Capitalism: Hollywood’s Miscast Villain
In the WSJ online I cover Hollywood and capitalism including Star Wars, Star Trek, Avatar, The Wire and much else. Here are two bits:
Although Hollywood does sometimes produce leftist films like "Reds," it has no deep love for socialism…
But Hollywood does share Marx's concept of alienation, the idea that under capitalism workers are separated from the product of their work and made to feel like cogs in a machine rather than independent creators. The lowly screenwriter is a perfect illustration of what Marx had in mind–a screenwriter can pour heart and soul into a screenplay only to see it rewritten, optioned, revised, reworked, rewritten again and hacked, hacked and hacked by a succession of directors, producers and, worst of all, studio executives. A screenwriter can have a nominally successfully career in Hollywood without ever seeing one of his works brought to the screen. Thus, the antipathy of filmmakers to capitalism is less ideological than it is experiential. Screenwriters and directors find themselves in a daily battle between art and commerce, and they come to see their battle against "the suits" as emblematic of a larger war between creative labor and capital.
On The Wire:
…although it uses character, "The Wire" is ultimately about how character is dominated by larger economic forces: drug dealers come and go, but the drug market is forever. "Capitalism is the ultimate god in The Wire. Capitalism is Zeus," says David Simon, the show's creator.
Over its five seasons, "The Wire" shows how money and markets connect and intertwine white and black, rich and poor, criminal and police in a grand web that none of them truly comprehends–a product of human action but not of human design. It's the invisible hand that's calling the shots, as Mr. Simon subtly reminds us in the conclusion to the third season, when Detective McNulty wondrously pulls a book from the shelf of murdered drug dealer Stringer Bell, and the camera focuses in on the title: "The Wealth of Nations" by Adam Smith.
Smith's metaphor of the invisible hand, like Mr. Simon's invocation of Zeus, tells us that to understand the world we need to look beyond the actions of individuals to see the larger forces at work. But Zeus is an arbitrary and capricious god whose lightning bolts fall out of the sky without reason or direction. Smith's "invisible hand," however, is that of a kinder god, a god that cares not one whit for individuals but nevertheless guides self-interest toward the social good, progress, and economic growth. So Mr. Simon understands that the Baltimore dockworkers lost their jobs because of the relentless change that capitalism brings and not through any fault of their own. But Adam Smith sees what Mr. Simon does not, namely that it was capitalism that brought the Baltimore stevedores their high wages in the first place and it is the relentless change of capitalism that slowly raises wages throughout the world.
More here.
China Fact of the Day
One of my students, Helen Yang, writes from China:
I encountered Tyler's book at a small bookstore. They were pirated English copies. Guess how much? 2 dollars per kilogram! I bought one and paid 1 dollar because it weighed 0.5 kilo.
I wonder if this is what Tyler meant by Create Your Own Economy?
Understanding Incentives
I had the following conversation with a friend who wishes to remain anonymous (it wasn't Tyler).
A: Heh, how's it going?
Anon: Oh, so, so. I had a paper rejected today.
A: Ah, sorry, I get depressed when that happens.
Anon: Well in my case it's not all bad. My wife and I have an understanding that whenever I have a paper rejected we have sex.
A: What! That's a terrible system for getting papers published. What kind of economist are you?! Don't you understand incentives!
Anon: What kind of economist am I? What kind of economist are you?! You have failed to understand what I am maximizing!
I bowed down before the greater wisdom of my friend.
Against Dust
In the past few months I have noticed a terrible trend in fancy restaurants, dust. Dust, not on the floor mind you, but on the food especially the desserts. The trend, for example, is to nestle ice cream in a bed of chocolate dust. Not chocolate chunks or even bits but a chocolate grit that ruins the elegant smoothness of the ice cream–like eating ice cream that has been dropped in the sand. Apologies in advance for the name dropping but the guilty include Marcus Samuellson at Aquavit, Wylie Dufresne at WD-50, Martin Rios at Restaurant Martin and Passion Fish in Virginia.
Dust is evil.
End rant.
The unenlightened economy
SNAKING AROUND the outer wall of the courthouse in Mbaiki, Central African Republic, is a long line of citizens, all in human form and waiting to face judgment. It’s easy to imagine them as the usual mix of drunks, reckless drivers, and check-bouncers in the dock of a small American town. But here most are witches, and they are facing criminal punishment for hexing their enemies or assuming the shape of animals.
By some estimates, about 40 percent of the cases in the Central African court system are witchcraft prosecutions.
…most lawyers I consulted there favored keeping the law intact, although they admitted that it fits uneasily in a modern legal system. “The problem is that in a witchcraft case, there is usually no evidence,” said Bartolomé Goroth, a lawyer in Bangui…
More here. Add this to the evidence for Joel Mokyr's thesis.
Hat tip: The Browser.
Top Kill
We hope some time today. Live video feed from 5000 feet below.
The 1964 Civil Rights Act in the 21st Century
Rand Paul's remarks about the 1964 Civil Rights Act brought forth lots of talk about libertarians and lunch counters but almost no discussion of how the Civil Rights Act actually works in the twenty-first century. Yesterday provided a nice reminder.
I won't comment on Lewis v. City of Chicago directly because it was decided on technical matters (the Supreme Court ruled that black firefighters in Chicago did not miss a deadline to argue that a test disproportionately hurt their chances of employment). The underlying facts, however, are of interest not because they are especially unusual but because they are common. From Fire Law:
The case, Lewis v. Chicago, involved alleged discrimination against African American applicants for the Chicago Fire Department who took a test in 1995.
The department set a passing score of 64 on the exam. Applicants who scored at least 64 but below 89 were informed that they passed the test, but would probably not be hired given the number of candidates who scored 89 or above. [26,000 applied and there were only a few hundred jobs, AT] Applicants scoring 89 and above were classified as “well qualified”.
The majority of “well-qualified” applicants were white. Only 11 percent were black…
The trial court sided with the black applicants, and ordered the city to hire 132 randomly selected African American applicants who scored above 64. The court also ordered the city to divide backpay owed among the rest of the black applicants.
White, Asian and Hispanic applicants who also scored above 64 but below the 89 standard were not offered employment or backpay.
Perhaps you are wondering about the tests? You would be hard pressed to find any obvious racial bias. I haven't found the Chicago test online but you can find similar tests from New York (also the subject of lawsuits) here. Here is a sample questions from New York.
Nowadays the Chicago fire department simply gives everyone an easy test and then they hire randomly.
More Evidence for the Slartibartfarst Principle
Earlier I wrote that due to the Slartibartfarst principle,
…the evidence for intelligent design ought to be readily available in the graffiti of DNA. "Slartibartfast was here," or perhaps "3.14159265," or given what we know of economics, "All rights reserved, MegaCorp. Call for a free estimate."
The fact that, as of yet, we don't see this kind of signature in the data is evidence against intelligent design.
With yesterday's announcement we have a bit more evidence favoring the premise of my argument.
To distinguish their synthetic genome from the naturally occurring version, the researchers encoded a series of watermarks into the sequence. They began by developing a code for writing the English alphabet, as well as punctuation and numbers, into the language of DNA–a decoding key is included in the sequence itself. Then they wrote in their names, a few quotations, and the address for a website people can visit if they successfully crack the code.
Life as advertisement, this is the wave of the future!
And Craig Venter said, “let there be life.”
Incorporated Men and Women
In my post on The Unincorporated Man “framing” writes:
Instead of saying that a corporation can own shares in your income, how about saying it is like a loan that you wont get into trouble ever paying back, but will have to pay more if you become rich.
Exactly. In fact, I have written about income-contingent loans before and how one of them got Bill Clinton through college. At the PSD blog Ryan Hahn also points to Lumni, a new firm that is investing in human capital in the developing world:
Lumni designs, markets and manages “Human capital funds”, an innovative investment vehicle for financing education. Students agree to pay a fixed percentage of their individual incomes for a predetermined number of months after graduation. The arrangement traspases part of the risk of investing in education from the student to the investor, who is in a better position to diversify it.
Lumni is the brainchild of economics professor Miguel Palacios. Here is his book and Cato paper on human capital contracts.
Gattaca University
From the NYTimes, Berkeley will give its students genetic tests.
…this year’s incoming freshmen at the University of California, Berkeley, will get something quite different: a cotton swab on which they can, if they choose, send in a DNA sample.
The university said it would analyze the samples, from inside students’ cheeks, for three genes that help regulate the ability to metabolize alcohol, lactose and folates.
Those genes were chosen not because they indicate serious health risks but because students with certain genetic markers may be able to lead healthier lives by drinking less, avoiding dairy products or eating more leafy green vegetables.
Don't be surprised if this is soon canceled.
Investing in the Poor
The Unincorporated Man is a science fiction novel in which shares of each person's income stream can be bought and sold. (Initial ownership rights are person 75%, parents 20%, government 5%–there are
no other taxes–and people typically sell shares to finance education and other training.)
The hero, Justin Cord a recently unfrozen business person from our time, opposes incorporation but has no good arguments against the system; instead he rants on about "liberty" and how bad the idea of owning and being owned makes him feel. The villain, in contrast, offers reasoned arguments in favor of the system. In this scene he asks Cord to remember the starving poor of Cord's time and how incorporation would have been a vast improvement:
"What if," answered Hektor, without missing a beat, "instead of giving two, three, four dollars a month for a charity's sake, you gave ten dollars a month for a 5 percent share of that kid's future earnings? And you, of course, get nothing if the kid dies. Now you have a real interest in making sure that kid got that pair of shoes you sent. Now it's in your interest to find out if he's going to school and learning to read and write. Now maybe you'll send him that box of old clothes you were thinking of throwing away. Under your system you write a check and forget about the kid, who'll probably starve anyway. Under our system, you're locked into him.
…the real benefit comes about when those 'evil, selfish, horrible corporations' get involved. How long will it take for a business to realize that there's a huge profit to be made in those hundreds of millions of starving children?…Imagine a world where a bank gives a loan to a corporation to build a school, hospital or dormitory. Not because its the right thing to do; who cares! They'd do it because it's the profitable thing to do. And because of that, my system, not in spite of greed and corruption and incorporation, but because of it, will work better than yours in any time period with any technology you choose."
So who do you stand with, JC or Hektor?
Hat tip to Robin Hanson for lending me the book and from whom I cribbed the description of ownership rights. Hanson offers other thoughts on the novel. And here are earlier comments from Reihan Salam.
Markets in Everything: Crop Insurance
Crop insurance for marijuana.
Here is a related question. How long do you predict it will be from legalization to government subsidization?
Hat tip: Ray Lehmann.
Oil Spills, Tort Law and Libertarianism
Here is Paul Krugman's Nth reason why libertarianism doesn't work:
Thinking about BP and the Gulf: in this old interview,
Milton Friedman says that there’s no need for product safety
regulation, because corporations know that if they do harm they’ll be
sued.Interviewer: So tort law takes care of a lot of this ..
Friedman: Absolutely, absolutely.
Meanwhile, in the real world:
In the wake of last month’s catastrophic Gulf Coast oil
spill, Sen. Lisa Murkowski blocked a bill that would have raised the
maximum liability for oil companies after a spill from a paltry $75
million to $10 billion. The Republican lawmaker said the bill,
introduced by Sen. Robert Menendez (D-NJ), would have unfairly hurt
smaller oil companies by raising the costs of oil production. The
legislation is “not where we need to be right now” she said.And don’t say that we just need better politicians. If
libertarianism requires incorruptible politicians to work, it’s not
serious.
In other words, libertarianism can't work because government sucks. I am tempted to comment further on this creative line of reasoning but that is unnecessary since Paul has misunderstood the facts of the matter.
The Oil Pollution Act of 1990 (OPA), which is the law that caps liability for economic damages at $75 million, does not override state law or common law remedies in tort (click on the link and search for common law or see here). Thus, Milton Friedman's preferred remedy for corporate negligence, tort law, continues to operate and there is no doubt that BPs potential liability under common law alone would be in the billions of dollars.
Thus, Paul now has only (N-1) reasons why libertarianism doesn't work.
Moreover, Paul has actually been too unkind to government, a defect it falls upon me (!) to correct. The point of the OPA was not to limit tort law but to supplement it.
Tort law, as traditionally understood, could only be used to recover damages to people and property rather than force firms to pay cleanup costs per se. Thus, in the OPA as I read it–and take the details with a grain of salt since I'm not a lawyer–there is no limit on cleanup costs. Moreover, the OPA makes the offender strictly liable for cleanup costs which means that if these costs are proven the offender must pay them regardless (there are a few defenses, such as an act of war, but they are unlikely to apply). The offender is also strictly liable for up to $75 million in economic damages above and beyond cleanup costs. Thus the $75 million is simply a cap on the strictly liable damages, the damages that if proven BP has to pay regardless. But there is no limit, even under the OPA, on economic damages in the event that BP failed to follow regulations or is otherwise shown to be negligent (same as under common law).