Lojack and Micrologic Alliance Assignment Example | Topics and Well Written Essays - 2750 words

Lojack and Micrologic Alliance - Assignment Example The intention of this study is the alliance between Lojack and Micrologic as an example of upstream vertical (supplier) alliance. Alliances between companies can be horizontal and vertical. Direct horizontal relations are those in which the company reaches a tactic understanding with its competitors. This understanding might be related to price or other factors. Indirect horizontal alliances are often done with industry outsiders – these alliances help both the companies in research or other factors and do not create a conflict of interest between them. Upstream vertical alliances are done with suppliers. Lojack did not produce the theft detection system. Most of the production and technological work related to the product was done by Micrologic. Thus the alliance is an example of upstream vertical alliance along with the supplier. The other type of vertical alliance is the downstream alliance which is done with buyers. The stolen vehicle recovery system (SRV) had to involve p olitical and regulatory actors such as FCC (Federal communication system as well as various law enforcement agencies. It also involved the partnership with car dealers as well as the technology provider – Motorola. Thus the alliance between Lojack and Micrologic also involved a number of other relational actors. The initial objective of the alliance between the 2 players was intended to develop the necessary base software and equipment and to obtain FCC approves technology for the SVR system. However over a period of time the two have changed strategic objectives – Micrologic now wishes to use the alliance in order to use the marketing network of Lojack. ... ever over a period of time the two have changed strategic objectives – Micrologic now wishes to use the alliance in order to use the marketing network of Lojack. This shows that the objectives of an alliance can vary over a period of time. As the strategic objectives of the firms involved changes, the nature of partnership between them also changes. (George Stonehouse, 2004) They tend to leverage sources or integrate activities with other firm which tend to maximise their value proposition. Evaluation of the Partnership Making partnership is not a very difficult phenomenon. In this age of various multinational companies there are numerous opportunities available for collaboration. However the important thing to do is to evaluate the different collaborations. Evaluation helps both the firms to consider what are the objectives of the partnership, what they have done to achieve them and how do they want to move ahead. Evaluation helps the firm to understand how they need to work in the partnership; it helps both the partners to improve management processes and procedures. They are able to analyse the objectives which had been set by the firms initially and allows for a revision in this objectives if the need arises. Effectiveness of partnerships is important at three levels – input, output and impact. Input factors involve the partners working with each other. Both partners may bring different inputs to the partnership. In the case we are analysing the input from Micrologic was technical expertise whereas the input for Lojack was distribution and marketing strength. Output is the result of the work done by the partners together. The input and output factors both combine in order to create an impact. We will use the life cycle model of evaluating the partnerships in

Trust in E - Commerce Essay Example for Free

Trust in E Commerce Essay Introduction The composition of this essay will concentrate on the topic about Trust in E-Commerce. Hence, this would focus in rendering a clear understanding on how such trust in E – Commerce would work in the actual practice of electronic business. The completion of this essay is up to provide general information about the importance of trust in E – Commerce. In addition to this, it will give an evident rationale in the primary functions of trust in actual practice of business in E – Commerce. Moreover, this paper holds on the purpose of providing comprehensive details on trust in E – Commerce. The following will be discussed: 1. A Brief Back Ground: Trust in Online environment 2. Importance of Trust in E Commerce 3. Major Risks in E-commerce 4. Arguments, Issues and More At the end of the paper, its goal includes determining the importance of trust in the practice of E – Commerce. Nevertheless, this essay would work to tackle prominent issues about E – Commerce with regard to trust. The Definition of Trust in an Online Environment Singh (1996) differentiates between two types of trust, which is that of soft trust and hard trust. Under the concept of soft trust, the important elements are that which â€Å"involve human psychology, brand loyalty, and user-friendliness† (Bollier 1996: 21 as cited in Singh 1996: 145). On the other hand, that of hard trust has factors, which â€Å"involve authenticity, encryption, and security in transactions† (Bollier 1996: 21 as cited in Singh 1996: 145). There is distinction that is to be made between the two that is the main reason for its separation. However, both sets of factors enable the users to have a sense of trust in a virtual environment where the virtual characteristic of the online environment has produced uncertainties.   Likewise, it is to be noted that the factors included for the â€Å"soft trust† involves those which are relative to the customers and are points where the online environment interacts with the users. These are the things, which are related to the client and would vary from every user. On the other hand, those elements under the category of hard trust leans towards those characteristics of the online environment which the users look for and which the different participants in the online environment should provide and possess in order for trust to be built. Moreover, Sutherland and Tan (2004) define trust as the element of the users that allow them to be vulnerable and take risks. It results to their acceptance of both the positive and negative consequences of their use of the online environment. The level for such may vary from one person to another depending on the elements of hard and soft trust placed above. Figure 1. E-Commerce Diagram for Secure Transactions Importance of Trust in E – Commerce Trust in a sense has always been significant aspect in doing business (The Importance of Trust and Credibility n.d.). Hence, establishing trust and credibility is a helpful way to gain the confidence of consumers or the customers (The Importance of Trust and Credibility n.d.). In sales, establishment of such trust is an efficient way to reach higher rate of sale (The Importance of Trust and Credibility n.d.). Likewise, trust and credibility is significant in building firm relationship with consumers and attract potential customers or buyers in the future (The Importance of Trust and Credibility n.d.). The E-commerce is a type of a socio-technical system in exchanging business data and information, upholding business relationships, and accomplishing business transactions through the used of telecommunications networks (E – Commerce Relationships n.d ). In literature, trust is commonly characterized as the confidence or predictability in individual’s potentials (Pavlou n.d ) and the confidence or faith in others goodwill (Trust in Electronic Environment n.d.). In the practice of E – Commerce, trust is considered to be the focal point of creating a firm relationship with the clients or the consumer (E – Commerce Relationships n.d.). This is due to the fact that in such environment the presence of risks, uncertainties, and interdependencies are prevalent (E – Commerce Relationships n.d.). Hence, such trust in the field of E – Commerce is significant for the fact that it serves as the key factor in establishing social capital (On-line trust: concepts, evolving themes, a model n.d.). In addition to this, trust in E-commerce is important in achieving positive outcomes or results such as improving supplier performance, attaining consumer’s satisfaction increasing competitive advantages, and other substantial economic achievement (Building E-commerce Trust Applying Usability Principles n.d., eCommerce and the electronics industry n.d.). In citation of these facts and information it is reasonable enough to say that such trust in the field of E –Commerce is proven to be significant and effectual in many ways. Moreover, apart from the significance of trust in E –Commerce, it also entails positive benefits. Such reward of trust is measurable in a broader range in E – Commerce such as reducing the transaction costs, endorsing advantageous behaviors to attract and limiting the extent of formal contracts (E – Commerce Relationships n.d., Egger n.d.). Nonetheless, trust plays a significant role in e-commerce due to the scenarios like lack of physical proximity, inefficiencies in web technology, anonymity, potential opportunism and lack of control (E – Commerce Relationships n.d.). Major Risks in E-commerce With the speedy development and improvement of technologies, more specifically that of the Internet, it is a fact that this entails a broader range of significant and new opportunities (Hunter n .d.). However, such new opportunities have come with new risks that are commonly not included in the company’s actual risk management strategy (Hunter n .d.). Likewise, the utilization of risk management has been part of the part of the business industry and is widely implemented in such environment (Hunter, n .d.). This is in support of protecting the company’s tangible assets that are exposed to different perils or risks (Hunter, n .d.). Thus, in the field of E –Commerce, such management strategy relies more in the use of technology such as the internet (Hunter, n .d.). Nonetheless, with the appropriate and accorded utilization of such risks management program, possible perils in E – Commerce could be addressed accordingly (Hunter, n .d.). In a sense, it is considered that the possible risks or perils in the field of E – Commerce is associated in different detrimental form such as, viruses, hackers and abuse of credit card numbers used in the transactions over telecommunication lines (Managing Risks in Electronic Commerce n.d.). However, such risks in E – Commerce could possibly be addressed by means of utilizing technological advances (â€Å"Managing Risks in Electronic Commerce n.d.). Certainly, in E – Commerce, major risks are categorized in three primary areas which are business risks, information risks, and technology risks (Managing Risks in Electronic Commerce n.d.). In a sense, the Information Risks are perils that involve information published and depicted in the web page or sites, which are associated with the manner of e-commerce (Managing Risks in Electronic Commerce n.d.). In addition to this, such category of risk in E – Commerce is considered to be the threats that are associated with the mismanagement of vital information such as violation of laws in a given state and other countries (Managing Risks in Electronic Commerce n.d.). The Technology risk is defined as the hazard that is associated with the databases, telecommunications, software and hardware (Managing Risks in Electronic Commerce n.d.). Also, these specific risks entails consequences that result to the mismanagement or misuse of technology and the utilization of inappropriate technologies in support of addressing the business needs (Managing Risks in Electronic Commerce n.d.). Business risks, on the other hand, are all about the relationship between the customer or consumers and the supplier. Also, this include risks that are associated with products and services, which are marketed and distributed over the Internet (Managing Risks in Electronic Commerce n.d.). In addition to this, such risk in E – Commerce also involves the possible risks associated with managerial factors in the business, which includes contractual and personnel matters (Managing Risks in Electronic Commerce n.d.). Furthermore, the risk of Credit Card Fraud is also perceived as one of the detrimental threats or danger in E – Commerce (Electronic Commerce n.d.). It is believed that such business peril has been in the system ever since credit cards are introduced (Electronic Commerce n.d.). As such, this risk of fraud is anticipated in the business as far as the credits cards are utilized mainly in the E – Commerce transactions (Electronic Commerce n.d.). Likewise, most of the companies involved in the E – Commerce industry is considered to be exposed to such risk by means of credit card utilization and losses for such (Electronic Commerce n.d.). By citing the actual process of utilizing the credit card in E – Commerce, it is clearly evident that such risk of fraud is prevalent in the business (Electronic Commerce n.d.). However, through the use of simple, but effective, strategies such risks in E –Commerce could possibly be addressed (Electronic Commerce n.d.). For instance, the service-based businesses with returning transactions from recognized client or customers entails a much lower risk of fraud (Electronic Commerce n.d.). Nonetheless, with the appropriate implementation of strategies and utilization of effectual business system, it is a fact that companies in E – Commerce could mitigate and prevent the possible risks that are stated above and gain positive benefits from online businesses such as credit transactions (Electronic Commerce n.d.). Arguments, Issues and More Just like any other business industry, the E – Commerce also experiences different issues that could be harmful in a sense. From a personal point of view, issues and arguments in business sectors is part of its actual practices. Thus, this could also serve as the valuable source of learning, which could be used for improvement and development of the company. In the industry of E – Commerce, it is perceived that the notion of trust is a significant matter that is considered in different issues. Moreover, â€Å"trust† is a notion that everyone clearly understands at a given personal perception (A Thoughtful Approach to Web Site Quality, E Commerce | Trust Trustworthiness n.d.). However, it is considered that one of the main issues with regard to trust in E –Commerce is associated with the people’s difficulties in expressing specific definition of such idea (A Thoughtful Approach to Web Site Quality, E Commerce | Trust Trustworthiness n.d.). Some of the public entails stricter basis in measuring and evaluating their trust in a person or a company (A Thoughtful Approach to Web Site Quality, E Commerce | Trust Trustworthiness n.d.). Moreover, the strategy to provide or render a reliable state of trust in the field of E – Commerce is considered to be one of the most pervasive issues in the industry that is still in search of possible resolution (Trust Issues in Ecommerce n.d.). This is due to the fact that such traditional method of face-to-face contact and reputation is far from occuring as compared to that of the actual business transaction of E – Commerce (Trust Issues in Ecommerce n.d.). Thus, the new method that is based on the utilization of digital certificates and cryptographic algorithms rendered by Certification Authorities are one of the common issues in E – Commerce as it is not enough to solve the issues with regards to trust (Trust Issues in Ecommerce n.d.). Conclusion With the above facts and information depicted in this essay, it is clearly reasonable to say that trust in E – Commerce plays a profound role in the industry. Hence, such notion is indeed significant in the entire process and actual practice of electronic business. As such, trust in Electronic Commerce works as the essential component towards the achievement of business success. In addition to this, such trust is important in rendering rooms for improvement and development in terms of financial aspects, operational, and over-all business performance. Thus, such is significant in the industry of Electronic Commerce as it is considered to be the key factor achieving various positive outcomes and results in the business. Nonetheless, the completion of this essay renders definite information on the primary uses and significance of trust in Electronic Commerce practices and business transactions. Moreover, this depicts the major issues of trust in E – Commerce and incorporated with the accorded reasons on such topics together with the appropriate mechanism or methodology to accordingly address such trust issues. References A Thoughtful Approach to Web Site Quality, E Commerce | Trust Trustworthiness [online] available from http://www.philosophe.com/commerce/trust.html [August 15, 2008]. Building E-commerce Trust Applying Usability Principles [online] available from http://www.nicolasdeproft.be/pages/ecommercetrust/conclusion.html [August 15, 2008]. eCommerce and the electronics industry [online] available from http://www.ferret.com.au/n/eCommerce-and-the-electronics-industry-n686364 [August 15, 2008]. E – Commerce Relationships [online] available from http://goliath.ecnext.com/coms2/gi_0198-239216/E-commerce-relationships-the-impact.html [August 15, 2008]. Egger F. (n.d.) Affective Design of E-Commerce User Interfaces: How to Maximise Perceived Trustworthiness [online] available from http://www.ecommuse.com/research/publications/CAHD2001.htm [August 15, 2008]. Electronic Commerce [online] available from http://www.responsivesystems.com.au/ecommerce/index.html [August 15, 2008]. Hunter S. (n.d.) E-commerce Risks [online] available from http://www.marsh.com.au/ECommerceRisks.htm [August 15, 2008]. Managing Risks in Electronic Commerce [online] available from http://www.muhlenberg.edu/depts/abe/business/miller/ecrisks.html [August 15, 2008]. On-line trust: concepts, evolving themes, a model. (n.d.) [online] available from http://www.sciencedirect.com/science?_ob=ArticleURL_udi=B6WGR-48DXRCC-1_user=10_rdoc=1_fmt=_orig=search_sort=dview=c_acct=C000050221_version=1_urlVersion=0_userid=10md5=9893dfb675be4b1cc30748424542452e [August 15, 2008] Pavlou p. (n.d.). The Transitional Role of Institutional Trust in Online Interorganizational Relationships [online] available from http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.3.6276 [August 15, 2008] Singh, S. (1996). The social impact of electronic money. In G. Rosston D. Waterman (Eds.), Interconnection and the internet (135-154). NJ: Lawrence Erlbaum Associates, Inc. Sutherland, P. Tan, F. (2004). The nature of consumer trust in B2C electronic commerce: A multi-dimensional conceptualism. In Information Resource Management Association International Conference, Innovations through information technology: 2004 Information Resources Management Association International Conference, New Orleans, Louisiana, USA, May 23-26, 2004. UK: Idea Group Inc. The Importance of Trust and Credibility. (n.d.) [online] available from http://www.zeald.com/Resources/The+Importance+of+Trust+and+Credibility.html [August 15, 2008] Trust Issues in E – Commerce. (n.d.) [online] available from http://www.unsw.adfa.edu.au/~lpb/research/trust/ [August 15, 2008] Trust in Electronic Environment. (n.d.) [online] available from http://rds.yahoo.com/_ylt=A0oGki7BHKhIaHYAmwpXNyoA;_ylu=X3oDMTBydHRjbmRzBHNlYwNzcgRwb3MDMwRjb2xvA3NrMQR2dGlkAw/SIG=12fkedrf3/EXP=1219063361/**http%3a//www.hicss.hawaii.edu/HICSS36/HICSSpapers/STFMS01.pdf [August 15, 2008]

Immigration Policy Of America Politics Essay

Immigration Policy Of America Politics Essay Immigration has been part of legislation since the founding of the nation. In 1790, Congress established a process saying ones that are born in the United States become citizens automatically. The first federal law was passed in 1875 limiting immigration qualification in order to prohibit the entry of criminals and prostitutes. Currently, there are two forms of immigration: permanent admission and temporary admission. The ones that are allowed permanent admission are granted permanent resident and a green card. Permanent residents are allow working in the United States and are able to file for citizenship. In 2004, there were about 946,000 people that were admitted to the United States as a permanent resident. Temporary admission is for foreigners who want entry to the United States for a limited of time on behalf of a specific purpose such as visiting families, tourism, temporary work, or school. These people are classified as nonimmigrants. Temporary admissions are not allowed to a pply for United States citizenship. If they want to apply for citizenship through naturalization, they need to submit an additional application for permanent resident before they can do so. In 2004, 5 million people were granted temporary admission. Immigration policy in the United States reflects many goals. First, it serves to reunite many families by admitting family members from foreign countries. Second, due to labor shortage, United States can admit ones with a specific skill to fill up positions in occupations. Third, it provides a shelter for people that face the risk of political or religious persecution from their own country. Lastly, by letting people from foreign countries immigrate to United States, it allows us to become a more diverse nation. Even though United States has goals for immigrations, there are still many rules and regulations involved; not anyone can just enter United States and become permanent or temporary residents. United States may deny visas or admission on either the temporary admission or permanent admission for many reasons. Some reasons may be because of criminal records, health records, or terrorism concerns. Immediate family members of a United States citizens are allow immigrating to the U nited States without many limitations. Citizens of the United States are allowed to sponsor relatives for permanent residents under the family-sponsored preference program. According to Garnett Hardin in his paper called Lifeboat Ethnics: The Case against Helping the Poor, he thinks that United States should simply not provide aid to people in the poor countries. Hardin started out his essay with a metaphor comparing the earth to a grand spaceship. Hardin said, Since we all share life on this planetà ¢Ã¢â€š ¬Ã‚ ¦ no single person or institution has the right to destroy, waste, or use more than a fair share of its resources (402). Hardin is more practical rather than liberal. He imagined United States as a lifeboat and the people that are out in the ocean are the ones that want to immigrate to United States. Hardin says, à ¢Ã¢â€š ¬Ã‚ ¦we must recognize the limited capacity of any lifeboat. A nations land has a limited capacity to support a population and as the current energy crisis has shown us, in some ways we have already exceeded the carrying capacity of our land (403). The way that Hardin think is correct. United States have more people being born each day then people dying; if United States accepts anyone as an immigrant, the nation would not have enough land to support them. Furthermore, there are many lazy people in this world. As what Hardin was saying, lets assume that we have a fifty people capacity on our lifeboat. To be generous, we can make room for ten more making the total capacity of sixty people. If we can make room for ten more, then we would need to make room for the rest of them also. Pretty soon, the lifeboat is going to overfill and everyone can possibly drown. To make that short, if we take one person into the nation, we would need to take the rest. There is no point letting them into our nation if they are not going to make any contributions. I believe that United States should only take immigrants that can contribute to the nation. Currently, there are many permanent residents in this nation that does not make any contribution whatsoever. Many immigrants have the mentality that if their relatives in the United States are able to sponsor them to come over, then they can sponsor them for the rest of their lives. In my opinion, ones that have an education, have a specific reason to come over to the United States, and ones that can help out the nation are allow becoming permanent residents in the United States. In John Tierneys paper, Angels in America, he believes that the United States immigration policy is too strict causing many immigrants to come illegally. Tierney used his grandfather and an illegal immigrant, Angel Espinoza, as examples. Tierney thinks it is unfair that Espinoza is not allowed to apply for citizenship while others can. Tierney continued onto explaining Espinozas situation. Espinoza left farm just like Tierneys grandfather and came illegally to the United States with little education. Later, he married an American descendant from his native country just like what Tierneys grandfather did. Tierneys grandfather applied for United States citizenship afterward and got approved while Espinoza did not. Espinoza was once caught at the border and violated the law which made him ineligible for a green card and permanent residency. Tierney goes on to explaining how Espinoza and his grandfather both worked hard, chasing the Americans dream, to support their families. Espinoza ha d to go to work every day with the fear of being departed from the United States for working illegally but his grandfather did not had to go through that. Tierney believes that if one is willing to work to achieve their goals then they should be treated equally. Tierney said, Id like to see Republicans on Capitol Hill explain to Espinoza why hes less deserving than their immigrant ancestors, but thats probably too much to expect. Espinoza has a simpler wish: I would like them to tell my American daughter why her father cant stay with her' (704). I personally disagree with Tierneys idea of immigration. Just because one is hard working does not necessarily mean they deserve to be a United States citizen. I believe that in order to become a United States citizen, one must have a moral character, knowledge of the United States history and government, and willingness to support the United States politically and militarily. Because Espinoza was caught at the border at one point in time, h e does not have the moral character. Tierney stated, Its been argued that Mexicans are different from past immigrants because theyre closer to home and less likely to assimilate. Compared with other immigrants today, theyre less educated, and their children are more likely to get poor grades and drop out of school (703). As I stated before, if one does not have an education, they are less likely able to contribute to the United States and have knowledge of the history and government. There are over a million immigrants that enter the United States legally or illegally each year. Having immigrants allow employers to have cheap labor but in the meantime, as David Masci stated, American workers suffer because the newcomers take jobs and suppress wage levels. Many people also argued that native-born people are unwilling to do low-wage jobs but that has been proven wrong. According to Mark Krikorian, an executive director of the Center of Immigration Studies, said in the article Debate Over Immigration, In parts of the country with few immigrants, low-wage jobs still get done, and by native-born people. Americans are not unwilling to do such jobs, but we prefer not to do so. If these immigrants did not take these low-wage positions, native-born Americans will be forced to take these types of jobs. Krikorian also said, Employers could find Americans to do these jobs if they wanted to, but theyd have to provide training and raise wages to do so. It is just easier to all ow immigrants to take these positions. There are also arguments stating that immigrants are over-crowding the United States and preventing immigrants already here from assimilating into American society (Masci). Masci also said that immigrants came to United States in the past because they want to be here, but currently, immigrants immigrate here for job opportunities and the concept of freedom. A lot of immigrants from foreign countries have the mentality that if they come to the United States and not able to find a job then they can get governmental aid such as Welfare. I believe that these are the type of people that are not allowed to immigrate to the United States. They do not truly love the country, but instead they want to come here for the freedom and for a better environment. In conclusion, immigration is a problem in the United States. People from foreign countries want to come to the United States for freedom and job opportunities. With all these people coming over and taking jobs from the current Americans, it causes the citizens to suffer. The extra people that are immigrating to the United States are overcrowding the nation. It is making it harder for new immigrants to adapt to and experience the American society when there are so many new immigrants coming into the nation each year. United States need a more strict immigration policy in order to keep out all the criminals and prevent terrorism. I highly agree with Garnett Hardins view of immigration where we should keep out as many immigrants as possible, and I strongly disagree with Tierneys view of immigration. He thinks that the policy right now is too strict causing people to come illegally. Without a strict policy, our nation would be in more danger due to criminals and terrorism.

Macbeth - The Importance Of Night :: essays research papers

When I thought about the role that the word "night" would play in the tragic play "Macbeth," I found that there were a variety of possibilities. Immediately, I thought of the nighttime as a period of rest and revitalization. I expected that this would allow characters to recover from the day's many demands. Secondly, I connected the night to the unknown. In the night's cloak of darkness, many more things could go undiscovered than in the revealing light of day. Next, I thought that the night would mean vulnerability. As the evening closes in, everyone begins to wind down, not expecting any real action until the breaking of the dawn. In addition, while one is sleeping, they are susceptible to almost anything. The most logical time to make an attack would definitely be after nightfall. Lastly and perhaps most importantly, is night's correlation with evilness. As children, we were all afraid of nasty monsters that lurked in the darkness of night. The night has long b een believed to host supernatural beings and occurrences. As I read the play and came upon the word "night," I was surprised to discover that all four aspects of my hypothesis were correct. First, in act I, we see the first usage, night as a period for rest and revitalization. In scene iii, lines 19-23, the First Witch says, Sleep shall neither night nor day / Hang upon his penthouse lid; / He shall live a man forbid: / Weary sev'nights nine times nine / Shall he dwindle, peak, and pine: / Though his bark cannot be lost, / Yet it shall be tempest-tossed. Here, she is punishing the sailor by depriving him of his sleep, which she realizes is important for anyone to function normally. Without the ability to recuperate after each hard day's work, one would grow very weak and eventually start to lose one's mind. Next, we can observe night's connection to the unknown. As seen in my word journal, Lady Macbeth beckons, Come, thick night, / And pall thee in the dunnest smoke of hell, / That my keen knife see not the wound it makes, / Nor heaven peep through the blanket of the dark, / To cry "Hold, hold!" Without the obscurity of night, she would not have urged Macbeth to kill the king as she did. The night, however, gives her the impression that Macbeth can indeed kill King Duncan with no one uncovering his contemptible crime, the same idea that Macbeth had when he said, "Stars, hide your fires; / Let not light see my black and deep desires.

Is Competition Good

Review of Industrial Organization 19: 37–48, 2001.  © 2001 Kluwer Academic Publishers. Printed in the Netherlands. 37 Is Competition Such a Good Thing? Static Ef? ciency versus Dynamic Ef? ciency MARK BLAUG University of Amsterdam, Amsterdam, The Netherlands Abstract. This paper addresses the rationale for antitrust legislation. It is a striking fact that the legitimacy of antitrust law has been taken for granted in the United States ever since the Sherman Act of 1890 and, until the advent of the so-called Chicago School, it was even taken for granted by conservative American economists. Europeans, on the other hand, have always been lukewarm about legal action against trusts and cartels and this attitude is found right across the political spectrum in most European countries. Nevertheless, in both the U. S. A. and Europe, the ultimate justi? cation for antitrust law derives from economic doctrine regarding the bene? cial effects of competition. But what exactly are these bene? cial effects and how secure is the contention of economists that competition is always superior to monopoly? Surprisingly enough, competition, that central concept of economics, is widely misunderstood by many economists, both as a market phenomenon and as an organizing principle of economic reasoning. I. A Little History of Thought I begin by drawing what I believe is a fundamental distinction in the history of economics, as far back as Adam Smith or even William Petty, between two different notions of what is meant by competition, namely, competition as an end-state of rest in the rivalry between buyers and sellers and competition as a process of rivalry that may or may not terminate in an end-state. In the end-state conception of equilibrium, the focus of attention is on the nature of the equilibrium state in which the contest between transacting agents is ? nally resolved; if there is recognition of change at all, it is change in the sense of a new stationary equilibrium of endogenous variables in response to an altered set of exogenous variables; but comparative statics is still an end-state conception of economics. However, in the process conception of competition, what is in the foreground of analysis is not the existence of equilibrium, but rather the stability of that equilibrium state. How do markets adjust when one equilibrium is displaced by another and at what speed will these markets converge to a new equilibrium? But, surely, all theories of competition do both; existence and stability are tied up together and to study one is to study the other? By no means, however; it is easy to show that, for centuries, competition to economists meant an active process of jockeying for advantage, tending towards, but never actually culminating in, an 38 MARK BLAUG equilibrium end-state. Only in 1838, in Cournot’s Mathematical Principles of the Theory of Wealth was the process conception of competition totally displaced by the end-state conception of market-clearing equilibria. At ? rst this did not succeed in wiping the slate entirely clean of an interest in competitive processes but in the decade of the 1930s – those years of high theory as George Shackle called them – the Monopolistic Competition Revolution and the Hicks-Samuelson rehabilitation of Walrasian general equilibrium theory, forti? d by the New Welfare Economies, succeeded in enthroning the end-state conception of competition and enthroning it so decisively that the process view of competition was virtually buried out of sight. Let me elaborate. It is a striking feature of the language of The Wealth of Nations that the term â€Å"competition† invariably appears with a de? nite or inde? nite article preceding it: â€Å"a competition between capitals†; â€Å"the competi tion with private traders†, and so forth. For Smith, competition is not a state or situation, as it is for Cournot and for us, but a behavioural activity; it is a race – the original sense of the verb â€Å"to compete† – between two or more individuals to dispose of excess supply or to obtain goods available in limited quantities. What we nowadays call competition or the market mechanism was for him â€Å"the obvious and simple system of natural liberty†, meaning no more than an absence of restraints or ree entry into industries and occupations. Neither competition nor monopoly was a matter of the number of sellers in a market; monopoly did not mean a single seller but a situation of less than perfect factor mobility and hence inelastic supply; and the opposite of competition, was not monopoly, but co-operation. Producers in The Wealth of Nations treat price as a variable in accordance with the buoyancy of their sales, much like enterprises in modern theories of imperfect competition. This was not a conception invented by Smith because by 1776, competition had long been analyzed by a whole series of eighteenth century authors as a process which brings temporary â€Å"market† prices into line with cost-covering natural prices, those â€Å"natural† prices were indeed â€Å"the central price, to which the prices of all commodities are continually gravitating†, and in saying that Smith invoked Newtonian language to dignify a conception of price-determination that had a long tradition going back to the seventeenth century. To obtain that end-state in which market prices equal natural prices and the rate of pro? is equalized between industries, there had to be a considerable number of rivals, possessing common knowledge of market opportunities; they had to be free to enter and exit different lines of investment; but that was all and even that much was never spelled out explicitly as necessary prerequisites for competition – only once did Smit h ever mention the number of rival ? rms involved in competition. It was Cournot who ? rst had the notion of sellers facing a horizontal demand curve when their numbers become so large that none can in? uence the price of their own product. Competition, which once meant the way in which ? rms take account of how their rivals respond to their actions, now meant little more than the slope of the average revenue curve depriving ? rms in the limit of any power to make the price. Thus was born, decades before the Marginal Revolution of the 1870s what IS COMPETITION SUCH A GOOD THING? 39 one writer has wittily called â€Å"the quantity theory of competition† (quoted in Blaug, 1997, p. 68). Edgeworth’s Mathematical Psychics (1981) followed Cournot in providing all the trappings of the modern de? nition of perfect ompetition in terms of a large number of sellers, a homogeneous product, perfect mobility of resources and perfect knowledge on the part of buyers and sellers of all alternative opportunities. However, Marshall’s treatment of the competition always carefully labelled as â€Å"free competition† was much closer to Smith’s â€Å"simple system of natural liberty† than to that of C ournot and Edgeworth’s perfect competition. Even Walras hesitated to follow Cournot to the letter. Indeed, it was not until the 1920’s that the modern textbook concept of perfect competition was ? ally received into the corpus of mainstream economics, largely due to the impact of Knight’s classic, Risk, Uncertainty and Pro? t (1921). But it is doubtful whether the idea was in fact fully accepted in 1921 and a good case can be made for the thesis that it was Robinson and Chamberlain a decade later who hammered down the theory of perfect competition in the very process of inventing imperfect and monopolistic competition theory (Machovec, 1995). The replacement of the process conception of competition by an end-state conception, which was ? alized in 1933 or thereabouts, drained the idea of competition of all behavioural content, so that even price competition, the very kernel, of the competitive process for Adam Smith, David Ricardo and John Stuart Mill now had to be analysed as â€Å"imperfect† competition, a sort of deviation from the norm. Indeed, every act of competition on the part of a businessman was now taken as evidence of some degree of monopoly power, and hence a departure from the ideal of perfect competition, and yet pure monopoly ruled out competitive behaviour as much as did perfect competition. II. Perfect Competition, the Unattainable Ideal All I have said so far merely reiterates what Schumpeter said in 1942 and Hayek repeated in 1949: â€Å"perfect competition is not only impossible but inferior, and has no title to being set up as a model of ideal ef? ciency†; â€Å"what the theory of perfect competition discusses has little claim to be called ’competition’ at all and its conclusions are of little use as guides to policy† (quoted in Blaug, 1997, p. 69). But this message, delivered over a half-century ago, fell on deaf ears and the endstate theory of perfect competition is more ? mly in the saddle today than it ever was in the 1940s when Hayek and Schumpeter, not to mention John Maurice Clark (1949, 1961), were writing. And why? The answer is simple: it is that most of us were taught that although perfect competition is rarely if ever attained, nearly-perfect competition is said to be observable in some markets (agricultural markets being a favour ite example) and these approximations to the state of perfect competition somehow replicate many 40 MARK BLAUG f the desirable characteristics of perfect competition; in a word, second-best is so nearly ? rst-best that we may indeed employ ? rst-best as a standard. Open any textbook and what do we ? nd? The concept of perfect competition is said to be like the assumption of a perfect vacuum in physics; descriptively inaccurate, to be sure, but nevertheless productive of valid insights about actual economies. Thus, Samuelson and Nordhaus (1992, p. 295) in the 14th edition of their Economics concede that a perfect and absolutely ef? ient competitive mechanism has never existed and never will â€Å"but the oil crisis of the 1970s† is only one of their many examples of how an empirically empty competitive model can nevertheless produce the right answers to a concrete imperfectly competitive situation (for other textbook treatments, see Blaug, 1997, pp. 69–70). This is prec isely what Reder (1982, p. 12), called the notion of â€Å"tight prior equilibrium†, which he thought was characteristic of the Chicago School of Economics: â€Å"one may treat observed prices and quantities as good approximations to their long-run equilibrium values†. Call this the good-approximation assumption. Unfortunately, the idea of a near or far approximation to perfect competition has absolutely no logical meaning. We seem conveniently to have forgotten the famous Lipsey–Lancaster (1996) second-best theorem published in 1956, according to which we are either at a ? rst-best optimum or it matters not whether we are at second-best or tenth-best because we cannot rigorously demonstrate that doing away with a tax or a tariff that put us at tenth-best will bring us closer to ? st-best in a welfare sense of these terms. This theorem has not been conveniently forgotten; it has been deliberately forgotten because it wreaks havoc with the end-state, ? rst-best conception of competition. Must we therefore cease to give advice on competition policy? I think not; but what it does mean is that instead of gnostic pronouncements about the desirability of any move in the direction of ? st-best perfect competition, we must engage instead in qualitat ive judgements about piecemeal improvements, embracing a dynamic process-conception of competition, which is precisely the old classical conception that Schumpeter, Hayek, Clark and modern neo-Austrians have urged us to adopt. To grasp why it was necessary to revive this tradition, we must spend a moment explaining why modern price theory is so strong on the nature of the competitive equilibrium end-state and so weak on the process by which competition drives a market towards a ? al equilibrium. III. The Awful Legacy of General Equilibrium Theory When Walras literally invented general equilibrium (GE) in 1871, he was just as much concerned with the process-conception of competition known as â€Å"the stability problem† as in what we have called the end-state interpretation of equilibrium known as â€Å"the existence problem† – is simultaneous multimarket-equilibrium possible in a capitalist economy? But gradually, in successive editions of his Elements of Pure Economics, the existence problem came ever more to the fore, while the sta- IS COMPETITION SUCH A GOOD THING? 41 bility problem receded in the background (Walker, 1996). Even so, Walras’s view of how markets adjust in disequilibrium was always somewhat naive. It is a story which we all learn in our ? rst course of economics: in response to the appearance of excess demand and supply, prices adjust automatically as independently acting buyers and sellers â€Å"grope† their way to a ? al equilibrium. When this tatonnement story is well told, it sounds utterly convincing and at such times we are apt to forget that many markets, particularly labour markets and â€Å"customer markets†, react faster in terms of quantities than in terms of prices (as Marshall always insisted in opposition to Walras) and sometimes only in terms of quantities (see Blaug, 1997, pp. 71–75). But prices and quantities aside, what about product ifferentiation and competition by maintenance and service agreements, what about Schumpeterian competition in terms of new products and processes, new methods of marketing, new organizational forms and new reward structures for employees? In short, all the forms of rivalry between producers which Chamberlain and Robinson have taught us to call monopolistic or imperfect competition (the irony of calling what cannot exist, perfect competition, and what always exists, imperfect competition, never ceases to amuse me! . Walras struggled manfully to provide a rigorous solution to the existence problem but never got much beyond counting equations and unknowns to ensure that there were enough demand and supply equations to solve for the unknown equilibrium prices and quantities in the economy. As for the stability problem, he solved that after much hesitation by simply eliminating disequilibrium transactions as â€Å"false trading† (another wonderfully ironic piece of rhetoric). Although he never mentioned the concept of a ? tional auctioneer announcing different prices until an equilibrium price is discovered, whereupon trade is allowed to take place – this is one of those historical myths that subsequent generations have invented – it is dif? cult to avoid the conclusion that he simply gave up the effort to provide a convincing account of how real-world competitive markets achieve GE. Such an account has in fact never been provided even to this date. In 1954, Arrow and Debreu ? nally solved the existence problem by modern mathematical techniques – topological properties of convexity, ? ed point theorems, Nash equilibria, etcetera – of which Walras could never have dreamt but, in so doing, they travelled even further than Walras had from anything smacking of descriptive accuracy: there are forward markets in their GE model for all goods and services in the economy, including all locations and conceivable contingen t states in which these goods and services might be consumed, and yet no one holds cash to deal with the likelihood that income and expenditure may fail to synchronize. They were perfectly candid about this failure to describe actual economies. Indeed, they made a virtue of the purely formal properties of their model. 1 1 As Debreu (1959, p. x) expressed it in his Theory of Value: â€Å"The theory of value is treated here with the standards of rigor of the contemporary formalist school of mathematics . . . . Allegiance to rigor dictates the axiomatic form of the analysis where the theory, in the strict sense, is logically entirely disconnected from its interpretation†. And yet this book claimed to be a work in economics! 42 MARK BLAUG They cracked the existence problem, not to mention the uniqueness problem – is there one unique vector of prices at which GE exists? but they never tackled the stability problem. In other words, after a century or more of endless re? nements of the central core of GE theory, an exercise which has engaged some of the best brains in twentieth-century economics, the theory is unable to shed any light on how market equilibrium is actually attained, not just in a real-world decentrali zed market economy but even in the toy economies beloved of GE theorists. We may conclude that GE theory as such is a cul de sac: it has no empirical content and never will have empirical content. Moreover, even regarded as a research program in social mathematics, it must be condemned as an almost total failure. That is not to say that highly aggregated computable GE models, such as IS-LM, are pointless or that a GE formulation of an economic problem, emphasizing the interdependence of all sectors of the economy, may not prove illuminating but simply that Walrasian GE theory – the notion that the existence of multi-market equilibrium may be studied in a way that is analogous to solving a set of simultaneous equations – has proved in the fullness of time to be an utterly sterile innovation. The real paradox is that the existence, uniqueness and stability of GE should ever have been considered an interesting question for economists to answer: a complete satisfactory proof of all three aspects of the problem would no doubt have been a considerable intellectual feat in logic but would not in any way have enhanced our understanding of how actual economic systems work. IV. The Welfare Implications of GE Of course, Walras hoped to show, not just that GE is possible, but that it is good. But here too he never got much beyond the idea that voluntary exchange between two parties improves both of their welfares – otherwise, why would they have traded? What is true of bilaterial exchange will also be true of competitive exchange between a large number of traders if individual producers cannot themselves set prices, so that all consumers face identical prices for identical homogeneous commodities. This is precisely where the notion of perfect competition as an end-state of rest comes into welfare economics grounded in GE theory. Pareto, who was a much better technician than Walras, carried on where Walras left off. He too was convinced that GE is good for everyone but as a follower of Ernest Mach in philosophy, he hated such metaphysical ideas as maximising happiness, utility, welfare, or call it what you will, and he strenuously objected to interpersonal comparisons of utility (ICU) on the grounds that such comparison could not be operationalised. Pondering these issues, he realised that the one circumstance that avoids ICU is a social state which meets with unanimous approval or at least with the absence of con? ict in which one person is only made better off at the expense of another person. In other words, we want a state which is so ef? cient that there is no surplus, no waste, no slack, â€Å"no such thing as a free lunch†. But is not perfect competition just such a state? Of course, it may leave some people rich IS COMPETITION SUCH A GOOD THING? 3 and some people poor but that will be the consequence of the fact that we started with unequal endowments of the individuals in our economy – some people are born clever and some people have rich parents – but, given those endowments that are not themselves explained by GE theory – no theory ever explains everything – the GE model will grind out the rental prices of all the services of land, labor and capital as well as the prices of all goods , produced with those services. Once we have somehow arrived at the end-state of perfectly competitive equilibrium, it will be impossible to make one person better off without making another person worse off except by interfering with the initial endowments of agents. In this way, Pareto thought that he had ? nally found an admittedly narrow de? nition of the bene? cial effects of competition that was totally free of that positivist bugbear, ICU. The idea, only later called â€Å"Pareto optimality†, fell into oblivion as soon as it was announced but was rescued along with Walrasian GE theory in the 1930s by John Hicks and Nicholas Kaldor. They extended the scope of Pareto optimality by arguing that any economic change, whether from a position of competitive equilibrium or not, was welfare improving if the gains to bene? ciaries of that change were large enough to enable them at least in principle, to bribe the losers voluntarily to accept the change. The existences of such potential Pareto improvement (PPI), as they are nowadays called, still involves no ICU because it is grounded on the voluntariness of market exchange. In short, Hicks and Kaldor (with a prodding from Lionel Robbins) stayed true to the Paretian conception of how an economist should study welfare economics. At ? rst glance, the Hick–Kaldor compensation test does seem virtually to pull a rabbit out of a hat but further re? ection soon showed that the achievement was semantic, not substantive. Why is it a potential and not an actual PI? The moment we try to implement PPI by encouraging gainers and losers to negotiate a bribe, they will engage in strategic bargaining and even without fancy game theory, it is easy to see that they may never reach an agreement. If the change has political signi? cance, the state may then intervene to force the parties to agree – in which case we have said goodbye to our taboo on ICU. No matter how we slice it, in the end we cannot avoid (1) a qualitative judgement from on high of the size of the PPI – remember that there is no objective way short of voluntary trade to measure the magnitude of a gain or a loss to the parties concerned – and (2) an interpersonal comparison of that gain and loss to the respective parties. But all that brings us back to Marshall and Pigou whose Economics of Welfare (1921) had none of Pareto’s compunctions about ICU and was perfectly content to declare that a pound sterling taken from a rich man by a progressive income tax hurt him less than the pleasure it gave the poor man when it was handed over to him. We have not quite reached the end of the story. The Arrow–Debreu proof of the existence of GE in 1954 was almost contemporary with Arrow’s proof of what he labelled the First and Second Fundamental Theorems of welfare economics. The ? st theorem demonstrates that every competitive equilibrium in a decentralized economy is Pareto-optimal, which we have already discussed, and the second 44 MARK BLAUG theorem demonstrates that a Pareto-optimum can always be achieved via perfect competition if lump-sum taxes and transfers are feasible, so that whatever were the original endowments of agents, we can still make everyone better off with a perfectly compe titive economy. Immense pains are taken in every textbook of microeconomics to persuade readers of the validity of those two theorems. And they are valid – as mathematical exercises. Lump-sum taxes and transfers are changes which do not affect economic behaviour and even the most ingenious modern welfare economists have never been able to come up with a convincing example of such things. 2 I think that we may safely conclude that the First and Second Fundamental Theorems of welfare economics are just mental exercises without the slightest possibility of ever being practically relevant. They are what Ronald Coase (1988) called â€Å"blackboard economics†, an economics that is easy to write on a blackboard in a classroom but that bears no resemblance to the world outside the classroom. V. Why Is Competition Good? I contend that perfect competition is a grossly misleading concept whose only real value is to generate examination questions for students of economics. 3 It is misleading because it breeds the view that economics is a subject like Euclidean geometry, whose conclusion may be rigorously deduced from fundamental axioms of behaviour plus some hard facts about technology. But of course this does not imply that competition is bad. I, along with most economists, believe that competition is good. But if perfect competition is impossible, and Pareto-optimality almost impossible, what is the basis of this belief in the desirability of competition? It is based on a concept of dynamic ef? ciency, the outcome of competitive processes, and not the static ef? ciency of Walras, Pareto and the First and Second Fundamental Theorems of welfare economics. The schizophrenia of economists on this issue is simply extraordinary. The manin-the-street favours capitalism because it is ultimately responsive to consumers’ demands, technologically dynamic and produces the goods that are wanted at low cost; of course, it also suffers from periodic slumps, more or less chronic unemployment even in booms, and frequently generates a highly-unequal distribution 2 They would have to be randomly assigned to individuals or else to re? ect some personal noneconomic characteristic, such as more consonants than vowels in one’s last name. It used to be thought that a uniform poll tax was a perfect example of a limp-sum tax but as Mrs. Thatcher discovered it had a most profound effect on economic behaviour: almost a million people disappeared from the electoral roll in Britain because the poll tax could not be collected without a home address. 3 I concede reluctantly that it has its uses for purposes of answering comparative statics questions on taxes and subsidies but even these have much less practical signi? cance than is usually assumed (see Vickers, 1995). IS COMPETITION SUCH A GOOD THING? 5 of income. 4 Still, on balance the good outweighs the bad and without becoming Panglossian, he or she votes for capitalism – and so do virtually all economists. But is this what we teach in our textbooks? To ask the question is to already answer it. Can one actually teach the principles of dynamic ef? ciency? Of course, one can and that is what we do in every course in industrial organization (and in every course in man agement schools), where, alas, we have to undo the brainwashing that students have undergone in their courses on microeconomics. In so doing, we employ historical comparisons and case studies, and these can only cultivate the ability to make informed judgements about speci? c attempts at what Popper called â€Å"piecemeal social engineering†, making the world a little better here and there, because we do not know enough to make the whole world best once and for all. VI. Some Conclusions: Coase and Posner Beliefs in the ef? cacy of antitrust law ? ts neatly into the concept of dynamic ef? ciency, or what Clark called â€Å"workable competition†. A question like: should we break up Microsoft or just reprimand and perhaps ? e the company? does not lend itself to a precise answer by the edicts of economists and it is just as well that it does not. Empirical science frequently proceeds on the untidy basis of what is plausible rather than what can be formally demonstrated beyond any doubt. The structureconduct-performance paradigm of yesteryear, associated with names of Edward Mason and Joe Bain, did j ust that but that has since been superseded by game theory and transaction cost on the one hand and the Chicago School of Richard Posner and Robert Bork on the other hand. In between we ? d Ronald Coase and the widely misunderstood Coase Theorem as the very centre piece of the law and economics movement. Since this so-called inappropriately named theorem picks up a number of the themes in welfare economics that we have discussed above, let us close with a brief discussion of it. As stated by its inventor, George Stigler (1966, p. 113), the Coase Theorem is the proposition that â€Å"under perfect competition private and social costs will be equal† and hence â€Å"the composition of output will not be affected by the manner in which the law assigns liability for damage†. This combines two claims in one, the ? rst of which will be familiar to us: (1) an ef? ciency claim that perfect competition is always optimal if voluntary bargaining between the affected parties to their mutual advantage is possible at zero transaction costs, de? ned as the costs of making deals, negotiating contracts, and policing the enforcement of those contracts (Allen, 2000), and (2) an invariance claim that the ? nal allocation of resources is invariant to different initial assignments of property rights provided these are in fact clearly de? ed. A voluminous literature has shown that both propositions are either highly contentious or else a tautology if perfect competition, perfect information and zero 4 In an instructive essay, Richard Nelson (1981 reiterates my charge of schizophrenia and adds to my list of the bene? ts of a private enterprise system of capitalism that of â€Å"administrative parsimony†, an echo of Hayek’s discussion of the merits of competiti ve prices as information signals. 46 MARK BLAUG transaction costs are rigorously de? ned (Medema and Zorbe, 2000). Lo and behold, however, Coase has argued ever more vehemently that transaction costs can be reduced by appropriate judicial decisions but that they can never be reduced to zero even under Cournot-type perfect competition. Of course, if we de? ne perfect information as literally foreseeing every alternative opportunity under all possible contingencies, now and in the future, it follows immediately that we can write and enforce contracts at zero costs (zero in ? nancial outlays, in time and even in cognitive effort), in which case only increasing returns to scale will prevent us achieving perfect competition. Once transaction costs are zero and competition is perfect, it follows immediately that the distribution of property rights cannot matter. In short, the Coase Theorem is just a logical corollary of perfect competition and perfect information but that does little to persuade us that it is much more than a logical theorem. 5 As for the more controversial invariance claim, income and wealth effects in consumption patterns and the strategic behaviour of the injured and injuring parties as they enter into voluntary bargaining (the old objection to Hicks–Kaldor compensation payments) will certainly make the ? al allocation of resources sensitive to the way in which the law of the moment assigns liability for damage. Are we really to believe that my claim against the American Tobacco Company for giving me lung cancer will be decided in 2002 in exactly the same way it would have been decided in 1940? Coase (1964, p. 105) said it all 35 years ago: Contemplation of an optimal system may provide techniques of analysis that would otherwise have been missed and, in certain special cases, it may go far to providing a solution. But in general its in? uence has been pernicious. It has directed economists’ attention away from the main question, which is how alternative arrangements will actually work in practice. It has led economists to derive conclusions for economic policy from a study of an abstract of a market situation. Richard Posner, in his in? uential textbook, Economic Analysis of Law (1998), now in its ? fth edition, subsumes Pareto optimality and the Coase Theorem in an ef? ciency logic of â€Å"wealth maximization†. He claims not only that common law, statute law and judge-made law should serve to maximize wealth, so that for example entitlements in property law should be shifted to the more productive litigants as evidenced by their willingness to pay, but that legal entitlements and hence resources actually tend to gravitate towards their most valuable use if voluntary exchange is permitted. Without saying so, Posner clearly believes that we can 5 Moreover, as Allen (2000, pp. 904–905) argues quite rightly, the famous Modigliani-Miller Theorem of corporate nance – if capital markets are perfect, the value of a ? rm is invariant to its debt-equity ratio – and the Ricardo Equivalence Theorem of government ? nance – if capital markets are perfect, the level of household wealth is invariant to the ratio of taxes to the size of the public debt – are both special cases of the Coase Theorem because all taxes, debt obligations and equity shares are simply delineation s of property rights; in a world of zero transaction costs, both ? rms and governments could decide on debt levels by tossing a coin. IS COMPETITION SUCH A GOOD THING? 47 isolate PPI, divorcing ef? ciency from equity without committing ourselves to ICU, in short, he believes in classic or rather neoclassical Paretian welfare economics. Although he deals at length with distributional issues arising from liability rules and various forms of taxation, he never lays down any general principles about income redistribution, such as, for example, Pigou did: any transfer of income from the rich to the poor that does not diminish national income was deemed desirable by Pigou. What he argues, when criticized, is simply that users of distributive justice will have to be addressed outside the framework of standard economic analysis (Parisi, 2000). But this is exactly what Pareto, Kaldor and Hicks said years ago. Orthodox welfare economics, including the â€Å"ef? ciency of the common law hypothesis† upheld by Posner, has simply stood still ever since the 1930s. This notion of a neat divorce of ef? ciency from equity, of an objective value-free de? nition of ef? iency, has haunted economics from its outset but it is, of course, a will-o’-the-wisp: there is in fact a different ef? ciency outcome for every different distribution of income, and vice versa. Ef? ciency is necessarily a value-laden term and welfare economics is necessarily normative, that is, a matter of good or bad and not true or false. 6 However, there is real merit in treating ef? ciency and equity questions lexicographically, so that we can be as explicit as possible about our di stributional judgements, but that is not because we can ever decisively separate them. My complaint about Posner is that he evades all these fundamental questions in applied welfare economics. Not only does he fail to tell us how to add equity to ef? ciency but he does not even tell us whether ef? ciency means static ef? ciency or dynamic ef? ciency. There is an almost deliberate fuzziness of language in all his writings, which smacks of ideology rather than science. If we are going to employ the economist’s language of ef? ciency, we ought to be told just how to apply it and why ef? ciency should be our standard for judging the consequences of the law. One of Clark’s old rules of â€Å"workable competition†, such that entry into industries should be kept as free as is technically feasible taking due account of sunk costs, if necessary by antitrust legislation, is more relevant for public policy than Posner’s continual appeal to the principle of wealth maximization. The Chicago school does not deny that there is a case for antitrust law but they doubt that it is a strong case because most markets, even in the presence of high concentration ratios, are â€Å"contestable† (Bork, 1978). How do we know? We know because the good-approximation assumption: the economy is never far away from its perfectly competitive equilibrium growth path! Believe it or not, that is all there is to the â€Å"antitrust revolution† of the Chicago School. 6 Some economists believe, extraordinarily enough, that welfare economics is positive and not evaluative at all (see Hennipman, 1992; Blaug, 1992, chap. 8, 1993). 48 References MARK BLAUG Allen, Douglas W. (2000) ‘Transaction Costs’, in Bouckaert and De Geest, eds. , pp. 893–926. Blaug, Mark (1992) The Methodology of Economics, 2nd edn. Cambridge: Cambridge University Press. Blaug, Mark (1993) ‘Pieter Hennipman on Paretian Welfare Economics: A Comment’, De Economist, 141, 127–129. Blaug, Mark (1997) ‘Competition as an End-State and Competition as a Process’, in Not Only an Economist. Recent Essays. Cheltenham: Edward Elgar, pp. 66–86. Bork, Robert H. (1978) The Antitrust Paradox: A Policy at War with Itself. New York: Basic Books. Bouckaert, Boudewijn, and Gerrit De Geest (2000) Encyclopaedia of Law and Economics, 3 Vols. Cheltenham: Edward Elgar. Clark, John Maurice (1961) Competition as a Dynamic Process. Washington, DC: Brookings Institution. Coase, Ronald G. (1964) ‘The Regulated Industries: Discussion’, American Economic Review, 54, 194–197. Coase, Ronald G. (1988) The Firm, the Market and the Law. Chicago: University of Chicago Press. Debreu, Gerard (1959) Theory of Value. An Axiomatic Analysis of Economic Equilibrium. New Haven: Yale University Press. Hennipman, Pieter (1992), ‘Mark Blaug on the Nature of Paretian Welfare Economics’, De Economist, 140, 413–445. Lipsey, Richard C. , and Kelvin Lancaster (1996) ‘The General Theory of Second Best’, Review of Economic Studies, 24, 1956, pp. 11–32, reprinted in Richard C. Lipsey, Microeconomics, Growth and Political Economy. Selected Essays, Vol. 1. Cheltenham: Edward Elgar, pp. 153–180. Machovec, Frank (1995) Perfect Competition and the Transformation of Economics. London: Routledge. Medema, Steven G. , and Richard O. Zerbe (2000), ‘The Coase Theorem’, in Bouckaert and De Geest, eds. , pp. 36–92. Nelson, Richard R. (1981) ‘Assessing Private Enterprise: An Exegesis of a Tangled Doctrine’, Bell Journal of Economics, 12, 93–100, in Peter Boetke, eds. , The Legacy of Friedrich von Hayek, Vol. III. Cheltenham: Edward Elgar, pp. 80–98. Parisi, Francesco, ed. 2000) The Economic Structure of the Law: The Collected Essays of Richard A. Posner, Vol. I. Cheltenham: Edward Elgar. Reder, Melvin W. (1982) ‘Chicago Economics: Permanence and Change’, Journal of Economic Literature, 20, 1–38. Stigler, George J. (1966) Theory of Price, 3rd edn. New York: Macmillan. Van Cayseele, Patrick, and Rog er Van den Bergh (2000) ‘Antitrust Law’, in Bouckhaert and De Geest, eds. , Vol. III, pp. 467–498. Vickers, John (1995) ‘Concepts of Competition’, Oxford Economic Papers, 47, 1–23. Walker, Donald A. (1996) Walras’s Market Models. Cambridge: Cambridge University Press.

Best Character Analysis Nick Carraway â€The Great Gatsby

Best Character Analysis Nick Carraway –The Great Gatsby SAT / ACT Prep Online Guides and Tips Nick Carraway is The Great Gatsby’s narrator, but he isn’t the protagonist (main character). This makes Nick himself somewhat tricky to observe, since we see the whole novel through his eyes. How can you watch the narrator? This difficulty is compounded by the fact that Nick is an unreliable narrator – basically, a narrator who doesn’t always tell us the truth about what’s happening. In this post we will explore what we objectively know about Nick, what he does in the novel, his famous lines, common essay topics/discussion topics about Nick, and finally some FAQs about Mr. Carraway. Article Roadmap Nickas a character Nick's background Actions in the novel Character Analysis Quotes about and byNick Nick as a narrator Nick as a character FAQ clarifyingconfusing points about Nick Quick Note on Our Citations Our citation format in this guide is (chapter.paragraph). We're using this system since there are many editions of Gatsby, so using page numbers would only work for students with our copy of the book. To find a quotation we cite via chapter and paragraph in your book, you can either eyeball it (Paragraph 1-50: beginning of chapter; 50-100: middle of chapter; 100-on: end of chapter), or use the search function if you're using an online or eReader version of the text. Nick Carraway's Background Nick grew up in the â€Å"middle West,† (what we call the Midwest), in a wealthy family that was â€Å"something of a clan† (1.5). His family made their money from a wholesale hardware business his grandfather’s brother began after sending a substitute to fight for him in the Civil War. Nick attended Yale, like his father, and then fought in WWI. Upon his return, he found the Midwest incredibly boring and so set off for New York to become a bond salesman: â€Å"I enjoyed the counter-raid so thoroughly that I came back restless. Instead of being the warm center of the world the middle-west now seemed like the ragged edge of the universe- so I decided to go east and learn the bond business† (1.6). Of course, we later find out that Nick’s also getting away from a woman who expects that they’re getting married, but Nick downplays this fact in his narration, which is one of our clues to his dishonesty. To see how Nick's background intersects with the stories of the other characters in the novel, check out ourGreat Gatsby timeline. Nick's Actions in the Novel This is a summary of everything Nick does during the novel, leaving out flashbacks he hears from other characters. (For a complete summary of the plot, check out our book summary!) At the beginning of The Great Gatsby, Nick Carraway takes up residence in West Egg, in a small house next to Gatsby’s enormous mansion. The year is 1922, the stock market is booming, and Nick has found work as a bond salesman. In Chapter 1, he is invited to his cousin Daisy Buchanan’s home to have dinner with her and her husband Tom, an old college acquaintance of his. There he meets Jordan Baker, Daisy’s friend and a professional golfer. In Chapter 2, while hanging out with Tom he ends up being dragged first to George Wilson’s garage to meet Tom’s mistress Myrtle Wilson, and then to the apartment Tom keeps for Myrtle in Manhattan. They invite over a bunch of friends and a drunken party ensues. Nick witnesses some of Tom’s ugliest behavior, including his physical abuse of Myrtle. In Chapter 3, Nick is invited to attend one of Jay Gatsby’s famous parties. There, he finally meets Gatsby, and also sees Jordan again. After seeing Jordan again at that party, they begin to date, and also does his best to win over her old Aunt, who controls her money. Once he starts dating Jordan he vows to stop sending weekly letters to the woman back in the Midwest. (Though, in typical Nick fashion, he never confirms that he stops sending the letters.) He also mentions a brief affair with a woman in his office that he lets fizzle out. After meeting Gatsby in Chapter 3 they begin spending time together. In Chapter 4 they drive to Manhattan together. At first he’s pretty wary of Gatsby and his story. This wariness of Gatsby is compounded by Nick’s poor (and very anti-Semitic!) impression of Meyer Wolfsheim, one of Gatsby’s associates. Later in Chapter 4, Nick meets up with Jordan in the plaza hotel and she tells him about Daisy and Gatsby’s romantic history (which she heard all about at the previous party). Nick agrees to arrange a meeting between Daisy and Gatsby, which occurs in Chapter 5. In Chapter 6, Nick goes to Gatsby’s house and witnesses an awkward exchange between Gatsby, a couple named Sloane, and Tom Buchanan. The trio had stopped by Gatsby’s house and Gatsby misreads how serious they are about having dinner together. Later, Tom and Daisy attend one of Gatsby’s parties. Tom is immediately suspicious about where Gatsby gets his money while Daisy has a bad time, looking down her nose at the affair. Gatsby confides in Nick afterwards that he wants to repeat his past with Daisy. In Chapter 7, Nick is invited along to a lunch party at Tom and Daisy Buchanan’s house, along with Gatsby and Jordan. Gatsby is hoping Daisy will tell Tom that she never loved him and is leaving him for Gatsby, but starts to feel nervous doing that in Tom’s house. Daisy is anxious as well and suggests they all go to Manhattan. Nick rides to Manhattan with Tom and Jordan, in Gatsby’s yellow car. They stop by the Wilson’s garage, where he learns that George has discovered Myrtle’s affair, but not the man she is cheating on him with. In Manhattan, the group rents a room at the Plaza hotel. A bunch of secrets come out, including the fact that Tom knows Gatsby is a bootlegger. Daisy tries to say she never loved Tom but can’t stand by the statement, Tom, satisfied he’s won, tells Gatsby to take Daisy back home in his yellow car while he drives back with Nick and Jordan. Perhaps the least subtle car in the history of cars. On the way back, they come along Myrtle Wilson’s death scene: she has been hit by the yellow car. Later that night, Nick stays outside of the Buchanans’ house while waiting for a cab back to West Egg, too disgusted with their behavior to go inside. He sees Gatsby waiting outside – he wants to make sure Daisy is alright. Meanwhile, Nick spots Tom and Daisy inside looking like co-conspirators. In Chapter 8, Nick goes to work but can’t concentrate. Jordan calls him to say where she’s staying, but he’s disgusted she doesn’t seem shaken by Myrtle’s death and they fight and break up. Nick later spends time with Gatsby in his mansion and learns his whole life story. The next day, Gatsby is shot and killed by George Wilson (and George kills himself). In Chapter 9, Nick struggles to arrange a funeral for Gatsby, which in the end is only attended by Gatsby’s father and Owl Eyes. Disgusted with the morally lawless life in the East, he decides to retreat back home to the Midwest. Key Nick Carraway Quotes In my younger and more vulnerable years my father gave me some advice that I've been turning over in my mind ever since. "Whenever you feel like criticizing any one," he told me, "just remember that all the people in this world haven't had the advantages that you've had." (1.1-2) The first lines establish Nick as thoughtful, thorough, privileged, and judgmental. This line also sets the tone for the first few pages, where Nick tells us about his background and tries to encourage the reader to trust his judgment. While he comes off as thoughtful and observant, we also get the sense he is judgmental and a bit snobby. To see more analysis of why the novel begins how it does, and what Nick's father's advice means for him as a character and as a narrator, read our article on the beginning ofThe Great Gatsby. When I came back from the East last autumn I felt that I wanted the world to be in uniform and at a sort of moral attention forever; I wanted no more riotous excursions with privileged glimpses into the human heart. Only Gatsby, the man who gives his name to this book, was exempt from my reaction- Gatsby, who represented everything for which I have an unaffected scorn. (1.4) Another quote from the first few pages of the novel, this line sets up the novel’s big question: why does Nick become so close to Gatsby, given that Gatsby represents everything he hates? It also hints to the reader that Nick will come to care about Gatsby deeply while everyone else will earn his â€Å"unaffected scorn.† While this doesn’t give away the plot, it does help the reader be a bit suspicious of everyone but Gatsby going into the story. Every one suspects himself of at least one of the cardinal virtues, and this is mine: I am one of the few honest people that I have ever known. (3.171) This is likely the moment when you start to suspect Nick doesn’t always tell the truth – if everyone â€Å"suspects† themselves of one of the cardinal virtues (the implication being they aren’t actually virtuous), if Nick says he’s honest, perhaps he’s not? Furthermore, if someone has to claim that they are honest, that often suggests that they do things that aren’t exactly trustworthy. Suddenly I wasn't thinking of Daisy and Gatsby any more but of this clean, hard, limited person who dealt in universal skepticism and who leaned back jauntily just within the circle of my arm. A phrase began to beat in my ears with a sort of heady excitement: "There are only the pursued, the pursuing, the busy and the tired." (4.164) Nick’s interactions with Jordan are some of the only places where we get a sense of any vulnerability or emotion from Nick. In particular, Nick seems quite attracted to Jordan and being with her makes a phrase â€Å"beat† in his ears with â€Å"heady excitement.† If there are only the pursued, the pursuing, the busy, and the tired, it would appear Nick is happy to be the pursuer at this particular moment. "They're a rotten crowd," I shouted across the lawn. "You're worth the whole damn bunch put together." (8.45) This line, which comes after Myrtle’s death and Tom, Daisy, and Jordan’s cold reaction to it, establishes that Nick has firmly come down on Gatsby’s side in the conflict between the Buchanans and Gatsby. It also shows Nick’s disenchantment with the whole wealthy east coast crowd and also that, at this point, he is devoted to Gatsby and determined to protect his legacy. This hints to us that our once seemingly impartial narrator is now seeing Gatsby more generously than he sees others. Gatsby believed in the green light, the orgastic future that year by year recedes before us. It eluded us then, but that's no matter- tomorrow we will run faster, stretch out our arms farther. . . . And one fine morning- - So we beat on, boats against the current, borne back ceaselessly into the past. (9.153-4) This is Nick’s conclusion to his story, which can be read as cynical, hopeful, or realistic, depending on how you interpret it. You can read in detail about these lines in our article about the novel’s ending. Nick Carraway Character Analysis Nick is the narrator, but he is not omniscient (he can’t see everything), and he’s also very human and flawed. In other words, he’s an unreliable narrator, sometimes because he’s not present for a certain event, other times because he presents the story out of order, and finally because he sometimes obscures the truth. (It takes most students two reads of the novel to even catch the fact that Nick has a woman waiting for him back in the Midwest.) Because of his unreliable narrator status, the central questions many teachers try to get at with Nick is to explore his role in the story, how the story would be different without his narration, and how he compares to Gatsby. In short, you often have to analyze Nick as a character, not the narrator. This can be tricky because you have to compare Nick’s narration with his dialogue, his actions, and how he chooses to tell the story. You also have to realize that when you’re analyzing the other characters, you’re doing that based on information from Nick, which may or may not be reliable. Basically, nothing we hear in the novel can be completely accurate since it comes through the (necessarily) flawed point of view of a single person. The best way to analyze Nick himself is to choose a few passages to close read, and use what you observe from close-reading to build a larger argument. Pay close attention to moments, especially Nick’s encounters with Jordan, that give you a glimpse at Nick’s emotions and vulnerabilities. We will demonstrate this in action below! Pictured: the rose-tinted glasses Nick apparently starts to see Gatsby through. Nick as the Narrator These first questions analyze Nick's role as a narrator. Why Is Nick the Narrator and Not Gatsby? Since Nick gives a roughly chronological account of the summer of 1922, we get to see the development of Gatsby from mysterious party-giver to love-struck dreamer to tragic figure (who rose from humble roots and became rich, all in a failed attempt to win over Daisy). If Gatsby was the narrator, it would be harder for Fitzgerald to show that progression, unless Gatsby relayed his life story way out of order, which might have been hard to accomplish from Gatsby’s POV. The novel would have also been a much more straightforward story, probably with less suspense: Gatsby was born poor in South Dakota, became friends with Dan Cody, learned how to act rich, lost Cody’s inheritance, fell in love with Daisy, fought in the war, became determined to win her back, turned to crime. In short, Fitzgerald could have told the same story, but it would have had much less suspense and mystery, plus it would have been much harder to relay the aftermath of Gatsby’s death. Unless the point of view abruptly switched after Gatsby was shot, the reader would have no idea what exactly happened to Gatsby, what happened to George Wilson, and finally wouldn’t be able to see Gatsby’s funeral. Plus, with a narrator other than Gatsby himself, it’s easier to analyze Gatsby as a character. Nick is very observant, and he is able to notice things about Gatsby, like the way he misses social cues, subtle shifts in his mood, and even smaller details like his arresting smile. We probably wouldn’t have seen these facets of Gatsby if Gatsby himself were telling the story. Finally, since Nick is both â€Å"within and without† the New York elite, he is an excellent ticket in to the reader – he can both introduce us to certain facets of that world while also sharing in much of our shock and skepticism. Nick is just like the â€Å"new student at school† or â€Å"new employee† trope that so many movies and TV shows use as a way to introduce viewers into a new world. With Gatsby as narrator, it would be harder to observe all the details of the New York social elite. Is Nick Carraway an Unreliable Narrator? In many ways, Nick is an unreliable narrator: he’s dishonest about his own shortcomings (downplaying his affairs with other women, as well as his alcohol use), and he doesn’t tell us everything he knows about the characters upfront (for example, he waits until Chapter 6 to tell us the truth about Gatsby’s origins, even though he knows the whole time he’s telling the story, and even then glosses over unflattering details like the details of Gatsby’s criminal enterprises), and he’s often harsh in his judgments (and additionally anti-Semitic, racist, and misogynistic). As a reader, you should be skeptical of Nick because of how he opens the story, namely that he spends a few pages basically trying to prove himself a reliable source (see our beginning summary for more on this), and later, how he characterizes himself as â€Å"one of the few honest people I have ever known† (3.171). After all, does an honest person really have to defend their own honesty? However, despite how judgmental he is, Nick is a very observant person, especially in regard to other people, their body language, and social situations. For example, in Chapter 6, Nick immediately senses Gatsby isn’t really welcome at the Sloanes’ house before Tom says it outright. Nick is also able to accurately predict Daisy won’t leave Tom at the end of Chapter 1, after observing her standing in the door with Tom: â€Å"I was confused and a little disgusted as I drove away. It seemed to me that the thing for Daisy to do was to rush out of the house, child in arms- but apparently there were no such intentions in her head† (1.150). If only Jay could have seen Daisy’s intentions so clearly! We also come away with a very clear understanding of the messy climax (Myrtle’s death at the hands of Daisy in Gatsby’s car, George Wilson’s psychological decay and murder/suicide of Gatsby), since Nick tells the events from his point of view but also from Michaelis’s, who owns a coffee shop near George Wilson’s garage. In short, Nick delegates to another narrator when he knows he doesn’t have enough information, and makes sure the reader comes away with a clear understanding of the fundamental events of the tragedy. In short, you shouldn’t believe everything Nick says, especially his snobbier asides, but you can take his larger characterizations and version of events seriously. But as you read, try to separate Nick’s judgments about people from his observations! Is Nick Actually the Hero of the Story? A hero, or protagonist, is generally the character whose actions propel the story forward, who the story focuses on, and they are usually tested or thwarted by an antagonist. So in the most traditional sense, Gatsby is the hero – he drives the action of the story by getting Jordan and Nick to reintroduce him to Daisy (which leads to the affair, confrontation in Manhattan, the death of Myrtle, and then the murder-suicide), he goes up against an antagonist of sorts (Tom), and the story ends with his death. Gatsby’s story is thus a cynical take on the traditional rags-to-riches story. However, some people see the protagonist as also the person who changes the most in the course of a story. In this case, you might argue that since Nick changes a lot during the novel (see below), while Gatsby during the story itself doesn’t change dramatically (his big character changes come before the chronology of the novel), that Nick is in fact the protagonist. Nick’s story is a take on the coming of age narrative – he even has an important birthday (30) in the novel! Basically, if you think the protagonist is the character who propels the action of the story, and someone who has an antagonist, it’s Gatsby. But if you think the protagonist is the person who changes the most, you could argue Nick is the hero. Nick as a Character We never get a physical description of Nick, so don't blame yourself if your mental image of him is bland and amorphous like this fellow. How Does Nick Change Throughout the Novel? Nick starts out naà ¯ve and hopeful about his summer, and his future in New York more generally, as revealed through his narration (this optimism about his own life is mixed up with his sharp, snarky characterizations of others, which remain mostly the same all through the novel). And so with the sunshine and the great bursts of leaves growing on the trees- just as things grow in fast movies- I had that familiar conviction that life was beginning over again with the summer. There was so much to read for one thing and so much fine health to be pulled down out of the young breath-giving air. (1.-12) (emphasis added) As the summer goes on, he meets someone wildly more hopeful than he is – Gatsby, of course – and he begins to be more cynical in how he views his own life in comparison, realizing that there are certain memories and feelings he can no longer access. Through all he said, even through his appalling sentimentality, I was reminded of something- an elusive rhythm, a fragment of lost words, that I had heard somewhere a long time ago. For a moment a phrase tried to take shape in my mouth and my lips parted like a dumb man's, as though there was more struggling upon them than a wisp of startled air. But they made no sound and what I had almost remembered was uncommunicable forever. (6.135) (emphasis added) Finally, after the deaths of Myrtle, Gatsby, and Wilson, as well as the passing of his thirtieth birthday, Nick is thoroughly disenchanted, cynical, regretful, even angry, as he tries to protect Gatsby’s legacy in the face of an uncaring world, as well as a renewed awareness of his own mortality. "I'm thirty," I said. "I'm five years too old to lie to myself and call it honor." She didn't answer. Angry, and half in love with her, and tremendously sorry, I turned away. (9.125-6) After Gatsby's death the East was haunted for me like that, distorted beyond my eyes' power of correction. (9.127) On the last night, with my trunk packed and my car sold to the grocer, I went over and looked at that huge incoherent failure of a house once more. On the white steps an obscene word, scrawled by some boy with a piece of brick, stood out clearly in the moonlight and I erased it, drawing my shoe raspingly along the stone. (9.150) In short, as much as this is a novel about Gatsby’s failed dream/love for Daisy, you could also argue it tells the story of Nick’s loss of hope and innocence as he enters his 30s. How Does Nick Feel About Gatsby? Why Does He Come to Like Him so Much? Nick goes from initially taken with Gatsby, to skeptical, to admiring, even idealizing him, over the course of the book. When he first meets Gatsby in Chapter 3, he is drawn in by his smile and immediately senses a peer and friend, before of course Gatsby reveals himself as THE Jay Gatsby: He smiled understandingly- much more than understandingly. It was one of those rare smiles with a quality of eternal reassurance in it, that you may come across four or five times in life. It faced- or seemed to face- the whole external world for an instant, and then concentrated onyouwith an irresistible prejudice in your favor. It understood you just so far as you wanted to be understood, believed in you as you would like to believe in yourself and assured you that it had precisely the impression of you that, at your best, you hoped to convey. (3.73) In Chapter 4, Nick is highly skeptical of Gatsby’s story about his past, although he is somewhat impressed by the medal from â€Å"little Montenegro† (4.32). He looked at me sideways- and I knew why Jordan Baker had believed he was lying. He hurried the phrase "educated at Oxford," or swallowed it or choked on it as though it had bothered him before. And with this doubt his whole statement fell to pieces and I wondered if there wasn't something a little sinister about him after all. (4.24) He also seems increasingly skeptical after his encounter with Meyer Wolfshiem, who Nick describes very anti-Semitically. When Wolfshiem vouches for Gatsby’s â€Å"fine breeding,† (4.99) Nick seems even more suspicious of Gatsby’s origins. In Chapter 5, as Nick observes the reunion between Gatsby and Daisy, he first sees Gatsby as much more human and flawed (especially in the first few minutes of the encounter, when Gatsby is incredibly awkward), and then sees Gatsby has transformed and â€Å"literally glowed† (5.87). As Nick watches Gatsby blossom in Daisy’s presence, I think Nick himself is won over by Gatsby. Notice how warm Nick’s description is: But there was a change in Gatsby that was simply confounding. He literally glowed; without a word or a gesture of exultation a new well-being radiated from him and filled the little room (5.87) In Chapter 6, Nick honestly and frankly observes how Gatsby is snubbed by the Sloanes, but he seems more like he’s pitying Gatsby than making fun of him. It almost seems like he’s trying to protect Gatsby by cutting off the scene just as Gatsby comes out the door, coat in hand, after the Sloanes have coldly left him behind: Tom and I shook hands, the rest of us exchanged a cool nod and they trotted quickly down the drive, disappearing under the August foliage just as Gatsby with hat and light overcoat in hand came out the front door. (6.59) By Chapter 7, during the confrontation in the hotel, Nick is firmly on Gatsby’s side, to the point that he is elated when Gatsby reveals that he did, in fact, attend Oxford but didn’t graduate: I wanted to get up and slap him on the back. I had one of those renewals of complete faith in him that I'd experienced before. (7.221) As the rest of the novel plays out, Nick becomes more admiring of Gatsby, even as he comes to dislike the Buchanans (and Jordan, by extension) more and more. Why exactly Nick becomes so taken with Gatsby is, I think, up to the reader. In my reading, Nick, as someone who rarely steps outside of social boundaries and rarely gets â€Å"carried away† with love or emotion (see how coldly he ends not one but three love affairs in the book!), is admiring and even somewhat jealous of Gatsby, who is so determined to build a certain life for himself that he manages to transform the poor James Gatz into the infamous, wealthy Jay Gatsby. On the last night, with my trunk packed and my car sold to the grocer, I went over and looked at that huge incoherent failure of a house once more. On the white steps an obscene word, scrawled by some boy with a piece of brick, stood out clearly in the moonlight and I erased it, drawing my shoe raspingly along the stone. (9.150) Gatsby’s fate also becomes entangled with Nick’s own increased cynicism, both about his future and life in New York, so he clings to the memory of Gatsby and becomes determined to tell his story. Is Nick Carraway Gay? At first, this might not seem plausible – Nick dates Jordan during the book (and also admits to a few other love affairs with women) and at one point confesses to being â€Å"half in love with [Jordan].† So why do people think Nick is gay? First of all, consider the odd moment at the end of Chapter 2 that seems to suggest Nick goes home with Mr. McKee: "Come to lunch some day," he suggested, as we groaned down in the elevator. "Where?" "Anywhere." "Keep your hands off the lever," snapped the elevator boy. "I beg your pardon," said Mr. McKee with dignity, "I didn't know I was touching it." "All right," I agreed, "I'll be glad to." . . . I was standing beside his bed and he was sitting up between the sheets, clad in his underwear, with a great portfolio in his hands. "Beauty and the Beast . . . Loneliness . . . Old Grocery Horse . . . Brook'n Bridge . . . ." Then I was lying half asleep in the cold lower level of the Pennsylvania Station, staring at the morning "Tribune" and waiting for the four o'clock train. (2.128-136) Nick’s narration is confused and sporadic as he was quite drunk after the party. However, what we do see – the elevator boy chiding him to â€Å"keep your hands off the lever† (hint hint wink wink nudge nudge), shortly followed by Nick saying â€Å"I was standing beside [Mr. McKee’s bed and he was sitting up between the sheets, clad in his underwear†- seems to pretty strongly suggest a sexual encounter. And in a novel that is so short and carefully constructed, why add this short scene unless it’s supposed to help us understand Nick? Some people see that scene as a confirmation of Nick’s sexual preference, or at least an indication he’s attracted to men as well as women. However, since this was the 1920s, he couldn’t exactly be out and proud, which is why he would never frankly admit to being attracted to men in his sober narration. So instead, as the theory goes, his love for and attraction to for Gatsby is mirrored through a filter of intense admiration. So, using this reading, The Great Gatsby is narrated by a man suffered from unrequited love. Do you have to take this reading as fact? Not at all. But if you’re curious you can check out a fuller write-up of the â€Å"Nick as gay† reading and decide for yourself. Final Questions These are questions students often have about Nick after reading the book, but ones that don’t always come up in classroom discussions or essay topics. Read on if you still have unanswered questions about Nick! Also, be sure to let us know in the comments if you have more questions about Nick! What’s Going on With Nick and Jordan’s Relationship? Do They Actually Like Each Other? Nick says in his opening narration that most people in the east have earned his â€Å"unaffected scorn,† so it’s confusing to see him cozy up to Jordan in the next few chapters (1.4). However, keep in mind that scorn is earned over the course of the novel, and Nick writes the opening narration looking back at everything. So before the tragic conclusion, Nick actually is strongly attracted to Jordan and hasn’t yet realized that her attractive skepticism actually means she can be callous and uncaring. Our quote above from Chapter 4, as Nick finds himself attracted to the â€Å"hard, clean, limited† Jordan, illustrates that strong initial attraction. But post break-up, do they still feel anything for each other? Their break-up scene is really helpful to analyze to answer this question: "Nevertheless you did throw me over," said Jordan suddenly. "You threw me over on the telephone. I don't give a damn about you now but it was a new experience for me and I felt a little dizzy for a while." We shook hands. "Oh, and do you remember- " she added, "- - a conversation we had once about driving a car?" "Why- not exactly." "You said a bad driver was only safe until she met another bad driver? Well, I met another bad driver, didn't I? I mean it was careless of me to make such a wrong guess. I thought you were rather an honest, straightforward person. I thought it was your secret pride." "I'm thirty," I said. "I'm five years too old to lie to myself and call it honor." She didn't answer. Angry, and half in love with her, and tremendously sorry, I turned away. (9.130-136) Jordan, for her part, seems to admit to having genuinely liked Nick when they break up at the end and was quite hurt. And Nick, for once, is a mess of emotions: â€Å"angry† and â€Å"half in love.† So despite Nick’s earlier proclamation that everyone from the east coast is the object of his â€Å"unaffected scorn,† it would seem his attachment to Jordan is a bit more complicated: he’s disgusted by some of her behavior and yet still feels a strong attraction to her, strong enough that he’s angry and sorry during their break-up. Of course, if you subscribe to the â€Å"Nick loves Gatsby† theory you could chalk much of this scene up to repressed desires, especially Nick’s comment about not wanting to lie to himself. Why Does Nick Say â€Å"You’re better than the whole damn bunch of them†? This statement officially marks Nick’s disillusionment with the East Coast, old money crowd. Remember that this line comes after the car accident, and the scene in the hotel just before that, so he’s just seen Daisy and Tom’s ugliest behavior. Nick is proud of the statement since it was one of the last things he ever got to say to Gatsby. What can be a bit harder to spot is when exactly Nick’s earlier distrust of Gatsby morphed into respect. I argued above it begins in Chapter 5, when he watches Gatsby’s reunion with Daisy and sees Gatsby transformed and enraptured by love. What’s Next? Nick sets the stage in Chapter 1 by first explaining why he can be trusted as a narrator. Read our summary of Chapter 1 for more analysis as to why Nick’s opening makes him a bit suspicious as a narrator. Want to read more about Nick and Jordan’s relationship? Curious as to why they get together despite their differences in background? Read about love, desire, and relationships in Gatsby for more on their relationship. Did Fitzgerald see himself as more of a Carraway or a Gatsby? Read our history of F. Scott Fitzgerald’s life for more on the man behind the book. 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