Concert tickets and the free market

Earlier this week I heard another discussion on You and Yours about ticket touting and the ‘no ticket’ scammers that try to rip off gig goers. One comment by the chair of the culture, media and sport select committee had me spitting out my tea, and then laughing heartily.

The story was ostensibly prompted by Muse’s plan to only sell tickets through their own site, so hoping that only the fans who actually want to go (‘the true fans’) can get tickets, as opposed to those who want to buy some and then resell at a higher price. This reselling, known as the ‘secondary market’, won’t be outlawed as government can see the ‘advantages for consumers’ (culture.gov.uk, p. 2), and as society seems to believe in the primacy of the market it would seem absurd to say that reselling has to be at face value. If this were the case, then those who get the tickets are just those quickest to act, and some ‘true fans’ still wouldn’t be able to go. At least with the clearing mechanism of the touts, those who want to go most (as measured by willingness to part with cash) get to go, and one never hears complaints about being able to buy tickets at less than face value from the touts!

But the concern here is the selling of tickets that haven’t been released yet. Of course there are some scammers who pretend to have a ticket, sell and fail to deliver: this is fraud. However, there are others who sell a forward contract on the tickets, taking someone’s money to deliver tickets that they are sure they will have at the point at which they need to sell:

Winifred Robinson: Would you support the idea of making it illegal to sell tickets that you don’t have in your possession? Because often in defence afterwards, these online sellers who don’t deliver will tell you that someone else let them down.

John Whittingdale, MP: Well, if you are trying to sell something you don’t deserve(?), then that is a criminal act in itself…

This is where I laughed. I laughed because selling something you don’t have in your possession is pretty common, and arguably the basis of our entire financial market, and a large part of our non-financial economy too. Futures trading, forward trading and a whole host of derivatives are based on buying and selling ‘promises’ as opposed to the actual commodities or shares.  Even in the old-fashioned manufacturing industries, importation and retail, money can be handed over before the goods are in existence, never mind in the sellers hand (known as ‘paying up front’, and I imagine the MP has heard of this). And sometimes someone further up the chain may let the seller down, and the deal doesn’t happen. Money can be returned, bankruptcies occur, and so on. Some end consumers can make losses like this too: if you pay for a telly online, and then the import company goes bust, you an end up with nothing. I don’t think the government is thinking of making all of this economic activity illegal too… that would be ridiculous.

If regulation is needed to counter the risks of default, perhaps they should start with the financial markets. After all, if we take the most cited reason for the current economic difficulties – sub-prime mortgage defaults – what we find is a number of financial bodies trading in future income streams (the repayments of homeowners) that in the end didn’t come in. They may have been wrapped up in credit default swaps and collateralized debt obligations, but effectively people were trading in the the future monthly payments of householders, as this is where the profit would come from eventually. It wasn’t these payments that were in the hands of the sellers, but promissory notes for these payments, and as we have seen some of these payments aren’t being made. How this differs from selling a gig ticket you don’t own yet, I can’t see.

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Income distribution

A couple of weeks back I went to a debate about the legacy of the miners’ strike. There was a lot of shouting at Edwina Currie, being the only Conservative there, and a member of the government at the time. There was an element of nostalgia too, with mining jobs being romanticised a bit too much (George Galloway and Ken Loach were there too). However, the fact remains that these dirty and dangerous jobs seem to pay better than the service sector jobs that have replaced them.

One of the more interesting claims was that British workers have really good earnings. Edwina pulled out the ‘creative industries’ argument, like Charlie Leadbeater’s Living on Thin Air, effectively saying we could all be earning good money designing computer games. It is of course true that the average British wage is high, and the creative industries is profitable. But for the worker at the bottom of the pile, it’s the distribution that counts.

For example, if a company makes £1m p.a., after costs, and shares it between 50 workers equally, then they all get £20k each. But if they decide to ‘award’ the 4 managers with £100k salaries, then the remaining 46 only get £13k each. The mean wage in each is the same, so in any analysis we should examine the distribution, not just the minimum, maximum and means.

Thus, on the one hand the government can tell its domestic audience that we’ve never had it so good, and that we’re paid really well. This was Edwina Currie’s line. But when its audience is overseas investment, a different story is told:

‘The UK has a competitive salary structure in the service sector [i.e. cheap], particularly when compared to countries such as Germany, Ireland,Spain, Sweden and Switzerland… hourly compensation costs for production workers in the UK are also lower than in many other countries…’ (UK Invest)

The same document also shows that the UK has the reputation of the most flexible labour market [i.e. best for business, not workers], except for China:

But internally, businesses give the impression of being hampered by red tape, unions with too much power, and the minimum wage. The CBI originally said the minimum wage would reduce the number of jobs, then each time there’s due to be a raise they say the same thing.

Perhaps at GDP per head, the UK is doing well, but we also have the most unequal wage structure outside the US, so people can still be badly paid here.

Entryism

On Monday, Andrew Gilligan’s Dispatches created a scare story about an ‘extremist’ Islamist group (Islamic Forum Europe: to be fair, they are Islamist but hardly extremist) infiltrating local politics in East London. This comes close to some of my work on ‘extremists’ in local politics, and the idea of ‘entryism’ just made me laugh… it’s what I call a minor conspiracy theory, that easily elides into the grand conspiracy theories of global organiations and elites who secretly control everything.

‘Entryism’ suggests a group of IFE people meeting, and secretly deciding to join a particular party en mass without revealing their prior affiliation. They hope to get enough numbers to steer the organisation in the way that they (who are stereotyped as being all of one mind) think will achieve the goals of their ‘actual’ organisation.

The reality, as far as I have found in my research, is much less conspiratorial.

First, ‘extremist’ activists are the same as everyone else involved in community stuff. They are the ‘do-ers’, who join a number of groups. In my research Islamist and far-right activists want to do good in society, and see their ideology / worldview as contributing to the good society. But their work isn’t limited to their specific ideology… they might be involved in charity work, residents’ groups, local consultation bodies, a religious group. Just like a Labour party person might be involved in their local church or community group. If members of the CofE join the Conservatives is this entryism? Given that involvement in community organisations is highly correlated with other involvement, we should expect this. It seems natural that when someone finds that having their say in a community group doesn’t achieve change, they then get involved in formal politics.

Second, they don’t come as a bloc: the activists do not all think alike in ‘extremist’ groups or any other for that matter. Groups as diverse as the BNP, IFE, Islam4UK, the Catholic Church, Labour, are attributed with a collective ideology, but ‘extremists’ suggests that this collective ideology is unbending and the only thing the activists think about. But, ‘extremists’ disagree just like those in Labour or the Conservatives. Some in IFE might see the local Labour group as a good way of gaining influence, others might detest the idea of joining a party which took us in to the war on terror. A conspiracy theory would have IFE members joining Labour, despite their reservations, on the orders of some IFE grand plan. I’m more inclined to believe in individuals, making little decisions that collectively make democracy work.