Pay, play or go away?

Here we go social sciences fans, another opportunity for me to apply my studies to my views on the world. As you will have read, I have chosen economics as my specialist subject. So far in the module, I have looked at industrial revolution, and the questions of whether we are living through a new one, or whether the process has been continuous. That is a point to which I will return. Since that entry I have read refined points on industry life cycle, entry and exit costs (to any given market/industry/business), and shakedown (the process whereby inefficient firms or those not innovative drop out). I have just finished reading about strategic competition, collusion, and price taking, and this most recent study will be the thrust of this entry.

How, then , can I apply this to my personal view on the world? In this case I have decided to look at the music scene in Glasgow, which has been in Renaissance for the last decade, having suffered from the demoralising effects of a practice known as 'Pay to Play'. In a nutshell, this policy meant musicians had to ensure a certain amount of ticket sales at their gigs, in order to avoid being out of pocket. The practice was extended by some venues by tying musicians into a deal which meant hiring the PA system and sound engineer belonging to the venue. These factors (amongst others) did a lot of damage to the music scene in Glasgow, causing many musicians, to use a local parlance, to feel scunnered.

Now, with the scene set, here's the (social) science bit. Since my last entry Long Live the (Industrial) Revolution, Feb 2012,  I have been studying cost curves, which look at various factors of production of a firm, or group of firms (industry/market), such as production costs, supply, demand and price. These factors, taken together can give a average cost curve, and parameters surrounding this usually become standard for a given market. This applies partly to the gist of this entry, inasmuch as to briefly introduce the concept of entry and exit costs. These costs are the amount of money required to enter a firm into a market, and the costs incurred to leave said market.

We have all heard of price fixing by supermarkets, and I have of course, blogged on this previously. The effect here is that when there are very few retailer to choose from, then it becomes possible for large firms to set the prices at which they sell to the public, and at which they buy from producers. The 'big four' set the price, for example, of milk which they sell on at an almost identical price. Small to medium sized firms have no choice but to adapt to this price because, although they can buy milk from producers at the same price as supermarkets, they cannot afford to undercut them, as the supermarkets will then buy more in bulk, driving the price lower, and so taking business away from small to medium sized shops. This makes the producers, small - medium retailers and the consumer 'price-takers'. That is to say, regardless of where they buy milk, they will pay much the same price.

So, why don't dairies simply tell supermarkets  to take a price set by dairies themselves? This brings us to strategic competition and collusion. Individual dairies cannot take the risk of increasing their prices, as they will drive retailers to their competition, and suffer financially for it. The supermarkets, with modern refrigeration and transport methods (usually  in house) could go abroad for their milk, meaning that dairies, cannot financially afford to do anything other than be price takers as the risk of financial ruin is too dire to contemplate. The entry cost for a dairy includes payment to farmers, transport to the dairy, the pasteurising and packaging plants, and staffing of these. A high entry cost to a market is usually mirrored closely by the exit cost. The dairies are, in this case, the victims of collusion by the large supermarkets, because they have, financially, no alternative other than  to court their custom. Small - medium sized firms could not afford the transport costs to be supplied, so dairies could not rely solely on their business.

How then, can all this be applied to your mate's band when they play a gig? Well, in the 1990s, as mentioned at the beginning of the entry, venues, presumably a bit fed up (and reasonably so) of your mate's band playing to six of their mates and the bar staff, and a music promoter being someone who dealt with big ballroom or theatre venues, came up with Pay to Play, described above. I played with bands at this time, and at first, no one really felt any issue with the policy. After all, bands could now go to a venue, be put on a bill with some other bands from the local scene, (probably friends of theirs) and get their music played, often for the first time outside a rehearsal room. Huzzah! Bands got to play, venues got a guarantee of not running at a loss. (No one sets up in business to lose money after all). Where it began to go wrong was when the amount of gigs reached saturation point. Your local boozer would perhaps have live music one night per week, but now city centre venues were putting on gigs every night of the month. On one hand, this is brilliant for music lovers, with loads of bands to choose from. On the other hand, this was a nightmare for music lovers, since very few people can afford to to go to a gig every night of the month (or sustain that physically).    This then meant that many music lovers simply stuck to what they liked, rather than take the risk of paying to see a band whom may not have floated their boat. An over supply of anything makes it cheaper. That is the most basic law of supply and demand, which inevitably meant that the bubble burst. Bands found it hard to compete with each other, and harder still to persuade all but the most devoted fans or partners to see them play so often. What remained constant then, and is still the case now, is that artists want their creativity to be on show. This kept bands coming back for more, taking the risk that, in order to showcase what they had crafted, they could be out of pocket. As long as this was true, venues were in a position of having 'price-taking' customers. Eventually, many bands were unable to maintain this financial suicide, and unable to commit to full time musicianship, keeping the dreaded "day job" for one of two reasons. 1. To support their musical ambitions, or 2. They could not earn a living wage as a musician. The proponents of this policy were able to continue operating as bars, still putting on bands, but with their draw diminished by the fall in the number of bands. This process took less than a decade.

Fast forward one decade more, and encouragingly, there are promoters working particularly within Glasgow and the surrounding area. This is a step forward for anyone who suffered from the drop in the music scene described above, since now, musicians could presumably get on with the business of crafting songs, while a promoter would, for a share of the income, book and promote your band's gig. So far, so good. Local promoters for local bands is something which, 20 years ago, could have been a boon for bands struggling to publicise their gigs, pre social networking sites. This represents, in economics terms, an innovation in the market. Innovations to an existing market always bring new impetus and customers to it. This seems to be borne out by the sheer number of gigs and bands on offer on most nights of the week. Oops, we seem to be forgetting the law of supply and demand again, no? We are now at the tipping point reached previously reached by venues in the 1990s, and this is being reflected in the reappearance of sharp practices which benefit everyone else first, and artist last. This where the idea of a continuous Industrial Revolution rears its head.

My first experience of this new breed of local promoter was as a solo artist. The deal, honestly made upfront was a 3/2 split in the promoter's favour. Entirely reasonable, since they had hired the venue. My next experience was of the same promoter, but the goalposts had shifted in a manner which I would not have agreed to had I known in advance. Instead of the previous (reasonable) deal, no it went like this. The promoter gets the income from the FIRST TEN tickets sold (they set the price), and the band would receive the income from any others sold. At first glance, some might see this as being reasonable, but it is just the same as Pay to Play because the artist will receive nothing below a minimum ticket sale. On this particular bill I had made a request to the promoter that only 3 bands ply the bill instead of the 5 normally crammed into their events. The reply was that this would mean the promoter would not cover their costs, and we compromised on 4 acts. This meant that 4 bands would be asked to play, but not to receive a penny until the promoter had made £50 from them. At a different event I attended, (same promoter and venue) to see my mate's band play, I was asked at the door which band I was there to see out of the 5 on the bill. Even though I was there to see initially one band, whether or not I had enjoyed all the acts I would have wanted them all to be paid equally.The venue being used (I researched later) cost £100 to hire, so a potential £100 to be made to simply telephone a bar and ask to hire it, then put an event page on a social networking site. On this basis, anyone could set themselves up as a promoter for an initial outlay of £100, depending on the hire cost of the venue. This is the entry cost referred to earlier, and this could be repeated. Since exit cost closely track entry costs, this is not a bank breaking risk to take, especially if you use sharp practices. If you set yourself up as a promoter, it will enable you to book many nights at venues in advance, especially during the period of early innovation when new customers will take what is on offer. This will make it difficult for a band to avoid using a promoter, and like the dairies, will become a price taker if there is only one game in town. Other bands will then potentially suffer from the lack of available gigs, so the rules of strategic competition mean that some bands will stick with the deal they are getting, to avoid the risk of not getting their music into the public domain. This is a part of the strategic competition known as 'the prisoner's dilemma', where the choice made as an individual will lead to a negative outcome for one or all players, or positive for all players, depending upon what each player wishes to achieve.

So, I've covered exit and entry costs, strategic competition, and price-taking. What about collusion? Collusion is very difficult to prove, and in some cases even more difficult to identify as being such. In this entry, I would suggest that the collusion could be between promoters and venues. Venues are guaranteed their money, because a hire contract has been agreed. Promoters stand a good chance of getting their money, since bands will use social networking and other types of advertising (the role of the promoter) to ensure they get as many people as possible to attend their gigs. But, if bands are willing to accept this type of deal, then are they more than simple price-takers? Only if they go into a deal knowing fully beforehand what the prospects are of being paid, it could be argued that they are in collusion too. Research and development costs are large parts of many firms costs. Could the prospect of playing for free, but getting your sound out here be counted as a research and development overhead? My suggestion is no. Research and development for a band is to practice playing, and writing material. Written word, music and art is an intellectual property, and the product of the artist, making the artist the golden goose in this scenario. Musicians are engaged to play. Promoters are engaged to promote the events at which musicians play, (even if the band has a Myspace, Facebook or Twitter account).

The collusion which some might argue is implicit between venues and promoters, and promoters and bands, could be ended in a choice of ways. Local promoters could innovate (some reputable promoters ask for no money, pay the artist, and offer to record and release your performance, only then requiring money to for a genuine overhead), leading to a shake-out in which unwanted promoters or venues would drop out of the running. Or, bands could simply decide not to be the price-takers of the piss-takers.

DD202 - First assignment

I have submitted the first (of six) tutor marked assessments last  week. In it I was asked to explain a few economics terms, and to draw graphs, to describe figures and tables given in the paper. I do not have the marked essay back yet, so do not have a lot to write about at this point. What I will say is that, as the module progresses, I should have much more to write/rant/comment about. There are some aspects of the first essay which I will probably refer back to in the coming entries to this blog.

Aspects, such as demand, factors of production (overheads), short and long term demand curves. The first two terms are self explanatory. Short and long term demand curves are about how much control a firm has to alter factors of production. If on a short term demand curve, then the firm has no way to alter any of its factors of productions, such as staffing levels, workspace, etc. In a long term demand curve, the firm is in a position to alter any of its given factors of production. This last term is one to which I will very likely be returning to in future entries, as I explore the idea of a firm being able to make profits ethically. I should say now that, although I am to the left of left when it comes to many things, I am not against a firm turning a profit. What I am against is the level to which firms are willing to go to to maximise these profits, be it through worker exploitation or tax avoidance.

Part of my drive to study economics is the importance of "knowing your enemy". If you want to fight against something, it makes sense to know what it is you are fighting against. Is it possible for someone to become a socialist version of Adam Smith? The only way I can think of is for a socialist to become an economist. This blog will allow for people to follow this process and my progress, and will give them the opportunity to question, or open debate on anything they see written here. So, feel free to do just this. Questions and debate are entirely welcome, nay, positively encouraged.

Long live the (industrial) revolution

Well, I have read chapter one of my new module textbook, (Microeconomics), entitled, "Are we living through a new industrial revolution. The evidence of the so called ,new economy, might at first suggest that we are. Since the mid 90s the global economy was given a huge boost by the advances in technology based industries and consumerism based around this. So much so that it fuelled separate share indices in the stock markets, leading to the dot com boom at the turn of the century, and subsequently, to the misplaced confidence which has led to the financial maelstrom affecting most of the global economy right now. That is a strand of the subject which I will doubtless cover as my studies progress, and will absolutely be devoting an entry too.

Back to the question in hand. We must compare previous instances of upheaval in working lives/practices to address the question. The Agrarian (or Agricultural) Revolution was driven by the study of efficiency of planting and soil use, leading to the still used practice of crop rotation. That would not have changed working lives, since a field being ploughed sown and harvested is the same process for the farm workers. The development of tools, such as the horse-drawn seed drill (among others) were the real technological change which led to farmers needing less labourers, and subsequently to huge unemployment.  (Note to prog rock fans, a book , the horse-drawn seed-drill was written by a certain Jethro Tull, now you know where the name came from)

This unemployment was one of the few times in history that farm labourers were able, or in this case forced to migrate to find work. Soon after, there were jobs aplenty in the cities, as the Industrial Revolution kicked in. The factories springing up were mainly driven by harnessing the power of moving water, then steam power to drive textile production on a scale unimagined by the people who would have previously spun yarn, and loomed cloth in their cottages, whilst the men of the family were toiling in the farmer's fields. Although they would not be affluent, they would at least have steady work, and a clean environment in which to raise their families. Within a generation, the men women AND children of these families would be working in factories. Now, regular readers of my entries will at this point be able to tell which way the wind is blowing, and you are right, I am not about to praise up factory owners for supplying steady work to displaced country folks. There are exceptions, such as Robert Owen, who developed workers' co-operatives. For every Owen there were too many others, whose workers were not even paid money. Rather, they were paid in tokens, redeemable only at shops owned by the same people who owned their factories. people would be working 14 hour shifts 6 days per week, and often ended up in slums, again owned by people who were every bit as exploitative as their factory bosses. Factory conditions changed again with the advent of the harnessing of electricity as a power source for machinery. A similar process came about in the 1920s, when car manufacture changed from being a hand crafted industry, to the assembly line which anyone could be quickly trained to work on. Artisans and craftsmen suffered, but the ordinary worker could get a comparatively good wage, resulting in thousands of people travelling from all over the US to Detroit. Work was easy to find, but the factories were run by owners who were vehemently opposed to unions. There is also a  migration similar to that of agrarian workers in the late 18th century.

To answer the question, it has to be determined whether or not people's lives have been affected by changes brought about by the 'new economy'. The rise of call centres has certainly changed peoples' work/life balance.  People are working at all times of day and night in order to deal with the queries of people using the service. This will impact on the time people have to devote to social and family life, not only at home, but abroad where the employees may be cheaper. Many businesses working practices have changed, due to people being able to shop online, not just for goods, but services such as travel agency, so leading to companies needing less employees. Also, due to the relative cheapness of labour in some countries, a lot of manufacturing work has been moved, leading to people having to find not only a job, but a new skill set. Because of this, people are working many short term contracts, rather than having a career in one post.  So, technology is still affecting people in the same ways in which it always has. People are still losing jobs. People are still having to move to find work, or accept work under reduced terms and conditions. I, and many people reading this, are probably able to quote their own experience(s) of any of these affects. As an example of how  bosses will always try to get more out their employers, and usually by introducing new technologies and working conditions, I offer this recent example. See how the employee is at first worried for his job, then is delighted by the new machine, then resigned to the new working conditions imposed upon him. Some people may think that I read too much into things. I disagree. I am simply more willing than most to peel back the layers.                                                                                                              http://www.youtube.com/watch?v=F5PO793A3jI

Brand new module, same old politics.

Hi readers. Sorry for the long gap in entries. My first module, DD101, Introduction to Social Sciences, ended in October, and the next one only began two weeks ago. I have been ill during this time, and began my reading of the new materials yesterday, and have almost caught up. This is not to say that I'm super absorbent, or that I have skimmed through the reading. It is more that the first week of a module is an introduction, and the 2nd is not overly stuffed with detail.

The new module is entitled DD202, Economics and Economic Change, and marks the beginning of my specialist studies. I was concerned on two fronts about this module. 1. That it would be boring beyond belief. 2. That I would not have an opportunity to write (what I consider) blog entries of interest to my enjoyment of both learning, and of having a right good rant about my political leanings. I am not always right, and at this time, I'm delighted to be wrong in my concerns. I have read the first chapter of the first (of two) textbooks, Microeconomics. Straight from the off the book speaks to theories on globalisation, of inequality, of ethics, and history. This writer is looking forward to spewing forth tidal waves of vitriol about all of these aspects of economics. Only, this time around, they will be informed by my studies of economic theory.

So, no rant on this occasion about my studies. Just an introduction, and a reminder that history repeats itself, and in so doing will give me the opportunity to express my views whilst studying the processes behind the events which shape them. My first Tutor Marked Assignment (hereafter, TMA) is due for submission on the 25th of March. I may write an entry before then, but will definitely have something to say at that point.

Here it is. Another entry outside of a module being studied. What started out on Facebook as a comment on the journalist/columnist/self absorbed git, Jeremy Clarkson, and his views on public sector strikes led to debate on the racist woman on the tram. More on her later. What I want to address here today is the right to free speech. Mainly because someone whom I  have never met in my life said he wanted to break my jaw today, because I challenged him on racist stereotyping. I may have confused him by confounding his prejudices with  intellect. I offer no apology for that. Play to your strengths.

Exclusive Exclusions

Well, module DD101 is one month behind me now (final mark will be issued next month), but I do feel I should keep posting on the world and its workings in a few terms. 1, through the theories I have come across in my studies, 2, through my own political leanings, and a general mash-up of these two and some of the examples from the text books.

What I would like to look at in this entry is the reporting of tabloid journalism. I will be looking a little at the theories of Michel Foucault, (referenced in "I'm Free, June 2011).  Two of  most obvious aspects of tabloid reporting is the sensationalist manner in which "news" is reported, and of how little reporting is devoted to items of genuine newsworthiness.

So, to Foucault. I studied and applied his theory of discourse previously, of how discourse, in the form of authoritative figures, or in experts invested with authority. These figures have changed throughout history, from kings, lesser nobility, to the government ministers, committees, and appointed experts of today. Foucault theorised that discourse from top down enters into everyday thinking, and that we adapt this in the long term into social norms. That was the theory I applied to the above mentioned entry, and although I will go on to look at another of Foucault's theories, his thinking on discourse is a basis of it.

Foucault has many theories surrounding sex, sexualisation, and procreation. He theorised that, apart from the sexual imperative of continuing a family, there was procreation. This, in his opinion, was only permitted, historically,  to  the ruling classes. The ruling classes were the ones with the power to make the laws of the realm, and to decide upon punishments for transgressions of these laws. In other words, they used the laws, and social order of these, to set examples. Their own crimes would be judged by their peers, so preserving the status quo, but that is for another day.

How, then can this be linked to tabloid rags, which, most people would agree, are actually aimed more at the lower end of the class scale (not unique to UK, incidentally)? After all, I'm sure your average judge or magistrate does not take legal advice from the problem pages of The Sun, et al.

The answer lies mostly in the idea of discourse. Newspapers still enjoy a large circulation, and the number of newspapers sold is only part of the number of people who might read them. eg in my house there are four adults, but only one paper has to be brought in to the house for all to read. The remainder of the answer is in Foucault's theories on sex, and social order, and in the move of population from rural to urban settings, which added to rising literacy rates, along with the growth of mass produced newspapers. And the Tories.

Yes, the Tories. They were in government in the UK for 18 years, during which they would obviously become a part of discourse. From 1989 right up until the end of their tenure in 1997, (and, for some time after) there were regular stories involving Tory MPs and "kiss and tell exclusives".  Although they were in power, and in Foucault's thinking, "permitted" to procreate, the means to report on this type of activity was there, established in the public domain. Despite exposure, very few MPs actually lost jobs through this, some spending time on the back benches before coming back to the forefront of political life.

Although politicians have been involved in such scandals before, the consequences have become less severe as time has passed, as mentioned above. Perhaps, because this type of scandal has entered into discourse, and because, more and more, people have recovered their public lives following "Exclusives" by newspapers, it has not become such a big deal. Perhaps the public have become desensitised by over exposure. This does not seem to be the case, because tabloid newspapers run the same type of stories, and their respective circulations have not dropped off.

Why, then are these rags still selling? Taking the theories of Foucault - discourse, sexual permission and social order, It can only lead to one thing. In the last 15 - 20 years populations have become so taken by it that they have gone from being interested, to obsessed, to willing to go through anything to attain it. The C word. Celebrity. Celebrities have been behaving like MPs (sexually) for as long as anyone can remember, and have been berated for it as much. To take an example of the obsession for celebs, let's look at Russell Brand.

The Sun, in particular,  regularly featured this man over a 2-3 year period, at first reporting, then glorifying the sexual exploits of a man, who is, it must be said, is a genuinely witty and entertaining comedian, eventually turning him into a parody of himself, awarding him the title "Shagger of the Year" twice running. So, a combination of celebrity, and a national obsession surrounding it, perpetuated the cycle of  kiss and tell stories, in this case, not always by the smitten fan I should add, adding to the parody. So, if this kind of froth continues to sell newspapers, can we really blame them for sticking with a winning formula?
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Yes. Yes, we can. We can and we should. Remember, Foucault has the power of discourse and social order in the hands of kings and nobles. The best known term for newspaper owners is "Press Baron". Baron. A noble. Ruling class. Is there a vested interest for reporting on celebrities, sports stars and  soap operas? Perhaps it is a diversion from the real issues, which would rouse people to take a more active interest in the real issues affecting our lives in the world today. To quote the late Bill Hicks, "Honey, come see, they figured out what really happened with Kennedy.....wait, Gladiators is on TV".

Perhaps the invasion of Iraq would truly not have been in our names. Perhaps the newspapers would have been less mercenary in their news gathering (hacking, blagging, etc). Perhaps true democracy could be in place in our countries, rather than just turning up and voting (for the parties supported by the papers we read). Perhaps the 99% would really be 99%, instead of what it is being reported by some "news" papers as being.

Blind universal justice.

Well folks, I have now finished Module DD101 - introduction to the social sciences. The final essay went today. In this, I had to "Critically asses the claim that states are necessary evils". There were a few examples I could have used to do this. What I decided to look at was the role of states as members of the United Nations, specifically, the resolution authorising the use of force in Afghanistan, and the NATO intervention in Kosovo. This was paralleled with the incidences of piracy through the last 2,000 years, and the legal doctrine of universal Jurisdiction was used to bring all these together.

First, the (social) science bit. I looked at the theories of Max Weber, a German sociologist of the 19th century. His definition a a state is along the lines of  'the authority of a government of a territotial area claiming  a monopoly on the legitimate use of violence'. Also considered was the theory of J Hoffman, who argued that Weber's type of state was claiming something it could never have, because having a monopoly on the use of force would surely mean that everyone was compliant and that no one was challenging that monopoly (or claim to it). The last was Artyama Sen, an economist who argued that 'democracy is the default setting of a legitimate state'.

The gist of part of the essay was that the UN had agreed unanimously (including ALL permanent members of the security council) that force could be used to go after Al Qaeda leadership in Afghanistan after the Taliban's refusal to hand them over. This was due to a group (Al Qaeda) using violence outside the accepted norms. In the NATO intervention in Kosovo, the unanimous agreement of the security council was not given, so NATO acted with out the rest of the UN. NATO argued that the doctrine of Universal Jurisdiction should be expanded to cover the intervention. Universal Jurisdiction covers piracy (it is often in international waters, international terrorism, and cross border criminality).

So, what has this got to do with pirates?  What has been said about pirates from Cicero (Rome BC) to the UN (resolution1851) is that they act outside the normal accepted framework of states, and that they create their own authority in the absence of any other present. (piracy in the Indian Ocean has increased markedly since the collapse of the Somalian state). Cicero declared them to be 'the common foe of all people' Sir Edward Coke (16th century) declared them 'hostes humanes generis' - enemy of all humanity, and the UN #has decided that their crimes are something which carry Universal Jurisdiction, so that all nations/states (in accordance with resolution 1851) must act in whatever capacity they can to stop them. This has led to mucho macho posturing by the presence of a multi-national pirate hunting fleet in the Indian Ocean, which is another matter, for another entry perhaps.

Let's get back to Kosovo. NATO argued that crimes taking place there should be covered by Universal Jurisdiction, since they are against some very fundamental human rights, with summary executions, rapes and people becoming homeless and/or refugees. This is the point in the blog where I take my social science learning and combine it with my own world view.

The financially straitened times in which many millions of ordinary people are being forced to contend with right now are exactly like the types of crimes which many of the world's great powers want to see in expansion of Universal Jurisdiction. How? The actions have effects which cross borders, just like international terrorism. Basic human rights are being infringed, since people are being driven into poverty, and potentially homeless. The driving force for the actions which led to the recession (now, likely to become a double-dip recession) was financial gain - just like piracy. So, who's for Universal Jurisdiction? Who has the stomach for it? What bankers and governments alike need to remember is this. Hard times bring hard reactions. Hard times are a breeding ground for extremism. WWII came hard on the heels of the Great Depression of the (original) Wall Street Crash. Some might argue that the Nazis brought about WWII, but, if unrealistic reparations had not been put upon Germany by the Treaty of Versailles, then the driving force of much of their radical politicians would have been diminished.

One thing is certain though. In contemporary UK, the public are not as docile as politicians would like to believe. This is the birthplace of NIMBYISM (not in my back yard), and for the first time in a long time, more of us will become interested in what must look like the very attractive doctrine known as Universal Jurisdiction.