Venn Diagram of the day.
Quotation of the day is on trade protectionism.
Following Amazon’s IPO in 1997, it took 18 years before its market capitalization matched its retail rival Walmart in 2015. Then in less than two years, the value of Amazon grew to twice the size of Walmart. This has to be one of the most remarkable cases of business success and wealth creation in history, at least over such a short period of time.
Venn diagram of the day on trade among buyers and sellers in different states, cities, neighborhoods and households versus trade among buyers and sellers in different countries.
Quotation of the day is from Adam Smith making the case for free trade and warning against the sophistry of domestic producers and manufacturers.
To get a CEO-to-worker pay ratio of 347-to-1, the AFL-CIO compares the compensation of 419 of the nation’s highest-paid CEOs to the cash wages of 100 million mostly part-time rank-and-file workers. Using a larger sample of 3,000 CEOs, including fringe benefits for workers, and increasing their workweeks to more closely match a typical CEO brings the CEO-to-worker pay ratio to as low as 41-to-1.
It’s difficult to even comprehend the enormous size of America’s economy. One way to understand the size of our nearly $19 trillion economy is to compare the economic output of US states to the GDPs of entire countries.
In its annual Executive Paywatch report, the AFL-CIO claims that the CEO-to-worker pay ratio is 347-to-1 for 2016. But that figure is hugely inflated because the labor group compares total annual compensation for a small group of the highest-paid CEOs to the average annual cash wages (ignoring fringe benefits) for 100 million rank-and-file workers who work fewer than 34 hours per week on average (i.e., mostly part-time workers).
Today (May 8) would have been the 118th birthday of a great Nobel economist — Friedrich Hayek, and this post is a tribute to him and his work. Although much of his academic writings and books were published more than 50 years ago, Hayek’s profound insights about the economy and markets are timeless and still very relevant today.