Economic Policy Review ISSN 1313 - 0544

Theory of Political Games

Author: Metodi Lazarov / 31.10.2007
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You have probably seen the movie "Beautiful Mind", which won the Academy award for best production in 2001. The story is about the life of the American mathematician John Forbs Nash, who is best known with his proofs of the so called "Nash's equilibrium." Briefly, the equilibrium proves that there is a balancing distribution of two or more strategies between the same numbers of players, where any action by one of the players (while the remaining players are not active) could not improve the existing situation for him.    During the distribution of the strategies player A makes the best decision, baring in mind player B, which also makes the best decision, baring in mind the best possible decision of A.   The solution of this equality does not mean, that the best result for all participants is achieved, but a situation is assumed where the players modify their positions against the other participants. Parts of this theory are similar to the political interrelations, which in their pure form are a method for distribution of power with a limited number of contenders and where cooperation is allowed regardless of the previously stated positions (for example breaking fundamental principals on incompatibility in coalitions).

The population of each country is a dynamic mass of people, which regularly change their views and political preferences for various but unclear reasons.  During 1997 a large part of the Bulgarian population was supporting the political believes of the right, four years later more center or liberal, while in 2005 the electorate moved to the left. The parties follow this, probably natural way of thing by changing their programs and claimed policies. Those, who have the possibility, knowledge and historic context to position themselves where the mass of people is concentrated, must win most votes. Such movements must be small since they could be accused as without principals and not really serious in their pre-election promises.   The Bulgarian Socialist Party (BSP) is taken as rightist for the small steps it took in that direction, such as the reduction of corporate and personal income tax. It is not clear why. Either really BSP is conducting right principals motivating labor and capital with reduced rates and does not surrender in front of the labor unions, or simply they bring more money in the budget for all sorts of "unforeseen" expenses. Only time would tell if BSP would be brave enough to move to the right by reducing the redistribution the tax revenues of the budget. In such way the party could take up some of the positions of the parties from the right in the next parliamentary elections, which themselves are competing in their pre-election programs for liberalization of the economy.  GERB looks like the largest opponent of BSP and a threat causes panic in the highest levels of power and immediate closing of such structures as the Commission of tracking prices. Actually the ruling party is making unsuccessful experiments to carry out left policies as well by preserving the status quo in certain sectors of the economy, which may satisfy certain privileged groups, but is harmful to us all, like health, education, infrastructure and available income. 

There is a consensus in society on the political preferences is definitely moving towards the right, because the economy is doing well, incomes are rising, the cost of credit are falling, etc.   The rates of change however are not sufficient and the change is the basis for the determination of the ruling party to complete what has been (un)initialized. The positions are being distributed between the players before the local elections, which would reaffirm the foundations of some and shake the positions of others. It is interesting to see if the parties are preparing for us a political cartel of the type "you promises this, you that and than will see". The compromise between the wide spectrum of opinions is already working on both local municipality level and national level, but it means less convincing and slow management. The electorate would discover that they have limited freedom of choice, when the positions become dangerously close. The political model in Bulgaria is shrinking to one dimension, where not the possible policies but the quality of their execution will become the decisive factor.  The parties who will bet just on the party color as a symbol of their policies will not be successful due to the simple reason the electorate is tired from unfulfilled promises. They would loose positions to the other party's in order to prove themselves as players with vision and members capable of leading a quality management. Thus, as the Government now is under questioning whether or not they could manage under pressure, the remaining parties will have the chance to show how they could handle the problems on the local level. The sensible policy brings negative regardless of how illogical it sounds. That is such because the dynamics of the environment changes positions, while the layers are adjusting very quickly. Consistency, however, is a symbol of quality, while the popular and impossible to forecast moves speak more about an immature long term policy. This is actually the paradox of the Bulgarian political life, while for the Government the lack of decisiveness is the real problem. The direction and desires of the Bulgarian people have been known for quite some time - fast grout of the real income, improvement of public services and good expectations for the future.   That could be achieved by withdrawal of the state from the economy - less but better quality and not impairing regulations on the business, transfer of state and municipal service to the private sector, privatization of the state companies, reduction of the Government administration, etc.  In the same manner as the revenues from the corporate tax exceed the targets, the expectations of the electorate of the party which breaks up the cartel of political equality in Bulgaria will be exceeded and will take the unexplored positions on the right.