Comments on economics, mystery fiction, drama, and art.

Saturday, February 19, 2005

Measure for Measure

I spent the late afternoon at Chicago Shakespeare, seeing "Measure for Measure. A strange play, with a seriously unsatisfying ending, but one with enough ambiguity for a crowd.

In the play, the Duke takes off and turns things over to Angelo to clean up Dodge. Angelo condemns Claudio to death and his betrothed (Juliette) to prison, for fornication. Claudio's friend Lucio entreats Claudio's sister Isabella to try to persuade Angelo not to execute Claudio. Angelo (a pillar of rectitude) agrees, but only if Isabella has sex with him. She pretends to agree, and, with the assistance of the Duke (disguised as monk), substitutes Marianna (once Angelo's fiance, until her dowry was lost at sea) for herself. Angelo doesn't notice and then renegs on his promise to free CLaudio.

The Duke reveals himself and, at the end, forces Angelo to marry Marianna; Lucio to marry a woman who bore him a child (we never meet her); Claudio to marry Juliette. He himself seeks to marry Isabella. Marianna wants to get married, Angelo doesn't. Lucio doesn't want to get married. Claudio and Juliette are OK with this. Isabella wants to become a nun.

In essence, the Duke offers Isabella the same deal Angelo did. Angelo says--have sex with me and I'll free your brother. The Duke says--I freed your brother, now have sex with me. (We don't actuallyknow how that turns out--the play ends.)

Everyone (except C & J) goes away unhappy.

And the comic relief--Constable Elbow--is no Bucket.

As usual at Chicago Shakespeare, the acting is exemplary, the directing is first rate, and the set design is terrific. And the music is first rate.

Worth the time, probably, but not emotionally satisfying.

Wednesday, February 16, 2005

Waiting for Goalies

Unless something dramatic happens this morning--and it might--the NHL seems unlikely to have a season. Major-league professional hockey was already in trouble, and this might well be something close to a death blow for the current organizational structure.

The remaining issues in the bargaining process don't seem all that daunting, however. The difference is between a "hard" salary cap at $42.5 million and $49 million per team, with the union offering a LOWER minimum team salary ($25 milion, compared with $30 million). The minimum salary seems agreed on at $300,000. Perhaps most importantly, the league agreed to de-couple the salary cap from revenues; the player's association had argued that the next couple of years are likely to have depressed revenue streams as a result of the lockout, so resricting overall salaries to 55% of a temporarily depressed revenue stream didn't make much sense. NHL Commissioner Gary Bettman, in his letter to Bob Goodenow (NHLPA Executive Director) goes, of course for the worst-case scenario of the NHL's position--if every team is at the cap, the league as a whole will lose money. It seems implausible that every team would be at the maximum, and there's no real way to guarantee profits in any event.

Interestingly, a coalition of NHL "stars" apparently pushed the union into accepting a salary cap.

Suppose there is a compromise--say, $45 million maximum team salary pool, and $30 million minimum. What are the implications?

First, average salaries are likely to fall. If they don't, then what was the point of the salary cap anyway? But whose salaries? Will salaries fall more for "stars" or for supporting players? I think it's clear that the supporting players would lose (proportionally) more. And, in particular, experienced supporting players will almost certainly be looking at large salary cuts, or at the prospect of being replaced by younger players at the minimum salary.

Second, will this solve the NHL's problems? No, it won't. The single major problem is the revenue stream the league is able to generate. There is no national media contract that provides any significant revenue streat. Some teams (the Rangers, the Maple Leafs, the Canadiens, the Black Hawks, the Red Wings, and a few others) generate local media revenue, but not enough, even it it were totally shared, to make up for the lack of a national contract.

In many ways, the lack of a national media contract is somewhat surprising. Hockey seems made-for-TV--a restricted playing surface, which can be covered fairly easily by a small number of cameras. Enough breaks in the action to permit instant replay. (The major negative is that the breaks in the action don't accomodate commercials all that well, which is a problem that can be addressed, if the league and players are willing to be creative about it. For example, a 2-minute break after a goal. Or a 1-minute break after every otehr--or every third--frozen puck/face-off.)

Most teams seem to do fairly well with arena revenues-attendance is strong, even in non-traditional locations. But arena revenue is not enough to allow teams to cover their costs. Take a team with a 17,500-seat arena, which sells out every game. That's 40 or so home games, or home attendance of about 700,000. (Assume revenue sharing is a net zero for arena revenues.) Then, if your payroll is the league minimum ($30 million), your averahe ticket price mas to be about $43 just to cover your payroll. Add in benefits, scouting nd player development (subsidies for minor-league teams), mamagement, arena probably need $65 - $70 million in revenue. Without media revenue, that's an average ticket price of $100...which will not fly.

So what can be done about the media revenue issue? I don't know, but unless the NHL solves that, all the lockout and lost season will do is depress fan interest and make it harder in the short-run.

Long-run? This is a league that might need to contract. In fact, something like the "promotion/demotion" system in English football leagues might be just the thing. Reduce the "major-league" part of professional hockey to 12-16 teams. The "secondary" league could pay lower salaries, making it easier to survive on arena revenues. Each year, the worst 2-4 teams in the "major league" would fall down a level, and the best 2-4 in the secondary league would get promoted. Any takers?

Monday, February 14, 2005

Tradeable emission permits

This article in the Chicago Tribune (2/14/05; the link will not be good in about a week) provides a very good introduction to and discussion of tradeable emissions permits as a pollution control strategy. The article focuses on extending the tradeable permits concept to carbon monoxide (under the Kyoto treaty) and outlines what's happening in Germany (but not in the US). The German program is patterned after a US program that created tradeable emissions permits for sulfur dioxide. Take a look, it's well worth your time.

Thursday, February 10, 2005

The Social Security Trust Fund: Default or No Default

There's been a lot of blogworld comment on whether (a) the Social Security Trust Fund is "real" or simply empty promises and (b) whether the Bush administration intends to effectively default on the bonds that are in the trust fund (and what, if any, consequences that is likely to have). For a taste of this discussion, look at this entry in Kevin Drum's Washington Monthly blog.

If occurs to me, however, that there's a relatively simple way not only to address the question, but to force everyone in Congress and in the administration to put their cards on the table. Harry Reid and Nancy Pelosi (with as many co-sponsors as they can get--all the Dems would be good for starters) should introduce identical legislation in the House and in the Senate declaring simply that the full faith and credit of the U.S. lies behind the Treasury securities in the trust fund. That legislation, if it passed, would place anyone attempting such a default in a tricky position.

And if it didn't pass, then we could ask, why do these people want us to default on an obligation of the government?

Sunday, February 06, 2005

Brain Drain Games

Phil Miller at Market Power links to this story (registration required), which describes a proposal to exempt people under the age of 30 from Iowa's income tax. The purpose? To try to slow down what is described as a "brain drain"--the (alleged) tendency for recent college graduates in State A to move to State B.

This is not, apparently, something that gets people's attention only in Iowa--or only in the US. A Google search returns more than 1,250,000 results, including an International Monetary Fund
study about international mobility, a web site listing "publicly-available sites" on the brain drain in Canada Canada, an article in Time/Europe on how to "plug the brain drain in Europe," and so on. A state-by-state check of the U.S. finds reported "brain drains" for every state (although some researchers in a handful of states do present evidence that those states are not experiencing net outflows of recent college graduates).

Clearly something does not add up here. Young college graduates can't be leaving everywhere.

And, more to the point, what's the national interest in whether highly-educated young people live in Place A rather than Place B? Are states, to some extent, now throwing money at recent college graduates, in the same way they've thrown location-incentive money at businesses? Isn't this a zero-sum game, from the point of view of the nation as a whole?

Isn't our real interest in increasing the educational attainments, the knowledge, and the skills of young people?

Perhaps (and here's a subversive though) the focus on state funding for public higher education is what contributes to the hysteria.