another contestant out there, and that contestant is given the same instruction. Their instruction is also to go somewhere in town and see if they can meet someone. Basically, the idea is that if you both show up in the same place, you both have two halves of the password and you both get a thousand dollars. If you don't show up at the same place and you can't find that person, then you both get nothing. You just have to go to one place and the other person is also asking to go to one place and the question is where do you go?
Now, obviously, it depends on what town you're in. But this is actually a problem in game theory and economics. This particular example or at least a form of it was given by Thomas Schelling in the 1950s and he was looking for something called a focal point. Got a little book on game theory here. I'm going to read here what a focal point is. “For the players in the game, the intuitive idea of a focal point was first advanced by Thomas Schelling in 1960 in his book, The Strategy of Conflict. It refers to a strategy vector that stands out from the other strategy vectors because of some distinguishing characteristics.”
What's going on here? A focal point, in this case, is someplace in town that you know is a good meeting place. The idea, the example that Schelling gives which is still, what is it now? 80 years later? 1960, yeah, 81 years later? No, no. Not 81 years later. Oh my God. There are a lot of people I know who were born in the 60s okay. 1960 to now. Sorry, 61 years later is that you would go to the clock at Grand Central. I know that's where my family likes to meet. If you're in Grand Central, it's where most people would meet. If you had to meet someone in Manhattan, in New York City. But if you're in a different town, it might be a different place. Do you go to City Hall? But sometimes, it's kind of an awkward meeting place that might not be the place to go. I'm trying to think for here in Salem, New Hampshire. I'm really just not sure where I would go. For Brooklyn, I'm really not sure where I would go. Let's see if I know if I was downtown, I'd probably meet in front of Borough Hall, but I don't know. Or do you meet in front of the bridge? It's very, very unclear.
You could play this game a bunch of times and you can sort of imagine it as... You can imagine playing a game of Family Feud where this becomes a lot more obvious like, "Hey, we asked a hundred people in Brooklyn where they would meet and this is what they said." Then, you can start guessing places. That's what makes Family Feud so fun. It's because it's actually based on an actual problem in game theory, which in this case is called the coordination problems. The coordination problem is you're trying to match other people. You're not necessarily trying to get the right answer but you're trying to match the answer that other people give. That's sort of the problem of coordination, and that is the problem of the game where you have to meet someone, and that's also the problem of Family Feud.
This problem becomes a lot easier once you play multiple times because once you are kind of coordinated with the other person, then you stop, and you kind of find your focal point. Just like if you have a bunch of people playing Family Feud and you have... Well, first of all, you already know what the answers are and so you'll all pick the right answers. But then, if the people who are guessing the answers in Family Feud, which for those of you who don't play Family Feud, it's like that they ask a question like I don't know, "What's your favorite food?"
Then, you have to guess what the most common answers were. But then, if the people who are guessing are also the people who are being surveyed, then eventually, you'll have 100% kind of coordinate onto the same answer because everybody knows that if they give the same answer as everybody else, then they win. That's not Family Feud that's just like a weird version of Family Feud.
Okay. That's all about finding focal points. And I think that we can broaden this economic idea, this game theory idea of focal points. And think of it as a possible analogy to the role that custom and tradition can play in either a society or in the case of, I'm sort of also thinking more in the case of a government, or in the case of other economic activity like a trade, or a contract, or that sort of thing. It also works for communication technology, and internet protocols, and alphabets, and languages because you have to be on the same protocol as everybody else. If I want to pick a computer language to use, well, it helps if there's a large community around that language because then, I know there will be more tools for it and there'll be more developers willing to write for it.
Words. Now, we like to think of words as having meaning but really, words are just whatever meaning that people assign to them. You can use any words and sounds you want to convey meaning but it only works if most people are on the same standard. You could think of language as also kind of a focal point there. This idea is something that kind of came to mind for me when thinking about the idea of a constitution, one that forms the basis of a government. Or you could also think of it as a charter or a contract of some time that defines the rules of an organization.
One of the ideas that I came in contact with when I was at the PorcFest liberty conference about a month ago is that a lot of people who believe in freedom, individual liberty have completely given up on the idea of constitutions. I want to address this a little bit. It's not meant to be a rant but as is common on The Local Maximum, this is kind of a forum for presenting thoughts and ideas. Hopefully we'll learn something and I'm open to being challenged. But I think that the theory of focal points formed part of the answer to "How do you get a constitution to work?" Because you could say the original US Constitution was originally meant to preserve liberty. Obviously, it's much more complicated than that. It's also meant to preserve the independence of the United States. It's also meant to kind of preserve order, in a sense, law and order, everybody kind of agrees on what's going on. You kind of need that for everything else.
But many are quick to point out a lot of aspects and a lot of liberties in the Constitution that are meant to protect us are often ignored. In the case of the US, I can give some examples throughout history. It seems like there definitely have been First Amendment incursions from time to time. People are prosecuted for speech. In other words, they violate free speech. This happened notably during World War I. Also, in the late 1700s under the Alien and Sedition Act. Some people, maybe talk about the Second Amendment or people who care about gun rights; gun rights have been violated. Maybe people who care about the Third and Fourth Amendment maybe say due process has been violated.
They're kind of say, "Okay, well, this thing just didn't work." is kind of the takeaway. I want to push back on this a little bit. Well, first of all, let me keep going on the argument that the Constitution didn't work. People can point out that in other countries, it's more obvious that the constitution didn't work. For example, in the Soviet Union, they did have a bill of rights that was said, "Hey, you have the right of freedom of assembly and the right to free speech" and all that and that was just completely ignored. Also, the UK has an unwritten constitution and so you would expect it to be even worse, but it still does better than the Soviet Union in protecting people's rights.
I think that there is kind of a historical focal point in British society where certain lines are not crossed. Now, these lines are crossed occasionally. It's something I've been thinking about very recently because I feel freedom of assembly, freedom to lawfully assemble has just been thrown completely out the window. Freedom religion has been thrown completely out the window in the last 18 months during the pandemic without apology or without any indication that "Hey, we need to do this. This is a big deal." No. Just thrown out. That's kind of a problem that hasn't made its way entirely through the courts yet. Who knows, maybe the courts will correct it to some degree or maybe once the scariness of the pandemic has worn off. They're going with the Delta variant now. It's really scary. We need to impose new lockdowns but I think it's working less and less. Maybe this will just wear off all the time.
I guess the argument is, “Well, our society is protecting other aspects. Society is protecting us. The Constitution isn't protecting us.” However, I would say that... I kind of think about it this way, I contend that the question isn't, "Does a written constitution keep politicians or political actors from breaking it?" The better question is the one that an economist would make which is, "Does having something in the constitution improve the chances that will get done that way versus not having it in there?"
Here's some examples. I'm just going to go back to the Bill of Rights, for example, which is the First and Second Amendment. Despite the fact that you can point to places where freedom of religion, freedom of assembly, right to bear arms have been violated, those have held up pretty well even when the general thoughts in society have kind of turned against it. There are some exceptions but parts of the First Amendment completely taken away during lockdowns, other times in history. But would it have been taken away more had it not been in the Constitution? Also, the right to freedom of speech has been pretty well fleshed out and defined by the Supreme Court.
We have a pretty long record and it's hard to just go against that just because someone feels like it. It might feel like it's easy when they do it but it really is kind of an uncommon thing. Actually, the Second Amendment, right to bear arms, has gotten a lot stronger in recent years in the United States than it was before. You often say it's very, very difficult to reclaim rights once they've been taken away. If you care about expansion of the right to bear arms, do you think that would have been possible if a Second Amendment didn't exist? I think probably not. These things, the fact that they're written down and codified into law that everyone can agree, it kind of gives supporters a rallying cry around to make these things happen.
I do think that there is a need for consistency among the political systems, among the judges, among the politicians, and all that. Now, we might be shocked at how hypocritical politicians can be sometimes or all the time. But there is a point, there's a point, where they do need to have a common language and a common set of facts. I know from reading Twitter and looking at statements and sometimes, it feels like they don't. They'll try to obfuscate. But a constitution makes it much harder to obfuscate the truth. It makes it much harder to do certain things and to be a hypocrite.
Because remember, all of these politicians have to have... They have donors, they have voters. And those donors, and voters, and supporters need to have some degree of consistency in order to support them, which means that they do have to rely on some set of principles and some set of rules even if most people who feel they're principled, and they have consistent ideas on policy. You look at what politicians are doing and you're like, "Oh, that's totally outside of... that's totally just crazy." Because of the political system they're in, they have to have some degree of consistency which is again, having a constitution and they all say that they support it. They all kind of pledge to support it. It makes it much more difficult, it makes certain things much harder to break.
Now, other people have point out there are certain amendments to the Constitution that have just been completely thrown out, the Ninth and Tenth Amendments, and that's probably because they're just too vague and, not that they're not important. They are important. They're too vague that they didn't congeal into a focal point, into a rallying cry in that way. The way that they're written, even though they're good ideas, perhaps, they are just very hard to rally around. Let's actually bring up the Bill of Rights here and let me see if I can look at the Ninth and Tenth Amendments.
Here we go. The Ninth and Tenth Amendments says, "The enumeration in the Constitution of certain rights shall not be construed to deny or disparage others retained by the people." Basically, Ninth Amendment says, "Yeah, there are other rights that are not in here. Well, great. But the..." Actually, it was some of the people who were originally creating the Constitution didn't want a bill of rights because they said "Well, you know that people have rights and it doesn't need to be in the Constitution." The Constitution doesn't enumerate them but politicians are still required to accept them. Amendment Nine was put in to say, "Hey, just because we listed things here doesn't mean there are others." But then, now the problem is that you can easily disagree on what the other ones are. I don't think that Amendment really gets used. I could certainly see it be used in certain circumstances.
Then, the Tenth Ammendment says, "Powers not delegated to the US are reserved to the states or the people." But of course, if you are consistently expanding which powers you think are delegated to the federal government, then it begs the question here where it's just like, "Okay, yes. There are powers that we leave to the States but we're not really clearly defining what those are." You could almost tell when it's written that it's sort of easy to keep expanding, and expanding, and expanding.
Maybe those can go through a rewrite where you can be a little bit more specific but I actually think that there... It's actually very clear that there's a difference here between the First Amendment and the Second Amendment where they talk about prohibiting the free exercise of religion, can't do that. Right to the people to keep and bear arms shall not be infringed. All that stuff is much more specific and much easier, and I don't know if I'd write it today. Look, this was written 250 years ago, obviously, language has changed. With the availability of information, they didn't have… I mean, imagine that all this had to be written out by hand multiple times. You might be able to do a better job today if you had good people in there, which the chance of having good people in there today, in comparison to what they had then, is probably very low.
But you can actually look at these clauses in the Constitution and you can look at how specific something is. And you can actually tell which are likely to be violated and which are not likely to be violated. Another thing people point out is that the structure of the Constitution is very rarely violated. For example, it says, "Every state has two senators and you can't change equal rights for states." Wyoming gets the same number of votes as California. People don't like that, particularly in California, but that is spelled out very clearly in the Constitution. It’s something that you can't really overturn, and therefore, people have not overturned it.
You can't just show up, you can't just have West Virginia appoint a senator or elect a senator and then have that senator show up in Washington DC. And then the Senate says, "No, we're not going to sit you, we're just going to sit one senator.” “What do you mean? What do you mean you're not going to set the second…?” “We just don't like you. We're just going to sit one senator for West Virginia.” That just doesn't happen even though I'm sure there are people who would like to do it, and it would be in their interest to do it. And there are powerful people who probably get away with it for a little while but no. It's just too flagrant and once you make something too flagrant to violate, there's too much of a cognitive dissonance there. It just doesn't happen.
Now, interestingly enough, delegates can be removed from Congress. That is a structural issue that could be a problem sometimes. It's kind of funny. Why doesn't this happen more often? The United States, it has happened several times and you have to do it by a two-thirds vote of Congress. It's very difficult to do. I think that, in some cases, in other countries, particularly countries that are heading down the path of authoritarianism and dictatorship, they'll just wipe out parties and people in their legislature they don't like.
A great example that I happen to know about is the Nazi Germany and the Weimar Republic. Basically, the last somewhat free election, I guess, the Weimar Republic had, they have the Nazi Party and the Communist Party have lots of seats in the Reichstag and both of those are totalitarian parties but they couldn't institute... They both believed in state socialism. They both believed in not having a democratic legislature representative republic. They both want all power in the state but they couldn't do that together because the Nazi Party would never do a coalition with the Communist Party because they have different state ideologies.
What happened, how do you overturn democracy with that happening? They might have to agree with the Democratic Parties of the Weimar Republic, the Social Democratic Party, and the Center Party. They had a ton of parties over there. Their strategy was... Well the Nazis, they basically took over after the Reichstag fire a bunch... There was a fire at their capital. It was set by people, unclear, a bunch of some communists, maybe. Although, people still think it might have been kind of a false flag operation by the Nazis themselves. They used that opportunity to ban the Communist Party from the Reichstag. “Well, we can't have that they're burning down the buildings so we have to get rid of them.”
Once they got rid of them, then they could pass the Enabling Act that lets them get rid of the next party which was the Social Democratic Party. Then, they got rid of their allies, and they got rid of the Center Party, and so on, and so forth. They sort of did a party collapse where they get rid of one party then they're a much bigger percentage of the Parliament. Then they can get rid of the next party then they're a bigger percentage of Parliament until finally, it's a one-party state. You don't want that to happen.
And in the US, comparatively the last guy who was thrown out of Congress, it's a very, very different situation. This was a guy called James Traficant. I actually remember when this happened in 2002. It was for corruption, and it's kind of a situation where it happened probably for reasons why you would want to remove someone from the Congress. And it's a fun one because if you listen to him, he has so many very funny quotes. He used to say, here's what I'm reading. He set to Congress when they were expelling him: “Many of them are so dumb they could throw themselves at the ground and miss.” All sorts of different funny– Maybe they shouldn't have thrown him out of Congress. I don't know. But it's not the case where it's sort of an authoritarian takeover. It's just... Yes, the seat was open for a little bit so you had people who are unrepresented. But then, it wasn't done for ideological reasons. It was that particular House seat could then be elected in the next Congress and the constituency there in Ohio, I think, were allowed to choose whoever they wanted.
Now, there is currently, actually, an effort by one Congressperson, Cory Bush, along with dozens of people in Congress, to expel large numbers of Republican representatives right now after the riot at the Capitol, and that's still ongoing. That seems a little bit more extreme. That seems like if that were to happen, then the Congress would be kind of a sham in terms of a representative body because it would be a whole bunch of people expelled for ideological reasons. And then, this faction of people who are doing the expelling then becomes a bigger percentage of the Congress. Then who knows, maybe they'll expel more and more people until we have a one-party state.
But I don't think that's going to happen, or I don't know that's not going to happen because you need two-thirds of the vote to do that. You're not going to get two-thirds of the votes. That's in the Constitution and it's, yes, you could theoretically, the leaders of the House of Representatives, Nancy Pelosi, could just say, "Hey, we're gonna ignore these two-thirds.” But you know it's not going to happen. The Supreme Court would get involved. When it takes too many people to get around a very clear law, it just won't happen, nor do I think they necessarily want to.
Here are my initial conclusions. Again, this is just kind of a stream of thought experiment, a little bit. Here are my initial conclusions and what I think about constitutions. Constitutions are clearly not ironclad guarantees that they will be followed. I think somebody at PorcFest said, "They should just add a clause in the Constitution that says, ‘And we mean it.’” which, of course, is a joke. The idea is that the Constitution doesn't do anything so amending it won't do anything. But I disagree.
I feel like you can amend the Constitution. Particularly structurally, it will have to be followed. Then also, even if you enumerate the rights better and have more specific things, I feel like the right of assembly during a pandemic, if that were protected or if there were very specific. Like it said, "Hey, if there's a really bad pandemic, then it takes two-thirds of Congress to overturn right of assembly, and that only lasts for six months, and then they have to vote again." Then I'm pretty sure that that would have had to been followed. And then, who knows, maybe that would have lasted for six months, and then I think you'd get more than a third to block it the next time around. I'm pretty sure if it were that specific, that they wouldn't have been able to just go in and do it.
Okay, I think that certain structural rules provide a focal point. Again, from a game theory perspective even though it's not a formal game, which is when we talk about like game theory, we're often talking about a mathematical game. But it's hard to dislodge that. A Declaration of Rights like the First Amendment, Second, Third, Fourth can provide a focal point for where those rights are, and it's kind of hard to break those down over time even though politicians and certain factions might try. Something that protects your right for a hundred years and then you can use it to get it back is certainly better than nothing at all.
I think my current takeaway... I don't have a whole theory on how to write a constitution. I'm not going to do that. But my takeaway in this kind of exploration is that when you're writing a constitution or any agreement, it's always good to think about how it can be undermined in the future. The US Constitution, again, is written pretty early on as far as constitutions go. They didn't have a lot of data to go on. They had a lot of history and stuff. But they didn't have a lot of data on how kind of a modern-day state with a constitution would work. It's still held up remarkably for what it is despite the fact that certain rights have been violated and certain bad things have happened.
The question isn't, "Do you blame those bad things in the Constitution?" The question is "Would it have been worse or better if certain things were in or not in or removed from the Constitution?" I think you have to go clause by clause and figure out which is which. But I think that's the better question to ask, ultimately, not say, "We had a constitution and all these bad things happened; therefore, constitution bad." It's always compared to what when you're talking about any economic or question of whether we should have something or not.
Where else can we take this? It's not just about the Constitution. I want to talk about other things. Look at cryptocurrency. Cryptocurrency is a set of rules that everybody follows, and it makes it almost impossible not to reach a focal point when it comes to cryptocurrency. In fact, Bitcoin was designed so that people can... different nodes in the system, different machines, and, ultimately, the different people behind those machines can come to an agreement on what is real, which payments have been made. And that's why I'm pretty sure that Bitcoin will stick to its original constitution because it's so hard to change it. Now, there are exceptions. You can create a fork like Bitcoin Cash who didn't agree and say you got two coins. That happens sometimes but because of the freedom of it, because you could pick which chain you're on, that allows a lot of innovation.
I also think a lot about this when it comes to kind of corporate governance. Corporations, they have a board. Foursquare, where I work, we have a board. In Episode 108, I talked about a proposal made by Bernie Sanders to... Because right now, everyone on the board has to represent the shareholders and in fact, they're legally required to represent the shareholders. Well, obviously, it's bad if they kind of represent their own interests on the board. You don't want that. Fiduciary laws kind of protect against that. But something Bernie Sanders said, "Well, yeah. Obviously, we don't want that but we want to have people on the board that represent other interests like what's going on in the community, what's going on with the customers, the suppliers, and the employees, and so on, and so forth."
People wouldn't be putting forth proposals like this if it didn't matter. It matters a lot. You think about a lot of things. What can the board do and what can the management do? Well, the board can ultimately fire the CEO and replace the CEO, but they can't get into the nitty-gritty of the management decisions the CEO makes overtimes. They can't micromanage them too much but they can issue shares and that sort of thing. There's very specific things that the board can do and very specific things that management can do. A lot of this has been kind of rolled up into custom of how these corporate agreements are written and, of course, regulation and how corporations are formed.
Another interesting example is treaties. Here, a lot of times you're making treaties with countries that you don't trust. Or what was the... I'm thinking of the treaty that Ronald Reagan signed with the Soviet Union and he used the phrase "trust but verify" that comes from the original Russian phrase. The idea was they're going to eliminate some nuclear weapons or they're going to cut back on nuclear weapons. There has to be verification protocols, weapons inspectors, to make it kind of difficult to cheat. In this case, you don't really have an expectation of kind of goodwill, of everyone kind of on the same page. If you don't have that, you do have to have some verification protocols like weapons inspectors or checking for radiation, that kind of thing.
More conclusion, I think in relationships that require trust, you need to seek common ground, common language, and common values. If you're dealing with someone you can't trust, a "trust but verify" model is good. And nowadays, you can develop cryptocurrencies and blockchains. Those can provide mass coordination without trust and that's something that you really couldn't do 20 years ago. That's why it's such a very exciting area of technology. Language, actually, now that I think about it, language is an interesting example here because that's also mass coordination without trust. Oh but then again, we know that people try to manipulate language all the time.
Let's bring this back to the whole coordination problem again. Where would you meet if you had to meet someone in your hometown? Let me know. If you join our locals, let me know at maximum.locals.com. And again, stream of consciousness on coordination, and trust, and constitutions. I think it's all related.
Next week, I am going to talk to Aaron, I hope, and we're going to come to a mathematical topic. We're going to talk about numbers, the theory of numbers. Not number theory but like, what is a number, and what are some interesting things you could do with them that you might not think? That'll be interesting. Have a great week, everyone.
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