Ice-cream for suckers

Has anyone here studied game theory? No? Good. That means I can tell you whatever I like about it.

One of the first things you’ll encounter in Game Theory 101 is the parable of the ice-cream vendors on the beach. It was invented by a mad professor named John Nash but I’ve tweaked it a bit here.

Imagine a long straight beach running left to right with a more-or-less even distribution of sunbathers along it. The sand is hot and no-one wants to walk too far from their beach towel. There’s a car-park located some distance to the right of the beach centre.

Along comes an ice-cream vendor. We’ll call him the man from Torycream. He’s thinking about the best location to sell ice-creams to sunbathers. Obviously the best place for the sunbathers is right in the middle of the beach. That way none of them have to walk more than half a beach length through hot sand to buy their cones. But the Torycream man isn’t thinking about the best spot for them. He’s thinking about the best spot for him. That’s next to the car-park where the truck from Big Ice-cream pulls up with his supplies. There’s only one ice-cream vendor so the sunbathers can like it or lump it.

But pretty soon a comrade from Social-ice shows up. He surveys the beach and is appalled at the exploitation perpetrated by the Torycream monopoly. “What about the non-workers!” he shouts, and sites himself halfway between the Torycream man and the left end of the beach. Social-ice is now selling ice-cream to all the sunbathers to his left and half of those between him and Torycream.

Torycream isn’t going to take this sitting down. He gets up off his well-tweeded butt and sidles down the beach towards the Social-ice stall, attracting an ever increasing proportion of beach-goers between the two sellers. Social-ice is forced to respond by edging closer to Torycream to protect his middle-ground market share. Pretty soon they’re standing at the same spot in the middle of the beach. They’ve each got about half the sea-side ice-cream trade and no sunbather need walk more than half a beach length through hot sand before making the now arbitrary choice between the two vendors.

But contrary to appearances Torycream and Social-ice aren’t fools. They recognise there’s no longer any difference between their positions and that they have more in common with each other than with the hedonistic layabouts they sell to. So they agree that for their mutual benefit they’ll relocate to the car-park where they can most easily engage with their suppliers from Big Ice-cream while continuing to divide the market evenly. As long as neither defects by offering sunbathers a real alternative it will be more comfortable for both of them.

A hot-footed young woman lying towards the left of the beach is outraged by their complicity. “They don’t give a damn about us customers.”, she thinks, “They’re just tools of Big Ice-cream. Neither of them are lifting a finger to mitigate the scourge of podal warming.”

As there’s no nearby bulldozers she can chain herself to she improvises a placard reading “Smash the popsicle duopoly!” and marches up and down the beach shouting rude things about Torycream and Social-ice. Some beach-goers raise a ragged cheer. Others scowl. All this stamping about might get sand on their ice-creams. The two ice-cream sellers studiously ignore her.

“This is making my feet hotter and getting me nowhere”, thinks the woman. “The only way to change The System is from within.” So she sets up her own ice-cream stall somewhat to the left of the car-park. She names it ‘CoolGreen’.

The man from Social-ice is alarmed. “She’s stealing my constituents!”. He reluctantly tramps down the beach to a spot mid-way between Torycream and CoolGreen. The Torycream man just smirks and stays put. He’s seen it all before and knows how it pans out. Besides, he’s got a cosy arrangement with Big Ice-cream. They’ll provide enough credit to see him through market fluctuations.

“Now I’ve got that stooge from Social-ice by the balls”, thinks the CoolGreen lady. “Let’s see how he likes a bit of a squeeze”. She moves her stall to the right, reducing the space left to Social-ice and cutting his margins to the bone. He’s left with the choice of either standing with CoolGreen and sharing the left of the beach with her or rejoining Torycream in the car-park. For the sake of convenience and Big Ice-cream he does the latter.

The situation has essentially returned to the two-vendor system and the old dynamic reasserts itself. Torycream and Social-ice move a little closer to CoolGreen to try to steal some of her customers. She isn’t about to let them force her out of business and leave the left of the beach without representation. She must show she’s a serious ice-cream vendor too. So she moves her stall closer to them to get her old customers back. Soon they’re all in the same spot. They look at each other, shrug, and retire to the car-park where they share a smoke and agree about how foolish sunbathers are for not moving towards the car-park like them. Then the truck from Big Ice-cream arrives and they restock. They all sell the same ice-creams you see. Only the wrappers littering the beach are different. Because Big Ice-cream realised long ago that you don’t maximise profits by competing. You do it by joining forces against your customers.

So what does this somewhat gamed example of game theory tell us?

It tells us the free market is a lie.
It tells us why Adam Smith despaired of the inevitable domination and abuse of markets by monopolies and cartels. It tells us why the Smith-worshiping free market think tanks seem to have misplaced those bits of his gospel. It explains why they’re all paid to pipe the same one-note tune by corporations that are ostensibly in competition with each other.

It tells us electoral democracy is a lie.
It tells us why the Australian Greens recently teamed up with the pro-business Liberals to change the electoral system and lock out independents and minor parties. Why they blocked legislation that would have forced parties to disclose political donations. It tells us why professional politicians of all stripes furiously agree that voters aren’t smart enough to understand the implications of their own votes, which must instead be guided by proper authorities to where they rightly belong.

It tells us that if we want to live in harmony with the bullshit we’ve built our society from we need to study Orwell’s 1984 and learn the art of Doublethink.

Choice is Democracy!
You can choose to drink Choke or Sepsis. You can choose to vote for Hump or Trillary. Ain’t democracy grand.

Slavery is Freedom!
What better way to demonstrate your freedom than by freely speaking and freely thinking exactly the same way as everyone else in the consumerist chain-gang? You can do it in any colour you like, though some are more likely to get you locked up or shot.

War is Peace!
So I’ll leave you all in somnambulant peace now. Happy shopping. Happy voting.

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