Friday, November 23, 2007

Ninoy must be rolling; Covetousness, Marx, and the WGA strike

It's so good when you can make a commentary just by juxtaposing quotes:

"I am not against the granting of a pardon to persons who deserve it. However, people who have refused to accept their guilt and have shown no contrition for the crime they committed do not deserve pardon."
-- Sen. Benigno "Noynoy" Aquino III, on the pardoning of ex-Sgt. Pablo Martinez who has been in jail for 24 years for the murder of former Sen. Benigno "Ninoy" Aquino, Jr.

"I am happy for former president Joseph Ejercito Estrada and his family. I pray that as a free man, former president Estrada will harness the lessons he had learned from the sufferings he had endured and continue to serve our less fortunate brothers and sisters."
-- Former Pres. Corazon "Cory" Aquino, on the pardoning of former Pres. Joseph "Erap" Estrada barely a month after his conviction for plunder.

***

On less idiotic and irritating news, it seems brain scans have shown that relative wealth (i.e., your wealth as compared with those around you) is a more important determinant of happiness than wealth level (i.e., what you can actually buy). This comes as no surprise to anyone who has envied someone else's stuff, or boasted one's wealth and watched others salivate in envy. However, this is an area in which mainstream economics still has to catch up.

Take any microeconomics textbook and you'll find that the utility(i.e., happiness) function, U(.), is defined as U(X, L) where X is a vector of goods and services and L is leisure time (sometimes L is even left out). In the Becker-type altruism models, you get U(X, L, V) where V(X, L) is some other person's utility. However, I have not seen a utility function that explicitly takes into account the impact of covetousness on utility. That part of utility that makes people want to get one over the other guy. This might sound crass and brutish, but, if you think about it, homo economicus is supposed to the paragon of selfish behaviour, so why not extend the description?

Among the early economic theorists, it was Marx who came closest to this concept of covetousness, albeit among classes rather than individuals. He acknowledged that it is possible for the material condition of workers and peasants to improve under the capitalist mode of production; however, their material improvement comes at the expense of their social position because the capitalists get rich even faster. This was confirmed by Kuznets (and lots of other later economists), who observed that economic growth exacerbates inequality-- everyone gets richer, but the rich get a bigger share than the poor.

Which brings us to the Writers' Guild of America strike, which has deprived me of my daily dose of The Daily Show with Jon Stewart and Late Nights with Conan O'Brien. It's a classic problem of splitting the pie-- the writers want a bigger share of the proceeds from their labour than the producers are willing to give. Eventually they will have to settle, but only after relative bargaining strengths have been determined.

I really hope the writers win this one, but chances are they'll get a small fraction of what they're asking for. The producers have time and options on their side, and eventually some of the starving writers (and not-so-starving writers like Ellen DeGeneres) will break the picket line and go back to work.

I think a better strategy for WGA would have been to conduct their strike one network at a time. Say, begin with CBS and close down all CBS shows but keep, say, NBC running. Ratings, along with advertisers, will flock to NBC and strike fear into CBS producers' hearts, making them likely to give in to the writers' demands. After CBS comes Fox, ABC, NBC, etc., all falling one after the other. It is the threat of advertiser flight that scares these producers, not work stoppage. The writers mistakenly believed that the product of networks is shows. The product of networks is advertising airtime; the shows are just there to attract ratings. By simultaneously stopping work all the networks were equally affected by the writers' strike, so there was no ensuing advertiser flight. For producers, it is relative position that matters in attracting advertising dollars, something that the WGA missed.

Which brings us back to the article on brain scans.

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