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A World with Bernie Sanders as the $65 million CEO of Disney
Bernie wants to redistribute profits. How would that work?
Bernie recently said that the profits from Avengers Endgame should be redistributed to the employees.
This got me wondering what kind of CEO Bernie would make.
It’s a nice idea but unfortunately Bernie has never run a business, never paid a wage, made a product, sold a service, never created a job and he’s never been a part of producing anything anyone wants to buy.
He’s not qualified to advise successful companies on resource allocation.
I’ll try to explain why.
These decisions are more complex than Bernie comprehends.
If Bernie had ever had a job working for a business, even a small business, he might understand these things.
If he had been a CEO or exec he’d have a better understanding that how you allocate things like salaries is a tricky stuff. Even the best companies make errors in this.
People who’ve never been involved in job creation logically don’t know how things like wages work. Bernie never paid a wage or created a job so the concept to him is as foreign as dental surgery. Unfortunately politicians market themselves as experts on “jobs” and so they have a voice for economic ideas which don’t relate to reality.
To Bernie, wages are a zero sum game. They assume that the “boss” is screwing the workers and even “robbing them of labor”. That’s one of the fundamental flaws in this type of socialist thinking. In a free and voluntary driven economy people choose what they think is fair and make agreements with others.
For Disney and every successful company, employees are a prime resource. Companies pay them based on skills, talent, supply and demand and other factors.
Lower paid workers
Company executives don’t sit around board rooms trying to figure out how to harm employees. They depend on employees and want to attract and retain them. If they don’t pay a fair wage someone else will hire them away and build a better company.
Do companies try to pay employees as little as possible given the market rates and value of the work the employee does? Of course. Just like employees work to gain the highest wage for the least / most fun effort.
Higher Paid Workers
What higher paid people like Disney CEO Bob Iger who Bernie called out for making $65 million?
His specific statement was:
“What would be truly heroic is if Disney used its profits from Avengers to pay all of its workers a middle class wage, instead of paying its CEO Bob Iger $65.6 million — over 1,400 times as much as the average worker at Disney makes.”
Let’s break this down quickly:
1) Is it heroic? No, of course not- this assumes the money is sitting in some Uncle Scrooge style vault in the Disney castle. It’s not. The money goes to pay for things that the execs decided would increase shareholder value. That’s what they do.
Disney execs have generally made good decisions — these decisions have created 201,000 jobs and entertained a lot of people.
There is zero chance that Bernie could make better decisions and build a larger company.
The value of the company has also increased over time. This benefits the employees more than any other group, since they are the largest shareholders (owners) of the Disney company.
The increase in share price helps employees, the largest stockholders and also helps people who own pensions, 401ks, mutual funds and others assets which own Disney stock.
2) Use the “profit from Avengers to pay all of its workers a middle class wage”
This is a common tactic of Bernie’s handlers: combine bad math with emotional sound bites to get a post viral.
First off the premise is ridiculous: Bernie acts as if the Avengers money is a) just sitting there or going to fat cat execs b) would be able to pay everyone a higher wage.
Neither is true. Avengers does not make enough alone to impact the 201,000 Disney salaries much.
3) If you took Bob Igor’s entire salary and gave it to the workers it would not be “a living wage” It comes to $323 per employee.
Then what? Iger, a CEO, who has created lots of jobs and lots of value quits the company. Do the employees of Disney, who have good jobs, increasing wages and a growing company want a CEO who isn’t as qualified?
So now if Iger quits, presumably some other executive steps up as CEO. A natural choice would be Christine McCarthy, CFO. Christine makes $11 million or so.
Presumably Bernie would also think $11 million is too high. He could fire Christine and distribute her money — giving employees another $54 a year or $4.50 / month.
The employees can now buy an extra sandwich but without a CEO or CFO there might be less profits and less jobs. In fact if this continued the company would begin spiraling downward and probably fail.
Before we cut Christines salary we should also cut Robert Downey — he made $75 milllion for Avengers playing Iron Man. Talk about unfair! Downey doesn’t have the responsibilities of Iger, didn’t even have to put in as many hours and doesn’t have the downside risk (Iger only makes his huge bonus if he meets targets).
So — we now have Avengers with some other actor playing Iron Man. If Bernie really wants to save money he could get a community theater actor to play Iron Man.
The world isn’t fair. I don’t have the looks Chris Evans has. I don’t have acting training. As much as I’d like to be Captain America, I don’t have those skills. I have business skills worth millions but I still don’t have the skills Bob Iger has. He he has more experience than me and is more qualified to run Disney. Likewise an average mid level exec has more marketable skills than Bernie.
(By the way, what market value do you think Bernie’s actual knowledge and skills have? What would a company like Disney pay him as a consultant? I’m talking skills only, not the press, name recognition or govt connections he got on our nickel, but real skills. If he used a pseudonym, would anyone hire him based on skill or knowledge?)
Even if you did reallocate resources from Avengers profits — how would you do so?
I’ve done some management consulting. Smart people spend weeks on these kinds of things.
The money Avengers makes goes to pay people from the electricians to the sound guys, special effects makeup people, actors like Chris Evans, writers, caterers, drivers etc.
People who understand business think these things through.
There are trade offs with any decision. Pay Chris Evans or Robert Downey less and they might quit — the movie wouldn’t have done well. Fire Christine McCarthy and the company suffers. Jobs suffer.
Executives at companies like Disney make mistakes.
But no politician is in a better position to make those decisions.
Bernie in an executive position or a board room would be a bumbling laughing stock.
His skin deep memes fall apart with the first response question “Where do you get the money and at what risk and trade off? What does the company look like after your change? What are the impacts to our growth, headcount and bottom line?”
Actions have consequences.
The market decides whether decisions companies make are good or bad. If Disney makes good decisions the company grows. If not it doesn’t. No politicians needed.