Tuesday, 22 June 2010

Economic thinking and political radio shows

Our main objective when teaching Economics is that students become capable of using economic thinking to analyze problems. Unfortunately many still believe that Economics is about regurgitating ideas (imperfectly) learned by heart or just knowing where to invest. Economics changes your way of thinking and will help tremendously in your understanding of the world. Moreover, this "economic mindset" is not that difficult to grasp and once you start using it you will be able to apply it to many aspects of your everyday life. Take for instance this fragment from Consider the lobster (2005), a book by late David Foster Wallace (in the photo), one of the greatest modern american writers and, also, an economic thinker. He uses the basic ideas of public good provision to analyze the rather conservative leaning of political radio shows in the US.

It is a fallacy that political talk radio is motivated by ideology

"The persistence of this fallacy among left-wing opponents of talk radio is extraordinary (...) the usual claim here is that right-wing radio is "owned by large, profit-hungry corporations of wealthy, profit-driven individuals, who use their companies to push a conservative, pro-capitalist agenda." This analysis also identifies the gross economic illogic of this claim. Suppose that I am the conservative and rabidly capitalist owner of a radio company. I believe that the free-market conservatism is Truth and that the US would be better off in every way if everybody were conservative. This, for me, makes conservatism a "public good" in the Intro Econ sense of the term - i.e., a conservative electorate is a public good in the same way that a clean environment or a healthy populace is a public good. And the same basic economics that explains corporate contributions to air pollution and obesity explains why my radio company has zero incentive to promote the public good of conservatism. Because the time and money my one company would spend trying to spread the Truth would yield (at best) only a tiny increase in the conservatism of the whole country - and yet the advantages of that increased conservatism would be shared by everyone, including my radio competitors, even though they wouldn't have put themselves out one bit to help shift public opinion. In other words, I alone would have paid for a benefit that my competition could also enjoy, free. All of which plainly would not be good business... which is why it is actually in my company's best interests to "under-invest" in promulgating ideology."
Impressive, don´t you think?

3 comments:

  1. It's a bit subtle though. Not his reasoning, but what exactly he was getting at. He seems right that what those radio stations do contradicts profit maximization. But what they broadcast may well be "motivated by ideology" in so far as they are not purely "profit-driven".

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  2. Well "Kohei", if that is your real name, the author is merely theorizing that at best he is not following self-interest, subordinated by a zealous and outwardly bellicose plan to not only persuade but envelope his auidence with right-wing conservatism, rather, to him conservatism is a brand.

    They are advertising the show through this brand, people watch this show because of this brand, and thus the show gets viewers and should (by most means) make money because the brand is political but the show is about exploiting the brand not the political nativity of its viewers.

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