Kevin, good friend and loyal blog reader, recently posed me this question:
I was reading the May 6th issue of _Cardplayer_ magazine today, and Roy Cooke’s column, which always sports excellent advice, had this quote about Limit Hold-Em:
“The larger the pot and the greater the risk you are taking, the less you should try to obtain extra bets and the more you should focus on playing your hand in a manner to win the pot with as little risk taken as possible.”
I thought that was superb advice, since taking any large hit to your stack is actually meaningful, whereas you can afford to take several small hits and continue on your way.
Then, I suddenly got chills up my spine, and thought, what if Obama’s overplaying his hand? I know the economy *seems* like a No-Limit game when the government (especially the Feds) has your money, but it’s really closer to Limit poker than it is to NL [As an example of a No-Limit Hold-Em government game, think cold-war military spending in the ’80s, and S.D.I. as the all-in move. Thank G-d Russia folded.]
“The larger the pot and the greater the risk” — sounds like a bajillion-dollar already-failing business bailout, doesn’t it? “The less you should try to obtain extra bets” — such as Nationalized Health Care — “and the more you should focus on playing your hand in a manner to win the pot” — a healthy United States economy — “with as little risk taken as possible” — such as giving a bajillion dollars to prop-up already-failing businesses instead of giving every taxpaying adult in this country a $17,000 tax rebate? Imagine all the cars that we’d be buying from those now-failing Detroit businesses if we all had $17,000 in our pockets! Imagine all the companies now in financial distress that Bank of America wouldn’t be allowed to buy! And the $17,000 play would definitely minimize O’s risk, since it would correct the economy (at least for now), guarantee his party’s dominance in the elections a year-and-a-half from now, and almost certainly set him up for the final table (his second term as President). That’d be playing your hand, O. My advice: Don’t give up your day job.
Just so people understand the poker principle at work, the idea is that sometimes you should play your hand differently than math would dictate to add deception as to what you have. However, as the size of the pot grows, deception loses its value in comparison to playing a strong hand in a straight forward way in order to win the pot since the value of a large pot begins to outweigh the value of additional money won through deception.
The analogy is a bit stretched here, because we’re not talking about Obama being deceptive per se. Rather Kevin is saying that saving the American economy is of tremendous importance and Obama should not waste precious time and effort trying to get pet projects approved. This is true. However, it also highlights an classic area where our elected officials have a significantly different interest than the citizenry. For citizens, political crises are caused by disruption and are to be avoided if possible. For politicians, political crises are their opportunity to pass far reaching laws that expand the scope of their purview. “Never waste a crisis,” as the saying goes. In this regard, Obama is acting like you’d expect a Socialist politician to act; he’s using the crisis to pass his agenda.
In terms of ending this recession, Obama’s actions are doomed to fail. Kevin is correct in pointing out that the bailout bill of $17,000 per adult would be far better spent as a tax rebate then as a bailout given in the form of a loan or an equity share in auto companies. Of course, it would be better still if the government did the opposite of Keynes’s advice and began to cut spending altogether rather than expand it, but austerity has fallen out of fashion in government circles. Cutting back on spending was a tried and true method for restarting a stalled economy from time immemorial, and a method that has an unparalleled level of success.
Spending our way out of a deficit, unfortunately, has very little to show for itself in terms of ending recessions. It didn’t end America’s Great Depression of the 1930s, nor did it end Japan’s ongoing depression. It really has very little in terms of economic history to suggest that it will work at all. To return to the poker analogy, this seems like the kind of self-destructive behavior you see losing players engage in all the time: they make plays they shouldn’t make, but feel they’re a good player despite never having seriously studied the game and being a consistent loser at it. Sadly, we the taxpayers have decided to stake this losing player with as much money as he needs. No one would be foolish enough to do this in the poker world, but that’s why government is such a wonderful invention- it allows us to collectively act far dumber than any one individual ever would.