News

Levitt: Selling Cable is Like Dealing Crack

7/19/2006 5:03 AM Eastern

Boston —Economics professor and Freakonomics author Steve Levitt offered CTAM Summit attendees an abbreviated version of the first chapter of his book on Wednesday, explaining the organizational structure and economics of street gangs.

He pleaded a lack of knowledge of business generally, and cable specifically, but used his platform to explain his vision that an open-minded examination of processes, and more importantly, the adoption of recommendations based on analysis, can lead to better understanding of the way things work.

A successful Chicago street gang, in his analysis, works a lot like big corporation, a corporation that took off once technology created a way to lower the production cost of crack cocaine. He joked that cable’s success mimicked the surge in the merchandising of crack, in that operators have found a much more efficient way of delivering entertainment and information into people’s brains. But he also cautioned that, following up on a gang years later, he learned that most of the members were dead or in jail, and he hoped that wouldn’t be the case 10 years from now for CTAM attendees.

Like gangs, success and failure of an endeavor correlates to the impact of government and policymakers on that activity, he said. The challenge cable faces next is from the effort underway by telephone companies to co-opt the legislative process, Levitt said. He suggested that campaign donations to legislators is a less effective use of money than spending more on lobbying those same legislators.