Game Theory on the Korean Peninsula

To my great delight, recently in Korea there has been renewed tensions along the border. This isn't delightful because I like conflict. It is delightful because recently my class has been studying game theory and this is exactly the type of situation to demonstrate the real life application of mutually assured destruction. Two nations, side by side, a potential powder keg that I don't think will ever go off. At least not until the balance of power changes which essentially means not until the US or China stop backing either side of the line.

Bride Price

During my Sunday morning perusal of the NYTimes I came across this article about the marriage market in China which was especially intriguing to me. When I lived in Shanghai there was a marriage market in the city’s central park and perspective parents and match makers would meet to post and chat about their charges. I had heard of the increasingly desperate plight of the poorer urban and even poorer rural male, but this article points to a whole new market in which brides are hunted in plain sight. Scouts are deployed, databases are kept, and huge bonuses worth a year or two in salary are paid to those who find the right girl. This is no dating service however, the top clients pay 50,000 to 1.5 million USD for a match. As the love hunter put it, “Why shouldn't they pay more to find the perfect wife? This is the most important investment in their lives.”

Recently I have been reading a book, The Price of Everything, which chronicles how things get their price. As an aside, this was very funny because the book still had a sticker on it that said, “Bargain Bin 2 for 1.99” and I had bought the book through Amazon for about 3 dollars. The price of everything indeed.

One of the major issues in the book is the price of girls/marriage. The traditional dowry and all the social implications that go with it can clearly be explained by economics and pricing. More or less, people had to pay to get rid of their daughters. Historically and currently in China males have been preferred to females as they extended the family line and are caretakers for parents in their old age. Some have gone as far as to say that women were maids/slaves for their spouse’s family. Definitely not a desirable position. 

The desire for sons has not changed and in fact has gotten quite a bit more extreme since the introduction of ultrasounds and other devices detecting sex before birth. At its peak in 2004 the sex ratio was about 121 boys to every 100 girls at birth. This is way out of sync with nature and has produced (or not produced) what many have coined as “missing girls”. Estimates differ, but there are expected to be about 25 million unmarried men by the end of the decade. The sex ratio gap has narrowed in recent years and is now 118 to every 100, but that is  still the world’s widest chasm.

As this gap has continued and as China’s economy keeps on pace, more and more poorer men have to remain bachelors as young women are snatched up by those who can afford them. For women the choice is an obvious one. Love or not, men with greater financial power give them and their offspring a better chance of survival and continuing the line. Many factors have contributed to the changing valuation of women, but none so much as the imbalance in the market.

Most interesting of all is not the left over men at the age of 35 or 40 trying to find a match, but the women on the flip side of the coin. Those who have had successful careers, but failed to  marry and find it increasingly hard as men do not desire women whose education or wealth are larger than their own. This to me seems in-congruent with what prices would signal. Why would a man, especially one who may also be a “leftover” be averse to marrying a woman who is of higher financial and educational ranking than he? Yes, there may be some pride or social conditioning there, but prices should change that. However, that does not seem to be occurring as much as I would expect. In one instance the article noted a pensioner, “who was seeking a husband for his eldest daughter, a 36-year-old economics professor in Beijing.” It would seem that there is an over abundance of smart successful Chinese women just waiting for someone decent to agree to marry them. Any single economists out there wishing to benefit from this disequilibrium?  

Plutocrats

About a month ago I almost sent an email to my mother because I had just read this article.

That email started like this, "... reminds me again of how hard children in the developing world, especially China and India but Malaysia too, aspire to have what Americans would consider a living wage. I end up teaching the cream of the crop of these students. Outside of the foreign children I teach I also teach the children of people who for one reason or another are ahead of the curve for their country and are straining for more. Sometimes students on scholarship or students whose parents have scrimped every penny and placed their odds on their kids cross my path and I can't help but to reflect how different American students are. I loved the kids I had in the US, don't get me wrong. I had a lot of hard working kids in the US as well, but it doesn't matter in a comparable sense. The world's playing field is becoming more even. All people of the world are reaching a higher standard of living (though not unilaterally), but standards of living in the US will slow down dramatically as students from places like China, where kids study for 12 hours a day or more, are filling the positions that global demand is asking for." 

In some ways I worry about these kids who constantly study. Its an arms race and I see how the anxiety of their parent’s hopes and efforts hang on them. To their parents it is especially important for them to make it because the parents have nothing or little for them to fall back on in terms of a comparable future prospect. The most difficult aspect for most families in the most quickly developing countries is how the inequality is causing mobility to become even harder. There was a time when hard work paid off in folds for the effort put forth, but that window is slowly closing. Those at the top are not in fact the best and brightest, they are just the richest who are trained hard to be the best and brightest. They benefit from the Great Gatsby curve. Some will make it though, and those parent's who scrimp and toil for their children are the ones who hope and pray for that day. Likely I will one day be one of them, though probably not as much scrimping and toiling, though just as much hoping. 

I started thinking about this email again because I had a holiday recently and while traveling around I was lugging a book that a student had given me. This book I had seen before while perusing economic books, but I didn't actually get it into my hands until one of my clever IB students and I were having a discussion about income inequality and he suggested that he would loan me Plutocrats. Knowing that I had a break coming up and would need reading material I asked him to borrow it. It turned out to be very interesting indeed. In general the book looks at the income gap between the richest and poorest in America, but also examines income inequality overtime in the US and makes connections to the larger world. Some of the more interesting parts of the book for me were the descriptions of the income gaps between those in the top 1% and those in the top .01% of Americans. It is enormous. I was also taken with the idea that today’s super wealthy are largely not the leisurely plutocrats of old, but seem to be a newer breed of working plutocrat. The percentage of high income earners has gone up and inversely the percentage of high income receivers has gone down. In other words, the super rich are working more than ever to be super rich. All that was very interesting, but what really hooked me in were descriptions of the new elite’s children and the expectations of future generations of the super rich. The descriptions of where and how these kids are growing up hit especially near for me. Many of the super rich kids, sometimes known as princelings, were all around me. Though I have rarely seen a child who comes from a home in which they move from gated community to school to home again in the comfort of air condition and tinted windows, I have come close. I can't point to one student I have ever had that I would point to with malice in saying that they were undeserving. Luckily, most of the kids have been very polite and hard working in the schools where I have been. Not so much the children of aristocracy, but the children of the new elite. Then again, I might have  Kim Jung-Un in the classroom and never know it. 

The school I am at now has an annual fee of around 15 to 20,000USD. This private international school has some of the best students I have ever taught, but it’s no wonder. Every day when school lets out a parade of Mercedes Benz, BMW’s, Jaguars, etc. come through the school gates to pick up kids. These kids are largely from somewhere else, know more than two languages, have the means to travel, and will likely all get into top schools.

The same student who lent me the book then sent me the link to this post the other day. Again, I found it especially interesting because this brought it even closer while keeping it in the same context. These children are becoming a society onto themselves. They belong everywhere and nowhere. They are multi-cultured and no culture. This is something new in our times. There have always been the children of the wealthy, but now there are the international children of the wealthy and they will be the ones to guide China, India, Malaysia, Thailand, etc. where much of the growth in the next 25 years is predicted to occur. The children I have in my classrooms today will be the economic leaders of tomorrow in a very real sense.

I couldn’t help but to wonder what, being a princeling, this student thought about all of this. Today in class I thanked him for the article, talked about the book, and then as we were parting I said, “What is your take on all of this?” as I gestured to his classmates and the school. He just said, “Well, I don’t really know, you know? I only came last year, before that I was in local school.” And there, is one who made it.