Markets in everything, Coase vs. Tullock, the culture that is Canada

by on December 16, 2011 at 6:59 am in Uncategorized | Permalink

A suburban Chicago high school fundraising to save a popular arts center is motivating students to donate with an earsplitting incentive: pay up and they’ll stop blasting Justin Bieber’s “Baby” during passing periods.

Evanston Township High School seniors Charlotte Runzel and Jesse Chatz convinced school administrators to let them play the popstar’s biggest hit over the loudspeakers for one week, or until they’d raised $1,000, the Chicago Sun-Times reports. Within three days, students had coughed up enough cash to silence the Canadian singer’s repetitive single.

The article is here, and for the pointer I thank the excellent Lawrence Rothfield.

revver December 16, 2011 at 7:13 am

Teacher Union protection racket money putting a strain on all school expenditures Im afraid. I have a feeling this will catch on with other schools, as the disutility of justin bieber is widely known.

some guy December 16, 2011 at 9:06 pm

As the linked article states the thing they were raising money for was not related to the school it is a cafe/art studio near the school. So…. At least as far as the article states it has absolutely nothing to do with a teachers union, a school program, or even teachers really (except for the fact they were forced to listen to Justin Bieber too).

For further clarification the caption under the picture in the article states-
“Students at Evanston Township High School reached their $1,000 goal after a Justin Bieber song was repeatedly played over the school P.A. system during passing periods in hopes their classmates’ disgust with song would raise enough money to help keep boocoo, a café-art studio/student hangout near the high school, remain open. ”

Here is there website http://www.boocoo.org/ where after a very quick overview it seems like there is no affiliation with the school.

Alan December 16, 2011 at 7:18 am

The culture that is Canada? Bieber is from Canada, but I very rarely see him mentioned in Canadian media. It’s the US that thinks he is a star of some sort.

Seth C December 16, 2011 at 7:20 am

I think the U.N. has condemned the use of loud music in psy-ops.

TallDave December 16, 2011 at 7:34 am

The U.N. War Crimes Tribunal has been notified.

NAME REDACTED December 16, 2011 at 7:55 am

Amnesty international will be out shortly to chide the school.

Rahul December 16, 2011 at 8:03 am

Will Bieber get a royalty?

Soren Dayton December 16, 2011 at 8:25 am

That’s my high school. So strange…

jdm December 16, 2011 at 8:42 am

For those of us who are not economists, what’s the meaning of Coase vs Tullock in this context?

MD December 16, 2011 at 8:59 am

Well, for the Coase side of it, he argued that people could make bargains to sort out negative externalities (spillover effects), if there were a clear assignment of property rights. What is happening in the school is analogous to those suffering from pollution paying a polluting factory not to pollute. That may sound atrocious, but the principle of Coase’s argument was really to clarify an academic point about reaching more efficient distributions.

For the Tullock side, well, I’m not as familiar with his work personally, but he’s a well-known public choice economist. So, I’d guess Tyler is alluding to the incentives of the school administrators in exploiting the student’s captive ears. Or something along those lines.

NAME REDACTED December 16, 2011 at 9:32 am

The story is that someone can then threaten to create (or create) externalities and then use that to extract rents from the others involved.

So a bandit/government/mafioso threatens people with being thrown in cages if they don’t give them money. Under Coasean bargaining it becomes efficient to give the bandit./government/mafioso money. However by doing so, you encourage them to create yet more externalities in the future.

This reveals a hidden assumption in Coase’s theorem: that the externality created isn’t created to generate rents directly, but is created asa byproduct of some other activity.

Douglas Knight December 16, 2011 at 11:16 am

There is no such hidden assumption in Coase’s theorem. This setup is a perfect example.

Coase says that the person who owns the PA can extort money from the students. Moreover, he says that the extorter doesn’t have to carry through on the threat, so no net harm is done. That part isn’t true in the real world – they played it for three days.

Tullock says that if the administrators are unable to exploit this themselves, different people will lobby them for the right to do so and the effort spent lobbying is inefficient:
https://en.wikipedia.org/wiki/Rent-seeking

Rahul December 16, 2011 at 2:30 pm

The problem with applying Coase in isolation is that it only considers systemic economic efficiency. Which way you assign property rights matters hugely to the parties involved; i.e. Coase neglects individual fairness. Isn’t there a nagging friction between libertarian ideology and Coase?

Jim December 16, 2011 at 10:25 am

Torturing children for money in America: not a problem when the Teacher’s Union needs cash!

Åse December 16, 2011 at 10:49 am

It’s not the children that are being tortured…

IVV December 16, 2011 at 11:30 am

I prefer our “Kiss A Pig” fundraiser.

We had jars out for people to put money in, each jar with the name of a participating teacher or administrator. At the end of the fundraiser, the person with the jar with the most money in it had to kiss a pig–we arranged a local farmer to deliver a hog for the occasion.

After a while, it wasn’t the students, but the teachers trying to make sure someone else had to do the dirty deed where we received the most money. It was fun all around.

Robert December 16, 2011 at 12:07 pm

Speaking of “markets in everything”, there’s today’s Times article about illegal underground pre-schools

http://www.nytimes.com/2011/12/18/nyregion/underground-pre-k-groups-often-illegal-abound-in-new-york.html?_r=1&hp

Troy December 16, 2011 at 12:56 pm

+1 to this article

Sigivald December 16, 2011 at 4:20 pm

What a wonderful precedent that sets – convince the administrators it’s a “good cause”, and you can pseudo-coerce payments from people.

And of course, eventually it’ll be “not so good” causes, because otherwise there’ll be complaints of discrimination.

Incentives matter, as we say – and the administration there just created one they might not like.

Don't take me seriously December 16, 2011 at 5:49 pm

See, the US pulls out of Iraq and straight away the terrorists win.

Don't take me seriously December 16, 2011 at 9:46 pm

I’m going to apologise for my previous comment. I thought I was being funny, but I might just be lowering the tone.

Rahul December 17, 2011 at 10:41 am

Reminds me of bars with electronic jukeboxes. If no money has been inserted they play songs that are so awful that forces someone to pay and select. Makes me wonder if their default selection is random or perversely horrid.

Fred December 17, 2011 at 12:20 pm

I don’t get the reference to Tullock either. A better title IMHO would have been Coase vs. Olson. Mancur Olson in “The Logic of Collective Action: Public Goods and the Theory of Groups, theorized that “only a separate and ‘selective’ incentive will stimulate a rational individual in a latent group to act in a group-oriented way”; that is, only a benefit reserved strictly for group members will motivate one to join and contribute to the group. This means that individuals will act collectively to provide private goods, but not to provide public goods.” In this instance Coase wins.

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