Does Rick Santelli Have To Go Off On Another Rant From The Trading Floor?

Apparently, he does. Hot Air has this video today, in which Santelli is beset with the dopey socialist Ezra Klein as he spews nonsense about “money moving around in ways that are unfair.” Mr. Stop Spending handles it pretty well and schools Klein on basic economics…

Ed Morrissey does a nice job of analyzing the exchange…

The entire problem with this economy is the notion that some people have of “unfairness” in markets. In fact, that’s how we got here in the first place. Government intervened to correct what was seen as “unfairness” in the housing market by guaranteeing risky loans, which set off a housing bubble that left the economic system in ruins. We got Obamanomics as the end result of that, which is all about “fairness,” and which has utterly failed to produce growth thanks to the arbitrary and punitive ways it treats investors.

Furthermore, despite Klein’s citation of two authors he claims has done “the best work” on this crisis, Klein is advocating for a policy which has already failed. He wants the Fed to intervene by creating inflation, which is exactly what they did with their two rounds of quantitative easing.  Not only has that failed to produce actual growth, as the latest GDP numbers show, it threatens to escalate a global debt crisis while weakening the value of assets for most Americans.   The Fed has no more options to play.

We’re not seeing growth because of the hostile environment for investors, and a lack of consumer demand related to high unemployment.  We could solve those tomorrow by reducing regulation (especially the arbitrary ObamaCare legislation that makes risk calculation nearly impossible), unfettering American energy exploration and extraction to create jobs and lower energy costs, and reform the tax system to put all investors on an even playing field and reduce the corporatism that drags down small-business creation and innovation.  We don’t need social engineers tinkering with the economic system to achieve their notion of “fairness” — we need actual economic growth, which the social engineers have proven completely incompetent at delivering.

True dat.

Fairness as applied to economics is and has always been an unworkable concept – because what the market regards as fair is that those players in the market who bring value will be rewarded, and those who do not will be punished.

Morrissey’s social engineers act at contretemps to this process. They impose their moral structure upon the market, and destroy wealth in the process.

An example which comes to mind which is more theoretical than practical: the constant screaming about how pro athletes make millions of dollars and school teachers are paid poorly. We hear this as a standard critique of the free market, and out of some sense of propriety it’s seldom ridiculed for the feint at socialist tyranny it is.

The biggest problem with the athletes-are-paid-more-than-teachers-and-it’s-unjust meme is that it’s simply not true. Sure, if you compared Peyton Manning or LeBron James to the nice lady who teaches math to your sixth-grader, you’ll come away with the idea that pro athletes are paid exhorbitant sums and teachers are exploited by the market. But that’s not an apples-to-apples comparison. The nice 6th Grade Math lady isn’t at the top of her profession, as much as the kids might like her. She’s probably about average.

The average teacher makes $32.17 an hour, which is more than accountants make. The average teacher salary is somewhere between $40,000 and $45,000 per year, and teaching is a profession in which someone can build a 40-year career. Data on the average length of a teaching career is a little fuzzy, and it’s hard to quantify it because so many young teachers decide to exit the profession. We know that the termination rate for public school teachers, which constitute 90 percent of the K-12 market, is under five percent. Let’s say, however, for the purpose of comparison that an average “lifer” in the teaching profession makes $45,000 per year over a 30-year career. This would come to $1.35 million in career earnings.

Compare that teacher to the average NFL player, let’s say. The average NFL salary is $770,000, according to BusinessWeek, and the average NFL career is 3.5 years, and while players who have had careers of 10 years or more frequently decide to retire the vast majority of careers in the league end because the player in question can’t make a team. In any event, 770K for 3.5 years comes to a career earnings figure of $2.695 million, which is about double what an average teacher would make.

So NFL players make more, right? OK – how many people try to become pro football players but can’t make the League? And how many people try to become teachers but can’t get a job in that profession? Is it twice as hard for, let’s say, a college scholarship football player to make an NFL team than it is for a college education major to get a teaching job?

That’s a pretty safe statement, wouldn’t you say?

There are 32 NFL teams, with a 53-man roster in each. They carry other players on things like the developmental squad and the injured reserve and so forth, so let’s say 70 players draw NFL salaries on a typical team. That gives you about 2,240 NFL players in a given season.

Generally speaking, you can’t get to the NFL if you’re not a scholarship player on a college team. There are 120 teams in the Division 1 Football Bowl Subdivision, who carry 85 scholarships each (for various reasons, most teams will in a given year carry a handful less than 85, but we’ll assume all of them carry a full roster for the purposes of this calculation). That comes to 10,200 players who might have a chance at an NFL career. Add to that another 117 teams in the Division 1 Football Championship Subdivision (the old Division 1-AA), in which most (but not all, as Ivy League clubs don’t give football scholarships) teams carry 65 players on scholarship. Let’s call that another 7,605 players, and we’ll cut that number in half and say that 3,800 of those players would be legitimate, if perhaps long-shot, hopefuls for an NFL career.

So out of 14,000 or so players on college football teams with some hope of maybe eventually getting on an NFL roster there are only 2,240 or so spots in the league. That comes to AT BEST one college player in seven in theoretical numbers; in practical numbers it’s far worse.

If you can’t make it in the NFL as a college player, you do have a couple of other options. There’s the Canadian Football League, for example – in which there are eight teams with 47 players apiece. That’s 376 players, with an average salary of $100,000 or so and an average career length of 3.2 years (average career earnings: $320,000). Or the Arena Football League, which has 18 teams with 24-man rosters (432 players), an average salary of about $85,000 a year and an average career length of three years (average career earnings: $255,000).

That’s about 3,000 opportunities for pro football players. So the “average” college football player will make nothing as a pro football player. Which is considerably less than what the average college education major can expect to earn as a teacher.

Now, if you want to make a more valid comparison, since NFL players (and for that matter CFL and AFL players) represent the very top of their professions, let’s set them against the top of the teaching profession – university professors.

The average salary of an American university professor is $73,000 per year, and there are 1.7 million people employed as post-secondary instructors. At the highest rank within that realm, namely that of a full professor, the average salary is $99,000. And the average career length for a full tenured college professor is 22 years; the average age at which those professors are given tenure is 39, meaning they’ve moved up the ranks from assistant and associate professors to that point.

That’s an average career earnings of $2.178 million. For working nine months per year. And getting paid to publish, plus earning research grants. Yes, the NFL season only lasts 16 weeks, but they’re in preseason for another 4-5 weeks, fall camp for a good three weeks prior to that, there’s a month’s worth of playoffs, every team will do a couple of minicamps and woe betide the player who doesn’t bust his rear end all year with conditioning, weight training and so forth.

When you add in the side income most professors can make, they can easily hit the $2.7 million career earnings figure. And they can do it without the ailing backs and knees and the concussions NFL players get.

But no professors make $25 million a year like Philip Rivers does, right?

Probably not. But Alan Dershowitz, the famed Harvard Law professor, has a reported net worth of $25 million. And how many professors across the country are earning royalties off patents their research generated?

We could probably find a few folks at the very top of the educational pyramid whose spin-off income directly related to their employment helps them pull in a high seven-figure, or maybe even eight-figure, income. And let’s remember that a professor who can get to the top of his or her field and roll in the big dollars can do so for maybe twice as long as an NFL player can.

In other words, athletes don’t really make more than teachers. Not when you really analyze it.

And yet we’re bombarded with that myth by people who purport to tell us what’s the moral way to decide who makes what. In other words, to do as Klein tried to do this morning and pontificate about how the market will allocate resources according to “fairness.” As the athletes/teachers example shows, though, guys like Klein aren’t just wrong on philosophy they don’t have the fact, either.

What this comes down to is, when you attempt to deny the rainmakers a drink because you think it’s “unfair,” you force a counter-market allocation of resources. The effect of that, nearly always, is to destroy the very wealth you seek to redistribute. Yes, that’s another way to phrase Morrissey’s assertion that what’s important is to grow the economy rather than try to make it fair.

We’re seeing an administration and a Senate majority made up of Ezra Kleins. And they’re destroying the America’s wealth. They’ve got to be stopped and the ideology they adhere to buried in the ash heap of history if we’re going to have a future as a great nation.

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