Stephen Colbert to Uber’s Travis Kalanick: Can you teach me basic economics?

Colbert Travis Kalanick

The Late Show with Stephen Colbert may not be the place where one can find Conan O’Brien-quality humor. It may not be the place where one can find Jimmy Kimmel-quality interviews. It is, however, the best late-night location for viewers who want to find a man who doesn’t understand basic economics.

Uber CEO Travis Kalanick was invited onto The Late Show on Friday for a generally hostile interview. Under the guise of, “Hey, I’m just asking questions!” Colbert treated his “guest” like he does everyone who he’d like to take down a notch. He failed because it’s not a good idea to take on a successful businessman before grasping basic economics.

Colbert: Explain surge pricing to me. Ok, if I’m someplace in say, Australia, and there’s a threat of a terrorist attack, why do prices triple? Is that how we should be treating each other?

Travis Kalanick: Absolutely not.

Colbert: But that happened.

Travis Kalanick: What happens is, when demand outstrips supply, the price comes up in a particular neighborhood or across the city. If it’s in a neighborhood and we see many more people need a car than there are cars available price goes up in that area. The drivers are told. They then go to that place so that more people can get a ride out. Sometimes, something happens in a city. We don’t know what it is. And if it’s an emergency, we basically turn it off because I just think community expectations are — an emergency, major weather events, things like that — we turn it off.

Let us turn to a scenario used by economists like Thomas Sowell. Say there is a hurricane and no power. The demand for flashlights will skyrocket. If the “greedy” store does not raise prices, then rich people (perhaps like Stephen I-brag-about-my-Tesla-car-during-interviews Colbert) are likely to buy many flashlights. Each member of a seven-person family may get a flashlight. If those prices are raised, then it is much more likely that, say, seven different families each buy one flashlight. The flashlights will be allocated much more efficiently. A guy like me, who already has a flashlight, won’t purchase an extra one “just because” I’m there buying water and canned tuna.

On another level, think of what Colbert is saying about how Uber drivers should respond during a terrorist attack (on the anniversary of 9/11, no less). Imagine there is a terrorist attack and you are an Uber driver. In Colbert’s mind (i.e., the mind of a man whose job is to tell jokes in an air-conditioned studio), you would be a jerk for charging more to drive into a life-threatening environment. Guys like Colbert can stand on a moral pedestal precisely because they don’t have to drive cars for money.

The interview continued on (no softball questions for you, Mr. Kalanick), and before long the subject once again turned to insinuating the wealthy businessman is really just looking for ways to exploit his employees until they are no longer necessary.

Colbert: Here’s another thing. I know you talk about how good this is for drivers, but you said you want like self-driving uber cars. That’s not for the driver. That’s just — we’re employing robots at that point. How is that helping … drivers at that point?

Travis Kalanick: Google is doing the driverless thing. Tesla is doing the driverless thing. Apple is doing the driverless thing. This is going to be the world. And so the question for a tech company is, “Do you want to be part of the future, or do you want to resist the future?” And we feel that, in many ways, we want to not be like the taxi industry before us. That’s how we think about it.

Colbert is the type of guy who probably lamented the invention of the internet because the music industry changed and it forced all those Tower Records employees to get a different job and possibly learn a new skill set. Today, however, he probably loves listening to Spotify on demand.

The good thing about The Late Show is that viewers get to see the “real” Stephen Colbert. The downside (for him) is that he can no longer hide his economic ignorance behind false personas.


Dan Price, CEO who pays all employees at least $70K, adopts business model at odds with human nature

Dan PriceThe CEO of Gravity Payments in Washington state announced a few months ago that he was going to pay all of his employees a minimum of $70,000 per year — regardless of what position they held in the company. Dan Price was going to be part of the vanguard in the fight against income inequality. If all went well, then history would record him as a leading general in the war against human nature.

The New York Times caught up with Mr. Price, and it appears as though human nature is a worthy adversary. The newspaper reported July 31:

Two of Mr. Price’s most valued employees quit, spurred in part by their view that it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Some friends and associates in Seattle’s close-knit entrepreneurial network were also piqued that Mr. Price’s action made them look stingy in front of their own employees. …

“Income inequality has been racing in the wrong direction,” he said. “I want to fight for the idea that if someone is intelligent, hard-working and does a good job, then they are entitled to live a middle-class lifestyle.”

If someone is “entitled” to a “middle-class lifestyle,” then how does one define “middle-class lifestyle”?

Why does Mr. Price seem to believe it is his role as CEO to play God by defining the kind of material comforts humans are “entitled” to receive?

Why does Mr. Price — a businessman — seem to mistake the wages he pays as a representation of an employee’s value as a person instead of the value their labor brings to the company?

Mr. Price’s intentions are well and good (he took a large pay cut to try and make the numbers work), but they are clouded by intellectual gobbledygook, economic ignorance, and a fundamental misunderstanding of human nature. To make matters worse, he violates his own litmus test for the middle-class lifestyle “entitlement” by issuing a blanket $70,000 minimum wage to employees who may not be “hard-working.”

The Times continued:

Maisey McMaster was also one of the believers. […] She helped calculate whether the firm could afford to gradually raise everyone’s salary to $70,000 over a three-year period, and was initially swept up in the excitement. But the more she thought about it, the more the details gnawed at her.

“He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump,” she said. To her, a fairer proposal would have been to give smaller increases with the opportunity to earn a future raise with more experience.

A couple of days after the announcement, she decided to talk to Mr. Price.

“He treated me as if I was being selfish and only thinking about myself,” she said. “That really hurt me. I was talking about not only me, but about everyone in my position.”

Already approaching burnout from the relentless pace, she decided to quit.

The new pay scale also helped push Grant Moran, 29, Gravity’s web developer, to leave. “I had a lot of mixed emotions,” he said. His own salary was bumped up to $50,000 from $41,000 (the first stage of the raise), but the policy was nevertheless disconcerting. “Now the people who were just clocking in and out were making the same as me,” he complained. “It shackles high performers to less motivated team members.”

The reason why many “intelligent” and “hard-working” individuals do not live a “middle-class lifestyle” is not because CEOs make a lot of money — it’s because humans are complex, spiritual beings with free will.

Some people invest their cash in fancy cars or expensive vacations, while others obtain human capital. One man puts in 70 hours a week at his job while a team member clocks out a 5:00 p.m. every day. One woman decides to raise children and work part time from home, while another devotes herself solely to her career. One man spends $1,000 per year on Starbucks coffee while the other puts it into an IRA so he can start his own coffee empire by the age of 40.

The businessman’s job is not to try and put a dollar sign on someone’s worth as a person, but instead to try and figure out how valuable their work is to the company.

Mr. Price’s compassion may give Gravity Payments short-term branding as the company with a big heart, but the biggest heart in the world is of little use if warped ideas swirling around the brain bring about an untimely death. Regardless, I am looking forward to a follow-up by The Times that takes place five years down the line.

‘Money: Master the Game’: Tony Robbins gives readers a sound blueprint for financial freedom

Money Master The Game Tony RobbinsWhenever I tell people that I’m a big fan of Tony Robbins, I get one of two reactions: Either the person I’m talking to agrees and a big smile comes to his face, or he squints his eyes and then says something about how Mr. Robbins must be a fake. Usually the people who find him suspect have never really listened to his presentations — perhaps they saw short clips of him firing up a crowd with his perpetual energetic delivery, or a brief appearance on the “Today” show — but little else. After reading “Money: Master the Game,” a monster at 616 pages, I will once again reiterate to anyone who will listen: Tony Robbins is the real deal.

There is really no way to break down the blueprint for financial freedom in a single blog post, and to try and do so would only do the book an injustice. However, my feelings on whether you should plunk down $28 for the book (probably $15 or less online) can be summed up from the following passage:

I was working as a janitor, and I needed extra money. A man my parents knew, and whom my father had called a “loser,” had become quite successful in a short period of time, at least in financial terms. He was buying, fixing, and flipping real estate in Southern California and needed a kid on the weekend to help him move furniture. That chance encounter, that fateful weekend of working my tail off, led to an opening that would change my life forever. His name was Jim Hannah. He took notice of my hustle and drive. When I had a moment, I asked, him, How did you turn your life around? How did you become successful?”

“I did it,” he said, “by going to a seminar by a man named Jim Rohn.”

“What’s a seminar?” I asked. “It a place where a man takes ten or twenty years of his life and all he’s learned and he condenses it  into a few hours so that you can compress years of learning into days,” he answered.Wow, that sounded pretty awesome. “How much does it cost?” “Thirty five dollars,” he told me. What!? I was making $40 a week as a part-time janitor while going to high school. “Can you get me in?” I asked. “Sure!” he said. “But I won’t — because you wouldn’t value it if you didn’t pay for it.” I stood there, disheartened.  “How could I ever afford $35 for three hours with this expert? “Well, if you don’t think you’re worth the investment, don’t make it,” he finally shrugged. I struggled and struggled with that one — but ultimately decided to go for it. It turned out to be one of the most important investments of my life. I took a week’s pay and went to a seminar where I met Jim Rohn — the man who became my life’s first mentor. — Tony Robbins, Money: Master The Plan (New York: Simon & Schuster, 2014), 260–261

Is your financial freedom worth at least $30? If so, and if you are generally in the dark about how to properly save and invest for your retirement, then you should read “Money: Master the Game.” The information inside it can literally translate into hundreds of thousands of dollars (perhaps millions?) during the course of your life. It can be the difference between having to take a job as the Walmart greeter when you’re 70 years old, and sipping drinks on a beach in Florida.

I do not say this lightly: I am extremely grateful to Mr. Robbins for writing this book. It came around at a time in my life when I had to finally start getting serious about planning my family’s retirement, and before I was even half-way through with the book I was taking advantage of the knowledge imparted within. After finally getting my financial affairs in order I circled back with two close friends who are excellent with money, and they said I made the right moves.

If you’ve ever felt like money controls you — and you’d like to be the one controlling money — then I can’t suggest Mr. Robbins’ book enough. He (and some of the most brilliant financial minds alive) give advice that is essential to securing financial freedom. I do have a few issues with the book (which I’m happy to expand upon in the comments section), but in general it’s a fabulous tool to have at your disposal.

Buy “Money: Master the Game” today and we’ll talk about it on a beach in Florida in 25 years.

Ferguson looters break glass, burn their own community down; Bastiat laughs from the grave

Ferguson FireIt’s probably a safe bet to say that the Ferguson, Mo. residents who looted liquor stores and McDonalds restaurants while essentially burning their own community to the ground late Monday, Nov. 24 have never read Frederic Bastiat. That’s a shame, because then they would know that while their actions may make glaziers happy in the short run, they have only done themselves long-term economic damage.

Ferguson McDonalds vandalismA grand jury decided Monday night that the evidence presented to them regarding the shooting death of Michael Brown did not warrant an indictment of police officer Darren Wilson. That evidence was combed through and analyzed by the federal government — The Department of Justice under Eric Holder’s leadership — as well as an independent forensics expert hired by the Brown family. Sworn statements by multiple eye witnesses backed what the forensic evidence was telling investigators — but that sort of thing doesn’t matter when you’re the kind of person who really, really wants an excuse to rob liquor stores.

Liquor Looter FergusonThere is something paradoxically sad, hilarious and frightening about watching men in “Scream” masks and black hoodies robbing liquor stores adorned with “Hands up, Don’t Shoot” posters.

Ferguson Scream MaskMany Ferguson looters erroneously believe that justice was not served by the grand jury’s decision. (Some know the truth but just want an excuse to steal.) However, they should be thankful that there are still enough members of their own community who are capable of letting evidence instead of emotion guide their thinking.

Ironically, the Ferguson, Mo. authorities will probably not be taken to task for turning a blind eye to the wanton destruction of their own community.

As Bastiat says in “The Law”:

“Man can live and satisfy his wants only by ceaseless labor; by the ceaseless application of his faculties to natural resources. This process is the origin of property.

But it is also true that a man may live and satisfy his wants by seizing and consuming the products of the labor of others. This process is the origin of plunder.

Now since man is naturally inclined to avoid pain — and since labor is pain in itself — it follows that men will resort to plunder whenever plunder is easier than work. History shows this quite clearly. And under these conditions, neither religion nor morality can stop it.

When, then, does plunder stop? It stops when it becomes more painful and more dangerous than labor.

It is evident, then, that the proper purpose of law is to use the power of its collective force to stop this fatal tendency to plunder instead of work. All the measures of the law should protect property and punish plunder,” — (Bastiat, The Law).

How many law-abiding business owners — who had absolutely nothing to do with Michael Brown’s death — will never recover from the destruction of personal property because of the misplaced notion that racial sensitivity trumps the law?

How many businesses — and the jobs that come with them — will now stay far, far away from Ferguson, Mo. because officials made the conscious decision to allow citizens to plunder from one another and raze portions of the city?

Enjoy your liquor, Ferguson looters. The rubble will still remain after your hangovers subside.

Dunkin’ Donuts employee’s death shamelessly used to push minimum wage debate

Dunkin APWhat kind of person would use the accidental death of a young woman as a vehicle from which to advocate for higher minimum wages? If you guessed the kind of individuals who work at The New York Times and Business Insider, give yourself a cookie — or possibly a doughnut.

Maria Fernandes worked at three different Dunkin’ Donuts in New Jersey, but she died Aug. 25 while napping in her SUV before one of her shifts started. The cause: a gas can that she kept in the back seat had somehow tipped over and opened, which filled her vehicle with fumes while she slept.

It’s an incredibly sad story, but one that has absolutely nothing to do with how much money she made at work and everything to do with the fact that she ignored her boyfriend’s warning not to sleep in her car with a gas can. Ms. Fernandes regularly refilled the can because she left her car running during extended naps.

That didn’t stop the New York Times from shamelessly using a woman’s death to push a political agenda:

In death, Ms. Fernandes has been held up as a symbol of the hardships facing our nation’s army of low-wage workers. Her friends say she earned little more than $8.25 an hour — New Jersey’s minimum wage — and passed her days and nights in a blur of iced coffees and toasted breakfast sandwiches, coffee rolls and glazed jelly doughnuts. …

In a statement, Michelle King, a spokeswoman for Dunkin’ Brands, said that Ms. Fernandes’s managers described her as a “model” employee. (Ms. King said she could not say how much Ms. Fernandes earned or describe the specific hours she worked, saying that only the three franchisees that directly employed Ms. Fernandes had that information. Ms. King declined to provide contact information for those franchisees.)

Business Insider took it even further:

The plight of service-industry workers has once again come to the forefront with the tragic recent death of Maria Fernandes. …

The incident highlights the fact that, in many places in the US, minimum wage isn’t nearly enough money for someone to live a healthy life, even if that person is extremely determined and conscientious. …

We used MIT’s Living Wage Calculator, which estimates the cost of living in a given area based on the price of various necessities, to better understand just how many hours a low-wage worker like Fernandes would have had to put in every week to make ends meet.

According to MIT’s calculations, living in Newark, where Fernandes did, would require an annual pre-tax income of $22,528. That means that at New Jersey’s minimum wage, $8.25, a worker would have to put in a little more than 52 hours a week.

Only the mind of a writer blinded by his or her own ideological zeal can turn an accidental death into a clarion call for higher minimum wages. The New York Times and Business Insider writers were both are aware that Ms. Fernandes “doted on her pet Chihuahua and three cats.” They both know that she “often slept in her car — two hours here, three hours there — and usually kept the engine running.” They know these things, and yet they still have no qualms trying to convince readers that if only she were paid $20 an hour, then she would still be alive today. Nobody knows that.

As uncomfortable as it may be for Business Insider to hear, sleeping in your car for hours each week with the engine running is expensive. If you have to carry a gas can in your car because you keep running out of fuel while you nap, then you are probably wasting money.

As uncomfortable as it may be for the New York Times to hear, owning three cats and a dog can be expensive. If you are trying to save money for school, as Ms. Fernandes was doing, then having four animals to care for is probably a waste of money.

Regardless, the whole discussion is essentially moot because the one person who could ruminate on what she thought about her employers, minimum wage laws, and the price she was willing to pay to have pets in her life is no longer living. She has passed away, and instead of simply grieving for a woman whose time on earth was needlessly cut short, political vultures swooped down and grabbed whatever bits and pieces of her life story that could be easily exploited.

If you get a chance, say a prayer for Ms. Fernandes and her loved ones. If you have a few more moments, say one for the writers at The New York Times and Business Insider, so that they might see how sick it is to twist an accidental death into an advertisement for their pet political issues.