Can J. Jonah Jameson Stop Spider-Man Using Economics?

Poor J. Jonah Jameson. For so long he's held such a passionate grudge against Spider-Man's vigilantism and has employed every means in his power as editor of The Daily Bugle to slander and whittle Spidey's popularity away from the public's eye. It's worked with mix results. But now, Jameson has just landed a position of power as the mayor of New York City. And that means things are going to be different. He has the political and budgetary power to take out Spider-Man through a variety of new methods. He's going to make life really rough on our web-crawler.

Except things are sort of the same.

You see, Jameson's first order of business was to use government funds to secure a special operative task force with the sole purpose of hunting Spider-Man 'round the clock. Aside from Spidey's quip about spending all this money in such a financial climate (Ecocomics Recession Watch!), there is a larger problem: it's not working the way Jameson had intended. His master plan is to either catch Spider-Man or force him into hiding, which would ensure him victory over New York and earn him respect for being a "no-nonsense, law-and-order, zero-tolerance arachnid" politician.

The problem with this plan is twofold. First of all, governments are generally lousy at catching superheroes. Many times in the comic book world have such task forces and organizations been created and it seems like they consistently get nothing done, while draining the economy's resources for high-tech surveillance gadgets. But the more interesting problem is that Jameson's actions are actually having a strange, adverse effect: rather than forcing Spidey into hiding, he actually decided to don the suit and fight crime 24/7, foregoing his Peter Parker persona. Jameson has actually increased Spider-Man's popularity.

I think that if Jameson really wants to beat Spider-Man, it's about time that he uses his newfound power and influence in a more creative way: economics.

Despite the fact that Spider-Man battles with an array of supervillains, most of his duties involve taking out regular crimes -- robberies, street thugs, gang violence, etc. This is what he is seen doing during Mark Waid's "24/7" story arc. And this sort of crime is currently running rampant in New York (at least in the Marvel Universe). But other things running rampant as well: poverty, uninsurance rates, health care and education costs, etc. These are factors that are known to contribute reductions in crime. A strong economy, for instance, is shown to have reduced the incidence of nonviolent crime (the kind with financial incentives--burglary, robbery, etc.). This paper from the Quarterly Journal of Economics shows that providing families with opportunities to move to lower-poverty neighborhoods significantly reduces juvenile violent crime. This article from The Washington Post describes investment in social programs' effect on reduction of gang violence.

Admittedly, a strong economy does not explain the whole story and there is plenty of evidence to suggest other factors in crime reduction (see Freakonomics, which argues that the legalization of Roe v. Wade in the 70s has played a large role in the reduction of crime rates in the 90s). Yet, Jameson should consider taking the money that he is spending on police forces, especially this anti-Spidey-squad, and funneling it towards anti-poverty measures, health care, education, job training, etc. This way, he accomplishes two things. First, he actually has a chance of achieving the reduction in crime that he preached in his campaign. This would win him the favor of the public. Second, he slowly but surely diminishes the need for Spider-Man, correcting the 24/7 plot that he accidently instigated and reducing Spidey's influence on the city. In this way, Jameson could demonstrate his considerable prowess and show to the people of New York that he is more effective than Spider-Man. Oh yeah, and it could also help reduce poverty, insure more people and help with education. Those things are nice too.

Economics: it might take a while and it might backfire, but it is certainly an idea that Jameson should try out if he's serious about finally nabbing that pesky arachnid.

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Supernatural Disaster Insurance 2: Insurance Harder

Cover from Superman #677 by James Robinson and Renato Guedes. Cover by Alex Ross.

Thank you all for your wonderful comments on the earlier Supernatural Disaster Insurance post. As promised, here is the sequel, equipped with some of my views on the matter.

There were three systems I had proposed in the first post: a full public system, a public/private mix, and a solely market-based system.

The merits of the market-based system are that it would allow individuals to choose the insurance system that they feel is most appropriate for their situation. It would also minimize public taxes and curb any potential moral hazard problems. The problem here is that, first of all, it is likely that the low-income individuals would be boxed out of the system. With the frequency with which supernatural disasters occur in the comic book world, premiums would likely be very expensive -- especially in Metropolis, New York, etc. It is also generally regarded that the income disparities in cosmopolitan cities in the comic world world are considerable and only widening by the month. The poor in Gotham can barely afford food (one of the factors which contributes to the significant crime rate in the city). Hardly would they be able to afford insurance on their homes. And that means that if Two-Face blows it up, time to get a new home!

The other issue is that I think there are potential adverse selection problems. A commenter, Ajay, pointed out that this is unlikely to occur with the higher-income people since they tend to have more property and assets and hence more expected loss (and more reason to insure against those losses). This is a great point. But consider other factors. What about region? In a voluntary system, it is likely that individuals living in particularly dangerous neighborhoods will purchase insurance, especially if premiums are not underwritten. People living in neighborhoods that don't see many pumpkin bombs or batarangs on the other hand will likely opt out. And those populations are not insignificant. Superhero violence, though having the potential to occur at any given neighborhood, does tend to be localized. How many times has the Daily planet been destroyed? How many times has Spiderman fought around Times Square? Let's face it -- certain neighborhoods are like tractor beams for superviolence. Hence, those choosing to opt out of the insurance system, feeling they are generally safe from harm's way, will cause average premiums to skyrocket, will impose an extra cost burden on those that need insurance the most and will further shrink the market.

A public/private system is an interesting solution because it will enroll more of society's low-income populations. Considering a "catastrophic" mechanism, the lower-income populations would be able to insure against major damages to their their property. So if I were living in New York, I would feel safe knowing that my home is protected against any potential throwdowns between the Green Goblin and Spiderman. If, however, I live in a neighborhood where lots of cars get blown up by pumpkin bombs, I might consider some supplementary insurance for the cheaper stuff. Again, though, unless there is a mandate, I think you would likely see similar adverse selection problems.

I think the solution that makes most sense is for the government to cover all costs imposed by supernatural disasters. The public would pay higher taxes, which would go towards a fund to cover these sorts of damages. You might argue that this could engender a moral hazard problem, as pointed out by commenter, Carl. I doubt this would be a huge problem. I don't see what kind of insurance fraud anyone is willing to commit that would pit them against the Joker. There are potential lives at stake with supernatural disasters. I don't think that the people of Metropolis would start flocking towards highly concentrated super-active areas simply because they know the government will pay for their toaster.

I tend to view this government spending as not all that dissimilar from national defense and security spending. For the most part, superheroes are government-approved (with exception of vigilantes like Batman). Consider the case of Superman. The Metropolis government, law enforcement agencies, and public have no problem allowing him to take residence in the city in exchange for their protection. It is a contract between him, the public and the government: Superman has free reign to conduct his business against evil-doers, while the police turn their heads barring any significant indiscretions. In exchange, the city is protected under the Man of Steel's umbrella. The cost of this security is the cost that the public pays towards repairing the negative externalities (destruction).

Now if only we had some way of curbing the destruction caused by Superheroes. Perhaps we do.

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Alien Technology and Economic Growth: Lessons from Solow

(Guest Post from Metropolis)


Ever wonder why people in comics aren't teleporting to work, watching TV through a personal projection device while walking down the street, or attending seminars hosted by an android via group-telepathy?

Instead, the worlds in our favorite comics still have potholes, poverty, and petroleum-powered cars. In fact, aside from the occasional reality-bending crisis involving metahumans, it’s hard to distinguish our world from theirs in terms of technological progress or standards of living. This begs the question of what happens to all the alien wreckage after the Justice League fends off another alien invasion, or to the abandoned spaceships when interplanetary thugs with a grudge against Superman land on Earth. Do men in black immediately cart them off to secret government facilities and weaponize them? If so, then these governments are doing a great disservice to their people. The fastest way to achieve economic growth is through the free and unfettered dissemination of knowledge. Governments should encourage the private sector to develop commercial uses for all the space junk that winds up on earth, thereby simultaneously increasing both the capital stock and total factor productivity.

Aside from physical capital, economies must take advantage of their human capital to grow. But even with metahumans this is a tricky proposition. In an earlier post Mark discussed the potential benefits of having mutants performing tasks such as construction if they ever took a break from blowing stuff up. However, looking at economic development through the lens of the Solow model I feel that these mutants may ultimately prove unable to increase long-run living standards. Any effect that Magneto may have on productivity will only temporarily move the economy to a higher steady-state output per person (y/n). With his death the economy will move back to where it was (and probably experience some unpleasant distortions during the transition). The reason is that Magneto is essentially no different than a tractor or any other piece of capital equipment. He ages, depreciates and eventually dies. More importantly however, is the basic result of the Solow model: sustained growth in y/n can only be achieved if there is concurrent growth in our stock of knowledge and technology, something Magneto cannot contribute to. Without technological change, the economy will eventually reach a steady-state level of y/n and all growth will cease. Even so, the Marvel universe does have one ace in the hole, and he’s got a big green head!

Samuel Sterns was just an average Joe working at a chemical plant when he was exposed to massive amounts of gamma radiation. Thus was born The Leader, a villain whose only real power is superhuman intellect (maybe some telekinesis, but whatever). This guy probably has enough ideas in his head to keep scientists busy for millennia. Imagine the technological advancements that could be made if the government hooked him up with a research position! And if there’s one Leader, then it’s possible to have more metahumans with precariously large crania. Given the right incentives, maybe some of these bums turned mutant geniuses will come up with life-enhancing inventions like 3D holographs or a flying car. There should be grants and subsidies to promote their research activities and encourage investment into new technologies, so guys with green skin and giant brains can yell at MIT grad students instead of toppling civilization with armies of plastic humanoids.

Finally, aside from investment from within our planet, economic growth can be sped along by Foreign Direct Investment (FDI) inflows from other civilizations. But what’s surprising is that with an entire galaxy of highly advanced civilizations, no interplanetary investment seems to be reaching earth. Capital should flow to where its return is highest. Being mere humans in a giant multiverse of galactic powers, it’s a fair assumption that earth is an LDP (less developed planet) with a comparatively small capital stock. According to the Solow model, alien entrepreneurs should be jumping at the opportunity to invest in Earth. Add a growing stock of technology from metahumans and falling debris and you can get productivity and standards of living rising indefinitely. The only thing I can think of that deters aliens from investing is the unstable sociopolitical climate. I mean, who really wants to deal with the risks of a Luthor presidency or an Emperor Joker? It seems that now, more than ever, the earth needs superheroes to stamp out crime so that other planets might feel safer about their investments.

Even without additional capital inflows, all people on comic book earth have a real shot at modernizing if the proper steps are taken. And it’s not just the responsibility of the governments, but also of the superheroes. The Green Lanterns have access to technology and information from all the planets in the galaxy. Superman can travel through space and time almost instantaneously and in fact spends much of that time in the 31^st century with the League of Superheroes. It’s about time some of this technology makes it back to Earth.

After all, maybe one of those alien spaceships had a toilet that could conserve water more efficiently, or something. It can’t all be hyperdrive this and giant laser cannon that!

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Superhero Decadence: Vanity

The world of the superhero is awash in eccentricity and excess. I suppose it's only natural to indulge in a little theatricality if your chosen profession is fighting evil in close-fitting costumes composed of spandex and leather. In spite of this it seems that, on occasion, a superhero can take things a wee bit too far.

This is especially true in the case of superhero vanity. It seems like the moment a superhero decides they will use their unique abilities and resources for the good of mankind, they then select a name and a symbol for themselves. And shortly afterwards, the superhero goes around plastering this name and symbol over everything they own. In some cases, it seems like the superheroes concerned are building a brand and increasing their own marketability by the manner in which they promote their heroic image.

Professor Xavier has "x"s all over his home and his students. Granted, these "x"s also refer to the "x-factor" in the genes of mutants, but I'm sure Xavier gets a certain degree of pleasure when he realizes that his last initial is emblazoned across Emma Frost's chest. Not to mention belts, guns, costumes, communicators, and an entire series of supersonic jets. The Fantastic Four use their special digit to stamp their flying car and (sometimes) even the building they live in.

The worst offender by far is Batman. Bruce Wayne created symbol of a dark knight defender whose mere presence would strike fear into the hearts of criminals. And then he integrated that symbol into every element of his crime-fighting arsenal. The bat-suit with its flowing cape and chest insignia letting you know just who you're dealing with. There's the batarang which can be thrown from long distances and left behind at a crime scene. The batmobile can be seen streaking through the night. Everything he uses is shaped like a bat. He even gave Commissioner Gordon a spot light marked with his symbol to shine in the night sky. The implicit purpose of all of this is to build the Batman mythos and give criminals the impression that he is everywhere. And though I still believe it to be incredibly arrogant to make everything you use shaped like bats, it's possible that doing so will deter criminals from engaging in illegal behavior by leaving behind these calling cards to show the consequences of committing crimes in Gotham City.

But then there's the Bat-plane.

Who even sees this vain aerodynamic monstrosity? Have you tried looking for a plane going Mach 3 while looking in between tall buildings? It's certainly not the most salient object in the night sky. And who exactly is deterred by a bat shaped airplane at 20,000 feet? Villainous 747 pilots and ill-tempered pigeons? No, the Bat-Plane is a sheer exercise in vanity. Any other shaped aircraft work just as well (or better) and would not require the needless expense of matching the design of a 6-million dollar vehicle to the little symbol you drew on your bat-chest. True, as a rich playboy, he's already the picture of excess, but why not buy a more maneuverable Apache helicopter from army surplus and use the leftover money to install more motion detectors and reinforced doors in Arkham Asylum?

So, regarding the Bat-plane, its utility is questionable but its ability to satisfy Bruce Wayne's personal bat fetish is undeniable.

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Supernatural Disaster Insurance

Suppose you own the car that's being blown up in this image. You park, run into the convenience store across the street for some batteries, and then some right-wing armored militia blasts everything in its way as it frantically tries to kill Captain America with rocket launchers. No more car. Now what?

In an earlier post, Mark mentioned that the construction industry in the comic book world must account for a large portion of the economy. I bet there is also a lucrative superhero / supernatural disaster insurance industry to deal with these externalities.

How would this insurance industry be set up and organized in the comic book world? Certainly no one is chasing after Superman asking him to pay each time the Daily Planet globe is decapitated from the building. So who is paying? I think there are several options for how a system of insurance in the comic book world could work:

1) A comprehensive, public system. If this government pays for all the damages, then this would effectively be equivalent to having no insurance at all. Instead, the government would levy extremely high taxes from the general public ($18 billion per person per year by Mark's count) and use them to cover all the costs of supernatural disasters.

2) A mixed public/private system. Such a system could be organized any number of ways, but I think two in particular make the most sense. One could be a system similar to obtaining catastrophic insurance (or high-deductible health insurance plans), but in this case it would be paid for by the government. So the government would only pay for certain services, such as for damage caused by superheroes of supervillains to your home, and would only pay "catastrophic" expenses--those that exceed a certain predetermined amount in costs. Everything else would be paid for out-of-pocket by the homeowner. The other way is to establish a base government benefit for certain services (i.e. superhero destruction, supervillain destruction, destruction to your home, destruction to your car, etc.) up to a certain amount. Beyond this base benefit, individuals can elect to purchase supplementary insurance to cover services not included in the package.

3) Market-Based System. This would work exactly like insurance markets work on real Earth. Multiple insurance companies would compete, offer coverage for different services related to superhumans, and charge premiums for that coverage. Likely there would be some significant administrative costs, since most coverage would probably be purchased at the individual level. Furthermore, premiums would be rated by region. That is, if an individual lives in a particularly active area of Metropolis or Keystone City, superhero insurance premiums would be much higher than they would for someone living in Kansas, where there is no action unless Darkseid takes over the entire world (but seriously, how rare is that?)

I will post my views on which system is the best later, but for now I'd love to get reader opinions: Which system makes the most sense in the comic book world? Is insurance necessary at all? A few things to keep in mind:

1) If a public/private system were put into place, should insurance be mandated? If not, then how would they prevent the richer individuals from opting out of the system, thereby increasing average premiums and shrinking the market?
2) Are there any measures that can be taken to minimize the amount of superhero destruction?
3) Should premiums be rated any other way than just by region?
4) What should be included in the base benefit?

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Superman, New Krypton, and Labor Unions

Over on New Krypton, Kal-El (formerly Superman) is having trouble negotiating a peaceful resolution to a very dangerous hostage situation. Members of the planet's labor guild have taken Alura, commander of the Kandorian people, as well as several other prominent members of the Council hostage. Though General Zod, who is now Kal-El's superior in the military guild, ordered him to use force to dissolve the attack, Kal-El resolves to listen to the guild's demands. What are they? Simple enough: the workers demand shorter work days so that they can see their families and reduce the illnesses they had been suffering from being overworked, exhausted and malnourished. They are also demanding some form of health care, sick leave, and other social benefits common in Earth's workplace today.

Even New Krypton, a society that favors efficiency over equality and views Earthlings as "primitive" and "weak" for their emphasis on the converse, cannot suppress the rights of the individual. Perhaps had they studied a little Earth history, they might have noticed some historical parallels.

The eight-hour day movement in Europe was a time of dramatic transformations in work life, as adults during the Industrial Revolution typically worked anywhere from 12 to 16 hours a day, with little or no time to eat or rest. Factories were unregulated, so there was no one to ensure they met health or sanitation standards. Child exploitation was extremely popular as well. These variables helped spark not only the movement for an eight-hour day, but began to sew the roots of unionization.

Of course, there is an important distinction between this and New Krypton: Capitalism. Workers in the United Kingdom, France and the United States were typically working for private, unregulated employers and were earning wages to survive. New Krypton doesn't seem to work this way. Employers are certainly not private, there seems to be no such thing as "business" or "profit," and hence there is no competition among them. There are no markets. The Invisible Hand has no place on New Krypton. Further, the workers do not actually seem to earn any sort of wage -- it seems that each citizen is instead motivated by an innate sense of civic duty. In fact, the labor guild likely adheres to the social code for one or all of three reasons:

1) Civic duty or a utilitarianism
2) Deep sense of Kryptonian tradition
3) Self-interest: they work in exchange for the right to be citizens, to enjoy the planets public resources (the only one I can think of is pretty crystals), and to be protected by the military guild

Civic duty and tradition are powerful motivators. As an example, consider feudal Japan where vassals were almost instrically attached to serving their lords and would rather experience death before suffering the dishonor of disobeying it. Yet, it's not always enough. We can already see the seams falling apart on New Krypton with Kal-El's presence. Lower-class Kryptonians desire to be equal to that of the nobility. They want to see their families. They don't want to be sick. Nobles want to sit around while laborers tend the fields for sixteen hours. What to do? Assuming Alura grants them shorter hours and medical care, what do you suppose comes next?

That's right! Labor unions! Supposing that laborers work for different employers (scientists, etc.), certain labor forces are going to band together in order to collectively bargain with their superiors for more benefits and better working conditions, to prevent against discrimination, and to be involved with political activity of the state (such as having votes on the Council).

The other issue that concerns me is moral hazard. The medical scientists in the science guild need to take time and resources to heal the sick. If the workers get continual access to health care from the science guild, what is to stop them from abusing this? I think that eventually Alura and Zod will need to introduce some system of payment. And what comes next? Markets! Workers will have more access to health services, but they will have to shell out some serious ice crystals in order to get it.

The point is that it does not seem that New Krypton can continue suppressing the labor guild. And that's not a bad thing. Kal-El is champion of the workers. He's like FDR. Better yet, he's like Upton Sinclair, laying upon the masses his masterpiece, The Ice Crystal Fortress.

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