Coase Colored Glasses


Archive for March 16th, 2011


Conscription and Chess

Leeson’s chapter on conscription was very interesting to me.  A lot of the statements that Leeson uses seem to be common sense.  I’m not sure however, if it is because of the economic training that I have had or because his arguments are really common sense.

He however, does have a way of simplifying complex motives and incentives in his analysis.  The most interesting part was when his introduced the idea of pirates wanting to be forced into piracy.  This allowed them to have a loophole in the law if caught and if not they were allowed to do what they desired in the first place.  It’s surprising how often things of this nature happen.

It is always interesting to watch how people bait others to gain what they want.  It ranges from flattery in dating to a bully provoking the first punch in a fight.  Humans seem to look for ways to rationalize their inappropriate behaviors and desires.  I have a tendency to like to playfully argue with my close friends and have almost a battle of words in seeing who can prove the other wrong even though nobody is incorrect.  The points of the argument are usually ambiguous but the trick comes when you bait someone into saying something that contradicts what they have said before.  This allows a justifiable attach.

The more I think about it, Chess really does provide many examples of incentives and baiting others to get what one wants.  In Chess one must be several steps ahead of his or her opponent in order to successfully achieve the objective.  One must generally give up something in order to get what they really want more.  Pirates were willing to give up absolute safety from the law in order to participate or get someone to compel them to participate in piracy.  It constantly surprises me how well incentives explain the actions of not only pirates but also ourselves.

Married here Divorced there

Between the 13th chapter of Law’s Order and the discussion that we have had in our classes I think that it is really interesting to think about marriage as a contract.  This isn’t the first time that I am thinking of it in this manner but it is the first time that I have attempted to think of it in economic terms, which this class has me doing now with most issues in my life.

Within the first few years of being married there is a huge learning curve.  Assuming that you weren’t living with the person for a long time before hand.  You spend time together creating traditions, memories, and having all of the same friends, hobbies and interests for the most part.  Not to mention both names of the couple are on deeds for houses, credit cards, cars, and other expenses that needed financing.  By the end of being married for even a couple of years you have invested so much that if one or the other of you were to try and end it, both parties would suffer greatly for a number of years following.

Marriage is in itself a great way of scaring people from getting married.  I am someone cynic and I much of the time believe that things are going to work out.  I actually prefer the term realist, and when 1 out of 2 marriages are failing in the US all I see is a 50 percent chance of having child support payments, half of my friends, awkward conversations for months, and terrible credit.   Divorce is definitely something that is always at the back of my mind.

I heard this story once of a man that caught his wife cheating.  He was married in a state where the law says that no matter what happens if there is a divorce then the two parties will split all monies and properties.  SO he decided that he would spend the next couple of years saving money into his account, getting a high paying job in a new state with different laws that were more in his favor and he then confronted his wife.  He got the kids, the cars, and the majority of the money and left his cheating wife with a house payment she could never afford and her cat that he never liked.  That was a man that showed an impressive amount of patience and organization.  He understood the costs and benefits for divorce and decided to move to a state more favorable.  SO the moral of the story is that chances are you’re going to get a divorce.  Sad right?  So understand the potential repercussions of what you are doing.  Identify the sunk costs and try to do as much damage control as possible.

Get married.  Even if it’s only once ( and hopefully it is!).

Mormons, Marriages and Economics

Not being married I do not know the specifics about it, but having parents that have been married 32 years I’ve heard a lot about it.  I also have a twin brother, which is kinda like being married.  But only kind of.  My parents have been married for 32 years yet still argue, disagree on certain things, and can irritate each other.  I do the same with my brother, but I’ve learned to put up with it.  So I figure this is what marriage must be like, because it’s what I’ve seen and what I’m used too.

Thinking about economics and marriage now, I ponder as to why my mom has not divorced my dad.  He’s a lawyer and makes a lot of money, and I’m sure she would get a large chunk of it.  But perhaps it would be in her greatest interest to stay as she will have a more constant supply of money and presumably because she loves him.  Mormons (and more specifically students at BYU) are stereotypically known to get married at young ages without dating for long periods of time.  While I have not known anyone personally who has done that, I’m sure we’ve all heard the stories.  Elder Jones gets off the mission, 3 days later he’s engaged.  Yada yada yada.  What are the economics behind that?  Well, like Kelsey said ‘you don’t have to go through the hell of dating anymore’, and especially for guys dating can greatly increase sunk costs.  Getting married soon is like making an investment, putting all your eggs into one basket.  It wouldn’t make a lot (though some) to put all your eggs in several baskets because you can only get married to one person (legally.  And why would anyone want more than one wife/husband?).

Getting married quickly can have its benefits, but also its downsides.  ‘The crazy comes out after you put the ring on’, they hide things they didn’t want you to know until it’s too late, now that you’ve fully committed they stop putting on their best behavior and you see their true face, etc.  Once you’ve shown them you’ve fully committed, they see your willingness to be in the relationship, so they pull and tug to see how much you’ll give them.  Some of their incentive has gone away.  But of course engagement is not a strict contract and can be terminated at any time.  Maybe there should be a website to rate men/women so you can find out how they are before you date them.

Like a Pirate

I think we should all be more like pirates.  Not really the whole pillage and plundering part of it, although that could be fun.  What I am referring to is the racial tolerance that pirates had.  Leeson contends that pirates were more willing to grant freedom and equal rights to black men once aboard the ship.  Because of this we automatically think that pirates were tolerant individuals who did not care about skin color.  As Leeson points out the exact opposite was probably true.  The only difference is that the incentives to treat black men differently were different on a pirate vessel than on land.  They could think about them however they wanted.

People respond to incentives and the incentives on a pirate ship all point to racial equality.  Having a slave on your illegal vessel would only naturally increases your likelihood of being caught.  Not to mention it creates one other thing you have to look after while at battle.  So it is better economically for a pirate to grant a black man the same rights and privileges that you would grant any other man hoping to go on the account for booty.

My question is why was it only pirates that were able to be as economically minded?  There must have been other instances where it was better to have black men free rather than keep them as slaves, and I am sure that pirates were not the only ones to think economically.  It would just appear that at first glance pirates were in the minority.  Were they just much more economically savvy than the rest of us?  Or were they the only ones who were able to put their own self interest above their raciest opinions?  If that is the case I think we should be more like pirates.  We all have our little qualms with people.  why don’t we just be as economically minded as a pirate and move past it?

I found Friedman’s chapter on “Marriage, Sex, and Babies” very interesting.   The part in this chapter that stood out the most to me was Friedman  explaining the reason why marriages don’t last now these days compared to the past using an  economic explanation.  I think it is very clever and makes sense to me.  Now today people or couples I would say are much more independent.  Today in most households both parents work, besides a parent saying home to watch the kids you just dump them off for someone else to watch.   So there is none of the what Friedman refers to has specialized to a particular job or what I think he is getting at is that there are no role leads or things that each other are depending on the other to do.  Both are worried about their careers and not dependent on the other or really needs them.  This also puts both the parents out in to the competitive market more therefore letting them met new people often.  I think this outlook on why divorced is so high is a good one, it makes sense.

Overcrowded Earth?

Reading chapter 13 of Friedman’s Law’s Order has left more confused than when I began. While many of the ideas are interesting others seem absurd. Friedman take distinctly different approaches to the topic of “Marriage, Sex, and Babies” in respect to economics. While I am not ready to formulate a concrete opinion on the bulk of the chapter, pg. 186 contains something very interesting to me.

Friedman discusses the idea that many have that babies are a bad thing in the sense that the world is overpopulated. Reading this my mind immediately went to an episode of The Office where Dwight says something to the extent of we need another plague because their are way to many people on this world. As Friedman put concisely, “The argument starts with the idea that more people mean less resources for each–less land, water, minerals, petroleum, and the like.” He continues to conclude that although more people may generate  more externalities (both positive and negative) these are all pecuniary. I completely agree.

Although good arguments can be made for any issue (not only political, economical) it does not mean it is the only argument or viewpoint that has validity. While more children may mean more money for schools, government programs, and my toll on the environment not having new children means less taxpayers into the welfare system, less overall production in the near future, and benefits as well. Ultimately Friedman sums it up best saying, “one must show not merely that there are some negative effects but that the net effect is negative”. And even then more than a simple majority or “red” negative effect must happen for new restrictions to be justified.

After reading chapter two of Leeson, I am again struck with the impression that our government sure functions poorly in relation to pirate governance (as Leeson presents it, of course).

On page 32, Leeson mentions how crews were easily able to depose captains and elect a new one if they felt that the former was overstepping his bounds. In this way, the captain had a powerful incentive to act justly and behave in a way best for the crew. Within our system of government, leaders can be impeached, or just be voted out of office when we are unhappy with the job they are doing. While this sounds like pirate governance, it is not. Individuals within government are rarely impeached, and if the citizens of this country are really as pissed off about government as they make out to be, it seems like a lot more impeachments would happen. But it doesn’t, because it isn’t a very easy process. Even just voting out an incumbent can be very difficult! Why is this? As I’ve mentioned before in relation to pirate government versus our government, I think it is very much a function of the size of our society. There are a lot more citizens of the United States than sailors involved in a pirate crew. The citizens of our country are in many ways more removed from government than pirates in relation to their captain. The actions of leaders in government are often less direct and apparent. Because we aren’t stuck on the same boat with our representatives and senators, information can be filtered before it reaches us. So how do we really make our leaders accountable? Is it a problem with the population or with government? Some think that leaders are held accountable well enough. I have my doubts.

Conscription

I found Chapter 6 of Leesons book quite intriguing. Seeing as how I am a future member of the military, I couldn’t help but draw a similarity between pirate conscription and the draft. Pirates knew that they would have a better more capable crew if their men were volunteers, not forced. It is much the same in todays military. By having an all volunteer force in the military, not only is morale higher but the people serving will do so not because they are forced but because they believe in what they are doing. This makes everyone happier. Also, when one enters the military, he agrees to follow his leaders, enters a contract, and fulfills it. Forcing someone to do this is much more difficult.

I found it interesting that the free members needed to be listed in the books as free men, they couldn’t just say it. A contract of their willingness was necessary. I thought it was interesting that the pirates were worried about covering their own tracks if it ever became necessary in a court of law. By creating a contract of the willing, it not only covered in case of legal action, but also became binding for the captain if his crew ever broke the rules. By creating this contract, they could protect themselves against mutiny and desertion. ALthough archaic, these contracts were pretty successful in maintaining order and protecting the captain and crew.

Buying Babies.

Buying babies? In chapter 13 of Law’s Order, Friedman writes on the controversial subject of buying babies. When I first read the title of the section I thought, “Wow this chapter is completely ridiculous”. However as I read through his argument about the concept of selling babies I have to admit that I now think that perhaps it might be a good idea.

Throughout this course I have learned a lot about economics. If there is one thing I have learned it is that those individuals who value a particular object the most will find a way to get it. So it naturally follows that those who are seeking to be parents would be willing to pay top dollar for a child. And it also seems pretty clear to me that if a mother is willing to sell her baby then perhaps she is not the most suited to be a mother and it is a good thing that she is willing to give up her child. It’s a win-win situation.

In high school my best friend got pregnant. She struggled with the decision to keep her baby or put her son up for adoption. In the end she chose adoption because she knew that she wasn’t ready to be a mother. Her medical expenses were covered by the adoptive parents, which is a common practice, however she was in no way compensated for giving them her son. Now she is doing everything in her power to become a great woman, a good wife, and eventually a successful mother. However I see her struggle as she tries to pay for school. As I read this chapter I could not help but to think that even though it seems wrong, I wish that there was some way that my friend could have been compensated for making the right and responsible decision for her son.

I am a pirate…well minus the violence, but I have the attitude: if you’re here to help, great, if not leave us alone. I do not care how you live your life (unless you went to jail, that would make me a little skeptical of any positive contribution you might make), whether you are gay or straight, religious or not, or what your race is. That must be why I have no problem playing women’s basketball. We are all here for one reason, basketball. Yes, there are gays on the team. Yes, there are blacks and pacific islanders and whites. And, yes, we only have a couple Mormons and no Utahans, which goes against what all the statistics say our team should be made of since we are in Utah. This team is like pirates because we get/have to get along. If we do not, we will not win. Teams without chemistry burn up in flames created by their internal drama. Just like the pirates, we can leave whenever we want, and, just as the pirates, there are repercussions for our actions. There may not be immediate problems for the team after leaving, but if enough left within a designated time, the team may lose scholarships or some other punishment the NCAA – the law on the high seas of college basketball – can think of that fits the crime of not graduating players. Our common cause, the “treasure” we seek, is the championship ring. We are blinded, failing to see our many differences as faults – unless a fault obscures the path to our precious championship.