Stuff and Nonsense

June 22, 2010
Posted by Jay Livingston

Divorce among the wealthy can provide us with a tray of financial delicacies that usually aren’t passed around. In today’s Times, Andrew Ross Sorkin gives us a taste of the goodies coming out of the divorce of Elon Musk, a co-founder of PayPal who says he is now broke. Well, rich-people’s broke – he’s out of cash.

He subsists, according to court filings, on $200,000 a month and still flies his private jet.

But with rich people, it’s not about the money. I know that because I heard Maria Bartiromo a few weeks ago on NPR promoting “her”* book, The 10 Laws of Enduring Success.

Success is a feeling that we get to when we feel content. So I spoke with people like Jack Welch . . . and I asked them all about this so-called stuff in their lives and then I asked them, is that what success is? And so many people told me that purpose, knowing what matters, is so important, because it puts things into perspective for you.

In Jack Welch’s 2002 divorce trial, we learned about the “so-called stuff” – the things that purpose put into perspective for the GE CEO. (Source here.)

In the affidavit, Jane Welch claimed that her husband’s retirement package allowed him unfettered use of corporate jets (a perk valued by an expert as being worth $291,677 a month). He also had a company-owned apartment overlooking Central Park, a limousine, a cook, free flowers, country-club memberships and a charge account at Jean Georges restaurant. He was also entitled to top tickets at the Metropolitan Opera, tennis tournaments such as Wimbledon, and for games played by the Knicks, Yankees and Boston Red Sox. The affidavit revealed that he didn’t even pay for his laundry.

And that’s the retirement package – what he gets after he stops working for GE.

* Written “with” Catherine Whitney. Ms. Whitney’s name is right there on the cover, though in much a smaller font than Bartiromo. Many with-ers wind up on an inside page among the acknowledgments – in the withness protection program.

Distinction on the Velvet Rope

June 21, 2010
Posted by Jay Livingston

What do you do if you got an undergraduate degree from Yale, and your sociology PhD. from Harvard, and you’re on the faculty at the Kellog School of Management at Northwestern? You get a job as a cigarette girl and coat-check girl, of course. At least, that’s what you do if you’re Lauren Rivera and you want to do research about how people read the signs of status. And to do that, you have to gain the confidence of the guys on the velvet rope.

Bourdieu did surveys to see which tastes carried greater capital. Lauren Rivera watched distinction in action. She looked at who did, and who didn’t, get in the door at an “exclusive Manhattan nightclub” (Bungalow 8? Marquee? The Box? C’mon Lauren, you can tell us.)


It isn’t just about how much money you have. It’s about who you are, though obviously the gatekeepers don’t want to admit someone can’t pop the $600 for a bottle of Cristal. They assess identity by the company you keep and what you’ve spent that money on.

Social network mattered most, gender followed. For example, a young woman in jeans stood a higher chance of entrance than a well-dressed man. And an elegantly dressed black man stood little chance of getting in unless he knew someone special.

Know someone. Or know someone who knows someone. If you’re a guy, bring attractive women—ideally younger women in designer clothes. Don’t go with other dudes. And doormen are well versed in trendiness, so wear Coach, Prada, Gucci—but don’t show up in a nice suit with DSW shoes.

(Full disclosure: 1. I had to look up “DSW shoes.” I thought they were something like NSFW shoes. 2. I admire sociologists who do research on nightlife (David Grazian is another). I just wonder what they do about that 8:30 class the next morning.)

The Kellog Schoo’ls story about this research is here.

HT: Robin Hanson

The Market for Corporate-Bashing

June 19, 2010
Posted by Jay Livingston

Why is Hollywood so anti-capitalist?

Marginal Revolution’s Alex Tabarrok was fretting about that question in the Wall Street Journal a few weeks ago. Alex loves capitalism (“the most humane and productive economic system the world has ever known”), so he’s miffed that American movies frequently make capitalists the heavies. Why does Hollywood refuse to show capitalism in its true, wonderful glory?

His explanation begins with a psychological analysis of the people who make the movies – writers and directors. They have, he says, a deep personal resentment of capitalists. They see capitalists as forcing them to sacrifice their art on the altar of commerce.

Capitalists work hard to produce what consumers want. . . . . filmmakers need capitalists for financial support, and so their resentment toward capitalists is especially strong.

Capitalists are nice, hard-working folks. Filmmakers are spiteful ingrates.

Ben Stein, too, thirty years ago, was struck by the anti-business leanings of writers that the media business was lavishly rewarding. Stein put it somewhat differently.

The Hollywood TV writer . . . is actually in a business, selling his labor to brutally callous businessmen. One actually has to go through that experience of writing for money in Hollywood or anywhere else to realize just how unpleasant it is. Most of the pain comes from dealings with business people, such as agents or business affairs officers of production companies and networks.

Hard-working writers, nasty capitalists.

I don’t know whose version is closer to the truth, Stein’s or Tabarrok’s. Both are economists,* both vigorously pro-capitalist. The difference is that Stein has actually worked as a writer in Hollywood.

As his quintessential anti-capitalist, Tabarrok singles out James Cameron, director of the two highest grossing films ever, “Titanic” and “Avatar.”

Despite his commercial success, Mr. Cameron is a notorious corporate basher.

That sentence, especially the word despite, makes sense only if you assume that success is antithetical to corporate bashing. Tabarrok is an economist, I’m not. My knowledge of the field barely extends past what you get at Father Guido Sarducci’s “five minute university” – “supply ana demand.” But I would think that the success of “Avatar,” “Titanic,” and the rest tell us that Cameron is supplying what consumers are demanding, and apparently, that’s corporate-bashing.

* Some people have questioned Stein’s economics perspicacity, especially after his August 2007 New York Times column in which he dismissed concerns about the subprime collapse: “these subprime losses are wildly out of all proportion to the likely damage to the economy from the subprime problems.”

Economists With Trembling Hands

June 18, 2010.
Posted by Jay Livingston

Economist Bryan Caplan blogs today about “trembling hand perfect equilibrium,” a concept he learned as an economics grad student and which he now finds “genuinely enlightening.”

It explains, for example, why imposing harsh punishments for small infractions isn't nearly as smart as it seems . . . The trembling hands concept also explains the value of trying to exceed others’ expectations. In the real world, it’s not smart to apply the minimum acceptable level of effort, or pay others the smallest amount you can get away with.

Doing your best work, paying people decently, and imposing rational penalties for infractions – all possible only if you understand “trembling hand perfect equilibrium,” at least if you’re an economist.

And they say that sociology is the discipline that takes common sense and packages it in fancy, abstruse language.