Morning Ed: Economics

Will Truman

Will Truman is the Editor-in-Chief of Ordinary Times. He is also on Twitter.

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14 Responses

  1. Jaybird says:

    When I read the words “remake the economy”, I feel the need to re-point out our “In The First Circle” bookclub, where we read Solzhenitsyn’s “In The First Circle”.

    It’s worth reading again. Not because we’re going to become like the old USSR, but because of all of the little moments explaining the subordination of reality to narrative. It exposed a handful of the tools most useful to those who were better at narrative maintenance than the whole science/engineering thing.

    Those tools will be useful in the next few decades.Report

  2. Jaybird says:

    Man, that VF oil industry story was something else.Report

  3. Jaybird says:

    Ec9: Part of the problem is the whole definition of “racism” thing. Are we talking about personal racism? Structural racism? With the whole “Minneapolis is where George Floyd got killed” issue, we find ourselves in a place where you can have a historically Democratic city in a historically Democratic state with a historically Democratic Mayor and a situation that can’t be fixed by voting for more Democrats.

    “You’re arguing that Democrats are the real racists!”

    No. I’m making distinctions between personal racism and structural racism. It’s possible for a structurally racist system to be populated entirely by people who are enthusiastic anti-racists (but anti personal racism).

    Anyway, “markets reduce racism” is one of those things that is very likely true when it comes to certain forms of personal racism.

    I’m sure you remember a couple of years ago when we were discussing Sears going bankrupt and how, back in the Jim Crow days, Sears/Roebuck undermined Jim Crow laws by just accepting a check and sending a product. They didn’t care about any color but Green.

    So when it comes to markets, yes! Markets absolutely reduce racism!

    Wait. What kind of racism are we talking about?Report

    • Oscar Gordon in reply to Jaybird says:

      Structural largely depends on the subversion of markets, either through rent seeking and capture, or cartelization.Report

      • Jaybird in reply to Oscar Gordon says:

        Yeah, rent seeking, capture, and cartelization all pretty much calcify any given social structure. They help maintain the status quo (or *A* status quo) which prevents change at the level that matters (e.g. “mine”).Report

      • Oscar Gordon in reply to Oscar Gordon says:

        Edit: Just in case I wasn’t clear, I meant Structural Racism, not just StructuralReport

      • Aaron David in reply to Oscar Gordon says:

        We creat systems that help “us” while hindering the “other.”

        Ingroup vs. Outgroup. You can see this everywhere from junior-high mean girls to North Ireland. Japan with Koreans, Arabs with Jews, White Americans with Black Americans, Huetos with Mestizos.Report

        • fillyjonk in reply to Aaron David says:

          And sadly, I think this is baked in to humans and is very, very hard to change. One thing I’ve noticed as a result of lockdown* is people in social media relitigating some of the dumb old internet fights they had back in like 2012 or 2017 or whenever, and it seems to me some of it is fighting for the sake of having something to fight about.

          And as someone who lived the “outgroup for mean girls to mock” life in junior high, a lot of adult life feels distressingly like we never left.

          Like I said: I think it’s baked in and even though it’s wrong to do it, I’m not sure there are any answers to it. Maybe the outgroup shifts over time and everyone gets their share of being it eventually, but that’s not really any better.

          I am in a generally pessimistic mood this morning, but then my typical view of humanity as a generalized whole is generally pessimistic. I suspect in hard times the lines get drawn even more sharply, and people who might have been on the fringes of being in an in-group get pushed into the outgroup as figurative wagons are circled.

          (*It’s also possible this always goes on and during non-lockdown times I got to socialize with actual normies and so I didn’t see the stupidity on the regular like I do now)Report

          • Aaron David in reply to fillyjonk says:

            Its like we are playing team King of the Hill.

            To your point, yes, I think this is baked into being human at this time, a sort of survival instinct on steriods. But, I do think that it can be broken. And the first step is to acknowledge its generallity. Followed by an insistance on not allowing the groups you (collective you) belong to do the same by renaming it or codifying it so that it never applies to you (again, collective you.)Report

        • Pinky in reply to Aaron David says:

          We creat systems that help “us” while hindering the “other.”

          What do you mean by “systems”? I think the market allows you to make a trade-off between profit and preferences. People may set up systems which benefit one group or another, but at the expense of $. This one study suggests that within the rice market in Bangladesh, people choose profit over preferences.

          Do markets reduce racism? Maybe. They at least give you a channel by which you can be rewarded for not acting racist.Report

          • Aaron David in reply to Pinky says:

            The market (free exchange a la Sears) is very diferent than, say, a welfare payment system, or subsidized housing, or policing, and so on. Those are non-market based in that they are politically based systems.Report

  4. LeeEsq says:

    Ec2: I think many of people want the fruits and products of capitalism without capitalism. I’ve been spending Covid-19 time watching many video critiques on YouTube. There are many interesting internet critics like Renegade Cut or Lindsay Ellis that examine pop culture from around 1980 to the present through different radical or literary theories. Their videos are interesting but it is clear that while all these critics see themselves as anti-capitalist, they like cultural products that can only be produced under a capitalist theory. This essay seems part of the same genre, we can have PlayStation without capitalism. The more austere Communists would argue that this is why the bourgeois like style is bad in and of itself. You need totally get rid of capitalist products too.

    Ec7: The liberal order might come from a rotten tree but what is replacing it is a lot worse, a return to the old system of competition that could easily flare up in war.

    Ec9: I’m with Jaybird on this. Markets might can reduce personal racism and some of the minor elements of structural racism. Catalog shopping made it easier for African-Americans to get goods during Jim Crow. What it isn’t good for is dealing with structural issues that keep that outgroup the outgroup. I’d also note that for in person stuff, businesses often find that accepting majority prejudices is easier than anything else.Report

  5. CJColucci says:

    There is a substantial body of literature purporting to show that rational economic actors wouldn’t discriminate because — well, that’s the problem. Since vast numbers of workers of all races are pretty much fungible, the competitive advantage of being willing to hire proficient Negroes is usually tiny, and often outweighed substantially by things like customer preference. A basketball team that insisted on an entirely white roster would be at a competitive disadvantage, but such cases are rare. Most of us are more easily replaced than we like to think. Still, some folks argue earnestly that, for example, if not for laws requiring segregation, southern business would, left to their own devices, have integrated before long (how long? don’t ask) out of iron laws of economic necessity
    So let’s do what economists do, and create a toy model of a portion of the economy and see how the market forces work in the model. It’s 1958 and you run one of the top three expensive, white tablecloth restaurants in a medium-sized southern city. For purposes of this model, assume no laws mandating segregation. You, personally, are happy to take the money of any solvent, clean, and well-behaved customer, white or black. A substantial part of your business is banquets of the county bar association, the county medical association, the Chamber of Commerce, the Toastmasters, the Daughters of the Confederacy, and the like, all whites-only organizations. Let’s say that half your customers don’t care if a well-behaved family of Negroes sits at a table sufficiently distant from them. Let’s say that 20% of them have a positive preference for restaurants where well-behaved Negroes are allowed to eat. The rest are adamantly opposed. The preference of the 20% is not likely to be intense, since their main interest, like that of the indifferent 50%, is a good meal, and whether well-behaved Negroes actually eat there is way down on their list of priorities. (In my case, since I would like to be able to eat out with my wife, the preference would rank somewhat higher.)
    What does the economically rational, non-racist restaurant owner do? How much revenue would he lose from the banquet business and the 30% of active segregationists if he entertained Negroes? How likely is it that the lost revenue would be made up for from a handful of Negroes who could afford to eat there once in a while, and how many more customers who fit the description of the 20% of integrationists would he get? I am not an economist, so I can’t math it up, but, intuitively, the rational business decision seems obvious. And a few years ago, some study, which I can’t now find, did show that segregating movie theaters, even in areas where the law did not require it, was economically rational.
    I’ve looked at the cited study and it seems to make sense. Where a small group of non-competitors control things, it is eminently reasonable to think that it would be easier to indulge discriminatory animus than in a competitive marketplace, but I’m not aware of anyone who denies that. Still, people must publish, and mathing up the obvious is a legitimate, but limited, form of scholarship.Report

    • Chip Daniels in reply to CJColucci says:

      It should be generally accepted as true that rational people will forego substantial financial hardship in exchange for emotional rewards such as social status and acceptance.

      Racism is the aristocracy of the mediocre; it gifts status and prestige to those would wouldn’t have it otherwise.Report