Peter Levin’s Rethinking Markets

September 20, 2007

Performativity…in Kid Nation

Filed under: Daily — Peter @ 7:31 am

So I’m minding my own business, watching the debut of Kid Nation last night. Fun premise, I thought, stick 40 kids in a desert town and watch as they tear themselves apart, Lord of the Flies style. Or make a better world. Or whatever.

But boy was I turned off by the way they structure the show. First, they bus in 36 of the kids, and then helicopter in 4 of them, to act as town council. So rule #1 of the new future - embedded hierarchy. It’s kind of funny, I actually expected the kids would reproduce some sort of democracy/hierarchy, but what a problem if they ended up with either a radical democratic or fascist system - there’s a 14-year-old boy who was a candidate for the latter, to be sure.

Second, after forcing these kids to split into 4 arbitrary teams, so that they could compete against one another (go collectivism!), they set up the system of rewards and resource allocation. Let’s go to the tape:

The pioneers gather around the Chapel, where Jonathan rings the bell. Jonathan shows the Kids the Job Board, which will help provide a little order for Bonanza City. The Kids learn that they will be divided into four classes to run the town: Upper Class, Merchants, Cooks and Laborers. Each District will be responsible for chores related to their specific Class and will be paid accordingly in buffalo nickels.

• The Laborers will clean the outhouse, pick up garbage and haul water for the entire town, for the pay of just two buffalo nickels.
• The Cooks will be paid twenty-five cents each to cook for the town, do dishes and care for the town livestock.
• The Merchants will be paid fifty cents each to run a grocery store, dry goods store and a saloon that sells soda for a nickel.
• The Upper Class gets an entire dollar and can do whatever they choose.

Ok, seriously, what the hell!? This part just steams me - of the limitless ways that authority and resources could be allocated, two of the most important elements for this little experiment, adults impose an unelected council and an unequal class system.

One of two things are going to happen now. Either the kids are going to rise up and decide this is a stupid way to start running a town - or I’m going to lose interest. WTF, CBS.

UPDATE: What the heck, I google ‘inequality United States’ and of the three top hits, one is the Heritage Foundation, one is the US Census, and one is the Becker-Posner blog? Is this for reals?

September 11, 2007

What counts in market accounting?

Filed under: Daily — Peter @ 10:49 am

An article in the NYT a few days back brought back one of those nagging little questions that gets at the heart of economic sociology. The article is about balance sheets in the new economy - the question is, how should we account for intangibles? Reputation, value of brand, environmental friendliness, IT investment, innovation, the list goes on:

But because accountants have found it impossible to determine the value or the risk of such assets with certainty or objectivity, official financial accounting rules give intangibles a wide berth.

Instead, each company makes its own valuation of intangibles, guided only by very general accounting standards. “There is not the rigor and uniformity that governs the valuation of ‘tangibles.’ In all cases, there is little relationship to market value,” said Mr. Kossovsky, who is also the executive secretary of the Intangible Assets Finance Society, an advocacy group that is working to develop new standards and practices for monetizing intangible assets.

I agree with this, but I think it’s patently stupid to think that this is either more important or just more because of the knowledge economy. The conventions that go into what ‘counts’ are just that - conventions - and the fact that some conventions, like inputs and outputs, sales and revenue, are highly institutionalized and thus taken for granted is not evidence of new intangibles in a new economy.

What it is evidence of is that there is still a huge opportunity for someone to come up with a better way to talk about the relationship between economy and society. What makes these things ‘intangible’ is not their importance but their distance from seemingly ’solid’ economic stuff. That one would really believe that earnings is a more solid measure than reputation is a testament to accountants’ persuasiveness and influence over time, not that earnings is solid and reputation is intangible.