Relearning an important non-economics lesson - again

Today I got stuck in what a former colleague called a YouTube vortex. That is what happens when you intend to watch a single video, then see an attractive link, and another, and another...

It all started because I was reading Cafe Hayek and followed a link to a Friedman clip. I decided to watch some more Friedman. That took me to Walter Williams. Then Thomas Sowell. Then Mike Munger. When I finally pulled out of the vortex, having been bombarded by a whole lot of highly thoughtful and intelligent ideas, the thing that struck me most had nothing to do with economics.

I have no idea why I scrolled down the page while watching any of those videos, but I did. Three times. The comments for each video were, without fail, quite depressing. As most consumers of online media are well aware, the comments section is not exactly the place one would go for a rational, civil, constructive discourse. The vitriol directed at Friedman, Sowell, and Munger was quite something, and I'm sure that, had I looked at the comments on the Williams clips, I would have found the same.

Today I relearned, again, that I need to be very vigilant in combating the human tendency to villainize people whose ideas do not agree with my own. Williams, Friedman, Sowell, and Munger are all brilliant men. They're also well-intentioned and, if the testimony of those who know them is accurate, quite caring, generous people. One would think, based on the YouTube comments I saw today, that these men are the best of the best when it comes to evil. It would be easy to tell myself that I'm better than the YouTube commenters, but I don't think that is true. I think I'm just as prone to this as anyone else is. I can think of several times when I was particularly guilty. My family, friends, and acquaintances have been guilty, too.

Economics, especially when it intersects with politics, as it often does, seems to elicit this kind of behavior. I hope that I have the presence of mind to remember the valuable lesson I've learned from great economists like Russ Roberts, Milton Friedman, Walter Williams, Thomas Sowell, and Mike Munger: sometimes wonderful, intelligent people have different views than I do, and I do a disservice to them and to myself to respond with anything other than openness and respect.








Wonder how long until I need to relearn that again?

Are CEO's taking all the money?

Over the last few days a number of my friends have posted the same video on Facebook. The video shows Elizabeth Warren 'correcting a CEO's math'. The commentary from my friends who posted this video tends to be executive bashing and calling for income redistribution. For the sake of argument I'm going to put aside all of the reasons I do not favor wage controls. Instead, I thought I'd do some very rough, back-of-the-envelope type calculations about what we could accomplish through income redistribution. Because the aforementioned video relates to fast food, I'll stick with fast food for my calculations.

McDonald's
According to McMichigan.com a  McDonald's location employs 61 people on average. Worldfranchising.com says each location employs about 50. That gives us a ballpark figure, I'll say 50. Reference.com and About.com both say there are about 13,000 McDonald's locations in the USA. Yes, I realize there could possibly be questions of reliability there, but I'll trust them for the purposes of this post. Multiplying these two gives a figure of 650,000 employees in the USA. Macroaxis.com says there are only 440,000 McDonald's employees in the United States. According to Bloomberg.com, the CEO makes $8.75 million. So, how about that greedy fat cat gives up some of that money that he doesn't really need. What if he gives up all of his salary? 8.75 million, divided amongst 440,000 employees, is $19.89. If the CEO's entire paycheck were redistributed each employee would get less than $20 per year, and that is taking the lower figure of 440,000 employees nationwide.

What about other businesses?

Wendy's
CEO salary: $4,200,000 (according to QSR Magazine)
Employees: 44,000 (Macroaxis.com)
Results of redistribution: $95.45 per employee per year


Starbucks
CEO salary: $10,700,000 (according to QSR Magazine)
Employees in the USA: 150,000 (Reuters and Jobs.com)
Results of redistribution: $71.33 per employee per year



Assuming that there would be no negative consequences of taking away the CEO's entire salary, that still seems like pretty meager gains to each individual employee. What's the take-away, in my opinion? The rich fat cat executives are not greedily hoarding money that could, if redistributed, make a difference to the lower level employees. They are paid quite handsomely because they create a great deal of value for consumers, investors, and employees. (Yes, there are exceptions, like on Wall Street and in Detroit, but that is a subject for another post.)