30 July 2013

Rock chalk! KU Undergrad's brilliant economic analysis: Big Mac + 68 cents = Utopia!

The Huffington Post helpfully reports on a "study" that shows doubling the pay of all McDonald's employees would only raise the cost of a Big Mac by 68 cents! Further, dollar menu items would only rise to $1.17.

The study, though, is no such thing. It is a simple calculation done by a KU undergrad who, while he obviously owns a calculator, clearly doesn't know how to read, and has not the slightest understanding of business, economics or, in short, the real world.

Had he given this "study" to his economics professor, he would no doubt have had a somewhat less friendly reception than he got at the Huff Post.

Our aspiring social justice economist has looked at the Consolidated Statement of Income on Page 30 of McDonald's 2012 Annual Report, and calculated the total "Payroll and employee benefits" as a percentage of "Total revenues." Thusly:

4,710,300,000/27,567,000,000=.17 or 17%

Our child prodigy therefore concludes that in order to double pay and benefits for all employees, one need only raise prices by 17% - and who among us wouldn't be willing to pay that in the interest of social justice? Inconveniently left out of the equation is the "Pay and benefits" of employees at about 80% of McDonald's restaurants, a fact one might glean by reading the rest of the report.

Nor does this scholar account for potential changes in sales due to price increases. Believe it or not, when prices go up, sales often go down. Nor does the "analyst" note the increased payroll tax expense that doubling pay would entail.

The real problem with the whole study is the notion that somehow this college student can glance at a summary financial table and say, "There's your problem right there!" and all the McDonald's execs will slap their foreheads and say, "How could we have missed that!"

I hope that the suffocating arrogance of that young man is not emblematic of his generation. The very idea that he could so easily figure out how to double pay, that only he cares enough to do so, that all the managers at McDonald's really want is to crush the little guy and roll around in their piles of ill-gotten gains.

News flash: bad businesses don't make money. Companies that don't serve customers don't make profits and don't stay in business. Companies that underpay don't get employees to work for them. Companies that overcharge lose business to competitors. Companies that go out of business don't have any employees.

And nothing happens in a vacuum. Raise the price of McDonald's employees and see how long it takes to build a robot that makes fries. The idea is hardly far-fetched.

I could go on all day and still be oversimplifying.

Guess what, Mr. Undergrad researcher? There are a lot of people at McDonald's who get paid to think about this stuff all day long. It's their job. No business ever became a success by trying to crush its own employees, but plenty of them were crushed by busybody know-it-alls who thought they knew better.

My advice is to stop trying to be a CEO unless you plan to start your own business, then apply your long division business principles to your own books and let us all know how that worked out.

15 July 2013

#Zimmerman multiple choice test

Choose only one:

1. Martin had every right to walk through that neighborhood.
2. Zimmerman never should have gotten out of his car.

The trick here is that these cannot both be true. Zimmerman lived in the neighborhood. Martin was a guest there. If Martin had every right to walk through the neighborhood, so did Zimmerman. You can't have it both ways. If Zimmerman never should have gotten out of his car, then Martin shouldn't have been wandering around the neighborhood.

And frankly, "Zimmerman never should have gotten out of his car" is a "the bitch was asking for it" argument. So think long and hard of the implications before you choose it.

Choose only one:

1. Martin was a threat to nobody.
2. Zimmerman never should have gotten out of his car.

If (1), then why (2)? Again, think about that one long and hard. And again, they can't both be true. If Zimmerman was stepping into an "obviously risky situation," then he was absolutely right to call the police (as he did.) Arguing that the situation, and by extension Martin, was dangerous, but at the same time to argue that he deserved the protection afforded by meek and willing victims is an appalling surrender of all moral authority. The predators are always in the wrong. That does not mean they all deserve to die, but when they assault others, those victims have an absolute right to defend themselves.

Choose only one.

1. Zimmerman's injuries were not severe enough to justify self-defense.
2. It was Martin who was acting in self-defense.

Again, these cannot both be true, as Martin was the only one who sustained no injuries (prior to his fatal one.) But at least if you chose (2) you acknowledge either that Zimmerman was beaten to a bloody pulp, or that legally one need not sustain any injuries at all to exercise legal self defense. Both, in this case, are true.

Choose only one:

1. A hispanic Obama supporter shot a black man and was acquitted of criminal charges by an all-woman jury.
2. It's all white men's fault.

I hope I don't need to explain that one.