30 20-Dollar Call Options On The Sidewalk
Ted Gioia has a lovely little blog post out on how he would revitalize arts and culture.
Each of these suggestions deserves leisurely rumination, and I can pay a blog post no higher compliment than that.
My personal favorite is this one:
(The reason this is a screenshot rather than an excerpt is because Wordpress either allows for a bullet point list, or for text to be formatted as an excerpt, but not both at the same time. Don't ask, I don't know)
As an economist, though, I have some uncomfortable questions to ask (of all of us, not the author, to be clear). Chief among which is this one: if these suggestions make sense, why have they not been implemented thus far?
Economists have a way of referring to this phenomenon/problem (of course they do). They speak sagely of the fact that there are no twenty dollar bills lying on the sidewalk:
There’s an old joke about economists that usually goes along these lines:
Two economists are walking down the street. One of them says “Look, there’s a twenty-dollar bill on the sidewalk!” The other economist says “No there’s not. If there was, someone would have picked it up already.”
There are a few ways to interpret this joke. The one most charitable to economists is to see it as a call for intellectual humility. If you think you see something valuable, just sitting out there in plain view, and for some reason nobody else has noticed it, you should pause and reconsider if things really are as they appear to you. Maybe you’re right and there really is something there, but it’s more likely that your eyes are fooling you.
There is a real kernel of wisdom in this. When someone comes up with what they think is a brilliant new idea, it’s reasonable to ask, “If this really is a great idea, why hasn’t anyone else thought about it or done it?”
And so with these suggestions too. If these are such great ideas, why haven't they been implemented?
Let me be clear: I really do think they're great ideas. I have my own opinions about which ones are the best (and this implies by definition that I like some more than the others), and you will have your own ranking. But this post is not intended to be a snarky one - far from it.
Instead, I hope to be able to explain to you the difference between a great idea and an implementable idea. The reason these ideas are definitely in the first category but not, alas, in the second, is because of two simple and related reasons.
We prioritize short-term gains over long term gains.
You simply cannot escape the fact that incentives matter (and the fact that Goodhart's Law exists). And that is why the fifteenth item in the list is never going to happen, to take just one example:
Rolling Stone, Billboard, and other industry periodicals should do more in-depth investigative reporting into corruption and deception in the music business. It’s curious how little interest they have in those matters.
In fact, if you are a student of economics, you will have a lot of fun going through the list and asking yourself how and why the principle that "incentives matter" will imply that a lot of these things, though great in theory, will never work out in practice.
Note that when economists say "will have a lot of fun", it's not quite the same thing as a normal human being using the phrase.
But even worse is the fact that most people can recognize that these ideas are in effect bets that will only pay off in the long run. So what are we more likely to choose? A guaranteed payoff that accrues to us immediately, or a guaranteed payoff that accrues to us in the long run? Will you, in other words, have the marshmallow right away, or will you wait?
We live in a world where we will, more often than not, gobble up the (musical) marshmallow right away. And not just the musical marshmallows - we live in a culture where delayed gratification is increasingly not an option worth considering.
And so much as I'd like to believe that some of these ideas will see the light of the day, as an economist, I'd want to bet against it.
Make my day and tell me how I'm wrong!