HOW THE WEST WAS LOST
Just read this from the above book - it should disgust you and
show you how wacky the West is - Keith Hunt
A MISALLOCATION OF LABOUR: PRICE SIGNALS
In June 2009 Real Madrid, the Spanish football club, paid
Manchester United US$ 80m for Cristiano Ronaldo, dubbed one of
the world's greatest footballers. In Spain, his salary comes to
180,000 pounds a week (around US$286,650 in October 2009
dollars), up from his English earnings of 120,000 pounds per
week. Across the Atlantic, the take-home pay, for the year
2009/2010, of Kobe Bryant, the famed basketball star of the Los
Angeles Lakers, is expected to be around US$23m (i.e.around
US$442,000 a week). Contrast this with the average UK salary of
24,000 pounds (i.e. 463 pounds a week, and US earnings averaging
around US$45,000 a year (i.e. US$884 a week).
If asked, many people in the West would baulk at the salaries of
sport personalities, but would nevertheless keep their emotions
in check and chalk these fantastic earnings up as the
understandable and inevitable result of the free market.
What many fail to appreciate is that these stellar salaries come
at an enormous cost; not in terms of the cash parcelled out to
the supremely talented few, but in terms of the wider social cost
that the average Westerner has to bear. These incomes, while
barely believable, have become part and parcel of Western culture
because, as the advertising slogan goes, they're 'worth it'. To
be fair, there are Indian cricketers who command high salaries,
but nothing like those of their Western counterparts.
What we see here - the propensity for high salaries in ostensibly
non-productive areas - is another example of the misallocation of
labour, further contributing to the economic demise of the West;
yet another nail in the West's economic coffin, the significance
of which is barely acknowledged, and scarcely understood.
But what exactly is the relationship between these high salaries
for the lucky few and the West's continuing economic decline? How
can what Ronaldo or Kobe Bryant earn possibly hurt anyone else?
How could their good fortune lead to the West's misfortune?
In their 2008 bestseller, "Freakonomics: A Rogue Economist
Explores the Hidden Side of Everything," Steven Levitt and
Stephen Dubner describe the payout structure for drug-dealers in
the Southside of Chicago, whereby the top echelons earn millions
of dollars while the foot soldiers pocket only a few hundred a
week. The foot soldiers are prepared to work for their small
amounts in the belief that one day they might get lucky and earn
the large amounts. The potential pot at the end of the rainbow is
the allure. But for the majority, like most pots at the end of
rainbows, it's a fantasy.
In the minds of the hundreds of foot soldiers, the payout looks
like this: the small probability of making it big, multiplied by
the amount of cash they can potentially rake in, is larger than
the greater likelihood that they won't make it big, multiplied by
the cost of failure (i.e. getting arrested, injured or even
killed). This is the lottery effect - the value of a dream.
Whereas people seem to understand that this is how the drug
world's pay scheme works, what is not acknowledged is just how
much of this is mirrored in more legitimate spheres. Very much
like the drug world's foot soldiers, thousands of young kids
across the West, often with the sincere encouragement of their
parents, aspire to be the top basketball, football or tennis
players - wherever their nascent skill appears to direct them.
What they in almost all cases (after all, only a few make it to
the big leagues) refuse to accept is that they won't get there.
For every David Beckham or Michael Jordan there are a thousand
disappointed wannabes that nobody ever sees.
There is clearly an externality to society of having a larger
number of people attempting to make it to superstar level and
failing, and not developing widely usable skills.
It would seem that there is a good case for governments to adopt
a policy here, arguably one that places a 'special' tax on
high-income earners (sports people, etc.), from which payments
can be made to subsidize the many thousands of aspirants who
don't make it to the big league. Conceptually, this 'high-earners
tax' would not be so different from the environmental tax levied
on industrial companies. As this higher proportion of tax is
diverted from the salaries of top players to a communal pot, not
only would their incomes decline, but also fewer people would be
lured into these areas. The Nobel Prizewinning Ronald H. Coase's
theorem would say we should assign the cost of this externality
to one of the actors and let the cost of the externality be
traded. Another example could be to place a special tax on the
very institutions such as FIFA, NCAA and so on that are creating
the high earners.
Of course, it is not just sports people and athletes and
Hollywood actors who are benefiting from the irrationalities of
salary pricings. Chief executives in publicly traded companies
and hedge fund managers have also come under fire. There is,
however, an important difference.....
It is indeed WACKY that the West should be so crazy in its
payment to film and sports stars, to the relative few, out of all
the thousands that aspire to be like them.
The writer of the book "HOW THE WEST WAS LOST" - Dambisa Moyo -
goes on to tell you the LOSS to the West over such wacky doings
as paying these and other people such unbelievable pay-checks
each week. She puts the cards on the table and tells you the LOSS
to the West in doing business this way. And there is so much more
in her book about how the West has been lost. It will blow you
away, how stupid and wacky we in the West have been in the last
50 years or so.
YOU and your family need to have this book; it is an eye opener;
it is educational; it will blow you away with the facts; it also
gives the correct way we should be going. This lady knows what
she is talking about, she did not get a PhD by playing "field
hockey" with the girls.
It should be a requirement that anyone wanting to be a leader in
Western society - political leader - should have to read this
book HOW THE WEST WAS LOST.