Economics of Identity Politics

Before we go into the details of Identity Politics, we need to spend some in understanding the concept of life time value of a customer. Let's say a toothpaste tube lasts one month. Let's assume that X  is 20 years old and his expected life expectancy is 70 years. If the price of toothpaste is Rs 100, the life time value of X for the toothpaste manufacturer is (70-20) * 12  * 100 = Rs 60,000. 

Let's take another example: Let's say X’s kid goes to some school and he is in grade 1. The yearly school fees is Rs 2 lakhs. The lifetime value of the kid to the school is 12 * 2 = Rs 24 lakhs. What this calculation enables is putting a cap on maximum money manufacturer or school can spend on acquiring the customer. They may not make money on the first few sale, but over the lifetime of the customer, they will still make money. 

Let's try to see how this applies to politics in a democracy. In theory, in a democracy political parties will come up with policies and then the voters will judge them on the basis of these policies. The party with better policies win. Democracy in theory is like economics, where the invisible hand of rational self interest will cause parties to come up policies that matter to most and the voters will choose the most representative government. Just like everything else, theory is not quite applicable in practice. Coming up with better policies and doing good work is just plain hard. Even harder is selling the idea of why their policies are “better”. Let's have better tax collection to make infrastructure better is a really bad idea. No one likes it and no one wants to pay more tax. It so happens that “better” is different for different people. The worst part of this strategy is that the party needs to compete in every election to get back the people who voted for them the last time. This is very expensive and uncertain politics. This is bad business. 

Identity policies is a far better strategy. Voters are not expected to change their identity, by definition of identity. Once the voter is sold using identity, voter is acquired for lifetime. This amortises the cost of voter acquisition over the life time of the voter. What it means is that if the voter decides to vote because of identity, he will continue to vote for the same party unless he invents a new identity or other parties claim the same identity. No amount of good policy from competitors can swing his vote. This is a gem of a strategy. Not only do party reduced the cost of voter acquisition, increased voter stickiness but at the same time got complete independence from voter judgements around policy.

I love this quote from Sin City where Senator Roark says  “Power don't come from a badge or a gun. Power comes from lying. Lying big and gettin' the whole damn world to play along with you. Once you've got everybody agreeing with what they know in their hearts ain't true, you've got 'em by the balls”.  Identity voting is a pact with the devil, sale of soul. Once sold on identity, any rationale against party policies would either insult the identity or the self. It looks almost impossible to beat the vote unit economics of this strategy and the freedom of action it gives to the party. It attacks democracy exactly at the point which it was not evolved enough to handle, namely tyranny of the majority. The only available counter strategy against identity politics is more identity politics. The problem of course is that what looses out in this game is the integrity of nation. You only win this game by destroying the stadium.