Poor Economics

In Delhi, street hawkers will sell food, flowers, and balloons to cars paused at an intersection and, sadly, small children will dance for alms. My favorites are the book hawkers. I suspect Banerjee and Duflo would approve of my choice of both title and seller. Good price also.

 

Comments

what is the noteworthy economics lesson/point in this little anecdote?

We like to be a little bit subtle at MR but there are lots of interesting things in the picture. The obvious point about inequality--standing in fumes to sell books is an awful job and can't pay a high return. Hence, not so much difference between the hawkers and the dancing kids. Second, the quality of the book selection indicates relatively high-brow tastes. Note also that all the books are in English, not a single in a native tongue, which tells you about the Indian elite. Third, the low price could indicate pirated copies but in fact the copy I got was real and so indicates price discrimination and the power of copyright in setting high prices in rich countries. More could be added.

Nice to see the Duhigg book on Habit in his mix - I read that book and thought it was terrific.

Respond

Add Comment

Ie, high economic rents in "rich" countries.

Unless you argue that the businesses in rich countries are extremely inefficient and bloated due to being "free market capitalist" compared to socialist India:

"WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizens
JUSTICE, social, economic and political;
LIBERTY of thought, expression, belief, faith and worship;
EQUALITY of status and of opportunity; and to promote among them all
FRATERNITY assuring the dignity of the individual and the unity and integrity of the Nation;
IN OUR CONSTITUENT ASSEMBLY this 26th day of November 1949, do HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION."

Note, the worker, the author, does not reap the excessive economic rent in the US from copyright, in most cases. Eg, I doubt you and Tyler get $200 for each copy of Economic Principles. Amazon ranking you at 20 vs Mankiw for Micro might illustrate price v quantity, #3 Mankiw priced at $107.83 v your #20 at $231.19, with #5 Krugman $178.63 in between.

The 1000 page print version of the CORE-econ textbook is $54, or $45 for the general student 650 page edit. Authors mostly British/Indian.

Respond

Add Comment

"Pirated copies" - you seem to be assuming this is synonymous with counterfeit. It is not. They could have fallen off a truck. There might even be regular events of books falling out of trucks. I've seen similar in grey markets in the US and Russia. You would see no difference, because the printing was legitimate. The transportation routing might not have been.
However, logic leads me to follow the thinking of another response here: i.e. that this is the result of discriminatory pricing. Price high when you can get it, and price low when you can't - leads, as you know, to maximizing profit.

Respond

Add Comment

BTW - great photo.

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Similar to the bouquinistes (bookenists) along the Seine River in Paris. Is there something comparable (i.e., book sellers with boxes used to shelve thousands of books) in Delhi?

Yes, very much. But its getting harder.
https://www.hindustantimes.com/delhi-news/a-requiem-for-daryaganj-s-sunday-book-bazaar/story-JSahV3axUtVHjSVpMi3KuO.html

Respond

Add Comment

Respond

Add Comment

Do you think these are from the publisher or are they like the ubiquitous Rolex watches and Louis Viton bags that many street vendors sell (e.g., counterfeits).

I wondered that too but it was the real thing!

Respond

Add Comment

If you google "cheap indian textbooks" there is quite a literature on it.

My understanding is that US publishers have offered Indian printers favorable deals. But this creates complications in an eBay and Amazon age.

+1

Interesting. Follows the same basic economics as any IP in a third world country.

Marginal cost is near zero, fixed price is high. Sell high in US to cover fixed costs, any marginal revenue in 3rd world is just gravy. See drugs as another example. Never advised a publisher, they make no profits. But the underlying business fundamentals is the same, which is telling.

Who will be the first to buy textbooks in India for $10, import them for $2, and sell for $100 and undercut the $200 US price? I assume the publishers are smart enough to avoid this arbitrage, but maybe not....

I assume this is somehow illegal.

And that assumption would be wrong. About the arbitrage, that is. The person who started doing this in 1997 was Thai, so you would be right no one in India will be the first to buy cheap textbooks to sell in the U.S.

Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013), is a United States Supreme Court copyright decision in which the Court held, 6–3, that the first-sale doctrine applies to copies of copyrighted works lawfully made abroad.

FYI:
The first sale doctrine, codified at 17 U.S.C. § 109, provides that an individual who knowingly purchases a copy of a copyrighted work from the copyright holder receives the right to sell, display or otherwise dispose of that particular copy, notwithstanding the interests of the copyright owner.

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

I am not sure Banerjee and Duflo would approve the “good price” and pirate copy

As Alex points out, it was not a pirated copy. You do get many authentic books and text books at a lower price. I remember bring my Graduate Physics text books to the US and a year later when I gave up Physics, getting a higher price on them than what I paid for them 3 years earlier ; the person taking them couldn't believe the bargain he was getting.

But even if it was a pirated copy, so what? The optimal level of piracy is not zero ...

Respond

Add Comment

Alex pointed that out after my comment. Even if the optimal level of piracy is not zero it may well be zero for Banerjee and Duflo ...

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

I bought books from street sellers in Delhi all my college life. They offer great price and you can always bargain. However, sometimes these books can be counterfeit. Pages could be missing but it’s only based on hearsay. I personally never had that experience. So kudos to you for buying one.

Respond

Add Comment

Decriminalizing street-vending, push-cart vending, truck-vending of all types would open up millions of business opportunities in America.

An since it is the consumer that is always exalted, it would lower prices to consumers too.

Obliterating property zoning would help too (and lower costs to the exalted consumers).

But...there are no atheists in foxholes and no libertarians when neighborhood property zoning and street-vending laws are under review.

The minimum wage, however, is bad! And rent control is really bad!

Relaxed business registration requirements would be great but there is still the question of where people will actually set up shop. Will they use up sidewalk space and then slow down foot traffic or force people to walk along the shoulder of the street? Will they put their pushcarts or trucks in parking spaces and therefore use of scarce on-street parking (as long as they pay market rates, not necessarily a problem)?

Or will the answer be a public-private partnership such as in Singapore where the government builds covered public marketplaces ("hawker centers") and then leases space to hawkers?

Locke argues that taking over the public common is a good thing, and the streets are the public common, is aok as long as more public common remains. The book seller in the street is not stopping the traffic because he needs new customers, and he got to and occupied free space in the common to improve the utility of that bit of the public common, so clearly no shortage of common existed.

Why do think jack boot government is needed to take opportunity from people?

Respond

Add Comment

Respond

Add Comment

Maybe we should try to make America less like India, not more like it.

More like Brazil , thIAGO?

Respond

Add Comment

Got a book for Thiago: Brazil Imagined: 1500 to the Present by Darlene J. Sadlier (Art History). Imagination is the keyword.

Respond

Add Comment

Respond

Add Comment

"...But...there are no atheists in foxholes and no libertarians when neighborhood property zoning and street-vending laws are under review.

The minimum wage, however, is bad! And rent control is really bad!"

Good point. It seems the laws exist to maintain the well being of the ruling elite and their upper middle class mandarins.

In my little lefty coast California city rules against sellers on or near the beach are ruthlessly enforced, much to the delight of the owner of the only beachfront business complex in the city, a property that could never be developed under current California Coastal Commission regulations approved by the voters decades ago. As a result, the property owner charges exorbitant rents to the business owners who in turn charge rediculous prices to customers - a monopoly enforced via the power of the state. A good gig if you can get it.

Even better, the business owners pay tiny wages to the workers.

Zoning laws impede housing construction, so rents are high and, in many cases, the workers can't find housing. Some leave the state. I think we are on the verge of some changes. Many of the service jobs go unfilled because the workers are unable to live on the prevailing wage. The good news is there are many open jobs available. Something has to give. Paying more won't help as the housing prices would just go up - there are plenty of buyers in Silicon Valley that consider local real estate cheap by comparison. The community is getting gentrified. Many if my customers are those new wealthy homeowners. My employer has positions he can't fill. Many of my colleagues are older people who have owned their houses for 30-40 years. When they die their children will no doubt sell the houses to the gentry and take the money elsewhere.

I don't know where this goes.

Our downtown is much the same.

It's good to be the property owner.

If you want peddlers on the beach, maybw you should move.

You missed the point.

Rules against beach sellers are just an example of a larger problem - the state protecting the interests of entrenched wealthy rent seekers.

Not at all. It is protecting society.

Respond

Add Comment

It is fortunate that wage suppression works so will, with the import of Hispanic labour. Otherwise, the neighbourhood rent-seekers would have priced themselves out of workers long ago.

How much of the Silicon Valley surplus gets captured by landowners?

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Thank you Alex. Just out of curiosity, were all the books being sold written in English?

Yes, all the ones I saw were in English.

Respond

Add Comment

Respond

Add Comment

My question is why economists focus on "sellers" instead of "buyers".

I can not find economist who focuses on customers/consumers/buyers as the most important factor in the economy, if you don't see the economy as a single complex organism.

New Yorker Radio Hour just played an interview with a representative of Patriotic Millionaires.

In summarizing their values:
"We believe that the trend of growing economic inequality is both bad for society and bad for business. We believe revenue models that rely on human misery should be exorcised from our economy. We believe the government should mandate a livable wage for all working Americans, rather than relying on “the market” which has failed to realize that goal over 240 years of American history. We believe a national “living wage” law will ensure a stable level of aggregate demand, which will fuel our economy more broadly, ushering in a new era of prosperity for all Americans, including rich ones."

...he dove into the nitty gritty: millionaires don't exist if most people have no money to buy stuff.

Note, if you google "who puts money in consumer pockets?" the results are dominated by tax cuts, cheaper gasoline, lower prices, lower costs, (never lower profits).

Or as this quote explains:

"The federal minimum wage was last raised in 2009 to $7.25 an hour. For an employee working a standard 40-hour week, 52 weeks per year with no days off, that comes to just $15,080 before taxes, before housing, before food, and before health care. At the end of the month, there is less than nothing left.

"But consumer spending comprises about 70% of the US economy, and a stable economy depends on maintaining a stable level of demand. In addition to being the right moral choice, significantly raising the minimum wage is also the right economic choice. Higher wages for tens of millions of Americans can ensure a stable level of “aggregate demand” that could spur economic growth from the bottom up."

Note, if the guy was in front of a US B&N, et al or the struggling independent book stores 25 years ago, he would be attacked for stealing the business from the established book retailers. Ie, guilty of crime.

God bless you Mulp. MR just wouldn’t be the same without you.

Respond

Add Comment

Respond

Add Comment

Seems these are not textbooks per se but popular books of non-fiction. As for copyright violations, Charles Dickens would not approve. Google: "Charles Dickens And Copyright Law: Five Things You Should Know".

Dickens tended to get a little too worked up about things, he would have lived longer if he was not so excitable.

Respond

Add Comment

Respond

Add Comment

In America we have buskers, but in India youngsters dance for alms. The difference is obvious.

Respond

Add Comment

There is a great book called Sidewalk by Mitchell Duneier about the sidewalk book sellers on a block in Greenwich Village, NY. Its about a lot more than just the book selling but it does give you a good sense of that.
For example, most of the books and magazines they sell are liberated (my word, not his) from dumpsters and trash cans around the city.

Respond

Add Comment

I think we pay $2.40 to get a paperback book printed in Australia. That's under $2 US. Books are reasonably cheap to make and don't require huge runs to get costs down these days.

Respond

Add Comment

Must be a pretty posh part of Delhi if all the books are in English and about economics.

Respond

Add Comment

Publishers publish international student editions. The prices are lower. Quality is less. If they don't do it this way the alternative is pirated copies. It is a tactic to minimize pirating. Students go to USA or wherever, buy books, bring them back, sell to agencies who make xeroxed copies. I have myself purchased many such books, when I worked and lived in a former 3rd world country where it was the only realistic option. One could also have the copy shops copy out-of print library books. I still have a large collection of such books, acquired 30-40 years ago. I have numerous international student editions as well.

Respond

Add Comment

Many good textbooks are reprinted in India legally at substantially reduced prices. For example the indian reprint of the 3rd edition of The History of Economic Thought book by E.K. Hunt is priced rupees 395 while U.S price mentioned in parenthesis is rupees 2, 836!

the textbooks by Mankiw are all available at a lower price with a note that the edition is for sale only in India, Pakistan, Bangladesh, Sri Lanka and Nepal. The difference between the American edition and the local reprints is that the entire text is in black and white, including the graphs. I never found that a problem. Several years ago there was even an Indian reprint of the revised edition of the textbook by Heyne.
Hopefully The reprints of the textbooks by Tyler and Alex will be available soon!

Respond

Add Comment

Why so sad at poor children dancing for alms?

Mr Tabarrok, you should celebrate their entrepreneurial spirit and applaud their utilization of relative advantage! Think how much more GDP rises this way than if they were pointlessly detained in schools, which are mostly signalling as you have told us. Indeed, the so-called "child labour" laws are merely a rent-seeking device to prevent younger, more motivated workers entering the "dancing for alms" market.

Indeed, the only thing that could improve the situation further is were you to smuggle a couple of the urchins back home; the influence of magic dirt will enable them to be 10x more productive on your high street rather than the alleys of Delhi; everybody wins!

Do you think that viewing child labor laws merely rent-seeking devices means one should not be sad to see children dancing for alms? If so, what do you imagine the connection is?

Let me tell you of a modest proposal by which we may entirely alleviate the problem of poor children and global hunger too....

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

I have seen all the videos of marginal revolution and it helped me understand how economy works.
here is the how it helped me

Respond

Add Comment

Respond

Add Comment