COMMENTS ON NOTES:
NAGEL'S UNIVERSAL VALUES AND WIN-WIN POLICY
SOS, INDEED
A. SPECIFYING SOS SYSTEM OBJECTIVES
Stuart Nagel has been, with others, articulating what is referred to as a superoptimum
win-win matrix of policy approaches which both handle the issues in question in some
measure and can be found acceptable across the political spectrum. It seems a noble
enough undertaking, but the identification of this SOS strategy with political schemes of
such as Carter and Clinton should raise some storm warnings. A closer consideration of
SOS solutions demonstrates the perils of this approach, but it may also point the way
toward more useful options. The initial stage of this evaluation of the SOS analysis is to
assess the stated appraisals as found in each of the cells of the matrix (as set forth in the
notes in the Summer 1995 PSJ, page 391 and in Policy Evaluation Newsletter-Journal
Autumn 1996). This puts some light on some serious shortcomings.
In regard to the issue of prosperity, for instance, it is rather curious to harken back to
the obsolete trade-offs of the initial Phillips Curve to hold conservatives opposed to
inflation and willing to accept some increased unemployment as an opportunity cost and
liberals wanting to deal with unemployment levels even if that means some inflation would
result. This holds conservatives as favoring higher interest rates as a method of combating
inflation while liberals oppose higher costs of money. This is simply not the case, either
theoretically or in practice, though it might be anticipated that the SOS solution objectives
require such perspectives to reach the win-win status desired.
If the Phillips Curve trade-off was ever valid (say, for example, in 1968), it has long
since ceased to be so, at least as originally articulated. In practical terms, the record of
unemployment, inflation, and interest rates over the last twenty years is quite at odds with
that ideological assignment. There have been negative relationships between more
conservative policy setting periods and inflation, interest, and unemployment rates.
Indeed, the more 'liberal' the policy implemented during that time, the higher all three have
been. The loan shark level of interest rates with the close (or demise) of the Carter
Administration was accompanied by double digit inflation and unemployment (although
the former of these may have been beyond the scope of at least some of the domestic
policies of Carter in part).
Those revisionist terrible eighties under Reagan's watch witnessed rather dramatically
falling levels of all three under 'conservative' agenda, while the somewhat less
'conservative' Bush years produced small increases in these three categories. It is difficult
to imagine anyone even remotely acquainted with business practices, as conservatives are
more apt to be (and are more apt to be portrayed as being, as well) favoring higher interest
rates as a method of checking inflation, anyway. Increased costs of capital can hardly be
termed good for, or desired by, business. Such would simply raise costs of operation and
thereby push up prices (a.k.a., inflation). Further, it would not be rational for business to
support higher unemployment, as that also means decreased business activity. And the
idea that liberals may be willing to accept some inflation, if it were true, would suggest
that they support the increased taxation that inflation in fact is tantamount to (or is that
what liberalism has come to mean?). It is certainly the case that high enough interest rates
can stem inflation by choking the economy, as we saw in the late seventies and early
eighties, but that is not a very practical approach, as we so painfully discovered (or at least
those of us who did not already know that found out).
B. STACKING THE DECK
The win-win solutions posed on the prosperity issue are no less problematic. Any
suggestion that "such solutions ... [mean] that the gain exceeds the best initial expectations
of each side, and thus excludes a nonsubstantial gain" is simply a matter of dealing from a
stacked deck in that their super-optimal status is premised on the assignment of
ideological preferences.
There is little question that "economic growth through increased productivity can be
such a solution" except that such would be economic development, not growth. It might
also result, at least temporarily, in higher unemployment over the short term. It can reduce
unemployment and inflation simultaneously, as is suggested, but how does it follow, in any
event, that it must be achieved "through training, new technologies, competition, exports,
and governmental capital where private enterprise is reluctant to get involved" at
government behest? Public policy formulators may actually produce such results, although
quite more often than they do so, they effect the exact opposite. Markets are much better
at performing the task. No bureaucratic operation, no computer program, can begin to
produce what the forces of the market are able to. And it is beyond patronizing to suggest
that some set of such wizards in Washington (or anywhere else) are better at producing
such results than each player in the market could be. Policy analysis need not feel
threatened by such assertions. Quite to the contrary, it should strike a cord of creativity in
them to be challenged to move beyond the level of such condescension toward more
meaningful policy invention.
It is also quite wrong-headed to hold that "inflation means too many dollars chasing
too few goods." Without whipping that dead horse, let it suffice to suggest that the crux
of the problem does rest with increased wealth generation, with supply. That is the end the
author seems to seek, but posing governmental largeness and largess to foster training,
technology, competition, exports, and capital can hardly be termed super-optimal win-win
solutions. Government can serve to enhance these. There can be an effective and efficient
such operation. NASA has posed one of the most productive, and arguably the most
laissez faire of recent Presidencies, that of Ronald Reagan, had as a central aspect perhaps
one of the largest 'command economies' in history in its defense budget, toward similar
end. Too often, what 'growing the economy' has come down to, however, has been
increased national expenditure through increased public spending. Even were that to
result in enhanced real national income, the real opportunity cost is the even higher levels
which would have stemmed from market operations (on the simple Keynesian GDP
estimation of C + I + G + Xn, it should be noted that increasing G must come at the
expense of the relatively more productive categories of I and C).
There can, of course, be market failure, though it more often results of governmental
interference. And while retraining, for example, might arguably be such a public function,
its cost must be weighed carefully against its benefits. Neither is government a very
efficient or economical purveyor of such functions, nor does the conjuring up of yet
another 'entitlement,' injurious as it can be to individual initiative and achievement, offer
much benefit to offset the cost, which even in the most optimal case amounts only to a
socialization of the cost involved. Of the myriad of alternative approaches to retraining,
public promotion of retraining through incentives to firms or individuals (tax credits, etc.)
is by far a more cost effective approach than top-down bureaucratic networks. If nothing
else, the 'specific gravity' of such schemes tends toward rendering them immobile, and
strapping leaden weights of this sort on the population will not operate to get the lead out
of the economy.
C. THE ACHIEVEMENT AND EQUALITY PROBLEM
The SOS options posed in the category of Merit Treatment pose several difficulties, as
well. Perhaps the greatest gains of the formerly 'dispossessed' have come during the
periods of peak performance of the economy, such as during the Arsenal of Democracy.
This must be kept constantly in mind when considering the dichotomy posited between
what Lipset has termed the achievement/equality pendulum. It is far overdue that we
recognize and accept the actuality that policies aiming at equality produce not only the
opposite, but that they inhibit achievement and put the brakes on development, while the
promotion of achievement effectively creates greater equality. Now, I realize that this may
be anathema to the 'liberal' policy mindsets, but it is the case that capitalism is, among its
other traits, the great leveler. The best alternative approach to the matter as it is argued by
Nagel is to allow 'minorities' the opportunity to achievement and then move quickly aside
-- quickly, because not doing so will get you run over. Instead of juxtaposing sides over
affirmative action to guarantee crumbs from a diminishing pie, we do better to foster
'affirmative opportunities' for all potentially productive people.
Probably the most apparent hole in this fairness doctrine is suggested in Nagel's notes.
The article suggests that fairness has suffered for individuals "who have not received
adequate training previously due to a lack of expenditures per student in school districts
that they attended," but one might be surprised by the lack of correlation which exists
between the two. Private schools with lower per capita expenditures seem regularly to
excel, while school districts with the highest such ratios, such as Washington, DC, have
notoriously low achievement levels.
The super-optimum solutions of Nagel's Merit Treatment horizontal seem flawed in
much the same manner as did those for Prosperity. An 'equal opportunity employer' is
going to be constrained onto failure on the 'fairness' quest whereas peak performance will
demand it. Such policies as 'focused grants' and 'merit hiring and training' are an extremely
troublesome component based on the matter as to on whom the decision of focus or merit
rests. The notion of government as 'insurer' again poses the problem of the cost, often
quite counter-productive, of socialization of cost without offsetting 'public' benefits. The
suggestions of 'reasonable royalties' is complicated by the entire question of
reasonableness, let alone determination of just who it will be making such determinations.
Even the concept of 'enterprise zones' is similarly complex. The terminology has been
bounced about in disparate form by such as Jack Kemp and John Engler with quite
different substantive character than that suggested by the Clinton people and Dennis
Archer.
D. POSTULATING IDEOLOGICAL OPTIONS -- HYBRID LIBERALISM
Nagel runs through the remainder of the matrix categories in rapid fire sequence, but
the result is each time the same, as is the problem. Each time the analysis suffers because
the ideological options posed have predisposed the solutions. In fact, they each end up
being mere hybrids of the 'liberal' vision. But the premises have been constructed, whether
intentionally or not, so as to predispose the solutions, which, in the final analysis are hardly
super-optimal or win/win. It may be that the tensions posed are not meant to necessarily
be declarations of the ideological orientations they are paired with, but rather hypothetical
examples. But, in such an instance, more care should be taken in posing such postulated
antinomies.
It is not a revelation that "conservatives are oriented toward increasing profits." If
liberals want more competition, however, they seem not to like bigger profits. And yet, it
is such social surplus which is the fuel for development! Nor is it a certainty that both
want to 'increase innovation.' If they are not Luddites, there is an element in the liberal
mind-set that runs toward a conviction that technology breeds unemployment, or
pollution, or alienation and unhappiness, or all of these.
Research grants are not in and of themselves a problem, so much as the matter of the
determination of their focus. Granting that they can be quite useful does not begin to
suggest that they are better than, or even as productive as, patents (which are themselves
governmental promotionalism). Certainly, the 'patent' carries with it the connotation of
profit. But profit, at least as social surplus, is the fuel of progress. And wishing to effect
tort reform does not necessarily translate into simply abolishing strict liability, as seems
to be implied.
E. QUALIFYING UNIVERSAL VALUES
When Nagel steps outside the arena of economics, carried with the schema are all the
handicaps weighing down the earlier analysis. For instance, the issue is not so simplistic as
suggested in reference to democracy. The identification of the 'positive apathetic' has at
least qualified the validity of the assertion that the "key issue with regard to democracy is
voter turnout." The suggestion that voter rolls not be purged, or of same-day registration,
like others of the optimal solutions, present far more of a problem than any they might
arguably help to remedy. Lowering the costs of information might be helpful as might
multi-day elections (but the objective of the 'liberals' seems to have been to increase the
cost of information through a concerted campaign of disinformation over especially the
past year and more). The fundamental remedy to low levels of citizen participation is
economic development, anyway, and that is something the optimal solutions posed here
may well inhibit.
Nor is it so clear that conservatives' vision of world peace is limited to concerns over
only the limiting of costs to the country in dollars and lives. Liberals may favor greater US
involvement. LBJ apparently took that route. It is the kind of involvement that is the issue,
and Nagel has premised this category on the "context of United Nations peace-keeping."
Thus, the SOS of endorsement of a volunteer UN force can be reached. But why that
especially? Why not the strongest possible US military as a deterrent? Prosperity and trade
promote peace, but that prospect may have been decapitated by the 'optimal' policy
reached above.
And in spite of supposed promotion of SOS reduction of trade barriers, the Clinton
version of NAFTA has structured mechanisms which threaten the concept and it has
pursued a course which has brought us to the brink of trade war on more than one
occasion with our largest overseas customer, Japan. Neither has 'democracy' fared any
better. Having bungled the attempt to engender it in China for at least the present through
trade measures, instead of the SOS measures suggested to enhance voter turnout
domestically, the direction has been toward the 'liberal' schemes of 'motor voter' and mail
order voting.
And with respect to the other 'universal values' of technological innovation, merit, and
prosperity, these practitioners have drawn back from even SOS to similarly problematic
liberal policies, and are poised to, for example, 'fix' welfare reform with a massive public
jobs program if re-elected. Any value in SOS strategies will soon fall by the wayside if it
becomes or is perceived as a tool for piecemeal incremental movement toward some
agenda.
To take one cell of the relevant SOS table as exemplary, it is clear that there is virtually
no win-win policy that can resolve the antinomy, anyway:
CONSERVATIVE LIBERAL SOS
PROSPERITY lower unemployment public jobs programs investment tax
credits?
less inflation moderate growth (unacceptable
in money supply to liberals)
lower interest rates increased tax rates
increased money supply confiscatory tax rates
reduced income tax and of 'excessive' profit
capital gains tax blocking balanced budget
balanced budget unfettered growth in spending,
reduce rate of growth new spending
in spending increased minimum wage
raise real wages through
productivity increases
In actuality, the purported common goals are not common at all. Liberal policies seem
bent on rejecting any attempt at the goal of SOS solutions which do not view the public
sector (the very cause of the problem, or at least the culprit in perpetrating it) as the key to
solution, and which reject what the 'conservative' policies seek to address. What should be
the super-optimal solution would result precisely out of conservative policies, and is
undermined by any movement toward the liberal approach.
F. CHECKING PREMISES
And yet the most confounding of the analyses involves law compliance, given as it is to
principally be concerned with the drug question. The article stumbles once more on
premises (and there seems to be a surprising inconsistency in the choices for premises --
though they need not necessarily be constrained by such considerations except that the
article does position the entire scheme on an ideological plane). While it may be more
libertarian than 'conservative,' the market analysis of the solution as posed by Milton
Friedman approaches what is assigned as the liberal approach. There are, however, severe
problems with that approach. Given the nature of the drug problem, it would hardly be
useful to legalize them, whoever has the idea. Although treatment and education are
useful and separating marijuana from cocaine hardly constructive, deprofitizing drugs will
not be as effective as increasing the costs so far as to offset any 'benefits' to some, such as
through capital punishment for dealers. Some of the side effects of drugs enumerated may
well be that, but they are also some of the root causes of susceptibility to the 'disease.' The
surest treatment of the malady may well be the prosperity these SOS prohibits. It will
certainly be no panacea -- middle class drug abuse is clearly not a small problem.
G. ENGENDERING UNIVERSAL VALUES AND PRACTITIONER BIAS
Superoptimizing may or may not be a new concept, but it seems just as out of place in
the context the essay poses as it seems in connecting it as is done to "practitioners like
Carter, Clinton, Gore, and others..." There may be universal values, but neither the
system here, in its premises or solutions, nor their's, is going to engender them. Indeed, it
will do quite the opposite. And if these practitioners popularized the methodology in the
1992 campaign, it was remarkably unseen subsequently (except until the 1996 campaign
began). Indeed, the record of the Clinton Presidency has done little toward promoting
such 'universal values.' Law compliance, in terms of illegal drug use especially, has
suffered tremendous set-backs. And having been painfully unsuccessful in that, the
President has recently acted to make tobacco use by minors a federal offense! In regard to
'world peace,' UN sanctioned efforts in Bosnia, though they have the appearance of
success (but without critical standards such as American national interest for the
involvement, purpose, evaluation of mission completion, or exit criterion), have done little
to resolve the lack of economic development or other complex factors which have bred
the bloodshed. One might arguably see such efforts at development in the mission that
ended in the tragic death of Secretary of Commerce Brown with dozens of business
executives, but even were that such an effort, seriously set back by the crash, the overall
condition of American armed forces has become such under Clinton that there is real
question as to our capacity to project power at a sustainable level in such a manner were it
desirable under UN or any auspices. And, in fact, world peace is probably much more
endangered now than it was four years ago across the globe, especially as it appears to
those who need to be convinced otherwise that the US lacks the resolve or capability to
act. Even more curious is Clinton's attempt to take credit for declining deficits which
resulted from spending constraints in the 104th Congress (while joining in with the chorus
of attacks on the Congress for the 'cuts' which were not cuts but which did allow the
deficit to decline) and the sale of RTC holdings as well as the rather sluggish but still
growing economy which itself is more attributable to the Fed's massive money supply
increases in 1992. Particularly in regard to such 'practitioners,' SOS probably takes on a
more traditional and more colorful connotation, and hardly does service to the effort the
conceptualization was apparently intended to promote.
Ronald Gordon Ziegler
October 17, 1995
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