Wednesday, April 13, 2011


How to negotiate

I've spent some pleasant time visiting Mexico and Thailand.  My wife, who was born in and grew up in Bangkok, Thailand had no difficulty understanding the method of negotiating a price for a souvenir or valuable art object in either country.  The basic principle is that the seller first asks a high price and the buyer offers a low price.  Eventually they reach an agreement and the sale is consummated.  In Mexico, at least, if the buyer has paid more than the seller expected, the seller will offer another item, not very expensive, at no charge.  If that happens to you, you know you've paid too much.  At any rate, the Mexicans and the Thai delight in such negotiation.  A friend once told me about the bargaining for time on a fishing boat in a town somewhere in Baja California.  The bargaining was very tense and determined.  After the price had been agreed to, the Mexican crew of the boat invited my friend to join them in a meal.

Compare those pleasant memories with the current negotiations in Congress over the budget for the year 2012.  The Republicans have made an offer that is ridiculously low.  No new taxes; make the Bush tax cuts permanent, then reduce them some more.  Make drastic reductions in government expenditures for Medicare, Medical, education, etc.  Maintain or increase the bloated defense budget.

What is the Democratic counter-offer?  So far there is none.  The President has revealed what he would accept as the final compromise between two extreme positions.  That's a serious blunder in negotiation.  Before the President makes his reasonable compromise offer - some cuts in Medicare, etc., and some increases in taxes - either he or some Democrat in Congress should make an extreme Democratic offer - say, no cuts in Medicare, etc., drastic cuts in unnecessary defense spending, and a big tax increase for the very rich.  Then the two sides can haggle and gradually make concessions and arrive finally at what the President has just proposed.

The President has given the game away.  Now the "reasonable" compromise will be something between the extremely conservative budget proposal of Representative Ryan and the moderate budget proposal just laid out by President Obama.  Too bad!  What should have happened is that a prominent Democrat should have presented an extremely liberal budget proposal.  After a week or two of much yelling and screaming about how far apart the two proposals are, the President would then present the moderate proposal.

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