Another Semester Has Started

 Welcome to any new students. The entries usually have something to do with a basic economic principle that is related to a recent news story.

Here is something I wrote for The Ranger (the school paper of San Antonio College where I used to teach) back in 2011 titled "Why is college so hard?"

Students might wonder why college, and SAC in particular, is hard. This might sound trite, but I think the faculty at SAC want students to achieve success in life and that means that classes have to be hard if you are going to learn and understand the concepts which provide a foundation for that success.

I think my own experience as a community college student over 30 years ago helps me understand this. My teachers took their subjects seriously and maintained high academic standards. They got me excited because of the expertise they brought to their teaching. Now that I have been a teacher for over 20 years, I can see how important that was.

After finishing my A.S. degree at Moraine Valley Community College (MVCC) in Palos Hills, Ill., I transferred to and graduated from the University of Chicago with a degree in economics. But it was my community college teachers prepared me to handle the rigors of the U. of C.

Later, I got a Ph. D. in economics from Washington State University. But I've accomplished some other things I never could have dreamed of when I began taking classes at MVCC and I think my teachers there paved the way for me.

In 2005, I had a letter to the editor published in The Wall Street Journal (I have now had five published there, three in The New York Times and three op-eds in the Express-News). This one was several paragraphs long, nearly as long as some of their op-ed pieces. It was the first letter in the letters section that day, and I got the top headline. It dealt with NAFTA and trade agreements.

As nice as that was, I got a big shock a few days later when I got a letter in the mail, on official stationery, from Richard Fisher, the president of the Federal Reserve Bank of Dallas. He complimented me on my letter and said it was superb. I had never even met him or ever tried to contact him before.

Wow. I graduated from high school with a 2.7 GPA, and when I started at MVCC, I had no idea what I would do with my life. If you had told me then that someday I would have a letter in the WSJ and get that kind of compliment, I doubt I would have believed you.

Then an adjunct professor at the business school at the University of Chicago contacted me a few years ago and wanted to know if it was OK for her to assign a paper I wrote on entrepreneurs for a class she was teaching on innovation. (Of course, I said yes).

That professor was Nancy Tennant Snyder. She has a Ph. D. from George Washington University and is a vice president at Whirlpool. Business Week magazine has called her one of the leading innovators in the world. She also cited two of my papers in one of her books.

Then I got an email from John Joseph, a professor at the University of Edinburgh. He is an expert on language and politics. He wanted to know if he could include an essay I wrote in a four-volume work he was planning. I again said yes and it was published last year (and it is called Language and Politics).

It is a collection of essays. Mine is titled "The Intersection of Economic Signals and Mythic Symbols." Other contributors include Jeremy Bentham and George Orwell. When I was a community college student, I never imagined being included along with the likes of those great thinkers.

The co-authors of the book The Economics of Public Issues have thanked me in each of the last three editions for my helpful suggestions. Almost all of the people they thank are from big universities. One of the co-authors of this book, Douglass North, is a Nobel Prize winner. Never imagined someone like that would value my input when I started out as a community college student.

Getting such recognition in cases like this gives me a sense of achievement. I know I have made a scholarly contribution to the world. And I want all SAC students to have a chance for this same kind of success (as an academic or any in line of work). I think all SAC faculty do. That is why school is hard, and that is why I'm thankful that my community college teachers were experts who maintained high academic standards.

Is Storytelling Important For The Economy?

"It's the economy, stupid"-James Carville, strategist for Bill Clinton in the 1992 presidential campaign

"The human mind is a story processor, not a logic processor."-from the book The Righteous Mind: Why Good People Are Divided by Politics and Religion by social psychologist Jonathan Haidt.

Wouldn't it be great if there was a blog that looked at the intersection of the economy and storytelling or mythology? Well, there is! See Dollars and Dragons.

Here is one example of how storytelling and economics come together. See Giving Your Brand Primal Power Through Storytelling by Nick Nanton & JW Dicks. Excerpt:

"At our agency, we make what we call “story-selling” an essential component of our branding efforts with our clients. We’ve seen firsthand that, when you create the proper story, you’ve done most of the heavy lifting required to build a successful brand.

The question, though, is why--why do stories have such “primal power” when it comes to influencing an audience?

It turns out there’s a perfectly good scientific explanation: Stories affect us on both on an incredibly deep intellectual and emotional level that we are just beginning to understand.

That quest began when scientists discovered that fictional stories affected the same region of the brain that reacts when we ourselves are engaged in real-life drama. Stories create a bonding empathy which causes us to strongly identify with the made-up protagonist, as if we were, in fact, that person. In other words, stories have such impact because our brains actually get a little mixed up as to what’s real and what’s not."

There is also a great book out there called The Storytelling Animal: How Stories Make Us Human by Jonathan Gottschall. Here is the review I wrote at Amazon:

"If you liked "The Moral Molecule" by Paul Zak, "The Righteous Mind" by Jonathan Haidt or "The Power of Myth" by Joseph Campbell, you will probably like this book, too. It would be worthwhile if only for the anecdotes. The explanation about how a scientist proved that cats dream. Or that going to an opera greatly influenced Hitler. You want to keep reading. You never grow tired of it. How stories are a deeply inherent part of our nature is entertainingly explored. Stories affect business and economics because CEOs and brands need to tell a story. The role that evolution played in making stories important is explained. His theories and conclusions are supported by science. But it is still enjoyable. Gottschall himself is a good story teller. I love the line about stories being the flight simulators for life. The moral and socials role of stories are also explored. But stories are personal, too. We each have a story we tell ourselves. As Jung said, we should all try to discover what myth we are living by. Books like this should help us out on that quest."

A related post is Economists Love Fables And Parables (Or, What Is The Essence Of Economic Analysis?)

The ariline industry looks competitive

See Air Travel Prices Have Barely Budged in 25 Years. (It’s True.) by Scott McCartney of The WSJ. Excerpts: 

"In the first quarter of 1996, the average domestic airline ticket cost $284, according to the Transportation Department’s Bureau of Transportation Statistics. Twenty-five years later—the first quarter of this year—the average domestic ticket cost? $260.

Adjusted for inflation, air travel in the U.S. has gotten much cheaper. That 1996 ticket in today’s dollars would be $482"

"But history suggests that inflation in airline tickets ends quicker than your last vacation. Over time, prices have fallen, even after the industry consolidated to four giant airlines commanding a large share of the marketplace.

Competition is a constant in the airline business. If prices in markets get high, another airline swoops in, sensing opportunity. Technology has helped airlines cut costs on a massive scale over the past two decades. It’s also made it easy for consumers to comparison-shop, keeping prices down.

Even pre-pandemic, when demand for air travel was strong, prices were a bargain. Domestic tickets in the fourth quarter of 2019 were 26% cheaper than the same period of 1995 in today’s dollars."

"add-on fees now generate a lot of airline revenue that might have previously been priced into tickets. In 2019, baggage fees totaled $5.8 billion for U.S. airlines, according to BTS. Those fees were 2.9% of operating revenue. And that doesn’t count fees for seat assignments, early boarding and other services.

John Heimlich, chief economist at Airlines for America, the industry’s Washington, D.C., lobbying organization, says even if fees were included, “the trajectory is the same. There is not a big difference between the average fare with or without fees. A lot of people don’t pay fees.”"

"Cheap airline tickets have driven a boom in air travel. Far more people travel today than in past decades.

Those tickets have also, in the eyes of many travelers, cheapened airline service to barely acceptable levels. Many feel compelled to pay extra for adequate legroom or even first-class seats—and that’s exactly the strategy airlines have pursued."

"Because competitors match prices, the impact of Spirit and other ultra-low-cost carriers like Frontier, Allegiant and Sun Country extends to travelers who never fly them.

“They have pricing power way beyond what their size would project,” says Scott Nason, a former American Airlines pricing and technology executive who now is president of SDN TT&H Consulting, based in the Dallas area."

"the share of domestic passengers carried by the ultra-low-cost carriers increased from 4% in 2009 to 11% in 2019."

"Those carriers were up to 15% market-share in 2020."

"After the big airline mergers—Delta and Northwest combined in 2008, United and Continental in 2010, Southwest and AirTran in 2011, and American and US Airways in 2013—the remaining large carriers enjoyed record profits. The four had 80% of the U.S. market, and capacity—or, the number of available seats around—was stable.

As demand rose, so did prices. From $302 in the second quarter of 2009, the average domestic ticket price jumped to $402 in the same period of 2014. Then airfares started descending again. By the second quarter of 2018, the average price was down to $349. The comfort zone big airlines had found was already eroding."

Related posts:

Is The Airline Industry An Oligopoly? (from 2014)

It seems like airlines are not passing along all of the increased fuel costs to consumers (from 2018)

People seem to like watching videos of fake morality plays on the internet

See The Internet Demands Uplifting Videos. So He Stages Them. by Robin Kaiser-Schatzlein writing for The NY Times. Excerpts:

"Dhar Mann and other “wholesome” channels combine the high-definition slickness of today’s YouTube content with the feel of a corporate-training video."

"Mann makes short sketches that deliver positive messages. In one recent video, “RICH Kid WON’T TIP Pizza Boy, He Lives to Regret It,” we see three teenagers playing video games when the doorbell rings, announcing the arrival of the titular pizza boy. One boy’s mother gives him $20 to pay. The dead-eyed son answers the door; finding that the pizza has pineapple on it, he derisively rejects it. The pizza boy — earnest, apologetic, saintly — races away and returns with yet another pizza the son takes umbrage with. Only on the third trip does the son, grudgingly satisfied, take the pizza and leave an eight-cent tip. His mother tells him he wouldn’t be so callous if he’d ever had a job and issues an ultimatum: He won’t get his birthday present (a BMW) unless he works for a month. In a slow-motion montage set to sad oboes, we watch the son deliver pizzas to his own assortment of rude customers. Back home, he orders dinner, and when the original pizza boy appears, the son apologizes and leaves a $5.08 tip. The acting is wooden, but the apology is weirdly affecting; it is, even against the viewer’s will, satisfying to see the sneering jerk from two minutes ago contrite."

"These clips combine the high-definition slickness of today’s YouTube content with the feel of a corporate-training video you would watch alone in your manager’s office on the first day of work. The sets seem hastily decorated, denuded of all but the most obvious props. The acting is either overexaggerated or barely there, and Mann’s subtlety-free writing broadcasts characters’ motivations as loudly as possible. (“Don’t waste your time with poor-looking people,” the dirtball realtor says.) His videos also exude a child’s dreamlike grasp of life’s finer details. The spoiled son still pays for pizza with cash on delivery; the dirtball realtor completes a multimillion-dollar loan application in minutes; the Mexican American son is bafflingly hostile about his mother’s Cinco de Mayo decorations and, incredibly, revolted by the smell of enchiladas. Some stories are built with such broad strokes that they insult the viewer’s intelligence; others are so surreal that they verge into great, if accidental, comedy."

"To some extent, their vagueness works. These videos sit neatly in a long lineage of short-form moral education, from religious parables to fairy tales to the sentimental moralizing of some serialized Victorian literature. Even the dramatic presentation is familiar, recalling everything from the clunky “social guidance” filmstrips of the 1950s to ABC’s “After School Special.” This sort of content was once part of an inescapable monoculture — a part it was easy to assume that the internet, with its tendency toward the niche, was destined to eradicate. Yet it recurs not only in Mann’s videos but in the growing supply of “wholesome” content that resembles, more than anything, the kind of mass-market, chicken-soup-for-the-soul material that thrived decades ago."

"Parents sometimes comment on Mann’s videos to say they intend to show the clips to their kids; like training films, the videos exist in part for one person to foist upon another."

"he also comforts us by ensuring that the antagonists always get their comeuppance, the smooth conclusion we are denied in the real world. And he flatters us by making the problematic characters so obviously wrong that we have no choice but to identify with goodness — and, often, to feel bizarrely moved by the uplifting outcome we always knew was coming."

"They are hermetically sealed re-enactments of real events: situations we have already made up our minds about yet crave to safely relive as fiction."

Related posts:

Are sellers paying Amazon customers to delete negative reviews?

Fake Reviews and Inflated Ratings Are Still a Problem for Amazon 

Photos show China's most surreal tourist spot— a fake Instagram-worthy town full of pretend farmers and phony fishermen

The Myth of Authenticity Or The Story Behind Products 

Fake Authenticity

Students: Make a mistake on purpose, its good for you!

A fake job reference can be just a few clicks away.

Fake Economist Fools Portugal.

Slave Redemption in Sudan. (Fake slaves are sold to those who buy slaves and then give them their freedom)

Can A Product Work Just Because It's Expensive?. (fake medicine)

If It Pays To Have Friends, Can You Pay To Have Friends?. (you can hire fake boyfriends)

Study: Half of American Doctors Give Patients Placebos Without Telling Them.

Saudis grapple with fake street sweepers .

Rent a White Guy: Confessions of a fake businessman from Beijing (by Mitch Moxley in The Atlantic Monthly, excerpts below)

Can adding a phantom third story to their homes help families find a wife for their son?

Why do employers pay extra money to people who study a bunch of subjects in college that they don’t actually need you to know? Signaling

Mexicans buy fake cellphones to hand over in muggings
 
Conspicuous Consumption, Conspicuous Virtue, Thorstein Veblen (and Adam Smith, too!)

How does a company selling used luxury goods spot fakes? (signalling and conspicuous consumption).

Why do stores sometimes pay people to be fake shoppers? 

What if companies can't afford real models for their ads? Use AI generated fake pictures 

Excerpts from "Rent a White Guy"

"Not long ago I was offered work as a quality-control expert with an American company in China I’d never heard of. No experience necessary—which was good, because I had none. I’d be paid $1,000 for a week, put up in a fancy hotel, and wined and dined in Dongying, an industrial city in Shandong province I’d also never heard of. The only requirements were a fair complexion and a suit.

“I call these things ‘White Guy in a Tie’ events,” a Canadian friend of a friend named Jake told me during the recruitment pitch he gave me in Beijing, where I live. “Basically, you put on a suit, shake some hands, and make some money. We’ll be in ‘quality control,’ but nobody’s gonna be doing any quality control. You in?”

I was.

And so I became a fake businessman in China, an often lucrative gig for underworked expatriates here. One friend, an American who works in film, was paid to represent a Canadian company and give a speech espousing a low-carbon future. Another was flown to Shanghai to act as a seasonal-gifts buyer. Recruiting fake businessmen is one way to create the image—particularly, the image of connection—that Chinese companies crave. My Chinese-language tutor, at first aghast about how much we were getting paid, put it this way: “Having foreigners in nice suits gives the company face.”

Six of us met at the Beijing airport, where Jake briefed us on the details. We were supposedly representing a California-based company that was building a facility in Dongying. Our responsibilities would include making daily trips to the construction site, attending a ribbon-cutting ceremony, and hobnobbing. During the ceremony, one of us would have to give a speech as the company’s director. That duty fell to my friend Ernie, who, in his late 30s, was the oldest of our group. His business cards had already been made."

"For the next few days, we sat in the office swatting flies and reading magazines, purportedly high-level employees of a U.S. company that, I later discovered, didn’t really exist."