Thursday, July 28, 2005

The Economics of Willy Wonka

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The Viking Child and I saw Charlie and the Chocolate Factory this afternoon. I’ve liked Tim Burton for a long time, and this film is one of his best. Johnny Depp is certainly one of the most interesting, and most talented, actors of his generation. A Dahl purist might object to the invented backstory of Willy’s disturbed childhood as the son of Saruman the Dentist; it didn’t bother me, it was sufficiently Dahlian to fit, and it helped flesh out the persona of a man who looks like Anna Wintour on purpose.

But if I want to blog about a movie two weeks in the theaters already, I have to have some oddball schtick and here it is: Willy Wonka as a primer on economics.

When we first meet the Bucket family, they are mired in comically desparate penury: one breadwinner, five dependents, and cabbage soup every night. Mr. Bucket is an honest and industrious man, but he can’t earn much, because he puts caps on toothpaste tubes by hand. Since an employer can’t afford to pay him more than the value he adds to the product at the margin, he makes a peasant’s wage and eats a peasant’s diet.

There’s a massive, modern, efficient factory right next to the Bucket house – the Wonka works – but there are no employment opportunities there. Grandpa Joe once worked for Mr. Wonka, but that all ended with a rash of industrial espionage. Some of the Wonka workforce were bribed to steal secret recipes for his competitors, and in response Wonka fired everyone and closed the factory. Wonka’s competitive advantage at candymaking is his fertile creativity; if his intellectual property rights can’t be defended, he can’t afford to keep inventing things. And although this was bad for Wonka, it was worse for Grandpa Joe. Wonka eventually found an alternative source of labor that wasn’t so untrustworthy. Grandpa had to go lie in bed with three other old people and eat cabbage soup every day.

Keep that in mind the next time you feel like bashing Big Pharma when they defend their drug patents.

Although things are bad for the Buckets at the beginning of the film, they get worse. Mr. Bucket loses his job at the toothpaste factory, when the demand curve for toothpaste shifts east in response to an exogenous demand increase for candy caused by the Wonka Golden Ticket craze (since of course toothpaste and candy are complementary goods). You might think that what’s good for toothpaste is good for the Buckets, but paradoxically the firm’s increased revenues give them the cash position to enter the capital market and purchase a machine that screws caps on toothpaste tubes and makes Mr. Bucket redundant.

Then Charlie finds a 10 pound note (or maybe it was a 10 euro note, or some made up currency. Ten somethings, though) half buried in the snow, takes possession of it, buys a Wonka bar and gets the last Golden Ticket. You might cavil that Charlie should have taken the note to the police and reported it as lost. I say he mixed his labor with an abandoned physical good, all according to John Locke, and it became rightfully his.

Most of the time spent in the Chocolate Factory is microeconomics free, but afterwards the Bucket fortunes improve when the toothpaste makers hire Mr. Bucket back at a significant wage increase to fix the machine that screws the caps on the tubes. This illustrates that Mr. Bucket’s previous poverty was in part due to insufficient capital to mix with his labor. While in the short run the capital purchase seemed bad for Mr. Bucket, in the end it’s once again shown that workers are more productive and better compensated when they have more capital to work with.

Next week: Baseball’s Antitrust Exemption and The Bad News Bears

51 comments:

Hunter Baker said...

Kathy, my three year old is in the habit of declaring various things "the best (insert thing here) EVER!" I have to rank this post as one of the best EVER. Outstanding, which means it will get about two comments while one of my tossed off "God exists" posts or "Bush isn't evil" posts will get 55.

Kathy Hutchins said...

You don't think the "Hurrah for Drug Companies" line will haul them in? Maybe I should have mentioned Halliburton.

Aside from the economics, on further reflection I think this is one of the funniest movies I've seen in years. Anne and I were laughing at spots that seemed to sail completely over the heads of the rest of the kiddie matinee audience. The scene where Dr. Wonka tells Willy "I won't be here when you get back!" and Willy returns to find the rowhouse completely vanished, leaving a ragged hole like a missing tooth, was priceless. And so Dahl-like -- a surreal absurdity, but based on the very real tendency of children to believe their parents have almost Godlike powers -- that it's hard to believe that Burton wrote that part in. But we were the only ones laughing.

Hunter Baker said...

One question you haven't answered: Was it better than the Gene Wilder version or just more expensive and different?

Kathy Hutchins said...

I don't like the Wilder version at all. It's too bouncy and sunny. Roald Dahl's vision is disturbing and scary, but internally coherent. Burton's captured that vision flawlessly in two movies now (James and the Giant Peach being the other one.) Gene Wilder played Wonka like a hippie leprechaun. Depp plays him like a cross between Howard Hughes and Gloria Vanderbilt. And much as I, lover of quirky movies made on the cheap by nobodies, hates to admit it -- the whizbang technology improvements of the last 30 years have a lot to do with the ease with which the audience is pulled into this bizarre universe.

Tlaloc said...

It is indeed a primer on economics, the huge successful Wonka factory makes gobs of money because of the indentured servitude of the oompa loompas who are of course sub-human.

You kind of left that part out of your analysis, I wonder why?

Hunter Baker said...

BAH! HUMBUG! The humorless left never had such a wonderful representative.

Tlaloc said...

Just pointing out that her analogy works a little bit better than she would have wanted seeing as it points out the deficiencies in her philosphy.

Besides I always think its funny when someone hangs themselves in a forum.

S. T. Karnick said...

Tlaloc said, "I always think its funny when someone hangs themselves in a forum."

So you've learned to laugh at yourself! Capital!

S. T. Karnick said...

Not at all incidentally, it is important to note that the Ooompa Loompas are NOT in the factory as indentured servants; they are there entirely voluntarily, because their own environment is so hostile that they cannot live there. Wonka takes them on for both his and their mutual benefit. And there is no indication that they are not compensated well. Tlaloc's quibble is dead wrong.

Tlaloc said...

"Not at all incidentally, it is important to note that the Ooompa Loompas are NOT in the factory as indentured servants; they are there entirely voluntarily, because their own environment is so hostile that they cannot live there."

Which suspiciously sounds just like the explanations by the Nikes of the world why their sweatshops are so good for the kiddies. Well see they'd starve to death if we didn't let them work twelve hour days for pennies an hour. We're humanitarians!



"Wonka takes them on for both his and their mutual benefit. And there is no indication that they are not compensated well."

There's no indication they are compensated period. The oompa loompas afterall never leave the factory.



"Tlaloc's quibble is dead wrong."

Sorry try again.

S. T. Karnick said...

Tlaloc: I see that you have once again adduced no evidence and simply stated that your position is correct. I disagree, and will leave it to the readers to decide.

S. T. Karnick said...

Kathy, I enjoyed your analysis of the economics of the film.

The Liberal Anonymous said...

In the first edition of the Dahl book, the factory was staffed by Pygmies. This was hastily changed after some uproar.

Both the pygmies and the Oompa Loompas were paid entirely in cocoa beans.

Tlaloc said...

"Tlaloc: I see that you have once again adduced no evidence and simply stated that your position is correct."

Funny, I thought I had pointed out how your statements exactly matched the propaganda of people who abuse children to make money and how your second claim was not supported by the evidence. That would seem to be adding something to the argument.


"I disagree, and will leave it to the readers to decide."

I guess I'll just have to hope the "readers" are reasonably observant.

S. T. Karnick said...

No, you adduced no evidence to prove that the Ooompa Loompas were being exploited in any way. Until you do that, your point is entirely invalid.

Kathy Hutchins said...

the Oompa Loompas were paid entirely in cocoa beans

The Oompa Loompas wanted to be paid in cocoa beans. When Wonka found them they were eating mashed caterpillars. They all spent all the time they had left over from catching and mashing caterpillars gathering cocoa beans. They were lucky to gather three or four per capita per year. Wonka offered them cocoa beans and they accepted in a mutually beneficial exchange. I suppose Wonka could have paid them money and they could have bought their own cocoa beans, but Wonka probably has an economy of scale advantage in cocoa bean purchases.

You can compare this treatment of itty bitty aboriginals, completely peaceful and positive sum, to the treatment of the itty bitty island women in that Japanese classic film of the Great Big Angry Animals that Symbolize Atomic Bombs genre: Mothra. An evil Japanese entrepreneur kidnaps the two little women (who are littler than Oompa Loompas, but also sing) and puts them in a circus show. Mothra follows their songs and levels Tokyo before getting them back. Definite negative sum transaction.

I could write a defense of the system of indentured servitude, but I don't want Tlaloc's head to explode. Yet.

James Elliott said...

I gotta say, y'all put way more thought into something like "Charlie and the Chocolate Factory" than perhaps should be there.

I do have to agree with Karnick though, I don't think the Oompa Loompas were indentured servants. They were paid in a coin of exchange. That the coin of exchange is weird doesn't change that basic fact.

Economics lessons aside, this was one of the best movies I've seen in theatres in a long, long time. I enjoyed it immensely.

Personally, my favorite part was how Willy Wonka would deal with Mike TV... "Mumbler!" Maybe that's how we should deal with Baker when he keeps deliberately misunderstanding things...

Oh, and Kathy? I would LOVE to see someone defend indentured servitude. While I'm sure you can do it on an economical basis, you'll have to encompass a few more systems to make your argument solid.

Tlaloc said...

"The Oompa Loompas wanted to be paid in cocoa beans. When Wonka found them they were eating mashed caterpillars."

Ah yes exploitations is always excused if people had bad conditions before.
So then naturally should Kathy come along a child being mauled by a tiger she's entirely justified to take that child home and say merely stab her with a hat pin from time to time. A hat pin puncture is clearly better than a tiger mauling and so the relationship is mutually beneficial.

I somehow thought you might aim higher than "I'm not harming you as much as you used to be" and maybe more in the realm of "I'm actually helping you." Again we come back to that hippy guy in Judea and what he'd think of your cavalier attitude toward people and oompa loompas.



"I could write a defense of the system of indentured servitude, but I don't want Tlaloc's head to explode. Yet."

I doubt it'd make my head explode. I think I know now exactly how committed you are to capitalism uber alles.

Tlaloc said...

"I do have to agree with Karnick though, I don't think the Oompa Loompas were indentured servants. They were paid in a coin of exchange. That the coin of exchange is weird doesn't change that basic fact."

Indentured servants can be paid (although often they weren't but worked for room and board) but what they can't do is leave.

S. T. Karnick said...

Yes, and there is no evidence whatever for the assumption that the Ooompa Loompas could not leave.

Tlaloc said...

Sure there is karnick. Had anyone in the town seen an oompa loompa or heard of them before the factory tour? No, their appearance is a huge shock not only to the visitors from far away but to charlie who lived on their doorstep.

Tlaloc said...

Frankly I think it's about time we reviewed the whole concept of Intellectual Property as it is both a retarding force on societal development and also makes absolutely no sense logically. Sorry to bring this back to Kathy's original post but it had to be said.

James Elliott said...

And let's not forget that Big Pharma is Evil.

Kathy Hutchins said...

I would LOVE to see someone defend indentured servitude.

Indentured servitude, at least as it was typically practiced in England and colonial America, was a legally accepted method for people whose wealth consisted solely of their future labor to trade that value in what we might think of as a primitive capital market. In that sense, it partially equalized them with people who had more fungible stores of wealth, wealth that at that time tended to accrue with status and rank.

If all I have in the world is the knowledge I carry around in my head and reasonable prospect that I can continue to work for a span of years, it would benefit me greatly to be able to obtain tools and additional skills. It might also be to my advantage to relocate to a place where labor is scarce and thus better compensated. But I have no goods or money that I can trade for these things -- all I have is a future stream of labor. Indentured servitude is just a contractual way to trade some of that stream of future value for access to something I need immediately to increase my productivity and therefore my future prospects: a passage to Boston, a forge, a cart and dray horse. My employer is these cases giving up something valuable here and now, and he needs assurance that I will repay him. In an age where consumer lending was unknown, this was a relatively straightforward way to accomplish that.

Indentured servants did not become subhumans as a result of this contract: they still had all the rights of any subject of the Crown, which at that time were the most expansive civil liberties that had ever been known anywhere. They were not chattel, they could not be mistreated, and if they wanted to be relieved of the contract subject to monetary repayment of the terms, but the employer refused, they could apply to civil courts for relief.

I don't see any moral problem in a contract of indenture that is not also present in, say, a mortgage loan or a non-compete employment contract.

Kathy Hutchins said...

Had anyone in the town seen an oompa loompa or heard of them before the factory tour? No, their appearance is a huge shock not only to the visitors from far away but to charlie who lived on their doorstep.

How does that prove they couldn't leave? It just proves they didn't leave. And Wonka provides a perfect explanation why they don't leave the factory -- they don't like the cold.

No person, no law, and no physical infirmity prevents me from climbing onto my barn roof, but they'll be choreographing Hell on Ice before you'll see me up there.

Tlaloc said...

"How does that prove they couldn't leave? It just proves they didn't leave."

I never said it was PROOF. He asked for EVIDENCE. There's a substantial difference.

Look you are the one who chose to take the movie seriously as an allusion to economic systems. I'm just playing that out to it's logical end.

S. T. Karnick said...

Tlaloc: For your argument to be valid, what is required is proof that the oompa loompas couldn't leave, not a supposition that they didn't leave. You cannot produce that evidence, because those of us who have seen the film know that there is none. To call the ooompa loompas' position indentured servitude is entirely unsupported by the evidence of the film.

Until you provide a quote from the film that directly states that the o.l.s could not leave, your argument has no basis, and there is no reason to give it any further consideration—your inability to concede even the smallest point notwithstanding.

Tlaloc said...

"Tlaloc: For your argument to be valid, what is required is proof that the oompa loompas couldn't leave, not a supposition that they didn't leave. You cannot produce that evidence, because those of us who have seen the film know that there is none."

Karnick obviously we are working off a very small amount of material. What we know is that the oompa loompas didn't leave the factory. We can infer that at some point some oompa loompa most likely would have liked to take a walk, even if it meant putting a coat on because it's cold outside. Yet it seems they never did.

Is this a proof? No of course not. We don't have nearly enough information to construct a real proof. What it is is an observation followed by a logical inference which is the best we can do under the circumstances.



"To call the ooompa loompas' position indentured servitude is entirely unsupported by the evidence of the film."

No you're wrong, it is supported by the evidence such as we have but the conclusion is not proven. In other words the few clues we have do indeed point toward indentured servitude.



"Until you provide a quote from the film that directly states that the o.l.s could not leave, your argument has no basis, and there is no reason to give it any further consideration—your inability to concede even the smallest point notwithstanding."

I am sort of surprised you fixated so hard on this one minor issue. But frankly since I haven't been wrong I see no point to conceed anything. I've made a claim and shown that there is some evidence to support it. You've made the counter claim but provided no evidence, and merely stated I hadn't met the burden of proof. Except there is no burden of proof because I'm not trying to formally prove anything.

Hunter Baker said...

Kathy, I was wrong. Your loving embrace of Big Drugs did, in fact, bring out the board crashers. Nicely, done.

Tlaloc said...

"Kathy, I was wrong. Your loving embrace of Big Drugs did, in fact, bring out the board crashers."

You know, hunter, you can always kill the comments or restrict the board to members only if the idea of outside opinions bothers so much.

S. T. Karnick said...

No, Tlaloc, you're the one who made a positive claim and based a further argument on it. Hence, you are the one who has to make a positive case that your proposition is fully proven. You have failed to do so. You can definitely say that you personally see the oompa loompas as indentured servants, and I can say that I think you're reading too much into the film. That's all anybody can do in this case, and I'm perfectly willing to leave it at that.

Tlaloc said...

"No, Tlaloc, you're the one who made a positive claim and based a further argument on it. Hence, you are the one who has to make a positive case that your proposition is fully proven."

Please you are telling me you can never make a statement that you cannot rigorously prove? Careful now Karnick that's the kind of thing that will come back to haunt you repeatedly, trust me.

We make statements based on the evidence all the time even when such evidence is sufficient to constitute a proof. Your fuel meter reads empty and you conclude based on that evidence that you have used up all your gas, and yet you don't have nearly enough evidence to prove it. But for most situations, especially situations in whihc no evidence to the contrary exists (as is the case here), circumstantial evidence is enough to point us in the right direction.

Tlaloc said...

whoops should be "issufficient to constitute a proof"

Kathy Hutchins said...

you can always kill the comments or restrict the board to members only if the idea of outside opinions bothers so much

Why would we do that, when we can just send out the Oompa Loompas to smash you with a gigantic caterpillar-bound copy of Summa Theologica? That would prove the Oompa Loompas can leave and provide an exquisitely Dantean end to the argument in one neat package.

Tlaloc said...

I think maybe you saw the movie a few too many times. I mean when you first started taking it seriously I assumed it was simply an attempt to be cute, but now I'm worried about you.

Kathy Hutchins said...

when you first started taking it seriously I assumed it was simply an attempt to be cute, but now I'm worried about you.

You're the one who's logged 14 comments in this thread so far, pal.

But seriously....no, not seriously, but a little more seriously...why is it inappropriate to devote serious thought to something frivolous? I've never thought that living the examined life meant pulling a long face and reading nothing but improving books. An examined life means applying your ratio and your caritas all the time as best you can. That's all I'm doing.

Tlaloc said...

"You're the one who's logged 14 comments in this thread so far, pal."

Sure but I'm not talking about sending out oompa loompas to assault people as if they were real.


"why is it inappropriate to devote serious thought to something frivolous?"

I never said it was. I was just worried when you seemed to be slipping into delusional fantasy.

Jordan said...

I haven't seen the movie, but because of this post (and in spite of the following conversation), I'm considering it.

I wonder if the concept of vocation might help clear up some of the mystery surrounding the O.L.s? Perhaps they are achieving their highest created purpose in working for Wonka.

And their situation seems to be somewhat analogous to that of the elves under that dictatorial "Saint" Nicholas.

James Elliott said...

Tlaloc, as someone who's usually on your side, I have to say, cool it. I admire your tenacity, but there's a point where you're just whistling in the dark.

Kathy, that was a nice, economical try. Like I said, however, you'd need to bring in other systems to make a solid argument and all you provided was the economic argument bolstered by what it ideally looked like.

According to Dolgoff and Janssen, the westward expansion of the United States was largely driven by indentured servants who, once released from their indenture, lacked any capital to make their way. They merely worked to pay off their debt. Once that debt was met (usually via menial or marginally-skilled labor), they could not afford to live or find work in the communities where tehy had been indentured. Often, this was as much an aspect of their lower social status than of their labor skillset. Indentured servants and formerly indentured servants faced discrimination (in jobs, housing, and where they could shop) and abuse not covered under British civil rights.

Usually these formerly-indentured families gathered with other formerly-indentured families and formed small communities on land that, while unsettled, belonged to large landowners or corporations, who would, every once in a while, decide to run them off with force.

So, as with most things economists enjoy, it looked great on paper, and even perhaps was intended well, but didn't exactly end up being so great in practice.

S. T. Karnick said...

I never denied that people make statements based not on rigorous proof but on some measure of evidence. I said explicitly, "You can definitely say that you personally see the oompa loompas as indentured servants, and I can say that I think you're reading too much into the film. That's all anybody can do in this case, and I'm perfectly willing to leave it at that."

Tlaloc said...

"Tlaloc, as someone who's usually on your side, I have to say, cool it. I admire your tenacity, but there's a point where you're just whistling in the dark."

JE sometimes people have to be hit over the head with their hypocrisy before they admit it. I'd much rather have a civil discussion but you can't when people are willing to bend reality to such lengths in order to win.

Tlaloc said...

"I never denied that people make statements based not on rigorous proof but on some measure of evidence. I said explicitly, "You can definitely say that you personally see the oompa loompas as indentured servants, and I can say that I think you're reading too much into the film. That's all anybody can do in this case, and I'm perfectly willing to leave it at that.""

Okay fine Karnick, so long as you explicitly admit that the only evidence we have supports my conclusion and hence it's the logical one. We have nothing to support yours.

S. T. Karnick said...

Oh, for goodness' sake!

Tlaloc said...

You insisted on pushing this. I'm just tired of letting you argue in bad faith.

Tlaloc said...

Just to be clear here:
Kathy wanted me to admit that my argument was not proof which I did willingly because it wasn't. I never tried to claim that it was.

I want you to admit that my argument has the only available proof behind it and yet you seem reluctant. And yet you claim I'll do anything to avoid conceeding a point.

I already have conceded a point (granted a point I had not made but one people claimed I had). Can you?

Tlaloc said...

whoops should be "the only available evidence behind it"

S. T. Karnick said...

My point was exactly the same one you conceded to Kathy, that your argument does not constitute proof. (Apparently I did not see your concession in the flurry of comments, and hence inadvertently created some confusion.) I have not claimed to be able to disprove your interpretation. I simply don't agree that your interpretation is the best one. Unless you are suggesting that no one can ever disagree with your interpretation of something, I don't think that there is any argument between us here.

Kathy Hutchins said...

So, as with most things economists enjoy, it looked great on paper, and even perhaps was intended well, but didn't exactly end up being so great in practice.

Economics is all about changes at the margin. You've offered some evidence that the system of indentured servitude was not perfect, or even very good. What you haven't done is compared it to what these people would have experienced had they not been indentured. My educated guess is "not perfect, not very good, probably even worse than what happened to them." For this you can rely to a large extent on the fact that people entered the state voluntarily. A choice between bad and worse still is better than no choice but put up with worse.

And of course, I have a personal reason for being grateful for the institution. I am the descendant of both Scots and Irish who originally came to this country under contracts of indenture. My great-great grandfather's employer voluntarily released him from his indenture so he could enlist in the 8th Regiment, Indiana Cavalry, in 1861.

Tom Van Dyke said...

Of course, indentured servitude still exists with teachers and doctors promising service in underserved communities in return for their education.

(And members of the Judge Advocate Corps doing a military stint in return for a financially free and clear Georgetown law degree. I will not be surprised when they join corporate law America in equal numbers as with the ACLU.)

But your larger, most important and underappreciated point, Ms. Hutchins, is that capitalism liberates human capital (a man's labor) and puts it on an even par with the wealth of the "haves," which historically has always been real estate, inherited and prior possession of the land; it makes the two fungible, that is to say, interchangable.

This puts privilege of birth and hard work on an even playing field, and as history has proved, hard work trumps all.

That is why, in its way, capitalism is inherently moral, as endeavor, not unearned advantage, is shown to be the true measure of a man's worth.

Abigail said...

The Oompa-Loompas were pygmies in the first edition!! That explains why I remember, from reading the book as a child, Charlie wondering whether Wonka had made them out of chocolate...but why I couldn't find the passage 25 years later when I read the book to my kids.

Alex said...

Tlaloc, not only have you not proved anything, but your single piece of evidence is, to put it kindly, pure conjecture. You say, "We can infer that at some point some oompa loompa most likely would have liked to take a walk, even if it meant putting a coat on because it's cold outside." How? Why? What makes you so sure of that? You're committing the "I Am The World" fallacy: assuming that everybody else has exactly the same desires and tastes as you; therefore, if they DON'T do what you would do, something must be unfairly preventing them.

This is also why the standard rant against "sweatshops" falls flat - the people who take these jobs are almost always OVERJOYED to take them, as the pay and working conditions are usually leaps and bounds better than their available alternatives. Besides, if some putative world government made it illegal to pay people in different countries different wages for the same jobs, developing countries would never GET the jobs in the first place, their economies would be denied the chance to follow a normal development curve leading to comparable wealth and living standards with the current industrial powers. They'd remain dependent on unilaterally-given aid, and we've seen how well THAT works in Africa. But then, letting the perfect be the enemy of the good is what makes modern leftism what it is...