Bourgeois Dignity by Deidre McCloskey

If you think of economics as a study of how we create wealth, economic theory was pretty much anybody’s guess until we finally made some.  For thousands of years the daily consumption of an individual remained pretty set at around $3 a day.

“Economic history has looked like an ice hockey stick lying on the ground.  It had a long, long horizontal handle at $3 a day extending through the two-hundred- thousand-year history of homo sapiens to 1800, with little bumps upward on the handle in ancient Rome and the early medieval Arab world and high medieval Europe, with regressions to $3 afterward – then a wholly unexpected blade, leading up in the last two out of the two thousand centuries, to $30 a day and in many places well beyond.”  (- McCloskey)   Modern day consumption in countries such as Japan or France hovers around a $100 a day, or in the United States of $120 a day, or in Norway of a $137.

Even at my age I can read a thick, thought provoking book.  What say?  And what I don’t remember, I can go back and check.  The benefit is that I have a bit of my own history and experience to check it against.  This is generally the reason a lot of wisdom is wasted on the youth, I’d guess.

Coincidentally, economics finds itself, at this juncture, in much of the same situation as me.  The world has recently suffered an experience with which to judge its former life against.  And, the metrics are available to measure the reality and amounts of said experience.

This “Great Fact of economic growth discovered by historians and economists in the 1950s and elaborated since then,” has changed everything.   The experience, which Deidre’s book circles, is of an amazing burgeoning of world wealth beginning first in Holland, and then Britain in the 1840s, and then experienced successively by other countries.  “The Big Economic Story of our own times is (when) the Chinese in 1978 and then the Indians in 1991” hopped onto the hockey stick of growth also.

McCloskey has it that modern economics has tended to view the Great Fact of our recent hockey stick growth in narrow materialistic terms because ‘the light is better there’.  McCloskey’s retort would be, ‘but that’s not where the money was made…’   Then he assiduously dismantles all of the classical economic explanations, using material statistics and facts, many previously unavailable to earlier economic theoreticians.

Classical economists like their prudent investors with their rational behavior, but this in not where the money is presently, nor was, at one time, made, McCloskey states.  Rational behavior does not create much wealth.  The historical record demonstrates that rational maximizing behavior generates rather paltry or even unremarkable growth.  One by one, McCloskey eliminates each of the classical economic explanations for the Great Fact – and finds each sorely lacking.  In doing so, he explodes some common beliefs.

For example, wealth is not created by robbing the poor – because they have none.  Certainly some miscreants benefit, but little wealth is obtained.

Slavery was of very little economic benefit to anyone in the supply chain, save the initial en-slavers, who were generally other tribesmen.  The South’s economy would have generated wealth without slavery nearly as it had with.

Trade generates little wealth.  It merely shuffles it around.

The mercantile system likewise generated little increased wealth.  (Though people obviously thought it did!)  While the great business houses (such as the East India Company) might have made some return, the nation’s citizens generally did not share – and more likely suffered  from the increased taxation wrought by the duties of imperialism.  For example, losing the American colonies was of an economic relief to the British.

Even education and scientific research are found lacking as explanations of the Great Fact.  Practical innovative insights generally preceded scientific explanation.  And education can often be counterproductive.  As McCloskey displays, if the wrong lessons are taught and the wrong social structures solidified, an economy can easily stagnate.

McCloskey assiduously eliminates explanation after explanation in order to surround and describe a more humanistic explanation for the Great Fact which is statistically harder to measure.  McCloskey believes that the Great Fact is explained by innovation, which alone has the power to create great wealth.  And he explains the origins and growth of innovation by way of the Bourgeois Revaluation: a cultural transformation, in which added to the value of prudence in handling ones finances, the bourgeois also found the liberty to innovate and cultural dignity for doing so.  These two principles, in McCloskey’s telling, unleashed a burgeoning economy through the creation of wealth through innovation – doing it better and easier.

Virtue has been often held up to be its own reward.  So it can be calming and reassuring to read a book in which Virtue makes us a lot of money, too -especially when the thinking seems to be wide-ranging and credible.  You might enjoy reading this one – a little bit nightly, taken like a pill following the evening news – with a little tea and chocolate, your dog and cat.

If you enjoyed this post, you may try more of Carl Nelson found here:  http://www.magicbeanbooks.co/home.html

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The Short Version / Reviews

“Read All About It!”

(The Growth of Government)

 

Crisis and Leviathan by Robert Higgs

 The growth of the private sector is rather magical.  You simply enforce property rights and a few other nurturing legal traditions, and commerce grows.  It’s rather like planting seeds in the proper soil and providing them with sun and water.  The miracle of economic growth occurs, and with it, the rise in individual income and comforts.

There is nothing magical about the growth of government.  It happens because certain people enforce it, and many more persons either allow or agree to it.  Most governments began as what nowadays would be seen as criminal enterprises.

The nature of the private sector is rather splendid and wonderful, both because of its natural quality and diversity – and because of its complexity that passes our understanding.

The complex, brutal, many times exasperating nature of government, on the other hand, can be byzantine, but it rarely appears wonderful, except in its self-limitations.  For example, with our own system of “checks and balances”, the Constitution, and the Bill of Rights, the wonder of humility has been introduced to government.  A twig of humanity has been grafted onto an otherwise powerful, unfeeling enterprise, which, from time to time, casts its entire monolithic pre-eminence in a noble light.  (Picture the glowing Dome of Congress.)  Other citizenry have found other ways to ‘humble’ their governments.  But, for the most part, “shock and awe” and raw power, the barrel of a gun – and not wonder – are the glistening aspects of most government.

Because the private sector grows from a natural action, whose nature passes our complete understanding – when it fails, when the economy fails us, we believers are left with little but our faith to sustain us.  When the seeds of enterprise we have planted grow and wither, there are many factors we can look at, and remedies we can try… but mostly we must have faith that the seeds still contain life and the plants can be saved.  And that the miracle which passes our understanding will blossom again.

Believers in government, however, need no faith.  In fact, they often disparage faith.  Believers in government are natural atheists and pragmatists.  They are “show me the money”, people.  And when a crisis occurs, the government offers to “show people the money”.  It’s rather like looking for your keys outside the tent, rather than inside where you lost them – because the light outside is better.

The theme of Higg’s book is that what happens when a crisis occurs depends upon the prevailing ideology of the times; that is whether we will hew to a faith in our natural occurring systems, and the value creating miracle of the private sector – or whether we have more faith in governmental directives, whose nature would seem more rational and apparent, and who can print money at will.

In Crisis and Leviathan, Robert Higgs traces the evolving nature of our national ideology, and the crisis’s which have formed it.  And what he has shown, is that in times of crisis, action tends to be valued over faith by the populace.   These crises’s stimulate governmental action which manifest as governmental expansion, which, assuming that the crisis is surpassed and the nation survives, creates a change in ideology.  This changed ideology, which is more comfortable with a larger government, insures that the governmental expansion which occurred, never shrinks to pre-crisis size but solidifies as real growth.  And, over time, and successive crisis, our faith in the natural guiding order of the private sector shrinks in comparison with our comfort in governmental solutions.  And just as a plant grows exponentially, the government grows as each succeeding crisis provides it with the ideological support to do so.  Of course, much of this growth depends upon concealed costs and fiat (printed) money.  And from there comes a sobering foreboding.

Higgs also notes that an ideology is a creation of its time.  Just as a plant cannot shrink back into a smaller plant or a seed, neither can an ideology ever become what it once was.  There is no going back to the yesteryears.

Crisis and the Leviathan is an engrossing, step by step, factual, sobering account, of why our government has gotten to the size it is, and why we are where we are as a nation – and he offers a rather dismal outlook, for anyone who values individual freedoms and the joy of personal enterprise.

Nevertheless, it’s a fascinating tour through history as situations are seen through the differing ideological lenses of history, as black becomes white and white, black – and laws are taken to mean just the opposite of what they appear to have said, when written.  You can almost hear the street paper boy shouting, as if hawking some lurid murder, “Read all about it!”

Picture from Google Images

From the Editor’s Perch…

Fashion

 

            In the book, Fascism versus Capitalism, Llwellyn Rockwell Jr. mentions the Harvard philosopher, Santayana’s observation “that ideas aren’t usually abandoned because they have been refuted; they are abandoned when they become unfashionable.”  Most people reading this who have tried to introduce an unfashionable notion probably have suffered this observation.  You either find yourself socially isolated.   Or you are made to feel as if you are speaking in a foreign tongue, as if, as a woman at a theater rehearsal once told me (regarding my thoughts):  “I feel as if I am talking to someone from the moon.”  Thoughts judged to be unfashionable are simply left to die alone while conversing to the backs and sides of heads, and thence to float away, detached and withered, into the cold outer reaches.

The most dramatic example I’ve run across of this phenomenon is from the same book as mentioned above.  Henry Hazlitt was an editorial writer for the New York Times from 1934 till 1945 who backed a return to the gold standard.  He was finally sacked for his editorials in opposition to the Breton Woods agreement of 1945 establishing the World Bank.   Hazlitt wrote: “it would be difficult to think of a more serious threat to world stability and full production than the continual prospect of a uniform world inflation to which the politicians of every country would be so easily tempted.”  Throughout his tenure, no one, as far as can be seen, joined him in his warnings.  He could not even generate a credible opposition.  His opposition around the Breton Woods agreement ignored him, claiming a world catastrophe if the measure were not passed.

History has proved Henry Hazlitt correct.  And millions of lives perhaps need not have been lost to the devastations of WWII if the advent of rampant inflation had not been there to fuel the rise of fascist philosophies.  But no matter.  WWII did occur.  The Times has never apologized.  (Don’t hold your breath!)  And Henry Hazlitt lost his job.  John Maynard Keynes ideas appeared to be new.  Henry Hazlitt’s appeared to be old.  To be included in a current conversation you must be perceived to be ‘new’ – otherwise, the argument goes, why have one?   Though there was no factual basis of incompetence for firing Henry Hazlitt, by 1945 the Times publisher,  Arthur Sulzberger, “had had enough.”  “When 43 governments sign an agreement, I don’t see how the Times can any longer combat this,” he said.

 

“How important is sound money?  The whole of civilization depends on it,” says Llewellyn Rockwell.  Nevertheless, fashion trumps it.

 

            If these anecdotes don’t arouse you, then I give up.  I can’t reach you with a sharp pin.

 

But fashion itself is a fascinating topic.  It seems to move and change on its own timeline, without regard for events.  (Which, I would suppose is as we should expect, given its impervious nature.)  In my younger years I lived in a home I’d purchased on the cheap in the Rainier Valley area of Seattle.   This section of Seattle contained (and still does) the most diversified population in terms of race and ethnicity of any area in King County.  While I lived there, gang violence was endemic.  I still remember my neighbor arguing loudly in the middle of our street with his son not to join the gang which was waiting for him on the corner.  I had passed the years watching this decent kid grow from a toddler, to the middle school aged youngster who now apparently had been judged old enough to join the gang.  I also remember a neighborhood friend relating the tale of going to pick up her son at school and having to hug the floor of her car outside of the school to escape the exchange of bullets passing overhead.  Our community and the city government tried this and they tried that.  Then, after it seemed I had given up hope and had moved on anyway, it just ended.  No more violence.  No more gangs on the corner.  And yet everything else was the same.  Same people.  Same laws.  Same police.   Same homes.  Same everything.  Only the people who did that sort of thing, didn’t do it anymore.  As near as I could tell, it just passed out of fashion.

Photo is Lady Gaga from Google Images

From the Editor’s Perch…

A Brief Review

 

History is written by the winners, as they say, but it’s not because there is not lots of material about losers in the public and private archives, says Scott Sandage.  “The voices of and experiences of men who failed (and of their wives and families) echo from private letters, diaries, business records, bankruptcy cases, suicide notes, political mail, credit agency reports, charity requests, and memoirs.”

As anybody with eyeballs is apt to see, failure is the much more likely result of business enterprise than success.  And if we are to celebrate the fruits of a Darwinian process, such as successful enterprise is – then we ought, as a culture, to explore ways to reap fertility from failed enterprise.  Not just economically, but culturally; making use of losers as a cultural resource, a fertile bed from which our next generation of achievers arise.  Just look around.  We paddle through a Sargasso Sea of failures every day.   History is stuffed with the biographies of high achievers whose upbringings came from families of failed patriarchs.   There is good fertile soil here.  But what is done to respect it?

It’s no surprise that our society produces much more failure than success, and much more quiet desperation than joy.  Competition naturally produces many more losers than winners.  And yet, Sandage would point out, we structure our social interchange as if success were the only virtuous possibility.  And in doing so, create a lot of suffering.  (And also, by the way, limit a lot of social potential.)  An interesting example he points out is contractual law.   The act of signing a contract “is a promise to be successful”.   Otherwise obligations could not be met.  Of course, this is preposterous.  Most enterprises fail.

And then, culturally, when we see failure, we look for a “reason in the man”, a phrase Sandage notes often passed around in the 19^th century.  But if you examine the victims of the 19^th century financial panics, which Sandage does, the most common plea of the pending bankrupt was that, he could pay his debts if only his customers would pay him!  Business naturally placed even the most shrewd and enterprising businessman within a web of contracts which turning together greatly contribute to either his success or failure.  This is as true today.

There is an awful lot more to be said about Sandage’s book, but I’ll close this short review with these two of his comments:  “Nineteenth-century Americans swapped liberty for ambition, adopting the striver’s ethic as the best of all possible freedoms.”  “Soon a man would be nothing more nor less than his occupation.”

But readers!  Hope springs eternal.

My next post reviews an article from The New Yorker about how a new entrepreneurial culture in San Francisco tends “to regard success in terms of autonomy”.  “This braiding of tech-business growth with life-style values and aesthetics – and from there, the world of art- creeps many people out.”

More to come.

Seattle Celebrity News!

UPDATE!

“Guys and Gals,

Eclectic Theater Company and Odd Duck Studio are not closing down because of a 3-day pay or vacate notice. We’ve made a payment and are making another payment today and have communicated with the property management, letting them know that we intend to be caught up by the end of the month.

This is not a hopeless situation. It’s an opportunity to get back on track. With fiscal sponsorship from the Shunpike, our IndieGoGo Campaign, Box Office from future shows and anticipated production rental revenue, we will get caught up and stabilized.

So do not hesitate to make a monetary donation of any amount you can muster either through our Click and Pledge button on our website athttp://www.eclectictheatercompany.org/ or via a contribution to our IndieGoGo Campaign here: http://igg.me/p/168795?a=64586”  – Rik Deskin

Photos by Carl Nelson

Seattle Celebrity News!

Editor’s Note:  Rik Deskin’s interview was posted here https://schn00dles.wordpress.com/category/seattle-celebrity-news/page/4/ about a year and a half ago.  Since then, Rik has followed through on his urge to promote comedy through his Odd Duck venue.  But the economics of the theater are quite bleak.  Producing live theater is for the faithful.  And when some artists involved behave like rabble, it can seem even bleaker.  Nevertheless, a person who ‘does’ something for what they believe in, that’s a little more than themselves, can always hold their head up.  Here’s a follow-up: 

Musing the Equation

A Behind-the-Scenes Look into the Economy of Live Theater

“A note about Odd Duck Studio to Comedians, Actors, Performers and Producers

Some of you know this. Some of you may be oblivious. I write this after spending several long hours in the Emergency Room with my 17-year old (for a possible concussion) and only a few hours of sleep. Don’t worry, he’s okay, but I’m now down $150 for the co-pay.

I am not independently wealthy. I am an unemployed actor. With a wife and four kids. Occasionally I do book acting work. Sometimes I work as a stagehand. Sometimes as a temp.

I started Eclectic Theater Company as a non-profit organization, hopeful that eventually, this company would provide me some income as the Producing Artistic Director. (I’m still working on that income part)

In 2006, my company, still all volunteer, took over management of the Odd Duck Studio. Primarily to have a venue where ETC could produce plays regularly and have a home, as well as be able to rent out the space to itinerant theater companies and co-produce Improv, Sketch and Stand-Up Comedy.

It’s been an uphill battle just to keep the doors open since the economy tanked in 2008. Since the beginning of the company, I have always given half of what was made at the box office or in donations to the performers and artists that work at my theater on anything I produced or co-produced. Sometimes sacrificing paying the rent on time (I do have to pay monthly rent for Odd Duck Studio: I’m not the owner), sometimes borrowing from my own family’s meager income to keep it afloat.

Which is why in May, I instituted a new policy on all productions and co-productions that were dependent on a box office split. The first $125 in the door paid the rent for the night. The second $125 would go to the performers. After that it would be a 50/50 split. But before anything was distributed, we would have to take 5% out of the overall gross for the Admissions Tax that must be paid to the City of Seattle.

Katie Morgan

These kinds of shows are risky to me. Sometimes they can sell-out, enabling everyone to walk away happy. Sometimes they barely meet the rent threshold. And I staff it with volunteers and spend volunteer time to market and try to sell tickets. It’s great for the other co-producer. All they have to do is promote the show and show up to perform. Which is far easier and less risky for them than renting the space at a flat rate and selling tickets and providing their own crew to run the box office, lights and sound.
Last year, a producer booked a large rental use of the Odd Duck Studio that would have covered our basic costs (rent and electricity) from May-July. They cancelled in May, leaving me scrambling to fill the dates with something that could possibly generate revenue. Right now we are two months behind in the rent.

I posted in all the Facebook groups that I’m in, that cover theatre, film, improv and stand-up to see if anyone wanted to rent space, produce or co-produce shows. Nothing. Only the sound of crickets. So I put together the Brown Bag Comedy Primetime Specials. I thought I was pretty clear in my original posting that this endeavor was solely dependent on box office revenue And that I would need the help of the Comics booked to promote their shows so that we can sell tickets so that I can pay the Comics. So far only two shows have made the rent and given something back to the Comics. I would much rather pay $74 to a headliner (I know that’s below Comedy Club rates) than $1.35. But that can only happen when tickets are sold and they don’t do that by themselves.

This brings up another point. Odd Duck Studio is not a Comedy Club. It is a theater run by Eclectic Theater Company, a non-profit organization. We don’t have a kitchen, restaurant or full bar to cover our costs like other venues. Our partial bar/concessions basically pays for itself most nights. The person behind the concessions counter only makes tips. Last night I made $4 between two shows. I think the most I’ve made is $35 in one night.

Here is my original post from May 22, 2012:

“Eclectic Theater Company at Odd Duck Studio is looking for Comedians for a series of Brown Bag Comedy Primetime Friday night specials throughout the summer. Two formats: Hour long special with two 15 minute Opener slots (one is the Host) and a 30 minute Feature. Ticket is $10. 50% of the box office (after 5% admissions tax) goes to the Comedians after rent threshold has been met ($125). That means when the show sells out (49 seats), 3 Comedians would be splitting up to $232.75.

90 minute special would be a traditional format with a MC/Opener (15 minutes), Feature (30 minutes) and Headliner (45 minutes). $15 Ticket with 3 Comedians splitting up to $349.12. Same applies with rent, etc above.

The splits would be proportional to performance time lengths.

Keep in mind that I’m a volunteer running a non-profit theater venue, so 50% is the maximum I can split on these shows in order to keep the doors open and I would need the help of the Comedians booked to actually promote and sell their shows. I know the door split is less than some Comedy Clubs, but that’s all I can offer for now.

I know it’s possible to do as demonstrated by Hari Kondabolu and Katie Morgan over the last two years.

With this all in mind I’m looking for serious Comedians willing to invest their time and effort to being on the rosters of these shows and making a little extra pocket change. As soon as the rosters are full for each show, I can begin listing them on Brown Paper Tickets and marketing. And if any savvy graphic creators want to design an image for a show or all the shows, a percentage can go to compensating that as well.

Show dates will be:

June 1, 8:30-9:30pm
June 15, 8-9:30pm
June 22, 8:30-9:30pm
June 29, 8-9:30pm
July 6, 8:30-9:30pm
July 13, 8-9:30pm
July 27, 8:30-9:30pm”

Why tell you this? Because I love Stand-Up Comedy as much as I love Theatre, Improv, Sketch Comedy and Film. Stand-Up has been a component of Eclectic Theater Company’s programming as early as 2007 when Blood Squad would bring in Comics from PROK to open the shows. It’s been a part of my life since I trained in Improv and Sketch, and observed Comics working at The Comedy Workshop in Houston back in 1988-1989. In December, 2010, there was a vacuum left by Giggles turning its back on Comedians. I wanted to help by offering a weekly open mic to help Comedians work their craft and give Comedians an easy venue to work with and sell-out (like Hari Kondabolu, Katie Morgan, Blood Squad and Yogi Paliwal) and help me keep the venue open as a place for all of us to work.

I want you to understand the economics. The business of the art. On nights like last night where the bulk of the tickets are sold through Brown Paper Tickets instead of over the phone or in person, I don’t see that money until the following weekend. On the evenings where we do sell enough so that I can give back to the performers, that money usually comes out of any cash sales that happen because I want to send Comics home with something.

Every once in a great while, I encounter an actor or a burlesque artist or a comedian that does not understand why I can’t pay them the rates they are accustomed to and that I wish I could pay them and they somehow think I’ve lied to them and am living it big off a show that sells less than half the 49 seat capacity. Ladies and Gentlemen, here is the truth. I do not make a penny (beyond potential tips) until we pass the $250 mark at the box office on any given night. And if rent needs to be paid, electricity, insurance, then I waive any possible pay for my time in order to keep the theater open and available.

So those open mic nights where no one buys a ticket and no one buys a beverage or snack? I eat that time and expense bussing or driving to and fro and the time to facilitate other performers cultivating their craft.

From this point on, you cannot say that I never explained it to you. This is my contract with all of you that choose to perform at my theater. I encourage anyone out there that thinks they can do it better than me and keep this venue open, then by all means the gauntlet is thrown. I’d love to have your help. If you are going to take a hit financially by coming to perform in a show that has no guarantee that it will sell, then don’t do it. I’m not the Mafia. I’m not going to twist your arm. I’m trying to build something long-term here that I am hopeful will eventually always pay everyone that works with my company.

Sincerely,

Rik Deskin”

Photos by Carl Nelson