Which James Bond villain plan made the most economic sense?

by on November 20, 2012 at 7:48 am in Economics, Film | Permalink

I suspect Tim Harford knew I would blog this when he tweeted this piece.  It starts with this:

We looked through their schemes, and asked Jean-Jacques Dethier [TC: link is mine], a development economist at the World Bank (and a lifelong Bond fan), what he thought.

And then:

Goldfinger
Plot: Gold tycoon Auric Goldfinger’s (Gert Frobe) plan is quite simple: He wants to attack the U.S. Bullion Depository in Fort Knox and detonate an atomic bomb, thus irradiating the gold stored there, rendering it worthless for decades. This will in turn increase the value of Goldfinger’s own gold and cause economic chaos in the Western world.

Plausibility: “This looks plausible to me,” says Dethier…

I must disagree.  First, it requires an upward-sloping marginal cost curve for gold production, including the flow out of commodity uses.  That’s actually plausible, but should death-risking criminal schemes rely on that?  Second, if you are going to blow up some gold, don’t blow up the gold held as an endowment, blow up some gold which might go on the market.  Third, couldn’t governments in response simply increase the capital gains rate on gold sales?  In any case just setting off a dirty bomb probably would spike the gold price more than blowing up some gold.  Or how about this criminal strategy?: hold on to the gold and perhaps in due time it will go up from $35 to the unthinkable level of $200 or $300 an ounce.

And there is yet another complication.  At that time the U.S. was (sort of) on a gold standard!  Admittedly ability to redeem was quite limited and held by foreigners who were themselves having their arms twisted not to redeem.  Still, what if the price of gold doesn’t go up (denominated in terms of what?  most of the major currencies are then fixed not floating) but the U.S. price level goes down?  Why use bombs to try to manipulate the price which is about the hardest to budge in the direction which is hardest to get it to budge in?  What if only quantities adjust?  And so on.  Wouldn’t an inflationary scheme have been easier to implement?  I am not convinced Gert Frobe was a stellar macroeconomist.

I see this alternative scheme as potentially more effective, and Dethier seems to go along with it as well:

Casino Royale
Plot: Before Bond foils him (and forces him into a high-stakes underground poker game), Le Schiffre (Mads Mikkelsen) is shorting airline stocks, while simultaneously planning to destroy a prototype luxury jetliner on its maiden voyage. That will then drive airline stocks down, allowing him to make millions.

If your productivity is especially high today, go over to Twitter and try #KrugmanBondFilms.

anon November 20, 2012 at 7:53 am

From MadSci.org

http://www.madsci.org/posts/archives/2003-03/1046983737.Ph.r.html

Gold has only one stable isotope, so all natural gold has an atomic weight of about 197 (called Au-197), and this isotope has a reasonably high neutron activation cross-section. So exploding a nuclear weapon would probably lead to a lot of radioactive gold. However, there is only one isotope of gold that has a half-life of more than a few days (Au-195, 186 days), and it is impossible to produce this isotope by neutron irradiation. So any radioactive gold would lose its induced radioactivity within a month or so.

Curt F. November 20, 2012 at 8:16 am

But would any of the gold be transmuted by the radiation into other, more radioactive elements that had longer half lives?

Aric November 20, 2012 at 10:48 am

@Curt:

Adding neutrons to stable gold turns it into slightly heavier isotopes of gold, which decay (with a half life of 26 seconds [four neutrons] to 3 days [2 neutrons]) into stable isotopes of Mercury.

Given that the actual irradiation would only last a fraction of a second, no appreciable Mercury would be irradiated, so we don’t need to worry about the Mercury transmuting into something heavier. Within a few weeks, you’d have tons of perfectly safe Gold with slight Mercury impurities.

Gold and Mercury are like salt and water, very eager to be absorbed into each other. Mercury has long been used to purify gold, though separating them in a non-toxic manner has always been a challenge for amateur gold miners.

Rahul November 20, 2012 at 9:25 am

Same post suggests a better strategy: Explode the bomb over a major gold mine. The residual-rock radiation due to long lived isotopes would make the mine off limits for years.

bpc November 20, 2012 at 11:55 am

please don’t give Goldfinger any ideas.

Colin November 20, 2012 at 12:32 pm

What’s this with all the “radioactive gold” stuff? Of course, that’s what the bond villain wanted to do, but what about just atomizing and dispersing the gold as a fine dust? I’d think that would be more effective since re-composing it would be essentially impossible in a reasonable time as the dust is scattered through the jetstream over the globe. Now, this might require a significantly more powerful device, but that seems more likely than irradiating a stack of gold that just sits there.

prior_approval November 20, 2012 at 8:07 am

Then there is this, not exactly tangential Register article (a site that was shameless, but surprisingly good, in its Bond coverage) from over a month ago –

‘A View to a Kill is generally regarded as one of the least successful Bond movies. Yet it stands out for two things: a suave villain who is deranged in an entirely believable way, and a villainous plot that appeared both logical and plausible.

———————————

Like any self-respecting yuppie, Zorin was interested getting rich and this, combined with his interest in semiconductors, resulted in what is arguably one of the more plausible plots in the Bond series.

Or as Zorin puts to his potential co-conspirators in the chip industry, in a conference room aboard an airship bobbing over San Francisco: “For several years we’ve had a profitable partnership: you as manufacturers, while I passed on to you industrial information that made you competitive, successful.

“We are now in the unique position to form an international cartel to control not only production but distribution of these microchips… I propose to end the domination of Silicon Valley.” (Via man made earthquake, n.b.)

——————————-

By 1984, when filming of A View to a Kill was underway, the chip business was worth $24bn and US firms accounted for between 50 to 60 per cent of this. It’s fair to assume that much of that was designed, if not completely manufactured in the Valley. Zorin certainly thought so.

So, as one of Zorin’s backers, coughing up a mere $100m and half your net profits going forward for a share of a chip monopoly would perhaps have been a compelling proposition given the sort of profit margins you might have expected to be making.’

http://www.theregister.co.uk/2012/10/08/view_to_a_kill/

KLO November 20, 2012 at 8:57 am

Seems like it is a lot easier to make a lot of money using quasi-legal bank or investment fraud schemes than it is to committ some overtly violent criminal act that catches the attention of the British security services. Intelligence agencies have a license to kill. Securities and banking regulators have a license to ignore lots of stuff while they look at porn on their government computers all day.

zbicyclist November 20, 2012 at 10:03 am

Here’s a plausible plot:

Wall Street insider uses credibility as head of industry groups and links with charities in the Jewish community to run multi-billion-dollar Ponzi scheme for decades, evading government agents, until done in, Oedipus-like, by his sons — one of whom commits suicide because of the disgrace.

Add some tech gadgets and some eye candy, and it’s ready to roll.

DocMerlin November 20, 2012 at 10:08 am

No one will believe it.

Andre November 20, 2012 at 7:51 pm

How about high level chinese police enforcer stumbles into the US Embassy detailing a wide spread corruption scheme with ties all the way to the top of the Communist Party. Bond, already in town investigating the murder of a British agent, fights his way through the Chinese underworld in a fight that will take him all the way to Party headquarters.

Final battle staged on a obsolete ukrainian diesel aircraft carrier in the south china sea!?

ThomasH November 20, 2012 at 10:14 am

I’ve always thought that the Goldfinger plot made the least economic sense. First one can transact in irradiated gold as well as non-irradiated gold. Even if the gold were physically destroyed, the Treasury could issue certificates for the no-longer existent gold that could be bought and sold just like the real stuff. Secondly, The amount of gold stored under ground woud have no effects macroeconomically unless it changed the Fed’s NGDP target, which it should not, right Scott? :)

rpl November 20, 2012 at 10:35 am

That was my thought as well. So what if the gold is irradiated? It’s not like you have to actually touch it. I’m reminded of the Rai stone that sunk in a storm but still “circulated” as currency because everybody agreed that even if it was physically inaccessible, it still existed somewhere on the ocean floor:

http://en.wikipedia.org/wiki/Rai_stones#Form_and_value

Joe Smith November 20, 2012 at 12:12 pm

If one is buying gold as a long terms store of value, it does not matter if it (or its storage vault) is currently radioactive and cannot be safely accessed for several decades. Death by radiation would be one way of discouraging thieves and reducing security costs.

Urso November 20, 2012 at 10:18 am

Pfft. Alec Trevelyan’s motivation was revenge against the British government and the British people who had made great promises to both his people and himself, only to abandon them when it became inconvenient.

The get rich quick scheme was just a cover – criminals, like economists, don’t understand the importance of non-monetary incentives, no one would’ve helped him if he said “I’m out to get revenge on the queen and her lackeys.” “We’re going to make millions” is the only kind of appeal that henchmen will respond to.

Goldeneye is an excellent film, yet it was preceded and succeeded by duds. It was all downhill for Brosnan. Tomorrow Never Dies was just so unrealistic, and the World is Not Enough is one of the worst films I have ever paid to see.

Nick_L November 20, 2012 at 10:21 am

“So you see Mr. Bond, my cunning plan to bundle subprime mortgages into collateralized debt obligations is totally legal, can’t be stopped, and best of all has the support of your own government leaders. So, convert all your holdings to cash and – please – do have a martini. You may need several..”

Thelonious_Nick November 20, 2012 at 11:58 am

In Live and Let Die, the villain Mr. Big owns a chain of soul food restaurants in black communities in the US, as well as vast poppy plantations on a Caribbean island. He plans to distribute free heroin at the restaurants, putting rival drug gangs out of business, as well as creating a huge number of addicts.

It’s not really spelled out, but I suppose he eventually plans to charge high prices and make monopoly profits. Seems pretty reasonable, I think.

Brett November 20, 2012 at 12:26 pm

The villainous plot in the film “From Russia With Love” makes a fair amount of sense. SPECTRE was planning to steal a valuable encryption key from the Soviets, and then sell it back to them (with the implicit threat that it might be sold on to someone else if they don’t buy it back at a high price).

Barkley Rosser November 20, 2012 at 2:31 pm

Not a Bond plot, but EMP from a sufficiently powerful and elevated H-bomb over the central US could wipe clean all the hard disks in the country, thereby destroying most of the money supply and much else that makes the US economy function, far more total than any likely computer virus that might get sent into our system.

Roy November 20, 2012 at 2:40 pm

Is no one going to give Karl Stromberg and Hugo Drax’s plans to kill everyone on Earth and replace them with their own master race in “The Spy Who Loved Me” and the execrable “Moonraker”.

Yes they seemed to be just cheap copies of Blofeld, but considering their end goals they really needed to engage in Supervillainy to achieve them.

David Young November 20, 2012 at 5:01 pm

It doesn’t matter whether the gold is going to market or not, just the government’s desire to hold a certain amount of gold in reserve. So if the gold is destroyed the government will be forced to go to market in order to replenish those stores hence affecting the world price.

So Much For Subtlety November 21, 2012 at 4:12 am

Doesn’t that sort of depend on the governments of the world not knowing about fiat currencies? What is to stop them simply not going to the market? They could declare themselves off the Gold Standard for the duration. As they did in the Napoleonic Wars. And WW1&2.

I think villans’ plots are the least of the Bond films’ problems. Isn’t anyone going to mention the idiocy of making Denise Richards an angry nuclear physicist?

aaron November 21, 2012 at 7:47 am

Gold is pretty inert, even if it was radioactive it’d be pretty safe.

I think the novelty would drive the value up.

aaron November 21, 2012 at 7:57 am

It’s the radioactive heavy metals that accumulate in the body that are dangereous, exposing tissue to high doses and very short distances couple. That or an accute dose that kills immediatly are the main dangers. Moderate high exposure seems to actually have health benefits.

There is a city where radiated alluminum was accidentally used for lots of construction (in Korea IIRC). There was one type of cancer that had a higher incidence, probably due to a small group of people exposed to a particularly high dose. Overall cancer rates were significantly lower and health outcomes were better for people living in radiated buildings.

aaron November 21, 2012 at 8:02 am

It was actually Taiwan.

http://www.jpands.org/vol9no1/chen.pdf

Jim K November 22, 2012 at 5:26 am

Goldfinger holding on to the gold wasn’t an option. Bond makes some back-of-the-envelope calculations out loud, indicating that moving that many tons before the Army showed up in force would be impossible. Liquidity, bro.

Licence to Kill’s villain is a brutal Latin American drug lord trying to make a lot of money by smuggling cocaine. I think that one wins the plausibility contest by a tragically wide margin.

Careless November 24, 2012 at 6:11 pm

smuggling cocaine in gasoline, IIRC. Works until the DEA learns about it, anyway

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