Monday, March 27, 2017

The difference between political and business deal-making

Donald Trump was never the master businessman that he always claims to be.  The analogy I have made on many occasions is that he is to business as Hulk Hogan is to martial arts-- great at bragging about how great he is at it, made even more perfect by his association with professional wrestling.  Trump failed to "close the deal" on healthcare because he ran into one of the biggest differences between deal-making in business and deal-making in politics.

In business, Trump could close a deal one at a time.  X for Y, one on one.  He was never the best at it, but he wasn't the worst either.  The thing about business deals is that the impact of one deal on another is minimal.  If I invest in you, I have less to invest somewhere else, but another business endeavor isn't likely to turn down my money just because I invested with you.  Spill-over effects just aren't that big.  This is part of why Trump thinks that he can handle everything with bilateral negotiations.  We have seen this in his desire to work out trade deals bilaterally, and his desire to handle Obamacare replacement negotiations person-by-person.

The problem is that politics don't work that way.  This is where we see the real value of something like "the spatial model," where we put policies and legislators along a line from left to right.  Within the Republican Party, on the left, we have Susan Collins and Lisa Murkowski.  Without them on board, the Senate Republicans would have had precisely 50 votes, with Pence casting the tie-breaker.  They would have had no extra votes to spare.  But, there were more Republicans nervous about how far to the right the Obamacare replacement bill had moved, including some in the House.  On the right, far, far, far to the right, there was the House Freedom Caucus.

Any change Trump tried to make that moved policy to the right, to satisfy the Freedom Caucus, made the moderates even less willing to support the replacement, and any move to the left to satisfy the moderates lost the Freedom Caucus.  Trump kept trying to make incremental changes to get the Freedom Caucus on board, but what Paul Ryan realized was that there was no way to get a majority, period.  Why?  Because any bill that would have satisfied the Freedom Caucus would have been unpalatable to the moderates (and couldn't have gotten through Senate reconciliation rules anyway), and any move to the left lost the Freedom Caucus.

Could any negotiation have solved this?  Perhaps not, but it certainly couldn't have been done one-on-one, the way Trump wants, and the way business deals work.  Politics don't work that way.


  1. Now add in the fact that the Freedom Caucus isn't more to the right on that single dimension, but rather further in a SECOND dimension (some call it "partisan warriorship;" I call it "batshit")

    1. Unnecessary. The basic Gilmour point is that there was no zone of agreement between the Freedom Caucus and the Collins/Murkowski side of the party. Don't add more than you need to add to explain things when lib/con does the work for you.

    2. Parsimony is great, but you have to let the data speak.

      Read Julia Azari's piece in 538 on this. The no "votes" came from the second dimension.

    3. Adding a second dimension when one does the job violates the principle of parsimony. Also, that analysis gets a whole lot less clear when you consider the Senate...

    4. One doesn't do the job if the data say they don't.

      No votes from the GOP can't be explained by 1st dimension. 2nd dimension DOES explain them.

      The problem isn't that there wasn't a big enough sweet spot of agreement on the policy; the problem is that about 30 members of their caucus refuse to govern.

    5. You don't get to ignore the "moderates" who weren't on board, particularly in the Senate, though. That's my point about the Senate. Collins and Murkowski. Then add in Porman, Gardner, Capito, Cassidy and rumblings from a few others. Only Collins and Murkowski are actual moderates, and none are partisan warriors. This is Gilmour and lack of a zone of agreement once you add in the Senate, and you don't get to pretend that we have no information on what Senators thought just because it fucks up an otherwise nice, neat little model.