Sex Markets and Ferocious Entrepreneurship

Sex markets and miserliness as generosity - strange concepts but nonetheless viable targets for
economic studies. Landsburg being interviewed by Freakonomics authors...

Also Mumbai in Shacks - a story of strong entrepreneurship

On the sex and the STD:
"...

Q: Many of the stories in your book rest on the idea that people should alter their personal welfare for the greater good — for instance, STD-free men should become more sexually active to give healthy women disease-free partners. In our society, is it possible to put such ideas into practice?

A: Sure. We put such ideas into practice all the time. We think that the owners of polluting factories should give up some of their personal welfare (i.e. their profits) for the greater good, and we convince them to do that via tradable emissions permits (when we’re being smart) or via clumsy regulations (when we’re being dumb). We think that professional thieves should give up some aspects of their personal welfare (i.e. their thievery) for the greater good, and we convince them to do that with the prospect of prison terms.

Our personal welfare is almost always in conflict with the greater good. When something exciting happens at the ballpark, everyone stands up to see better, and therefore nobody succeeds. At parties, everyone speaks loudly to be heard over everyone else, and therefore everyone goes home with a sore throat. The one great exception is the interaction among buyers and sellers in a competitive marketplace, where — for fairly subtle reasons — the price system aligns private and public interests perfectly. That’s a miraculous exception, but it is an exception. In most other areas, there’s room to improve people’s incentives.

One theme of More Sex is Safer Sex is that some of those disconnects between private and public interests are surprising and counterintuitive. Casual sex is one of those examples. If you are a recklessly promiscuous person with a high probability of HIV infection, you pollute the partner pool every time you jump into it — and you should be discouraged, just as any polluter should be discouraged. But the flip side of that is that if you are a very cautious person with a low probability of infection — and a low propensity to pass on any infection that you do have –then you improve the quality of the partner pool every time you jump into it. That’s the opposite of pollution, and it should be encouraged for exactly the same reasons that pollution should be discouraged. ..."

In my opinion, the market mechanisms to ensure symmetric information in this transaction can be quite cumbersome, but a further analysis is warranted by interesting economic and social consequences. The other part of the post dealing with justice system is completely true, the current judicial system is answer to that dynamic optimization problem? Perhaps it's just the transaction costs that maintain the system in a peculiar homeostasis.

Mumbai in Shacks (via Freakonomics)

MUMBAI (Reuters) - The first sight for anyone flying into India's richest city is a sea of corrugated and tarpaulin-covered roofs beside a narrow, filth-choked river.

It is an aerial view of Dharavi, considered Asia's biggest shantytown, two square km (0.8 square miles) of open sewers, muddy lanes and ramshackle tenements that is home to almost a million people.

But strip away its squalid veneer and Dharavi bares a unique entrepreneurial spirit, and multi-million dollar micro-businesses, that breaks all the stereotypes of a slum.

Past scavenging crows feeding on dead rats, past children scampering through trash, one arrives at the plastic recycling factory of Nisar Ahmed.

Here, half a dozen men toss plastic boxes into massive grinders that chop them into tiny pieces and melt them down into multicolored pellets, ready to be cast into, perhaps, cheap plastic toys.

"Dharavi has a huge plastic recycling industry, and we are one of the biggest," Ahmed told Reuters sitting in his soot-blackened, one-room factory with a tangle of electric wires hanging from the roof.

"There are other industries as well like chemical, pottery, soap-making, leather goods, electrical equipment and many more."

A RICH SLUM

Arguably the most prosperous among the world's biggest shantytowns, Dharavi has about 5,000 single-room factories and hundreds of cottage industries that together have a turnover of around $1 billion.

Practically every home here produces something to sell - incense sticks, poppadoms, pickles, soft toys and candles among the many crafts.

"Most know Dharavi as a slum where poor people live," said Abu Khalid Anjum, president of Dharavi Businessmen's Welfare Association. "Not everyone knows how productive this place is."

In Dharavi, leather is the main product, much of which is exported to the Middle East.

Then there are the foundries, which make everything from buckles to brass fittings. Gold jewelers sit next to people making junk-metal ornaments, bakers and potters, clothiers and cobblers, motor welders and paint makers and countless other craftsmen. ..."

No comments. Gumilev would say that historical "passionarity" now is focused on that region.