10° 40' N, 61° 30' W

Tuesday, December 31, 2002

The murder toll in Trinidad and Tobago has reached 164--that's an 8.6 percent increase from last year's total on 151, and the year is not quite over yet. Nicholas points to an op-ed in the Trinidad Express by Kirk Meighoo, a sociologist (and, may I add, one of my former lecturers) who says "We are witnessing an embryonic development of Jamaican-style politics, in which “dons”, drug lords, and other criminals are essential parts of the state and political party system." Nicholas also links to a letter to the editor by his former colleague Peter Popplewell, who says that education is the answer.

What do I have to say about the angst and turmoil in my home island? I could counsel for a long-term solution, like Popplewell does, or criticise the performance of the government. While I do share in the criticism, I would like to help find a solution. With my limited knowledge, I offer my two cents.

In the first chapter of his book The Armchair Economist, Steven Landsburg says that most of economics can be summarised in the four-word phrase "people respond to incentives". Crime is no different, and an economic analysis can provide much insight on what Nicholas calls a "callous disregard for the lives, safety & property of others". The economic analysis of crime was a field invented in 1968, when Gary Becker's paper, "Crime and Punishment: An Economic Approach," was published in the Quarterly Journal of Economics. Behind his model lay a simple assumption--that criminals are rational actors, and they engage in crime because it is the most attractive ("utility-maximising", in economic terms) option available to them. Costs and benefits, from the criminal's perspective, are broadly considered; Ricardo Lagos, an assistant professor of economics at New York University, writes:

From an individual's point of view, a key element entering the criminal decision must be the rate of return on illegal activities relative to the rate of return on legitimate ones. The expected pay-off depends on three factors: the size of the reward (supposing the crime was successful); the probability of being caught and convicted; and the severity of the punishment. The opportunity cost of engaging in criminal activity is given by the rate of return on legitimate market activity. This depends on the wage at which the person could find employment; the likelihood of employment (i.e. the chances of finding a job if that person is unemployed and of keeping it if they are employed); income during periods of unemployment; and future job prospects (such as expected wages and the probability of getting and keeping a job).

Leaving aside the potential reward from criminal activity, we would expect a negative correlation (or inverse relationship) between the factors listed above and the crime rate. If potential criminals do respond to the relative rate of return from crime as determined by those variables, then changes and trends in crime rates could in turn be associated with changes and trends in these variables. This would then provide policymakers with a much wider range of policy tools with which to try to combat crime.


Popplewell is therefore right--education is important, as are meaningful career and earning opportunities. Becker himself says:

In pretty much every society that we know about, the poor and less-educated are more likely to commit more violent crimes. Contrariwise, the more-educated are more likely to commit embezzlements and various white-collar crimes. Why should that be so? I think a good part of the answer is that the poor and less educated don't have as many opportunities to earn. So the gain to them from spending time stealing, rather than from working at some legal job, is greater than it is for the more-educated. This story does not require assuming that the poor have low I.Q.s, an idea that has received some attention. It also does not require assumptions about genetics. It is simply that, being low-educated and having fewer alternatives, you will be more likely to commit crime. That may be reinforced by the tendency of poor families to be less stable and thus less likely to instill the view that crime is bad.


So far, so good. The trouble with this, though is that the solution is necessarily long-term; it will take years before there is any discernible impact, even if an ideal policy intervention is put into place. (That's also provided that a reasonable agreement on the form of such intervention could be made). The analysis so far, though, only looks at one side of the equation--the benefits to be gained from legal activity (the opportunity cost of criminal activity). Another means of intervention is to directly affect the costs of crimes, either by adjusting punishments, increasing the probability of capture and conviction. This, in the short run, is where the authorities in Jamaica, Guyana and now Trinidad and Tobago are failing.

In the World Bank Voices from the Poor report for Jamaica, the following observations were made about the police:

In urban communities, the Police force was widely seen as a negative influence on society. Except in Cassava Piece, all groups tended to view the Police as not committed to their responsibility for providing protection from criminals. Many groups, particularly males and especially younger men, vocalised concern over Police abuse. This typically takes the form of illicit fines and violence. Indeed some respondents seemed to suggest that the Police had the
capacity to inflict harm to the community, through involvement in criminal activities. In Cassava Piece all groups, with the exception of younger men, praised the Police as a positive institution because of the personal accessibility of the officer in charge.


The police cannot be expected to do anything about crime if the public they protect not only have no confidence in their ability to protect them, but also seem them as a menace. Amnesty International's 2002 report talks of 148 Jamaicans being killed by the police in 2001. Police in the West Indies are overly reactive; they respond to crime and deal with its aftermath, as opposed to preventing it and changing the cost-benefit calculation of potential criminals.

In the March 1982 issue of the Atlantic Monthly, James Q. Wilson and George L. Kelling first put forward their notion of Broken Windows, the basis for New York City's successful crime-fighting strategy in he 1990s under Rudolph Guiliani and his first police commissioner William Bratton. Regarding the title subject, they say this:

Social psychologists and police officers tend to agree that if a window in a building is broken and is left unrepaired, all the rest of the windows will soon be broken. This is as true in nice neighborhoods as in rundown ones. Window-breaking does not necessarily occur on a large scale because some areas are inhabited by determined window-breakers whereas others are populated by window-lovers; rather, one unrepaired broken window is a signal that no one cares, and so breaking more windows costs nothing. (It has always been fun.)


In London, where I currently live, there is a lot of graffiti, which is a stark change from when I first visited 12 years ago. Leave aside the prosecution and punishment for the offence; one "benefit" remains there for all to see--the artwork. A simple intervention that removes this benefit is cleaning it up; indeed, the city of Chicago, for example, has a programme dedicated to removing graffiti from both public and private property. The city government there sees the denial of posterity for graffiti artists as both an anti-crime strategy and a quality of life issue. Now there is a world of difference between graffiti and murder; what Wilson and Kelling suggest is that an environment in which there is graffiti is perceived as an unsafe enviroment; quoting Nathan Glazer, they say that "the proliferation of graffiti, even when not obscene, confronts the subway rider with the inescapable knowledge that the environment he must endure for an hour or more a day is uncontrolled and uncontrollable, and that anyone can invade it to do whatever damage and mischief the mind suggests".

One need not agree with the specifics of what Wilson and Kelling propose. It is one way, though, of taking an incentives-based approach to policing and criminal activity. Incentives are the reason why the Prime Minister's meeting with the gang leaders is a fundamental mistake--by sending the signal that he will reason with gang leaders, Manning is also showing that the cost of crime to criminals is going down, not up. Better to press on with the very-long term (though so far successful) strategies of reducing unemployment and improving primary education, while focusing the police on public order, preventing, and increasing the costs of, criminal acts.

Monday, December 30, 2002

The Barbados Advocate carries a report of a meeting of the Caribbean Association of Indigenous Banks (CAIB). To quote:

An official of the association said banks within that body “benefit from working together... we share ideas and in some instances pool resources to the ultimate benefit of our clients”.

The association provides a range of services to members to facilitate their effectiveness and profitability, and to influence policy in the Caribbean, particularly policies that impact banking.


This brings to mind a much-overused aphorism of Adam Smith, but no less applicable in this circumstance: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

Friday, December 27, 2002

A troll through my blogroll of dismal scientists led me to this statement on the part of Daniel Davies, otherwise known as D-Squared:

[W]e can talk all day about why it is that Black Americans lack the "social capital" of, say Chinese Americans. Why do they not have strong extended family links and social and business networks? Because they were separated from their families by slave traders and shipped two thousand miles away from their social capital, in chains. They even lost their surnames, for God's sake.

Why is "black culture" so opposed to learning/advancement/success/anything except criminality and music? Why do black children seem to regard doing well in school as "white"? Because culture is history, and the history of black people in America is one which has given them no reason at all to trust white people.


The above is overly emotional, and I hope that I will not sound the same. What Davies writes, though, is untrue, as far as I know, and I fell compelled to respond to it.

European slave traders, to start with, never separated slaves from their families--no, that distinction goes to fellow Africans (albeit of other tribes) who were engaged in slave raiding and trading centuries before Europeans ever set foot in West Africa. To them, Europe was just another market, albeit a vastly larger and more lucrative one. One can repudiate the ethics of that trade, but it is nonsense to imply that the slave traders caused it.

Secondly, the changing of names. This is difficult to defend, but the practice was so widespread that is it difficult to see that this could have happened because of a generalised malice on the part of slave owners. Slavery is an inhumane system, but, as Nobel Laureate Robert Fogel showed, it was economically efficient. (At least in the United States--the debate about he profitability of British West Indian slavery, started by Eric Williams's classic Capitalism and Slavery, continues.) It can be construed that attempt to "westernise" the slaves, of which the renaming was a part, could have been done because of a widespread belief that it contributed to making the plantations more efficient.

Thirdly, about black people having no reason to trust white people. Is this a general or a specific statement? Not all Europeans were comfortable with slavery in the New World. Bartolome de las Casas, who had first advocated African slavery to relieve the condition of the native Americans, later recanted. In the UK antislavery movements started, and fought a successful campaign first for the abolition of the slave trade and, later, of slavery itself. America went so far as to fight a four-year war over the subject. Much debate continues as to the motives of the abolitionists--if they were sincere or pure of heart (William Wilberforce, it appears, was not a terribly nice man)of if they had something to gain by abolition. The point I am making is that the movement for abolition of itself gave black people reason to trust at least some whites, as did the civil rights movement a century later.

Davies goes on to state what the "negro problem" in the USA is: "It is nothing to do with 'racism'. It has everything to do with the fact that a large minority of the population are the ongoing victims of one of the most monstrous crimes in history." Slavery is wrong, but it is a mistake to characterise it as a crime -- it was not illegal until those same untrustworthy whites decided to make it so. This, to me, is the main reason why the call for reparations (which Davies supports) is misguided--there are no criminals, in any sense of the word, to pay the victims. Reparations arguments are directed towards governments, which, by implication, are eternally liable for what their constituents have done.

Losing faith in reparations, Davies advocates local government corruption, in the style of to the Irish and New York's Tammany Hall. He credits machine politics with the rise of Irish Americans into the mainstream. He may well be right, unlike the history of slavery, I have not read the history of he Irish in America. He is wrong, though, to suggest that it could work again--that Tammany Hall was not a product of particular time and circumstance, and that its practices, if legal (they're probably not now, in part because of he Voting Rights Act of 1965) would be effective now. He draws on the example of the Rev. Al Sharpton. Sharpton is god at one thing--publicity; there is little evidence that he has advanced the welfare of blacks in New York in any significant, long-lasting way. Washington DC provides terrible schools and social services for its majority-black residents, in spite of its (black) mayoral candidates getting 80 percent of the vote in some elections. Davies is also an economist, and a reading of public choice theory would show that a community's self-appointed leaders may not have their interests at heart.

The last thing is that Davies commits the same sin he decries by treating blacks as a group, rather than as individuals. Blacks need not have the same outlook, opinion, interest, ideology, or goal. To suggest that they do is misguided, especially for the United States, where conservatives and liberals argue a lot about the subject, as the recent furore over comments made by Senator Trent Lott indicates. The modern civil rights movement has been around for less than 50 years, and in that time the progress on blacks in the United States has been considerable, at least in absolute terms. There is still a huge gap between blacks and whites, though, in terms of life expectancy, morbidity, incomes, literacy and the incidence of violent crime, to name a few measures. On the incidence of poverty alone there is reason for action. That should not be reason, though, to decry or belittle the progress that has been made so far, to minimise the hard-fought struggles of the past.

UPDATE: Glenn Reynolds links to a Los Angeles Times story about the most segregated city in America, Milwaukee:

In Milwaukee, where 37% of the city's 600,000 residents are African American, the disparities between the races are among the greatest in the nation. The inequities are glaring in nearly every social index: income, child poverty, education, even access to home mortgage loans.

Blacks in metropolitan Milwaukee earn just 49 cents for every dollar that whites earn, far below the national average of 64 cents to the dollar.

As a result, 44% of the city's black children live in families scrambling to subsist on incomes below the poverty line. Only 10% of white children are equally poor.


It is saddening. Poverty is an issue I care about immensely, and it is a huge part of the reason why I'm studying economics. I must say that I care about poverty more than inequality, especially as a poverty strategy, in my opinion, does the greatest good for the greatest number, without substantial costs for everyone else. D-Squared is a true egalitarian, and I respect that. I, for one, don't expect to see equality in my lifetime, though I do foresee (with my limited abilties) substantive progress. Will we be happey with where we are in another 50 years? We'll see.

Of all the things to do on Christmas Day, I watched Black Hawk Down. (I also saw The Fellowship of the Ring, which was wonderful; I will probably venture to see The Two Towers in the next couple of weeks.) BHD got me to thinking about war, nation-building, and a little about the all-but-inevitable conflict in Iraq next year. I have yet to come to any conclusions on Iraq, but I do have a few thoughts.

Black Hawk Down, based on the newspaper serial and subsequent book by Mark Bowden, describes the clash in Mogadishu on 3-4 October 1993 between United States forces and the militia of Somali warlord Mohammed Farah Aidid--a clash that left eighteen U.S. personnel dead and seventy-eight wounded, along with over one thousand Somali casualties. Public outcry in the United States contributed to the decision to withdraw U.S. forces in March 1994. The film is worth watching simply to understand the events of that day, and the cost of an apparent "victory"--the U.S. forces had actually succeeded in capturing the two Aidid functionaries they were after.

I had read a lot about the film before I saw it, though I have yet to read the book. One get the impression, though, of hubris on the part of the mission commanders. The original Somali relief mission, Operation Restore Hope, started in December 1992; this was aimed at suppressing clan violence in Somalia, which interfered with international famine relief efforts in the horn of Africa. The Federation of American Scientists notes, though, that "the US failed to acknowledge the political dimensions of the situation at the highest political levels". This early effort, though, is still regarded as a success; the FAS, for instance, notes that:

By March 1993, mass starvation had been overcome, and security was much improved. At its peak, almost 30,000 US military personnel participated in the operation, along with 10,000 personnel from twenty-four other states. Despite the absence of political agreement among the rival forces, periodic provocations, and occasional military responses by UNITAF [the unified task force], the coalition retained its impartiality and avoided open combat with Somali factions--blending its coercive powers with political dialogue, psychological operations, and highly visible humanitarian activities.


On May 4, 1993, Operation Restore hope was succeeded by the second United Nations Operation in Somalia (UNOSOM II), which as the FAS describes, became "a badly flawed peace, with military forces which came to be seen by parties to the local conflict as co-belligerents rather than impartial peacekeepers." The failure to acknowledge the political dimensions is illustrated by Bowden's description of the escalating tensions between the US-Un forces and Aidid:

It didn't take long after arriving in Mogadishu in the spring of 1993 for [UN Special Representative, retired US Admiral Jonathan] Howe to conclude that Aidid had no interest in power-sharing. Aidid's army had overthrown longtime dictator Mohamed Siad Barre two years earlier. He and his clan felt that it was now their turn to rule Somalia. They had purchased that right with blood, the ancient currency of power.

With 20,000 Marines patrolling the city, Aidid didn't dare confront the United Nations, but when the Marines pulled out on May 4, the situation deteriorated. Howe was stuck trying to advance a more ambitious UN agenda at the same time that the United States was scaling back its military muscle.


The United Nations official history of peacekeeping, The Blue Helmets, states

. . . it became clear that, although signatory to the March [Conference of National Reconciliation] Agreement, General Mohammed Farah Aidid's faction would not cooperate in the Agreement's implementation. Attempts by UNOSOM II to implement disarmament led to increasing tensions and, on 5 June, to violence. In a series of armed attacks against UNOSOM II troops throughout south Mogadishu by Somali militia, 25 Pakistani soldiers were killed, 10 were reported missing and 54 wounded. The Special Representative of the Secretary-General [Howe] stated that the soldiers were "murdered as they sought to serve the neediest people in the city". (UN italics)


After the attack on the Pakistani peacekeepers, Howe and his UN forces started a manhunt for Aidid, The Blue Helmets states that "UNOSOM II removed Radio Mogadishu from the control of the United Somali Congress/the Somali National Alliance (USC/SNA) (General Aidid's faction), and disabled or destroyed militia weapons and equipment in a number of storage sites and clandestine military facilities." These efforts culminated in a July 12, 1993 attack on on ``Abdi House,'' after Aidid's self-styled interior minister, Abdi Hassan Awale. In the second floor on that house was a meeting of elders and statemen from Aidid's Habr Gidr clan was taking place. Washington Post journalist Keith Richburg describes what happened (as quoted by Mickey Kaus):

[I]t was a slaughter. A half-dozen Cobras pumped sixteen TOW missiles and two thousand rounds of cannon fire into the house with deadly accuracy. First they blew away the stairwell to prevent anyone from escaping. … A video taken just after the attack showed the mangled bodies literally blown apart in the attack—the religious leaders, the elders, even the women in their colorful wrap dresses who were always on hand to serve the tea.


Kaus says that "[t]he July 12 massacre caused the entire Habr Gidr clan—and some other clans—to rally behind Aideed"; Bowden says "[f]rom the Habr Gidr's perspective, the United Nations and, in particular, the United States, had declared war." The attacks continued, culminating in the debacle of October 3/4, 1993.

There are several lessons one could conceivably draw from the experience in Somalia. One gives comfort to pacifists by saying that all war is terrible, and as a result it should be avoided at all costs; the loss of the lives of 18 American soldiers, plus the hundreds of Somali dead only highlights this. This position, however, does a tremendous disservice to the earlier Somalia operation, which had successfully created an environment for international famine relief assistance. Another lesson missions of vengeance; as Kaus notes, there is "well-documented tendency of such vengeance missions to get out of control." Does this apply to the policy of regime change in Iraq as well?

The most important lesson, in my opinion, is know who and what you're dealing with. Kaus again says "If you're trying to bring peace to a country, you have to deal with the existing social structures and military powers. Realism please!" The Pentagon was skeptical of the entire operation at the time; Bowden says:

The generals, however, wanted more solid reasons for getting their soldiers killed. Gen. Colin L. Powell, then chairman of the Joint Chiefs of Staff, was skeptical of the whole nation-building effort. He considered Somalia a tribal nation that had been living that way for centuries. Did Howe and the U.N. think they could establish a Jeffersonian democracy there overnight?


The reason why the US has used Afghan proxies, in spite of their dubious nature, demonstrates this. In a seminal post on the subject, Jim Henley notes that

"Why are atrocities committed by the Northern Alliance more acceptable than those committed by the Taliban?" is simple: The Northern Alliance has shown no special interest in killing Americans.

So far. If we make it our business to thwart more warlords, more warlords will make it their business to thwart us.


Henley describes the Somalia operation in terms of the "soft racism of low expectations"--"[t]he racist part is that, as was clear at the time, the idea that the warlords would take exception to [the disarmament operation] took the US government, media and public completely by surprise." In Somalia people were starving because the warlords wanted them to starve--food, or the lack thereof, was a weapon of war; the notion that the arrival of US-UN forces would cause the warring factions to lay down arms is an overly naive one, which fails to account for the "adult power brokers who cared more for their own plans than American ones."

All of this is discomfiting. A lot of people in the current Iraq debate would like to know what will happen in the post-Saddam era--what will the US put in place when it administers Baghdad. In light of the above, a more basic question is should any kind of blueprint be drafted? Any outside plan fails to account for the fact that Iraq has a politics of it own, and that building a pluralistic democracy, especially one imposed from the outside, that respects human rights could take decades, especially as no such Arab state exists. This is one of the reasons why Henley opposes the upcoming war. it is also a reason why, despite minor leaks, no post-Iraq war strategy has been laid down by the Bush Administration. Any such strategy creates promises, which the US would have to deliver. This is why the British government's dossier on Iraq's human rights abuses is cynical--in the end, the people who have the greatest interest in the matter are the Iraqis themselves.

The war, if it happens (a very probable if) can probably only open the possibility of an improvement in the condition of the Iraqi people. There is a lot the West can do, but in the end it is up to them. America is pushing "regime change" to further its own ends, with an active debate as to what those ends are and why they must necessarily be achieved through war. In this case a war and the betterment of the Iraqis, at minimum by the subsequent ending of sanctions, can possibly coincide. On the other hand, they can not. This is something that both those who support the war, and those that oppose it, should keep in mind.

Tuesday, December 24, 2002

Michael of 2 Blowhards makes my main point about the new World Trade Center designs:

Isn't it plain weird that architectural reviewers and critics feel that it's OK to review a building without a) talking to people who work or live in it, b) talking with people who work or live near it, and c) spending serious time living and/or working in and near the building themselves?


Last year I saw the Guggenheim's show on Frnak Gehry, and, while I liked a lot of the design, I was unsettled about a lot of them being built. In a follow-up post, Michael says:

I visited and enjoyed Frank Gehry's famous Santa Monica house. What a kick! It looks like a suburban house freeze-framed a millionth of a second after a bomb detonated! Whee! Yet I also couldn't help feeling a few other things, such as: "I'm glad I don't live in it," and "I'm glad I don't live next door to it;" and "I'm glad I don't live on the same block." For one thing, architecture fans are forever dropping by -- what a pain. For another, making a house like that on such a pleasant, placid, and typical Santa Monica block seems to me like a selfish and uncivil thing to do. How do the neighbors feel?


Stewart Brand's book How Buildings Learn, as well as the subsequent BBC documentary series, describes a phenomenon know as "magazine architecture", were critics, reviewers and others get caught up in how a building looks, especially just after construction, rather than in how it works. Buildings then become statements, and how the afgfect the people who live and work in them is a secondary consideration, as is adapatability and, consequentially durability.

No proposal is going to satisfy everybody, and it is true to assert that none of these designs will be built in their present form. I actually prefere a couple of concepts from the previous, much-derided set. Then again, I don't (yet) live in New York, so I don't have to suffer whatever goes up.

Tuesday, December 17, 2002

As I was studying for my test last week, my normal study routine (if it can be called that) was disrupted by the fire brigades strike. I generally don't have sympathy for anyone seeking a 40 percent pay increase, but the way Birkbeck responded to it had me somewhat more frustrated and less sympathetic. The safety officials at the college got paranoid and shut the college at 9:30 pm--a terrible inconvenience given that the college is where I do my studying after lectures, which finish at nine, as I can't really study at home. I also do all of my online stuff at night from the fast computer labs. The test was important, though, so I had to find a reasonable substitute study location.

I decamped to Starbucks, Leicester Square. Not a bad choice, all things considered.

Now a coffee bar may not be one's first choice of study location, and I know more than a few people who would loathe the choice of Starbucks especially. Part of this, it must be said, is the coffee itself--I have heard more than one complaint of undrinkability. This is, in part, a cultural thing. Caffe Nero, for instance, one of a number of British coffee bar chains, serves all coffee with two espresso shots rather than Starbucks' one. Starbuck's coffee is therefore "weak", and weak coffee, ergo, is undrinkable. This is a matter of taste; I, for, example, generally prefer tea to coffee. Two espresso shots is not a major distinction; most of Caffe Nero's competitors would happily add another shot for an extra 30p. It's probably part of Caffe Nero's way of branding, and it does not seem to be hurting them; just last year they bought the Aroma coffee bar chain from McDonalds. Starbucks, though, is the only chain in the UK that makes decent profits.

Part of the anti-Starbucks feeling, if it can be called that, has to do with a thing against chain stores in general, and brand names in particular. In the UK, at least, much of this not so much influenced by the anti-corporate writings of Naomi Klein, but rather for a notion of fairness and responsibility; "fair trade" and organic brands do have something of a niche in the UK market. Despite Starbucks postioning itself as a socially responsible company, including selling fair-trade coffee in its shops, it is still seen by many as another Seattle-based global corporate behemoth. It's ubiquity (in some parts of New York, for instnace, you can barely walk two blocks without running into an outlet) also turns people off.

Whether fair trade and organic coffee actually helps Third World coffee producers is questionable, at best. Cofee prices are now at a four-year low, and margins are being squeezed worldwide. In an excellent article in the Federal Reserve Bank of Boston Regional Review Miriam Wasserman asks "How is it then that, at a time of historically low [coffee] prices, American consumers are paying $2 and more for their lattes?"

In part, they are paying for a lot more than coffee beans. When Americans buy a prepared coffee drink—be it a cappuccino or one of its humbler relations—coffee is one of the smallest components in the product. One pound of beans makes about 40 cups, according to Don Schoenholt, a well-known coffee enthusiast and owner of Gillies Coffee Company, based in Brooklyn, New York. Even if the beverage is made from great coffee beans—the type that roasters buy for $4 to $5 a pound— the value of the coffee is about a dime per cup. Just “the cup and the lid are about 20 cents… the Equal packet often costs the restaurant as much as the coffee,” says Schoenholt. More important, the price of each beverage also has to cover the cost of prime real estate rents, U.S. salaries and benefits for the café employees, research and development, taxes, and marketing expenses, among others.


An article I read a few years ago in the now-defunct Third-World magazine South made the point that McDonald's is "less a fast-food company than a real estate company that sells food". This, I think, also has some part of play in the anti-Starbucks feeling, with some people having a reaction against what they see as a growing sameness in much of England. (I cannot speak for Scotland--fifteen months in the UK and I've still not been there.) A common complaint here is that most English high streets look the same, and from what I've seen, that's true. Arrive in any town centre and you'll find the same Link, Boots, Dixons, Marks and Spencer, all of the five main high-street banks (Barclays, HSBC, Lloyds TSB, Halifax and Royal Bank of Scotland), at least three stores selling the same mobile phones with the same price plans, a "metro" or "central" outlet of the Tesco or Sainsbury's supermarkets, and branches of the William Hill and Ladbrokes betting chains, to name a few. Why travel throughout the land if you're going to end up in the same place?

The clustering of like stores can be explained by game theory, as an example of the "beach location problem". Take a beach alon which sunbathers are evenly distributed, and assume there are two hot dog vendors competing for that market, with the sunbathers buying ice cream from the nearest vendor. Where on the beach would be the best location for a vendor to set up?

John D. Stiver, of the University of Connecticut, proides the answer:

Suppose that you are considering opening a hot dog stand on the beach. Currently, there is already one hot dog stand already in business. Presumably, this vendor has chosen his location at the most crowded section of the beach so he can be near the largest number of customers. Given the existing vendor’s location, where should you choose to open your stand? If you locate far away from the existing vendor (hence, far away from the customers), you will probably have to charge a low price to attract business. However, if you locate right next to the existing vendor, you can charge the same price he does.


This model of spatial competition, therefore, can be used to explain why similar business seem to be "clumped together" in the same location, the reasoning being that business in the same location can charge the same prices. This is a noncooperative equilibrium; no prior agreement on location was made between the parties, and each was simply acting to maximise their individual profit. This is what produced homogenous-looking high streets, and the point about monotony is taken. To be fair, though, one could assume that most people do not travel to places simply to see high streets.

Brands, of which chain stores are a part, a also a part of the way consumers deal with the lack of perfect information in a market. Consumers are often willing to pay a premium in a chain store they trust, partly because they have an expectation that the quality of branded merchandise is better than the average quality of merchandise out there. In this sense, brands can be though of as a means of lowering the consumer’s cost of acquiring information on quality. Markets in which brands are dominant may not be perfectly efficient, but they do come a long way in lowering consumer's transaction costs. In Canterbury a few months ago my friendand classmate Sophia and i went into a local establishment, and here put off by the price and quality of the coffee and sandwiches we were given. The service was not great either. Sophia (who's one of the "undrinkables") says that could be a reason why Starbucks does so well--their service is generally so much better than the local average.

Nationalism plays a role; I would not go as far as to call it anti-Americanism, but some people regard the presence of American chains (like the Gap) as an import of the vulgar, common part of Americana they would rather do without. The imports, though, went out of their way to do things differently to attract business. Until the European Union Working Time Directive became law in the UK in 1998, branches of Borders bookstores would remain open until 11pm, everyday. (The directive indirectly led to the reduction of most shop hours to just six hours on Sundays.) To this day, good and venerable British stalwarts as Foyle's, Blackwell's and Waterstone's don't open past eight or nine pm.

To busy people, extended opening hours are a great convenience, and the bookstores, in effect, add to public space--they become third places, which, as Glenn Reynolds points out, are "somewhere more congenial than the office, less isolated than home". A July 2001 article from the Atlantic quotes the New Statesman on Waterstone's, saying that "Cities that lacked any decent bookshop suddenly got one; sometimes, with the competition, even two or three. Culturally it matches Allen Lane's invention of the cheap, good paperback when he launched Penguin Books in 1935." The convenience of late opening hours was why I was studying at Starbucks--it was one of the few places wih a decent ambience that remains open until midnight. (Links via Virginia Postrel.)

For me, Starbucks illustrates one thing--prosperity. If your residential neighbourhood has a Starbucks, or if one is coming there soon, then it's a sign that outsiders are taking notice of what's happening in an area. (The same could possibly be said for the Pizza Express chain. I, for one, do not get the European taste for pizza--either it's gourmet or it's Domino's. Give me a big slice of New York-style any day.) Last weekend I was in Sutton and Croydon, both in south London. Both had a branch of Starbucks. Lewisham, close to the Thames and the part of London where I live, does not. Now I quite like my area, and I think it's on the up and up, but a Starbucks outlet would be a another sign of arrival--of being cosmopolitan, if a working-middle class area could be such a thing. Some may rail against this, but I think it would be not bad thing, once they keep on serving Tazo Chai tea.

Monday, December 16, 2002

I'M BACK: Sort of. My exam went okay, and now I have three weeks off from Birkbeck. Well, almost: I have a paper to write on the tragedy of the commons for the first week in January. I still have to figure out a way to blog without disrupting my studies and by doing all of the research I think is necessary. I'll see.