This week’s EconTalk Podcast featured Bruce Bueno de Mesquita discussing Iran, and the threat (or lack thereof) it poses to the United States. Some of the stuff in the podcast was old news to me: Ahmadinejad, while he gets a lot of attention, doesn’t have much actual power, and those who really are running things have proven to be fairly pragmatic.
Of course, the obvious question is: if the real leaders of Iran are so pragmatic, why do they let Ahmadinejad run around saying all the crazy things he does? According to Bueno de Mesquita, Iran’s actions can be seen as an example of the so-called “Madman Theory” used by Nixon in Vietnam. The basic idea is that if you act like you’re crazy (or, as the case may be, pick a President who really is crazy, but isn’t really in charge) people won’t want to mess with you.
Bruce Bueno de Mesquita is actually a fairly interesting character. Here is a profile. His basic operating assumption is that political actors are rational, even when they appear not to be. Based on that assumption, he has developed a computer model that has been able to predict international events with a surprising degree of accuracy and specificity. He managed to predict who would succeed the Ayatollah Khomeini in Iran five years before it happened, and despite the fact that Khomeini had already named someone else as his successor. He also accurately predicted the second intifada, Tienanmen Square, the Good Friday Agreement in Ireland, and numerous other events.
One of the things I found most interesting were his views on how to solve the Israeli/Palestinian conflict:
“In my view, it is a mistake to look for strategies that build mutual trust because it ain’t going to happen. Neither side has any reason to trust the other, for good reason,” he says. “Land for peace is an inherently flawed concept because it has a fundamental commitment problem. If I give you land on your promise of peace in the future, after you have the land, as the Israelis well know, it is very costly to take it back if you renege. You have an incentive to say, ‘You made a good step, it’s a gesture in the right direction, but I thought you were giving me more than this. I can’t give you peace just for this, it’s not enough.’ Conversely, if we have peace for land—you disarm, put down your weapons, and get rid of the threats to me and I will then give you the land—the reverse is true: I have no commitment to follow through. Once you’ve laid down your weapons, you have no threat.”
Bueno de Mesquita’s answer to this dilemma, which he discussed with the former Israeli prime minister and recently elected Labor leader Ehud Barak, is a formula that guarantees mutual incentives to cooperate. “In a peaceful world, what do the Palestinians anticipate will be their main source of economic viability? Tourism. This is what their own documents say. And, of course, the Israelis make a lot of money from tourism, and that revenue is very easy to track. As a starting point requiring no trust, no mutual cooperation, I would suggest that all tourist revenue be [divided by] a fixed formula based on the current population of the region, which is roughly 40 percent Palestinian, 60 percent Israeli. The money would go automatically to each side. Now, when there is violence, tourists don’t come. So the tourist revenue is automatically responsive to the level of violence on either side for both sides. You have an accounting firm that both sides agree to, you let the U.N. do it, whatever. It’s completely self-enforcing, it requires no cooperation except the initial agreement by the Israelis that they are going to turn this part of the revenue over, on a fixed formula based on population, to some international agency, and that’s that.”
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