A Christmas calculation

There is a simplicity to being cynical which cannot be denied. An easy way to sum up human interaction as nothing more than self interest. It is a view which personifies much of economics and which has shaped the world we live in.
Instead of trying to take that leap into the darkness, where we can see that not everything is motivated by greed and desire, we take the path of least resistance. We assume as a species that the actions of others will be to maximise their own gains with no regards to the repercussions on those around them. Logically it falls on each of us to only think of ourselves and try and get the best deal we can before the rest of the world catches up, otherwise generally known as backward induction where you use your knowledge of what the last move will be to work backwards in an attempt to ensure you get the best deal in each round.
The depressing notion of self interest falls down in one key respect though, it fails to take humanity into account.
The last 12 months have seen some of the most devastating scenes in our generation. The mass exodus from Syria, the attacks in France and Tunisia, bombings in Lebanon, wars and terrorism throughout Nigeria, Afghanistan, Iraq, Ukraine, Yemen, Gaza and Israel, Egypt and repeated mass shootings in America are all only a tiny fraction of the pain and misery the world has suffered through.
In the face of such acts of violence and callous disregard for the lives of others the principle of self interest is clear and understandable. Where it is undermined however isn't in the grand headline grabbing actions of a crazed minority. It is in the selfless acts, those who when the first shots were fired didn't run from the chaos but put themselves between the bullets and others. Humanity has shone through as people have fought to retain that glimmer of hope for those who need it most. Those who didn't shut themselves off against the storm but threw their doors open to refugees and those who still strive to do just what they can to make others lives better.
A focus on Game Theory demonstrates that self interest is not always the most profitable approach. By collaborating individuals may not achieve the Parreto optimal strategy, where you cannot become better off without someone else losing out, they can however achieve a dominant strategy, or more simply the best course of action for each player knowing what the other player will do.
Self interest is fine for modelling strategies but it is not realistic when applied to the real world.
At this time of year that feeling of collaboration should be stronger than ever. It is all too easy to see the holiday season as nothing but an excuse for even greater crass commercialisation than usual. For many western high street retailers it is a season where the laws of supply and demand are everything as sales account for approximately 40% of their annual earnings. It is so much more than that though. It is a time when we can think about what really matters. A time of reflection and peace. It is most of all though a time to realise that there is so much more to this world than the maximisation of self interest. If the old economics is to be overturned it won't be through campaigns against capitalism or shouting slogans. It will be about taking a moment from our own selfish ideals and thinking about others. If we act on those thoughts then just imagine the benefit to all.

A developing issue of aid

The critical condition in Vanuatu once again has brought the issue of aid to the forefront of the global consciousness and with it the same old problems.

While the devastation reeked upon the country by Cyclone Pam has destroyed what little infrastructure the country, considered as one of the poorest in the world, it seems unlikely that the international community will do much more than symbolic handwringing.

Based on the economics principle of game theory to maximise stability in the international system it is better if all countries invest. If only one country invests then stability does increase slightly, although not as much as the accumulated investment of all. For an individual state therefore it makes sense not to invest as stability will still be increased. The issue arises however that if all states decide to not invest, thinking that the others will, then the level of instability will remain in the international system, and potentially in the face of such an emergency as in Vanuatu increase.

The barrier to effective aid therefore is that states will act in their own interests if they believe that another state will shoulder the burden, essentially free riding.

Over repeated games however if all states invest then it may occur to each state to decide that as stability will be increased whether or not they invest it makes sense for them to stop donating development aid and invest that money elsewhere. As each state only has the same information though this would logically lead to all  states stopping investment.

For a positive distribution of development aid to be determined using game theory players must be playing a coordination game, whereby they cooperate with each other while still potentially receiving different payoffs. When players in a coordination game have reached a mutually agreeable decision they will gain nothing by defecting from it. For the purposes of development and aid programmes this could mean that despite disagreement in putting together a proposal once it has been agreed upon all players will either remain with it or leave it all together. This has been seen in the way states have continue working towards achieving the Millennium Development Goals despite initial differences of opinion when they were being created.

An alternative form of game however can see individual states defecting from an agreement if they feel that they can increase their gains. Such a game may reduce the trust among other actors however and therefore make future long term cooperation harder. If all players in a game know that any of them may leave an agreement at any point if it benefits them then it can reduce the legitimacy of the agreement as a whole. This distrust amongst actors will prove a lasting barrier to global governance.

Vanuatu's problem, aside from the near whole scale destruction of its economy, is that it does not pose enough of a risk through instability to be of concern to much of the international community. It is unlikely therefore that there will be a coordinated effort among donor countries to provide a concerted and long term approach to development aid. The issue is instability is not strong enough to create an atmosphere of global governance, as few countries will feel their own interests are threatened by an destabilised Vanuatu. It would seem likely that it's richer neighbour Australia, fearing perhaps an influx of refugees among others, will be the only country to see the need to help, and even then it will only be through preservation of its own self interest.  

A positive sum approach to a negative sum game

JE SUIS Charlie has become a rallying cry for freedom of speech following last week's senseless killing of 14 people in Paris.

The attacks, most notably that on French satirical magazine Charlie Hebdo, shocked not just France but people around the globe. They have been called attacks on liberty and freedom of speech. 

For all the media's bleating and politicians posturing they weren't though. They were murderous attacks carried out by a handful of deluded and twisted individuals. They were an attempt to show power which ultimately just demonstrated weakness.

Attacks on free speech and democracy are taking place all the time. They take place when governments ban ideas and when people allow those ideas to be banned. Freedom of speech ends when people no longer stand up and shout. It doesn't end by the barrel of a gun and a bullet. It ends by quiet degrees of apathy.

The journalists who died last week knew this. They knew that free speech only ends when the people speaking allow it to. The surviving journalists from Charlie Hebdo have gone out of their way to demonstrate that this week. Refusing to be cowed by the brutality of events surrounding them they have brought out a new edition, and one which makes their views very clear. It demonstrates once again that terrorism is 100% ineffective.

In a very oversimplified way terrorists are by their nature carrying out a negative sum game. Individuals or cells will face the reality of negative consequences against themselves if they believe that their opponents will suffer even greater losses. 

As a stand alone game this appears completely irrational. Why cause harm to yourself only to cause harm to another individual? The key lies in the terrorist's rational irrationality, they believe that they are carrying out actions which will form part of a greater equation. In a sense they are taking part in a game within a game. Their negative sum outcome may they believe lead to a positive sum, in this case changing the entire mentality, moral and legal system of the Western world, outcome for the larger game.

Another way of thinking about it is that the terrorists in this instance are pawns prepared to be sacrificed for a greater tactical advantage.

What they have forgotten is a crucial exogenous part of the equation, human feeling. Terrorism isn't a failure because it doesn't meet its objective. Of course it does. Terrorist acts make people feel afraid and vulnerable, public beheadings sicken and shock us, grief numbs us and fear cripples us. After the initial shock though one of two things tends to happen, solidarity or hatred. The outpouring of support for the families and survivors of the Charlie Hebdo massacre demonstrate the first. The pegida marches in Germany represent the other. 

Back to the theory and gradually a pattern emerges. When we react with hate to a terrorist attack it leads to more fear. Already 10,000 troops have been deployed in France and tough new antiterror legislation in Britain threatens to do more damage to free speech than any number of bullets. In essence we allow the terrorists to achieve their aims. A negative reaction creates a negative sum.

Defeating them isn't easy, nothing worth fighting for is though. It involves taking the path of peace. Of standing tall and showing that their actions cannot diminish us. We will not stoop to their level of hate and animosity. Creating a positive sum is hard but if we are to win the game then it is the only logical and rational approach to take.