Labor Market Allocation and Market Valuation - Determining Value in Opaque Markets - It's Good by Lil' Wayne, Jadakiss and Drake

Darkseid has shifted our view to an important market that has been much discussed within the past few years: the labor market. I thank him for his timely posts on Labor Equilibrium and Trickle Down policies. Please, if you haven’t, I would ask that you digest his posts closely and carefully. Now, every once in a while, the “masters” of the rap universe, philosophers in their own right, release a song that clearly outlines the pitfalls of understanding the labor market as it is traditionally modeled in economic theory. While I may be very bold in saying this – this is that song.

First, let’s examine the players in this philosophical tirade. Jadakiss, known as Jason Phillips to his parents, is arguably a legend. Lil’Wayne, or Dwayne M. Carter, has been making a name for himself over the past few years. Finally, Drake (his middle name), or Aubrey Graham, under the tutelage of Lil’ Wayne has entered the discipline with a force unseen in history. Now, let us examine the arguments in “It’s Good.”

You who are rich and whose troubles are few,
May come around to see my point of view, What price the crown of a King on his throne, When you're chained in the dark all alone....

What an introduction! “You who are rich and your troubles are few.” Clearly, the authors begin with the premise that the economic positions of those who are “rich”, undefined in this thesis, have few troubles. We can agree that the rich (we’ll define it based on net worth) would have the resources available to pay for unexpected problems that may arise. But clearly, the authors have picked out only the set of economic actors who are rich and meet the condition "troubles are few." We assume it allows them the resources to purchase other goods. The authors continue that those sets of economic actors will come to see the “price of a King on his throne, when [they] are chained in the dark all alone.” We will come to see what this means in a bit.

Jadakiss begins his argument:

I’m as real as they come, I follow the rules

I’m still in the hood but I probably should move

Made enough money, I don’t fuck around

I just felt they needed me, so I stuck around

We need to deconstruct the economic meaning behind this first verse. Under normal economic consumer theory, as consumer income grows, they begin to substitute away from inferior goods to normal goods. Specifically, they switch to luxury goods, a good whose demand increases more than proportionally as income rises (elasticity greater than 1). Jadakiss should under normal consumer theory consume more “house” in a higher cost neighborhood. He sees the externalities associated with his leaving the hood as an implicit cost, thereby extending this “new” consumer theory to include the externalities of consuming luxury goods on the “hood’s” need for Jadakiss to continue to reside there.

Feds got my man, shit is real son
Cause my god son just became my real son

Think life is a game but all you get is a turn

You live and you learn, either you freeze or you burn

Kush in the air, I’m pushing the gears

Love turned into hate, hate turned into fear

Jadakiss presents a fatalistic vision of capitalism  Economic actors are faced with a single choice or decision point and must learn from that single choice. He does not go on about whether opportunities will present themselves again, so we are left to guess what he believes about choices after the single decision point.  

If it ain't right, I don’t sign the deal

Shoot me in the watch, I got time to kill

Gasoline, propane, ain't no salary cap in the dope game

Ain't no collective bargaining on cocaine

So in other words nigga, do your thing

Wow! What a claim! “Ain’t no salary cap in the dope game, ain’t no collective bargaining on cocaine, so in other words nigga, do your thing.” Jadakiss makes the claim that there is no salary cap in the “dope game.” This seems to be a fundamental misunderstanding of the labor market and a gross misallocation of resources. By advertising that the “dope game” has unlimited earning potential, Jadakiss clearly avoids speaking of the associated costs such as potential prison time and loss of inventory. What can he possibly be thinking? Further, the sale of “dope” is a market based on commission, not salary. Jadakiss clearly does not understand the mechanisms of this market. Further there is no “collective bargaining” on cocaine. He is correct, insofar as there are no set hours, benefits, etc. when selling cocaine. Sellers in that market serve as independent contractors and there earnings are limited to the inventory available at the time. Jadakiss cannot think that there is an unlimited inventory of cocaine available for sale. If that were the case, in a competitive labor market, participants will come into the market until it is no longer lucrative to enter the cocaine market. Clearly, Jadakiss is has not expressed the true costs of selling cocaine. Distortions in the labor market will continue our current pattern of high unemployment. Jadakiss is not doing anyone any favors.  

[Drake]
Mind in one place, heart in another
Please pardon my brother
He’s just angry at you niggas who don't have your heart in your rap shit
And got too fuckin comfy, cause we still fuckin hungry
Young Money, got the munchies

Drake explains his take on the labor market. He believes the participants in the “rap” labor force have had decreasing productivity (“don’t have your heart in your rap shit”). They (Young Money) on the other hand are willing to spend more time and resources in order to on order to produce a high quality product. Let’s be clear, this is not a tangible product they are producing. This continues along Darkseid’s deconstruction of Pusha-T’s post-industrial America. He argued in his thesis :

“However, this theory rests on the assumption that each individual that is being added to the business is contributing to the production. It appears from Pusha T's strenuous research that this is no longer the case. He is bravely pointing out a significant market inefficiency.” -  

"Economies of Scale?", Darkseid, Nov.19 

Clearly Drake agrees – the rappers who have been added to the rap game have not contributed to “good” production. There are too many players in the rap game who are producing a poor product (see the earlier post on Soulja Boy) and thereby wasting precious resources. This is yet another call for the reallocation of labor resources, but unfortunately he does not make it clear that the Jadakiss theorem is wrong on its face.

[Lil Wayne]
Swimmin’ in the money, Imma need some fuckin goggles
Its better to give, but we don't give a fuck about ‘em
I just came home, shit then got real hoe
Lil Weezy-ana, the boot nigga, steal toe
I ain't workin with a full deck but I deal hoe
I just touched down, kick the motherfuckin field goal
Talkin ’bout baby money? I got your baby money
Kidnap your bitch, get that ‘how much you love your lady’ money

Finally, Lil’ Wayne weighs in. He first makes a normative claim that it is “better to give”, but refines his argument saying that “giving a fuck about them” is not something he is willing to do. This can only mean the costs of doing so are too high for Mr. Carter – he would rather spend resources elsewhere. But Mr. Carter exploits the market in the two final lines above – “Talkin ’bout baby money? I got your baby money, Kidnap your bitch, get that ‘how much you love your lady’ money” Mr. Carter is making an amazing claim here – that he can value the price of a human life! He simply needs to kidnap the subject and figure out the markets willingness to pay. What an interesting experiment. Mr. Carter may be on to something. He has proposed a solution to a vexing question – what is the value of a human life? Mr. Carter seems to propose a natural experiment – kidnap said person, then figure what is the market’s willingness to pay is! Everyone must have some value, and Mr. Carter proposes that he will find that value.

The blistering overview, while full of some market fallacies, is interesting in its presentation and presents some important research questions that we believe should be followed up.

Argument Presentation: A-