Mitchell’s Musings 10-30-2017: Stasis

27 Oct 2017 11:08 AM | Daniel Mitchell (Administrator)

Mitchell’s Musings 10-30-2017: Stasis


Daniel J.B. Mitchell


I can recall looking at scenes on TV of the Iranian revolution in its initial stages when the American embassy was seized. At the time, I noted what was going on in the background. The focus of the TV narration was on the demonstrators and hostages. But if you looked at background shots of the embassy, traffic was passing in the streets as if everything was normal. People were going to work, school, or wherever. It reminded me of something I had once heard about the Civil War. In the initial days after the south had seceded in 1861, mail service across the north-south border continued for a time. As in Iran, folks were trying to continue doing what they had been doing despite the big events that would eventually have a major effect on their lives.


At least to this non-expert observer, there seems to be a great deal of contemporary fascination with the idea of “nudge” in academic behavioral science. The nudge idea – really a set of examples with empirical backup – is that you can motivate behavior by seemingly inconsequential environmental adjustments. The standard example in the human resource field is the changing of a workplace choice from opt in to opt out.


If you have a 401k-type savings plan on offer at a workplace, more people will choose to use it to save if it is said that the plan is available but you can opt out than if it is said the plan is available but you have to opt in. Essentially, since checking a box or not checking a box is a very minor matter, there should be no difference in the behavior of new hires as to whether the plan is opt in or opt out. But empirically, there is a big difference in their behavior.


Despite the proliferation of examples of this type of seemingly-irrational behavior, the key element may be in avoiding choice, i.e., keeping the status quo. There is apparently inertia in attitudes that leads to the notion that the status quo is best, or at least is best not disturbed. If being in the 401k plan is the default, the fact that people stay in it is really based on a sense that the best choice is to leave things as they are. The same is true if the default is not being in the 401k. Furthermore, I suspect that once someone has made the choice – even if it wasn’t a real, thought-out choice at all – there is going to be a tendency to stick with the decision. After all, if you change the decision after the fact, it means you made a mistake initially. And people don’t like to admit mistakes.


Now sometimes – if there are really bad consequences to a choice that suggest a change is needed – behavior is altered, both for individuals and groups. Germany and Japan, for example, are now very different countries than they were before World War II. But it took massive destruction to effect that change. Similarly, the economic destruction of the Great Depression put the U.S. on a different political path than existed before the 1930s.


It seems to this non-expert that the fascination with nudge should be re-focused on the power of stasis, which is really why the default state matters. How do you get people to make different choices (overcome stasis) once they have made a choice and nothing terrible has (yet) happened as a result? (Whether you are in or out of the 401k plan may matter years in the future when you retire, but it has little immediate impact.)


If you are guessing that I am thinking of the current political scene, you are correct.  Yes, there is a lot of political turmoil in Washington, for those who are paying attention. But there are strong forces of stasis settling in. Despite the White House turmoil, the mail continues to be delivered, airplanes come and go to and from federally-regulated airports, Social Security checks continue to go out, etc.


On the international front, war with North Korea hasn’t happened, even if experts on talk shows or in op eds say the risk of military conflict has materially increased. On the economic front, unemployment is low and inflation is low. By some measures, even worker pay – often characterized as stagnant – has shown some growth.[3] True, it’s not the kind of real pay gains seen in the 1950s and 60s. But that was then and expectations of what is possible have changed.


It is true that two of the 52 Republican senators have lately been very critical of President Trump. But they aren’t running for re-election. The other 50 Republican senators can rationalize avoiding joining their dissident colleagues 1) because they might get voted out if they do, and 2) because nothing terrible has (yet) happened. Moreover, some things you probably like as a Republican have happened. For example, public-sector labor unions are about to be weakened by an upcoming Supreme Court decision on union dues and agency fees, thanks to the latest appointment to the Court. There has been some deregulation by executive fiat, etc.


It’s true that there is the problem of conflict of interest in the president’s business dealings. There seems to be a proliferation of racial friction, thanks to the president’s encouragement of such tensions. Other nations seem to regard the U.S. as unreliable. The president has a tendency to undermine his own cabinet. Despite these unpleasant facts, what you have in the Senate on the part of the GOP is a political variation on the well-known quote of Upton Sinclair:


It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”[4]


You can say that in the long run, there will be demographic changes that will benefit those on political left. You even can point to California where the U.S. demographics of the future have already arrived and where, as a result, the Democrats now dominate state politics and the GOP is marginalized. But that demographic long run will arrive for the U.S. as a whole well after the national elections of 2018 or 2020. It’s beyond the horizon of contemporary political calculus. So in the meantime, look for traffic on the street to flow normally (as around the embassy in revolutionary Iran) and the mail to be delivered (as across the north-south border in 1861). For the moment, at least, life for the median voter has not been disturbed. It will take more than a nudge to move us from the contemporary stasis.

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Footnotes:

[1] After looking for confirmation of this memory, I found 

http://historybuff.com/how-was-mail-delivered-during-civil-war-WBlmAPv8q2Yr.

[2] http://www.latimes.com/opinion/op-ed/la-oe-baker-wages-are-growing-20171026-story.html

[3] https://www.brainyquote.com/quotes/quotes/u/uptonsincl138285.html.  

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