Trick or Treat and The Street

October 31, 2012
Posted by Jay Livingston

Why do the Wall Street super-rich seem so dissatisfied.  As a non-rich person, I like to think that I’d feel very satisfied if I had tens of millions of dollars or more; that I wouldn’t spend long days doing whatever it is that hedge funders or derivativistas do just to supersize my wealth; that I wouldn’t be disgruntled that my bonus from Goldman was a measly $11 million when the guy down the hall got $14 million?*  (I actually heard such a story from someone who knows.)  What could I do with $14 million that I couldn’t do with $11 million?

Obviously, my thinking about this was all wrong, and Halloween two years ago showed me why. 

We took a little tour of the building to see what people on other floors were doing.  (One family on thirteen made an elaborate haunted house out in the hallway.)  We left the basket of candy on a small table outside our apartment.

As I was coming back to my apartment, I saw two boys of twelve or so standing over our table scooping the candy bars into their bags.  They saw me, turned and ran past.  When I got to the door, I saw that the basket was empty except for a couple of Almond Joys. They had probably done this at other apartments in addition to whatever they got by knocking on doors. 

Could anyone actually eat that much candy? Probably not. This was not about the inherent pleasure of Snickers. It was some sort of competitive game, and the candy was just a way of keeping score.  Satisfaction came not from eating the candy but from the thrill of skirting the rules to get a lot of it and then from just having a lot of it for the sake of having it, or at least having more of it than other kids.

Are they any different from the super-rich? Well, yes. These twelve-year olds would not claim that what they do is virtuous or that it benefits all kidkind or that hyperglycemia, for want of a better word, is good. 

Maybe Wall St. should start giving bonuses in the form of Snickers, or better yet, lower-value currency like Necco Wafers and tiny boxes of Sun-Maid raisins.  (More on candy rates of exchange here.)


* This earlier post argues that greed is not so much  personal as institutional.  Its sources lie not in the traits of the traders but in the structure of  the Street.  

Art as a Commodity

October 30, 2012
Posted by Jay Livingston

Andrew Gelman looks at my post about the fake Rothko from a slightly different angle – moral outrage. If you paid $8 million for what turns out to be a fake, you’ve been ripped off, and you react accordingly.

I agree.  But the moral consideration still doesn’t close the gap between aesthetic value and market value. You feel ripped off only if you were thinking of the Rothko as a commodity.

Two (or two and a half) personal anecdotes relate to this distinction, though I’m not sure how.

When I was a young grad student, I bought a couple of Calder prints as a birthday gift for my mother.  The woman in the art shop said that if I preferred, she had the same prints but signed by Calder.  They cost ten times as much.

“You mean they’re identical except for a signature?” I asked.  (How naive I was.)  I bought the unsigned ones, very pleased with myself for getting such a bargain.  I had the same prints that some artsy pretentious schmuck was going to pay ten times as much for.

When my mother died, we consigned the prints, along with much of the rest of her stuff, to an auction house. 

They sold for much more than I’d paid decades earlier, but it was still less than I’d hoped. I kept wondering: what if I’d bought the signed version?  How much more would a signed Calder have appreciated?

My first summer in New York, I met a guy at the tennis courts who turned out to be an art dealer.  (The people who have their afternoons free to play tennis are people who don’t have real jobs – musicians, actors, art dealers, professors . . .)

One afternoon I asked him, “Just hypothetically, if I was going to buy something, what would you suggest?”

“Well, right now I have some Frank Stella drawings you could have for $200.”

I passed.  It seemed like a lot of money back then, at least to me, even if I’d been crazy about Stella, which I wasn’t.

Occasionally, I still find myself thinking: what if I’d bought one (or more) as an investment, as a commodity?  I’d have done well.


I once asked the art dealer* if he’d seen some art show that was getting good coverage in the press.  No, he said. The only art that he could appreciate now was from the Renaissance. Why? I asked.

“Because I know I can’t touch it. With anything else, I’m looking at it and thinking about whether I could buy it and who I could sell it to and what I could get for it. I can’t enjoy it as art.”


* What I didn’t know at the time was that he didn’t really think of himself as an art dealer.  It was just something he did when he couldn’t make a living in his true metier – theater.  (I just discovered this by searching for him on the Internet. And now I realize why his regular tennis partner was a conductor/musical-director who did Broadway and other non-symphony gigs.)

Control Freaks

October 28, 2012
Posted by Jay Livingston

There’s much to be said for control. “Create Your Own Economy,” says Tyler Cowen in a book of the same name. Lane Kenworthy (here) summarizes part of Cowen’s argument:
Imposing order on information is psychologically satisfying. The increase in our ability to control the amount, the content, and the timing of information and entertainment we consume may be just as valuable, in terms of our well-being, as the increase in the amount of information to which we have access.
But do we really want to turn our lives into those Holiday Inn ads that promised “No Surprises”? 

Halloween is coming, and if you go to a costume party or wait for kids to come to the door for candy, you know you’re going to see people in costume. That’s fun. But last night I found it more amusing to see costumes in surprising places. 

You don’t expect to see a knight waiting for the downtown express.

When you’re walking to Times Square, you don’t expect to be approached by three gorillas.

These ghouls were just outside the entrance to the subway.

If I had seen these girls at a costume party, I would have shrugged – some girls in store-bought costumes. 

But seeing them in such an incongruous place – the stairs to the subway – tickled me.  And maybe when they got to the top of the steps they were tickled to see those zombies, more so than if they’d seen them at a costume party. 

Control is nice, but it isn’t everything.  You can’t tickle yourself.  (I don’t know, maybe Tyler Cowen can.)

Silly Ideas About Voting

October 27, 2012
Posted by Jay Livingston

“Elections are silly season,” says Katherine Mangu-Ward at Reason.  I agree, but on different grounds.  Mangu-Ward says that voting itself is silly, and so are the reasons people give for voting.  My view is that what’s silly are articles like Mangu-Ward’s. 

She repeats the usual arguments against voting:
  •  your vote will not make a difference – elections are almost never decided by a single vote
  •  “people do not typically vote in ways that align with their personal material interests.”
  •  “the expected utility of your vote still amounts to approximately bupkes.”
  •  the wrong people vote –  “Get-out-the-vote campaigns promote precisely the kind of morally condemnable ignorant voting we should be discouraging.”
  •  people vote for “expressive” reasons – “Ignorant expressive voters, even rationally ignorant ones, may be committing immoral acts”
Underlying all these arguments and underlying her contempt for voting is one crucial assumption: the only worthwhile motive is calculated, individual self-interest.   Little wonder that most of the people who make these arguments are free-market economists* –  the people who also have a hard time wrapping their mind around economically irrational customs like tipping and Christmas presents.

The individual rationalists do manage to see the social motives that bring people to the polls – for example, a feeling of connection to wider communities.  (An earlier post on this sentiment is here).  But that connection as a legitimate motivation seems to have lost strength. That’s why Obama’s brief mention of citizenship in his acceptance speech was so unusual.  Much more common is the idea implicit in Romney’s statements:  Ask not what you can do for your country, ask how you can make a lot of money as an entrepreneur.

That difference in the way we think about citizenship (or don’t bother to think about citizenship) is nothing new.  Nearly thirty years ago in Habits of the Heart, Robert Bellah and co-authors wrote about Biblical and republican traditions in America, traditions embodied in the small-town America we feel so much nostalgia for.  We feel that nostalgia because in the America of modernity and mobility, political discussion often speaks the language of “ individual utilitarianism.”  Mangu-Ward provides a stunning example.  She seems to be aware of the concept of citizenship – voting or participating because you are a member of the polity  –  but rather than celebrate citizenship as an important foundation of the nation, she dismisses this sentiment as unworthy.  It is “silly” and even “immoral.” **

And they say that it’s the liberals who are elitists.

*Mangu-Ward is a journalist with an undergraduate degree in political science and philosophy, but the people she cites are conservative economists like Casey Mulligan and Greg Mankiw).

** Andrew Gelman (here) finds other flaws in Mangu-Ward’s essay – the “innumberacy” of some of her calculations and her assertion that “Rich people are not more likely to vote Republican,” which is just factually wrong.