An article in Sunday's NYT travel section carries the season-appropriate headline, "Brad Pitt's Gifts to New Orleans." The piece suggests, rather gently, that the actor has made a common mistake: giving what pleases him rather than what the recipient wants. The displaced residents of the Ninth Ward would like comfortable, inexpensive, and quickly available houses. Pitt prefers cutting-edge architecture. Residents are grateful for his generosity and good wishes, but their gratitude is tinged with regret for what might have been if he'd heeded their desires.
Gifts are like that. Even the most generous can disappoint. As Cheryl Strayed writes in a terrific essay in the December issue of Allure (alas, in typical Conde-Nast fashion, it's not online):
"My boyfriend gave me a 12-pack of Diet Coke for Christmas!" I occasionally exclaim with glee, now that years have passed since the roil of sorrow and humiliation of that day. That present is little more than a funny memory now, a mere entry in my annals of the Really Bad Gifts I've Received. There was the "electronic guard dog" — a plastic speaker that emitted a screeching bark each time it detected motion — given to me when I had two actual dogs that did the job with authentic verve. There was the book about how to succeed as a financial executive in Japan that I received upon my college graduation as an English major. There were the used bath towels sent as a wedding present by an otherwise sane relative. And then there was the granddaddy of them all: a Weight Watchers gift certificate from my mother-in-law for my birthday when I was eight months pregnant.
Each of these gifts made me believe, in a new light, the old adage that it's far better to give than it is to receive. Receiving sometimes hurts. Bad gifts tell us not who we are, but who the gift givers wish we would be — thinner, say, or a Japanese capitalist rather than an aspiring writer. Or, perhaps worse, they imply that we mean so little to the gift giver that he or she didn't even bother to consider what we might like or need. That's how it felt to receive soda for Christmas.
To be fair, Strayed's mother-in-law very likely chose her gift out of womanly sympathy for the impending struggle to lose pregnancy weight, perhaps even thinking that she herself would have once appreciated such a present. But whatever the good intentions, the gift itself revealed that she knew little of her daughter-in-law's own desires or how Strayed wished to be thought of by others. The gift certificate wasn't just wasteful, like the electronic guard dog. It actually hurt.
The problem of buying good presents for other people, even people you supposedly know well, illustrates that old familiar Hayekian concept, the knowledge problem. If you can't even give your loved ones the right presents, how likely is it that a central authority could make the right decisions for everyone?
Posted by Virginia Postrel on November 30, 2009 • Comments
The Institute for Justice has filed suit to overturn the federal prohibition on financially compensating bone-marrow donors. Megan McArdle has a good post on the subject.
I do take issue with the idea that bone marrow should be exempt from the federal prohibition because, like blood or sperm (but not eggs), it regenerates. The same is functionally true of kidneys, where the remaining organ grows to take up the slack; liver lobes also regenerate.
Posted by Virginia Postrel on October 28, 2009 • Comments
Blunt-spoken, deeply informed, and relentless, Luigi Zingales has been one of the great public-intellectual heroes of the financial crisis. (See this September WSJ op-ed with John Cochrane for a sample of his work.) In this meaty and readable essay for National Affairs, he spells out just how much is at stake in the response to the crisis. Here are just a few small samples from a nuanced and long (by the standards of the Twitter age) essay:
In countries with prominent and influential Marxist parties, pro-market and pro-business forces were compelled to merge to fight the common enemy. If one faces the prospect of nationalization (i.e., the control of resources by a small political elite), even relationship capitalism (which involves control of those resources by a small business elite) becomes an appealing alternative.
As a result, many of these countries could not develop a more competitive and open form of capitalism because they could not afford to divide the opposition to Marxism. Worse, the free-market banner was completely appropriated by the pro-business forces, which were better equipped and better fed. Paradoxically, as the appeal of Marxist ideas faded, this problem in many of these countries became worse, not better. After decades of contiguity and capture, the pro-market forces could not separate themselves from the pro-business camp. Having lost the ideological opposition of Marxism and lacking any opposition from pro-market ideology, pro-business forces ruled unchecked. In no coun- try is this more evident than in Italy, where the pro-market movement today is almost literally owned by a businessman, Prime Minister Silvio Berlusconi, who often seems to run the country in the interest of his media empire.
...
The problem is that people who have spent their entire lives in finance have an understandable tendency to think that the interests of their industry and the interests of the country always coincide. When Treasury Secretary Henry Paulson went to Congress last fall arguing that the world as we knew it would end if Congress did not approve the $700 billion bailout, he was serious and speaking in good faith. And to an extent he was right: His world — the world he lived and worked in — would have ended had there not been a bailout. Goldman Sachs would have gone bankrupt, and the repercussions for everyone he knew would have been enormous. But Henry Paulson's world is not the world most Americans live in — or even the world in which our economy as a whole exists. Whether that world would have ended without Congress's bailout was a far more debatable proposition; unfortunately, that debate never took place.
Compounding the problem is the fact that people in government tend to rely on their networks of trusted friends to gather information "from the outside." If everyone in those networks is drawn from the same milieu, the information and ideas that flow to policymakers will be severely limited. A revealing anecdote comes from a Bush Treasury official, who noted that in the heat of the financial crisis, every time there was a phone call from Manhattan's 212 area code, the message was the same: "Buy the toxic assets." Such uniformity of advice makes it difficult for even the most intelligent or well-meaning policymakers to arrive at the right decisions.
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If the free-market system is politically fragile, its most fragile component is precisely the financial industry. It is so fragile because it relies entirely on the sanctity of contracts and the rule of law, and that sanctity cannot be preserved without broad popular support. When people are angry to the point of threatening the lives of bankers; when the majority of Americans are demanding government intervention not only to regulate the financial industry but to control the way companies are run; when voters lose confidence in the economic system because they perceive it as fundamentally corrupt — then the sanctity of private property becomes threatened as well. And when property rights are not protected, the survival of an effective financial sector, and with it a thriving economy, is in doubt.
The government's involvement in the financial sector in the wake of the crisis — and particularly the bailouts of large banks and other insti- tutions — has exacerbated this problem. Public mistrust of government has combined with mistrust of bankers, and concerns about the waste of taxpayer dollars have been joined to worries about rewarding those who caused the mess on Wall Street. In response, politicians have tried to save themselves by turning against the finance sector with a vengeance. That the House of Representatives approved a proposal to retroactively tax 90% of all bonuses paid by financial institutions receiving TARP money shows how dangerous this combination of backlash and demagoguery can be.
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We thus stand at a crossroads for American capitalism. One path would channel popular rage into political support for some genuinely pro- market reforms, even if they do not serve the interests of large financial firms. By appealing to the best of the populist tradition, we can intro- duce limits to the power of the financial industry — or any business, for that matter — and restore those fundamental principles that give an ethical dimension to capitalism: freedom, meritocracy, a direct link between reward and effort, and a sense of responsibility that ensures that those who reap the gains also bear the losses. This would mean abandoning the notion that any firm is too big to fail, and putting rules in place that keep large financial firms from manipulating government connections to the detriment of markets. It would mean adopting a pro-market, rather than pro-business, approach to the economy.
The alternative path is to soothe the popular rage with measures like limits on executive bonuses while shoring up the position of the largest financial players, making them dependent on government and making the larger economy dependent on them. Such measures play to the crowd in the moment, but threaten the financial system and the public standing of American capitalism in the long run. They also reinforce the very practices that caused the crisis. This is the path to big-business capitalism: a path that blurs the distinction between pro-market and pro-business policies, and so imperils the unique faith the American people have long displayed in the legitimacy of democratic capitalism. Unfortunately, it looks for now like the Obama administration has chosen this latter path.
And to Oliver Williamson and Elinor Ostrom for their well-deserved Nobel Prize in economics. Here's a Times column I wrote about the New Institutional Economics, in which they are major figures. Their work is extremely fundamental. (I discuss some of Ostrom's work on fisheries in The Future and Its Enemies.)
Here's a Reason editorial I wrote in 1997 that hints at why honoring Williamson and Ostrom is coincidentally quite a negative comment on the current rage for technocratic planning: "Conventional political discourse continues to define government as the manipulative determiner of national purpose, but the twin challenges of Third World development and postcommunist transition have revived the fundamental insight of classical liberalism--the idea that government best serves its citizens by limiting itself to enforcing neutral rules."
I posted the following notice on DeepGlamour yesterday.
DeepGlamour is an Amazon affiliate. Virginia Postrel receives a percentage of the purchase price on anything you buy through one of our Amazon links, including purchases you make while on Amazon that we did not link directly to.
The Federal Trade Commission demands that we tell you this — they think you're idiots and are violating the First Amendment with their regulation of what bloggers publish — but it's also a friendly reminder to Support DeepGlamour by starting all your Amazon shopping here.
We also get money or in-kind compensation from places that have ads on the site, our contest prizes are donated, and Virginia receives review copies of lots of books (most of which never get mentioned on the site and end up donated to the Westwood branch of the L.A. Public Library). But you could probably figure that out on your own.
Now that we've complied with federal regulations, how about a little shopping?
The same applies to Dynamist, except I don't run contests here.
Other good responses to the FTC regs here and here.
Posted by Virginia Postrel on October 07, 2009 • Comments
An interesting point in this Forbes.com report is marred by an egregious grammatical mistake.
Gourmet's dive into "cheap eats" service stories were a big mistake, says another ad executive. "Gourmet went down-market. It made matters worse by pandering to readers' financial fears with budget recipes."
I've given up on the its/it's distinction and become tolerant of various homonyms (fare/fair) used interchangeably. But is BASIC GRAMMAR too much to ask from a respected publication? With a surfeit of unemployed journalists, it should be possible to hire ones who can write their own sentences without making basic grammatical errors.
Posted by Virginia Postrel on October 07, 2009 • Comments
An article in Sunday's NYT travel section carries the season-appropriate headline, "Brad Pitt's Gifts to New Orleans." The piece suggests, rather gently, that the actor has made a common mistake: giving what pleases him rather than what the recipient wants. The displaced residents of the Ninth Ward would like comfortable, inexpensive, and quickly available houses. Pitt prefers cutting-edge architecture. Residents are grateful for his generosity and good wishes, but their gratitude is tinged with regret for what might have been if he'd heeded their desires.
by Evelyn Welch (read a 
.)
is Williamson's classic work. (Be forewarned that he is famous for his peculiar jargon. See Stephen Bainbridge's Amazon review.) 
is Ostrom's basic work.
affiliate. Virginia Postrel receives a percentage of the purchase price on anything you buy through one of our