The Next Step is...
In an April, 2011 post titled “Governmental Procrastination
,” I wrote how precommitment can be used to curb the US national debt. Essentially, precommitment is acting now to prevent you from acting otherwise later and it come in many forms (see “Bondage and Procrastination
” for a full review). One shot at using precommitment to rein in government debt was the Debt Ceiling, a particularly bad attempt as it was in effect for over eight decades and ineffectual for all those 80 plus years. Fortunately, using the science of self-control, it can be fixed. In fact, this is exactly what the U.S. Founding Fathers intended. As James Madison, the Father of the Constitution, wrote "It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature?" In short, what works for individuals can also work for governments.
Much to my surprise though not likely to my credit, three months after my post on precommitment, the US government actually implemented a stronger form of precommitment, called the Fiscal Cliff. This is a poison pill of tax increases and budget cuts that neither Democrats nor Republicans should want to swallow. The only way to prevent it is by striking a deal, forcing them to agree what is to be done about debt besides kicking it ever forward to the next administration. As we are discovering, literally passing the buck isn’t a sustainable financial practice. There is an excellent New Yorker article “Cliff Hangers” by James Surowiecki where he takes a similar stance:
Congress has tried to use pre-commitment to curb its bad habits. A big part of the dreaded “fiscal cliff” that we keep reading about is the direct result of Congress’s attempt to force itself to change its ways. Last summer, during the absurd imbroglio over the debt ceiling, House Republicans and the White House agreed to get serious about reducing the deficit.
James Surowiecki, though, doesn’t like the idea of precomitment here, considering it a foolish choice. I’m half in agreement. The choice wasn’t foolish but how it was implemented was. As per “Governmental Procrastination,” there are at least six scientific steps that be applied to maximize the effectiveness of precommitment:
- Express The Debt Ceiling in Terms of Percentage of GDP:
- Set the Debt Ceiling Conservatively Low
- Make it Progressively Harder to Raise the Debt Ceiling
- Make it Hard to Keep The Debt Ceiling High
- Give Motivation To Reduce Debt
- Maintain Attention
From this, the government focused on only of them, number five, and not exactly in the way recommend. The pain of the fiscal cliff will be felt acutely by the citizens of the US in general but not necessarily by specific members of Congress. To some, especially those who have signed a “no-taxes pledge,” it actually gives them some credibility as a no-negotiation hardliner. If this helps them get re-elected, then the fiscal cliff simply becomes a launching pad for their hand gliders.
To make precommitment work, it has to impact the decision maker personally, incenting them to avoid the repercussions. Originally, I recommended salary reductions might help but others noted that many of our politicians are so ridiculously rich that salary considerations don’t enter the equation at all. However, if you can’t take away money, how about time? The US Senate was called back to the Washington Capitol to deal with looming Fiscal Cliff, immediately after Christmas. Not exactly what you want to find under the tree. The loss of time with family and friends might be what we are looking for. As Senator Charles Schumer, Democrat of New York, spoke about returning to the Capitol “"I didn't realize how much I didn't want to be here until I got here."
Will there be a new scientifically designed precommitment strategy that actually works? Will what psychology recommends ever be adopted? I’m not optimistic at this point. Many of our government and social policies draw upon mainstream economics, otherwise known as the rational model. As I wrote about it in “Occupy Wall Street, Procrastination and the Battle of Ideas,” the rational model is very effective but it isn’t perfect. It creates a simplified version of humanity that leaves out all the complexity of reality, where unfortunately we all happen to live and work. The result is public policy that relies almost exclusively on monetary incentives and doesn’t quite get the bang expected for the buck. If we want to make self-regulatory mechanisms like precommitment work, we have to take the advice of James Madison and account for our own human nature. And that’s what psychology is all about.
Addendum (New York Times, January 18, 2013):
"To add muscle to their efforts to bring Senate Democrats to the table, House Republicans will include a provision in the debt ceiling legislation that says lawmakers will not be paid if they do not pass a budget blueprint."
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