Wednesday, January 30, 2008

The market return on talent 

Suppose we discover a new sport in America -- out of respect for John, let's say it's curling. And let's suppose a new curler captures the imagination of American youth. Carl the Curler. People buy t-shirts, brooms and other Carl memorabilia. ESPN decides to air Friday Night Curling matches, and they draw a remarkable 9 share on TV when Carl is on.

What happens? Young people who have wanted to be good at sports but for whom the traditional sports do not come easily, and for whom the skills of curling are held at a high level, now receive rents on their skills. Just as many young men and women have made money finishing 12th on the Nationwide golf tour thanks to Tiger Woods, people now make money curling thanks to Carl.

Isn't that the same thing as this Anne Applebaum story about the sudden presence of beautiful Russian women? She plays up the notion of Soviet women dressed like those women in the late 1980s Wendy's commercial (to show all other burgers are the same, the "models" would come out in drab outfits, while the emcee announced "evening vare" "svim vare", etc.) But now there's a possibility that your investment in beauty gets reward.
In the past, you had to play chess or be a champion gymnast to come to international attention if you were born in the Eastern bloc�chess and competitive sports figuring among the few party-approved export industries. Nowadays, stars in fields previously unsanctioned by the party�crime novelists, conceptual artists, computer whizzes�from Russia, Hungary, or Uzbekistan have a shot at fame and fortune, too. As for talented entrepreneurs, the sky's the limit.

Beauty is a matter of luck, but the same could be said of many other talents. And what open markets do for beautiful women they also do for other sorts of genius. So, cheer up next time you see a Siberian blonde dominating male attention at the far end of the table: The same mechanisms that brought her to your dinner party might one day bring you the Ukrainian doctor who cures your cancer or the Polish stockbroker who makes your fortune.

I wonder whether the Russian government, or any other government, would consider taxing the "windfall profit" that has been laid before these beauties, or those doctors, or those stockbrokers? All of them are the result of the market signal "we value X" reaching those who have a comparative advantage in producing X ... and who have the freedom to engage in trade of X.

Russian women have benefited from globalization, as have we, and for more than just some lovely eye candy while we watched the Aussie Open.