>Don’t think me cynical, but here’s an unorthodox way to introduce basic economics

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(REPOST FROM Saturday, August 26, 2006)

A story in Al-Jazeera yesterday tells us that Palestinians are enthralled by a song called “Hawk of Lebanon” by the boy-band outfit dubbed “Northern Band”. Not an especially exciting name, but whatever.

The song’s simple lyrics, “Hey, you, hawk of Lebanon. Hey, you, Nasrallah, Your men are from Hezbollah and victory is yours with God’s help”, have struck a chord with Palestinians.

With lyrics like these, they sort of remind me of that christian band dc Talk, but without the multiracial angle and the world’s foremost superpower on their side. (Assuming dc Talk are mainstram Republicans, which they may not be at all.) Then again,

“I see people turning toward Islam, so I have to sing to that.”

So maybe they aren’t all that genuine in their religiosity. Which is fine by me, to the extent that religion is inextricably linked with conservatism. Consideirng the song was originally a tune about Hamas, which has been reworked to praise Hezbollah, I don’t find the source of the tune’s inspiration especially satisfying. Hamas is a profoundly conservative organization after all, apart from whether its martial spirit is something to be praised or condemned.

Anyway, the title of this post refers to economics, and in this respect Northern Band doesn’t escape the law of supply and demand:

The group are now writing their next song about Nasrallah and enjoying the fruits of their labour. They have doubled their performance fee to $230 and at a recent wedding in Ramallah were asked to play “Hawk of Lebanon” six times.

Are the members of Northern Band greedy? I mean jeesh, just last week they were only charging $115 for a performance! Well, the band did just became scarcer, did it not? Demand has grown, supply has not. There is only one Northern Band after all.

On the one hand it could be said that their increasing their performance fee is not a law of nature; that is, the law of supply and demand is an inescapable fact of nature, but their choosing to raise their rates was something they volunteered to do (as the word “choosing” so implies). In this respect, the market is something people can alter, and does not represent “just the way the world is”, as some conservatives might assert.

But on the other hand, is raising the performance fee necessarily unethical? Apart from the fact that almost nobody you nor I know would pass up the chance to make a few more bucks on a sale if suddenly increaseed interest and the willingness to pay more presented itself, is it not justified to do so? Not only is it justified – because what you own you may ask any price for (and likewise be rejected) – but it has socially beneficial results as well. In raising the performance fee, Northern Band is rationing its services. In doing so they are allocating their skills to those who are most interested in obtaining them. Presumably those that pay the most want it the most. If the cost of an iPod went up by 50% due to a negative supply shock of some sort, perhaps caused by an explosive increase in enthusiasm for iPods, I’d have to think just a bit harder about how badly I want it, looking at my budget and deciding yay or nay. If I decide that after trimming my purchases of weed and books I can in fact afford an iPod, then hooray for me. I wanted the iPod that badly, while others didn’t, and I got what I wanted.

One objection to this is that those that really, really want a performance but can’t afford to pay for it won’t get it. They have no other resources from which to draw from to redirect toward the purchase of a performance of Northern Band. It’s undeniable that there are some in that situation, but two remedies are in place. One is charity, which, contrary to more vulgar leftists, is not something that more market oriented societies are without, much less most societies around the world. It’s in the self interest of Northern Band to give charitable performances, and true to the ethic of charity and community service common in the Arab world incidentally. And the second remedy is a loan, in this case to fans of Northern Band that find they can’t afford a performance at the new, higher price…at least right now.

With most products, the profit opportunity revealed to entrepreneurs by increased demand and higher prices would flood the market with more supply, bringing prices back down. This isn’t quite the case with one lone band, which is not reproducible, but luckily people have fickle tastes, and this means constant variety and a plethora of musical options. As it happens, one of my favorite songs by 21st century electro-jazz outfit
Flanger is named “Options in the Fire”. In the case of Lebanon recently, this is uncomfortably appropriate.

To Econ 101 by way of Hezbollah…

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