Are Liberals Hypocrites?

Am I a hypocrite for being a liberal? I’d like to propose some ideas that might re-frame the way we look at this issue. First of all, for the purposes of these arguments, when I say conservative and liberal, I’m going to be referring exclusively to economic policy. For example, things like welfare, minimum wage, and healthcare as opposed to things like abortion, same sex marriage, or criminal justice reform. There’s an entirely different conversation to be had about conservative vs. liberal social policy but that one is heavily wrapped up in issues like religion.

One easy way to look at the difference between conservative and liberal economic policy would be to point out that conservative policy appears inherently selfish while liberal policy seems inherently generous. Let’s use welfare as an example. A liberal might suggest that we should slightly increase taxes in order to make sure that the poorest among us have their basic needs met while a conservative might say that we shouldn’t increase taxes despite the fact that poor people may suffer as a result. On its face, that seems like a very selfish position to take.

However, if you play devil’s advocate for a moment, you might quickly come up with an argument that would seem to suggest that liberals are hypocrites. I’m a liberal with more money than I need, so why am I not giving more of my money to poor people? At first glance, this feels a lot like hypocrisy. On the one hand, I claim that I believe that those with more money should give up some of it to help those who don’t have enough, but on the other hand, despite having the opportunity to do that very thing in my personal life, I largely fail to do so.

In this oversimplified view of the world, my motivations don’t seem to add up. If however, you look at these decisions through the lens of game theory, a new interpretation begins to emerge. Broadly speaking, game theory is a field of mathematics which studies the strategic interactions between rational agents.

In my personal life, I can be thought of as a rational agent seeking to maximize my reward. As a rational agent playing a game (life) that involves other rational agents, I’m going to try to pick a strategy that will maximize my reward based on the assumption that other people are also trying to maximize their rewards. When each person in the game is operating based on those principles, they will often find themselves in a game state called a Nash Equilibrium. This is a state in which, assuming nobody else changes their strategy, there are no decisions that any individual agent can make that will improve their rewards.

There is a famous thought experiment about Nash Equilibria called the prisoners dilemma (I won’t describe it here but I’d encourage you to look it up if you’re not familiar with it.) One of the interesting things about how the prisoner’s dilemma is set up is that the Nash Equilibrium is different from the global optimum. There is a possible game state which is both globally better than the Nash Equilibrium and also better for each individual than the Nash Equilibrium and yet, if both agents are operating independently of one another and each one makes the best strategic decision for themself, they are going to end up worse off than they could have.

Another interesting feature of the prisoner’s dilemma is that the global optimum is inherently unstable. What this means is that even if the two agents could coordinate a strategy ahead of time, there is a large incentive for either of them to cheat. If both of them make the seemingly rational decision to cheat on their agreement, then they both end up worse off back at the Nash Equilibrium. By contrast, the Nash Equilibrium is very stable. In other words, from that game state, there is a disincentive to either of them changing their strategy.

Let’s reduce the concept of giving money to someone poorer than me down to a super simplified version. Let’s say I have $100 and my neighbor has $20. Let’s also assume that each of us can either keep all of our money or we can put 10% of our money into a common pot that will be split between us. There are 4 possible states in this game:

a) Both of us keep our money

b) Both of us put 10% in the pot

c) I put 10% in but my neighbor doesn’t

d) My neighbor puts 10% in and I don’t

Let’s look at the distribution of money for each scenario. I’ll use a D to signify me and an N to signify my neighbor.

a) D=100, N=20

b) D=96, N=24

c) D=95, N=25

d) D=101, N=19

Let’s assume that my neighbor does put money in the pot. If I also put money in I would end up with $96 whereas if I don’t I would have $101. If we assume that the neighbor doesn’t put money in then I end up with $95 if I do put money in and $100 if I don’t. No matter what my neighbor does, I end up with more money if I don’t put money in the pot.

If that is my optimal strategy in my personal life, wouldn’t choosing a different strategy with my policy decisions be hypocritical? Not necessarily and here’s why. This turns out to be a false dichotomy based on two erroneous assumptions. The first is that personal strategy and policy strategy are equivalent and the second is that economics is a zero-sum game.

In the context of game theory, my personal decisions are like an agent choosing a strategy to pursue within a set framework whereas policy decisions are akin to changing the rules of the game itself. Just because one strategy is optimal under the current rules does not mean that those rules are optimal for me.

Because money and value can be created and destroyed, economics is not a zero-sum game. By changing the rules of the game, its possible to end up in a situation where both me and my neighbor are better off. With careful forethought we can also create a set of rules in which the Nash Equilibrium and the global optimum are the same so that each individual acting in their rational self-interest within the new rules results in everyone being better off than they would be in a Nash Equilibrium under the previous rules.

To put this back in the context of welfare, if wealthy people give up some of their money to poor people, it will increase spending (since poor people tend to spend all of their money while wealthy people tend not to) which will boost the economy, which will in turn give the wealthy person more opportunity to make more money. Everybody wins.

In addition to all that game-theoretic nonsense, I think that it’s morally right to create policies that are equitable and just, even if they might not create the optimal outcome for me personally. I view the fact that I don’t give more money to poor people as a flaw in my personal behavior not a virtue, and as such, I shouldn’t seek to replicate that selfish flaw in our public policies. So in the end, am I a hypocrite? Maybe, but I try to be one of the good ones.