The Pay Gap

Here is an interesting corrective on the nonsense CEOs make 311 times the average worker.  But I'd like to point out something others tend not to notice.

So we now know the greatest problem with the AFL-CIO statistic is that it is not representative of all CEOs, just those at the nation’s largest companies. The report does reveal an actual fact: there is a CEO to worker pay gap. The average CEO in the United States earned a salary of $178,400 in 2013, compared to $46,440 for the average worker (both figures exclude benefits). This is a radically different picture from the misrepresentation of the AFL-CIOs data report, which enthusiastically takes a group of outliers to draw conclusions from. The pay gap between the CEOs the AFL-CIO sampled and the average worker is a multiple of the gap between the actual average CEO and average worker.

Before benefits, note it says parenthetically "both figures exclude benefits."

A CEO of a company is denied practically nothing, but at a large company he is obliged to "play the game" that is sit through soul-killing meetings with politicians, attend charity events which bore him to tears, deal with pesky issues and never have enough time for family.  He is underpaid.

The small business owner also is denied nothing, and inasmuch as his business is his lifestyle, his activities are ordered to simultaneously business and lifestyle.

Let's take a new business with $360,000 in sales, a 50% gross profit margin, and ten per cent net.  In this case, cost of goods sold is $180,000.  Although we would never straightline purchases, let's pretend a 30 day turnover on inventory, which would mean the owner is in charge of buying $15,000 worth of inventory a month.

Now that inventory, and the logistics, and the paperwork is time-consuming, but that is just to get the goods in your warehouse ready to ship to your customers, against the orders you have received.

Getting those orders, having a warehouse, keeping it going, managing it all, all that is overhead.  So of $360.000 in sales, and $180,000 cost of goods (or landed warehouse value) we have a balance of $180,000 gross profit.  From the gross let's, for ease of elucidation, remove the net profit of (10% of $360,000)  $36,000.  $180,000 gross profit - $36,000 net = $144,000 that your company spends on salaries, sales commissions, royalties, travel, dues and subscriptions, heat light rent, professional fees, entertainment, goodness gracious... so much money, so little time.  But every cent is spent (or under the direction of) by you, the owner, the CEO.

This takes time, $12,000 a month in discretionary income on top of $15,000 per month on non-discretionary (since it is for what people ordered).

Yes, $12,000 discretionary, but with the double effect of pleasing both you and your customers, in both categories.  When you are working in joy having passed through the passion of the problem to solve, everything you do contributes to your happiness.  The payoff is the lifestyle attendant to the ends to which you work. In fact, most small business CEOS tend to take a very small salary since any money taken out is taxed, and it can just as easily be spent inside the business on the owner as a business expense, with the money going farther as pre-tax dollars.  The law provides for this.  Indeed it is so common the IRS, I hear tell, will come after some CEOs for making too little!

The big 500 CEO is being paid in order to accumulate, in the big 500 distorted definition of wealth.  The accurate definition of wealth is the degree to which how many people have access to what range of goods and services with their own earnings.  Only a free market can effect this, and socialism and capitalism interfere with the process, but in different ways.  A pox on both socialism and capitalism.  Well, they are poxes themselves on the comity.

http://www.etymonline.com/

weal

"well-being," Old English wela "wealth," in late Old English also "welfare, well-being," from West Germanic *welon-, from PIE root *wel- (2) "to wish, will" (see will (v.)). Related to well (adv.).

passion

from Late Latin passionem (nominative passio) "suffering, enduring," from past participle stem of Latin pati "to suffer, endure," possibly from PIE root *pe(i)- "to hurt" (see fiend). 

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

End of Deflation, or Just Volatility?

I think volatility, but Ambrose Pierce says Keynesianism worked:

The bond crash has been an accident waiting to happen for months. Money supply aggregates have been surging all this year in Europe and the US, setting a trap for a small army of hedge funds and 'prop desks' trying to squeeze a few last drops out of a spent deflation trade. "We we're too dogmatic," confessed one bond trader at RBS.

I don't think volatility, especially when there are shorts to be squeezed, can overcome the organic problems, or at least there are no policies in play, nor actors offering solutions, to the mess we are in.

I've been wrong before, but so has Ambrose Pierce.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Gold to Rise or Fall?

This from Mish, quoting Steen Jakobsen:

Gold will be the best performer in commodity-led rally. We see 1425-1435 by year-end.

See. I don't think so...  you do not get a rally in a massive downturn, gold goes down too, but not so fast nor so far, which makes it an excellent hedge in deflation.  We'll see who is right.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Stock Market Valuation Follies

The people who got the last bust right are predicting another one, when is not sure, and even how big cannot be estimated, for a simple reason: no one knows how distorted things are.  There is no way to estimate....

I was speaking to an international banker with HSBC about deflation, which he acknowledged is in play but waived it off as a problem for banks.  "My real problem is trust, wee cannot rust our clients any more..."  In essence, everyone is lying.

Here is a forensic review of how people lie about their businesses:

There is some truth to the argument that “this time is different.” The accounting mechanizations that have been implemented over the last five years, particularly due to the repeal of FASB Rule 157 which eliminated “mark-to-market” accounting, have allowed an ever increasing number of firms to “game” earnings season for their own benefit. Such gimmickry has suppressed valuation measures far below levels they would be otherwise.

Never look at another business with envy.  You have no idea what you are looking at, and what is behind it.  Only be pleased with your business, what you have created.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Trade With Iran Growing

After Vietnamese farmers defeated the imperial military might of the USA, we began trading peacefully with the Vietnamese.  Now that the welfare/warfare USA hegemon has been defeated in the Middle East, by farmers, we are now trading again, even with Iran, our chief target:

Iran imported $154.117 million worth of products from the U.S. and exported $195,616 worth of goods to the U.S. in the past calendar year. 

We could have simply traded with the middle east starting back in the 1950s, but capitalist welfare/warfare states need war to steal enough to make good on a few of their cross-promises.

Now we can let free trade bring peace and prosperity to us and he middle east.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Selling Into Canada: Non-Resident Importer (NRI)

Farrow is a customsbroker/freight forwarder that bought a USA-based CHB/FF a friend of mine started 30 years ago, and it is working hard to build market through education.  Here is an interesting webinar:

Join us for our webinar:
Date: July 8th, 2015Time: 11:00 am - 12:30 pm EDT
In our webinar, you’ll learn that by becoming an NRI, US exporters are able to exercise greater control over their supply chain into Canada without having an actual physical presence north of the border.

Here is a link to the registration, quoted at $100, which I don't know if that is US$ or C$ (prox US$90)...

Frankly I advise people selling to Canada simply require FOB terms, but maybe this would work out to the advantage of some USA exporter.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Why Not Usury?

On Jun 8, 2015, at 11:29 AM, mg wrote:

Was reading this...

 

https://mises.org/library/technology-needs-capital-produce-economic-growth

 

The Rothbard quote...

 

"What is lacking in (underdeveloped counties) is not knowledge of Western technological methods (“know how”); that is learned easily enough. The service of imparting knowledge, in person or in book form, can be paid for readily. What is lacking is the supply of saved capital needed to put the advanced methods into effect."

***Nothing controversial there...  but keep in mind Rothbard is an anarcho-capitalist, so he finds charging interest ok...***

 

Why must the capital be saved?   Why not borrow the capital?  Why can't usury be used to put the technology into effect?

*** Expansion through division of labor comes through the ability of some to forestall gratification today for more and better goods and services tomorrow.  The baker's extra loaves allows workers to build a mill, which then expands bread production, fostering delivery services, or whatever.  so far so good.

Anyone who forestalls payment, who does not demand liquidation of debt immediately is a saver.  Workers who delay being paid at the end of the month are the primary savers in our society, a massive source of bene-credit.  Much of that is stolen by banker's mal-credit, as an aside.

Industry that extends credit to its customers is bene-credit and "borrowing" on the other side of the agreement. So in any instance where there is credit extended, capital is being borrowed.

Usury is harmful in all instances, unnecessary to achieve goals, so why bring it up?***

 

"Take, for instance, a baker John who produced ten loaves of bread. He consumes two loaves of bread whilst the other two loaves — his real savings — he employs to purchase a new part to improve his oven. With a better oven he can now raise the output of bread to twenty loaves. If he still consumes only two loaves, then with a larger savings (now stands at eighteen loaves) he can enhance further his oven by introducing new parts, which will enable the introduction of new technology. Note that all this is made possible on account of real savings."

 

Why not borrow first for the technology then pay it back with 2 loafs +1 loaf for interest? 

***Because you can build vast networks of goods and services provisioned without interest.  And you are assuming that your offer harms no one, and will pencil out.***

  Meanwhile,  the Spiers bakery down the street insists on saving and can't meet demand and loses customers to my bakery

***  Why wouldn't my vendors front me what is necessary with bene-credit.  It is how it was done for most of history, up to circa 1978.  What makes you think my advantage is by paying interest and not in customer satisfaction, unless you think price is all.  And as to your scenario, how has Wonder Bread done?

John

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Trade Show Over Budget

Trade shows are critical to growing your self-employed business, but it is also a great occasion of burn-out for lack of preparation and timing.  I spend time detailing when and where and how to visit a trade show in my classes, and found this study interesting:

First, with the decline of manufacturing in Europe and the accelerated growth in Asia, the number of potential exhibitors in the catchment basins of European trade shows decreases, whereas the market potential ofAsian events increases. Second, to exploit the commercial opportunities in high-growth Asian markets, European producers need to exhibit at Asian trade shows. This causes a reduction in the promotional budgets allocated to trade show participation in Europe, where commercial presence is more established and other promotional instruments can be employed to maintain relationships with buyers (e.g. individual events and existing salesforce). In contrast, the budget for Asian events increases. Third, Asian buyers have more limited incentives to travel to European trade shows as a result, since they can see much of the European offering at local events.

To be sure, if you plan to trade worldwide, think Hong Kong as a venue and target opportunity for just about any category of industry.  A fellow was telling em the other week he figured his budget would be $15,000 for a show all in, I told him that was too much for too little solid business.  There is a sort of sliding scale of market penetration and reasonable trade show costs, something I've worked out and will be delighted to send to anyone who would like to see such a decision tree.

And then -

Interstoff Asia also experimented with market-sensitive exhibition layouts. For a long time, trade shows in Europe and elsewhere had arranged the exhibitor layout according to nationalities. One of the reasons behind such practices was related to the fact that national pavilions were often organized and financially backed by national export promotion policies (Seringhaus and Rosson 1998), which rented larger exhibition areas from trade fair organizers and offered them to national firms at a subsidized price. Exhibitors at these collective stands were typically small and medium-sizedfirms in the early phases of their internationalization processes, lacking the marketing competencies and financial resources necessary to take part in international trade fairs on their own. During the 1990s, Interstoff Asia organized the exhibitor layout according to product groups in order to help buyers find the product groups they were looking for more easily, but national pavilions still remained an important feature of the show. As reported by Haisma-Kwok(2001, p. 10), buyers often complained about this: ‘I just wish they’d organize by fabric and not by country . . . It doesn’t matter where it’s from, we just want to see what we need’, said a US buyer of fabric; ‘I also prefer to categorize by fabric’, replied Interstoff Asia’s project manager. ‘However, this show is also supported by government association, like Korea’s and Taiwan’s. The companies cannot support themselves, they come in a group and askto adhere to a group.’

See, this is such nonsense and it is coming to an end.  Those "national pavilions" so odious to the buyers are a money-maker to the exhibition organizers who sell "pavilions" the cost of which is borne by taxpayers for people demonstrably not ready to be in a booth.  Here again, welfare transfer payments so distort the market.

One way to burn out is to join one of those pavilions.  Here again my decision tree .pdf will show when and how to join a trade show effectively, to what degree.

The fact that the shows are organized contrary to the needs of the buyers, and are organized around welfare-transfer payments instead, means that by knowing this you can trim your sails to win in this environment.

With budget crises galore, expect these kinds of frivolities to be cut back, bringing new opportunities for market-based trade shows.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

American Communism

When socialism was all the rage in the 1930s, the USA pursued collectivism every bit as much as Mao's China and Stalin's Russia.  To this day the economic policy of the USA is get big or get out.

When I was a kid there was a doctors' office every few miles, in a storefront.  Not any more.  You go to the hospital.  Hospitals were run by charities, because some people could not afford to pay.  Now they are run by HMOs, and almost no one can pay.  Those huge medical centers are dangerous inasmuch as they collect and distribute diseases among the visitors, MRSA being an effective killer.  Not to mention 1 in 7 Americans have been aborted since Roe v Wade.  Whole lotta pain out there over a whole lotta loss, like in Stalin's Russia and Mao's China.

There were burger joints every few miles, run by families, with good wheat, beef, lettuce and tomato.  Not any more: there is more cost in the toy in the happy meal than any other element of the "meal."  The Frankenfood is not yet proven dangerous (only because science get suppressed in the USA) but it is extremely foolish to concentrate so much power in so few hands.  The Ukraine war is largely to put what was once Europe's breadbasket (and the source of wealth for the hanseatic league) under the hegemon for Monsanto and the other GMO outfits.

In business and industry back in the day nobody charged each other interest, private asset-backed non-usury credit extension was the norm.  Now almost all finance is run through banks and their poison-credit, which has hyperinflated to the point it is only used to trap unfortunates into auto, student and home loans...  and ponzi stock market valuations.  Nobody wants it for real economy activity.

If you take the numbers harmed by bad food (obesity, diabetes, etc), wars financed by malcredit, the economic destruction of big banking, and throw in the occasional Tuskegee Experiments (still allowed today), pound for pound USA has been every bit as destructive as Mao's China or Stalin's Russia.  Ask the Egyptians, Vietnamese, Libyans, Iraqis, especially the Christians in those lands who suffer most as a result of USA capitalism.

But being a capitalist means never having to say you are sorry.  Hear Donald Rumsfeld:

George W Bush was wrong to push democracy on Iraq, one of the chief architects of the 2003 war has admitted as he warned that the West is woefully ill equipped to cope with rampant Islamist extremism.

Well, rampant?  If your country was attacked by another country whose primary concern of law and culture is the saga of some transexual and gay marriage, would you not flee to the anarchy offered by "rampant Islamist extremism?"

the best and brightest minds who brought us here will be the ones to decide the next steps, who gets what scraps going forward.  There is an alternative, and that is self employment, and join the growth part, unplanned and uncontrolled (an + archy = no + king) but legitimate wealth creation, wealth defined as access to as wide a range of goods and services everyone needs with the money each earns.  not wealth defined as personal accumulation, which is the capitalist's definition.

We need free markets, and free markets in justice too.  We keep electing war criminals to office, and they need to be tried,  but not in our system, but a truth commission system, where Rumsfeld can escape his sentence if he tells the truth about Bush, and bush in turn rats out Rumsfeld, so the American people get an accurate picture, and the God help them what they do with it.

Bush and Rumsfeld, of course, would then have to spend the rest of their lives looking over their back, fair warning to future war criminal wannabees.  Right now we pay for their security, and if convicted, we'd pay for their sentence.  No, let's just have truth commissions, and free markets.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post