Wednesday, February 24, 2016

Is José Bautista greedy?

Of all the questions raised at our most recent Value Crisis Exploration, this one seemed to sum up a good portion of the evening.  I'm sure there is a detailed background that we could go into on this sports story, but I'll stick to the essentials.

José Bautista is a professional baseball player - a right fielder for the Toronto Blue Jays.  His contract is currently up for renewal, and the word is that he is not interesting in negotiating a salary - he simply named one, take it or leave it.  Those in the know are guessing that it is something on the order of $150 million over 5 years.  So the question was posed at our meeting:  Is José Bautista greedy?

I don't think I had a really good answer at our gathering.  Now, with the benefit of some reflection time, I'd like to try and make up for my shortcomings of the moment.  What I should have done was go back to the way the meeting opened in the first place - with a question on the definition of greed.

Defining the term is in fact something that has already been addressed on this blog in an earlier post, and this is what I put there:
  • excessive desire to acquire or possess more than what one needs or deserves
  • excessive consumption of or desire for food; gluttony
  • excessive desire, as for wealth or power
  • excessive or rapacious desire, esp. for wealth or possessions; avarice; covetousness
I'm going to go with the first of these, since it is most relevant to the context of our discussion for the evening.

To further fill in the context of the contract negotiations, it might be relevant to some to know that the Toronto Blue Jays team is worth at least $1.4 billion; Rogers Communications, the massive corporation that owns the team, is worth about $25 billion dollars; and credible connections can be argued for a correlation between the team's prospects and Rogers' share price.

The word "greed" has a lot of negative connotations, and that's the first thing that got us into trouble.  The discussion seemed to be heading rapidly towards "Does José Bautista deserve $30 million per year?"  I'm going to avoid that question because I couldn't possibly answer it without (a) a lot more information, and (b) going into a debate deeply mired in number-based value systems.  In other words, anybody with a working brain and 30 minutes of preparation could weave an entirely convincing argument for either side.  That's what it means to argue using numbers.

Another trap that we get into if we start asking what people deserve is that it is suddenly relative to everything else.  You will note that I mentioned how much money Rogers and the whole team was worth.  I could also have mentioned that Bautista is asking for seven times more than the average Major League Baseball player.  We could talk about how he is one of the top offensive players in the league right now, or we could consider that, as a defensive player, he is ranked a pathetic 197 out of 200 players.  See what I mean?

I'd rather bring it back to those essential elements of our chosen chapter for the night: "Motivation" and "Need".  Is Bautista motivated by wealth?  Again - define the terms.  Do you mean "Does he want more money?"  Obviously yes.  Or do you mean "Will he play better with a higher salary?"  That's not clear at all.  Most research on this subject would suggest the answer is no.  For now, the motivation question boils down to the way Bautista himself framed it:  "You either get me or you don't."

What if we ask the question "Does José Bautista need $30 million per year?  On this point, I can confidently state:  No, he does not need $30 million.  He wants $30 million.  Need - want - not the same thing.  Our reference point for this discussion happened to be Maslow's Hierarchy of Needs.  Everyone seemed to agree that even in our consumer society, basic human needs (food, shelter, healthcare, security) could (on average) be met in North America with a salary of about $75,000 - according to the studies.  For the vast majority of us, everything beyond that is negotiable.  We have other 'needs' that are, in reality, a direct consequence of other wants, or are the result of a societal level 'want' - a standard of living that we have grown accustomed to through affluence and hedonic adaptation.

So is this post suggesting that we should all live like monks in a barren world of bare necessity?  Not at all.  Indeed, even within the stark context of Maslow's pyramid, an individual's impulse for self-actualization will include the needs for respect, achievement, creative expression, morality,  etc.  We don't simply want art, music, recreational pursuits, fine foods, and all those other nice 'extras' - we need them.

However, we have to remember the basic premise of Maslow's theory.  We focus on the lowest level of current needs until they are met, and then we move on to the next level of needs.  Each level has an implicit concept of sufficiency.  Once you can determine sufficiency, you can also determine excess - going beyond what is sufficient.  Which also happens to be a key element of most definitions of greed.

The life of a professional baseball player likely has all kinds of hugely expensive expectations that we mere ballpark patrons could only begin to guess at.  The job has a working-life expectancy that ends when most other careers are really taking off, and physical injuries can cut that even shorter in an instant.  There are all kinds of supply and demand marketplace reasons why players receive phenomenal salaries to play a game.  Furthermore, it cannot be denied that we have created a culture where respect and worth are intimately enmeshed within the single numbers that are our annual paycheque and net worth.

So is José Bautista greedy?  What do you think?

Friday, February 12, 2016

The Mystery of the Uncomfortable Barter

One of the truly wonderful things about The Value Crisis discussion groups and speaking engagements is that my perspective gets challenged by intelligent people struggling to apply the concepts to everyday life.  One such magical moment arose this week, when a participant in our chapter-by-chapter exploration of the book gave us a perplexing anecdote to puzzle out.  Let me first set up the context...

We were discussing Chapter 3 (Money - The Number Culture), which includes a brief history of money, from the days of barter through to today's banking databases.  One of the propositions of that chapter is that the barter of goods or services between two willing participants is always a win-win transaction.  Both sides are getting something they want, and either employing a skill that they already have or giving something that they want less - hence the net value of both sides goes up.  Such an exchange feels quite different when you instead look at two separate transactions that use money to quantify the value.

Barter actually capitalizes on the concept of marginal value.  This economics term is used to convey the idea that the 'value' of a particular thing (to us) depends on the quantity of that thing that we already have.  If I have hundreds of arrowheads, their marginal value to me is low, but if I have no baskets, the marginal value to me of a needed basket would be quite high.  I would be very willing to trade a few arrowheads for a basket.  Barter works when I find someone with many baskets (each therefore having a low marginal value for them), who needs an arrowhead or two.

So back to our story.  The reader who shared the anecdote is an organic hobby farmer of sorts.  She keeps a variety of livestock and is an enthusiastic promoter of permaculture practices.  As she relates it, she had an experience where the long hours of back-breaking farm work had taken its toll and she wanted to get a massage.  She had met a masseuse who was open to providing such a service in barter for some of the meat that the farmer raised on her land.  Learning that the typical price for the service was $80, she gathered up $80 worth of organic beef and went in for the relaxing treatment.

Alas, afterwards, she was disappointed by how she felt about the transaction.  Perhaps while in the midst of having the knots removed from her back, she was thinking about all the hours of work that had put them there: looking after her stock day after day, mucking out stalls, and hauling buckets of food for the grain-fed beef.  And, in exchange for a significant portion of the end gains, she was getting perhaps less than an hour on a massage table.  It didn't feel right.

This struck a chord with me.  In a later chapter (Ch. 5 - The Value of Time), I talk about how difficult it was for me, as a newly self-employed person, to set a billable value for my time.  I might do a day's work with community not-for-profits for $100, and then do the same work for a large corporation and bill more than ten times that amount.  So what was the true value of my time?  What should I bill clients who fell in between those extremes?  Was it right that the client's budget always determine my fee?  How could I determine if a particular project remuneration was "worth my time"?

My ultimate solution was how I felt about my contribution and corresponding compensation.  If I felt I was being taken advantage of (or was taking advantage of someone else) I felt bad.  Otherwise, I would consider the project a fair transaction.  The numbers played no direct role.  Now here was this woman voicing a familiar reaction:  the massage-for-beef transaction didn't feel right.  But this was barter!  So what went wrong?

Most people initially see the disconnect in terms of the time differences.  Farmers work long hard hours to grow, maintain, harvest, and prepare their produce for consumption.  And here was my friend, trading a chunk of that for a service that was provided in a tiny fraction of that time.  I agree that this would certainly be an influence.  However, quantifying time and worth is full of all kinds of pitfalls.  There are so many added variables.  A dentist charges not just for the half-hour of teeth work, but also the training, capital costs of the office, etc.  Part of a masseuse's fee has to take into account that they don't usually work full 8-hour days.  Nor can they leverage economies-of-scale to massage more than one client at a time, the way a farmer might be able to double their herd with minimal additional effort and overhead.

No, upon reflection, I think something much more interesting happened to this transaction.  The clue is the $80 value.  The reader had looked up the posted value of the massage and then tried to put together a package of food that had the same monetary value.  To me, that is not really barter.  That is simply a transaction, using prices on both sides, that happens to use meat as a currency.  Marginal value was no longer a key component of the feelings of value and worth.  Instead, both players reverted to the quantified market value, which completely alters the quality of the relationship.  As soon as the numbers come in, the barter doesn't even have to take place for the farmer to feel disappointed.  She could simply contemplate how she had just paid $80 for a massage and then later think about how much work had gone into a totally separate sale of $80 worth of beef.

That's the thing about numbers and number-based values.  They allow us to do things like instantly compare our salary to that of our spouse or a co-worker or a professional baseball player.  Or compare a season of livestock management to a spa treatment.  Such pursuits often to lead to bad feelings, no?