Playing the Game

With a marginal profit there is a marginal risk. Securing the full value of the gain requires minimizing the marginal risk (present value being reduction of probable risk in the future based on past performance).

Minimizing the margin of risk to reward requires a gaming strategy. It is necessary to gain the confidence of buyers in the value of the marginal risk-to-reward. Politically, voters need to be convinced that they will not be stuck with all the risk (reduction of net worth and declining income) like it was with the previous Republican regime to produce the promise of future gain.

Since being stuck with all the risk is of recent memory, House Whip, John Boehner, says the Republican Party will not be running the same game as last time.

For the majority of voters, the question is then: what is the probability of being stuck with the risk that correlates with the reward? Backtesting, the probability is 100% without an additional catalyst. If the reward is not economic growth (i.e., less need for budget deficits), the promise of a Republican game indicates the need for growing budget deficits, like we have now.

The prospect of making the need worse is unthinkable, but if Republicans plan to cut the deficit without growth, the need (the risk to be bourne) increases. It will be like being offered a short-sale of your home. If you do not take the entire loss of your equity, you will be stuck with the loss and what you owe the bank on the loan. It will be the same with the budget deficit.

Budget deficits are a measure of need, not just out-of-control, wasteful spending like Republicans say it is. Record budget deficits directly correlate with Republican administration--the Reagan and Bush administrations in most recent memory.

The new game is to "Pledge" cutting the deficit. There is no bait-and-switch here, just cutting the deficit pure and simple. Combined with the tax-cut agendum, of course, the risk of general detriment (the need for deficit spending) will, supposedly, reduce proportionate to the extent of the cut. Democratic opposition to the tax cut (a compromise to the full extent of the cut) will be blamed for the extent of the detriment which will be a deepening recessionary trend into 2012. The game would then be politically perpetrated with virtually no risk of liability. The marginal risk would be successfully minimized and absorbed into the fully expected risk of realignment, which is virtually (binomially) no risk at all.

Ideology will shape policy when technical analysis is needed. Ideologically, budget deficits, for example, are best eliminated, but it technically begs the question.

If budget deficits are ideologically reduced by popular demand of Tea Party candidates, the populace it is intended to represent will suffer a tremendous detriment when aggregate demand is reduced even further. It will be a technical disaster unless budget deficits are the technical result of a distribution that must occur from the accumulation, which is a fundamental, technical principle of capitalism (and the understanding is they want to return to the fundamentals). Without a distribution from the accumulation, budget deficits result.

Budget deficits largely measure the amount of distribution that needs to, but did not, occur. When the distribution is sub-optimal, basic needs go unmet without budget deficits.

Deficits occur as a technical, practical measure to provide for the general welfare. In order to technically eliminate budget deficits it is necessary to have an adequate distribution from the accumulation, not from the Congress, not from the Treasury, not from the Fed.

Without attending to the technicals, an ideological game of confidence is being played in which Tea Party (middle-class) populists have been burned too many times and intend to do something about it (minimize the marginal risk). So, the Republican Party is now saying it is not the same party that led the charge to pillage and plunder the middle class. As long as the Tea Party sticks to the technicals (reducing the value of its presence to a probable risk in the future based on reversing past performance), the republican form of government has a higher probability of being truly representative of the golden mean--the middle class.

The Republican Party has always tried to have a populist aspect, but the results have always failed the expectation of distributive value. Working from the inside out, however, the Tea Party is looking to game the party system to a positive, populist, middle-class default. The cognitive dissonance of being ideologically conservative but operationally liberal can be sufficiently reconciled with technical reality, realizing that the detriments we suffer have not always been by fault, but by default.