Saturday, July 19, 2008

Adam Smith On Sugar and Scalping Concert Tickets

An unsigned piece on (The Wilmington Magazine, Wilmington, North Carolina) HERE.

Laissez-faire or laissez-foul?(July 18)

'Ah, free enterprise - the capitalist doctrine that allows a person to buy a ticket at face value and sell it for many times that. Some people call it scalping.
It used to be widely illegal, but many places, including North Carolina, have recognized that it's futile to fight the law of supply and demand.
In recognition, North Carolina's Honorables have decided to make Internet scalping legal, wiping out a previous ban on selling tickets for more than $3 above the face value.

The bill has the backing of, among others, our professional sports organizations, which value money and attendance more than an innate sense of fairness.
To some extent, scalping is the ultimate homage to capitalism. If someone's rich enough or foolish enough (maybe both) to plop down $2,500 so his little princess can see a real pop princess on stage, far be it from Adam Smith's disciples to stand in his way. The seller makes a profit, Daddy's princess is happy, and the law of supply and demand lives on.

When the spirit of free enterprise prevents the majority of fans from picking up tickets at a fair price, however, laissez-faire becomes extortion


Adam Smith’s disciples’ – a mixed bunch if ever there was one, running from the Bernard Mandeville's ‘greed is good’ school of Hollywood script writers and other interlopers, who missattribute their selfish nonsense to Adam Smith, through to the modern economists who have never read Adam Smith but use ‘rent-a-quote’ Internet sources instead, and on at last to that small band of economists who have read Adam Smith and don’t prattle on about ‘high priests’, ‘disciples’, and other unlikely imaginary worthies – are unlikely to take a stance on the price of tickets for a venue that cannot hold everybody who wants to attend and the low ticket prices the promoters print for the fixed number of places available.

I haven’t heard of fans of Opera being put off by the extraordinary high prices for performances by the top – very highly paid – names in the business. With the availability of other media, ‘live’ concerts are rationed by the space available. When the Rolling Stones played Copacabana Beach free, the audience reached one million. The space was rationed by the closest distance from the stage fans could get to. A stadium seating 80,000 rations seats by price, but the prices are set well below the matching demand; hence, re-selling takes place, and will take place whatever the promoters devise or are ordered to impose.

If mum and dad want to buy a ticket for ‘little princess’, it’s going to cost them. If I want to go to watch Manchester United, it’s going to cost me (and has). If no tickets are available, I can’t go. It’s no time to teach ‘little princess’ anything different – you could fill venues for pop stars several times over with all the ‘little princesses’ who want to go for nothing (they don’t pay for their seats – their parents do).

That the State Governor of North Carolina, and the ‘Honourable’ members in the State Capital, get involved in banning and unbanning ‘scalping’, with parents taking sides (what about those parents who cannot afford even the ticket price for their ‘little princesses', never mind those who can?), we have a classic state intervention too far.

In Adam Smith’s time sugar was very expensive, and Adam strongly liked sugar too; he could afford it on £900 a year. The majority of people in Edinburgh couldn’t afford the price of sugar, at least in the amounts they would have liked to have consumed it, but he didn’t demand that the Prime Minister introduce a law to lower the sugar price. He took the longer view; follow policies that promoted economic growth and through growth increase employment that permitted the spread of opulence. That would bring (and did) the availability of sugar to the table faster than any other route.

As it was, the UK legislators did not follow his advice very strictly, but even still, sugar appeared on the tables of working families by the end of the 19th century – it was on my family’s table even during the 2nd World War with rationing in force and it had been on family's table in the 1920s (my Gran had a sugar bowl from that period).

Now the deeply impatient among us will be in despair and shout in frustration that two or three generations is far too long to wait: ‘What do we want?’ ‘Sugar’! (or free concert seats); 'When do we want it?’ ‘Now, now, NOW!’ (You must have heard that refrain by now about whatever they are in a hurry for.)

But the brute facts of life are that you cannot hurry into existence the benefits of a commercial market or substitute for the slow and gradual growth of an economy – socialism tries this with disastrous results – only the Commissars got sugar on their table and got to go to the big concerts. Meanwhile, fans can get to the free concerts…which may not be daddy’s ideas of what is appropriate for his ‘little princess’.


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