Money for Nothing. And Chicks for Free

I live in Singapore, a city state near the equator. It is a beautiful place built on a tropical island. At noon the sun rises perpendicular, straight up in the sky. The heat hits hard. Temperatures soar. The air is humid. It is sweltering hot. It is nice in the aircon.

THE BIN MEN

Every day a garbage truck drives into my street. Compliments of the tropical heat, waste bins need to be cleared every day. Skip one day, and rubbish will rot in no time. Rats and rodents will feast. So, will cockroaches and other vermin. Diseases will follow soon.

Needless to say, the men who lift these bins and dump the rubbish in their truck, do an essential job. Theirs is hard work. Especially in the scorching temperatures. To protect themselves from the sun, these men cover their faces with scarfs and large hats. They dress in long sleeves and pants and wear heavy boots. Essentially, they work – fully wrapped up – as in a sauna.

These men’s status in society is rock bottom. Their salary is nothing but a meagre sum of dollars. The career prospects of a bin man are, at best, below mediocre. No little boy grows up dreaming to become a garbage collector. Yet, these men in my street are always cheerful. Always ready with a friendly ‘Hello’ when I greet them.

The bin men’s work goes very unappreciated. They are unsung heroes.

THE STAR MEN

At the other spectrum of society are people who are doing absolutely non-essential stuff.

Their job is to perform non-essential work, totally useless. But they are very good at it. They are the very best at it. And they are paid like kings and worshipped like gods. Welcome to the professional athletes, the actors, the artists and all the other sorts of rock stars. These men are the star men.

Here is a sample of what star men actually do.

Footballers – soccer for my American friends – run in coordinated hordes after a ball, trying to escape other hordes that are running after the same ball. This goes on and on, until the ball lands in a giant net. Then everybody goes wild, or sad.

Golf players dress in funny pants and wear shoes with needles. They look serious. They swing a long stick – it’s called a club – and hit a tiny little white ball as far as possible. Then they walk after that little ball, to hit it again, till it falls into a tiny little hole.

Formula One racers slide into impossibly low cars that are dolled up with bizarre wings front and aft. They fire up their brash engines and go round and round in circles at lightning speeds, until some guy waves a black and white flag. Then they all stop, park their cars and spout champagne in all directions.

And it goes on.

Film actors memorise a bunch of lines and pretend to have meaningful conversations while speaking those lines, in front of a camera. Sometimes they pull funny faces. Or sad faces. Sometimes they pretend to love each other. And sometimes they fight each other with plastic guns and paper knives. And then there is CGI, where they literally don’t have to do anything at all.

A BIT OF ATTITUDE

All the actions of the star men described here are, apart from the pleasure it gives to the star men and to the audience, perfectly pointless. They don’t contribute anything to the improvement of human conditions.

Unlike the work of the bin men, the work of the star men is essentially, totally non-essential. It is rubbish. Yet, star men rake in millions and millions of dollars, gazillions more than bin men do.

In addition, lots of star men tend to have a bit of an ‘Attitude’, which they assume, is part of the perks of the job. Unlike the friendly bin men, they think they are a bit ‘Special’, and can’t resist to give the rest of us advice on how to live our lives. Do as I say, don’t do as I do.

The institutional economist Thorstein Veblen wrote about this ‘Attitude’ in his bizarre book The Theory of the Leisure Class. “… there is almost invariably present a good share of rant and swagger and ostensible mystification – features which mark the histrionic nature of these employments”. That’s cool.

DIRE STRAITS

In the early 1980s, Mark Knopfler walked into a department store in New York and overheard a conversation between two shop assistants watching music videos on MTV. He wrote their words down on a borrowed bit of paper.

“We gotta install microwave ovens”

“Custom kitchen deliveries”

“We gotta move these refrigerators”

“We gotta move these colour TVs”

At the time, Mr. Knopfler was the lead vocals and guitar of British rock band Dire Straits. With a flash, he realised how these two working-class men were envious of the musicians on MTV. To their eyes, this wasn’t real work. And insult to injury, those musicians were paid unimaginable sums of money, for really doing … nothing.

“That little faggot got his own jet airplane”

“That little faggot. He’s a millionaire”

Mr. Knopfler wrote the lyrics of the song Money for Nothing when he was actually in the store. It became a big hit in 1985.

 “That ain’t workin’, that’s the way you do it.

“Money for nothin’ and chicks for free.”

According to Money for Nothing, it seems that musicians not only get money for nothing, but for strange reasons, they also receive chickens for free. I guess they must have an arrangement with a chicken farmer or a large supermarket chain or so. Guys …, just joking here. I am not that na?ve.

But seriously, how can it be that people who produce fundamentally non-essential work, are paid much and much more than people who do produce essential work?

Keep reading to find the answer.

PROGRESS

All progress starts by doing essential work, before doing non-essential work. Economics is no exception to this logic.

The fictional character, Robinson Crusoe, first had to work to find water and food, before he could start building a beautiful place on his tropical island. Consumption of water and food is far more essential than enjoyment (a.k.a. consumption) of living in a beautiful house with a garden and a shrubbery. That is non-essential. That can wait.

Note that Mr. Crusoe lives all alone on his island, yet, all his work (a.k.a. production) is directed towards his own eventual consumption.

Likewise, all production in a free market economy is directed towards eventual consumption. Consumer demand determines what is being produced.

Austrian School economist Ludwig von Mises wrote in Liberty and Property that, “go into the home of the average American family and you will see for whom the wheels of the machines are turning”.

Production is not an end in itself. It is progress towards mere consumption. It transforms the world of horse-drawn carriages, sailing ships and windmills step by step into a world of airplanes and electronics.

All progress starts with the production of essential things.

LESS MEANS MORE

A classic example of economic progress is highlighted by Chicago School economist Milton Freedman in Free to Choose, a book he co-wrote with his wife Rose.

Mr. Friedman writes that, “In 1776, when the United States of America declared independence from the United Kingdom, fewer than three million people (the native Indians not counting) were living in a narrow fringe along East coast. Agriculture was the main economic activity. It took nineteen out of twenty workers to feed the country’s inhabitants and provide surplus for export in exchange for foreign goods. In 1980 it takes fewer than one out of twenty workers to feed 220 million inhabitants and provide a surplus that makes the USA the largest single exporters of food in the world”.

Ironically, today, more people in the USA die from too much food instead of not enough food.

Economic progress is the work three groups of individuals operating in a free market economy. They are the savers who postpone consumption and as such accumulate capital funds. The scientist-inventors who come up with new things and findings. And the entrepreneurs who combine the capital funds and the new findings, and turn them into capital goods; new uses to serve the consumers.

LEISURE

The natural outcome of economic progress is that lesser number of people are needed for the same work.

Many people are freed to do other jobs – new jobs, jobs that do not exist yet – to produce more of other things. This is how economic progress raises living standards.

In Mr. Friedman’s example, having fewer people employed in agriculture, means more people can have more of other things. We ignore this at our peril.

At times, the process of economic progress can be painful and stir up big emotions. People get upset.

Interestingly, people are more willing to accept this process of progress when it is supported by examples from a far away past.

The ‘invention’ of the wheel in pre-recorded history surely increased people’s living standards, even though it reduced the number of essential jobs associated with moving things from one point to another. Today, nobody gets upset that the wheel was ever ‘invented’.

However, as examples of economic progress get closer to the present, the script changes. Progress then is being defined in terms of jobs lost in an industry that is adversely affected by economic change. Think of the arrival of Uber and its impact on the taxi industry in cities like London or New York.

There is a catch that comes with economic progress. It does not only bring about a higher standard of living. It also allows for the enjoyment (a.k.a. consumption) of more leisure.

People are able to buy more leisure time and enjoy more pleasure. Watch a football game, or a golf game or a Formula One race. Or catch a movie with the family.

Bin men are in the business of production. Star men are in the business of leisure (a.k.a. consumption).

BIG BUSINESS

?In a society where living standards have increased and people have time for leisure, people get bored. People want to be entertained.

So, producers produce entertainment. After all, consumer demand determines what is being produced.

Star men are born.

There is big demand for high-skill football games, golf games, Formula One races and movies and music. Sports, movies, arts, etc. is big business.

Big business always serves – directly or indirectly – the masses. No masses, no big business.

Many people are willing to pay for tickets to watch sport games and races and movies. Which means prices for tickets will go up. 

What people do not necessarily get when they think about economics and pricing, is that the valuation of goods drives the input prices. It is a misconception that many people have about markets – and that leads to some tragic results.

If the preference for football rises, that means that the prices of the inputs will rise. In other words, the wages of football players will rise. Likewise with golf players, Formula One racers, movie actors and so forth.

THE OTHER WAY AROUND

Notice it is not that you pay a lot for tickets because football players and other star men are getting paid a lot of money.

It is the other way around. You are willing to pay a lot for tickets to be entertained. And therefore, the inputs – the star men – are paid a lot. You want what they – the star men – have to offer.

Ludwig von Mises writes in Economic Policy that “it is not the Hollywood film corporation that pays the wages of a movie star; it is the people who pay admission to the movies. And it is not the entrepreneurs of a boxing match who pay the enormous demands of the prize fighters; it is the people who pay admission to the fight”.

The same economic reality applies to the bin men. But sadly for the bin men, the demand for what they produce, for what they have to offer – albeit essential in the whole process to progress – is not as high. Which is why the price for their inputs – their wages – is low. It is why their salary is nothing but a meagre sum of dollars. Let’s put it this way, no one buys tickets to watch bin men lift bins and dump the rubbish in their truck.

Unfair as this may seem to the bin men, there is another reality attached to ‘it is the other way around’. And that is; there is a limit to this price process of inputs. In the long run, the star men can never get more than the consumers allow.

BIN MAN TO STAR MAN

Earlier in this article I wrote that the career prospects of a bin man are, at best, below mediocre. There is simply no career path in being a bin man. Even if you are the best bin man in the world.

The career prospects of a football player, a golf player, a car racer or a movie actor are much more elaborate. It goes from sky high to rock bottom.

There is a huge difference between the wages of a football player at the very top – a star man – and a low ranked club player. There is no big demand to watch an amateur footballer in action. The same is true for all other athletes, all actors and all artists and musicians.

Just picture the image of an old man with his shabby dog playing a shabby violin on a dark night, in a cold street. An open violin case begging for some coins. It is miserable. Yehudi Menuhin – the greatest violin player ever (my view) – invariably performed on his Stradivarius in overbooked concert halls all across the world, worshipped by the crowds.

But somehow bin men can become star men.

Here are two examples. One man was sweeping floors and cleaning cars in a garage. The other had no qualifications at all. None. He was destined to drive a forklift in a factory.

Sir Jackie Stewart was hopeless at school. Ridiculed by class mates and ignorant teachers. It was only at the age of 40 that he was diagnosed with severe dyslexia. He ended his sad childhood sweeping floors and cleaning cars in the family’s garage. Good for nothing. Stuck rock bottom. Then a customer was so impressed with Jackie’s cleaning work, that he asked if he wanted to test ride one of his racing cars. Sir Jackie became three-time world champion Formula One.

Carl Fogarty didn’t achieve anything at school. He never sat for an exam. A school dropout from a working-class family. His last contact with a teacher were two words, the second one of which was ‘off!’. So much so for an education. But young Carl had tremendous self-belief and drive. He knew he wanted to race motorbikes and never doubted he was the best, convinced it was his destiny. Mr. Fogarty became four-time world champion Superbike.

OPPORTUNITY

Bin men may be working at the bottom of society, earning only a meagre sum of dollars. But in a society where economic progress takes place, opportunity increases. Especially for bin men.

Economic growth creates opportunity, wherever you are in society.

And social mobility becomes possible.

Sources:

Aidan Millward, One Extraordinary Life! The Full Story of Jackie Stewart 2020 (YouTube)

Antony Carilli, Praxeology, Supply and Demand 2011 (YouTube)

Garett Hickling, Carl Fogarty. History of a Legend 2011 (YouTube)

Ludwig von Mises, Human Action, p133 and p612

Ludwig von Mises, Economic Policy, p9

Ludwig von Mises, Epistemological Problems of Economics, p228

Ludwig von Mises, Liberty and Property, p22

Ludwig von Mises, The Anti-Capitalistic Mentality, p2

Ludwig von Mises, The Ultimate Foundation of Economic Science, p90 and p127

Milton and Rose Friedman, Free to Choose, Chapter 1, p4

T. Norman Van Cott, The Iceman’s Job was Destroyed. Good! 2016 (FEE.org)

Timothy D. Terrell, The Entrepreneur 2015 (YouTube)

Thorstein Veblen, The Theory of the Leisure Class, p256