Prices Only Economists Can Appreciate in Deadwood

HBO's Deadwood continues to pour out blatant economics disguised as a western in this week's episode.

Economists are sometimes described as heartless and unemotional, and you probably need to be that way to see the economics of this episode.

The plotline is that Wu imports opium from California by (Chinese) courier. He then sells it to Swearengen who is the prime distributor. This week, Wu confronts Swearengen with the news that two white men killed his courier and stole his opium. He expects Swearengen to find the culprits and deal with them (the unspoken idea is that Wu cannot pursue the culprits himself due to prejudice in the old West). Wu clearly desires a blood atonement for the death of his hireling. And, there is never a question about catching the perpetrators, or passing judgement.

So, where is the economics? It is in the question that comes up repeatedly throughout the episode. If two white men committed the murder, how many need to be killed in order to settle the issue? Swearengen inquires with a number of people (whites only), who tell him implicitly that the opportunity cost of a Chinese man is definitely not two white men. In fact, many exhibit their prejudices by saying that the opportunity cost is zero white men! Ultimately, Swearengen settles on a price of one white man for one Chinese man, but this is only because he is afraid that Wu could extract that cost in other ways that might hurt Swearengen more.

See my earlier economics in Deadwood posts at:
Corruption's Prices in Deadwood
Deadwood's Invisible Hand
Derivatives in Deadwood
Collusion and Asymmetric Information in Deadwood
Elasticities in Deadwood
21st Century Economics in Deadwood

P.S. I'm wondering if there isn't a seed being laid in the plot here. How did Wu know two people committed the murder? How did he know they were white? My guess is that he may be trying to face off Swearengen and Tolliver (the other saloon owner) for his own gain. After all, what was clear is that one of Swearengen's employees and one of Tolliver's employees (and Swearengen's too) had the opium.

Comments

[Jacqueline Mackie Paisley Passey]

Obsess much? Or just trying to carve out a niche in the blogosphere?

[David]

LOL. It is kind of an obsession.

I am totally hooked on that show because I'm always waiting for the economics to show through (although I'd probably watch it anyway).

When it dawned on me (about 3-4 episodes in) that there was explicit economics in each episode I wrote something about it. I also went to their site to get some links, and the creator of the show actually says that what was interesting historically about Deadwood was that everything was driven by economics. There was almost no politics at all, because it wasn't considered a part of the U.S. at the time.

Now that I'm paying attention, I'm shocked at the variety of economic ideas that turn up in the show. They're usually fairly explicit, somewhat complex, and dealt with realistically. I'm teaching Principles of Microeconomics this summer, and for their writing project I'm actually going to suggest that they can write about Deadwood if they want to.

And then there is the whole blog thing. Of course I'm trying to carve out a niche on that particular topic - that's what flippery fish do.

[Anita Campbell]

I agree that Deadwood is just packed, not only with economics, but also with business lessons. Now that you've pointed it out, that's what the whole show is about.

The show has:

A startup business (hardware store) involving two partners.

Entrepreneurs in uncharted waters (gold claims).

Corporate greed (Swearengen trying to steal away the prize gold claim).

Corporate espionage (Swearengen sending Trixie and the hotelkeeper to spy on the widow).

Another startup (the mail and freight service), and Swearengen's angst that he didn't think of the idea for the business first.

A startup's quest for good employees (the mail service owner trying to hire Calamity Jane).

Corruption and bribery (paying off the government officials).

The value of customer service (is the new piano a draw that will help business or detract it?).

I could go on, but I'd rather wait and see what else you write about Deadwood.

[David]

That is a whole new perspective that I hadn't thought of ... and it looks like a richer vein than the one I'm mining.

[Howard Owens]

I just came to your site through COTC ... I too have been watching Deadwood through a business perspective.

I've been fascinated by Swearengen. In the start, he was just an evil man to me. But by the third episode, I realized he was just an entreprenuer operating within the rules of the game as he understands it. He's not evil, really. Tolliver, however, is another question.

Swearengen is always practical. He will do what he has to do to protect his business interests. He doesn't necessarily take what we would consider the immoral choice, except where necessary. If he didn't, he could never survive in his kind of business in that era and place. He's the Tony Soprano of his time and place, and just like T, I expect there will be a book on "Business Leadership According to Swearengen."

[David]

My wife is also fascinated by Swearengen. He's sort of like Dr. Evil in the Austin Powers movies: he wants to be bad, but his underlings keep him too busy tackling the minutae of his business.