Category: economics

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Allen Inverson

Allen Iverson is a point guard on the Philadelphia 76ers. He is possibly the most promising young talent in the game. The Sixers pay him $9.4 million over three years, but he also receives endorsement money from Reebok. It costs $54 a ticket to watch Allen Iverson play.

Iverson grew up in Hampton, Virginia, in the ghetto, in a dilapidated house that was frequently unheated because his mother, who was 15-years-old when he was born, could not afford to pay the bills. The house reeked of backed-up sewage.

As he grew up, Allen watched friend after friend die violently in gang turf wars. Allen’s father served time–for stabbing a girlfriend–as did his step-father. But Allen was born with a gift, and he worked hard to perfect it. He starred in high school basketball, and then for two years at university. Then he hit the big time: the NBA.

Now that he is a millionaire, Iverson has moved his mother, his sisters, his aunts, his uncles… just about everyone in his extended family, and his girlfriend and two children of his own, into decent housing outside of Philadelphia. He also supports two full-time body-guards.

Who is after Allen Iverson? I don’t know. But every important person has a body-guard.

Allen Iverson served some time in jail when he was in high school because he was in a bowling alley when a riot broke out between some whites and blacks. The police arrived and arrested four blacks, including Iverson, and none of the whites. He was alleged to have thrown a chair that struck a woman in the head. He received five years in penitentiary even though he had no previous convictions and insisted that he had left the alley immediately after the trouble started. His conviction was later over-turned upon appeal and erased from his record.

Did you read that carefully? A young black man with no previous convictions received a 5-year sentence for allegedly throwing a chair at a woman during a fight in a bowling alley. Five years. Isn’t that a little harsh? What does five years in prison do to a young man like Allen Iverson? What do you have when he comes out? Do you think that when he comes out, he will say to himself, “Whoa! I’ll never do that again!”

Allen’s high school friends can’t afford the $54 it takes to see Allen play, but Sports Illustrated reports that some of the white men who can afford it heckle Iverson mercilessly.

What does Allen spend his millions on, after supporting his extended family? Incredibly tasteless, ostentatious jewelry, a red Jaguar for his mother, a Mercedes Benz for himself. Whatever he wants.

This is the face of the modern pro athlete. Everyone I know complains bitterly about the absurdly excessive amounts of money these athletes are paid. When we find out what they spend that money on, we are sometimes shocked at the waste and extravagance. We are disappointed that they don’t seem to put the money back into the poverty-stricken communities they came from.

Salaries for professional athletes entered the realm of absurdity years ago. Everyone seems to know it, but no one seems to know any way to stop it. And they keep going: the latest contracts are for over $100 million. This is beyond idiocy and absurdity: it is pure madness.

But the story of Allen Iverson should give us pause. It is one thing for comfortable, middle-class whites to stand appalled at the state of affairs in professional sports; it is quite another for a black-teenager from an American ghetto. For many of these teenagers, their only hope of leaving their poverty behind is either drug-dealing or professional sports. In some ways, Iverson’s huge salary is his payoff for suffering years of abuse and degradation.

Consider also the case of Latrell Sprewell, who assaulted his own coach, P.J. Carlesimo. The team and the League did the right thing, for once. The team terminated his contract and the NBA suspended him. Astonishingly, an arbitrator over-ruled both, shortened the suspension to six months, and reinstated his $17 million contract. Once again, we are beyond the realm of the unusual and into the realm of the completely bizarre. If you physically attacked and injured your supervisor, do you think you would be merely suspended? Where would you find an arbitrator dumb enough to reinstate you at full salary?

Given the general weirdness of all this, is it so hard to believe that the CIA deliberately encouraged drug-use by inner-city blacks, or that the budget deficit was the result of a conspiracy among bankers, investors, and the military, to convince the general public that government spending was out of control and force social spending down while continuing to line their own pockets? If you carefully analyze the changes in tax law over the past twenty years, two things are clear:

  • a huge chunk of the deficit spending went into the pockets of military contractors and suppliers (think of the infamous $450 hammers charged to the Pentagon)
  • a huge chunk of the taxes that will pay off the deficit is coming from the pockets of hard-working, average citizens, because of all the tax cuts and deductions that benefit the rich
  • the budget deficit did not hurt the rich one little bit. While you and I were constantly told that we had to lower our expectations, cut back, and make sacrifices, accept down-sizing, because times are tough, the rich continued to increase their own salaries and profits, sometimes by astronomical sums.

What has this got to do with Allen Iverson and basketball? Just part of the general weirdness of our economic system, that’s all. Millions of people go to work every day. They spend hours and hours working hard, doing various challenging tasks, and thusly they generate enormous wealth. Where does this wealth go? Well, we know that you and I are getting about the same amount we got twenty years ago, maybe a little less. On the other hand, professional athletes, heads of corporations, and Al Dunlap– the man who is famous for taking “down-sizing” to extreme heights in the name of shareholder profits–are all making way, way, way more than they used to. Bank profits are way up. Microsoft is making a bundle. Oprah Winfrey, Bill Cosby, Madonna…. In 1990, the average NHL salary was $200,000. Today it is $1.1 million. When was the last time you got an increase in your pay?

Money moves around. We ought to pay close attention to how it moves around. There is one thing that is resoundingly clear about the way it moves around: pretty well anybody who can take more, will take more. There is no restraint on human greed. Some people regard unions as greedy. That may be true, but the difference is that unions distribute wealth far more widely than corporations do, and history tells us that the more widely and evenly wealth is distributed, the safer and healthier a society is.

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The New Economy

On a grand scale, there’s a lot of strange things about our economy.

We thought we abolished slavery in the 1800’s, but if you define slavery as enforced servitude, who among us is not a slave? Could you quit your job tomorrow? You would lose everything you own. You would be cast out into the streets. You would sleep on a park bench and eat from a dumpster, or starve or die of some contagious disease.

Perhaps you feel that prosperity liberates you. We have more material possessions than any slave ever had. On the other hand, slaves lived much shorter lives than we do. They worked for 15 or 20 years, in exchange for food and a place to sleep. We work for 40 or 50 years. If we are so much better off than slaves, why do we work so long?

I’m joking of course. Slaves worked longer hours and didn’t get paid vacations. They didn’t have tv or cars or stereos and they couldn’t send their children to ballet school. So we are better off than slaves.

Still, I find it sadly ironic that we really have about as little choice as the slaves did about how we spend our days. Our society produces immense piles of goods. If you want an immense pile of goods, who is going to stop you? Suppose, however, that instead of a VCR, indoor plumbing, a car, boat, lawnmower, stereo, and digital camera… suppose all you wanted was food and shelter. You should be able to work for one or two days a week, live in a non-descript, unfurnished apartment, and do as you please the other five days. Could you do it?

Your expenses would come to at least $500.00 a month for the apartment alone. Food would probably be about $400.00 a month. So, you would have to be earning about $1,000.00 a month or $12,000.00 a year or $250.00 a week just to get by. Can you do that on a part-time salary? I don’t think so. The trouble is that the well-paying jobs are tied to full-time activities. The part-time jobs don’t pay nearly as well.

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The Salaries of Canadian MPs

According to Southam Newspapers, Canadian MP’s rank near the bottom of the world in terms of pay. Here’s some comparisons:

The big surprise here is socialist Sweden, which pays their members of Parliament less than anyone else, though they sit for a respectable 125 days a year. My goodness. What happened to the stereo-type of the free-spending left-lib government hack squandering all the taxpayer’s hard-earned money on useless and wasteful policy-wonking? What’s going on here? How come the most conservative government in the western world, the U.S., pays their legislators nearly the most?

There is a theory that a national health insurance plan similar to Canada’s would never work in the U.S. (where the cost of health care is, proportionately, three times what we pay) because conservative doctors would consider it a moral duty to cheat the plan as much as possible. There is a good deal of evidence that this theory is true. So the conservatives have made themselves a self-fulfilling prophecy: national health insurance will not work in the U.S. because we will abuse the system to death.

Good for them. That’s why they get paid so much.

Canadian MPs are paid too little. Most people in responsible positions that are at all comparable to being a member of parliament earn well over $100,000. But if we do decide to increase their pay, we should demand something in return: genuine democracy. Thanks largely to Trudeau, our government has evolved into an overly centralized system wherein most key decisions are made by top advisors and cabinet and ordinary party members play almost no role in arriving at decisions anymore. If we really only need ten people to run the country, let’s pay ten people to run the country and toss the rest of the bums out. Let’s also abolish the Senate now and get it over with.

Yes, our MPs are paid too little, but one thing does need to be pointed out: they all applied for the job knowing full well what the wages were. No one forced them to run. If they don’t like the pay or working conditions, fine, quit. There is something offensive about these guys campaigning on civic-mindedness, prudence, and responsibility to the taxpayer… and then doing everything they can to line their own pockets once they get in.

The problem is: who decides what the government should be paid? I have a solution. It’s so ingenious I can’t believe no one every thought of it before! And it’s perfectly in tune with the modern spirit of privatization and downsizing. This is the plan: every candidate running for political office must include, as part of the registration process, a “bid” for his own salary. So when Joe Schmo launches his campaign in Kamloops, the first thing voters want to know is, how much is he offering to work for? Preston Manning can offer his services for $34,500 a year. Chretien thinks he’s worth $100,000. Voters can decide.

You may think this will give an unfair advantage to the rich, who can afford to offer to govern for free. I don’t think so. I think most voters will realize pretty quickly that a Paul Martin at $125,000 is worth a lot more than a Sheila Copps at $69,000, or a Conrad Black– should he decide to run– at $5,000. It would make elections a lot more interesting, because really good, popular politicians could set records for highest pay, and would be entitled to influential positions because the voters want them to have influential positions. Politicians would be more accountable, because we could quickly figure out if they were worth the amount of money they asked for, instead of the amount that all MPs, competent or not, receive.

One last rant here: the taxpayer subsidizes education in Canada to an enormous degree. I forget the actual figures, but I saw them once in the Globe and Mail, and believe me, the numbers are huge. Among the most expensively subsidized educational programs is medicine. And those figures do not even include the cost of providing hospitals and clinics in which doctors and nurses are trained.

I propose that every medical student, nurse or doctor, who enrolls in a Canadian college or university, should be required to sign an agreement to repay every last cent of the subsidized portion of their education if they ever decide to move to U.S. and practice there. The amount would probably be well over $100,000 for doctors, and $40,000 for nurses. Perhaps someone will come up with better figures for me. Why should we Canadian taxpayers, in effect, subsidize the U.S. health care system just because they’re too stupid or dishonest to have their own coherent plan?

Country Salary Sitting
Japan $169,759 43
Germany $102,798 66
United States $169,672 144
Canada $64,400 148
Sweden $36,465 125

 


	


	





		

		
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Alan Eagleson’s Friends
	


	
	

		
I was, in my youth, somewhat of an enthusiast for Marxism. Our society seemed to me to be based on greed and corruption, and I thought a good dose of Marxism would solve a lot of social ills. Of course, I knew that the Soviet Union was an oppressive, unjust society. I just didn’t think the Soviet Union represented Marxism any more than I thought the United States represented Christianity. In each case, the high ideals of the state religion was propounded but the actual practice was ruthlessly materialistic. Nowadays, I suppose I could be called a liberal.


There are days when I miss the idea of overthrowing the established order. Like today, when I read in the Toronto Star about Alan Eagleson’s friends.


Alan Eagleson has been charged with more than 44 counts of fraud committed since 1994, when he was head of the National Hockey League Players Association. Among other things, he stole money from players he represented and he colluded with the owners to keep player salaries low.


Some players now say they did kind of wonder about why their union leader was spending so much time on the owner’s yachts. They did, did they?


There is not much dispute about his guilt: Eagleson has admitted to some of the charges, and has been sentenced to 18 months so far, of which he will probably serve six. He is presently serving his time in Mimico Correctional Centre.


The Law Society of Upper Canada, hilariously, is now trying to decide whether or not Eagleson has engaged in conduct “unbecoming a barrister or a solicitor”! Like what? Did he donate some of the proceeds of his fraud to a charity?


In the same article, the Toronto Star reports that Mike Gillis, a former Boston Bruin, sued Eagleson successfully in 1996 for $40,000, part of a disability payment which Eagleson had swiped from him. Gillis was awarded $570,000 but Eagleson has appealed. The trouble is that almost all of that money is going to go to Gillis’ lawyers. Conduct unbecoming? Eagleson is a crook precisely because he behaves like a lawyer.


Look at this system! A man is owed $40,000 by a lawyer. The lawyer refuses to pay. Is he arrested? No, hell he’s a lawyer! So the victim of the fraud has no recourse but to go to court. The judge says, you can’t represent yourself– get yourself a…. lawyer! So the victim hires another lawyer to get his money back. But he can’t afford to pay this lawyer, you see, because he lost his money to the first lawyer. So the second lawyer says, no sweat, we’ll sue for what he owes you and for what you will owe me!


Now, you might observe that Mike Gillis, having been enlightened as to the courageous, unselfish, righteous needs of his own lawyers, has the solution. This solution is carefully suggested and facilitated by his lawyers: he sues Eagleson not only for the $40,000 he is owed, but for an additional $500,000 to pay his lawyers. The lawyer says, “I’ll help you get back your $40,000 and while we’ve got him down, I’ll rob him blind.” The man doesn’t care because it won’t come out of his pocket. So the system “works”.


Everybody’s happy, right? Consider Eagleson’s lawyer. Does he mind? Hell, no. He will charge Eagleson at least $500,000 himself, to spare him from having to pay out $40,000! But if he does a lousy job and loses the lawsuit, does he give the $500,000 back? Now, don’t laugh yourself silly. If he was going to do that, would he have advised him to fight the lawsuit in the first place, knowing it would cost a lot more than any possible out of court settlement would cost?


The truth is that this system is insane. It is absolutely, totally, completely, irrevocably insane. And everybody knows it. This system destroys everyone consumed by it…. except, of course, for the lawyers. And who, pray tell, makes these laws under which these cases are heard? Who is the judge? Who is the defense, the prosecution? What profession is represented in our legislature at numbers all out of proportion to their share of the population? Lawyers!


Are we really so surprised that they have cleverly evolved us a system that pays only them?


And now the most distasteful part of this particular story. Eagleson’s loyal friends have written him letters of commendation. Eagleson is a good man. Eagleson is honorable. Eagleson is a loyal friend. Eagleson never done me wrong. Here’s a list (side bar) so you can remember their names. If you bump into Bobby or Willard on the street, please restrain your desire to punch one of them in the nose. And remember that Bobby Clarke is the hero of the 1972 Canada-Russia hockey series for breaking Valery Kharmalov’s ankle with a wicked–and unpenalized– slash in game 5. Sittler? Shame on you.


Yes, this is how it works. These are Alan Eagleson’s friends.. So while he was cheating Mike Gillis and Glen Sharpley and Bobby Orr, he was carefully cultivating loyal friendships with Bobby Clarke and Paul Henderson and John Turner. What does this tell us? That, contrary to the testimony of Gillis and Sharpley and Orr and all the others that Eagleson was actually an honest man? That’s what these “gentlemen” want you to believe. Their signatures on their letters are a slap in the face to all the honest, hard-working NHL players whom Eagleson has cheated over the years. Paul Henderson is saying, “hey– he didn’t cheat me. Why should I care if he cheated you? Go to hell, Orr…”


The only thing their letters prove is that even a brilliant lawyer like Alan Eagleson couldn’t screw everybody at the same time.


We often hear about the two tiers of justice in this country, but we don’t often get such an intimate glimpse into how it works. You rob a string of banks of various amounts up to $40,000 and get caught and brought before a judge. If you don’t have your friendly letters from wealthy members of the establishment, judges, members of parliament, and retired professional hockey players, you can look forward to a long stay in prison. But if you are a lawyer and you rob a disabled hockey player of $40,000, and numerous others, and if you have invested that money wisely by acquiring the clothes and cars and boats and homes that allow you to move within the ranks of the privileged and blessed… you’re not likely to serve any time at all. Well, maybe 6 months. In mean old Mimico Correctional Facility.


Eagleson moves in conservative circles and was a member of the provincial Tory caucus at one point. I wonder if he ever partied with Mike Harris, who grew almost hysterically angry at the teachers who defied the law and went on strike last year. At moments like this, it seems transparent to me that the law has nothing to do with justice or fairness or good order. The law is there to hold you down while the lawyers rob you blind.


 


Who wrote letters asking the courts to be lenient on Alan Eagleson?


    

  • Bobby Clarke
    • 

  • Paul Henderson
    • 

  • Douglas Fisher
    • 

  • John Turner
    • 

  • Darryl Sittler
    • 

  • Willard Estey
    • 

  • George Gross
    • 

  • Darcy McKeough
    • 


	


	





		

		
Posted on 
The Wrong Issue: Welfare Bums in Ontario
	


	
	

		
A surprising number of my friends and acquaintances absolutely agree with Mike Harris when he says he wants to kick those lazy free-loaders off the welfare roles and put them back to work. Why should the government subsidize able-bodied adults who should be out there working? Why am I working hard just so my tax dollars can pay for you to have a good time?


Maybe I agree, maybe I don’t. The thing is, I don’t think most people realize how much a smoke screen this issue is.


The thing is, when the government writes a check for $450 to Mabel Smith (not a real person) and her two children because she doesn’t have a job and needs to pay for her apartment and food, we cry “hand out”! Welfare bum! Parasite!


But when a corporation receives a tax exemption…. we get confused. The government doesn’t give Molson Breweries, for example, a check, so it isn’t a handout… or is it?


You tell me: what’s the difference? There isn’t any. If Molson owes the government $10 million in taxes on it’s net profits and the government says, hey, tell you what, pay me $5 million instead, what we have is the government giving Molson’s $5 million dollars as surely as if they handed it to them in small denominations in a little black briefcase. If it was true, this would be a massive government “hand-out”. It would be unfair.


Well, the government does this all the time. It does it when it allows corporations to deduct the cost of renting a box at the Skydome as a “business” expense. It does it when it allows corporations to pollute the environment without paying the cost of cleaning it up. It does it when it uses tax money to pay for sports stadiums, or when it defers taxes on a new factory, or subsidizes the cost of electricity for aluminum plants. It does it when it builds highways and bridges for the cars manufactured by Chrysler, GM, Ford, and Toyota. It does it when it helps bail out the banks that made stupid loans to third world despots who used the money to buy weapons from American manufacturers. It does it every time two businessmen go out for lunch and bill their expense accounts.


The most egregious example of this kind of lavish government subsidy of the rich is, of course, professional sports. The Minnesota Twins are, at this moment, demanding that the hardworking taxpayers of the State of Minnesota fork over about $400 million to pay for a new stadium for the Twins. The owner of the Minnesota Twins is a billionaire. But, he weeps, he can’t afford a new stadium. The old stadium, built to last 30 years, is only 15 years old, but it doesn’t have a private entrance for the boxes, you see, so those rich people actually have rub shoulders with ordinary plebes on their way to their exclusive, private, privileged seats.


At the same time, these idiot owners are offering their players contracts for up to $100 million over seven years. Everyone on the face of the earth knows that this is insane, but most people seem to think that it doesn’t directly affect them because they don’t go to many professional sporting events and if the owner wants to squander his money like that, so be it. The truth is though that you and I are paying Joe Carter $6.5 million to hit 25 home runs and bat .240 this year, because we paid for the Skydome with our tax dollars and the money that the Blue Jays didn’t have to pay for a stadium was thereby freed up to pay for their players. Just to add insult to injury, they gave the exclusive food concession rights to McDonald’s so they could charge twice the regular price for a hot dog. You would think that since we paid for the stadium we could at least get decent food at a fair price. And, of course, McDonald’s is thereby getting a government subsidy. Where are all the free market believers when it really matters?


This is madness. This is insane. This is the product of a society that is full of macho sports freaks who get visibly upset when they hear about a welfare mother spending $30 of her money on booze and cigarettes instead of food but stare with envy when see a basketball star show up with his two bodyguards. What that welfare mother should really do is learn how to play baseball.


The solution is simple. The reason Minnesota even considered subsidizing the stadium for the Twins was the threat to move the Twins to another town that would be willing to pay for a stadium. (Minnesota turned them down). It should be illegal for any town or any state or province to subsidize, with tax dollars, a professional sports stadium. All of the other subsidies should also stop, including “hidden” subsidies, like the costs of dealing with environmental damage caused by factories and industries.


Every corporation should be required to clean up after themselves– if they complain that they can’t afford to do this, they shouldn’t be in business. Should car manufacturers pay to build roads? They’ll scream bloody murder. They’ll say that it would make cars too expensive. Well, isn’t that a thought! You mean the real cost of cars is far higher than the sticker price? How about the cost of bodily injuries caused by speeding? Maybe we should have built up the public transit services instead of the highways. Maybe we should have more trains and buses today and less Firebirds and Intrepids. Read the history of the development of our cities: this idea is not as far-fetched as you think.


Finally, no bank– including the IMF– should be allowed to loan money to any government that is not certifiably democratically elected. Why should the people of Brazil or Argentina pay for F-14 fighter jets ordered by the illegal governments that ran those countries in the 1970’s? Do you know what those jets were used for? Nothing. Do you know where the money is coming from to pay back those loans? It’s coming out of the schools and hospitals and development projects that are needed to help the average people of these countries survive.


Either that, or we should learn to shut up about welfare recipients.

	


	





		

		
Posted on 
I am not Paid Enough
	


	
	

		
I just read in the Globe and Mail (November 11, 1997) that Disney Corporation has settled a suit with Jeffrey Katzenberg. Katzenberg quit after he was denied a promotion by Michael Eisner. So he sued Disney for– get this — 2% of all future profits on any product developed during his ten years with the company.


Now you may think this is a very strange idea. You work for a company. You go into a snit because your boss doesn’t give you a promotion. So you quit. In the real world… pardon me… in the world that people who do real work exist in, if you quit your job you’re told to turn in your tool kit or your notebook computer and get lost. Just imagine your bosses face if you asked him for a percentage of all future profits based on anything you worked on while you were there? But then, that is the world of unionized employees who we all know are ruining our society with their ruthless, greedy demands. Now let’s get back to the rarefied world of capital gains deductions and private boxes at the Skydome.


So, is this another of the endless cycle of incidents demonstrating ruthless greed among the upper classes in our society? You’ll be surprised at my reaction: I think this is a great idea. And since all citizens in this country are treated as equals by the law, I intend to contact my lawyer and initialize similar proceedings against all of my previous employers. I figure that when Katzenberg wins– actually, I think he has won– Disney settled out of court– I can appeal to his precedent.


So I am going back to all my previous employers, including United Grain Growers, and demanding a specific percentage of all the profits they have made since I worked there for four summers about twenty years ago. Let’s see. I worked for three months driving a truck and moving things around in a warehouse. I’ll have to get some figures from them: how much profit did they make while I was there? What percentage of the total work activity performed by all employees at that time did my hours comprise (judging from the level of activity at their downtown office, I’d say about 50%)? How much profit have they made since then? Fifty million?


Let’s see. If they had 5,000 employees at the time, then I represented about .02% of the workforce. Since I only worked from June to August, I’ll have to accept a measly 25% of my .02, which is .005. Now multiply that times total corporate profits of $50,000,000 and you have a modest $250,000 that United Grain Growers owes me right now. But I’ll tell you what, Wheat-Boys: pay me $125,000 cash right now and I won’t sick my twisted lawyers on you!


Boy, I can see now why Disney hired Katzenberg in the first place! The man is a genius! And don’t forget– this is the same company that paid Michael Ovitz $38 million dollars to quit. Why? Why does a company as smart as Disney pay someone $38 million dollars? Because he made their stock go up? Because he masterminded the production of several brilliant movies that won loads of Oscars and grossed hundreds of millions of dollars? Because he opened a new theme park that had to be expanded right away because it was deluged with rabid fans from all over the world? No, my friends. He got $38 million dollars from Disney because– hold on to your hats– he failed. Yes, he was FIRED because he stunk up the place, and Disney preferred to pay him $38 million dollars than put up with his incompetence any longer.


Now kids, before you go to work tomorrow at McDonalds or Burger King and try these same proven strategies for personal success, remember one thing: you don’t make the rules.


UPDATE: Wired Magazine estimates that Michael Ovitz, who left Disney in 1996 after 18 months as President, received $38 Million plus $92 million in stock options. Eisner won’t be crying in his beer any time soon: he himself has earned an estimated $1 billion and still holds 8.7 million shares.