A game theoretic explanation for why unrestricted campaign spending drives political extremism
The Prisoner’s Dilemma Goes to Washington
The Prisoner’s Dilemma Goes to Washington
The November mid-term elections will soon be upon us. I can remember a time, not too long ago, when nobody paid much attention to the midterms. They were the winter Olympics to the Presidential Election’s summer Games. You had to like that kind of thing.
Nowadays even primaries are national newsworthy.
A lot of people will tell you that it is because the divide between the political parties has grown, and that is true to an extent. The nasty rhetoric and branding of the other party as “evil”, such as when Biden recently called the Trumpist wing of the Republican party “semi-fascist”, however, is a symptom of a much deeper problem.
This growing extremism and the divisions it has created in our political system reflects what the media loves to call the “two Americas”. These two Americas, it is surmised, are at loggerheads with one another at a level not seen since the lead up to the Civil War. Gaps are everywhere: between generations, rural and urban, college educated and not, and Coastal and Flyover.
They are blues and reds.
Blues see reds as ignorant, short sighted, and reactionary while reds see blues as arrogant, wasteful (of other people’s money), and corrupt.
America seems more ideological than ever.
But that is what they want you to think, and, when I say “they”, I mean political parties and their supporters.
In reality, America’s political system isn’t more ideological. Instead, it is following its primary ideology: the Almighty Dollar.
The lack of controls on campaign financing had been getting worse for decades with major reforms starting in the early ‘70’s. In 2002 McCain-Feingold passed which limited “soft” money contributions. Almost immediately, the Supreme Court began chipping away at it with landmark decisions in 2003, 2010, 2014, and 2022. Spending on political campaigns skyrocketed.
It is this money and not actual shifts in voters ideologies that explains why the political parties have shifted to the left and right over the years.
You might say, but why? If voters haven’t changed, why would they support more extremist policies?
That is because money buys votes, and money doesn’t come from the voter on the street. It comes from the party’s “base”. The base is the set of voters who will vote for that party no matter what. They attend rallies. They canvas. They commit themselves. And in committing themselves, they open their wallets too.
By donating to political campaigns, they buy advertising which is used to boost those candidates and bring their opponents down. This means that base voters, even though nobody has to campaign for their votes (except perhaps in primaries) are worth a great deal of additional votes. The desires of the party bases are more valuable to parties than those of ordinary voters.
The voters on the street, meanwhile, are easily swayed by slick campaign ads and any unpalatable positions the candidates hold can be sugarcoated. The voter is led to the voting booth and made to swallow the bitter pill because each political party has carefully curated the ballot so that no viable alternatives appear.
This system in which party bases (including corporate and special interests) fund campaigns which buy ad time which steer votes to whichever candidate has more money is entrenched in the party system. Consider that even a candidate like Obama with a wide grassroots support system, who appeared to be able to go outside the party system and outspend the party favorite as he did in 2008, depended on that party being in power in order to get anything done. Thus, no individual candidate matters as much as the party as a whole which depends on the flow of cash from the base.
So when that party gets into office, it needs to pay back the base for supporting it, and this explains why the parties indulge in policies and rhetoric that are popular with their bases but unpopular with the rest of voters. Corporate tax cuts, for example, or student loan forgiveness are popular with party bases but not so popular with the rank and file voter. Calling the opposing party fascists or communists is also a play to the base. These are payoffs that buy more funding in the next round of elections.
This theory makes sense as an argument, but what makes it even stronger is to look at the game theory that backs it up.
Think of the American political system as a game with two players: Republicans and Democrats. The system’s rules apportion about 35-40% of the voters to each party. These make up the party base, a spectrum of voters whose beliefs align enough with one party and against the other that they can be reasonably expected to vote that way every time. The remaining 20% or so are undecided. In order to win the game, one party has to gain about 11 of that 20%.
The party bases vs. the more moderate voters creates a Prisoner’s Dilemma, a classic problem from game theory. If you have heard of this, you can skip the following explanation. Otherwise, here is what the Stanford Encyclopedia of Philosophy says,
Tanya and Cinque have been arrested for robbing the Hibernia Savings Bank and placed in separate isolation cells. Both care much more about their personal freedom than about the welfare of their accomplice. A clever prosecutor makes the following offer to each: “You may choose to confess or remain silent. If you confess and your accomplice remains silent I will drop all charges against you and use your testimony to ensure that your accomplice does serious time. Likewise, if your accomplice confesses while you remain silent, they will go free while you do the time. If you both confess I get two convictions, but I’ll see to it that you both get early parole. If you both remain silent, I’ll have to settle for token sentences on firearms possession charges. If you wish to confess, you must leave a note with the jailer before my return tomorrow morning.”
The “dilemma” faced by the prisoners here is that, whatever the other does, each is better off confessing than remaining silent. But the outcome obtained when both confess is worse for each than the outcome they would have obtained had both remained silent.
This is a problem where the optimal decision for the group, the two prisoners, is different from the optimal decision for each individual. The four possible payoffs for each player are “Sucker’s” payoff, S, punishment payoff, P, reward payoff, R, and temptation payoff, T, where T > R > P > S. That R > P makes it a dilemma since if P > R, silence would always be better.
When it comes to the two major political parties, campaign money has created a Prisoner’s Dilemma where there was none before.
Here is how the Dilemma arises:
Supporting the base means bringing in more money. If both parties support their bases, then the remaining votes are a toss-up. If one party supports their base and the other takes a more broad approach, then the one taking the broad approach will probably win even if they get less money from the base. If both parties take a broad approach, it again becomes a toss-up.
For many years thanks to restrictions on campaign spending, the two parties had an advantage in taking a broad approach and covering a lot of the same issues that were widely popular. Both for the individual party and the parties as a group, going broad was the best decision. There was no prisoner’s dilemma as you can see below.
What has happened recently is that campaign money has shifted the advantage from taking a broad approach towards supporting the base. This creates a Prisoner’s Dilemma in which running to the base (and abandoning the middle) is the optimal decision for the two parties as a group (because voters are forced to pick one), while taking a broad approach is more advantageous for the individual party, provided the other runs to the base. You can see the shift below where now the reward payoff is for running to the base, not going broad.
As campaign finance reforms disappeared, the reward (R) payoff increased.
As the base starts becoming frustrated with the lack of action on the platform and starts cutting off the donations, the party must run towards them. The more money, the greater the reward for doing so.
When Democrats or Republicans run to their bases, it gives the appearance of working against their interests when in fact it helps both parties when they do this. For example, when Biden introduces student loan forgiveness, some questioned why since those who benefited would probably vote Democrat anyway. There is an argument that those who benefit most are people who took out loans and dropped out of college. These are people who may be blue collar voters who wouldn’t necessarily vote Democrat, but they are a small proportion of those who would benefit. The real reason is because the base has been demanding action in the run up to the midterms where they believe, perhaps rightly, that the Democrats will fall out of power.
Student loan forgiveness seems an expensive sacrifice to the base until you consider that many of these loans won’t be paid back anyway. They will default, so the government will lose that money either way.
Meanwhile, this forgiveness drives the Republican base up the wall and so indirectly the decision helps the Republican party gain from its own base. This is just one way in which the two parties work together despite having opposing interests.
The loan forgiveness is distinctly different from the Inflation Reduction Act which passed with only Democrat votes. The bill, despite the name, was a climate change bill. This bill passed because climate change legislation has achieved substantial broad support, so it was not a run to the base at all but a generally popular bill. Thus, it only benefits Democrats and not Republicans in the midterms. (Since it provides considerable money to Republican states, it is unlikely to be dismantled when Republicans retake power. Everyone likes money.)
The trend towards more and more runs to the bases over the years is a direct result of the dismantling of campaign finance reforms. Going back to the Prisoner’s dilemma it is as if the prosecutor (representing the base) keeps demanding more from the Prisoner in order to get the reward. The Prisoner is forced to not only confess but become a confidential informant.
This actually happened in Florida culminating in the murder of 23 year old Rachel Hoffman. Rachel’s law was subsequently passed to protect confidential informants from being placed at risk.
In politics, the trend has been the other direction. With more money at stake, parties have been willing to go further to their right or left or to special interests to maintain cash flow and compete. They do all this while at the same time trying not to lose votes.
That is why restricting voting appeals to Republicans. It helps them run further to the right while cutting off less committed voters who might vote against them. Restricted voting might help Democrats as well. Early and absentee voting, for example, help the over 65 crowd, and they often vote Republican. Meanwhile, college educated voters are likely to vote regardless of the restrictions, and they tend to vote Democrat. Nevertheless, appearing to support democratic principles helps Democrats more than restricted voting does. This is likewise a run to base that helps both parties.
The constant running to base will only get worse as the money increases, and, while it helps the two parties, it doesn’t help the average voter. The answer seems to be that we need to reassert campaign finance controls, but it is not so simple.
The original McCain-Feingold act was bipartisan, and Bush signed it into law, but most of the votes for it were Democrat. They voted for it even though they received more soft money than Republicans. One game theoretic argument is that supporting the bill was more advantageous to them than the money it brought in, especially given that it would cut off Republican soft money at the same time.
Republicans won out in the courts over the next decade. One of the big problems with the bill is that it too easily ran afoul of the 1st amendment. People have a right to spend as much money as they like to express their opinions, political or otherwise, the court found. While Citizen’s United seemed like a game changer, the reality is that several decisions before and after had more cumulative impact. Trying to control that would be like trying to control bias in news reporting, impossible.
Alternative plans would be to provide public funding for candidates officially on the ballot. Presidential campaigns have had public funding since 1976. Barack Obama was the first presidential candidate not to take any, and it has now become more common to prefer private over public money. The competition with private money and the additional reporting and auditing requirements make it less palatable. This system would need substantial reform to compete with the deluge of private funding.
Another possibility is to allow people more control over their vote by introducing ranked choice voting which already exists in a few states. While this wouldn’t directly affect campaign spending, it would change the way that politicians campaign because they would be competing not only to be a person’s first choice but possibly their second.
Ranked choice could force a break up in the two party system that controls all the campaign spending, meaning that the bases would shift towards the center as their fringes joined 3rd parties. This would make the game more complicated and perhaps running to base less desirable. It would also dilute the power of the two parties and lead to further gridlock as they would need to form coalitions in the case of no party being in the majority. There are benefits to giving people more choice, but it isn’t clear how ranked choice would change the system fundamentally. One look at Europe tells us that.
Another option that I like would be for Congress to create a special tax exemption for businesses and individuals who abide by certain political spending and campaigning rules. This would be effectively like taxing political speech but because it is an exemption there is a precedent for it. Churches, in order to keep their tax exempt status as religious institutions, must refrain from political campaigning. There are cases where churches have lost their exempt status because they failed to abide by these rules. If this exemption were sweet enough, then many groups would want to take it.
In politics as in many other areas of life, if you want to understand what is going on, follow the money. Money is the lifeblood of campaigns for buying ad time and paying staff. For many politicians, it also supports their lifestyle when on the trail. No money, no campaign, no votes, so to assume that candidates and elected officials are always after votes alone is short sighted. It is also short sighted to assume that, just because a party supports a position, it is because that fits with their core ideology. It may be payback. In an ideal world, elected officials would only be interested in courting the public, but in reality they are courting a variety of special interests who can write them (or their opponents) checks.
As we learned from the classic nuclear standoff movie, War Games, the best way to win the Prisoner’s Dilemma is not to play, by establishing rules beforehand that prevent the prosecutor from creating it. If both parties were more after votes than money, they would develop platforms that cover popular rather than niche issues. They would also have less incentive to stonewall on important reforms or to create massive handouts to their base supporters. Reducing the appeal of the run to base as a global strategy seems to be the way forward.