Results for “law literature” 167 found
Why TPP on IP law is better than you think
I have read and heard many times that TPP will bring harsher intellectual property law than is appropriate for the poorer Asian countries, noting that over time we can expect more of them to join the agreement. In general poorer countries often benefit from weaker IP enforcement, more copying, and lower prices. This is standard stuff.
It is less commonly recognized by the critics, however, that tougher IP protection may induce more foreign direct investment. Why for instance invest in a country which might subject your patents and copyrights to an undesired form of compulsory licensing? Trade agreements are likely to rule out or restrict such risks. There will be more cross-border licensing activity as well, if there is tougher IP enforcement. A company might even set up an R&D facility in a upper-tier developing country.
Carsten Fink and Kwith E. Maskus have an entire volume on these questions, Intellectual Property and Development. Here is one sample bit from their introduction (pdf):
IPRs are quite important for multinational firms making location decisions among middle-income countries with strong abilities to absorb and learn technology.
You will note however that the effect is not there for poorer countries. But in general:
…stronger IPRs have a significantly positive effect on total trade.
And this:
The study’s findings support a positive role for IPRs in stimulating enterprise development and innovation in developing countries.
I would say the volume, and the surrounding literature, as a whole provides some positive support for how IP rights may boost economic development, though not overwhelming or unambiguous support. And the literature does not support a “one size fits all” approach to IP law; in this sense TPP is far from ideal. But still, the literature does find some very real development benefits when a country moves to tougher IP rights.
But here’s the thing: TPP opponents simply tell us that bad and too tight IP law will be foisted upon the world’s economies. I see talk of Aaron Schwartz and Mickey Mouse extensions, but I don’t see enough of the critics weighing the costs and benefits, or for that matter even mentioning the possible benefits of extending IP regimes. I think the benefits of this IP extension may well outweigh the costs, when it comes to the developing nations involved in TPP. At the very least it seems to me up for grabs. And I certainly don’t think that voting down TPP this time around is going to lead to a more favorable redo of the agreement, not on IP for sure.
So IP considerations are not weighing nearly as much against TPP as you might think.
Tyler Cowen’s three laws
Many of you have been asking for a canonical statement of what I sometimes refer to as Cowen’s Laws. Here goes:
1. Cowen’s First Law: There is something wrong with everything (by which I mean there are few decisive or knockdown articles or arguments, and furthermore until you have found the major flaws in an argument, you do not understand it).
2. Cowen’s Second Law: There is a literature on everything.
3. Cowen’s Third Law: All propositions about real interest rates are wrong.
I coined those some time ago, when teaching macroeconomics, yet I remain amazed how often I see blog posts which violate all three laws within the span of a few paragraphs.
There is of course a common thread to all three laws, namely you should not have too much confidence in your own judgment.
Addendum: Kevin Drum comments.
Bob Lawson writes me, on the importance of institutions for economic growth
“Dear Tyler,
I read with obvious interest your post (and the paper itself) about the endogeneity of institutions. Leaving aside my issues with the IV literature, I decided to take the bait regarding Jeff Sachs’ challenge to, “Go back to 1960 and choose any measure of institutional quality you want. Then see how well it predicts cross-national growth since then.”
Ok, I will.
The Economic Freedom of the World (EFW) index was first published in the mid 1990s, and the first year of data is 1970. So I’ll have to start in 1970 instead of 1960.
Here is a regression with growth from 1970-2010 on the lhs, and EFW and GDP per capita in 1970 on the rhs.
Growth1970-2010 = -1.62 + 0.75*EFW1970 – 0.13* GDPPC1970 R^2=0.18
(2.90) (3.17)
This regression adds the change in EFW from 1970-1980 to the rhs.
Growth1970-2010 = -1.69 + 0.84*EFW1970 + 1.00*chEFW70-80 – 0.15*GDPPC1970 R^2=0.32
(3.54) (3.39) (3.86)
A one-unit higher EFW score in 1970 correlates to 0.84 percentage points in higher annual growth over the next 40 years. A one unit EFW score improvement during the first decade, 1970 to 1980, correlates to a 1.00 percentage point higher annual growth rate over the 40 years.
I don’t know if that satisfies Jeff Sachs’ challenge, but it works for me.
Looking forward, I’ve constructed a back-of-the-envelope indicator that combines each country’s EFW rating in 2000 and with its change from 2000-2010. The top 20 (combined highest level & most positive change) versus the bottom 20 (combine lowest level & most negative change) countries are:
Top 20 – Bottom 20
Hong Kong – Haiti
Romania – Cameroon
Rwanda – Senegal
Singapore – Guinea-Bissau
Bulgaria – Mali
Cyprus – Bolivia
Unit. Arab Em. – Algeria
Chile – Guyana
Mauritius – Gabon
Lithuania – Ecuador
Slovak Rep – Burundi
Albania – Cote d’Ivoire
Jordan – Chad
Switzerland – Togo
Bahamas – Congo, Rep. Of
Malta – Central Afr. Rep.
Taiwan – Argentina
Korea, South – Myanmar
Finland – Zimbabwe
Estonia – Venezuela
I’m willing to bet anyone $100 (up to 10 people) that the Top 20 group will outgrow the Bottom 20 group by at least 1 full percentage point per year (on average) over the the next 20 year period (2015-2035).
Bob”
Does Medical Malpractice Law Improve Health Care Quality?
Maybe not so much. That is a new paper by Michael Frakes and Anupam B. Jena, the abstract is here:
Despite the fundamental role of deterrence in justifying a system of medical malpractice law, surprisingly little evidence has been put forth to date bearing on the relationship between medical liability forces on the one hand and medical errors and health care quality on the other. In this paper, we estimate this relationship using clinically validated measures of health care treatment quality constructed with data from the 1979 to 2005 National Hospital Discharge Surveys and the 1987 to 2008 Behavioral Risk Factor Surveillance System records. Drawing upon traditional, remedy-centric tort reforms—e.g., damage caps—we estimate that the current liability system plays at most a modest role in inducing higher levels of health care quality. We contend that this limited independent role for medical liability may be a reflection upon the structural nature of the present system of liability rules, which largely hold physicians to standards determined according to industry customs. We find evidence suggesting, however, that physician practices may respond more significantly upon a substantive alteration of this system altogether—i.e., upon a change in the clinical standards to which physicians are held in the first instance. The literature to date has largely failed to appreciate the substantive nature of liability rules and may thus be drawing limited inferences based solely on our experiences to date with damage-caps and related reforms.
There is an ungated version of the paper here.
*The Anatomy of Influence: Literature as a Way of Life*
That’s the new Harold Bloom book, which has all the strengths and weakness of Harold Bloom books (I am a fan). Excerpt:
Picasso is reputed to have said he did not care who influenced him but he did not want to influence himself.
Bloom’s books are very good for motivating rereads of classics, in this case Walter Pater, Paul Valery, Shakespeare, Hart Crane, Walt Whitman, Leopardi, and Montaigne’s essay “On Experience,” among others. Here is a weaker passage:
I recall first reading the poem when I was thirteen, thrilling to Satan and falling in love with Eve. In those years I fell regularly in love with fictive heroines and encountered Eve after a year of infatuation with Thomas Hardy’s heroines, particularly Eustacia Vye…and Marty South… I all but wept when Marty South cut off her long, beautiful hair, while I joined Milton and Satan in their lust for Eve’s wanton tresses.
Still, he is one of the greatest readers ever, this is probably his last major book, he truly believes in his project, and the point about prompting rereads makes this — whatever its flaws — better than almost anything else you can pick up.
The Navajo mother-in-law taboo
It's not what I had expected:
Observing an old and curious Navajo taboo, Narbona was not allowed to look at his mother-in-law, nor she at him. It was a custom designed to keep the peace and, apparently, to avoid sexual tension. In fact, many mothers-in-law in Navajo country went so far as to wear little warning bells on their clothing so that a son-in-law would not round a corner and inadvertently find himself staring at her. This was no small thing, especially if he happened to look her in the eye. Even an accidental violation of the mother-in-law taboo might require that the family hire a healer to perform an elaborate — and expensive — nightchant to undo all the harm that had been done.
That is from Hampton Sides's quite interesting Blood and Thunder: The Epic Story of Kit Carson and the Conquest of the American West. From the specialized academic literature, here is an entire study of the mother-in-law taboo (JSTOR); I'm not sure any of the offered hypotheses or explanations are persuasive. It seems the taboo lasted well through the twentieth century. Here is another discussion, under the more general heading of Navajo taboos:
The only explanation ever given for this custom is that “it avoids a lot of trouble in the family.”
My favorite things Japan, literature edition
I do not know Japanese literature well but nonetheless I recommend the following:
1. Out: A Novel, by Natsuo Kirino. Vicious fun. Dark, violent, etc.
2. Kobo Abe, The Woman in the Dunes. He has been called the Japanese Stanislaw Lem. Why do I never hear about this book? The movie by the same name is good too.
3. Yasunari Kawabata, both The Go Master and The Snow Country.
4. Mishima, Spring Snow, others.
5. Haruki Murakami. My favorite is Hard-Boiled Wonderland (one of my favorite books period) and then Underground, a modern classic of social science (really). I like most of them but I feel he is repeating himself as of late.
6. Shusaku Endo, Silence. Very powerful and I remain fascinated by Japan’s so-called "Christian century."
7. Kenzaburo Oe: I like Teach us to Outgrow Our Madness.
Question: Is Tale of Genji actually fun to read? I would say about half of it, so yes it is worth the time. The best parts are very beautiful and mysterious and unlike anything else in literature. Pillow Book of Sei Shonagon is fun and is a good introduction to the period.
The bottom line: There is lots and lots more that I have never heard of, not to mention manga.
Economics and literature
I just received my copy of The Literary Book of Economics, compiled and edited by Michael Watts of Purdue University.
I love the book, it contains excerpts from literary works that present economic themes. On opportunity cost, you get to read Robert Frost on “The Road Not Taken”.
On equality, you get to read Kurt Vonnegut’s “Harrison Bergeron”, one of the most biting critiques of egalitarianism ever penned. The story is truly short, just a few pages, do click on the link and read it if you have the time.
Here is the opening to the story:
THE YEAR WAS 2081, and everybody was finally equal. They weren’t only equal before God and the law. They were equal every which way. Nobody was smarter than anybody else. Nobody was better looking than anybody else. Nobody was stronger or quicker than anybody else. All this equality was due to the 211th, 212th, and 213th Amendments to the Constitution, and to the unceasing vigilance of agents of the United States Handicapper General.
Or are you familiar with the economic proposition, sometimes associated with Aaron Wildavsky, that the demand for safety rises with wealth and income? British poet Alexander Pope first stated that idea in 1737, for his short poem “Imitations of Horace,” click here.
You don’t have to read this book in one fell swoop, it offers 348 pp. of wonderful browsing. In addition to the authors cited above you get John Milton, Ayn Rand, Thomas Mann, John Steinbeck, Victor Hugo, and George Orwell. Highly recommended.
Immigration Backlash
In a new paper Ernesto Tiburcio (on the job market) and Kara Ross Camarena study the effect of illegal immigration from Mexico on economic, political and cultural change in the United States. Studying illegal immigration can be difficult because the US doesn’t have great ways of tracking illegal immigrants. Tiburcio and Camerena, however, make excellent use of a high-quality dataset of “consular IDs” from the Mexican government. Consular IDs are identification cards issued by the Mexican government to its citizens living in the United States, regardless of US immigration status. Consular IDs are used especially, however, by illegal immigrants because they can’t easily get US IDs whereas legal migrants have passports, visas, work authorizations and so forth. Tiburcio and Camarena are able to track nearly 8 million migrants over more than a decade.
Our main results point to a conservative response in voting and policy. Recent inflows of unauthorized migrants increase the vote share for the Republican Party in federal elections, reduce local public spending, and shift it away from education towards law-and-order. A mean inflow of migrants (0.4 percent of the county population) boosts the Republican party vote share in midterm House elections by 3.9 percentage points. Our results are larger but qualitatively similar to other scholars’ findings of political reactions to migration inflows in other settings (Dinas et al., 2019; Dustmann et al., 2019; Harmon, 2018; Mayda et al., 2022a). The impacts on public spending are consistent with the Republican agenda. A smaller government and a focus on law-and-order are two of the key tenets of conservatism in the US. A mean inflow of migrants reduces total direct spending (per capita) by 2% and education spending (per child), the largest budget item at the local level, by 3%. The same flow increases relative spending on police and on the administration of justice by 0.23 and 0.15 percentage points, respectively. These impacts on relative spending suggest that the decrease in total expenditure does not simply reflect a reduction in tax revenues but also a conservative change in spending priorities.
The main reason for this, however, appears not to be economic losses such as job losses or wages declines–these are mostly zero or small with some exceptions for highly specific industries such as construction. Rather it’s more about the salience of in and out groups:
We study individuals’ universalist values to capture preferences for redistribution and openness to the out-group. Universalist values imply that one is concerned equally with the welfare of all individuals, whether they are known or not. By contrast, people with more communal values assign a greater weight to the welfare of ingroup members relative to out-group members. We find that counties become less universalist in response to the arrival of new unauthorized migrants. A mean flow of unauthorized migrants shifts counties 0.06 standardized units toward less universalist, i.e., more communal (Panel B, Column 5, std coeff: -0.16). This result is the most direct indication that some of the shift to the political right occurs because migrants trigger anti-out-group bias and preferences for less redistribution. Although this evidence is based on a smaller subset of counties, the impact is large. The change toward more communal values is consistent with theories that hinge on out-group bias. Ethnic heterogeneity breaks down trust, makes coordination more difficult, and reduces people’s interest in universal redistribution (Alesina et al., 1999).
These results are consistent with the larger literature that finds “Across the developed world today, support for welfare, redistribution, and government provision of public goods is inversely correlated with the share of the population that is foreign-born and diverse.” (Nowrasteh and Forreseter 2020). Similarly, one explanation for the smaller US welfare state is that white-black salience reduces people’s interest in universal redistribution.
Contra Milton Friedman, it is possible to have open borders and a significant welfare state but it may be true that the demand for a welfare state declines with immigration, especially when the immigrants are saliently different.
What do we know about non-profit boards?
In fact, however, a reasonable consensus of experts on NPOs [non-profit organizations] agrees that their governance is generally abysmal, worse than that of for-profit corporations. NPO directors are mostly ill-informed, quarrelsome, clueless about their proper role, and dominated by the CEO — as proponents of shareholder primacy would predict.
Here is the full paper by George W. Dent, Jr. Here is the more general literature.
Corporate taxes matter, incentives matter, but does economics matter?
This paper combines administrative tax data and a model of global investment behavior to evaluate the investment and firm valuation effects of the Tax Cuts and Jobs Act (TCJA) of 2017, the largest corporate tax reduction in the history of the United States. We extend the canonical model of Hall and Jorgenson (1967) to a multinational setting in which a firm produces in domestic and international locations. We use the model to characterize and measure four determinants of domestic investment: domestic and foreign marginal tax rates and cost-of-capital subsidies. We estimate elasticities of domestic investment with respect to each and use them to identify the structural parameters of our model, to quantify which parts of the reform mattered most to investment, and to conduct policy counterfactuals. We have five main findings. First, the TCJA caused domestic investment of firms with the mean tax change to increase by roughly 20% relative to firms experiencing no tax change. Second, the TCJA created large incentives for some U.S. multinationals to increase foreign capital, which rose substantially following the law change. Third, domestic investment also increases in response to foreign incentives, indicating complementarity between domestic and foreign capital in production. Fourth, the general equilibrium long-run effects of the TCJA on the domestic and total capital of U.S. firms are around 6% and 9%, respectively. Finally, in our model, the dynamic labor and corporate tax revenue feedback in the first 10 years is less than 2% of baseline corporate revenue, as investment growth causes both higher labor tax revenues from wage growth and offsetting corporate revenue declines from more depreciation deductions. Consequently, the fall in total corporate tax revenue from the tax cut is close to the static effect.
That is from a new NBER paper by Gabriel Chodorow-Reich, Matthew Smith, Owen Zidar, and Eric Zwick. How many times has the NYT told you otherwise? As I’ve noted in blog posts over the last six years or so, the standard literature already was indicating that such tax cuts are relatively effective (though no panaceas). I hope this settles the matter, though I fear it will not…
Via Jason Furman, who also reproduces some nice pictures from the piece.
Disputes over China and structural imbalances
There has been some pushback on my recent China consumption post, so let me review my initial points:
There exists a view, found most commonly in Michael Pettit (and also Matthew Klein), that suggests economies can have structural shortfalls of consumption in the long run and outside of liquidity traps.
My argument was that this view makes no sense, it is some mix of wrong and “not even wrong,” and it is not supported by a coherent model. If need be, relative prices will adjust to restore an equilibrium. If relative prices are prevented from adjusting, the actual problem is not best understood as a shortfall of consumption, and will not be fixed by a mere expansion of consumption.
Note that people who promote this view love the word “absorb,” and generally they are reluctant to talk much about relative price adjustments, or even why those price adjustments might not take place.
You will note Pettis claims Germany suffers from a similar problem, America too though of course the inverse version of it. So whatever observations you might make about China, the question remains whether this model makes sense more generally. (And Australia, which ran durable trade deficits from the 1970s to 2017, while putting in a strong performance, is a less popular topic.)
Pettis even has claimed that “US business investment is constrained by weak demand rather than costly capital”, and that is from April 4, 2023 (!).
It would take me a different blog post to explain how someone might arrive at such a point, with historic stops at Hobson, Foster, and Catchings along the way, but for now just realize we’re dealing with a very weird (and incorrect) theory here. I will note in passing that the afore-cited Pettis thread has other major problems, not to mention a vagueness about monetary policy responses, and that rather simply the main argument for current industrial policy is straightforward externalities, not convoluted claims about how foreign and domestic investment interact.
Pettis also implicates labor exploitation as a (the?) major factor behind trade surpluses, and furthermore he considers this to be a form of “protectionism.” Now you can play around with scholar.google.com, or ChatGPT, all you want, and you just won’t find this to be the dominant theory of trade surpluses or even close to that. As a claim, it is far stronger than what a complex literature will support, noting there is a general agreement that lower real wages (ceteris paribus) are one factor — among many — that can help exports. This point isn’t wrong as a matter of theory, it is simply a considerable overreach on empirical grounds. Of course, if Pettis has a piece showing statistically that a) there is a meaningful definition of labor exploitation here, and b) it is a much larger determinant of trade surpluses than the rest of the profession seems to think…I would gladly read and review it. Be very suspicious if you do not see such a link appear!
Another claim from Pettis that would not generate widespread agreement is: “…in an efficient, well-managed, and open trading system, large, persistent trade imbalances are rare and occur in only a very limited number of circumstances.” (see the above link) That is harder to test because arguably the initial conditions never are satisfied, but it does not represent the general point of view, which among other things, considers persistent differences in time preferences and productivities across nations.
Now, it does not save all of this mess to make a series of good, commonsense observations about China, as Patrick Chovanec has done (Say’s Law does hold in the medium-term, however). And as Brad Setser has done.
In fact, those threads (and their citation) make me all the more worried. There is not a general realization that the underlying theory does not make sense, and that the main claim about the determinants of trade surpluses is wrong, and that it requires a funny and under-argued tracing of virtually all trade imbalances to pathology. And to be clear, this is a theory that only a small minority of economists is putting forward. I am not the dissident here, rather I am the one delivering the bad news.
So the theory is wrong, and don’t let commonsense, correct observations about China throw you off the scent here.
The Birth-Weight Pollution Paradox
Maxim Massenkoff asks a very good question. If pollution reduces birth weight as much as the micro studies on pollution suggest, why aren’t birth weights very low in very polluted cities and countries? Figure 1, for example, shows birth weights in a variety of highly polluted world cities. The yellow dashed and blue lines show “predicted” birth weights extrapolated from the well-known Alexander and Schwandt “Volkswagen study” which looked at the effects of increased pollution in the United States. Despite the fact that every one of the highly-polluted cities is much more polluted than the most polluted US city, birth weight is not tremendously lower in these cities. Indeed, there is no obvious correlation between birth weight and pollution at all.
Similarly, US cities were more polluted in the past but were birth weights lower in the past? Figure 2 shows a number of US cities which were two to three times more polluted in 1972 (right side of diagram) than 2002 (left side of diagram). Yet, birth weights do not appear lower in the more polluted past and certainly do not follow the extrapolated birth weight-pollution predictions from the micro literature.
Massenkoff looks at a variety of possible explanations. One possibility, for example, is culling. Perhaps in highly polluted areas there are more miscarriages, still births or difficulty conceiving with the result that the observed sample of births is highly selected. There is some evidence that pollution increases miscarriages and stillbirths but these tend to be correlated with lower birth weight–a scarring effect rather than a culling effect. In addition, the effect of pollution on miscarriages and stillbirths also appears to be bigger on a micro level than on a macro level. That is, these rates aren’t massively higher in high pollution countries.
Another possibility is that pollution isn’t that bad and, in particular, not as bad as I have suggested. As a good Bayesian, I update, but for reasons I have given here, it’s not justifiable to update very much.
I assume, as I always do, that there are some overestimates in the micro literature for the usual reasons. But, more fundamentally, my best guess for the birth-weight pollution paradox is that weight is one of the easiest margins on which the body can adapt and compensate. Even in poor countries there are plenty of calories to go around and so it’s relatively easy for the body to adjust to higher pollution, on this margin. Indeed, weight is known as a variable that creates paradoxes!
Micro studies on weight and exercise, for example, show that exercise reduces weight. But looking across countries, societies, and time we don’t see big effects–indeed, calorie expenditure doesn’t vary much with exercise! Importantly, notice that the micro-estimates are correct. If you increase physical activity for the next 3 months, holding all else equal (which is possible for 3 months), you will lose weight. However, the micro estimates are difficult to extrapolate to permanent, long-run changes because there are complex, adaptive mechanisms governing weight, calorie consumption and energy expenditure.
The exercise paradox doesn’t mean that exercise isn’t good for you–the evidence on the benefits of exercise is extensive and credible. In the same way the birth-weight pollution paradox doesn’t mean that pollution isn’t harmful–the evidence on the costs of pollution is extensive and credible. In particular, it’s going to be much harder to adapt to pollution for heart disease, cancer, life expectancy and IQ than for weight.
I am always impressed with papers that present big, obviously-true facts that most people have simply missed. Massenkoff is becoming a leader in this field.
*Regime Change*
That is the new Patrick J. Deneen book, with the subtitle Toward a Postliberal Future. I would say that reading and trying to review this book most of all raises the question of what a review is for. As you might expect from Deneen, the book is well-written and comes across as highly intelligent. The question is what one should make of the actual claims and content.
The opening chapter tells us what a failure America is, but not much in the way of concrete evidence is cited (what again would an American passport auction for?). Deneen writes “A growing chorus of voices reflects on the likelihood and even desirability of civil war…”, but that I think means he simply faced some publication lags with the book. America still seems to be gaining on most of the world.
By the end of the next chapter, we are told “Unfortunately, the current ruling class is uniquely ill equipped for reform, having become one of the worst of its kind produced in history…”
C’mon, people…C’mon, Patrick! I don’t even have to invoke Godwin’s Law to refute that one. I can think of a few historical elites who were slightly worse than those who go to Harvard and Yale.
The quick segment on Mill on slavery (p.82) is both wrong and deeply unfair.
Burke is closer to Mill than Deneen might wish to think, especially if one studies Burke on Ireland.
The chapter “The Wisdom of the People” is rather under-argued in a post-Bryan Caplan, post-Garett Jones intellectual era. You don’t have to agree with Caplan or Jones to recognize they offer orders of magnitude more evidence than Deneen does. One of the bigger lessons here is that you can no longer write such a book without seriously engaging with social science.
All this talk about creating a “mixed constitution,” but what exactly does he want to see happen? Is “Machiavellian means to achieve Aristotelian ends” really what we need? (Might some rather mundane changes in policy get us further?) What exactly are we supposed to do to increase the status, influence, and reputation of the populace, as Deneen repeatedly suggests? Where is the evidence any of that is going to work, whatever “work” might mean in this context? This book will not tell you.
National service, tariffs, and immigration restrictions are all endorsed, but with no consideration of the rather extensive empirical literatures on these topics, mostly not supporting Deneen’s hastily presented conclusions.
Is liberalism really (p.229) “premised on the complete liberation of the individual from any limiting claims of an objective good…”? Mill certainly didn’t think so, nor did most other classical liberals.
I would start by distinguishing the social consequences of birth control — which isn’t going to be reversed and shouldn’t be — with the social consequences of classical liberal ideas. Is Deneen in fact willing to endorse birth control? Inquiring minds wish to know.
If Western liberalism is “exhausted,” is he short the market?
Overall, I leave this book with the impression that it is no accident classical liberal ideals have endured as much as they have.
Is American Culture Becoming More Pro-Business?
In Capitalism: Hollywood’s Miscast Villain, a piece I wrote in 2010 for the Wall Street Journal, I described the slew of movies and television shows featuring mass-murdering corporate villains including “The Fugitive,” “Syriana,” “Mission Impossible II,” “Erin Brockovich,” “The China Syndrome” and “Avatar,” and Hollywood’s not so subtle attacks on capitalism with characters like Jabba the Hut in the Star Wars universe and the Ferengi in Star Trek. I explained some reasons for Hollywood’s antipathy to capitalism:
Directors and screenwriters see the capitalist as a constraint, a force that prevents them from fulfilling their vision. In turn, the capitalist sees the artist as self-indulgent. Capitalists work hard to produce what consumers want. Artists who work too hard to produce what consumers want are often accused of selling out. Thus even the languages of capitalism and art conflict: a firm that has “sold out” has succeeded, but an artist that has “sold out” has failed.
…Hollywood share[s] 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 successful 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.
However, I also noted that some good stories could be told if Hollywood would only put aside their biases and open their eyes to the world:
…how many [movies] feature people who find their true selves in productive work? Not many, which is a shame, since the business world is where most of us live our lives. Like many works of literature, Hollywood chooses for its villains people who strive for social dominance through the pursuit of wealth, prestige, and power. But the ordinary business of capitalism is much more egalitarian: It’s about finding meaning and enjoyment in work and production.
Well, perhaps things are changing. Three recent movies do a good job highlighting a different perspective on capitalism: Flaming Hot, Air and Tetris.
Flaming Hot (Disney) tells the story of a janitor and his improbable rise to the top of the corporate world via leveraging his insights into his Mexican-American heritage and culture. The details of the story are probably false but no one ever said a good story had to be true. A standout aspect of the film is Richard Montanez’s palpable excitement witnessing the Frito Lay factory’s operations — his awe of the technology, the massive machines churning out potato chips, and his joy at being part of a vibrant, productive enterprise, quirks and all. Montanez does find meaning and enjoyment in work and production. Flaming Hot also skillfully emphasizes the often-underestimated significance of marketing, which is frequently brushed off as superfluous or even evil. Incidentally, does “Flaming Hot” contain a subtle nod to the great Walter “E.” Williams?
Air (Amazon Prime) is about a shoe contract. Boring? Not at all. The shoe was the Air Jordan and Air is about Nike’s efforts to court Jordan and his family with a record-breaking and precedent shattering revenue percentage deal. Nike was not united on going all in on Jordan and at the time it was a much smaller firm than it is today so a lot was at stake. Jordan wanted to go with Adidas. His mother convinced him to hear Nike out. Jordan’s mother comes across as very astute, as she almost certainly was, although it seems more probable that it was Jordan’s agent, David Falk who engineered the percentage contract. Regardless, this is a good movie about entrepreneurship. Directed by Ben Affleck, who also portrays Phil Knight, “Air” showcases Affleck’s directorial prowess, previously demonstrated in “Argo,” a personal favorite for personal reasons.
Tetris (Apple) is also a story about legal contracts. In the dying days of the Soviet Union, multiple teams race to license the Tetris video game from Elektronorgtechnica the Soviet state owned enterprise that presumptively held the rights as the employer of the inventor, Alexey Pajitnov. Gorbachev and Robert Maxwell both make unlikely appearances in this remarkable story. One aspect which was surprising even to me, all the players take the rule of law very seriously. A useful reminder of the importance of property rights and a sound judiciary to the capitalist process.
While these films may not secure a spot among cinema’s timeless classics, each is engaging, skillfully made, and entertaining. Moreover, each movie offer insightful commentary on different facets of the capitalist system. Bravo to Hollywood!
Addendum: See also my review of Guru one of the most important free market movies ever made.