David R. Henderson  

Play the Hand You're Dealt

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I have a few mottos in life. The title of this post is one of them, and it has served me well. It sounds obvious. What other kind of hand could you play? None. But what you can do is complain about the hand you're dealt. And that normally does either zero good or negative good, i.e., bad. The bad part is that it can distract you from making the best of an imperfect situation.

Why do I write about this on an economics blog? Because of a comment by someone earlier this month when I Facebooked about the Econlib Feature Article by Pierre Lemieux titled "Free Trade and TPP." Because of my policy of not violating FB confidentiality, I will not quote his name. I had titled my post "Is the TPP Good or Bad on Net?" Here was our discussion:

Person X: I cannot believe the question is even seriously being posed by those who claim to support liberty and free markets.
DRH: You can't believe it before reading the article or after reading the article?
Person X: Both, it read somewhat as I expected. I still am disappointed. It is like arguing for fascism as a good step away from communism. It is not and I don't even appreciate seeing the option on the table. We all have limited lifespans. No one should have to waste their lives while politicians and economist experiment.
DRH: I'm not clear what this has to do with wasting your life.
Person X: My point is that by not immediately going for the gold standard in liberty, by tolerating a mediocre oppression over an absolute oppression, or as in the case of the TPP, even advancing oppression in the name of profit, we are burning up the hours of people's lives, keeping them in chains, and that is unconscionable.

Person X was acting as if he thought that the alternatives being presented were the TPP and totally free trade. If that had been true, the choice would have been obvious. But, as Pierre Lemieux pointed out and backed up, the choice is between TPP and the status quo. That's the hand we're dealt.

I see this a lot, especially in libertarians. When I was a senior economist with Reagan's Council of Economic Advisers, a libertarian friend who was in town visited me in my office. He complained about a lot of the things Reagan was doing and I agreed with him about all of his complaints. I also pointed, though, that the things I was working on were, almost entirely, fighting off bad ideas from other executive branch agencies and, when I had time, fighting off ideas from a Tennessee congressman named Al Gore. And I was winning almost all of them. He agreed with me that I was on the right side of all the fights I named.

Then he said, "I just don't see why you would work for him, inching along instead of working for massive reductions in government power."

"That would be wonderful," I responded. "Who's offering to hire me to do that?"

To his credit, he grinned. He got it.

From a very early age, I learned to play the hand I was dealt.

In 1968, Gerard Pelletier, Canada's secretary of state in Pierre Trudeau's government, suggested a draft for civilian work. Young people would be required to spend a year working for the government at artificially low wages. The penalty for refusing to go would be a prison sentence. I immediately wrote a letter to the Winnipeg Free Press, which was published. I wrote:

I read with astonishment the article in the Free Press, October 29, entitled Non-Military Draft Plan Under Study. The only objection to the idea made by State Secretary Gerard Pelletier was that it would be difficult to put into practice. Considerations of justice do not appear to have entered his mind.

It is indicative of the temper of our times that when people propose government intervention, they do not say, "Is it right?" but only "Can we get away with it?"

In the same article Mr. Pelletier is quoted as saying that the young would like to "play their part in creating a more just society." I am one of those young people. Because I want a just society I am taking my stand. I refuse to be coerced into serving a year for the government. Government intervention has never led to a just society and never will. (November 9, 1968.)

After the letter appeared, I had more time to think about it. My initial thought was "OK, I might show up if I'm drafted but I'm going to make their lives miserable." My next thought was "Nah." I knew myself, and I knew that I always got over resentments very quickly and played the hand I was dealt. Would I have risked prison by not showing up? Probably not. I probably would have tried to figure out a way around being drafted. And, in the worst case, if I were drafted, I would have then said "What can I learn in my year here?"

Playing the hand I'm dealt has served me very well. I recommend it.

Comments and Sharing

COMMENTS (19 to date)
Ieiunus writes:

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David R. Henderson writes:

If I pointed a gun to your head and claimed I will do my best to kill you with this gun should you not participate in making the world a better place on my terms, am I best handled with acquiescence or forceful recalcitrance?
I don’t know because you haven’t specified your assumptions fully. If you have a gun right up against my head and it is loaded (I assume these are your assumptions), I would probably acquiesce. Forceful recalcitrance would likely get me killed.
In my situation, what would you do, IEIUNUS?

Matt Moore writes:

David - do you see any substantial difference between 'play the hand you're dealt' and 'avoid the sunk cost fallacy'?

David R. Henderson writes:

@Matt Moore,
David - do you see any substantial difference between 'play the hand you're dealt' and 'avoid the sunk cost fallacy'?
They are closely related. I’m not sure there are no substantial differences. What do you think?

Scott Sumner writes:

Great post, that's my view as well.

Nathan W writes:

Why are there measures in a trade deal which would force telecom companies to turn over data to authorities on demand, in a context where everyone knows that several TPP signatories are sharing massive amounts of information on each others citizens?

No one is allowed to spy on their own citizens. So you spy on me, I spy on you, we all share information, and the police state has all available information on all citizens in all countries?

Why is the pathway to such an internationalized police state structure written into a "Free trade" agreement?

And since when does forcing excessive IP rules (especially for pharma) on trading partners something that one would call "free trade".

Too many elements of the TPP bear no relation to anything that can be realistically defended as related to "free trade".

The whole thing should be canned, to be started over again with consumer and privacy advocates at the table.

The logic of broadly cutting tarrifs is easy to explain. There is comparative advantage in trade, there are eventually productivity gains from competition, market discipline, etc.

But the TPP doesn't do any of this. The "comparative advantage" is more like the "entrenching the oligopolist incumbent perspective". In so doing, it fails to improve long-term competitive pressures or provide additional market discipline.

This is probably the most anti-market "free trade" deal that has probably ever been written in the history of the planet.

Economists should not feel obliged to support the TPP just because someone wrote in the words "free trade" beside it.

Matt Moore writes:

I suspect sunk costs are a proper subset of the causes of not playing the hand you're dealt. I suppose sunk costs (defined as actions you hoped would be optimal ex post, but turned out not to be) are a form of irrelevant path dependency that arise from one's own actions. One might also care about others' moves: 'if only he hasn't done that, I wouldn't be in this position!'.

As a practical matter, introspection leads me to think that the lingering effects of one's own actions are far more powerful at distracting from the game at hand than those of others.

'Play the hand you are dealt' is good advice for seeing the game clearly, because regret is so powerful. The corollary is that one should play to avoid regret. 'Minimise the chances of regretting this decision in two years time' is my most commonly used heuristic.

Kenneth A. Regas writes:

@ Matt Moore & David

I suggest that play the cards you are dealt, and avoid the sunk cost fallacy are two stations along a sequence successively narrower statements:

Decide on the basis of your best estimate of the present, including the prospects of various alternative futures (play the cards you have), even though you may not be responsible for this present situation (play the cards you are dealt), and despite your preferences among the possible futures (avoid wishful thinking), such as because you are already invested in some outcomes (avoid the sunk cost fallacy).


[Overuse of uppercase change to italics. Please use italics or bold face, not uppercase, which looks like yelling.--Econlib Ed.]

Kevin Dick writes:

@David--I have a question about practical application of this rule... the US Presidential election.

Politically, I am strongly aligned with the primary EconLog bloggers. But I am at something of a loss as to what the "Hand Your Dealt" option is in voting this cycle.

I suppose the meta-answer is that it doesn't really matter at the margin. However, assuming that I want to vote for a candidate, in your opinion, what is the most pragmatic vote? Every time I sit down to calculate, I find incredibly objectionable policies for every option.

According to the prediction markets, Clinton and Sanders are the two viable Democratic options. Which do you recommend as least objectionable?

For Republicans, it's Trump, Rubio, Cruz, and Bush. Your recommendation?

And in the general?

Not to put you on the spot or anything :-)

Roger McKinney writes:

A lot of libertarians make the common mistake of thinking that the president can change much. He can't. Mises used to say that the majority always rules, even in a dictatorship.

Libertarians have deluded themselves into thinking that the majority supports them and they merely need to change politicians at the top. Nothing could be further from the truth.

Government does not change the people; it merely reflects the will of the majority. Libertarians need to concentrate on the hard work of converting the majority of Americans and quit fooling themselves that it's as easy as changing presidents.

John Hayes writes:

@Nathan W

Actual tariffs these days are quite low (under 5% in most cases), so modern trade deals focus on non-tariff barrier. These are regulations that prevent products or services from being sold because they don't meet local requirements. Those requirements can be blunt "only locally produced goods" or subtle "must be made under certain labor conditions". The regulation you're raising isn't about spying (which isn't bound by treaty anyways) but it's about legally issued warrants for information.

Today information sovereignty problem is a real issue for international companies, a US company operating in a foreign country or serving foreign citizens today is has a catch-22. They must respond to US warrants, which may be illegal in the local country, and they must respond to local warrants which is definitely illegal in the US. US companies can only operate where there is a treaty coverage for resolving this conflict, until last fall that was just Europe but then the "safe harbor" regulation was rescinded. US companies (and companies from may other countries) are legally vulnerable is they host data on the citizens of other countries - which is the basis for international ecommerce. If you want competition in ecommerce, you must allow companies to legally store information in foreign countries and on foreign citizens.

IP has the same issues, right now access to drug is locked into regions because patents are not recognized internationally. So the US market lacks drugs produced by foreign companies and therefore lacks competition. If you want lower drug prices, they you have to increase the scope of IP.

Modern free trade deals require much deeper harmonization - look how deep the EU has gone just to partly offer free trade of goods and services.

ThomasH writes:

That's sort of the way I feel about the MW. It would be better if we tried to get more income into the hands of low wage workers with an EITC, but I don't see the Congress doing that. It might do a small increase in the MW which wold be better than nothing.

SaveyourSelf writes:

I have an issue with using the phrase, “play the hand you are dealt,” to apply to political decision making. David’s stories—particularly his reflection on a Canadian draft—sounds less like, ‘play the hand you're dealt’ and more like, ‘I’m just not willing to take risks for my own freedom.’

Acquiescing to bullies is unquestionably a practical, low risk solution in the short term. In the long term, though, it rewards bullies. Rewarding a behavior generally leads to more of that behavior.

Thiago Ribeiro writes:

"and, when I had time, fighting off ideas from a Tennessee congressman named Al Gore."
What did he want?

David R. Henderson writes:

@Kevin Dick,
I suppose the meta-answer is that it doesn't really matter at the margin. However, assuming that I want to vote for a candidate, in your opinion, what is the most pragmatic vote? Every time I sit down to calculate, I find incredibly objectionable policies for every option.
I do too.
According to the prediction markets, Clinton and Sanders are the two viable Democratic options. Which do you recommend as least objectionable?
Clinton is way worse on foreign policy. Sanders is way worse on domestic policy. Of course, that might argue for Sanders because a president, although he/she shouldn’t, has way more discretion on foreign policy.
For Republicans, it's Trump, Rubio, Cruz, and Bush. Your recommendation?
I don’t know. Cruz is way better than Trump on domestic economic policy. Bush is better than the rest on immigration. Cruz is worse than Trump on foreign policy.
But here’s the thing: Given, as you have hinted at above, the expected value of my vote is very low, probably under $1, I don’t spend a lot of time sweating this. The consequences for the nation of any choice could be huge. The delta in those consequences, multiplied by the probability that my vote makes the difference, is very tiny.

David R. Henderson writes:

@Thiago Ribeiro,
"and, when I had time, fighting off ideas from a Tennessee congressman named Al Gore."
What did he want?

I’ve forgotten all but one. I just remember that when I saw a bill that looked really bad, the probability that it was from him was way higher than 1 in 435. One bill I do remember and, unfortunately, although I fought it, I lost, was his 1984 bill to ban organ sales.

The way I see it, David, your disposition, including your unwillingness to risk prison, is part of the hand you were dealt. Other people were dealt different dispositions — including willingness to risk prison. Such people were the founding fathers of the US, Nelson Mandela, and Mohandas Gandhi.

I believe that we humans vary considerably in how we are driven, that is in what we find interesting or what we want most to do. And it makes sense to me that this variability in drive is probably built into our species; the programmer of our genes figured out the value of specialization long before Adam Smith.

Daublin writes:

+1 to the general point that the correct notion of the "hand" is larger than which side of a formal vote to support.

For most people, I figure the best way to deal with the hand we have in American politics is:

+ Disengage. Every time we let them sweep us up into their drama, we implicitly validate that the people in Washington are speaking for us and have our interests at heart. They don't and they don't, and it would do tremendous good for the country to develop a healthy disrespect for Washington politicians. Do your part.

+ General education, especially about economics. Many people have never encountered the benefits of a floating price (e.g., high prices fetch more supply). Many have never encountered the idea that when minimum wage goes up, many people just can't lose their job. Many have never encountered the concept of non-monetary wages, and the flexibility employers have to manipulate them. Many have never encountered a description of net-positive mutual trade, much less the argument that if two people voluntarily agree to a trade, it is probably such a case.

LD Bottorff writes:

Great post, and a great reply from Roger McKinney. I am sure Professor Henderson did the best he could within the constraints of working for a politician. I faced a more ominous draft, the possibility of being forced into the Army. I held on to my student deferment until the draft ended. And then, I voluntarily served in the Navy. I don't like the draft and given the technological aspect of modern warfare, I think we could probably fight World War III without a draft.

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