Economics and Reality

I often say that economists study models and don't really care about reality. I often complain about "market fundamentalism," the belief that the market works perfectly and can solve all our problems. I rarely, however, have as good examples of these "tendencies" of economists as what came up in the NY Times today:

 In an article on SR5 of the Sunday Review, entitled "Fairies, Witches and Supply and Demand" that discusses the economic principles being taught in children's books. It quotes an "avowedly liberal" economist as angry because so many children's books have virtuous poor and evil rich characters. Not mentioned is that this is the value of most major religions. And then we get a classic:

Sometimes, economists think that children’s books get things wrong. Dr. Seuss’s “The Lorax,” about the destruction of a forest by a greedy industrialist, “assumes that there is no economic system in place,” Mr. Conant said. In a modern capitalist economy, he said, the trees “would get very valuable as they got scarce, and the person with the property rights would harvest them at an economically reasonable rate.”

What planet do these economists study? Or rather, do they ever look at real markets. In most cases that I know of, higher values leads to higher prices which leads to greater pressure on the resource (because owners can make more money on it, or because poachers can make more on it).  Even in the US, it has been found necessary to impose regulations to assure the protection of scarce forest resources.  Economists say the same thing about scarcity in girls; they claim that as girls become scarce in Asia because of sexual selection for boys, girls will become more valuable. Instead, we have found throughout history that girls become commodities, and bought and sold, and are not treated as "more valuable."

The author concludes the article saying:

By and large, the economic lessons in children’s books lean left of center. “I think the writers are not particularly sympathetic to or don’t understand how a market works,” said Gary S. Becker, the Nobel laureate who teaches economics at the University of Chicago. “It’s not easy to convey that to a child. It’s not always easy to convey it to grown-ups.”

For the most part, the economic concepts conveyed in the books reflect values like generosity and equity rather than competition. Raymond Fisman, an economist at Columbia University, said his 3-year-old daughter’s favorite books teach the importance of sharing and gift-giving, values that might not lead to the greatest wealth in the real world. But, he added, “I doubt that 3 is the age where you start teaching people the brutal economic truths of grown-up commerce.” 

It is just astonishing how narrow minded economists are. In the real world, economic principles are only one of many principles we humans use in everyday life, but economists treat them as the only true underlying principle of social life. Anyone who values friendship, loyalty, the environment, stewardship of the planet, gift giving, etc., is either not too bright or a bleeding heart liberal or old fashioned. We should get with the program and value competition, and be a follower religion of economics.

Who in their right mind would criticize Dr. Seuss!

Cheating and Honesty in Hong Kong

Hong Kong is one of the safest cities in the world. Though some super-rich have bodyguards, most people can go about their lives without having to worry about crime. One of the reasons the Hong Kong Rugby Sevens has been so successful is that people can go out partying and not worry about getting mugged. A policeman friend commented that tourists can get drunk in Wanchai and wake up the next morning in their hotel room and still have their wallet.

At the same time, many Hong Kong people live their daily life assuming others are out to cheat them. Hong Kong shoppers do not ask clerks for advice on what appliance to buy because they assume the clerk would steer them to the appliance that they make the most profit on, or the old model that is hard to sell. They are sometimes right, but overall, I’ve found clerks in large stores to be fairly helpful, if they speak Mandarin or English and I can communicate with them!

So it came as a bit of a shock to be completely taken for a ride yesterday on Tung Choi Street, AKA “Goldfish Street”. I needed to get one (or preferably two) fluorescent tubes for my aquarium light. The tubes I need are 6000K, which means they are designed to provide the light that is most suitable for growing plants. I went into one store where I have been before and the clerk (I realized it was a chain, or a large store divided into several nearby small shops, because the employees were wearing similar blue polo shirts with a company logo on the breast) told me that they did not have my brand, but they had a similar tube from another brand. Since I did not even know the Dazs brand of the old tube I brought with me, I said it would be fine. He checked in the back section of the store, but could not find it. But he told me that the 6000K tube I wanted would cost HK$130, while the regular light tube would only cost HK$25. In my experience, the stores charge pretty much the same price for most things, so while the difference did seem high, these were actually different products, so I reluctantly said OK. He said he had to go to another shop to pick it up.

We waited near the front of the store watching customers.  One group came in with two boys. One boy in a green t-shirt had surprisingly long eye lashes. His parents spoke to him in Mandarin. The other couple they were with spoke to their son in Cantonese. The boys first looked at the iguanas hanging from plastic leaves in a terrarium, commenting on their changing colors. I then was looking the other way when I suddenly heard a man who was not wearing the uniform come in and yell at the boy in the green t-shirt, “Siu pang-yau, lei you mo gao co!”  Apparently the boy had put his hand in one of the salt-water aquaria, or something similar. The whole group fairly quickly left the shop; his father was smiling broadly and giggling, in the way that some Asians do when they are embarrassed (which looks totally inappropriate to Westerners). A few minutes later, the boss yelled something out and an employee next to us told us “mo fo”, there is no stock. So we also left.

$55 for a tube... really!

I checked at a couple other places that did not have it, so then I went to a shop across the street that often has what I need but I have found fairly unpleasant. If nothing else, the small of their cat makes the store unpleasant. But I’ve always found the queen laobanniang (lady boss) at the till to be unsmiling and unpleasant. As soon as I walk in holding my old tube, she and an employee tell me to go to the back where they have the bulbs. The employee says he has one, but it is not for plants, but he says it is white and 6700K, and about the same. I don’t remember my physics, so can’t remember if that is really about the same or not, but decide to get one tube, so I can at least replace the one that does not turn on. He tests it to prove it works (they always do that in Hong Kong; once you buy it and leave the story, you cannot bring it back saying it does not work), I ask how much it is. He goes the 10 meters forward towards the counter. The store is very crowded (always is on weekends), but it is still quite clear that everyone is looking at me and does not know the price, but are embarrassed. The queen of the till then says, “Fifty-five dollars.” Now, I had been told that the regular light was only $25 at the first store, so I’m pretty sure I’m being ripped off, but I pay anyway. This is why I don’t like this store; I often get the feeling I’m being charged the special guai-lo price.

As we make our way home, I remember that there is a new store that sells imported Danish plants (this is real globalization: why should tropical aquarium plants come from Denmark! They must grow inside there, because of the winters, but could grow outdoors in Malaysia.). I think this store might have my “flora light”. But when we walk there, they say they don’t sell lights. But as we walk out, one of the employees kindly tells me that I should go across the street to another store, where they would have it. So I go there, and to my amazement, they have the same Dazs brand tubes. She tells me the price in Cantonese, and I think I’ve misunderstood her, but no: $28 each. So I buy two. But now I’m sure the first shop was trying to not just cheat me but rob me, and the second certainly did cheat me.

$28 per tube...

This blog entry is my revenge. There are also layers of hell for people who cheat (I know, because I saw them in the Disneyesque park of Fengdu, China). 

Notice that both pictures have a "Top Sun" 升輝 shop in it. Tung Choi Street appears to be one small shop after another, and I have long tried to get a student to do research on why Hong Kong still has such a bazaar economy. But now, I see multiple shops with the same name. What is going on? The shops are not obviously specialized, but staff now, as mentioned, also wear uniforms. 

Corporate Doublespeak

Mobile phone carriers in Hong Kong and the US claim that a small minority of users abuse the network by downloading a huge amount of data. CSL in Hong Kong says that 5% do 50% of downloading; that seems a bit more than a "small minority", and it makes me wonder about their claims of "abuse".  In principle, what they says makes sense, but I'm suspicious because they seem to be using this idea to move away from unlimited data plans. The whole effort seems to be a way for them to increase their revenues (or to find a "new revenue stream").  I'm especially suspicious because of the way they justify the new charges.  The statement from CSL in Hong Kong is laughable; don't they have their PR people read these things?!

     Nothing has changed and that’s why we have heard what our customers have said
     about our policy and that’s why we are moving to adjust it;

Huh? No change, but an adjustment? Are we quibbling here?

     Only abusers who may impact the experience of all our customers by using a
     very high amount of bandwidth will be affected by our policy. At the moment
     approximately 5% percent of customers are very high bandwidth users;

In order to gain the approval of the majority of customers, attack a minority (your best customers, from a certain point of view), and label them "abusers." Slick.


And they move towards giving priority to some users over others, which has been very controversial in the US and Europe:

     Our broadband network is like a high speed motorway. When traffic is light all users can
     move as fast as their cars (or devices) will allow them. When traffic is heavy at peak
     times we guide the heavy vehicles (unless they pay for special access to the fast lanes)
     to the slower lanes so that they do not hold up users who want to have access to the
     fast lanes.

This is a very clever use of the highway metaphor, except that congestion charges and special prices for fast lanes have not been accepted for the Internet.  So I think the doublespeak and PR fluff is, after all, designed to misdirect us from the fact that they are moving to controlling who gets Internet access at what speed, all in the guise of "fighting abuse."

The Haka goes to America

I learned from my Anthro 1010 textbook that there is a high school in Texas (Euless Trinity High) that has a high number of Pacific Islanders so they perform the Haka (not clear if it is supposed to be entirely like the Maori Haka, or just based on it, but it looks a lot like it.)  You can watch a video of it here. The comments are interesting, if often intemperate. Some say they should not be doing the Maori Haka but should get their own war dance. Others say they are doing it wrong or poorly.  They comment on the lack of passion and poor movements, and a number of writer mock the athletes for doing it with helmets on, and for facing their fans rather than the opposition.  But someone wrote in explaining the shift in practice:

There are very strict rules for football in Texas schools. Players on the field once pre-game procedures begin must be wearing their helmets. Players are not allowed to deliberately attempt to intimidate the other team. This is why they have on helmets. This is why they are facing the crowd. It is the way they are able to perform this Haka. Euless Trinity has a very high number of pacific islander students. And yes, some are even Maori.

The haka does violate a spirit of sportsmanship, in a sense, especially with the explanation that it is a "war dance" (some note that it was originally a celebration of life, composed by a Maori leader who had fooled his enemies by hiding underground, but it still is used as a war dance). It will be interesting to see if its use expands, and if new, similar war dances, are created. After all, it is a small step from small rituals like "Clear eyes, full hearts, can't lose" or Notre Dame's prayer on the field before kickoff to the haka.