Friday, November 20, 2009

Why Peyton Manning Deserves to Make More Money than a School Teacher

Occasionally you will hear proponents of public schools whining about how little money teachers make, and sometimes they will mention that professional athletes make 100 times (for argument's sake) more money than a school teacher.  This is apparently unfair in the mind of the union hack, as a school teacher clearly provides more to society than Peyton Manning.

This argument relies on flawed economic reasoning.  Prices and wages are not derived from societal benefit.  If this was true, parents should make the most money.  But they typically work pro bono.  Also, Congressmen should make negative money, based on how they typically leach the lifeblood out of society.  The fact of the matter is that wages are determined entirely apart from any consideration of the value a job presents to society.

Wages are determined by supply and demand.  That's it.  And the fact of the matter is that hundreds of thousands of people are "qualified" to be school teachers, regardless of the benefit teachers present to society.  Only one person is qualified to play quarterback like Peyton Manning can.  And that's why he makes stacks and stacks of cash.  Because he's the only person in the world that can play like he can.  Further, Manning's employer makes tons and tons of money off of his services, through increased jersey sales, ticket sales, and increased television revenues.  As such, someone is demanding the services of a top-tier quarterback, and an employer stands to make a lot of money by getting this quarterback to play for him.  Supply is small (only 1 person) and demand is fairly high (32 teams who stand to gain a great deal from his services) and as such he is paid a high wage.

In fact, Peyton Manning deserves to make more money than he does.  If a salary cap didn't exist in the NFL, he would probably make more money than he does now.  And school teachers deserve to make less than they do.  If the teachers' unions didn't have a vicegrip on public policy in most states, and if spineless schools actually had to spend their own money rather than the taxpayers' money, school teachers would almost certainly get less than they do.  Plus, they only work full time for 9 months of the year, and get paid a very generous full year salary.  

This is why Peyton Manning is far more deserving of an extremely large salary than a school teacher.  Because voluntary participants in an exchange economy don't have to care about societal benefit.  They care about the supply of the things they need for a living.  This is how society allocates resources, and complaining about it really does no good.

Saturday, November 14, 2009

Language and Politics

I was recently at the American Enterprise Institute for an event in which the economic advantages and disadvantages of the "estate tax" (many of you will know this better as the death tax) were debated.  This got me to thinking about language and politics.  At this event, it was stated that when asked essentially identical questions (something like "do you support an estate/death tax on estates worth mover than 3 million dollars after death?), when the word estate was chosen over death, the tax was a full 10% more popular. People aren't so much in opposition to a tax on estates after death as they are to some ethereal concept known as a death tax.  Even though the estate and death tax are the same thing, people are more likely to support an estate tax, even when given a description of what the tax is. 

Are we really so illogical that labeling changes our opinion of something?  Absolutely.  End of life counseling v. death panels.  Cap and trade v. cap and tax.  Government takeover v. health care reform.  Social security.  Medicare.  Temporary aid for needy families.  Food stamps v. electronic benefits transfer program.

If it didn't work, politicians wouldn't do it.  But the incredible power of rhetoric can be used to stir up the people.  Would it be likely that Social Security ever would have been passed had it been called the massive government ponzi retirement scheme?  But who opposes society?  Or security?

Frankly, I have no idea of what to do about this.  But it's very interesting to see the power that nice and nasty words have over people.

Monday, November 9, 2009

End of Tyranny

As most of you know, I usually do not speak very glowingly of our government.  But on this day I will.  Twenty years ago today, the Berlin Wall fell, signaling the beginning of the death throes of communism.  This day represented the liberation of millions of people from true unadulterated tyranny.  Our government is taking steps in the wrong direction, but we still enjoy an incredible amount of freedom here.

The freedom we have to speak our minds, the freedom to practice our religions, the right to a trial, the rule of law, and a host of other freedoms are things which we enjoy every day and usually don't even think about.  To paraphrase JFK, democracy is deeply flawed.  But at least we have never had to build a wall to keep our people from leaving.

On this day, be grateful for the great country that we live in.  It certainly has its flaws, but it is the greatest country in the history of the world.  Freeedom is a great thing, and we have an incredible amount of it here.  We have been greatly blessed.

Friday, November 6, 2009

Too Many Republicans

I and thousands of other protesters attended the health care rally in DC yesterday.  The protesters were great.  The speakers, not so much.

At about 12:05, all of the House Republicans came running down from the Capitol building.  One legislator tried in vain to pump up the crowd.  I kept expecting to hear Queen blasting from the speakers.  The speakers all co-opted tea party terms like liberty into their speeches.  Many spoke about the need to defend the Constitution.  But where was this principle during the Bush years?  Where was this principle when they authorized a monstrous new entitlement program costing us billions (Medicare part D)?  Or expanded education spending exponentially (No Child Left Behind)?  Or passed out "stimulus checks"?  Or bailed out banks from their "troubled assets"?

I am glad that our reps railed against health care.  I will take any help I can get to kill the bill.  But don't insult me by waving your Constitution around when you have clearly ignored it for the last 8 years.  And longer.  Really, the last 100 years.

Republicans and Democrats are plagued by a similar character flaw; arrogance.  They all think that they know what's best for your life better than you do.  Republicans are liberals with a clearer sense of human nature.  That's why they try to interject market forces into (Medicare Part D's "donut hole") or "reform" entitlements (welfare reform in the 1990's) rather than just doing away with it all and letting you decide what's best for the life of you and your family.  They don't want you to be able to use your money the way that you want to.  They are wiser than you, and they will use your money better than you will.

But they are all human beings.  Some of them are wiser than us, but that does not give them the right to dictate to ordinary Americans what's best for our lives.  Hayek commented on the basic problem with this mindset.  He said that information is the primary problem.  No bureaucrat or politician can have the detailed knowledge of the lives of all Americans in order to make informed, rational decisions on all of our behalf.  If he had that knowledge, and he was wise enough, he could make great decisions for all of us.  But each one of us knows what's best for ourselves better than any politician.  A little humility and acknowledgment of human limitations would be greatly refreshing from our leaders.  Policy cannot solve every problem.  It can't even solve most of them.