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Thomas Schelling won the Nobel Prize in Economics
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1961 was a very tense year for those who lived through it.
The Bulletin of the Atomic Scientists had a clock marking the end of the world – because of nuclear war.
Students were told what to do in the event of a nuclear attack, and Soviet President Nikita Khrushchev built the Berlin Wall so the US was convinced it would lose the space race.
In late September 1961, Henry Kissinger, who served as US Secretary of State from 1973 to 1977, and some US strategists were not far from the Pentagon when they received a call from West Berlin.
The stakes were high: If the Americans withdrew, they would relinquish control of West Berlin, and if the Soviets withdrew, it meant they were threatened.
If neither side backs down…
Let’s say Kissinger and his colleagues didn’t sleep well for 48 hours because the phone calls kept coming.
But there was a silver lining: the calls didn’t come from West Berlin, they came from the next room.
It is a war strategy developed by economist Thomas S. Selling, one of the most influential strategists of the 20th century.
To Henry Kissinger, you have to go back to World War II to understand what an economist does in organizing war strategies.
Game theory
During this conflict, some of the intellectuals of the time were allies of the military by being involved in the design of secret codes or computers that would make the atomic bomb.
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Henry Kissinger (right) was appointed Secretary of State by Richard Nixon.
One of the leading figures among them was a mathematician named John von Neumann, who had a side project called “game theory” about which he published a book with an economist named Oskar Morgenstern.
This is the basis of von Neumann’s game theory: think about human strategic interactions. I have interests, you have interests. What you do affects what I do. What I do affects what you do.
Von Neumann wanted to solve problems in mathematics.
After the war, von Neumann and others like him met at the RAND Corporation, a think tank set up to advise the US military and think about the problems of modern warfare, which of course meant Armageddon, nuclear war.
But it was a good place to do it, it was on the Pacific Ocean, beach front and people were wearing Hawaiian shirts. It was actually very relaxing and relaxing. A very fun environment to work in strategic theory, which was strong in America at the time, was heavily influenced by RAND.
So the most disturbing idea is that Mutually Assured Destruction is based on this: if the Soviets cross the border, the US will retaliate with nuclear weapons on a massive scale. Then, of course, the Soviets would fight back and the world would end. So did not cross the Soviet border.
Common interests and nuclear disarmament
Von Neumann died in 1957, a few months after Thomas Schelling came to RAND for the first time to work on research.
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Von Neumann wanted to solve problems in mathematics
In one sense, Schelling disagreed with RAND. He was a researcher at a research station on the East Coast.
But in other ways, Schelling was the perfect man. He loved game theory, spoke the language of game theory, and thought it was an incredibly powerful tool.
However, he thought it should be used in a completely different way. Experienced in business negotiation. He worked on the Marshall Plan to rebuild Europe after World War II.
So when Schelling thought about game theory, he was thinking about strategy, which always has a common interest to explore, a common ground. A clear example of this is the range of strategic weapons.
He argued that both the United States and the Soviet Union were interested in reducing their nuclear arsenals, and he was a true evangelist for this type of weapons limitation.
Schelling was also concerned with consistency.
Schelling wondered what would happen if something went wrong, and if a psychotic colonel used a bomb, what resources did the great powers have to escape Armageddon? According to his analysis, the answer is: not much.
He devoted himself to convincing the world that everything should change. Not because he is a pacifist. He was totally focused on how to conduct a nuclear war, but he thought they weren’t doing very well.
One of the obvious things is the red phone. By the late 1950s, there were no direct contacts between Moscow and Washington. Schelling had suggested that this might be a good idea.
Schelling was at the height of his career at this time, and many approached him for advice.
In 1964, then US Under Secretary of Defense John McNaughton approached him for advice. The U.S. was embroiled in a war in Vietnam, and McNaughton believed that if the U.S. launched a brief three-week bombing campaign, it could persuade the North Vietnamese to stop attacks on South Vietnam.
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Ethnic diversity and climate change
Schelling was interested in racial segregation. To solve, he used coins and a chessboard.
He also developed behavioral economics. He is a pioneer. Having become addicted to cigarettes, he wanted to use the theory to see if he could break the addiction.
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Schelling was interested in racial segregation. To solve, he used coins and a chessboard.
Another topic that interested him was climate change. He wrote a book in the late 1970s.
Thus, he said, climate change can be solved through negotiations, but the problem lies in the inequality between rich and poor countries, so it is difficult to find a way to reach an agreement.
An elusive Nobel Prize
When theorists were first awarded the Nobel Prize in Economics in 1991, Schelling was a shortlist but did not win the prize.
Economist Oskar Morgenstern, who developed game theory with John von Neumann five decades earlier, once complained that Schelling never proved a mathematical theorem in his career. It’s true and it’s a very interesting thing.
Social science has a tendency to stick to the formal. But you can try to engage in difficult world problems to solve.
Think of the issues Schelling addresses: racial segregation, climate change, drug addiction.
He died at the age of 90.
But before that, in 2005, when the Nobel Prize in Economics was again awarded to game theorists, Schelling was one of the winners.
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