The Marriage Model of Economic History

There are two simplistic ways to do economic history. The first is the muddy, materialistic, and miserly (plus Marxist) approach. The second is the airy, heavenly, and idealistic approach. I want to propose a third. 

In the first, all the dependent variables are functions of material incentives. Why did the Industrial Revolution happen? Because property rights were secured, and long-term capital investments became worthwhile. Why is church attendance going down? Cable-TV has provided an ample substitute on Sunday mornings. Why did some Communist revolutions succeed and others fail? The successes occurred when the material interests of enough classes aligned. The basic tools of supply and demand explain the earthquakes and avalanches of human society, in all its peaks and valleys. (Figure 1)

The second approach can’t be expressed as a function, or if it can, it’s non-continuous and non-differentiable. Think of a Dirac-delta function. Why did the Industrial Revolution happen? The heroes of the Enlightenment wrote great tracts on liberty unleashing the spirit of human creativity and flourishing. Why is church attendance going down? The same spirit of Enlightenment has shown the old gods to be obstacles to human advancement. Why did some Communist revolutions succeed and others fail? Because some failed to properly enliven the proletariat with ideas, rhetoric, and revolutionary spirit. Supply and demand may have its place, but the primary agents of change are exogenous ideas. Ideas fall like manna from heaven. They’re a free lunch and we all get a slice. (Figure 2)

Both of these are caricatures, and I don’t believe any serious economist believes them in totum. The materialistic approach runs counter to the lived experience of being a human. Most people are motivated in business, love, and war by ideas. But the idealistic approach also runs counter to life on a material planet. Just as many people are motivated by money, pleasure, and navel-gazing self-interest. Most of life is shoving your meat bag around the planet as efficiently as you can. There’s a tension between both styles of explanation. I want to propose a third approach that hopefully incorporates the insights of both. 

What is the primary actor in biological evolution? Is it the mutations of the DNA, or is it the shape of the environment? Well, the environment, after all, is what “naturally selects”, but without mutations there would be no gas for evolution to get going. One could contend that as long as mutations occur, the environment is actually the final decider waiting for the one mutation that will survive, but why do we have to presume that there is only one potential mutation that the environment will select for? Suppose there are three possible mutations that we can evolve into (A, B, and C). If the environment tells us that B will not survive, then it is still up to the randomness of mutations to decide whether we go for A or C. If the environment selects against people that are five-foot tall, we may evolve into either four-foot tall or six-foot tall creatures. From that point on, the mutations that were chosen in the past create the new environment that selects for future mutations. There are two independent operations, the source that chooses mutations and the choice that selects for them. But when put into action over time, the environment selects the mutations that survive, and the mutations that survive create the environment. This understanding of evolution as a guide to human history is primarily motivated by William James’ essay “Great Men and their Environment”.

How many counterfactual histories depend on questions about individuals? What if Hitler had gone to art school? What if Columbus hadn’t gotten the funding for his voyage? What if Mary told Gabriel no? Individual human lives, ideas, and the spirit that they infuse the world with are like novel mutations on the human soul. But the society of incentives and interests that they’re born into remains ever-powerful. Wycliffe’s reformation didn’t work, but Luther’s did. The Reds beat the Whites on the battlefield and determined the 20th century for Russia. Sometimes the commodities market does matter more than the marketplace for ideas.

Of course, there has to be a seed, but the seed cannot fall on rocky soil or thorny soil or pre-trod path. And after the crops are grown, they’re going to determine which fields are plowed next. But what came first, the seed or the soil? The answer to me is in John 1, but that’s a bit too much to go into right now.

Also:

Beliefs and Institutions. A chicken and an egg problem or are they two sides of the same coin? When somebody says that they are Catholic, does this mean that they are part of an institution or that they hold a set of beliefs? Jesus was the meeting place of heaven and earth, “The Word made flesh”. Institutions are “beliefs made flesh”. Institutions aren’t just necessary for the proliferation of beliefs, they are also the product of beliefs themselves.

Adam Smith’s Guide to Loving Your Country

Image result for Adam smith american flag

Why does a single relatively-unknown football player’s refusal to stand for the National Anthem cause such intense and fiery clashes in the gladiatorial arena known as Twitter? Cries against injustice often back patriotism up against the wall. The Kaepernick Affair acts as a convenient little package of sentiments reflecting a broader tension. Adam Smith in The Theory of Moral Sentiments discusses “the love of our country”.

The love of our country seems, in ordinary cases, to involve in it two different principles; first, a certain respect and reverence for that constitution or forms of government which is actually established; and secondly an earnest desire to render the condition of our fellow-citizens as safe, respectable, and happy as we can.

Adam Smith, The Theory of Moral Sentiments pg. 231

It’s natural to split these two sentiments between conservatives and liberals, Republicans and Democrats, but those words already have too much baggage. I’ll use patriotism for Smith’s first principle and activism for the second. Smith says further:

He is not a citizen who is not disposed to respect the laws and to obey the civil magistrate; and he is certainly not a good citizen who does not wish to promote, by every means in his power, the welfare of the whole of society of his fellow-citizens.

Adam Smith, The Theory of Moral Sentiments pg. 231

Smith explains that these two principles are not necessarily in tension. In a golden age, when the current laws and traditions coincide with the well-being of the majority, we have relative peace and tranquility. The moment that they disjoint, however, “public discontent, faction, and disorder” rear their ugly heads. Smith takes neither the patriotic side nor the activist side. It requires “the highest effort of political wisdom” to determine when to make exceptions to tradition, and when to let their entrenched position grant them the last word. We respect traditions as they preserve wisdom from the experiences of our ancestors. We respect new ideas as they have the chance to correct for past misjudgments.

The passage on love of country precedes Smith’s famous passage about the man of system. He pits the spirit of system against public spirit.  The man of public spirit is able to toe the line between patriotism and activism. A country is one group of people, but it is made up of conflicting interests which must be parsed out and respected. The man of system is the villain of Smith’s story. He believes that what he knows about the political world and the principles he has devised are sufficient to judge political actions, regardless of whether or not those actions respect tradition.

In the Kaepernick case, respect for the flag and the causes of Black Lives Matter are not in necessary tension. This fault comes from a misunderstanding of what the flag represents to people. To most, it represents both the broadest American principles and it’s particular traditions such as liberty, the Constitution, baseball, and hot dogs. In fact, we may find it particularly patriotic to continue the mission of wider equality under the law. In this case, many had set up a false dichotomy because of a misunderstanding of what the flag might mean to others. To better serve public discourse, I recommend, invoking the authority of Adam Smith, to respect both patriots and activists. They are both legitimate sentiments with unique perspectives. The supposed choice between patriotism and activism is best answered with “Why not Both?”.

Special Thanks to Matthew Beal, Dr. Daniel Klein, and Molly Harnish for helpful comments and proofreading.

Game Over? – The Economics of Video Game Death

My father, being a casual video game player, will occasionally spectate my endeavors into virtual realms.  Being interested in game design he will on occasion comment on my game, usually ridiculing it and very rarely praising it.  One particular gripe that he has had with many games is in the respawn function in which your character can die and then continue the game.  Compared to the arcade games that he would have played back in the 80s, the consequences of failure or death in a video game is no longer a simple and blunt GAME OVER.  Players are just slapped on the wrist with a loading screen and then plopped back perhaps a few steps.  Essentially, games with narratives are just models of plots in which the players provide some of the exogenous variables as I discussed in my article on Economics and Plot Vol 3.  Various models of death have significant impacts of both artistic importance and in the construction of a solid game without plot holes.  

 

To start we could categorize game death models into two categories.  The first being permadeath, and the second being some sort of respawn.  Permadeath would entail that once the game has decided that you have died, then the game ends and you must start over from the beginning.  This would be similar to the arcade games of my father’s era.  A respawn would not make the player begin the game again, but would bring the player back at some checkpoint or when they last saved.  Most games today function this way.  Perhaps because most games are in the home rather than a quarter a play.  Respawns can be brought down to two additional categories as well.  One being the in-game universe respawn and the other being the out of universe respawn.  In-universe respawns give an explanation in the story of why the player can continue playing after death.  Out of universe respawns merely let the player continue from a checkpoint or their last save.  There are of course some games that fall in between these respawns and permadeath, so they are not all-encompassing.  Some examples would be Super Mario Bros. and Contra where they have a respawn model until the player runs out of lives.  The permadeath model is fairly self-explanatory and now mostly out of date so I will focus on the respawn model.  

One of the most important features of any game is the separation of knowledge between the player and the character they are meant to represent.  Both Skyrim and Diablo have respawn models.  In Skyrim, the player respawns at the last save.  In Diablo, the player respawns at the last town (checkpoint).  If a player is in a Skyrim dungeon and dies, they will now replay the area on the path to their quest between the save and the location of death.  Since the path will be the exact same that was just experienced, the player then has knowledge that the character does not lead them to make decisions that would disrupt the coherence of the plot, damaging both the player’s experience and the artistic integrity of the game.  In Diablo (or my preferred clone, Path of Exile) each dungeon or area is randomly generated every time that the player goes through.  If the player dies and re-enters the zone, the player and character have the same amount of information with roughly the same difficulty.  If the player is meant to represent the choices of the character then their knowledge must match to allow the game to maintain a coherent series of events.  

 

Subsequently, it becomes quite difficult for the game designer to construct a story that surrounds their death model.  The Skyrim or “Last Save” model can be copied into most stories quite easily, but the Diablo model might be quite difficult.  A game I have found to have a quite good integration of the death model and the lore is the MOBA SMITE.  In Smite, you play as one of the gods of ancient mythology battling it out over various eternal battlegrounds.  When you die, there is a penalty period depending on the strength of your character, and then you respawn at your team’s base.  This makes total sense in the context of deities fighting with one another as they are presumed to be immortal.  The epic saga Bioshock respawns the character in a nearby Vita-Chamber which were apparently reincarnation tools used by the crazed residents of Rapture. However, you still lose the bullets that you used before you died, so there really is no complete do-overs.  The popular FPS Counterstrike also takes a hard line as opposed to its
counterpart Call of Duty in that a death is a death.  There are no respawns until the next round.  This has led to Counterstrike having a much more respected competitive community than COD, but that might have to do with the target demographic for both games.

 

In conclusion, video games, like any other narrative art form, is to some degree subject to economic law.  The player-character dichotomy can likely be further studied and the split is almost reminiscent of the classic problem of mind-body interaction that plagued the modern philosophers.  However, in this case, it becomes a problem that the mind knows more than the body ever experienced, and can reincarnate itself after the body has already died.  Spooky.  The death problem and other player-character problems hopefully will inspire game designers in the future to get ever more creative with their stories and break new ground in the art form of the future.

Photo Credit: https://i.ytimg.com/vi/votpmwC25Ek/hqdefault.jpg

Jean Baptiste Colbert: The Rise and Fall of Mercantilism

This is a short video that I did for my AP Euro class last year. Again thanks to Mr. McCauley.  It’s on the topic of mercantilism and particularly the policies and ideology of Jean-Baptiste Colbert.  This is the first upload to theeconplayground youtube channel so be sure to subscribe to that as well.

Two Christmases and a Birthday Worth

There is a lot of economics in Christmas, and I’ve been waiting to post this article since I first saw a recent episode of South Park.  South Park just recently finished up its 20th season in which they commented on a wide range of topics as they usually do.  However, one particular joke in one particular scene stuck out to me.  

Did you catch it?  When Cartman’s laptop, iPad, and iPhone are being destroyed he pleads to the boys by saying “This is like two Christmases and a birthday worth of stuff!”  Imagine if Cartman had been perhaps a 30 year old man.  He very likely would have cried out, “This is like 3000$ worth of stuff!”.  Kids, especially before they’re teenagers, are in a very different economic situation than most people, but they still function alongside many of the same basic rules.

Money is used for many different purposes, one of which is that it functions as a unit of account.  This means that when we try to measure value between items we refer to how much money we would be willing to spend on it to give our desire a numerical value.  Since money is divisible, transferable, and valuable it lends itself to this use.  However, it is only useful to this purpose from a perspective where you are actually using money regularly.  

Children rarely buy a majority of their own needs with money, but they still spend something.  When an adult spends money on something their cost is an opportunity cost.  They lose the opportunity to buy the next best thing for the same amount of money.  Kids often make a list of things that they want for Christmas, and they also often order their list.  When children ask for the top present for Christmas or their Birthday they lose the opportunity to ask for the second thing on their list.  Thus to children, Christmases and birthdays function like a unit of account allowing Cartman to say that his electronics are worth to him Two Christmases and a birthday.  Gift-giving occasions are still not money as they can’t be exchanged, spent on anything, or saved up over time, but they offer a route for children to receive one of the many societal benefits that we gain from a currency system.  

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