To truly understand what has been going on in Hollywood with Harvey Weinstein, and the inevitable parade of others that are sure to follow, we need to delve more than a little into what motivates human beings, how they respond to incentives. Note that none of this excuses sexual harassment or assault in anyway, it is only to explain why it might be more prevalent in Hollywood.
One half of what we need to know comes from this Washington Post report on the subject:
Show business is known for its comically unbalanced ratio of supply and demand: Hordes of young, aspiring actors and filmmakers scrap over every grunt-level Hollywood position. For a toehold in the industry, hopefuls will endure bad parts, low pay, long hours and a level of mistreatment that might not stand in other professions.
Supply and demand, scarcity — we’re talking economics here, obviously. The basic point is that power typically goes to whoever controls a scarce resource.
Say, for example, that we’ve got some wondrous alloy which is very useful in doing something. There are many possible suppliers of the basic metals to make the alloy, but only one or two know how to do the transformation. The profits from that wondrous use will flow to the alloy makers, not the miners. Imagine, instead, that there’s only one mine with that metal – the mine owners will gouge the alloy makers and take almost all of the profits. Control of whatever is the scarce resource leads to capturing the profits.
We also need to add one more observation: Humans don’t maximize profit or income; they maximize utility. Utility encompasses everything that we might desire, not just money. Some desire power, some enjoy humiliating others, many focus their desires on sex, and so on. Not that we always approve of those desires, but note that they exist.
At this point, the explanation of harassment in Hollywood should be clear.
There’s a very limited supply of really serious acting talent. The few who get paid to act in movies for millions of dollars, decade after decade, truly have something the rest of us just don’t. Behind them, there’s a vast army of skilled, talented, good-looking people who don’t quite have as much talent but are just as entirely reasonable and suitable as the rest of the industry. It’s just, as the Washington Post notes, there are many more people willing and able to do the work than are actual positions available.
Supply and demand are indeed entirely out of whack.
Thus, those who control the access to those positions get to maximize their utility — whatever that utility is, unfortunately. Entry level work in such a tournament industry, the other economic name for this setup, is always going to be exploitative.
The question then becomes, what are we going to do about this?
Obviously and clearly, jail the rapists and so on — that’s a crime and that’s why we’ve got prisons and a court system, to sort through the claims and punish those who are proven guilty.
But more than that? The economists’ answer is, equally obvious, about economics, not the wider morality. If we can’t bypass labor chokepoints, parts of the market where those who control scarce resources can abuse their positions, then we should be doing our darnedest to make sure their rewards are being paid in cash and not in the ability to sexually subjugate others or anything else. Let the people who control the scarce resource become gloriously rich and gain their utility that way, not out of the actions or subjugation of those they have power over.
After all, we’d be much happier having film producers even richer than they are instead of one of them, allegedly, onanizing into a potted plant to humiliate a young woman, wouldn’t we?
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute.
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