Chilean miners confront the cartel problem
The rescue of the Chilean miners was a heartwarming miracle. The miners have both my sympathy and respect – I can’t even begin to imagine what those first 17 days were like, trapped far underground without any hint that rescue was even possible. I wish them the best as they try to return to normal life.
I also thank them for providing an excellent case study for my microeconomics class. According to media reports, the 33 miners agreed to a pact of silence in which none will speak about the details of the first 17 days of their ordeal. In addition, they struck an agreement to coordinate the telling of their story and to share equally the resulting profits.
In short, the Chilean miners formed a cartel. A justified and moral cartel to be sure — they deserve whatever profits they can jointly extract from their ordeal — but a cartel nonetheless.
All of which raises a natural question: Can such a cartel be successful? Or will it succumb to the perennial challenge that confronts all cartels: how to enforce a joint agreement in the face of individual temptations? A unified silence may well maximize the financial value of the story and defend the privacy of those moments that some miners do not want to share with the world. But the media circus will tempt some miners to cheat on that agreement either for monetary gain or to ensure that their individual perspective gets reported.
I wouldn’t want to downplay the solidarity among these men, but over at the New York Daily News, Jaime Urabarri reports that there are already concerns that the agreement may break down. In “Chilean miners may break pact of silence, for the right price,” he writes:
Some of the rescued Chilean miners are apparently willing to tell their story for the right price, despite a promise made between all 33 of them that none would reveal details about the worst of their 69-day ordeal buried underground.
During a special Sunday mass held in honor of last week’s dramatic rescue, miner Jorge Galleguillos said that the pact was non-binding and hinted that he’s entertaining offers to spill the beans on exactly what happened.
“I have to think about myself,” he argued, without going into specifics about what information he’d be willing to share.
There are also rumors that some of the miners have already reached deals to tell their story. El Mercurio reported last week that Victor Segovia agreed to sell the contents of the journal he kept during his time in the mine for $50,000 to German newspaper Bild.
My prediction? Regardless of how this turns out, the Chilean miners will show up in the next edition of many economics textbooks.
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