METALLICultural Costs

When I firstMetallica Concert listened to Metallica it changed my life.  Before a certain point I would have told someone that asked about my musical tastes that I outright didn’t like music.  After Metallica, and the subsequent dive headfirst into headbangerdom I would proudly call myself a metal-head.  Recently, Metallica released a new album, Hardwired…To Self Destruct, so I thought it appropriate to write about an idea that I got from experiencing Metallica myself and delving deeper into the history of thrash metal culture.  What makes Metallica, thrash ,and metal unique to other more popular genres of music is that the music is directly tied to a greater culture, and that culture incurs certain costs.  Metallica just so happened to be born in the right place at the right time.  

Firstly, we need to actually define what a culture is.  The way I want to organize this is by designating culture to a special kind of utility.  Cultural utility is unique from other kinds of utility in that cultural utility is the satisfaction gained from a good or activity because it is shared with others.  You cannot have culture with only one person.  On my own, I can listen to Metallica in my room or in the car, but at that moment I am not gaining cultural utility.  The cultural utility of Metallica comes when I go to a concert, or when I talk to a fellow fan and we share the bond that the music creates.  A more grounded example would be with the way that we use the road.  If there were no other cars on the road, driving on the left or right side, would be largely indifferent to most people.  However, since the road is usually filled with many cars, the cultural utility of us all driving on the right is great as it prevents accidents.  None of us really have ever made the explicit choice to drive on the right side, but the government recognizes that a law like enforcing driving on the right provides cultural utility.  

So with every culture, there are two necessary costs.  One is the cost of producing that specific good or service which is shared.  The other, since we’re dealing with multiple people in culture, is communication or transaction costs.  So if either one of these two costs is high, a culture may have a difficult time taking root, and when they are low new cultures have the opportunity to spring up.  The most basic example of communication and transaction costs being low is when people live very close to each other.  It’s not too hard to yell at someone across the street, or to make a short distance phone call.  This is often why we like to think of cultures in terms of ethnicity or country.  

Now that we have this theory, we can apply it to Metallica and the Bay Area Thrash culture.  Thrash metal bands are known for mostly coming out of the San Francisco Bay area, but Metallica actually originated in Los Angeles.  Los Angeles was saturated by glam metal bands, which were the opposite of everything that Metallica stood for.  However, record labels would only pick up glam bands, as they were the ones who made the money.  Thrash bands didn’t have a way to produce their music on a massive scale.  However, during this time the costs of recording studio equipment were falling, and a new record label Megaforce Records popped up to sign Metallica.  The still prevalent Metal Blade Records opened to sign other bands like Slayer.  The recording costs in this case are the same as the costs of producing the shared good, the music.

But only producing music would not have created the cultural explosion that it did.  It needed an easy way to communicate.  For thrash, it was cassette tapes and metal magazines.  Cassette tapes allowed thrash fans to easily reproduce the music and spread it to friends anywhere in the world.  Magazines allowed them to talk to each other, and consolidate information on bands such as tour-dates or album releases.  These both contributed to the ease with which the thrash culture was able to grow, and how Metallica was able to be as dynamic and wild as they were when they finally reached San Francisco.

So thrash was built on the backs of not only talented musicians, but savvy entrepreneurs who built the thrash metal culture and studios, tapes, and magazines.  There may be out there cultures who are not dependent on communication costs or the costs of producing the cultural good.  If you can think of any more interesting examples that either confirm of break this theory, leave a comment. Regardless, Metallica is still super metal. \m/

Photo from http://marklange.typepad.com/blitzkrieg/2013/08/metallica-returns-after-20-years.html

Information from Metal Evolution Episode 6: Thrash

Democritus’ Atom of Economics

The Greek philosopher Democritus pioneered a theory in physics that all matter is made up of indivisible, invisible, and homogeneous particles called atoms.  All of the laws of physics were based upon the properties of atoms.  Modern physicists do not believe that atoms have these exact properties, but that they are made up of further particles, electrons, neutrons, and protons, which are made up of even further particles.  However, physicists can draw on some fundamental truths which function to modern physics the way that the atom functioned to Democritus’ view of the natural world.  Namely, these truths are that matter and energy exist and have certain qualities that interact to create the physical world.  All of thought that is in light of these two truths is what we call physics.  Why matter and energy exist in the way that they do is left to other fields such as philosophy, theology, and perhaps even math.  For every field of study there are fundamental principles upon which it is based.  For math, these might be self-proving theorems such as 0=0 or 2<3.  For biology, these are the existence of cells which interact in various ways to create life.  This is all related to the question which I want to answer today.  What is the “basic particle” or “Democritus’ Atom” of economics (I think I know the answer I just wanted to go through a few things first).

Economics students first learn that people deal with utility.  Utility is the value that something has in light of the goals of the actor.  In that sense, isn’t the entire economy made out of utility?  At every single level of the economy, with every single step, we encounter utility.  Does this make utility our basic particle?  I don’t think so.  The nature of utility doesn’t explain why the economy is the way that it is, in the same fashion that the laws of energy and matter explain the entire physical world.  Utility merely functions similarly to how potential and kinetic energy function in the physical world.  It keeps goods flowing through the economy as it gives those goods reasons to move and their actual motion.  

So what about the resources?  Could the goods that hold the utility be our basic particle?  Utility is just a quality that various goods and services hold in the eyes of actors.  Goods and services are at every level and step of the economy along with utility.  All market transactions involve some form of goods whether it be labor, money, or other physical goods.  It would be hard to imagine an economy without goods and services.  As with utility, their ever-presence does not make them a fundamental principle.  Again the various qualities of the goods do not explain why they are where they are in the economy, or again why they have as much utility to various people as they have.

Alright enough screwing around.   In physics what is being studied is the interaction of the qualities of matter and energy to create the physical world.  In economics, it is the interaction of finity and decision-making (sometimes rational, sometimes irrational).  Every interaction of energy and matter results in a physical event, and every interaction of finity and decision-making results in the phenomenon which we call scarcity and an economic event or economic choice.  We then come to the already accepted definition of economics; the study of choice.  

Being that this is a playground, let’s play around with this.  Suppose neither finity nor decision-making existed.  This world has infinite possibilities and no way to discern between them.  There we cannot perceive economics. Suppose only one existed.  If there were finite material yet no decision-making agents, then there is only so many possibilities yet again no one to make choices between them, and they play out on their own.  The situation in which there are decision-making agents yet infinite material is the same as the famous question, “What is the economy of heaven like?”  The answer is that there is no economy in heaven.  The decision making-agents already have all that they could possibly perceive as valuable and therefore have no need to make choices.  

So there we have it; the economic choice is our economist’s Democritus’ atom.  The other proposed ideas of utility and goods are very core properties of economic study, but are still emergent from the economic choice.  Utility exists because there are agents which have goals to which they assign utility, and the resources have utility because the agent is trying to manage around their scarcity.  This fundamental object of the economic choice is what separates economics from other disciplines even though it is still dependent upon other fields such as physics and psychology.  The more that economics focuses on its own base particle, the more confident we can be in a new economic idea.

Physics Proofreading credit to Amartya Banerjee

Photo Credit: http://www.iep.utm.edu/democrit/

Exclusive Interview with a Candy Market Broker

I haven’t yet mentioned my career before starting this website, but I used to work for my family’s candybroking business in the BMCE (Bryn Mawr Candy Exchange).  Today I conducted an interview with a close associate of mine from my candybroking days, my sister, Miriam Shera.

Q: So Miriam, How have you been?

A: I’m doing fine.  Our parents have been doing fine. They’re still alive. They want you to call more.  

Q: Can you discuss the unusual spikes in price that occurred in the mid-Fall quarter of the candy market.

A: It’s referred to as the All Hallow’s eve effect.  Our market analysts have been unable to explain why it occurs only that it is a constant trend in late October, in which suburban candy demand skyrockets as a result of costumed marauders threatening locals with a war chant of “Trick or Treat”.  The demand here is really one for security.

Q: Can you describe these costumed marauders?

A: They seem to wear a wide variety of costumes making it unable to track their origin.  Costumes tend to focus around figures in popular culture or more traditionally horror themed.  Some of them seem to be nonthreatening, but since there is no way to know where they come from, no one is willing to take the risk.  They seem to be attracted to pumpkins like moths to a light, and some have had success at deterring gangs by merely turning their house lights off.

Q: How does this affect your candy trading?

A: Honestly, it gives us a big boost.  This period is consistently a bull market as most candy firms tend to raise their prices to adjust for the newfound utility of candy, crime deterrence.  Many insurance companies also subsidize candy buying in order to prevent having to pay for property damages.

Q: This season have there been any particular trends that you noticed.

A: There are a few industry standards such as the consistent success that candies like Kit-Kats and Snickers have, but this year we were willing to take a risk and invest in Almond Joy.

Q: Has anything come of that?

A: I can’t reveal too much information, but it appears to have been somewhat of a bubble as a majority of the stock that we accumulated inexplicably disappeared after the bag was left open near Dad’s desk.  

Q: Other than that how profitable have you been this year?

A: We’re weighing in at about 1500g of sugar, up from our down round last quarter.

Q: Where is the market going as you see it?

A: Two words.  Fun Size.  

Q: Is there any advice that you have for prospective candybrokers?

A: You really need to know the products you’re working with.  You can’t make in this business without getting your hands sticky.  And you have to be prepared just because you’re on a sugar high doesn’t mean the sugar crash isn’t coming soon.  

Credit to David Shera for the idea.