Monday, February 23, 2009

Economics on the Beach

This post relates to the following Keystone Economic Principles:
4. Economic systems influence choices.
5. Incentives produce “predictable” responses.

Lately, my wife and I have been looking at movies that have been remade - the most recent being On the Beach. As is our pattern, we start with the original film - done in 1959 in this case. We follow up with the remake - done in 2000 as a made for TV movie.

For those of you unfamiliar with the movie, here's a brief set-up. In both cases, the film is set in post-WWIII Australia. The war has devastated most of the planet north of the equator, and the residual fallout is slowly drifting southward. A lone U.S. nuclear submarine pulls into port in Melbourne, Australia. After submitting to the command of the Australian navy, the sub is sent on a mission to investigate the northern hemisphere searching for signs of life, or at least decreasing radiation. There are other, personal stories involved and I don't want to give away the ending.

After watching the two films and talking with my wife, I found myself thinking about some economic concepts. My wife had mentioned after the first film that the people of Australia didn't seem particularly panicked or even upset about the approaching radiation. In the 1959 version, the people of Australia seem resigned to an unpleasant fate. They remain civil, sometimes comically so, and even friendly to the Americans.

The second film is very different. Australian society is on the verge of collapse. People are panicking and looting is a regular occurrence. The Americans are not welcome, and the people of Australia are often belligerent.

After watching both, I was struck by the difference in the portrayal of a post-apocalyptic society. I wondered to what extent the difference was the result the institutions in place at the time the film was made.

The first version was made in the midst of the Cold War. The second was made at the dawn of the 21st century. In the first, we had been told and we believed or wanted to believe that a nuclear exchange would not necessarily return civilization to the dark ages. The latter version comes after the collapse of the Iron Curtain and a protracted discussion of nuclear winter. It views human nature as having a little less dignity in the face of possible extermination. There is a sense of a reversion to the basic and the animal within us. In the 1960s, we viewed our military with a less jaded eye than we frequently do today. (See the difference in how Gregory Peck and Armand Assante portray the U.S. submarine captain.) Perhaps the difference is that between naiveté and cynicism.

The institutions (in this case informal beliefs and values) played a role in how Australia and the members of the submarine crew are shown. And these incentives (at least as depicted in the films) produced a different set of incentives as shown by characters' reactions and choices within the context of these fictional events.

I would not recommend showing these to your students. The opportunity cost of spending the time is too high. But for those of you looking for an interesting "film study" on a cold, rainy weekend - this could prove thought-provoking. It was for me.

I look forward to your comments, if any.

1 comment:

Bob said...

Good one, Tim. But let me offer another possible explanation for the difference in behavior: Twenty-plus years of greed-is-good, laissez-faire economics have brought us to the point where our guiding philosophy seems to have become "I've-got-mine-and devil-take-the-hindmost."

Until the recent economic downturn, we tended to overlook the pain of our neighbor's job loss or the declining state of our public institutions, as long as:
1) Our 401K balances were increasing at 10 percent annually. (Where is it written that a 10 percent annual return is a god-given right?)
2) We were able to keep amusing ourselves with the expanding inventory of cheaper consumer goods on the shelves of big box stores. (Never mind that those stores don't offer their workers health insurance or paid sick leave.)

And if anyone out there thinks I'm preaching socialism, save your breath. I'm not. All I'm saying is that when we make it acceptable to use "the bottom line" and unfettered self-interest as our guiding principles, we shouldn't be surprised when the invisible hand turns up its palm -- or worse, grabs us by the throat -- when hard times times turn tough.