A friend of mine, whom I shall call Jack, started a business nearly 40 years ago that has grown to be a widely respected international behemoth.
Jack grew up in New Jersey and had a childhood friend who had spent his life as a university professor. Jack was in the area one day on business so he decided to invite his friend to dinner.
Over dinner the professor and Jack ran out of remembrances rather quickly and began to ask questions about each other’s lives.
The professor asked: How many people did Jack employ? What was their average pay? What was Jack’s annual compensation?
Jack thought this all a bit odd, but had nothing to hide and answered the questions. The professor then began to lecture Jack on how wrong it was for the CEO to make more than 10 times the average pay of the workers who actually did the work.
Jack asked if his friend had ever worked in a private business. He said no, he had committed his life to service and he chose to do it in a university setting.
Jack asked him what his salary was. His friend made just under $200,000 a year. Jack asked him how many hours a week he taught. “Oh,” he said, “I don’t teach anymore. Grad students do that.”
“What do you pay them?” Jack asked.
“Less than $20,000 a year.” He said, “But while they are getting paid they are earning an advanced degree.”
“Well, If you don’t teach,” Jack asked, “What do you do with your time?”
“I mentor. I think. I attend conferences to compare ideas with other academics and I consult with various government agencies.”
Jack built his business by taking huge risks and putting every thing he had on the line. He could have lost it all at several different points in the growth of his company. Most efforts such as his failed.
The professor had spent his life progressing through the university system, reducing his workload as his salary increased and using his university office and salary to get additional outside income. He made no investment and took no risk.
Jack built his company listening to employees, customers and shareholders and learning new things every day to which he must respond in order to succeed.
The professor learned from books and meetings and told others how to run their business. Jack was stunned by the arrogance he endured.
I thought about Jack and the professor as the stories about Professor Jonathan Gruber came to light. Gruber is the MIT economist who played a prominent role in the development of Romneycare in Massachusetts in 2006 and then Obamacare in 2009 and 2010.
In 2009 Speaker Nancy Pelosi celebrated Gruber’s role as the go-to expert in evaluating Obamacare.
Today Pelosi says she doesn’t know who this guy is and insists that he had nothing to do with the House plan.
It seems that Gruber has embarrassed his former employers by attending academic seminars across the country and speaking the truth about the passage of the very law that has made him rich.
He has been captured on video saying that they had to obfuscate, lie and confuse to get the bill passed. This while they had a filibuster-proof Democrat majority in the Senate and a Democrat House in lock-step compliance.
He said that he and his Democrat colleagues thought that the voters were too stupid to understand anything about economics or direct vs. indirect taxation. The responses of his audiences were uniform smugness and laughter. They were comforted in the knowledge that the media agreed with them and would never report it.
I don’t know what Gruber’s salary is at MIT or if he teaches classes, but he has found time to build a consultancy that has earned him $6 million from various governments since 2000.
There is no reference to his ever holding a job in a market economy. It appears that a university job perfectly prepares one to make large sums of money telling others how to live.
It’s possible that Jack’s friend and Jon Gruber are the only two college professors in the nation who profit like this, but somehow I doubt it.
Aren’t we the lucky ones, though, to have experts from academia to order our lives since we are just too stupid to know what is good for us?
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