A stake in the future

Publius has an interesting post on the role of income/wealth in promoting socially beneficial behavior. Among his observations, Muslims in America tend to be better educated and have higher incomes than the average American, whereas in England, Muslims then to be considerably worse off than the average citizen. Publius believes, and I tend to agree, that this tends to explain why Muslims here are far less radicalized than those in Britain.

Muslims here have a stake in the future. Muslims in England see little opportunity in the future -- at least as things now stand.

As Publius puts it:

The truly interesting question, though, is not so much establishing that class matters, but why class matters. I’ve touched on this before, but I think it gets back to the idea of having a stake in the future — or in game theory-speak, to the idea of iteration and repeat-game scenarios. People with money and an education have a greater possibility of future economic and social benefits — i.e, they have greater incentives to stay “in the game” and within its rules. They know they’ll be playing future “games” and will have strong incentives to maintain their reputation to reap the benefits.

For example, take a well-to-do suburban kid and an inner-city kid. One avoids trouble in youth, the other doesn’t. Why? Conservatives would tend to focus more on individual merit and culture, whereas old-time Lefties would focus on economics. The latter would argue that the inner-city kid — facing a bleak future with no prospects — has no future benefits to keep him in line. Therefore, there is less reason to worry about one’s reputation. In economics lingo, “bad” behavior has fewer opportunity costs because there were no opportunities to begin with. If the suburban kid, by contrast, sells crack, then he loses his ticket to a good college and his ticket to future “games” (i.e., jobs, social relations, dating Comp Lit majors, etc.).

One reason I like thinking about this stuff from a game theory perspective is that it lets me be a materialist without embracing the more misguided aspects of the old Left’s idealism. Call it a “Third Way.” Conservatives argue that individuals are flawed and that culture matters most, and so economic reform doesn’t help much. Old Lefties (in the line of Rousseau), however, argue that men are bad because of economics and inequalities. Fix the inequality, fix the man. In short, man can be made good. (On an aside, that’s why Rousseau and the French Revolutionaries he inspired are the true intellectual ancestors of the neocons and the intellectual assumptions of the Iraq War).

The game theory approach sort of splits the baby. Contrary to conservative assumptions, economics is in fact the primary source of the problem. But contrary to old Left assumptions, fixing the economics doesn’t necessarily make the person better (I am, after all, a Madisonian pessimist on this stuff). It simply aligns individual self-interest with public self-interest. Giving someone an economic opportunity doesn’t make him a better person, it just gives him incentives to behave. Thus, the suburban kid (or his culture) isn’t necessary “better” than the inner-city kid. It’s just that his opportunity costs are higher for bad behavior. In other words, if he acts selfishly (i.e., in a way to maximize benefits to him), the public benefits as well. The suburban kid not selling crack is, in this sense, acting as selfishly as the kid selling crack. It’s just that society is better off with the former.

The upshot of all this is that if we really want to reform the problems facing the Middle East or even our urban inner-cities, we need to focus on economic reform first. Dreamy democracy promotion comes second. Before you can have the latter, you have to a population committed to stability and invested in the future. Our new allies in Sadr City aren’t exactly there right now.

Frankly, I don't think you need the game-theoretic framework to explain this. The central idea is pretty simple, and the standard economic concept of opportunity costs works without the extra embellishment of game theory. With or without game theory, the idea has merit I think.

One important lesson of all this, it seems to me, it that the growing disparity between the rich and the poor in this country is likely to lead to anti-social behavior on the part of those not participating in the benefits of the economy. The rich don't seem to understand this, but it may come back to haunt them if they end up having to live in a lawless, chaotic society, where the majority of the population has nothing at stake in preserving stability.