Boycott This Episode

Speaker 1

Welcome back to happy hour econ. We're a comedian and an economist walking to a bar. I'm Lou Perez, the comedian. So something that I want to talk about is boycotting boycotts. What are they? Where do they come from? Are you guys boycotting us right now? I hope that's not the case. What can we do to please you? What can the cast of happy hour econ do to make sure that you are checking in each and every week? Let us know. and film Magnus.

Speaker 1

in the comments call if you see me on the street, let me know directly. So Phil, in a world where you know, we've seen so many boycotts come and go, what's the deal with them? You know, where did boycotts start? What's what's happened? You know, there's no real original boycott that's recorded in history, but we know something that pertains to almost every situation. There's usually a political cause associated with it. And this stems from a, I guess it's formalized as a concept by economists as an exercise in one of two things that you can do to affect the economic direction of a particular product. There's a famous economist, political thinker by name of Albert O. Hirschman that wrote a theory of exit versus a theory of voice. And a theory of exit is you don't like the product, you just don't buy it. You move to something else, you basically... off doubt of consumption period. And you don't really say anything about it. You just leave and the market takes its place. But there's a gray area because the other end of it is the exercise of voice. If you dislike a product, you write the company and say, hey, I don't like what you're selling anymore. Give me something better. Or this washing machine doesn't work. Give me a an improvement on it. And the gray area emerges in between these two polar opposites exit and voice because a boycott is an attempt to exercise voice by threatening exit. It's saying either you fix what I don't like about your product or the cause associated with it or I'm not going to buy it anymore or I'm going to shop at your store anymore.

Speaker 2

Therefore, I'm going to boycott it. So it's the use of voice to threaten exit to try to bring about a desired change. And if we think about this, you know, we hear it associated with products. It's like a store does something that you don't like, and then someone declares a boycott on it to try to sway their customers to abstain until they fix the situation. But it goes way back in history. So in some respects, the Boston Tea Party was one of the early boycotts in American history. British put taxes on on goods coming into the port of Boston, tea in particular, and said you can only buy tea from this one company that we have sanctioned through the Crown. Well, what did the colonists do? They didn't like that, and to protest the tax, they boycotted and then threw the tea over the side of a boat into the harbor as kind of a retaliatory mechanism to exercise voice while also engaging in this threat of exit simultaneously. So in recent memory, think the one product that had a boycott element to it was the Super Bowl 60 halftime show when it was announced that Bad Bunny would be performing. A lot of people were very vocal about saying, I'm going to abstain from the halftime show. I am not going to watch it. And then I believe it was Turning Point USA had their own halftime show that some people tuned into. I didn't watch either of them the night of the game, not because I was making a statement just because my wife and I had our kids and we were at a friend's house and it was time to go to sleep. So we had to leave after I think it was like the first quarter. So by the time we got home, we just wanted to go to bed. But What I found interesting was there's all this talk about potentially boycotting Bad Bunny's performance. But then in the aftermath of that, even to now, all anyone seems to be talking about is the halftime performance and not the boring football game that took place. It was almost like that just completely overshadowed the game itself.

Speaker 2

Yeah, it's like the carnival sideshow, the halftime show has moved into the center of the circus ring and displaced the main performance here, which is really kind of interesting about that because I look at something like this, a sports championship game, it should be about the game. It's about which team wins and which team loses, who scores the most points, who has the best talent on their team. And I think that's why most people tune into the Super Bowl. Same reason why they tune into the World Series or the Stanley Cup. cup finals. It's because they're interested in the teams, but when they become a media spectacle around the performance that occurs at halftime, I think you've kind of lost the plot here. And you know, one thing I've noticed about halftime shows at the Super Bowl for as long as I've been like aware enough to even watch the Super Bowl, they're all terrible. They're usually an outdoor arena. It's a a group or a singer. Oftentimes it's a couple decades past its prime. There's flashy light shows that may look impressive in the stadium if you have multiple thousands of dollars necessary to purchase that ticket, but they don't translate over very well on TV. The acoustics are terrible. And then you get a performer up there that I think, I'm on the Super Bowl stage. This is my chance to make a political statement. And again, Most of the audience isn't there for the political statement of the performer. They aren't even there for the performer. They're there because their favorite team is playing. So what have you done on the side show of the halftime performance? It's like moved it to the center stage to the point that it's now even detracting away from the game. Well, it's interesting, too, with that specific example, because for one, it seemed like whatever the boycott was, if there was going to be one, it completely backfired. They completely just discounted just how big of a of a global star Bad Bunny is. But also what I found interesting was in Super Bowl's past, there was what looks like a

Speaker 1

an arena performance. like when Bruce Springsteen performed and when Prince, who I think I absolutely loved Prince's performance years and years ago, when they performed, was as if they were performing a live show, an arena show. Whereas now with Bad Bunny's performance and other performances, the way that the sets are built, the way that it's shot, it's very much, it's almost like you're on a sound stage and it just happens to be set in on a a football field, where where they're, they're really playing to and directing to the people at home watching on TV, which I think changes the dynamic so much, especially when it comes to to boycotting, because, you know, it used to be, you know, if you were going to boycott something, you would have to make an effort to boycott like if you were boycotting a bus. you know, with the you know, the bus boycotts, you would have to walk or find another way to get to where you're going. But now it's sort of like, boycotting is so it's so easy. And it's so easy to get around a boycott when all you have to do is just sit down and watch. Or change the channel if you don't want to watch. again, it's like the purpose of a boycott in order to be effective, to be economically effective, it actually has to hit the pocketbooks of the targeted company. And this is why some of the more successful boycotts in history, like when in the abolition movement, they targeted companies that had slave produced products, like sugar and tobacco and some things like that that were deemed to be of an immoral origin. And it becomes an impact on the bottom line of the industry.

Speaker 2

or the company simply because people are saying, that this is not something I'm willing to support morally or ethically. More recently, you mentioned the bus boycotts in the civil rights era. It sends a major signal because people are taking the burden on themselves to walk or get other means of transportation. And then you have all of sudden all these empty buses going around the city that no one's paying their fares for anymore. That draws attention to it. That has a meaningful impact. into the dynamics of this exit voice tension. other words, for the threat of exit to be effective, for this exercise of voice through the boycott to be effective, you have to have a very well-defined, concentrated target. You have to have a broadly salient message. You have to have a homogenous directive on why people are choosing this thing to boycott. It can't be just this scattershot. eclectic array of political causes of why people don't like bad money. It's actually, well, no, we're targeting buses because they're segregated. We're targeting slavery because it's wrong. We're targeting the British tea regulations and taxes because they're a burden upon us. So it's really having that concentrated focus and cause that makes the boycott effective. One of the side effects of Bad Bunny's performance is more people are talking about Puerto Rico. And in particular, I'm hearing people talk about the Jones Act. Who would have thought that that would have come out of this halftime performance? And maybe we could talk a little bit about that because the Jones Act has to do with shipping, it has to do with products, it has to do with. Yeah, yeah. Yes, exactly.

Speaker 2

So Bad Bunny, know, his performances in there first off He had a whole group of people that didn't realize Puerto Rico's part of the United States, right? So that's coming out of this Exactly. They're like, what is this thing called Puerto Rico? it's part of the United States and it's not a foreign country, but that has substantial political and economic implications. Since Puerto Rico is part of the United States, it falls under our system of laws, including this one from the 1920s called the Jones Act, which governs regulations on how goods are shipped between ports. And the Jones Act is this protectionist measure that was designed to prop up US shipping industries by giving preferential treatment to ships that are flagged and built in the United States. In order to qualify under the regulation, it has to come from a US shipyard in certain circumstances, it has to belong to a company that is based in the United States, and it has to have a flagged home port in the United States. Well, it turns out United States shipping is exceedingly protectionist and heavily regulated. So that means it's also much more expensive than most other countries around the world. And if you're a Jones Act governed jurisdiction, it means that if I'm a ship owner from Great Britain, I can't sell from New York City, pick up goods and then transport those goods to another port on the Eastern seaboard because I'm no longer under international waters and I fall under the Jones Act jurisdiction. So inter-coastal shipping, shipping within the same country has to be under a ship that's flagged and qualifies by these regulations. Well, Puerto Rico's an island, it's part of the United States, that means shipping to and from Puerto Rico also falls under the Jones Act.

Speaker 2

Hawaii is another example that's in the same situation. It's a state, not a territory like Puerto Rico, but because it's a US state, shipping has to go through US ports under ships that are flagged with the regulations of the Jones Act. In other words, a ship coming from Japan can't just stop over in Hawaii halfway across the ocean and... unload and then pick up goods and then continue on its way to Los Angeles without coming into major regulatory hurdles. And what this means is that anyone that lives on an island state or territory, including Puerto Rico, has to pay much more. for goods in terms of their shipping costs just to get them to those islands, then it would be if that island were an independent country located right next door to it. So like the Dominican Republic, it's just across the channel from Puerto Rico. It's under a completely different set of rules and regulations because it's an international jurisdiction now. It doesn't fall under the Jones Act. So they can get cheap shipping, whereas Puerto Rico cannot, even though it's basically the same distance. would a boycott look like of the Jones Act? is that is that possible? Yeah, the problem is because the Jones Act is such a narrow regulation that affects a very limited number of politically connected companies. And this has been the case since the 1920s when it was set up. It was named after the senator, I think he was from the Pacific Northwest, Senator Jones, and he was friends with and a campaign donor recipient of shipping firms.

Speaker 2

that were guaranteed preferential treatment under his regulation. And what did they do? They turn around and they reward him by ensuring that he's reelected. One of the firms, in the year when the Jones Act is passed, one of the firms that was a beneficiary of it started naming its ships. after US presidents to ensure that the presidents were flattered and kept the regulations in place. So there was like an SS Calvin Coolidge and an SS Warren Harding and an SS Herbert Hoover in that whole era of the 1920s that are flagged under the Jones Act. And this was like the reward to the politician. Well, some of that pattern still plays out today. In a way, it's much more insidious because it's through campaign contributions and specialized interests in a few congressional districts. and states where shipping firms are located, well that's their baby. It's just like getting rid of the Jones Act would be like repealing corn subsidies and trying to get that through with the electorate of Iowa. just for other states that have shipping involved in them. You have a very narrow concentrated interest that's connected to the politician. That politician will never allow a regulation to go through that reforms this act, even though it impoverishes far more people than it benefits. You may be saving a couple thousand jobs in the shipping industry by making things much more expensive on millions of people in Puerto Rico and Hawaii. Is there?

Speaker 1

like a particular study where it's sort of like, okay, if you want to affect change in these areas, this is where boycotting will work. This is where boycotting will not work. Because it seems like this one is really a political matter. Right. And I guess when you when you were talking about Puerto Rico is a part of the United States, but it doesn't have the same political power as a state would, right. So they're sort of, guess, at the mercy of mainland US politicians. Yeah. Yeah. Well, and you know, some of the tactics they've used, they've gotten temporary reprieves from the Jones Act in the past, usually after a natural disaster occurs. So when a hurricane strikes Puerto Rico, it's Caribbean island, it's in the hurricane zone. And, you know, it's kind of heartless to force them to abide by the Jones Act when you're trying to ship bottled water and generators and all the things you need to do to recover from a hurricane at five times the cost of what it would be if you shipped it on another flagship from another country. So they give them a temporary reprieve, but that's an illustration of the disaster itself becoming the mechanism. that allows them to plead the case that otherwise is ignored in normal times. Normal times it's like, well, sorry, you're out of luck. You're an island and you're governed by the Jones Act. That just means you have to pay more. After natural disaster, it's like, well, you're actually struggling here. People care about your recovery. We can give you a reprieve from the Jones Act. Something that I saw a number of people point out was the amount of people who move to Puerto Rico so they don't have to pay, I guess, income tax. Right. Right. It's so funny, whenever I hear politicians making these arguments that I'd never heard before, it's like, okay, there's obviously a political basis for making this argument because I've yet to hear any politician say, hey, we got to tax Puerto Rico. Yeah. We got to make sure that Puerto Rico is paying federal income taxes. Yeah.

Speaker 2

Yeah, and again, it's one of the benefits, the fact that they're a territory does give them other economic benefits. This is one of the major arguments whenever there's a Puerto Rico statehood movement, people are like, no, wait a minute, that's actually going to take away our tax benefit. So it might be in their interest to remain as a territory. And it is interesting anytime I see, you know, multitudes of people seemingly mobilizing for a cause. one thing that I have seen happening in the United States is you have all of these young kids in high school in particular doing these walkouts in protest against ICE, which I find interesting because it's sort of like, you know, are these kids really politically minded or they just like, hey, here's a way to skip school and let's just get out of here. And it's almost always the latter category. mean, school's not fun. let's be plain about that. School is often boring. Kids are always looking for a way to get out of their classes, whether it's senior skip day, whether it's, you know, there's some other event going on on campus that means that you're really kind of just phoning it in the classroom and really going out to celebrate the football game that night, whatever it is that's happening as a distraction. and any kid will seize that. And it creates kind of a bootleggers Baptist phenomenon playing out here. And this is an analogy from economics, refers to the prohibition era where the Baptists, that was the stand in for the moralists, the preachers, preached against the sin and vice of alcohol. But in doing so, they got it banned, which actually helped the bootlegging industry. It helped the people that are smuggling illicit booze because now they are able to corner the market because their legal competitors are written out. So Bootlegger's Baptist scenario is anywhere where there's a moral cause that seems lofty tied to a cause that's actually much more self-interested. And you see that with the kids, they're able to say, well, we're taking a moral stand against injustice, whether it's ice right now or...

Speaker 2

some previous era, it's any other cause that high school students are saying we're protesting, but it's really self-interest because this means, hey, I don't have to take exams and I don't have to go to class today. or they can skip out on the lesson of the Baptist and bootleggers. One thing that I've been seeing pop up a lot is this idea of a general strike as a way to sort of grind the economy to a halt so that it either bring out like a revolution or really big change in the country. How many days before the general strike? Exactly.

Speaker 2

You see this pop up as an idea, usually it's on the very far left of the labor movement. As these people are like, well, we're the proletariats, we're exploited by unfair conditions and our wages are too low. All we need to do is to rise up and declare a general strike, i.e. a work stoppage, and that'll grind the economy to the halt and then we'll get what we want, whether it's our demands or it's our revolution will be instigated. It's really kind of a pie in the sky type of a utopian scheme though, because you find out if you first off labor unions in the United States are very diffuse. They are not the majority of the workforce and oftentimes they don't agree with each other on their particular causes. A general strike of asking all workers nationwide to halt their work. All it takes is someone to say, a minute, no, I'm not going to do that because I've got an income to earn. I've got a family to feed. No thank you. No, thank you. I don't care about this utopian Marxist vision of a proletarian revolution. I do care about my next paycheck, being able to buy a car and buy a TV and things like that. So all it takes is a very small defecting force and the general strike collapses. Where you do see examples of this historically, so there was a famous one in 1926 in Britain, which was a much more unionized society where they declared a general strike. lasted about two weeks or so, and it shut down basically the transport and energy industry.

Speaker 2

and they had all these lists of demands they were going to take to the government. And what it ended up doing is it actually just inconvenienced people and it made them turn against the strikers. They were like, well, I can no longer get my train ticket anymore because these silly strikers are on a nationwide work stoppage. This is inconveniencing to me. So the general public loses interest in the cause and actually turns against it. We see some more narrow examples of this today. So in Europe, where you have government run train and transport systems and heavily regulated agriculture, France is notorious for this. Someone in the railroad industry decides that, we want a better contract from the public sector to be negotiated and our demands are not being exceeded by shutdown passenger trains, or we're going to quit delivering baggage at the airport. What does that do? It just infuriates all the people that are trying to take trains or trying to get their baggage delivered by imposing inconveniences on them, and then they turn against the strikers. European agriculture, we're not getting this protectionist measure so we can grow crops in this cold rocky field in Northern Europe. So we're going to go on strike and pull our tractors out into the middle of the highway. Anyone attempting to go anywhere is now in a traffic jam and they hate the strikers. It's a self-defeating type of a mechanism unless you have a really well-defined, narrow cause that has some moral salience beyond the strikers themselves. Yeah, that's a really good point. Any kind of movement that you have, optics are so important. My social media is just flooded with examples of people not understanding optics. recently saw just so many people doing a sit in of Target. Yeah, to me that doesn't make you look very good. The just stop oil people who, you know, are throwing paint on

Speaker 1

onto priceless paintings or gluing their hands to, you know, to concrete and stuff. It's like, this isn't a good look. And it makes me think about the example we were talking about earlier about the the bus boycott, you know, during the civil rights era, and how that was done with so much dignity. It's, it says, I'm not going to sit on your, I'm not going to take your bus, I'm going to walk, I'm going to find another way there. There was no like, at least least as far as I've seen, there was no like, I'm going to fire bomb this bus. You know, I'm going to throw myself in front of this bus or anything over the top like that. And I think that probably did a lot of good for the movement itself. Yeah, well, and it actually put the moral onus on the other side. And what you saw on this, these are the pictures on the national media, it was the segregationists, it was the Klan, was the racists that were trying to enforce discrimination. Here they are attacking a nonviolent protester. and this is on national media and everyone sees it and they're like, wait a minute, something's wrong here. So optics really do matter on the boycott. And that's why if you're doing a really silly cause and your tactic doesn't achieve economic harm to the company or product being boycott. Rather what it achieves is well, you've changed yourself to the road That's the entrance to the airport and now tens of thousands of people have missed their flight to go to their grandkids birthday party What are you going to do? Well, you've just angered all of those people by inconveniencing them You're saying well your silly cause because you're you're worried about

Speaker 2

climate change or something and you're chaining off the road to the airport is now more important than me meeting my granddaughter on her birthday or me flying to see a loved one in the hospital. That's a really bad optical situation and it actually ends up being a self-defeating exercise for the cause. I often ask myself if I was going to be an activist for a cause, I take a minute and I think, is it possible that I might actually turn people away from my cause because I'm so annoying? like, people just don't like my face. They're like, God, I have to look at this guy and whatever whatever he's for. I'm against him. Exactly, Self-defeating, because at the end of the day in a boycott, you want to convince more people beyond just your in-group, your inner circle, to take up your cause and recognize it as just and right. And that's what the civil rights movement succeeded in doing. That's what the American Revolutionaries succeeded in doing with the Boston Tea Party and the accompanying tea boycotts. As they spread the cause, because they drew a clear moral line and it shows, the British are in the wrong, or the segregationists are in the wrong. And then other latent observers that are watching this from afar come to that realization, they're like, OK, they have a point here. I, am a supporter of the boycott. If it's... I'm gluing my hand to the floor of a museum and throwing paint on the Mona Lisa. It's like, you just look like a vandal and a vagrant. So it's completely self-defeating. It's like, shrill activists that glue themselves to the floor or chain themselves to the road and berate people who are just trying to go about their day. I don't think there's a more unlikable person.

Speaker 2

one could imagine to come up with. So it's completely self-defeating. Although I think in one of those art-mandal cases, there were some guys, they glued themselves to the floor of a museum or something in Germany, and the police came and they said, okay, well, you're glued there, and they just turned off the lights and left them there overnight. And the protesters were like, well, hey, no, you're supposed to remove us and arrest us. And they're like, yeah, we'll get around to that tomorrow. You made your bed, you'll lay in it. I don't know if it was that instance or another one where they were really surprised that people just kind of let them be and they were complaining about, have to go to the bathroom. Well, you know, nobody told you to do this. Well, with that, I want to thank all of you out there who listened to this episode that you haven't boycotted us yet. And if there's some magic where boycotting happy hour econ will bring in more listeners, then please do it. But right now I'm doing the math and I don't think that's You should have thought this one through.

Speaker 1

where we are right now. I hope you'll tune in next week for another exciting episode of Happy Hour Econ. I've been Lou Perez. We'll see you next week. I'm Phil Magnus.