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.

Minimum wage hike hits San Fran comic shop: ‘I voted for that, and I didn’t realize it would affect you’

National Review San Fran ComicRegular readers of this blog know that on any given day they might get a post on minimum wage or they might read a review of Dan Slott’s run on The Amazing Spider-Man. Today is a special occasion for yours truly because our friends in San Francisco have provided me with a chance to touch on the comic book industry and minimum wage laws at the same time!

National Review somehow managed to get the owners of Comix Experience to agree to an interview for its piece “When Minimum-Wage Hikes Hit a San Francisco Comic-Book Store.” Nothing says it better about progressive public policies than the first sentence:

I’m hearing from a lot of customers, ‘I voted for that, and I didn’t realize it would affect you.’”

So says Brian Hibbs, owner and operator of Comix Experience, an iconic comic-book and graphic-novel shop on San Francisco’s Divisadero Street, of the city’s new minimum-wage law. San Francisco’s Proposition J, which 77 percent of voters approved in November, will raise the minimum wage in the city to $15 by 2018.

As of today, May 1, Hibbs is required by law to pay his employees at Comix Experience, and its sister store, Comix Experience Outpost on Ocean Avenue, $12.25 per hour. That’s just the first of four incremental raises that threaten to put hundreds of such shops out of business. …

Hibbs says that the $15-an-hour minimum wage will require a staggering $80,000 in extra revenue annually. “I was appalled!” he says. “My jaw dropped. Eighty-thousand a year! I didn’t know that. I thought we were talking a small amount of money, something I could absorb.” …

“Despite being a progressive living in San Francisco, I do believe in capitalism. I’d like to have the market solve this problem.” That applies not just to his plight, but to the question of the minimum wage: “We’re for a living wage, for a minimum wage, in principle. . . . But I think any law that doesn’t look at whether people can pay may not be the best way to go,” [Mr. Hibbs added].

“I didn’t realize it would affect you.’” That sentence should be tattooed on the forehead of every person who walks into Comix Experience and realizes that the minimum wage law he or she voted for doesn’t just hit “the rich” because the vast majority of job-creators in the United States are small business owners. Wages and prices aren’t just arbitrary numbers — they convey important information about the cost of business — and that often doesn’t sit well with people with little to no understanding of basic economics.

Perhaps the strangest thing about places like San Francisco is that no matter how much evidence piles up that playing Puppet Master with the economy is a horrible idea, citizens continue to vote for wannabe puppeteers. The unintended consequences of trying to control an infinite amount of transactions between free people rarely causes a left-leaning population to reevaluate its political disposition.

It will be incredibly sad if Comix Experience can’t figure out how to raise an extra $80,000 per year and is forced to let some of its employees go. If that does happen, then perhaps those involved will realize that good intentions mean little if the end result is pink slip or a “Going out of Business” sale.

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.

‘Maximum wage’: America’s Communist thugs deny they are Communists, sell tyranny as compassion

Marx

Imagine there was this guy named Steve Jobs. He had a vision for a computer company that he wanted to make. He had all sorts of ideas for weird devices he just knew in his heart people would love. He would call them the ‘iPad’ and ‘iPhone’ and ‘Mac’ (people would love it like the McDonald’s Big Mac, but this would actually raise the standard of living for hundreds-of-millions — perhaps billions of people — instead of cholesterol).

In order to achieve his dreams in a limited amount of time (who knows when we’ll kick the bucket — we can all die at any moment), he needed to raise a lot of money. He needed the freedom to run a company as he saw fit. He needed to pay himself and his employes what he believed would bring that dream closer to fruition. In short: He needed to do what he wanted with capital he acquired through legal means.

Enter egg-headed American Communist thugs who deny they are Communist thugs while selling tyranny as compassion:

Nearly everyone writing on the subject [of income inequality] agrees that inequality is increasing, and growing numbers of Americans are troubled by the trend. The question is what can be done about it.

Increases in wealth, inheritance, and incomes taxes certainly might do some good.

But not as much as imposing a maximum wage.

No, this isn’t some Marxist fantasy. It’s a clear-eyed response to the fact that in 2012 the ratio of CEO compensation to that of a typical worker in the United States was an astonishing 273-to-1. …

CNN columnist John D. Sutter has smartly suggested a maximum wage set at 100 times the federal minimum wage of $7.25 an hour (or $15,080 a year based on a 40-hour work week). That works out to a maximum of roughly $1.5 million a year.

Or if that’s too harsh, how about making it 200 times the minimum, raising the maximum to $3 million a year. Hell, we could even peg the maximum to 1,000 times the minimum wage — $15 million a year — and still allow CEOs to be filthy rich while reining in the most obscene excesses at the very top.

Now imagine that you’re Steve Jobs. What would you do? Because you’re a visionary, you might still accomplish your dreams, but there is no doubt that a very low ceiling has been placed over your head. And that ceiling, thanks to tyrannical thugs at mainstream media outlets across the nation, might not be one you can bust through.

Here is what Mike Fossum of the International Space Station said of Steve Jobs upon his death:

In every generation there are great thinkers and people that have the vision of what can be and then have the energy, the skill, and the genius to make it happen. Steve Jobs is definitely one of those rare individuals, and the world’s gonna miss him a lot,” —  Commander Mike Fossum of the International Space Station.

In an alternate reality, where guys like CNN columnist John D. Sutter and Marxists who deny they’re Marxists have had their way, Commander Mike Fossum of the International Space Station says this of Steve Jobs:

“Steve who?” — Commander Mike Fossum of the International Space Station; Communist Reality 616.

Everyone on earth has different dreams and ambitions. “Income inequality” can result from any number of things, and only greedy and envious losers who seems to think there is a giant money pot with a fixed amount of cash in it are interested in arbitrarily setting the wages a man can pay himself — at his own company.

Money does not matter to me. I honestly do not care about money, aside from being able to be my bills. I enjoy writing, and I’ve always said that I’d be happy working at Panera Bread as long as I could go home at the end of the day and write my blog, work on my book and dabble around in other creative endeavors.

However, because I don’t care about money, there is no doubt that I am making less than I would if I did make it a high priority. And yet, Communist thugs from ‘The Week,’ CNN analysts, and hacks like Paul Krugman use me — and others like me — in statistics to prove that I am “exploited” and that other men should be shackled from making large sums of money at their own companies. Why on earth would I care if someone like Mitt Romney makes millions of dollars a year in the private sector? Why should I care what men in the vein of Steve Jobs pay themselves in the finite amount of time they have to walk the planet? If a man’s goal is to experience what it feel like to make $10 billion while he walks the earth, I wish him the best of luck and do not want to see him hampered by envious individuals with less drive and determination than he.

There are many reasons why income may differ from person to person over time. None of them have anything to do with nefarious plots to keep “the poor” (as if “the poor” is a static group) poor. Fee markets — true free markets — are not zero-sums games. When one man profits, it does not necessarily mean that one man must lose something.

If a man makes his fortune through legal means, his hopes and dreams should not be encumbered by tyrants cloaked as compassionate saviors.

I posted Lee Doran’s take down of the ‘income inequality’ crowd before, but I think that it’s time to post his video again. I don’t like to throw the word ‘evil’ out very often, but a person who tries to convince others to voluntarily embrace tyranny and servitude is engaging in an evil act.

Venezuela’s Maduro tries to stop spinning down the toilet drain by spinning faster

Flush

Venezuela has number of problems on its hands lately, one of which had been toilet paper shortages predictably caused by its awesomely awesome socialist revolution. This is fitting, because its economy has been spinning down the drain. Now, Venezuelan president Nicolas Maduro has a bright idea for preventing the flush from completing — spin faster!

USA Today reports:

“I want a Sony plasma television for the house,” said Amanda Lisboa, 34, who waited seven hours outside a Caracas Daka store, USA Today reported. “It’s going to be so cheap!”

“This is for the good of the nation,” Mr. Maduro said in the report. “Leave nothing on the shelves, nothing in the warehouses. … Let nothing remain in stock!”

“This is more like government-sanctioned looting,” said Caracas-based engineer Carlos Rivero, 42, USA Today reported. “What stops them going into pharmacies, supermarkets and shopping malls?”

Looting, indeed. When you go after private property owners — at gunpoint — call them “bourgeois parasites,” and tell the people it’s all being done in the name of “fairness,” lawlessness ultimately will rule the day.

Think this can’t happen in the United States? Think again:

While the country is immersed in Obamacare headlines and a congressional tussle over delays and mandates, the Obama administration is stealthily moving toward unprecedented control over private property under a massive expansion of the Environmental Protection Agency’s Clean Water Act authority.

The proposed rule, obtained by the House Science, Space, and Technology Committee in advance of EPA Administrator Gina McCarthy’s testimony at a Thursday oversight hearing, widely broadens the definition of waterways over which the federal government has jurisdiction to as little as a water ditch in a backyard.

The Clean Water Act redefinition of “waters of the United States” would include all ponds, lakes, wetlands and natural or manmade streams that have any effect on downstream navigable waters — whether on public lands or private property.

The U.S. is going down the same drain, but the difference is that we have people who are trying to slow the process down. It’s just sad that advocates of administrative state are trying to create a bureaucratic vortex of centrifugal force to keep us in the toilet. “Got a ditch in your back yard, kid? Yeah, well, that means it’s the federal government’s yard, now. We’ve been spying on you for quite some time and, quite frankly, we don’t like what you’re up to. So now, you’re up to nothing.”

As I said in August, 2011:

We know how statists feel about the Founding Fathers—and it’s not warm and fuzzy. In order to hide their animosity towards the Founding Fathers and the magnificent document they produced, they refer to the Constitution as “a living document” (i.e., it means whatever it is they want it to mean.) Only by viewing the Constitution in that light can the statists work around what has been an impediment—and a source of frustration—to their central planning for ages. In order for them to succeed, they need power. In a country of 400 million people—each with their own thoughts and dreams and desires—it requires incredible power to get everyone “in line.” The Constitution stops them in their tracks, which is why its defenders must be labeled “unhinged.”

To see how this works, one needs to look no further than the early roll out of Obamacare. Already, politicians are blaming the insurance industry for the economic fallout of their own policies. Individuals who understand basic economics predicted millions of people would lose their plans, that prices would go up, and that the Affordable Care Act would in fact not lower the underlying costs of the health care industry. Now that the writing is on the wall, even Diane “I think you might be a terrorist some day” Feinstein is trying to find a way to avoid the political fallout.

The world was always complex, but as technology advances the world’s perpetual busybodies will become increasingly frustrated. There are too many moving parts. Billions upon billions of voluntary transactions take place ever day between complex spiritual beings with free will. One camp seeks to control the uncontrollable — which has a historical track record of ending in tyranny — and the other believes that the free market (another imperfect system in an imperfect world) is still the best system ever devised for allowing man to obtain his full potential while pulling countless others out of poverty.

Americans should watch what is happening in Venezuela, because in many ways it is giving us a glimpse into the future if we refuse to change course.

Update: I’ll be on NPR’s “Wait…Wait…Don’t Tell Me” on Saturday, Nov. 16 talking about Venezuela.

Venezuela: You can’t have a revolution without a few skidmarks; ignore the toilet paper shortage!

Here we have Venezuelan president Nicholas Maduro telling the "unwashed masses" that if they put their fist into a ball and use it correctly, there is no need for toilet paper. True, the soap shortage will have to be figured out with the increased demand, but price controls will fix that, too. Or not.
Here we have Venezuelan president Nicolas Maduro telling the “unwashed masses” that if they put their fist into a ball and use the surface area correctly (knuckles are key!), there is no need for toilet paper. True, the soap shortage will have to be figured out with the increased demand, but price controls will fix that, too. Or not.

How greedy are capitalists? They’re so greedy that they would dare to make a profit on something as essential as toilet paper. Or … perhaps not. Perhaps socialists are so economically challenged that they would try price controls on something as essential to odorless living as toilet paper.

I’ve been meaning to write on this subject for quite some time, but I’ve held off because I feel bad doing so. The free market allows me to buy Quilted Northern as well as Charmin. My bottom is so pampered living in the United States that I don’t want to kick a socialist while he’s down. But … what the heck. At some point we all must answer for our own stupidity; life is full of learning moments if we’re willing to listen.

The Associated Press reports:

CARACAS, Venezuela — Police in Venezuela say they have seized nearly 2,500 rolls of toilet paper in an overnight raid of a clandestine warehouse storing scarce goods.

The Thursday announcement on Twitter said that the officers raiding the garage in western Caracas also seized about 400 diapers and 7,000 liters of fruit juice.

Police chief Luis Karabin told Venezuelan news agency AVN that police, acting on a telephone tip, found “merchandise that we know is scarce on the shelves and doesn’t reach the people.”

Toilet paper is hard to find in Venezuelan grocery stores, as are staple food items such as sugar, milk and cooking oil.

What would it be like to live in a society where tipsters are ratting out their friends and family over rolls of toilet paper? I don’t particularly know, although if you pay attention to the news in the U.S. you’ll find that many, many Americans buy into the notion that price controls work.

I’ll leave it to Lee Doran of “How the World Works” to explain in greater detail:

Over and over and over again, politicians and well-intentioned folks act on behalf of “the poor,” in ways that predictably hurt “the poor.” And when that happens, people are ignorant enough when it comes to basic economics to continue to blame businessmen whose crime is apparently trying to produce a product and get it to the market.

Don’t like what you’re seeing in Venezuela? Think it’s funny? It’s actually not that funny because basic economics is not taught in high school. Most people avoid it like I’d avoid eating burritos in Venezuela right now.

America is on a strange trajectory. A frightening size of its population sees nothing wrong with $17 trillion dollar debt toilet drains, trillion dollar deficits and public policy primordial soup messes that come out of Congress crafted with sound economics as an afterthought.

To my fellow Americans, I say: Do not laugh too hard at our friends from Venezuela. There are plenty of stealth socialists right here at home, and listening to them already has us on the path to Skidmark Row. Let’s wake up before it’s too late.

Lee Doren takes down ‘Wealth Inequality in America’ video as only he can

Recently, a video titled ‘Wealth Inequality in America’ was uploaded and has gained millions of views. Based on the comments section, there are a lot of really envious people who have little to no understanding of basic economics out there. I had planned on deconstructing the video, but Lee Doren of CEI has already done the work for me as only he can. If you’re not familiar with his YouTube channel, “How The World Works,” then check it out. If the old Milton Friedman show “Free to Choose” was brought back, Mr. Doren would be a great host.

The other reason I’m not breaking down “Wealth Inequality in America” is because I’m busy licking my wounds. Last night I was thoroughly thrashed by a Scrabble Shark, who lulled me into a false sense of security by starting off the game with ‘dug,’ and my wife with ‘gone.’ Shortly thereafter my wife’s friend  busted out the Official Scrabble Dictionary (Who just randomly has that except Scrabble hustlers?), and both of them started slinging out words only medical students know. Like Apollo Creed I underestimated my opponents, and wound up dying on the mat.

This is an accurate representation of what happened to me when I got too cocky during a game of Scrabble with my wife and her friend. Like Rocky Balboa, I am now going off to Russia to train for a rematch.
This is an accurate representation of what happened to me when I got too cocky during a game of Scrabble with my wife and her friend. Like Rocky Balboa, I am now going off to Russia to train for a rematch.

With that said, here is Doren’s video. If you’re looking for the proper response to socialist claptrap, you’ll want to want to watch Wealth Inequality in America, The Critique.