Rules-based Public Policy FTW

Rules-based policymaking allows us to find common ground

TLDR: Rules-based policymaking allows us to find common ground.

In my Vulcan-esque political fantasy, we use rules-based public policy in place of many of our fixed policies.

The reason is: it’s easier to agree on ideal states of the world than it is to agree on how to get there. And when we miss this crucial step, and jump straight to policy positions, we lose the opportunity to find common ground.

Rules-based policy in practice: monetary policy

One of the most prominent examples of rules-based public policy today is monetary policy. The Federal Reserve sets monetary policy via their choice of the interest rate. (This conversation glosses over a ton of nuance. If you have beef with that, follow the rabbit hole here.)

How do they determine the interest rate? The generally accepted decision model is known as the Taylor rule, which explains the Federal Reserve’s interest rate decision as the result of their effort to jointly keep unemployment low and inflation under control.

The rigorous mathematical formulation of the Taylor rule specifies a loss function with respect to both unemployment and inflation — and target levels of both inflation and unemployment.

The further inflation or unemployment get from the Fed’s targets, the greater the “loss”. The Federal Reserve thus sets policy (the interest rate) to minimize the output of the loss function — i.e. to keep inflation and unemployment as close as possible to target levels.

Why is this helpful?

I think it’s easier to common ground. We could avoid becoming quagmired in partisanship by debating about the loss function instead of debating about the particular policies.

The reason for this derives from a very popular method of negotiation, popularized in the book, “Getting To Yes”.

In short, the negotiation strategy is to focus on interests, not positions.

This shift from “positions” to “interests” dramatically improves our ability to find common ground, and thereby reach compromise in the negotiation that leaves everyone feeling understood, and like their needs were addressed.

Let’s translate this strategy into the framework of public policy.

“Interests” = your loss function.
“Positions” = your proposed policy for achieving your interests.

Interests vs positions, in practice

Consider again the case of a monetary policy. Suppose we determined monetary policy by debating our “position”, what the should the interest rate be. I imagine the Federal Reserve’s policymakers shouting numbers across the table…

“ We need to raise the interest rate 10 basis points.”
“10 basis points? You’re insane! No more than two basis points!”

Not very substantive!

Moving from “positions” to “interests” allows the policy-makers to instead debate questions like:
1. What is our target unemployment rate?
2. What is our target inflation rate?
3. How do we want to make trade-offs when we can’t jointly achieve both at once?

Again: It’s easier to agree on ideal states of the world than it is to agree on how to get there. And when we miss this crucial step, and jump straight to policy positions, we lose the opportunity to find common ground.

What public policy would you like to see moved from fixed to rules-based?

Perfectionism & Degrees of Freedom

Done Is Better Than Perfect

Perfectionism is one of my most pernicious attributes, keeping me from being the ruthlessly efficient and effective human that I aspire to be. When solving a problem, I feel the allure of the minutia. Plumbing the edge cases, and searching for the true global optimum — even on a relatively flat surface of alternatives.

I’m not sure how this is related to pedantry. It feels similar. Yet, I scorn pedantry, and still applaud undo rigor. Not “rigor qua rigor”; this is where i see pedantry. Rather, I see it as a thorough explanation to find the truth.

In academia this seen as a good thing. Getting published in my field almost always required a closed-form, analytical proof of a new methodology’s validity. I now see this as undue rigor. But I struggle to shake it in business.

Confidence In Uncertainty

I feel a need to fully understand everything before diving in. This initially hindered my ability as a web developer. Upon entering a new codebase, I’d try to understand the entire structure before I felt comfortable contributing. Painstakingly following every function call back up to some root state…

I’d see an unfamiliar class, method, or variable, and alarm bells would go off. I’d grep the whole codebase to see where it was defined — completely derailing my current path of inquiry.

Finally, I learned to be comfortable looking things up “just in time”. I became confident in uncertainty. I trusted variable names and used them to make educated guesses about what was happening. And only if some missing piece of knowledge became i) a blocker to my understanding, or ii) showed up multiple times s/t I knew I’d be dealing w/ it directly, would I stop to learn more about it. In either case, I already had more context to know what I was expecting. (APIs are a good example of this.)

Degrees of Freedom

Vacillating on decisions is another place where perfectionism stymies efficacy.

The key is to realize that there’s no perfect answer. Or, if there is, the cost of the search for it might outweigh the benefit once found. 

This leads to the imperative to make a decisions and commit to them.

Business partners are a good example of where I struggle on this. No business partner is perfect. You and I certainly aren’t. But those partnerships need to be steadfast in the face of extreme challenge. It’s easy to second guess a business relationship before you’ve raised money, hired employees, etc. (It’s even easy after you’ve done those things!) But without a foundation of unwavering commitment — if you always have a foot out the door, feeling FOMO for all the other business partnerships that could’ve been — you’ll be operating way under capacity and are far less likely to succeed.

In cases like these, then, it’s important to have some way to commit to your decisions.

I think of this like degrees of freedom. Take a simple system: x + y = 1. If I asked you to solve for x and y, you’d give me an infinite sequence of pairs, all satisfying the above system. One equation, two degrees of freedom => no single solution.

If, however, I told you that y = ½x or y = 0.5, now you can easily identify a unique solution for x. We’ve reduced the system’s degrees of freedom, and can now find a tractable solution.

We took this thing which was a variable, y, and turned it into something immutable. From that foundation, we were able to solve for x.

So, when you’re waffling on a decision that you’ve already made, and that you don’t have any compelling reason to change: reduce the degrees of freedom. Adjust your mental model to think of that thing not as a variable, but as something immutable.

It will give you a stronger foundation to solve the other problems downstream of that one.

When to Waffle?

It’s clear that there will be times when it makes sense to change these immutable things. “When the facts change, I change my mind. What do you do, sir?”

That’s beyond the scope of this discussion, but i’ll give two rules that can help.

  1. Give yourself some other condition that must be hit for you to reconsider this immutable variable. e.g.) an amount of time, an objective milestone, etc.
  2. Realize that as a perfectionist you likely skew way too far towards wanting to rethink these immutable decisions, and therefore should try to overcorrect for them.

Fin.

My first week with an executive coach

The Problem

I had a problem with communication. It’s not that I’m shy; on the contrary I’m often the most garrulous guy in the room. Rather, I felt uncomfortable communicating with someone when I thought doing so would inconvenience them.

It showed up everywhere:

With my directs: I needed employees to cover extra shifts, I’d procrastinate telling them about it.

With my manager: when I needed an answer from them, I’d go to great lengths to try to figure it out on my own, to avoid interrupting their workflow.

Even with friends and significant others: I’d often find myself cancelling on plans last minute — even though I’d known about the schedule conflict for a while — because I hated to let them down.

Naming the Problem / The Magic of Coaching

When I came to John, I’d known about this problem for months but i’d consistently failed to overcome it. I hadn’t even overtly addressed the problem. John’s coaching sessions gave me a platform to do just that: to self-diagnose. And from there, to self-prescribe treatment.

Within minutes of our first session, I had named the problem. “I have communication aversion,” I told him. And it was almost as if it came from someone else: someone who knew me better than I know myself. This was my first “a ha!” moment with coaching. I realized that we often have the answers in us but we don’t have a mechanism for uncovering them. Coaching provides this mechanism.

Talking candidly about my personal limits. Intentionally troubleshooting a personal issue. This is the magic of coaching. Sure you can do it with friends, but if you’re like me and hate inconveniencing others, asking someone to regularly “rubber duck” for you is a nonstarter. With coaching, it’s all about me. No strings attached. John is there to listen for 30 minutes each week.

The Solution

Throughout the session, John’s questions guided me through turning this insidious “communication aversion” into a set of manageable, actionable to-dos.

“Which important conversations are you avoiding?”

“How is this holding you back?”

“What are you going to do this week to overcome this?”

I knew the answers to these questions! But without asking myself those questions, I hadn’t been able to answer or act on them

After that first 30 minute session, I felt empowered to tackle my communication aversion with actionable, short-term goals. I’d made a list of uncomfortable conversations that I needed to have and, one-by-one, I checked them off.

A Retrospective

A week after that conversation, I’d made huge strides in overcoming my communication aversion. And I had gained some incredible insight on the tragic perversity of this issue:

The people I was loathe to inconvenience were actually made worse off by my communication aversion. In fact, my dread for a given conversation was directly proportional to how mismatched our expectations were.

After that week of uncomfortable conversations, I realized that my sense of dread was therefore predictive of how much value I could add through a given conversation. By having a conversation early on, I was able to re-align expectations. Without doing this, the rift would grow wider over time.

The directs whom I needed to work extra shifts? They needed to know ASAP so they could plan around it. The date I needed to reschedule? They’d feel blown off if I waited until the last minute.

Time and time again I saw how these conversations actually made the other person better off. A virtuous cycle began to develop. And my natural dread turned into delight and anticipation for the future benefits of our matched expectations.