Would CBS shareholders have been better off paying Les Moonves more modestly?

CBS has been in the news lately. The all-male corporate executive team is now trying to find sort out ways to “donate $20 million to women’s groups following the Sunday resignation of CEO Leslie Moonves after sexual-harassment allegations by several women.” (Chronicle of Philanthropy; maybe this is better in their view than hiring a woman to join their team?)

“Les Moonves, one of the highest-paid CEOs in the US, leaves CBS with a net worth of $700 million” (Business Insider) is something that seems more interesting for shareholders. The company’s market cap is $21 billion. Thus roughly 3 percent of the total enterprise value has been extracted by this one employee (he also made some money before joining CBS). Was he working 24/7 at this job? From a 2005 NY Times article: “Moonves, although a lifelong Democrat and a friend of Bill Clinton’s, is something of a throwback. In his shows, he likes the men alpha and handsome and the women smart and beautiful, and he wants little personal complexity: happy endings are imperative.”

How does it benefit shareholders to have an employee who is so rich that he is hanging out with former Presidents? And did CBS need to pay someone $50+ million every year to tell them that the American public likes a happy ending?

Related:

  • Harry Potter and the $100 million/year manager (from 2003: “Yesterday’s posting raises the question “if an executive can’t do a good job for $2 million/year, will he do a good job when paid $20 million/year?” The moribund U.S. economy seems to suggest that paying out huge sums to managers is not effective. … think about how focussed on work you’d be if someone handed you a $75 million check tomorrow. You’d probably move into a bigger apartment and redecorate. And wouldn’t it be nice to have a few vacation houses? You know that you’ll be traveling by private jet from now on, but to which of the 50 fractional jet ownership plans should you subscribe? You’re going to get invited to a lot of fun charity events so you’ll need a new wardrobe. In short, living like a rich person is very time-consuming.”)
  • Gawker on the lawsuit filed by Moonves’s first wife (2004; being a defendant under California family law was a further distraction from the job; the litigation lasted for two years prior to what was expected to be “a lengthy trial”; every extra dollar paid by CBS to Moonves would have prolonged the litigation (when more is at stake, people fight more intensively))
  • The Journal of Popular Studies on how the current wife supports and defends the man (July 2018)

[Buried in the middle bullet is something interesting. The journalist for “legalzoom” says that “But appearing in court wasn’t Moonves’ only speedy option. He could have rushed the process earlier by divorcing outside of California. While most states have residency requirements or long cooling-off periods, a few states offer a quick out. Nevada isn’t just the home of the drive-through wedding chapel. It’s also the best state for a quickie divorce.” The lawsuit was filed by his wife in California under California law. At that point, Moonves had no choice but to defend the suit (under the “no-fault” system, the wife was guaranteed to win a divorce, but there was an open question of how profitable it would be). The “no-fault” system is referred to by researchers as unilateral. Yet the American media portrays the defendant as having a world of options (which would be the case only under a bilateral system) and/or the decision to engage in a divorce lawsuit as an entirely voluntary process, agreed upon by both spouses.]

Readers: What organization should get the $20 million? There are roughly 75 million women in the U.S. labor force (U.S. Department of Labor, Women’s Bureau). Should each of these women get 27 cents (minus admin costs) for what they’ve suffered at the hands (etc.) of guys such as Moonves?

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Freedom to fly and airplanes will soon be almost free?

It has been 17 years since the events of 9/11 transformed the United States. Despite fears of domestic jihad, we have preserved some of our traditional liberties, including the freedom to fly (well, except in the Washington, D.C., area, any time the President is visiting, any time there is a major league sports event, etc.). From the 1920s through the mid-1980s, the idea was that a middle-class American could purchase an airplane and fly almost anywhere within the U.S. without filing a flight plan, talking to Air Traffic Control, or otherwise becoming tangled up in a bureaucratic process. Due to skyrocketing (so to speak) costs, this had to be backed out to rent an airplane rather than purchase, at least for the middle-class earner. But we still have most of the freedom of avigation that we had back in the 1920s.

Could it be that we’ll get closer to mid-1980s prices for aircraft? Read on…

I met a young pilot recently and we discussed the possibility of him buying an airplane. Here’s part of an email from him:

My game plan is to keep adding certifications and experience then buy an aircraft in 7-12 years or so. I’m a long term thinker to a fault. The market should be flooded with many small aircraft in the future. Below, per FAA data, you can see from the 2012 and 2017 charts of the private pilots they are fewer and older as time progresses.

(Complete data: faa.gov)

Certainly it does seem as though potential light aircraft owners were concentrated at 55-59 in 2012 and are now concentrated at 60-64. The composite airplanes, such as Cirrus and Diamond, that have been built over the last 20 years, are mostly immune to corrosion.

It seems as though history is on his side. The pilot-owners who knew how to fly piston twins have aged out of being able to handle these high(ish)-performance aircraft and they are now selling for under $100,000, oftentimes for less than a same-era single-engine plane.

So perhaps in 7-12 years we will still have the freedom to fly and a Cirrus SR22 will be almost free (at least to acquire, if not to maintain)?

On the third hand, what about China? They have a rapidly developing general aviation culture. They are the owners of Cirrus and Continental, the manufacturer of the engines inside nearly all Cirruses. As Americans hang up their wings, why wouldn’t there be thousands of Chinese folks interested in exploring their new freedoms?

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Do folks in Tennessee want a New Yorker to tell them how to vote?

At a recent family event I asked a young cousin what he was doing for a job. “Working on the Senate race in Tennessee,” he responded. He describes himself as a passionate liberal so I was later surprised to look up the race on Wikipedia and see that that the liberal New Yorker is doing his best to ensure that a female-identifying candidate (Marsha Blackburn) is defeated by a white male (Phil Bredesen, a former advocate of amending the state constitution to ban same-sex marriage).

How does it work with voters when they find out that out-of-state consultants are employed to persuade them? Can a “bring in the (Scarsdale) New York Democrats” approach succeed?

[Separately, if the Democratic Party tells voters that American women are victims and only the Democrats can help them, how can they spin their attempt to defeat a woman trying to bust through the glass ceiling and instead place a 74-year-old white male in a position of power?]

Related:

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Oxana and I talk about Oshkosh at MIT on Wednesday at 6:30 pm

Boston peeps: You’re invited to MIT Room 35-225 at 6:30 pm on Wednesday, September 12. Oxana and I will talk about Oshkosh as a Safe Space (photos) based on our 2018 trip. Sponsor: MIT Flying Club.

(It might be safer to show up closer to 7 pm. The first 30 minutes of the block may be devoted to MIT Flying Club administration because it is the first meeting of the semester.)

Related:

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Serena Williams US Open dust-up an example of female or Hispanic victimization?

My Facebook friends are outraged because umpire Carlos Ramos penalized Serena Williams at the U.S. Open. This was a textbook example of female victimization in their view. Given that Ramos is Portuguese, however, would it make more sense for them to be outraged at Mr. Ramos being called a “thief”? That is an example of a Hispanic being victimized, no?

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Social justice = replacing a slate of white male directors with white female directors?

A reader sent me these amusing portrait galleries:

I wonder if everyone will view these all-white (plus one token) groups as progress…

[Related: During the 2008 Presidential race, a (short) Massachusetts female friend said, regarding my primary vote for Obama, in a disgusted tone of voice, “What a surprise. You voted for another tall man.”]

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Less price competition in the supermarket coffee business now that Nestle has acquired Starbucks?

Our local supermarket used to have at least one brand of packaged coffee on sale every week. It would rotate among Starbucks, Peet’s, and Dunkin’ Donuts. Discounts were typically 30 percent, e.g., from a regular price of $10 down to $7.

In May of this year, however, Nestle acquired the Starbucks supermarket coffee operation. Shortly after the deal closed, the sales stopped on all of the brands. What formerly cost $7 is now $10.

Readers: Have you noticed anything similar in your region?

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New York Times highlights a well-paying job and the illegal immigrant who holds it

“Harvard Is Vaulting Workers Into the Middle Class With High Pay. Can Anyone Else Follow Its Lead?” (nytimes) is a feel-good story for readers about an enterprise so stuffed full of cash that it claims to pay workers wages based on something other than the market (left out of this is that, with higher pay, the contractors may just hire fewer and more-productive workers; see “MIT professor studies high-wage retailers” for how high wages may actually cut the percentage of an enterprise’s revenue that flows out to labor due to “Costcoization” (hiring only the most productive and energetic folks)).

From the Times:

Martha Bonilla is not your typical middle-class worker. And it’s not just that she was born in a backwater of El Salvador and crossed Mexico hidden among a pile of bananas in the back of a truck to make her way illegally into the United States at age 20.

Like millions of Americans lacking a college degree

“Coming to the United States was the best decision I ever made,” Ms. Bonilla said.

For Ms. Bonilla, the result is an hourly wage of more than $25. Adding the money from a part-time job cooking at a student dorm, most weeks she clears more than $1,500.

So the good news for an American with minimal education is that it is possible to earn nearly $80,000 per year (in a town where a 3BR house costs $2 million!). On the other hand, the actual job described has been taken by an illegal immigrant.

The folks at the New York Times can’t imagine that an expanding supply of low-skill workers due to low-skill immigration has anything to do with the challenge of finding a high-paying job:

As the wages of American workers without a college education languish below where they were 40 years ago, Harvard’s experiment has led some economists and union organizers to think about similar arrangements to broadly benefit low-pay service workers, who form the biggest and fastest-growing part of the job market.

Recent research by economists at four top universities and the Social Security Administration concluded that the parceling out of less-skilled work to low-wage contractors — Goldman Sachs outsourcing its janitorial services, say, or Apple contracting out the assembly of its iPhones to Foxconn — could account for around one-third of the increase of wage inequality in the United States since 1980.

It is shuffling an employee from one enterprise to a different one that accounts for the huge wage cut. Nothing to do with supply and demand. Thus, if you’re a hospital and tired of paying surgeons $600,000 per year you can contract with Surgco and get surgeons for $400,000 per year plus a 5 percent fee for Surgco.

Larry Summers still remembers some economics (see “Women in Science” for how he never considered an economic explanation when he pondered a phenomenon and got fired):

But as Mr. Summers pointed out, across the economy, better jobs may mean fewer jobs. If, say, Massachusetts were to introduce a similar policy for public services, it would need to find the money. Taxpayers could provide it — or the state could scale back services and cut jobs. And employers forced to pay more may attract better-trained workers, displacing less-educated ones.

(i.e., Summers could manage a Costco if he gets forced out completely the next time he says something about women)

Readers: Is the nytimes trying to get low-skill Americans to vote for Trump? If not, how can we explain this article highlighting the fantastic low-skill job that has been snagged by an illegal immigrant?

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Arabia Felix: The Middle East in 1761-1767

Arabia Felix: The Danish Expedition of 1761-1767 moves at a slow (18th century?) pace, but provides some interesting looks at how people were living back then. The expedition from Egypt through to present-day Yemen was motivated by an interest in Biblical times:

Michaelis fancied that the investigators could also study the Arabs’ daily habits and customs, and their architecture. His idea here was that as there were only a few places left on earth where so conservative a people as the Arabs could still be found, there was a good chance of finding in Arabia cultural forms similar to those of ancient Israel—better even than in Palestine itself, which in the intervening centuries had been exposed to numerous foreign influences.

Academia was the place for anyone who wanted to work at a slow pace:

In Rome, too, innumerable difficulties seemed to have conspired against him. On an earlier occasion, Professor Michaelis had emphasised the pointlessness of going to the Italian capital for instruction in Arabic, since nobody there knew the dialect spoken in Arabia Felix. Instead, von Haven’s instructions supposed that he was “to gain practice in the reading and copying of Oriental manuscripts.” Naturally, this could be done only in the Vatican library. But three months after his arrival in Rome he wrote to Bernstorff that he was receiving instruction in Arabic from a Syrian priest every morning and afternoon. Not until four months later did he report that he had been given a letter of recommendation to the Vatican library; and not until five months after that, thanks to the French Ambassador, had this letter of recommendation become a ticket of admission. Six months after arriving in Rome and eighteen months after leaving Denmark, the scholar was more or less able to begin his studies. Then once again fate took a hand. He wrote on 22nd March to Bernstorff that the Vatican library was unfortunately open only from nine until noon. “But,” von Haven continued, “in matters of discussion and learning I prefer the living to the dead; and as I can meet my Syrian priest only in the mornings, I am afraid there is nothing I can do but let others copy the manuscripts at the library.”

They got 43 paragraphs of instructions from the Danish king. Samples:

You will traverse the interior of Arabia as well as journey along the coast. As you are accompanied by a physician, it is expected that this will allow you an opportunity of visiting a number of places where deadly diseases are prevalent without exposing your lives to danger.

The members of the expedition will behave very circumspectly towards the Mohammedans, will respect their religion, and will not behave towards their women with European freedom.

Moreover, you will pay particular attention to the ebb and flow of the Red Sea, to the relations between the living and the dead, to the influence of polygamy on the increase or decline of the people, to the relationship between the sexes, and to the number of women in the towns and in the country.

These folks would not have complained about a Ryanair seat:

The wind freshened once more, and on 26th January the Greenland skimmed north through the Kattegat before a fresh south-westerly breeze. They had passed Skagen and were in hopes of reaching the open sea when the wind veered west and increased to near-hurricane force. In his diary Carsten Niebuhr endeavoured to keep his composure: “All day on 2nd February it was so stormy that we could not even light a fire on board. However, we did not worry too much on that account, for when one is at sea one must learn to disregard such inconveniences. We suffered the loss of only one sailor, who fell from the yard-arm into the sea during the gale and could not be rescued because of the darkness and the tremendous seas.”

It took about six months to reach modern-day Turkey, from which the expedition officially launched.

By 8th September, 1761 all the preparations for the journey were complete. Now the real adventure began. Dressed in their new Oriental clothes, the learned gentlemen took leave of their host von Gähler and went aboard the boat which was to take them to Alexandria. On this ship, a little Turkish vessel from the Adriatic port of Dulcigno, the expedition encountered quite another world from the one they had been accustomed to on the Greenland. The purpose of the ship’s journey was quite simply to take a cargo of young slave girls to the Egyptian markets. It is apparent right from the start how this curious cargo captured the interest of our travellers. Peter Forsskål forgot his jelly-fish and marine plants for a while and noted in his diary: “We find ourselves in the company of a merchant who is going to Cairo with a cargo that would be highly unusual in European ports, namely women. He has taken all the safeguards of jealousy: a special cabin, which lies above our own, has been reserved for the young women, and he alone takes them their food. In addition, he has fastened a blanket inside the door so that the women cannot be seen when he lets himself in and out.” It would appear from this description that Forsskål had lost nothing of his power of exact scholarly observation; and Niebuhr too seems to have made a conscientious study. The young women, he says in his diary,“are generally very well treated, because when they are to be sold in Egypt it is very important for their owners that they should arrive at the market healthy and cheerful.”

There were worse things than Internet/Facebook mobs:

During their stay in Alexandria the members of the expedition lived in the house of the French Consul; and when one late afternoon they went up to the flat roof to enjoy the cool of the evening as the sun sank over the roofs and minarets of the town, they suddenly witnessed a distressing scene in the street below them. A number of Bedouin robbers who had made their way into the town from the desert were discovered by the populace, and those of them who did not succeed in escaping were surrounded in front of the consul’s house and beaten to death by the angry crowd.

Trade was extensive, if not globalized:

Other evenings he visited the caravan that came up from Sennar, deep in the Sudan, which was called the djellabe and was led by coal-black men with yellow, violet or scarlet shawls over their shoulders under their short curly hair. They halted their animals in front of ogelet-ed-djellabe, the inn of the djellabe, and came to fetch coral and amber for jewellery, beads and mirrors, sabres and guns. With them from Africa they brought slaves and slave girls; young boys of about eight who cost only 25 mahbub; young men from twenty to thirty who could be got for between 35 and 40 mahbub; eunuchs that cost up to 110 mahbub; young women costing up to 40 mahbub for virgins, for those who were not virgins up to 30 mahbub, and for those who knew how to prepare food up to 60 mahbub.

Life before photography was slow and sometimes awkward…

Niebuhr came very close in these months to answering the complex questions which the German professor had put concerning the practice of circumcision among the Arabs. This he did partly by talking to Arab scholars, but also by experiences of a more direct nature. One visit to a distinguished Arab which Niebuhr paid together with Forsskål and Baurenfeind became a memorable experience. We may allow Niebuhr himself to report: “Whilst we were one day visiting a rather distinguished Arab of Cairo at his country estate, six or seven miles outside the town, Herr Forsskål and Herr Baurenfeind expressed the wish to see and to draw a young girl who had been circumcised. Our host immediately gave orders that a young peasant girl of eighteen years old should be brought in, and he allowed them to see everything that they wanted to see. In the presence of various Turkish servants, our artists drew the whole thing from nature, but with a trembling hand because he feared unpleasant repercussions from the Mohammedans. But as the master of the house was our friend, none of them dared make any objection.”

There was a tremendous amount of petty theft, grifting by vendors, and official corruption at every stop from Egypt through Yemen. Extra cash was turned into extra wives:

“In that corner of the Faran valley [Suez] there were eight tents full of wives and children. Only the very poorest Arabs had only one wife. The wealthier sheiks had two or three. Two of our guides had two wives each, and the third only one. But they all wanted more money, or at least enough to buy several wives.

Income inequality was an issue back then…

Only four days after the return of von Haven and Niebuhr from the Sinai peninsula the great caravan arrived at Suez with pilgrims on their way to Mecca. Like a swarm of outsize grasshoppers they settled on the little harbour town and overnight made it more densely populated than Cairo itself. Men, women and children were there in confusion; the poor with their bundles and beggars’ crutches, the rich with their servants and heavily armed mercenaries to protect them during the journey; and great numbers of traders, neither rich nor poor, who had learned to use this chance of getting themselves and their goods in safety to Mecca while doing a little business en route. Wherever rich and poor meet you will soon find a trader, so that the rich may become richer and the poor poorer.

The trip to Jeddah was slow:

In the middle of this hectic bustle Forsskål had had to step in. In time he had become well-known among the people in the harbour quarter, and he managed to reserve the topmost cabin in the biggest of the four ships now preparing to sail with all this turmoil to Djidda.

The best cabins were occupied by rich Turks on their way to Mecca with their entire harem; the women were accommodated immediately under the expedition’s cabin,

Finally, each of the four ships had up to three or four smaller vessels in tow. In most of these were horses, goats and sheep; when the animals were to be fed, a sack of straw was thrown overboard and allowed to drift astern to the boat in tow, where the herdsman fished it up with a boathook. With one of the other boats in tow there was a lively traffic of a different kind. It was filled with prostitutes, the so-called Hadsjs of Mecca, who worked hard during their pilgrimage to the Holy City to earn their keep.

While this floating caravan was making its way south, Forsskål and Niebuhr checked their course; and both of them remark in their diaries, with a shake of the head, how because of his fear of losing landmarks the captain always followed the line of the coast among the dangerous coral islands and skerries, where a European skipper would have made for the open sea as quickly as possible. Every evening at sunset they had to heave to, because the captain dared not continue this hazardous coastal journey in the dark. One afternoon Niebuhr found a partial explanation of this when, shaken to the core, he asked permission to remove two enormous lumps of iron which the helmsman had placed under the ship’s compass in the belief that its presence would strengthen the magnetic needle.

They are at the mercy of the winds:

and their stay there eventually lasted over six weeks, rather longer than they had anticipated. The reason was the constant northerly wind; the coffee ships, which were to take them the last stretch southwards along the coast, had been delayed by head-winds on their

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