Archive for the 'Immigration Prisoner’s Dilemma' Category

Immigration Creates Prisoner Dilemma Inefficiencies

February 13, 2008

The Prisoner’s Dilemma is where two prisoners are interrogated separately. They each do best if both refuse to squeal. But individually they do best by making a deal, holding the other’s choice as given, even if unknown. They harm the other prisoner in the game theory equilibrium outcome. Multiplied over and over one gets a non-cooperative society. That means it produces less wealth and also gets less satisfaction from the wealth created. In effect, the same dollar wealth is lower real effective wealth.

If people think they are in a repeat situation, they behave better. If they think they are in a one-off situation where they are not monitored by reputation costs, then they will tend to be less cooperative and try to take what they can. The result is that people can’t make deals and also they just harm each other.

If people expect cooperation, everything works better and monitoring and contracting costs are lower. If people expect cheating, then everything works worse no matter how much is written into contracts or codes of behavior. The society has multiple equilibria available to it. It can choose an equilibrium that is just worse.

Immigration does that. Immigration means less repeat business. With zero immigration, you know you have to deal with the same people in the future, because they are the only people around. With high immigration, that is changed. You can cheat customers, employees, bosses, spouses, etc.

Immigration creates a cheating, uncooperative society. It creates misery and the expectation of harm from strangers and co-workers alike. This makes it harder to work with others and to create value. The whole system works worse. There is less value to teach or mentor others.

Immigration by its nature pushes society and the economy to the cheating equilibrium. This is the equilibrium where the worst behavior is expected and expectations are met. This degrades every type of trust, just as Putnam of Harvard found. Game theory implies that diversity and immigration both will create distrust.

Diversity creates distrust because cheating is more common where genes in common are lower. So it also pushes the society towards the uncooperative equilibrium. The MSM doesn’t read books on game theory. They just repeat pablum. Immigration is good only to those who want to cheat others from a position of power. Apparently that includes Congress, the universities, think tanks and business.

This essay was inspired or came after reading the following bio piece in the New Yorker.

The Birthday Party
How Stephen Schwarzman became private equity’s designated villain.
by James B. Stewart
Wall Street has promoted the end of trust by expropriating the value of relationships and society trust. Wall Street deals try to extract the trust bequest embedded in companies for future generations or for stake holders for private equity gurus. The result is that men’s median wages are the same as in 1973, and women’s the same as in 1960. This is despite a doubling in productivity. Labor force participation rates of black and white men were 80 percent in 1965 and are 67 and 74 percent today.

Wall Street has become a machine for extracting value from trust and creating an expectation of expropriation by Wall Street of any trust value embedded in companies or between them and others. The result is a general lowering of the economy. We see this in GM’s buyout of its high paid workers.

America’s businesses are being eroded as Wall Street eviscerates them. We are left with warehouses of goods from China and debt.  Bush wants the countries that funded al Qaeda to own the warehouses.  Clinton gets 300,000 speaking fees from the countries that funded al Qaeda while he was president.  Nothing shows how Wall Street destroys the society that nurtures it like 9-11 and America’s debt run up.  Wall Street destroys.

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