Good evening, mister Bowie.
Listen, we're already in a lot of trouble
with the EPA and if you stick around we're
gonna have to fill out a bunch of inter dimensional commerce forms. So, if you can relocate to
New Jersey or maybe Canada. You would really
be doing us a solid.
Good, thanks very much, Ray.
Are you a God?
Half on my mother's side but we're not very
religious about it. We really only go once
or twice a year on high holidays.
Then....die!!!!
Hello , I'm Andrew Heaton and you're watching
EconPop, the show that sifts through haystack
of popular culture to find the needle of economics
within... And then stabs you with it!
Ghosts: they're terrible. They come into our
houses at night, drink all of my roommates'
beer, leave dirty plates in the sink, and
then forget to put the toilet seat down. Ghosts
are responsible for nearly all of the things
which irritate my roommate, who unfairly blames
these clearly paranormal shenanigans me for.
But it's ghosts. So who am I gonna call?
That's right: my friend Jim. Jim never hassles
me about leaving dishes in the sink. Also
he likes Ghostbusters, which is one of my
favorite films. A 1980's classic which explores
ectoplasm, Sumerian gods, entrepreneurship,
and the pitfalls of overzealous government regulators.
Entrepreneurship is about alertness to opportunity,
taking risks, finding innovative solutions
to problems and hopefully making a profit
at the end of it all.
At the beginning of the film our heroes are
uniquely aware of the problem of ghosts. But
they're not doing much about them because
they're in comfortable, cushy academic jobs.
Personally, I liked the university. They gave us money and facilities and we didn't have to produce anything.
You've never been out of college. You don't know what it is like out there.
I've worked in the private sector. They expect results.
Once they're forcibly jettisoned into the
private sector they decide to take a risk
and start their own company. Taking risks
is a crucial aspect of entrepreneurship. Most
startup companies fail. For example, my idea
for a one-time-use disposable ladder company
failed horribly. Seriously--a lot of people
died. To start a business at all is a risk,
because in most instances you have to leave
what is normal and comfortable for something
that will probably fail.
It's also a big financial risk. Dan Akroyd's
character, Ray, mortgages his house in order
to get a loan to start the Ghostbusters. If
the business had failed, he would have gone
bankrupt and lost everything. 
You're never going to regret this, Ray.
My parents left me that house. I was born there.
You're not going to lose the house. Everybody has three mortgages nowadays.
None of the guys were guaranteed income on day one, 
as opposed to taking jobs as employees in established firms. But great risks can lead to great rewards.
If the business succeeded, they would get
to keep the profits.
The ghostbusters are also innovators. Ray
and Igon invent devices to trap ghosts. Bill
Murray desperately wants to sleep with Sigourney Weaver, and works diligently and creatively
towards that end. Somehow an entirely new
industry, ghostbusting is born.
And it works! They make money! And lots of
it.
Their first ghost busting job at the hotel
illustrates an important and often confused
aspect of the market economy. It doesn't
reward people for the amount of effort they
put in, but the value they create for others.
$5000? I had no idea it would be so much. I won't pay it.
That's alright. We can just put it right back in there.
Well, we certainly can, Dr. Venkman.
No. No. Alright.
Economists call this "subjective value" and
it's the reason shiny diamonds cost more than
bread and water.
Unfortunately for the Ghostbusters, their
biggest obstacle wasn't getting enough customers
to become a viable enterprise. It was the
EPA. And, to a lesser extent, an interdimensional
Sumerian god. You might think that, all in
all, a malicious superpowerful entity bent
on destroying the world is worse. But you
should also keep in mind that the Ghostbusters
actually managed to defeat Gozer, whereas
they only stalled Walter Peck. He's probably
drawing a pension right now.
I want to learn more about what you do here.
Frankly, there have been a lot of wild stories in the media and we want to 
assess any possible environmental impact from your operation.
Walter Peck is the avatar of snarky bureaucrats, the obsequious EPA official we'd all love
to smack. His employer, the Environmental
Protection Agency, was formed in 1970 by beloved
US president Richard Nixon's executive decree
to counter pollution, what economists call
"negative externalities." Negative externalities
are where some activity you're doing imposes
costs onto unrelated third parties. Let's
say that the proton packs used to capture
ghosts produce smog. That's a negative externality.
Resolving negative externalities is about
tradeoffs. Sometimes people talk about pollution
like we can either have it, or not. And that's
true, we COULD ban all pollution. If we banned
all cars, tractors that harvest our food,
and power plants that make our electricity.
I'm disinclined to do so. So unless we want
to bring back the Middle Ages, where we grow
our own zuchini, use carrier pigeons to literally
deliver our tweets, and generally die around
thirty-five, there's going to be some smoke.
We have to decide: how do we best deal with
these tradeoffs? One problem with the EPA
is that it changes the equation from economic
tradeoffs to criminals vs. non-criminals.
Peck doesn't simply threaten to tax the
ghostbusters for their emissions, he threatens
to throw them in jail.
Excuse me, this is private property.
Shut this off. Shut these all off.
I'm warning you. Turning off these machines would be extremely hazardous.
I'll tell you what is hazardous. 
You're facing Federal prosecution for at least a half a dozen environmental violations.
Now, either you shut off these or we will for you.
Further, EPA regulations tend to deal with
public health via micromanagement. It's one
thing for the government to say factories
can only produce so many pollutants in the
air or river. It's another thing to tell them
exactly HOW they must go about achieving this.
By creating complicated rules and regulations
as to how business must operate; how often
they must clean particular components, what
sorts of machines they can use, which solvents,
etc. we run the risk of stifling businesses
from coming up with their own (possibly better)
solutions to meet the quality of public health
we want to achieve.
For example, in 1975 the EPA mandated platinum-based
catalytic converters for all cars to ensure
that they met certain emissions guidelines.
American car manufacturers favored this approach,
because they had already put a ton of money
into developing these catalytic converters themselves.
Japanese car manufacturers had gone a different
route, using alternate, more affordable technology.
Their cars were already clean enough to meet
EPA emission guidelines, but they were forced
to adopt catalytic converters anyway, raising
prices for American car buyers, reducing competition,
and ironically wasting precious resources
at the same time.
In the film, the EPA shuts down the Ghostbusters,
and by doing so releases a wave of ghoulish
specters across the city. That's what economists
call unintended consequences.
In the end everyone wants both a cleaner environment
AND innovation. The question is, in a world
where everything has a cost, how do we best
achieve both?
As for me, next time my apartment is swarmed
by poltergeists, who am I gonna call? Not
the EPA. The Ghostbusters. Or, more accurately,
Dan Akroyd. He's really into that stuff.
And now it's time for everyone's favorite
part of the show, subjective value, where
we invite famous economists to weigh in with
their thoughts on the film.
Today we have the man who coined the term
entrepreneur, French classical economist Jean
Baptiste Say.
So you think you know so much about le Ghostbusters...hey André?
but did you know that Chevy Chase and Michael Keaton
turned down the role of Peter Venkman? Did you?
No...no. Did you know that Bill Murray ad libbed most of his lines? Did you?
No...no. Did you know Bill Murray is the third greatest comedic artist of all time after Jerry Lewis and Jacques Tati?
No...no you did not. Viva le Ghostbusters! Viva le France! 
3 Stars
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Well that's our show, thanks for watching.
Be sure to subscribe to our YouTube channel.
And if you're looking for more on entrepreneurship,
externalities and the economics of Ghostbusters,
you can download the EconPop podcast with
economist Steve Horwitz, professor of literature
Paul Cantor, and myself. Available on iTunes.
