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April 3, 2012 12:01 am

The Economic Depression of “The Hunger Games”

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I haven’t read “The Hunger Games” nor the other two books in the series. But like most Americans, I substituted reading the novel with watching the movie. The movie was a great film filled with rich character development, consuming plot points, romance, and heart-wrenching violence. I assume the books are just as enthralling, if not more so. Although I have not read the next two books nor read the Wikipedia entries on them, I can assume with 95 percent certainty that their will be no more tributes, no more reapings, no more rankings, and no more games because of one scary thing: severe economic depression.

The President and senior government officials of Panem must have slept through ECON 101 back in their heyday at District 13 University (or maybe they were too busy rebelling). Minus The Capitol, Districts 1 through 12 have to suffer through the awfulness of pre-industrial agrarian economies. Many economists estimate that the GDP per capita of Districts 1 through 12 is a measly one loaf of bread, a two pound bag of berries, and one haunch of squirrel meat (approximately $7) whereas the GDP per capita in The Capitol is three supersonic trains and one eccentric wardrobe (approximately $36 million). Whereas The Capitol is home to approximately eight million people, all 12 districts house the other 300 million Panemians. Some welfare economists estimate the gini coefficient of Panem to be approximately .992.

The economic structure of Panem creates a net loss of human capital each year as some of the countries brightest and innovative entrepreneurs are forced to kill each other. Even human capital superstars like Katniss Everdeen are used inefficiently as her labor specialization lies far away from coal-mining, the main economic activity of her district (12). The Capitol has removed virtually all capital and labor incentives and has suspended all investment and capital flows to the outlying 12 districts. In District 12, for example, The Capitol has forced a labor intensive coal-mining operation where historical economic records note that before the rebellion District 12 grew at an average rate of six percent thanks to its capital intensive economy. The few Capitol scholars who say more than “punishment for the rebellion” when asked about District growth rates said District 12 is one of its more promising cases, growing at -26 percent every year.

Eventually, the inefficient allocation of resources to labor-intensive operations will skyrocket costs so the high the CBO estimates that Panem’s unemployment rate will increase from 35 percent to 62 percent. Real wages have been so depressed for years that consumption and savings levels are at historic Panem lows. Because the marginal propensity to consume (MPC) is approximately one, the citizens of Districts 1 through 12 have fallen into the “poverty trap.” With such low levels of consumption and savings, and subsequently output, the tax base will shrink incredibly. This shrinkage will force The Capitol to dramatically increase marginal tax rates for its citizens from zero percent to 91 percent, a level not seen since the Kennedy administration, which will eventually cause severe contractions of capital, investment, and labor because of the low-value of work and the high level of leisure. The inevitable substitution effect will eventually cause The Capitol to resemble something like a Hooverville.

Because of the massive income inequality and severe economic control, Panem will plunge into depression and no more hunger games will occur. Many political theorists expect the social unrest caused by the death of Rue and Thresh as well as by the civil disobedience of Katniss and Peeta’s simultaneous nightlock berry suicide attempt to accelerate the inevitable Great Depression of Panem. Political theorist Michael Doyle argues that only with liberal democracies can economic opportunity flourish. Citizens of Panem may want to Occupy The Capitol with copies of the Bill of Rights and the Constitution. Otherwise, the Great Depression of Panem will end the Hunger Games as we know it and Lionsgate Films will be out of $300 million in box office sales.

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