Spengler | The bones of rational actors and the Nash Equilibrium

The bones of rational actors and the Nash Equilibrium

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I am weary of reading (as I did yet again under the byline of Matthew Duss in Tablet Magazine) that Iran is a “rational actor.” Of course it is a rational actor. It is doubly dangerous for being rational, like a bank robber with a brain tumor taking a hostage. It is a dying country whose rational interest lies in desperate gambles. The bones of rational actors lie in heaps along the timeline of Western history. The Entente and the Central Powers of 1914 were rational actors; so were the Germans and Japanese of 1939 and 1941, not to mention Cardinal Richelieu of France, the Count-Duke Olivares, and the Ferdinand of Austria during the Thirty Years’ War. The Athenians of the Peloponnesian War were rational actors. Napoleon was a rational actor. The leaders of the Confederacy during our Civil War wee rational actors. What they have in common is that rationality can produced catastrophic results.

There is a specific form of rationality celebrated as a “Nash Equilibrium,” after the Nobel Laureate John Nash whose tragic battle with schizophrenia made him a cultural icon. Dr. Nash died May 23; few of the obituaries explained just how dour his theory was. In a multi-player game in which all players know the intentions of the others, individual players may accept a less than optimal outcome. For example: why do businesses who sell the same product cluster on the same block, rather than choose a location where they might command a higher share of the trade? The answer is that each business fears that if customers learn to go to a certain block to buy a certain kind of product, they will ignore businesses situated elsewhere. Each business accepts lower volume to mitigate the risk of an even worse outcome.

A Nash Equilibrium may lead to extinction. Suppose you are a hunter-gatherer tribe that lives by killing mastadons. If competing tribes kill more mastadons than you do, they will grow stronger and exterminate you. All the tribes strive to kill as many mastadons as possible, and the mastadon becomes extinct, and so do all the tribes. That is a rational course of action (in fact, the only rational course of action under the circumstances) that leads to the worst possible outcome.

World War I was just this sort of Nash Equilibrium. As I wrote on the war’s 100th anniversary:

 

  • With a stagnant population, France could not hope to win back the provinces of Alsace and Lorraine it had lost to Germany in 1870 – or to win any future war-unless it fought soon. From parity in the middle of the 19th century, the German population had become half again as large as France’s by 1914.

  • Germany could not concentrate its army on a crushing blow against France if it waited for Russia to build out its internal railway network.

  • Austria could not keep its fractious ethnicities within the empire if it did not castigate Serbia. It could not grant equal rights to Serbs without provoking the Hungarians, who held a privileged position in the empire, so it could only suppress them.

  • Russia could not maintain control over the industrialized western part of its empire – Poland, Ukraine, the Baltic States and Finland – if Austria humiliated its Serbian ally, and Russia depended on these provinces for the bulk of its tax revenues.

  • England could not maintain the balance of power in Europe if Germany crushed France.

None of the European heads of state wanted a war (except perhaps the French), but all of them considered war the second best choice.

The Peloponnesian War was a Nash Equilibrium. Half of Athens’ food came from its colonies, which it ruled with the threat of massacre. Colonial tribute fed the Athenian mob. The great comic poet Aristophanes scorned the leaders of Athens as follows:

They are the men who extort fifty talents at a time by threat and intimidation from the allies. “Pay tribute to me,‖ they say, ―or I shall loose the lightning on your town and destroy it.” And you, you are content to gnaw the crumbs of your own might. What do 146 the allies do? They see that the Athenian mob lives on the tribunal in niggard and miserable fashion, and they count you for nothing, for not more than the vote of Connus; it is on those wretches that they lavish everything, dishes of salt fish, wine, tapestries, cheese, honey, chaplets, necklets, drinking-cups, all that yields pleasure and health.

The historian Thucydides blamed the catastrophic Athenian campaign in Sicily during 413-415 B.C.E., and his city‘s ultimate humiliation, on the Athenians‘ quest for loot. Athenian democracy voted to attack a fellow democracy, the Sicilian city of Syracuse, “on a slight pretext, which looked reasonable, [but] was in fact aiming at conquering the whole of Sicily. . . . The general masses and the average soldier himself saw the prospect of getting pay for the time being and of adding to the empire so as to secure permanent paid employment in the future.”

As for Iran: in 2010 it had 18 million people aged 15-24. By 2020 the number willfall to 12 million, and by 2040 to only 5 million. That is the result of the collapse of Iran’s fertilty rate from 7 children per female in 1979 to an estimated 1.6 children in 2012. By 2075, Israel will have a larger military-age population.

 

Israel Will Have More Military-Age People Than Iran by 2075

Population Aged 25-24, Constant Fertility (UN Projection)
Population Aged 25-24, Constant Fertility (UN Projection)

The chief advisor to the Iranian government on water management warns that the country’s water resources are disappearing so fast that “Approximately 50 million people, 70% of Iranians, will have no choice but to leave the country.”  Iran has the highest rate of infertility in the world (reportedly 25% of all married couples), which may be due to the world’s highest rate of STD infections. As things are going, Iran will implode as a nation during the next twenty years. Iran’s government is making matters worse: 25% of its university graduates (and the majority of its most-qualified university graduates) emigrate. The Iranians with the skills to address the country’s existential problems for the most part have fled the country.

It is not outside the realm of possibility that a different regime in Tehran could woo back its talented diaspora, obtain foreign investment, buy Israeli water management technology to achieve the requir4ed 50% reduction in water consumption, and save the country. This government can not do any of these things. What it can do is destabilize, terrorize, and aggrandize itself at the expense of its oil-rich neighbors. Iran is Nash’s Equilibrium saddled on one of the horses of the Apocalypse.

Periclean Athens killed off a quarter of the city’s population. Richelieu’s France and Ferdinand’s Austria killed two-fifths of the population of Central Europe. Napoleon killed 30% of the military-age population of France, and the Confederates came close to Napoleon’s number in four years of Civil War. And all of them were a lot of more rational than the ayatollahs of Tehran.

A few dozen bunker-busters would cripple Iran’s nuclear program and humiliate its regime, opening the way for regime change (which the United States should fund covertly). That would give the Iranians a chance to survive–not a guarantee, but a chance. As things are going, the clerical regime will leave a ruined, parched and depopualted land behind it a generation from now.

 

David P. Goldman
David Paul Goldman (born September 27, 1951) is an American economist, music critic, and author, best known for his series of online essays in the Asia Times under the pseudonym Spengler. Goldman sits on the board of Asia Times Holdings.
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