I am not the world’s greatest negotiator. If I were, I would be rich. I have however learned one thing in life. Negotiating in the government sector is not like negotiating in the private sector. Every deal in the private sector is a win/win deal (or at least it is perceived to be so at the time the deal is made). It has to be win/win, since both sides enter into the deal voluntarily. Yes, any person wants to get the best deal possible, but in the end, both sides have to get something for the deal to be consummated. That is why voluntary transactions are preferable. By definition, if both sides perceive themselves to be better off from the deal, the result to society is a net positive, all of the time.
Government deals, however, are win/lose, or maybe even lose a little/lose a lot. The only reason government intervention is necessary is when one side or the other thinks they will lose something from the deal. If they are going to lose in the deal, they have to be forced to enter into it, and government is the only party that has the right to use force to require people to interact. Since the best that a deal can be with government intervention is win/lose, society is actually worse off in most cases where government intervenes. Voluntary transactions = everybody better off. Forced transactions = someone worse off. Some times that is a good thing, you don’t want terrorists or criminals to be better off after they kill or steal, society is better off with them put away. However, in most other transactions, like health care or business regulation, it is very easy for everyone to be worse off, like higher prices, less choice, and less profit for everyone in the deal because of government intervention.
That is why those in government can’t negotiate a deal like they do in private business. I don’t think the Governor understands that. This week he said that taxes on services might be on the table for this budget. Is he nuts? That’s like telling the Democrats that you have a 7 high poker hand while trying to pull off a bluff. He has just put all of his chips on the table, told the Dems his hand, and is now trying to bluff them into cutting government spending. He is throwing in the towel before the fight even begins (to seriously mix my metaphors).
Quite frankly, negotiating in politics is a lot like bluffing in poker, or sparring in a prize fight. For the first several bets, or the first several rounds, both sides are trying to feel each other out. How strong are they? How strong do they perceive themselves to be? How strong am I in relation to them? Can I bluff them, or feint a punch in one direction, and knock them out from the other? Can we force them to cut government spending, or will they be able to push enough Republicans to vote for higher taxes. The negotiations begin with both sides pounding on their chests, claiming that nothing the other side wants is going to happen. Until 2002, the usual ending to these negotiations were that Republicans folded, and taxes were increased. It changed in 2002, government spending was cut, people were spared increased taxes, and the government recovered.
This year, the governor’s opening gambit is to indicate that he may fold on taxes. He walks right out, and drops his left hand guard, and says hit me in the face for a knock out. He says "he is open to increasing taxes on services." That literally is inviting the Democrats to propose such taxes, and allowing the Democrats to hold out until they get such taxes. The last time he pulled this kind of bonehead negotiating maneuver, he ended up with getting Jeff Denham a recall, since he practically called Denham irresponsible for not voting for last year’s absolutely terrible budget deal. Denham was right. The Governor was wrong, but Denham faces the recall.
Yesterday’s comments were foolish. The Governor needs to watch what he says. It will come back to bite him.