Beautiful Theater and Economics

The first Broadway show I ever attended was My Fair Lady. My mom took me to the show, and I remember enjoying it but being disappointed by the ending. My only other live theater experience, when I was growing up, was going with my mom to Radio City Music Hall every time there was a new Cary Grant film, and where every movie was accompanied by a live musical performance by the Rockettes. In those days I had not yet experienced my first economics course, not yet majored in economics in college and not yet earned my PhD in economics. Fast forward to today and from that very limited initial exposure to professional theater, I now try to see almost every Broadway musical but, given my educational background, I also think a lot about the economics of Broadway.

Last night I attended a performance of Beautiful, The Carole King Musical. The show, not surprisingly, focuses on the life of Carole King and also on the music of Carole, Carole and Gerry Goffin as well as the music of their contemporaries, Barry Mann and Cynthia Weil. I grew up with this music and I enjoy it as much today as I did growing up. Songs like “So Far Away,” “Some Kind of Wonderful,” “Will You Love Me Tomorrow,” “You’ve Lost That Lovin’ Feeling,” “Walking in the Rain,” “You’ve Got a Friend,” and “Beautiful,” are classics that are easy to listen to and have broad audience appeal. In Broadway terms, the fact that the music is known and liked also helps the show succeed and takes some of the risk away from the almost speculative investing that is part of almost every Broadway show. You need to look no further away than Spiderman which at its closing, almost three years after it opened, still had a loss of 10’s of millions of dollars. If the story is good, and that was certainly the case for Beautiful, and the music memorable to begin with, the show has a greater chance of success and the risk involved in the investment is somewhat mitigated. Added evidence in support of this conclusion include Jersey Boys, Motown, and Mama Mia. But great music is not a guarantee of a great show or even a modestly successful show. All Shook Up featured great Elvis music and a great cast, but a story line that just didn’t work. Other Broadway shows featuring the hit songs of very popular groups have closed before I even had the chance to see them. Nevertheless, beginning with top notch music is a recipe for financial and artistic success

Because the costs of putting on a Broadway show are as high as they are, and because there is very substantial risk in the investment, the ticket costs of Broadway show are high and very much limit the potential audience. Turning shows into movies (Les Mis) and into television specials (The Sound of Music) can increase their accessibility. So can not-for-profit- family theaters such as New York’s New Victory. College and high school groups also enhance accessibility. I am an advocate for the arts and for the profound impact that theater can have. I know that the economics of professional theater requires high tickets prices to cover costs and recoup investments but I also know we need to do a better job in promoting accessibility and providing alternatives. When done right, the experience and the educational impact is certainly beautiful.

Right Priorities but…

I have been watching and listening to multiple state and local leaders articulating their priorities for next year. And much of what I hear is music to my ears. I support a longer school day, I support universal pre-K, and I support no increase and, if possible, a decrease in local and state taxes. What is there that anyone could argue with in this ambitious agenda?

If you take a look at much of the K-12 education that we already provide in our local communities, there are often areas where more could be done or more resources are necessary. I live in an excellent school district but we are nevertheless constrained. There are a significant number of excellent districts; and there are unfortunately too many districts that are far from excellent. Dated facilities, limited technology, dated textbooks, and limited support services are just a few of the symptoms of districts that are not able to provide what is needed. And please remember that the end result of not providing the inputs that are necessary is that the children in the schools are at a disadvantage, one that often lasts throughout their careers and their lives. These kids would benefit from universal pre-K and they would benefit from a longer school day but before we do more, with an added cost, we first need to make sure what we are doing is being done as well as possible.

Universal pre-K and a longer school day are very worthwhile objectives but cannot be implemented with the present resources and obviously require added funding. Where will that come from? Vastly greater government or school efficiency? At the margin perhaps there are a few resources that can be reallocated. But the bulk of what is necessary will have to come from added taxes. Either very visible taxes such as income or property taxes or more subtle taxes such as sales taxes or fees. Other than income taxes, much of our tax structure is regressive. Increased taxes can be positioned as impacting only the rich, or millionaires, or the top 1%. But if the tax is only on the top 1%, and if the increase is reasonable, I doubt that sufficient funds will be generated for what needs to be done. Who, then, do you tax next?

Robust growth can of course lead to more employment, higher income, greater purchases and as a consequence, more revenue for government. Our economy is stronger but the growth won’t be sufficient to provide the resources we need. The reality is that at best we will be able to make token progress in these new priorities given the constraints we operate under. And if that is the case, my vote and my priority would be to concentrate on doing better what we are already doing rather than do more but with too little of it done well.

Because of the Bad Weather Just After New Year’s Day

Because of the bad weather just after New Year’s Day, we spent three days trying to get back from Hawaii. The trip to Hawaii was wonderfully restful; the return trip beginning the Friday after New Year’s Day was not a positive experience. Three years ago, bad weather stranded us at Newark airport for two days and we never made it to Hawaii; this time I was wondering when we would get back to New York.

Being stranded in Hawaii can really not be considered a negative. Being stranded in the Portland and Minneapolis airports doesn’t have the same tropical feel. Our return trip from Hawaii had as its only scheduled stop, a change of planes in Portland. Shortly before we arrived in Portland, the connecting flight to New York was canceled because of bad weather airport conditions at JFK. The snow had stopped a day earlier but JFK was having continuing problems which seemed to affect some airlines more than others. Now, we all understand that delays can happen; however, the fact that it took three hours trying to find an airline representative to talk to, including standing on a long line before we could get any rerouting help is not my idea of good customer service. There wasn’t even an airline representative at the gate when we disembarked in Portland, though many passengers were affected.

The initial rerouting had us staying in Portland from late Friday until Tuesday. I followed up with the airline on the phone (an 8 hour experience from start to finish) and we were given an alternative where we would arrive in Philadelphia on Sunday evening. The alternative involved flying from Portland to Minneapolis and subsequently flying from Minneapolis to Philadelphia, at which point I would rent a car to drive back to New York. We made it almost on time to Minneapolis and prepared to embark on the flight to Philadelphia. Minneapolis at the time had a temperature of -10 Fahrenheit and we had no clothes that would keep us warm or semi-warm if we needed to go outside. Somehow a sweatshirt really doesn’t serve the purpose when the climate is in negative numbers.

Getting onto the plane in Minneapolis took 3 hours longer than we expected, and then the surprise happened. The bathroom water lines had frozen and first needed to be thawed before we could take off. It never happened. First we just sat on the plane for an additional hour; then we were asked to leave the plane so that the temperature in the plane could be increased as much as possible. Another two hours later and there was the announcement that this hadn’t worked, and that another plane would soon be available. Two hours later we were able to get onto the replacement plane. And more than seven hours later than originally scheduled, we landed in Philadelphia. Add another 30 minutes waiting for the luggage, and at 12:40 AM we were set to leave the airport. Now, a snow storm is clearly an act of god and not under the control of the airlines; however, letting water lines freeze at -10 degrees is clearly a mistake of the airline. They had to know that subzero temperatures impacts water. And yet there were no consequences for the airline.

Because we landed so late in Philadelphia and it was very foggy besides, we didn’t try to drive to New York in the middle of the night. We rented a car, stopped at a local hotel, and the next morning after breakfast drove to New York.

Safety needs to come first in air travel and I would never argue that a flight should take place if that safety would be compromised. But in a difficult situation, the absence of customer service makes the situation all the worse. The lack of airline agent support in Portland, the lack of proper plane preparation in Minneapolis made a difficult situation much more unpleasant and ultimately more costly and time consuming. Shouldn’t more of this burden be carried by the airlines? And I know that some airlines did better than others. Those that did better, and the airports that did better, should be recognized and those that didn’t should face the consequences. Outcomes assessment has an important role outside as well as inside of education.

Intuition

As an economist, I always await all the major economic data that is released on a regular weekly or monthly or yearly basis. I always look for the more positive signs of economic growth and prosperity, and I worry when the signs reflect weaknesses or areas of concern. But what if I didn't have access to all this data? Could I still tell what was and was not happening? Would I be reduced to visiting a fortune teller on a regular basis? Or isn't this in the cards for me?

For broad trends (as opposed to very nuanced happenings), I would rely on observation and intuition and I would expect to be more right than wrong. This holiday season was especially telling for me. More than a few times the line of cars from the highway to the largest mall in the area stretched back a full exit on the highway. Putting a value on my time, I doubt I would be willing to join this car cavalcade but more cars /people were on line and I believe that translated into more sales. Another example took place late on the night before Christmas Eve. My older daughter needed to finish her shopping and so she asked me to drive her to the nearest major department store. I grimaced and reluctantly agreed. Since it was already late at night, the store was not that full but more importantly you could see areas where there were clearly some shortages of desirable merchandise. Good lesson for my daughter but also a small positive indication regarding the economy.

My family and I spent the holiday break in a nice warm climate. Part of the allure of visiting this area is visiting our favorite restaurants and here too there were positive signs. The restaurants were packed so much so that I was glad I had made the reservations months ago. Easily more packed than the past year or the year before or even the year before that. The same for the hotel we stayed at. For much of the holiday break period, the hotel was at 100 percent occupancy, which also wasn't the case in previous years. From observation, both travel and retail sales looked more robust to me.

I'm glad to have both economic performance data and empirical data readily available. Statistics are enormously important but empirical data with a dose of intuition for me is another helpful dynamic way of assessing where we are. Thinking back to the recent holiday seasons, I am thankful for the progress that has been made and the signs that are clearly visible.

New Year’s Gift

The Congressional compromise deficit reduction agreement is a very good end of the year present. After the prior budget impasses, government shutdowns, sequestration, and not helpful rhetoric, it is refreshing to see that an agreement has been crafted that will last two years and move us in the right direction—spending increases will decline in a more rational way, some fees will go up, and a non scorched earth fiscal discipline seems to be in place at last.

This clearly wasn’t an easy compromise to craft, especially given the current climate. And it is already evident that certain ultra conservative politicians and think tanks are vehemently opposed to this package. On the other hand, though perhaps less vocal, the far left leaning liberals are equally disenchanted. But isn’t this what compromise is all about? No side gets all that it wants; the country however wins when there is a measured response to serious issues that have major ramifications on the economy.

Our economy is strengthening. Third quarter GDP increased an annual rate of 3.6% which is a significant improvement over the second quarter increase of 2.5%. New residential sales of single family homes increase by 444,000 units which is more than a 25% increase. Unemployment for the month of November was at 7%, a rate unseen since the end of 2008. And the Dow Jones Industrial Average being close to 16,000 has helped bring comfort after years of concern about the viability of investments in the stock market. In all these areas we can and should do even better but the improvement has made a significant positive difference.

But, we should all remember that an economy can be both robust and yet still fragile. Every threat of a government shutdown, every mention of sequestration and, most importantly, every indication that common sense compromise is off the table, weakens the threads that hold the economy together and move the economy forward. Our government leaders do a tremendous disservice when they turn their backs on what needs to happen to best serve the interests of our country.

There are fundamental differences between the Democratic Party nationally and the Republican Party nationally. Those differences are a healthy part of the fabric of our society. But getting past these differences when decisions need to be made makes all the difference in helping to move an economy forward and a society forward.

All the best for the New Year.

Multitasking

On more than one occasion, I have sat behind students taking notes at a lecture on their computer but also looking at Facebook, email and other websites almost seamlessly at the same time. I always wonder if I am sitting behind an A student or a C student but there is no way for me to gauge the impact of these work habits. This past week, while on a reaccreditation visit, I sat in on a number of excellent classes; in those classes virtually every student was taking notes on a laptop and also accessing information on related websites. But it was also the case in half the classes I attended that the student sitting next to me or in front of me was accessing email and other websites at the same time. How can this possibly work?

After three days spent on the reaccreditation visiting team, I immediately went to the TIAA CREF Higher Education Leadership Conference where I spent the next two days. By this point in time, my unanswered emails were starting to accumulate and the conference sessions were wall to wall worthwhile presentations/discussions. What should I do? Was there any chance of some catching up before the weekend? What I decided to do, was to take my IPad Mini to a number of the sessions and work on my email, before, after, and during as the opportunity arose. My first surprise was that three other higher educational professionals sitting at my table (out of 7 people in total) also had their tablets along and were accessing them regularly. In fact throughout the room there were a significant number of individuals attending with their tablets. This was in addition to the individuals trying to look regularly at their smartphones without being noticed. Adding these two groups together, constituted more than 75% of the audience

I started slowly, just the occasional peak and limited responding. But soon thereafter I was seamlessly making the transition from presentation/discussion to email. Notwithstanding the multitasking, I also asked questions at most of the conference sessions; typically, one of approximately eight questions asked at each session. I made progress on my email and I also benefited greatly from being at the conference. I have been relatively quick to criticize the learning habits of the current generation of students. They strike me as too screen oriented and I am wondering what is being lost in the process. And I still don’t know whether it is possible long term to successfully multitask almost simultaneously and continuously as seems to be the pattern today. But I will refrain from future criticism. I have for a long time combined talking on the phone while still doing email, and I have also now participated in a conference while working on email. It can work effectively and our current students are leading the way.

50 Years Ago

I am writing this blog on the 50th anniversary of the assassination of President John F. Kennedy. Like so many people of my generation, I can still remember exactly where I was when the news was announced and can still remember how depressed and sad I was. At the time, I was a student at City College and the day was going very well. I had just completed my swimming class and was headed toward an economics course. On the way from the pool to the other side of campus, word began to spread of the shooting of JFK. Compared to how fast information is disseminated now, my college years could be considered the middle ages. Yes, there was TV and there was radio and of course there were newspapers and telephones but the information became available at a snail’s pace and was not conveniently or quickly delivered. I especially appreciate having a smart phone and instant access to information when I think back to that moment and to how little information we had.

By the time I arrived at the economics course, it was clear that President Kennedy had been gravely wounded. I just wanted to find a radio or TV to get the latest details or find a payphone so that I could call my parents to see if they had more. All the students seemed in shock but the economics faculty member didn’t want to talk with the class about what was happening, and he didn’t want to cancel class so that we could go find out. Instead he insisted on spending the full hour talking about macro-economics. He taught the class he intended to teach but for me and, I am certain almost all of the students, the lesson went in one ear and out the other. The faculty member wanted to ignore a serious reality and at that moment, I preferred to ignore economics. To this day, I still feel the faculty member was insensitive to the class and insensitive to reality. In the middle of a national tragedy, the focus should clearly have shifted.

As soon as the class ended, I headed for home. I remember watching everything that was on TV regarding the death of President Kennedy for days and buying every newspaper that was available. I was already profoundly sad but remained glued to the TV and radio no matter what.

I can’t say with any certainty whether our world or our county would be a different place if he had not been assassinated. Would we have avoided Vietnam? Would we have still passed the Great Society legislation? Would we have made more progress in Civil Rights? None of us are clairvoyant, so that there are no definitive answers to the questions. But one thing was clear; the strong sense of optimism that surrounded the Kennedy administration was gone replaced by a malaise that only expanded the more we became involved in Vietnam.

In so many ways, 50 years ago is an eternity but when I think about the Kennedy assassination, it still seems very current and very painful.