Sexonomics 101

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Sex in a developed service economy is a service like any other, and it is imperative that it be quantified economically as such. The costs to sex consumers of not quantifying sex economically, as we will show by and by, can include financial ruin and/or imprisonment in a surprisingly large (and growing) number of cases. This applies not to the simple and upfront sex-for-money transactions we call “prostitution”, but to legal sex transactions which imply, and sometimes explicitly spell out (as in the case of marriage) complex legal obligations. This is not to say, even in the case of marriage, that legal obligations which are clearly spelled out to both parties at the outset cannot later be made subject to arbitrary revision and change by legislative and/or judicial fiat; in fact, as we will see, the sex industry, when it is cloaked in legality, not only under marriage but under any arrangement between people in the legal sphere who may be construed as potentially interacting sexually, is the only domain of economic activity in a free society where initially agreed-upon contracts between freely transacting parties are routinely rewritten after the fact by lawmakers and judges. The legislative and judicial rewriting of such contracts almost always favors female sex producers at the expense of their male sex consumers—that is to say: you. Truman Capote famously said, “The problem with living outside the law is that you no longer have its protection.” Our purpose in this section on the economics of sex—“sexonomics”—is to demonstrate that Capote’s dictum has been stood on its head in current-day money-sex transactions: the problem with transacting inside the law, from a male sex consumer’s point of view, is that you leave yourself open to later prosecution under the law’s “protection” of politically favored female sex producers; or, to put it in clearer terms, consuming sex outside the law means that men no longer have its persecution.

The role of prices

In a free economy, prices convey information to producers and consumers alike. High prices tell producers to supply more and consumers to demand less, leading to an eventual lowering of prices, just as low prices tell producers to supply less and consumers to demand more, leading to an eventual raising of prices. Prices in a free economy constantly fluctuate, much like water seeking its own level.

 

Prices exist in the first place to indicate an underlying scarcity of resources. There is less of any given thing than there would be demand for it if it were free; prices reflect that scarcity. According to the late great London School of Economics professor Lionel Robbins, “Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses.” In other words, means are not only scarce; they also have alternative uses. For instance, raw milk can be pasteurized and sold as drinking milk, or it can be used in the making of a whole range of by-products, from yogurt to cheese to sour cream to ice cream, and so on. How much milk gets directed to how much of each by-product gets determined by prices in the market, which in turn are set by demand, which demand in turn gets determined by prices in the market, and so on, as producers continue to seek the highest possible return on raw milk, while consumers continue to pay higher prices on the by-products they value more than on the by-products they value less. This systemic free-market process assures that what I call the Kinks’ Demand (“Give the People What They Want”, which is the title of that British rock group’s 1981 album) is met with the highest possible efficiency.

 

As wonderful as all this sounds, it works optimally only in a free economy, where prices are allowed to fluctuate in order to convey to both producers and consumers alike constantly changing information about scarcity and supply and demand. Anyone who has seen trading-floor scrambling as traders frantically try to keep up with second-by-second fluctuations in the prices of commodities, stocks, bonds, currencies, futures, and so on will have some idea of how sophisticated this process can become in an advanced economy. Such rapid-fire adjustments to price fluctuations by traders, from the point of view of society as a whole, means that less lag time between information and action leads to greater efficiency, and therefore to more people getting more of what they want, which means an ever-better satisfaction of the Kinks’ Demand. Paradoxically, the much-bemoaned “greed” or rapaciousness of individual traders, insofar as it leads to an increase in their performance, is in fact highly beneficial to the system’s smooth operation; what is often denounced politically as being a nefarious intention on the part of financial-sector professionals who are paid on commission turns out to minimize waste and thereby maximize wealth for the society at large—even though that may have nothing to do with any individual trader’s intention in the process. What we need to keep in mind is the degree of efficiency of the economy as a whole in allocating scarce resources which have alternative uses.

 

Price controls

Unfortunately for the efficiency of economic systems, prices are not always allowed to fluctuate freely, but sometimes get determined by government fiat. This can happen, as it did in the Soviet Union for decades, by outright price-setting by government officials; in that country, for instance, over 24 million prices were set directly by the government. The legendary market inefficiencies that these arbitrary price-settings led to, with produce rotting in warehouses while, simultaneously, shelves in stores stood empty and people went hungry, are all very well-known and need not be discussed at length here; what is important to understand for our purposes is that any third-party price-setting system denies prices their crucial role, which is to convey scarcity and supply-and-demand information to both producers and consumers, who can then most efficiently allocate scarce resources which have alternative uses. When the Soviet Union’s last President, Mikhail Gorbachev, asked British Prime Minister Margaret Thatcher, “How do you see that people get food?” she replied: “I don’t. Prices do that.” As a shopkeeper’s daughter, she knew well whereof she spoke.

 

A second—and far more widespread—instance of government interference with the free fluctuation of prices is the case of price controls. Whereas outright price setting over the breadth of an entire economy has had such a clearly disastrous record for so long that virtually every nation in the world had abandoned it by the end of the twentieth century, price controls by governments have been allowed to continue unabated—and even to multiply, often by stealth, usually to favor politically powerful constituencies. While typical examples include minimum wage laws, where price floors on labor are set by law to satisfy labor unions, or rent control laws, where price ceilings on rent are set by law to satisfy tenant associations, other typical but far less advertised cases include a large and growing array of anti-male or pro-female laws, all of which effectively set price floors on legal sex for male consumers in order to satisfy feminist groups.

These latter, less advertised cases are the ones on which we will focus generally as we move forward. However, before we get there we need to define our terms explicitly, as we paint the larger economic framework within which sexonomics increasingly is being delimited by laws that create new incentives and constraints for both producers and consumers of sex. Much of this painting of the larger economic framework involves dispelling commonly held misconceptions about economics. Minimum wage laws, for instance, are often assumed to be in the interest of low-wage workers, when in fact they are the direct opposite. Such laws invariably increase unemployment among low-productivity workers, whether young and inexperienced, or undereducated and/or low-skilled, and are never the result of political pressure from such people, who typically have very little political power. Minimum wage laws, on the contrary, are passed at the behest of labor unions, who seek to erect barriers to entry to non-unionized workers by pricing them out of the market. Thus unionized workers who are on the inside looking out gain a large competitive advantage over those who are on the outside looking in. Unionized workers typically are more experienced, more productive and more likely to be worth a high salary than the people whom they seek to keep out of the labor market with such laws. As a result, while a worker whose productivity is seven dollars an hour would be employable at five dollars an hour, that worker becomes unemployable at nine dollars an hour, and ends up unemployed if that is where the “minimum wage” is arbitrarily set. Whatever others may say on this topic, we sexonomists need to keep in mind that the minimum wage is always zero. Similarly, and for similar reasons, rent-control laws end up having an effect contrary to the intentions proclaimed when such laws are passed, which is that such laws will help low-income families obtain “affordable housing”. As has been amply documented, rent-control laws in fact have the opposite effect, benefiting existing tenants who are literally on the inside looking out, at the expense of prospective tenants who are literally on the outside looking in; therefore, as we would expect, rent control is sought by the former and not by the latter. As a matter of empirical evidence, cities across the United States and across the world where rent control laws were instituted have experienced paradoxically far higher average rents than cities where no such laws exist. Thus New York and San Francisco, two cities with longstanding draconian rent-control laws, have long had the highest average rents among major U.S. cities. How could average rents be higher when rents are set lower by law? Rent control laws typically have an escape clause for luxury housing, which is free from price control. Scarce construction resources therefore get diverted to the luxury home market, where free prices offer builders a better return on investment. With growing shortages of rent-controlled apartments, in part because tenants hang on to such apartments longer than they would in a free market, and in part because landlords may allow their buildings to degrade when rents cannot cover the costs of upkeep, leading to those buildings being condemned and boarded up, prospective tenants may have no choice but to opt for luxury housing which they can ill afford.

Nor is any of this surprising. Perhaps the most basic law of economics is that more is demanded at a lower price than at a higher price, while less is supplied at a lower price than at a higher price. In a free market such competing tensions resolve themselves through the self-adjusting mechanism of fluctuating price levels. However, where prices are kept artificially high, as in the case of the price of labor being kept artificially high by minimum wage laws, the self-correcting price mechanism is prevented from maximizing the economic options of either employers or workers; in short, to offset artificially high prices more labor keeps being supplied than demanded on an ongoing, uncorrected basis, leading to a surplus of labor—unemployment. In the case of rent controls, to offset artificially low prices more housing keeps being demanded than supplied on an ongoing, uncorrected basis, leading to a shortage of apartments.

 

Here are two laws we need to keep in mind in our study of sexonomics:

 

1)     Artificially low prices cause shortages; artificially high prices cause surpluses.

2)    Scarcity is inherent but shortages and surpluses are price-control phenomena.

 

Sex as a service in legally accepted contexts is being set by government legislation at artificially high—indeed, exorbitant—prices, as we will show in later posts. As a result, once that fact has been understood by sex consumers, a surplus of undemanded sex is a foregone conclusion. There are no known cases in the history of humanity where prices set by government at artificially exorbitant levels have not resulted in surpluses. The argument that the demand for sex is inelastic will also be debunked with telling statistics in later posts. The central fact here is that sex as a service has been priced at artificially high levels by government, whether that service is rendered through a set of elaborate economic arrangements between two people in traditional guises such as marriage, or as simple workplace coexistence between people who, it could be argued, might have some kind of sexual interest in a coworker (requited or unrequited). That central fact has systematically been obscured and kept secret by government and complicit media outlets, as we will demonstrate in later posts. Until sex-consuming men understand this fact, they will continue to make economically irrational—if not outright suicidal—decisions in their consumption of sex. Once they do understand it, demand will plummet and a gargantuan surplus is sure to result. History has a tendency to repeat itself, and economic history most of all.

 

To get back to our consequences of price-controlled economic phenomena: a further and universal consequence of price controls is that of alternative markets. Sometimes those alternative markets materialize as markets in different goods or services. If airline travel becomes prohibitively expensive, say, then car, bus or train travel can be adopted as more rational alternatives. Alternative markets can also develop as illegal markets (black markets) dealing in the same goods or services which were rendered prohibitively expensive by government regulation. The worker whose productivity falls below the legally mandated “minimum wage” may thus find employment “off the books” or “under the table”. Similarly, in the case of black markets, people who cannot find legally sanctioned living quarters due to rent control laws may resort to illegally subletting such apartments, or to bribing housing board officials in one way or another. More typically, in the case of rent control, such laws tend to make exceptions for “upscale” housing; as this kind of housing is not subject to rent control, more house-construction resources get diverted to upscale housing, with resulting higher-than-average rents, as in the aforementioned cases of New York and San Francisco.

 

In one way or another, whether as producers or consumers, people’s inventiveness when confronted with price controls will lead to the creation alternative markets in price-controlled goods and services, either by replacing the goods and services originally sought with alternative goods and services, or by creating different, sub-rosa markets for the same goods and services. In the latter case, that of black markets, producers will tend to charge higher prices than they otherwise would in a free legal market, to cover the costs of evading the law, as well as the cost of bribes and the cost of defense if and when legal prosecution for breaking laws should result. As a consequence, consumers will pay more for the same goods and services than they would in a legal free market—albeit less than in a price-regulated market, otherwise the consumer would never deal in a black market to begin with.

 

To recapitulate: prices in a free market economy convey information to both producers and consumers about the scarcity of goods and services, as well as about the current supply and demand of such goods and services. When prices are not allowed to convey this information because of price setting (now all but defunct) or price controls (currently on the rise), prices set by law at artificially low levels lead to shortages, whereas prices set by law at artificially high levels lead to surpluses. In either case, price controls always lead to the creation of alternative markets, whether in competing goods or in competing illegal markets. To give an obvious example in the case of sexonomics: artificially high prices in legally obtaining sex will lead consumers to seek alternative markets, either in competing services such as online pornography or sex tourism, or in illegal domestic sex markets such as prostitution.

 

Prices and costs

While prices are money costs, some costs can be difficult to quantify in terms of money. However, from a sexonomics perspective, pricing costs is of the utmost importance, and we will devote a lot of our attention in these posts to doing just that. In fact, the sex-grievance industry, of which the divorce and family courts are an obvious example as far as the study of sexonomics is concerned, has not shied away from quantifying sex costs from a female sex producer’s viewpoint in terms of monetary compensation from a male sex consumer. Therefore, we will proceed here, at least in part, by examining the statistics on monetary awards that courts have extracted from sex-consuming men and handed over to sex-producing women. We will do a reverse analysis on such awards and attempt to show to sex-consuming men the extent of the potential money costs to which they can be exposed when entering in legal sex transactions, whether deliberately (as in marriage) or not (as in workplace law suits). Next, we will attempt to quantify other costs, most notably the cost of “shame”. Yes, shame is quantifiable too. Sex-producing women have shamed many a sex-consuming man with ad hominem attacks, such as that of being “abusers” or “deadbeats” or “exploiters” or the like; by wielding such shame over sex-consuming men those sex-producing women have extorted from them considerable sums of money, as well as quiescence.

 

We will attempt here to put such shamed quiescence from men into economic perspective. In doing so, we will provide sound economic explanations for the extortion schemes practiced by sex-producing women against sex-consuming men. We will examine the incentives and constraints on both the male consumer and the female producer in the shame game industry.

 

Nor is direct financial extortion from sex-producing women the only potential liability to which sex-consuming men can be exposed. Governments may profit from such extortion too, and in many ways. To give an example, imagine a city where municipal government officials legally mandated privately owned newspapers to publish photographs of convicted johns, ostensibly in order to deter prostitution; would it be such a surprise to learn that those officials then demanded large bribes from the johns to keep their pictures out of the paper? We could of course quantify the corruption costs doing business in the sexual domain if there were adequate government statistics on such bribes, which unsurprisingly there are not. As for those who could not pay the bribes, or for the few who paid the bribes but had their pictures published anyway, with no legal recourse over the breach of contract, it may seem difficult on its face to quantify their shame in money terms; and yet, we will attempt to do just that.

 

The next, and the worst, cost of sex transactions gone wrong is incarceration of male sex consumers on the often unsubstantiated say-so of female sex producers. The cost of being incarcerated might seem to be almost impossible to quantify in money terms, especially as it can include the horrific experience of gang rape by prison thugs; however, we will attempt to give as exact a money cost to such incarceration as economics can provide.

 

In short, prices are money costs, but other costs—human costs—can also be quantified in money terms, and in these posts we will do our best to do just that. On the generally agreed upon notion that understanding one’s exposure to financial risk is key to deciding whether or not to enter into a sexonomic transaction, we will show sex-consuming men what they are exposed to whenever they interact with sex-producing women, whether or not they happen to enter voluntarily into a money-sex relationship with those women.

 

Uncertainty and risk management

Uncertainty and risk are permanent features of life. In a free market economy under a predictable framework of laws, mechanisms for dealing with both have evolved. Although often maligned, market speculators and insurance companies perform a valuable function in the market: respectively, they outsource and redistribute uncertainty and risk, essentially all but eliminating each of them in economic transactions.

 

While market speculators are often viewed as greedy and rapacious—which may in fact be true but paradoxically may be of great service to systemic outcomes—their speculation takes much of the risk out of the hands of individual producers. Wheat farmers, for instance, will outsource the risk of a catastrophic crop by agreeing to a speculator’s future-determined price before the wheat season. By the time the wheat harvest comes around, they may find that they would have earned more at market than the speculator’s price, in which case they lose money, or that they would have earned less, in which case they gain money. Either way, dealing with a speculator allows them to know in advance what their income will be at the end of the year, allowing them to plan accordingly with the peace of mind that comes from a predetermined financial outcome, and freeing them from financial worries while allowing them to focus more of their energies on doing their job as wheat farmers. Because market speculators (speculators in “futures”) know more about statistical data and international markets, they are in a better position to assess risk and probable outcomes. Farmers gain by outsourcing risk to speculators; if they didn’t, there would be no market for futures speculators. As it is, futures speculation is a growth market, suggesting a win-win collaboration. While speculators have been likened to gamblers, they are in fact the exact opposite: gamblers create risk where none existed before, whereas speculators take an inherent risk and reduce it with their specialized knowledge.

 

Insurance companies, also much-maligned, perform a similar service: they cover the costs of an uncertain catastrophic loss, in the case of property and casualty insurance, or of a time-uncertain catastrophic loss, in the case of life insurance. Most people can afford to pay $800 a year in home insurance, but could ill afford a $400,000 loss from a catastrophic event such as a fire or a landslide. It makes economic sense for them, therefore, to buy home insurance. Home insurance provides, once again, peace of mind: paying those premiums is a drag, but at least you can sleep at night, knowing you won’t lose your life’s savings (most people’s homes are their biggest economic assets and liabilities) if a catastrophe should occur. Some 500 years ago, in the days of seafaring entrepreneurs, most of them pooled their resources with other ship owners, whereby each entrepreneur owned 1/10 of ten ships rather than owning one ship outright—thereby avoiding the risk of being wiped out financially by a catastrophic loss. To further extoll the economic benefits of insurance companies: these days, most insurers actually lose money on underwriting; the money they pay for administrative costs plus the money they pay out in claims exceeds what they take in in premiums. Their profits come from investments—and those capital investments, which allow promising new businesses to get off the ground, represent one more way in which insurance companies benefit the economy as a whole.

 

In the realm of sexonomics, however, there are no speculators or insurance companies the sex consumer can turn to. There are, however, real catastrophic losses to be incurred by sex consumers at the hands of sex producers and/or the government.

 

In the absence of any protection against built-in uncertainty or potential catastrophic losses, our advice is to refrain entirely from engaging in legally-approved sexonomics in the Western world.

 

We will explain more by and by.

 

Summary and implications

Prices are signals to producers and consumers alike, providing critical information on scarcity and on supply and demand. In the absence of freely-fluctuating prices, as under price controls, this information to producers and consumers gets garbled and leads to mistaken decision-making. In time, artificially low prices lead to shortages, and artificially high prices lead to surpluses.

 

Prices are money costs, but conversely non-money costs can—and must—also be quantified in money terms. Quantifying such human costs as shame or prison rape in money terms may appear impossible on its face, but there are economic formulae for doing so. Only by doing it can we assess quantitatively the risks inherent in sexonomics.

 

While assessing risks and protecting against them are normal features in a free market economy, where risks can be outsourced to market speculators or insurers, sexonomics has been left out of such protections. There is no way in the market to offset a catastrophic sex-consuming loss by redistributing the risk of such a loss through a risk-management entity such as a market speculator or an insurer. There is no divorce insurance, and no violence-against-women-accusation insurance.

 

Therefore, the only economically sound, prudent thing for sex-consuming men to do is to avoid contact with women, or for that matter with anybody who might allege sexual harassment or abuse with no serious burden of proof to substantiate those charges. In short, if Internet pornography proves insufficient to those hardwired and persistent sexual needs, the smart sexonomist will resort to unregulated prostitution—and preferably do so abroad.

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