Nike has hired Colin Kaepernick for an ad campaign, presumably to show that the company virtuously opposes the “wrongdoings against African Americans and minorities in the United States” (Sports Illustrated, 2016): “I am not going to stand up to show pride in a flag for a country that oppresses black people and people of color,”
If we assume that the most oppressed Americans are those on welfare, let’s look at the economics of this. The typical welfare household in 2011 consumed roughly $60,000 in tax dollars (“America Spent Enough On Federal Welfare Last Year To Send $60,000 To Each Household In Poverty”, from budget.senate.gov). That’s roughly $68,000 today.
Also in 2011, it was reported that the folks in Indonesia making Nike shoes were being paid 50 cents per hour (Mercury News).
Assuming that inflation in Indonesia has been comparable to the U.S. rate, a Nike worker would have to work 120,000 hours per year to enjoy the same spending power as the American welfare family whose oppression Nike is now concerned about. (We wouldn’t want to question whether the $68,000 per year of tax money translates into $68,000 of spending power; if it did not, it would mean that our central planners were inefficient somehow.)
Using a standard 2,000 hour/year working rate, a Nike worker is getting only 1/60th as much as an oppressed American welfare family.
There are some problems here.
There’s no evidence to support this assertion:
Nike has hired Colin Kaepernick for an ad campaign, presumably to show that the company virtuously opposes the “wrongdoings against African Americans and minorities in the United States”
If Nike wanted to express its opposition to wrongdoing, there would surely be a less controversial way to do that. Opposition to wrongdoing isn’t generally controversial in the first place.
It’s also unclear why you make the jump to welfare. Kaepernick is clearly concerned about the way that non-white Americans are treated by the police. This affects many who are not poor.
The first sentence of the second paragraph of that Senate document is The U.S. Census Bureau estimated that almost 110 million Americans received some form of means-tested welfare in 2011. In other words, plenty of the funds spent by those programs went to non-poor households. Thus, it is unreasonable to conclude that “America Spent Enough On Federal Welfare Last Year To Send $60,000 To Each Household In Poverty” means that “The typical welfare household in 2011 consumed roughly $60,000 in tax dollars”.
We might also note that “means-tested” is not a great way to determine whether a federal program should be considered welfare. According to that definition, a 64 year-old person who has her health care paid by Medicaid will get off of welfare when she turns 65 and has her health care paid by Medicare, which is not means tested.
«Opposition to wrongdoing isn’t generally controversial in the first place.» – Such a bold statement! Ever heard of Martin Luther King (to cite one example)?
«In the years leading up to his assassination, the preacher and civil rights activist was less popular than ever. A 1966 Gallup poll found that almost two-thirds of Americans had an unfavorable opinion of Dr. King and a third had a positive opinion, a 26 point unfavorable rate increase from 1963. [1]» – Not controversial, you say?
[1] https://www.newsweek.com/martin-luther-king-jr-was-not-always-popular-back-day-780387
@philg: your argument reminds me of those comments that always came about – why are we spending money on space exploration before solving hunger on earth?
@Francisco: exploration of space may be justified by the fact that technological improvements do indeed benefit all of humanity eventually (trickle down to other products). Having a hundred pairs shoes or thousands of clothes made by cheap labor does not really help anyone. And even most advanced shoes (which may help Olympic or NFL atheletes) do not help vast majority of people who just want to ride their SUVs to a restaurant.
Francisco doesn’t see the irony in Nike championing the American “vulnerable” while paying 50 cents/hour to Indonesians who produce $129 sneakers ($10 production cost) for the righteous inequality-hating consumer. Maybe he will join me in trying to convince Lockheed Martin to paint portraits of Mahatma Gandhi as nose art on every fighter jet that the company produces. It would also be nice to see our country’s next aircraft carrier named the “John Lennon” while firearms enthusiasts purchase a special “I have a Dream” MLK-edition AR-15.
A more appropriate comparison might be found comparing the wage in Indonesia against the average factory worker wage in the US – by some quick searching, around $26,500. That puts the Indonesian wage closer to 1/26th that of a US worker.
Anyone want to guess how many sneakers Nike would sell if they were priced at $350/pair?
Glenn: If the average factory worker in the U.S. is earning $26.5k for 40+ hours/week of noise and tedium, it is no wonder that Americans are reducing their labor force participation in favor of collecting welfare! (see http://philip.greenspun.com/blog/2015/06/01/book-review-the-redistribution-recession/ for an economist looking at this quantitatively)
I would question that number, though.
https://www.bls.gov/iag/tgs/iag31-33.htm#earnings says “production and nonsupervisory employees” in manufacturing earned about $21.50/hour times 42.2 hours per week = $47,000+ per year (assuming that they receive paid vacation time).
You didn’t factor in the cost of living in Indonesia vs the US. That factors into the market clearing wage, no? The folks in Indonesia probably aren’t funding private aviation infrastructure, for example, so that a tiny fraction of citizens can enjoy a hobby. And so on. All of that drives up the cost of living in the US, and welfare in turn. That Nike factory wage goes much farther in Indonesia.
Senorpablo: I don’t think the cost of living is that different. I asked a Coca Cola executive back in 1994 how it was possible that Coke cost more in Costa Rica than in a U.S. supermarket. He explained that Coke’s costs (clean water, electricity, highway transportation) were higher in Costa Rica.
The Indonesian will pay less for land, perhaps, but if building a house has to buy cement, wood, and petroleum on a world market at world prices. The backhoe from Japan will cost the same as here in the U.S. Transportation of goods within Indonesia has to cost more than in the U.S.
(Indonesians aren’t funding aviation? https://en.wikipedia.org/wiki/List_of_airports_in_Indonesia says they have 673 airports. In the U.S., aviation is funded almost exclusive by people who fly. Taxes on airfares and charter/private fuel go into https://en.wikipedia.org/wiki/Airport_and_Airway_Trust_Fund . There is sometimes disagree between airlines and the private jet operators as to the appropriate share, but a person who works in a factory and drives a Honda Accord contributes only minimally. When a Gulfstream is fueled for Hillary Clinton or Al Gore, a massive slug of cash goes into this fund. Yet there is no additional runway built at Martha’s Vineyard for Gulfstream-only access. The Gulfstream uses the same runway that was built for the U.S. Navy in 1942 and that has been maintained for the airlines and cargo ever since. Australia killed off most of its general aviation industry with fees and their costs of running the overall system did not go down. The marginal cost of receiving Bernie Sanders in a private jet (hang around airports in New England and you will realize that Socialism need not be uncomfortable!) on an existing runway is almost nothing.)
(Bernie is off the campaign trail, but somehow he continues to charter jets using campaign funds? https://freebeacon.com/politics/bernie-sanders-senate-campaign-spent-nearly-40k-private-jets-last-quarter/ is about jet charter in 2017)
If the cost of living is based only on the global market costs of hard goods, we’ll have to look into how the people of China, India, Africa, etc. are getting by on many orders of magnitude less money than Americans!
As for aviation being “self-funded,” it seems very unlikely that the true costs are being considered. Santa Monica airport, for example, is 227 acres. Going rate for land in Santa Monica seems to be in the neighborhood of $10-15M/acre. Are the landing fees covering that value? If the land was sold, the city could collect 5% yearly return on that $2-3B dollars, plus property tax revenue(1%) on some multiple of that number. Is the airport paying the city $120M+/year on top of whatever maintenance and operating costs they incur? That would be pretty remarkable because in 2014 they had 83k landings which would ring it at an average cost of $1500 per just to cover potential interest and taxes from the land sale. Probably 95% of Santa Monica residents have never flown out of the airport and find the noise and traffic routing a nuisance. Not that an additional 1500-3000 homes would be a better alternative, but in capitalist America, it’s all about the cold hard value today.
According to https://patch.com/california/santamonica/bp–santa-monica-airport-economics-101 the airport did not even cover operating costs in 2012.
No doubt the majority of private airports, in more rural areas, can cover their true value, but are those the places private pilots like to fly?
People who have “orders of magnitude of less money than Americans” are not living well in any country! (And China’s per-capita nominal GDP isn’t even one order of magnitude less than the U.S. See https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita )
Santa Monica airport is an outlier. The land is super valuable. It is situated within a region where citizens hate each other and are constantly passing laws that they hope will enable them to find harmony. There are a bunch of other airports within a one-hour drive (or six hours, depending on LA traffic?). The folks who run the run the government there have decided they’ll be better off doing just what you suggest: shutting it down and selling the land.
I’m not sure that the U.S. air transportation system exists purely for Hillary in her Gulfstream or Maria Butina in her Piper Warrior. See https://www.nytimes.com/2018/09/07/nyregion/andrew-cuomo-helicopter-airplanes-air-travel.html for how the governor of NY made use of the airports within that state for business that was at least described as official. Maybe as the U.S. trends toward the Indonesian or Chinese level of population density people will decide to shrink most current airports to helipads. But Indonesia is already more densely populated than the U.S. and hasn’t made the decision to repurpose all of its airports without scheduled airline service (see https://en.wikipedia.org/wiki/List_of_countries_and_dependencies_by_population_density ).
At our local airport there are some companies that run twice-daily flights to satellite offices, e.g., in Maine. So the airport adds value (that can be taxed) to the real estate nearby. The companies would relocate to be near some other airport if they couldn’t run their shuttles. We also see planes from Target and Walmart carrying middle managers at the GA airports around our region. Maybe the existence of these airports influences their store location decisions to at least some extent? http://www.chicagotribune.com/suburbs/daily-southtown/news/ct-sta-matteson-sams-club-st-0810-story.html talks about Walmart choosing a location near “airports” (not the big Chicago one! They may have meant Midway and/or Gary, Indiana) for an ecommerce center.
If it truly made economic sense to shut down 95 percent of the U.S.’s air transportation infrastructure and restrict flights to the busiest current airports, I think that it would have already been done, e.g., during the Great Recession that started in 2008 and the slow growth that persisted through 2016.
These lobbyists for GA hired PWC to look at the question and they came up with https://www.nbaa.org/business-aviation/2015-general-aviation-contribution-to-US-economy.pdf , which claims that there is a big positive impact. I don’t think that their analysis considers “What if we shut down all of these government-owned airports and turned the land into tax-paying commercial or residential property?”
One data point: the Navy ran a huge airport in Weymouth, Massachusetts. This is in the Boston suburbs, which have seen a booming economy and crazy amounts of sprawl. The Navy moved out in 1997 and gave the land to the local towns. They could have made huge amounts of money the way that Providence and Manchester, NH are doing by keeping the airport as an airport and undercutting Massport/Logan on fees. They might have gotten half of the international flights, for example! Instead they decided they were going to get rich on real estate development. Here we are 21 years later and the site is mostly a wasteland. The only positive is decades of high-paying government and committee jobs. See https://www.mass.gov/news/audit-finds-improvements-at-southfield-redevelopment-authority-though-concerns-remain
See https://en.wikipedia.org/wiki/Naval_Air_Station_South_Weymouth for some more of the history of how they were going to get rich. Weymouth has an median home price of $389,400 according to Zillow. That’s well above the U.S. as a whole ($218,000 says Zillow). So I just don’t see how it would work for the average GA airport.
(Counterexample: the active duty base got shut down in Portsmouth, NH. The city kept the airport running and there is a lot of industrial development around the airport, e.g., Lindt U.S.A.)
Another data point on the standard of living thing… you don’t see that many Indian Americans move back to India on retirement. If the same $$ generated 10X the standard of living, presumably we’d see a lot of retirees going back to their home cities.
At some point doesn’t quality of life(health and happiness) reach a point of diminishing returns? At the end of the day, aren’t those the only valid metrics by which to compare how well one is living? You often point out how other countries deliver almost as good, or better, health outcomes with far less expense. Not to mention that’s also a significant factor in cost of living.
Why not look into one of your favorite examples of efficiency, Singapore, as to the effects of GA on productivity? Then seem to have very limited general aviation. What you describe is a very small fraction of 1%’s who benefit in terms of productivity from general aviation, while it’s more or less a large money sink hobby for the rest of the people, similar to horses. It doesn’t seem likely to me that proximity to airports has much impact of business. I guess we’ll find out when Santa Monica shuts down if all the Gulfstream owners move away.
I doubt that any of the LA/Orange County airports(Torrance, Hawthorne, Fullerton, Bracket, etc.) which are primarily GA make any financial sense even though the surrounding area isn’t as valuable as Santa Monica.
Senorpablo: https://www.forbes.com/sites/learnvest/2013/01/25/money-does-buy-happiness-we-were-shocked-too/#7e4346c62ef8 says that wealth and happiness correlate to potentially infinite levels of income, but not on a linear scale.
Singapore has limited general aviation? The country is 278 square miles in size (5X the size of Denver’s airport!). They’ve devoted 5 square miles to their main commercial airport. They also have Seletar Airport! See https://en.wikipedia.org/wiki/List_of_airports_in_Singapore
They’ve invested way more of their surface area in airports than the U.S. Given how successful Singapore Airlines is, maybe aviation is a bigger percentage of the Singapore economy than U.S. airlines contribute? https://www.timeout.com/singapore/things-to-do/the-best-aviation-schools-in-singapore shows the flight schools.
If your theory that general aviation is a drain on a country’s economy is correct, Singapore could shut down all of its airports and start collecting property tax on more housing or commercial buildings. It is only a 45-minute drive from the center of Singapore to Senai International Airport in Malaysia (12,500′ runway). Depending on traffic, that’s a lot closer in minutes than most of Los Angeles to LAX.
Circling back to the original post and Nike… are you sure that spending on airports is a smaller percentage of the Indonesian economy (where Nike workers are living it up on 50 cents/hour) than of the U.S. economy? If Indonesians spend just as much on air transportation infrastructure, as a percentage of GDP, then why is aviation relevant to the question of standard of living?
(Separately, Santa Monica is not turning the airport that they’re destroying into housing. It will continue to be city-owned land that pays no taxes. The plan is to build baseball fields, etc. See http://www.latimes.com/local/lanow/la-me-santa-monica-airport-20170128-story.html (the big question is why Santa Monica wouldn’t turn this land into housing for the homeless, the undocumented, and the vulnerable. The residents claim to care about homeless, undocumented, and vulnerable people. They’re about to have 227 acres of vacant land. Why wouldn’t they follow their (virtuous) hearts and use these 227 acres to “make a difference”?)