Thursday, May 29, 2008

Income inequality and the NFL

Steven Malanga over at actually makes a solid case for income inequality in society by comparing it to the situation in the NFL (I am only quoting part of the article below. I fully recommend reading the whole thing at the link above. It is short.):
I took a look at the salary structure of the team with the biggest payroll in 2007, the Washington Redskins, who paid $123 million in salaries to 59 players, including those on the practice squad, over the course of the year. That’s a rich pot, but what I found was that the top quintile, or 20 percent, of the roster took home 63 percent of the money, and the top two quintiles earned 85 percent. The Skins’ aren’t an anomaly, even though they are one of the richest teams. The other teams at the top of the salary scale—the Pats and the Saints—devoted 62 percent and 60 percent of salaries, respectively, to a fifth of their players.

It was only slightly different at the bottom. The team with the lowest payroll in 2007, the Super Bowl-winning New York Giants (talk about value for your dollar), paid 59 percent of wages to the top 20 percent, and 78 percent to the richest 40 percent of players.

Malanga goes on to show that numbers for other sports leagues, as well as the U.S. in general, are similar.

One place where Malanga fails in his comparison (even though his conclusions are correct) is in completing his comparison.

In the NFL, how many players are responsible for a team's financial success? The top 40% of the team may see the field most of the time, and may win games and draw fans. But in a market where players can change teams, and do so frequently, the cream will rise to the top of the salary scale, either through free agency or fear thereof by the team.

The real world operates similarly. When a company sees an employee outproducing other employees, a company must quickly recognize this, and reward it, or risk losing the employee to another company which does recognize the employee's abilities.

But where do CEO's fit into this comparison? Truth be told, CEO's tend to be like a starting quarterback. A starting quarterback can have a bad day and the rest of the team can still pull out a win, or even a successful season (do I need to mention Trent Dilfer won a Super Bowl?). A bad CEO is similar in that a company can only cover his shortcomings for so long.

On the other hand, if a CEO or a quarterback is REALLY bad, they will actually make their company/team worse. Even in these situations, both will probably make a lot of money in comparison to their workers/teammates, but both will end up getting fired in the end.

In the long run, good CEO's will tend to make more than bad CEO's, just as good quarterbacks will make more than bad quarterbacks. But that doesn't explain why CEO's and quarterbacks should make significantly more than the lowest paid employees or the team's lowest paid players.

For that, you have to look at their impact. If a quarterback is making $10 million per year, and a backup player makes $500,000 per year, should the backup make more at the sacrifice of some of the quarterback's salary? With salary cap considerations, this is the question an NFL team faces. The logical answer is "of course not". The quarterback has a far greater impact on the team's success, so he naturally makes significantly more.

Just like an NFL team, companies have a salary cap: it is called the free market. Specifically, a company which spends more than it can afford on a CEO, regardless of how good the CEO may be, runs the risk of putting itself out of business (although there are times when that can be a good strategic maneuver, but those are exceptional cases).

But what value does a good CEO bring to it's company? The best example of CEO value comes from Roberto Goizueta, former CEO of Coca Cola. While he is best remembered for the "New Coke" debacle, he also was the CEO who introduced Diet Coke. In addition, it should be remembered that Goizueta was not so headstrong he couldn't admit his mistakes, bringing back Coke Classic after New Coke flopped.

My point is the New Coke debacle could have crippled Coca Cola under a more headstrong CEO. Instead, Goizueta brought the company back and made it one of the most profitable companies today. Was Goizueta worth the high salary he was paid? Most certainly (according to Wikipedia, he "[b]ecame the first CEO to gain billionaire status from a company which he did not found"). Instead of costing the company thousands of jobs, he instead allowed it to expand.

Was Goizueta worth a $1 billion more to Coca Cola than their lowest paid worker, who may have done more of the "sweaty" work? Absolutely. Ideas move companies. Anybody can do the manual labor, but not everyone can come up with ideas that make money in the free market.

Certainly there are plenty of examples of CEO's who make more than they deserve. The CEO who made $100 million in a year when their company tanked is almost a cliche. But companies that do that all the time tend to go out of business quickly, unless the CEO is much better than the public realizes. But is that situation so much different than a rookie quarterback who gets a huge contract based on his potential?

Actually, it is. If a rookie quarterback fails, he is the one who gets fired. If a CEO fails, there can be tens of thousands or even hundreds of thousands of jobs lost due to his incompetance. So who is REALLY more important?

Of course, income inequality isn't about comparing quarterbacks and CEO's. Considering the size of modern corporations, and all the responsibility sitting on the shoulders of CEO's, it would be foolish to pay them "a little more" than their lowest paid worker.

Wednesday, May 28, 2008

Hello Savannah!

Since I've been in Savannah for a month, I figured it is finally time for me to announce it, as well as changing my profile location in the upper right corner of this page.

So far, here are some of the things I love about Savannah:

1. Traffic! As in there is none! Compared to the Atlanta area, Savannah is...well, a drive in the park.
2. The food! I am talking FRESH seafood! There's a restaurant called The Oyster Bar near me, where I had the BEST steamed shrimp I've ever eaten. There's also a greek/italian place called Basil's Pizza and Deli, which makes the best pizza I ever had, not to mention a damn fine greek sausage with peppers and onions and orzo.
3. The beach! A nice ten minute drive from me.
4. The ghettos! Ok, this part surprised me, but Savannah has the nicest looking run-down section of any town I've ever been to. The houses are gorgeous! (even if they are VERY old)
5. 6 Gb DSL! Yes, you can get this most anywhere, but I like it. I gave up tv for this during the move, and it's worth it. (I confess, I'm waiting for NFL preseason before I get the cable hooked up.)
6. My job! (I discussed this previously)

Tuesday, May 27, 2008

Tom Coburn and the Republican Problem

In an opinion piece at, Tom Coburn nails the Republican problem:
Voters are tired of buying a GOP package and finding a big-government liberal agenda inside. What we need is not new advertising, but truth in advertising.

...The fruit of these efforts is not the hoped-for Republican governing majority, but the real prospect of a filibuster-proof Democrat majority in 2009. While the K Street Project decimated our brand as the party of reform and limited government, compassionate conservatism convinced the American people to elect the party that was truly skilled at activist government: the Democrats.
Coburn even goes on to explain why "compassionate conservatism" is neither compassionate nor conservative:
Compassionate conservatism's next step – its implicit claim that charity or compassion translates into a particular style of activist government involving massive spending increases and entitlement expansion – was its undoing. Common sense and the Scriptures show that true giving and compassion require sacrifice by the giver. This is why Jesus told the rich young ruler to sell his possessions, not his neighbor's possessions. Spending other people's money is not compassionate.
A valid point to George Bush (as well as those who use religion to defend their socialism), who probably isn't listening any more than the rest of the Republicans.

Saturday, May 24, 2008

The Not-so-great Political Debate

Have you noticed that on practically EVERY campaign issue between Republicans and Democrats, there is no longer a question of WHETHER government intervention is needed. It is now only a question of how much government intervention.

Even when politicians use the buzz words "free market", it is usually followed up with some government program. Take John McCain's global warming solution. He says we need a free market solution in one breath, while in the very next breath he calls for a "cap and trade" carbon emissions system. And don't even ask about Barack Obama's solution, which offers just about every environmental government program imaginable, short of having "carbon emissions police" carrying CO2 detection devices, breaking into private homes in the middle of the night (although check back next week. Obama might change his mind).

Consider taxes. Do we need an income tax system where we have to report to the government every detail of how we, as individuals, make money? Do we need tax breaks for every special interest lobbyist in D.C.? No one in either party asks whether we should eliminate the income tax for an alternative form of revenue collection (i.e. the FairTax). No one in either party talks about eliminating corporate taxes, even though it would revive the U.S. manufacturing sector. McCain's idea to cut the corporate rate from 35% to 25% is a nice start, but that should be the argument from the Left, not the Right.

Look at healthcare. We got this problem when the government gave companies tax breaks for providing health insurance to employees. Now we have a large segment of the population which expects someone else to pay for their healthcare costs. But nobody asks if we should completely remove government's role from the healthcare issue.

Of course, we cannot forget high gas prices. Nearly every aspect of the high prices can be traced to government actions:
1. Gas taxes which account for more government revenue than oil companies make net profits from the sale of gas.
2. The devaluation of the dollar, which leads to higher prices when we buy gas from overseas.
3. The government's refusal to allow drilling for oil in places like Alaska and off the coasts of Florida and California.
4. The government's support of the biofuel industry (which has also led to higher food prices). Unfortunately, oil companies have no incentive to build new refineries in the U.S. when they see the government supporting an industry which could take a large chunk of their market share in the near future. Why build a refinery which will take 20+ years to see a profit when you may not need it in 20 years? In addition, our insufficient refinery capacity for our oil consumption forces the oil companies to order oil from overseas refineries (also adding to our cost).
5. Whether you agree or disagree, environmental regulations add to the cost. Everything from drilling for oil to refining oil has environmental regulations on it. These costs are all passed along to the consumer.

Aside from numbers 1 and 3 above, no one asks about the other three government interventions. And the taxes are only mentioned in McCain's absurd "summer gas tax holiday" (why not a year-round gas tax holiday?).

This is NOT to suggest getting government out of these issues is the only way, or even a good way. Rather, it begs the question of WHY the possibility is NOT even part of the political debate. Why would politicians ignore it? Unfortunately, this is a question that answers itself. Politicians from both parties can see that their own power rests in the expansion of government. The more government expands, the more power they have over the people.

Even people who think we need more government (i.e. liberals and socialists) would look at the period earlier this decade when the Republicans controlled the White House and the Congress in disgust. But they would happily give the Democrats that kind of control, even though we could expect the same levels of unchecked corruption?

The great irony is that socialism was descended from a political theory, Marxism, which was born from a healthy distrust of aristocratic European government's abuses of power. The even greater irony is that the anti-establishment leftists of the 1960's have become the modern day Democrats who LIKE the idea of more government.

"That government is best which governs not at all" - Henry David Thoreau

How did we go from a society with a healthy disrespect for government power, as exemplified by millenia of monarchical abuse of power, to one where we happily hand over the keys to our lives to government, without even asking "why?"

Wednesday, May 21, 2008

Ayn Rand, Phyllis Schlafly, and a ditsy coed

I have been reading Atlas Shrugged for awhile now (I know I am past page 400). While I am nowhere near done with it, I must admit that Ayn Rand has the liberals in her book portrayed perfectly. They do everything for altruistic reasons, regardless of how stupid or how many people inevitably end up getting hurt by their actions.

I mention this because I was reading an interview over on the Fox News website today between Laura Ingraham and Jill Strominger, a Washington University student who was one of many students and faculty who protested against Phyllis Schafly's receipt of an honorary degree there (by standing up and turning their backs to the stage):
LAURA INGRAHAM: ...Which conservative, which prominent conservative do you think would deserve an honorary degree at Washington University? Why don't you name a few?

JILL STROMINGER, PROTESTER, WASHINGTON UNIVERSITY: Well, I absolutely think that's not the issue, Laura.

INGRAHAM: Now what is the issue? And I just ask the questions, Jill. Stay with me here. We only have a few minutes.

You turned your back on one of the leading lights of the conservative movement. Phyllis Schlafly is a pioneer. Whether you agree with her or not, she changed the way people think about politics in this country, period. So I'm asking you: If she is not someone who legitimately should receive an honorary degree, which conservative do you think should?

STROMINGER: Well, I mean, there are many fabulous choices, like Colin Powell. But the issue...

INGRAHAM: He wouldn't qualify as a pioneering conservative. He's a great man though.

STROMINGER: Laura, you're completely mischaracterizing, you know, what happened and what we were standing against, which is actually part of the reason that we chose to protest Schlafly.

Our problem was less her specific viewpoints but more the way that she expresses herself. The way that she mischaracterizes her opponents and how her style of debate changed the debate in such a way that it led people to be oppressed.

INGRAHAM: Jill, do you or do you not believe in free speech on college campus?

STROMINGER: I absolutely believe in free speech, but there's a difference.

James Taggert or Lillian Reardon could not have said it better than Strominger, who would have fit perfectly into Rand's novel. But I haven't gotten to a part in Atlas Shrugged that includes ditsy liberal coeds.

I still want to know who has been led to be oppressed because of Phyllis Schlafly's "style of debate"? And how does one lead people to be oppressed in the first place? "Please, come here. I'm in the mood to oppress someone today, and you look like a jolly good candidate!"

Seriously, I watched the interview afterwards, and Strominger was clearly nervous (and not very Media savvy). Laura Ingraham had her for lunch.

But even with that consideration, Strominger showed where liberal arguments fall apart. I question whether Strominger even knows who Schlafly is, other than Strominger knows Schlafly is a conservative. But for most liberals, that is all they need to hear. Much like a KKK member only needs to know someone is black to hate them, liberals only need to know a person is conservative to hate them.

Liberals tend to be two-dimensional characters in our society, much like the antagonists in Atlas Shrugged. For both, there is what they feel, and what they do. What they think is irrelevant, since reason never enters their mind.

Monday, May 19, 2008

The not-so-gay marriage post

(This post is dedicated to Myrhaf. He inspired me, but not in the way he intended.)

Why do we have marriage at all?

What do WE gain as individuals, or as couples, from the state sanctioning our relationships?

Wikipedia has this somewhat overly simplistic answer:
A marriage, by definition, bestows rights and obligations on the married parties, and sometimes on relatives as a consequence. These may include:

*giving a husband/wife or his/her family control over a spouse’s sexual services, labor, and/or property.
*giving a husband/wife responsibility for a spouse’s debts.
*giving a husband/wife visitation rights when his/her spouse is incarcerated or hospitalized.
*giving a husband/wife control over his/her spouse’s affairs when the spouse is incapacitated.
*establishing the second legal guardian of a parent’s child.
*establishing a joint fund of property for the benefit of children.
*establishing a relationship between the families of the spouses.

Mind you, all of these things can be obtained or done outside of marriage, although admittedly some of them are more expensive than others. But based on this list, one could easily conclude the purpose of marriage was to save some hefty legal fees.

(Of course, anyone who has been through a divorce knows they get you on the back-end with the legal fees.)

So basically marriage is kind of a no-brainer for any couple, regardless of their sexual orientation. If you completely trust someone, why not marry them? The practicality of marriage extends beyond the answer of "love".

But marriage is NOT just a contract between two people: The state sanctions it. Because of the legal arrangements involved, the institution of marriage is a three-way deal: you, your spouse, and WE THE PEOPLE!

So what benefit do "WE THE PEOPLE" gain from the sanctioning of "love"? If I am going to be paying taxes to keep your marriage license filed as well as a whole bunch of other legal freebies, not to mention your tax breaks, what's in it for me?

If you tell me your "happiness", I'll call you naive on the subject of marriage. Anyway, I am NOT paying money to the government to support your happiness. Get your own.

Now if you tell me you are going to have children, or adopt children, THEN you have my blessing (and my tax dollars). Your children are not only your future, but also the future of our country. Love them, and raise them well.

Unfortunately, that brings us to the issue of gay marriage (the ultimate oxymoron). My answer on this question is similar: If a homosexual couple already has a child from a previous relationship, or if they will adopt a child, or if they want to be artificially inseminated, then I have no problem with them getting married.

Otherwise, they are no different than a heterosexual couple living together. Have your jollies, then move on. But DON'T ask me to sanction your relationship!

This brings us to the question of how is the government supposed to ascertain the intentions of marrying couples. It is quite simple really: When a man and a woman get married, what are the odds of procreation occurring? Now compare those odds with those of a man and a man, or a woman and a woman?

Many years ago, when this issue first came up, I asked a simple question: Would you give a blind man a driver's license? Then why on earth would you give a homosexual couple a marriage license?!

This whole issue is about asking for rights, with none of the responsibilities. When the homosexual community shows me they are serious about the responsibilities of marriage, specifically procreation or raising children, THEN I will support them politically.

Tuesday, May 06, 2008

Syllogism of the day

If money is the root of all evil, and we should give money to poor people, wouldn't that make poor people evil?