Matt Ranen: How “Win-Lose” Could Actually Be a “Win-Win”

Public debates about policy often focus on trying to explain why a particular approach will make the ‘whole system’ work better.  Consider Obamacare:  it’s supposed to insure the uninsured, improve the quality of care, and ‘bend the cost curve’ to reduce the costs.  Or Education reform: the online MOOC is supposed to radically reduce the costs of education while scaling the very best teachers by orders of magnitude.  It’s become almost a necessity of public debate—at least in the US—to assert that a big idea reform proposal is a ‘win-win.’  And to stand in opposition to this best-of-all possible worlds means you are either too dumb to understand or simply dishonest.

Would that it were so.  This kind of thinking can be popular on the surface and it certainly makes for ‘provocative’ op-eds that garner lots of hits on newspaper websites. But it doesn’t serve the public interest, isn’t good for business-government relations, and is not a good way to work with other stakeholders that will have to be involved.  Ironically, it gets in the way of both the technical and social innovation it is trying to foster.

Here’s why.  Almost every big public policy debate is ultimately an argument about the aspirations and visions we have and how we want our society to ‘look’.  Implicit in this is a decision about the tradeoffs we are willing to make to get there and the effective winners and losers of policy decisions. The win-win discourse tries to push what are in fact deep disagreements about this into the background where no one has to look too closely.

We get the motivation.  It’s certainly comforting and easier to claim that everyone can have better, cheaper healthcare distributed more fairly and no one will lose anything in the process.   But look beneath the hood and the supposed cost savings in the short and medium term depend heavily on cutting Medicare reimbursements to doctors.  And that doesn’t happen:  every year, like clockwork, Congress postpones those cuts.  So we don’t actually face the trade-offs, but rather, push them off into some unspecified future.

Or elsewhere, in the current debate over Internet traffic rules: it’s much easier to assert that net neutrality makes the Internet better on all dimensions—more open, more free, more secure, speedier, and more fair to newcomers—until someone points out that they didn’t have sufficient bandwidth to get the SuperBowl on their iPad, watch the opening episode of Game of Thrones without disruption, or get high quality FaceTime streaming with their grandma, even though they paid for this.  If only we could have our broadband cake and eat it too.

It takes courage on the part of business leaders and public policy makers to put these kinds of trade-offs in the foreground.  But here’s the twist — we think this would actually be very good news for innovation.  Figuring out how to compensate or reduce the pain to losers is actually one of the most significant drivers of innovation because it forces real choices from which new value springs.  If Comcast is simply evil and Google is simply good, then it feels like a win-win to force Comcast into being a dumb pipe for Google content.  But dumb pipe companies won’t (indeed, can’t) invest very much in new infrastructure and new services.  So a better solution might also include incentives or requirements for the ‘good’ companies to deliver their content and services with radically greater efficiency: using 1/10 or 1/100 of today’s bandwidth—which in turn would open up the remainder for new applications from brand new content innovators.

Putting trade-offs in the foreground doesn’t offer the cheap thrill of demonizing certain companies in the ecosystem — the health insurers, the broadband providers, the for-profit education companies, and so on.  But it’s more honest and ultimately better for innovation and growth.  And it may actually lead to a more stable profit margin over the long run for those companies who are wise enough to not create a desperate, and possibly angry, set of losers later on.