Economics 101, retail edition

Tom Woods:

Bernie Sanders just tweeted:

“Walmart’s CEO Doug McMillon made about $11,000/hour in compensation last year. I’d like to hear from him why he thinks his workers don’t deserve to be paid a living wage of $15/hour.”

One of my Facebook friends replied, correctly, with this:

$11,000/hr is $22,880,000 assuming 40 hrs a week.
Redistribute that to the 2,300,000 Walmart employees and you get a whopping $9.94 per employee PER YEAR. With the CEO working for free.

OK, so maybe we’re not going to get to $15/hr by stealing from the CEO, but maybe we can get there by expropriating the shareholders.

Walmart had a net income of $9,862,000,000 last year. Redistribute that to the 2,300,000 employees and you get about $2/hr. Still not enough to have cashiers making $15/hr.

And of course if investors knew you would expropriate them in this way they wouldn’t have put up the money to build Walmart and it literally would not exist.

(Now before you tell me that Walmart uses the government’s roads, or gets some hidden privilege, that’s all beside the point: you think Bernie or his followers are making subtle distinctions like that?)

People in the thread were explaining about the value of the CEO, and why this kind of Tweet is — at the very least — extremely unhelpful.

Someone responded with:

“yeah but 11,000$/ hr thats f***ing absurd”

Why?

“because the average person working at that company makes like 10$/hr. ceo’s are not worth 1000x of 1 person”

Then why do they make that much?

“good question”

Then I jumped in: “Since you can’t answer the question, is it possible that you’re not really understanding the way the economy works? Maybe it’s a little more complicated than ‘this phenomenon seems unreasonable to be, so I shall condemn it’? Why would you think the contribution of the janitor in one building is comparable to a CEO running a worldwide enterprise, making decisions that affect millions of people?”

He said that “1 person is not worth 1000x of another person,” and that the real value added comes from “the people working the actual jobs on the front line.”

A philosopher in the thread responded, “I don’t know if any human being is worth 1000x another human being. However, yes, some people’s labor is worth 10,000 times other people’s labor.”

Then I chimed in (bold to make it easier to read): My father was a forklift operator in a food warehouse. He was intelligent enough to understand that his brawn alone would have accomplished nothing. Thanks to the capital investment by capitalists, he had a forklift that vastly increased what his labor was able to contribute to the enterprise. Not to mention the organizational genius necessary to coordinate the almost incalculable number of moving parts involved in running hundreds of grocery stores.

“No one should earn that much money,” you say. That’s just prejudice.

According to you, since lots of people struggle to earn even a fraction of that, they should simply earn more and other people should earn less. Why? How? On what basis? Your personal prejudices?

If you’re so concerned about inequality, I have news for you: you yourself are in the global 1%. To most of the world, you look like that CEO looks to you. What specific steps are you taking to make yourself more equal to them?

I never got an answer about what steps he was taking. You can imagine my surprise.

It’s always about what other people should be doing with their wealth.

There’s a lot of economic ignorance out there.

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