The Art of Bargaining, Lost Upon Washington
ALMOST everyone agrees about one thing these days: Congress is malfunctioning. To help our representatives escape from their current morass, I suggest that they read “An Essay on Bargaining,” the classic 1956 article by Thomas Schelling, the Nobel laureate economist. It is profound, and it doesn’t contain a single equation.
The article’s primary theme is that the key to success in many bargaining situations is the ability to commit to a future course of action. In this analysis, the Senate “won” the payroll tax cut showdown late last year by passing a bill and then going home for the holidays. This was a highly credible “take it or leave it” offer.
This ability to commit can help solve games in which the two players must choose between strategies: either they cooperate or they “defect,” as a decision not to cooperate is called in the literature. They are much better off if they both cooperate, but there is always a temptation to defect when the other player cooperates, scoring a big win at the other player’s expense.
When this game is played repeatedly, a natural — and often successful — strategy is called tit for tat. You begin by cooperating, hoping for the best. If the other side cooperates, too, all is good. But if it defects, you retaliate. And once the retaliating starts, it is hard to stop.
When I asked a former Republican senate staff member to explain why so many qualified Obama administration nominees were being denied confirmation hearings, he told me, “We are tatting.”
Last year has to be one of the worst episodes of senatorial tatting in history. Extraordinary nominees like Peter A. Diamond, the Nobel laureate economist who was nominated twice to the Federal Reserve Board of Governors, and Dr. Donald M. Berwick, a leading authority on evidence-based medicine, nominated to head Medicare and Medicaid, never got an up-or-down vote. (Dr. Berwick served for a while after receiving a recess appointment.)
Turning down such experts’ offers to help is like declining an offer from Phil Jackson to help coach your high school’s basketball team.
Even more worrisome was the failure to confirm Richard Cordray, a former Ohio attorney general, to the Consumer Finance Protection Bureau. In this case, many Senate Republicans did not deny that he was qualified; they said they just didn’t like the agency and refused to confirm anyone to run it. The president has responded by making an unusual type of recess appointment of Mr. Cordray. Republicans are furious because they thought they had blocked such a move by holding “pro forma” sessions, in which the sole business conducted was to adjourn for a few days. Expect each side to argue that the other is behaving unreasonably.
Perhaps the refusal to confirm Mr. Cordray was simply follow-through on the publicly stated goal of Senator Mitch McConnell, the Republican minority leader, to assure that President Obama is a one-term president.
But I have a question for Senator McConnell: If you achieve your goal and a Republican is elected president. what will happen then? Won’t Senate Democrats take it up a notch? If they don’t like the new president’s foreign policy, for example, they could refuse to confirm a secretary of defense, citing the Cordray case as a precedent, and leading to either more recess appointments or 24/7 sessions for the Senate.
