In 1975, Kareem Abdul Jabbar made $450,000 as the highest-paid player in the NBA. In that year, the average player salary was $90,000.

The way the game of basketball was played then determined which competencies (i.e. skills) were of most value. At that time, it was the center position. In terms of income inequality, a popular measurement of labor statistics favored by French economists and a former candidate for president of the United States, the difference of player income was a multiple of 5x. In that same year, the US median household income was $13,779 and an unarmed security guard working NBA arenas was making $3.50 per hour on average, $7,280 annually. The income inequality measure between Jabbar and the average family was 33x.

Fast forward to 2020, and the highest-paid player in the NBA is Steph Curry, making $40 million. The game has changed; 3-point shooting is now perhaps the most valued competency. In 2020, the average player in the NBA makes $7.7 million, roughly the same multiple of income inequality at 5x. Stated another way, both NBA figures, the top, and average contracts, represent a 10.5 percent CAGR (Compounded Annual Growth Rate), demonstrating how much American and global consumers value the NBA.

In 2020, the US median household income is $63,688 and the average pay of the NBA security guard is $13.91 per hour, $32,429 per year. While the income inequality measure between the guard and the family remained constant at 2x over 45 years, as did the inequality between the top salary and the average salary in the NBA, the income inequality between Curry and the average family increased to 628x.

What can explain such an increase?

If we were demonstrating this sort of income inequality in a profession outside of the NBA or using an entrepreneur as the example rather than Steph Curry, you can imagine the exasperated cries from many who are convinced capitalism is an unfair economic system, perhaps even evil. Many make the unreasoned leap that the existence of an economic disparity between the top and bottom proves the existence of exploitation or structural unfairness.

In reality, it turns out that such unequal distributions are quite common. It’s as if they are governed by a natural law. Well, they are. There is a recurring pattern in all facets of our life that demonstrates the extremely unequal distribution of creative production. It’s called Price’s Law.

Derek Price, a British physicist, made the discovery that governs organizational output. Essentially, a small handful of people are always responsible for a large majority of the value creation. Price’s Law explains how this inequality exists in everything. Whether musicians, artists, writers or athletes, a small minority of people produce a majority of the most valuable things. It’s why only five composers have produced roughly 50 percent of all of the classical music we listen to. There is a hierarchy of competence that exists in everything.

The Pareto Principle is another helpful way to understand that inputs and outputs are not equally distributed. The Italian economist, Vilfredo Paretoobserved that 80 percent of the wealth in his country was controlled by 20 percent of the population. As he discovered, the same was true in other countries. Nearly everywhere we look, a minority outscores the majority in wealth because a few people have mastered the competency of their realms. We can look again to sports to see this play out in teams and leagues.

Of the 25 million people who play golf in America, only a few hundred of them are able to have a competency level high enough to play on the PGA Tour each year. And within that elite group, the Pareto Principle and Price’s Law hold true. Brooks Koepka started 21 tournaments in 2019 and earned $9,684,006 in prize money. Rod Pampling also started 21 tournaments in 2019. He earned $102,127.

Does this suggest the rules of the game were unfair? Did Koepka cheat? No, the results were simply unequal.

Let’s look at the NHL, where Connor McDavid is the highest-paid player at $12,500,000. Anthony Richard is also a center in the NHL. He makes $688,333. McDavid scored 116 points (41 goals, 75 assists) in 2019; Richard did not score. Are Canadians up in arms over this?

What about the NFL? The Pittsburgh Steelers have Ben Roethlisberger and Paxton Lynch under contract as quarterbacks. Roethlisberger makes $36,042,682; Lynch makes $735,000. In 2018, Roethlisberger threw 34 TDs; Lynch threw two in 2017. In Seattle, Russell Wilson earns $31 million per year as the starting quarterback of the Seattle Seahawks. He threw 31 TDs last year. Cody Thompson is also a QB on the Seahawks roster. He makes $510,000 annually.

If we go across the pond to the English Premier League, will we find a more egalitarian system based on an equal distribution of compensation? The top goalkeeper in the EPL is David De Gea. The Spanish wizard has a record of 167 wins and 65 losses, including an astonishing 107 clean sheets. De Gea is paid £19,500,000 per year. The lowest-paid goalkeeper in the EPL is Pontus Dahlberg at £156,000. Dahlberg is yet to make an appearance in an EPL match.

Returning to the NBA, what about a favorite of social justice advocates, LeBron James? In the 2019 season, James averaged 25.5 points and 10.5 assists and earned $31 million in salary, which was roughly 30 percent of the Lakers’ cap space. Talen Horton-Tucker is also a player on the Lakers. He earned $898,310, despite averaging zero points and one assist per game.

In other words, the NBA has become such a valuable form of entertainment around the globe that a benchwarmer today is making what Kareem Abdul Jabbar made in 1975 (in inflation adjusted dollars). And that’s a good thing. While we focus on how much Steph Curry makes at the compensation ceiling, what we need to recognize is how much players are making on the compensation floor. The difference in compensation is not a result of bias; it’s a result of a meritocracy that rewards value creation. No NBA players are being exploited.

What these salaries reveal is the liberating nature of free enterprise. It works beyond sports, too.

Free enterprise gives opportunity to the creative and encourages productive actions. There is no other way to explain the substantial decline in extreme poverty in the world over the past 40 years. In the 1980s, 40 percent of the world lived in extreme poverty. Today, 8.6 percent do. Instead of focusing on the income gap, we should keep raising the floor.

Yes, the rich are getting richer. But who says they are doing so at the expense of the poor? Well, lots of people. The list includes French socialists, economics professors at Harvard, Project 1619 contributors at The New York Times, Bernie Sanders, CNN commentators, even some professional athletes.

We don’t know if these people believe attacks on the rich will lead to a more prosperous society, but when citizens start to believe this popular fiction, it leads to a strong resentment against the most creative producers in our society. It feeds the belief that these producers obtained their wealth by stealing it from others.

This can lead to destructive public policies, such as Sen. Elizabeth Warren’s wealth tax. Rather than focusing on attempting to narrow the gap between rich and poor, we should focus on expanding economic growth.

That’s what the professional sports leagues have done over the past four decades, and there are many more millionaires as a result.

This appeared in FEE on March 27, 2020.

The legislature will not reconvene on April 1 as initially planned when the session was suspended last Wednesday. 

HCR 65 halted the session and allowed legislative leaders to further delay the return, as they have chosen to do.

“Lt. Gov. Delbert Hosemann, Speaker Philip Gunn, and members of the legislature continue to analyze the impact of COVID-19 and the new federal stimulus legislation on the state’s emergency response efforts, healthcare facilities, and the wider state budget. Budget analysts and agencies have advised legislative leadership that all agencies currently have the funds needed to meet the needs of our citizens,” the release said.

An official return date has not been announced, but public schools in the state are closed through at least April 17. 

Gov. Tate Reeves announced today that he is clarifying his executive order from earlier in the week after it caused confusion among some mayors. 

Reeves’ order stopped dine-in service at restaurants, unless there are 10 or less people present, and mandated social distances practices were being followed.

Prior to that, many cities had fully stopped dine-in service in their towns, or in the case of a couple towns – issued stay-at-home orders. 

This then caused confusion among some city leaders, but Reeves clarified today that his order is the baseline, not the ceiling. If the locality had a more stringent order in place, that order still is in place. Or if they wanted to create a more rigid order tomorrow, they could still do that.

But if a city did not have any restrictions on the books, restaurants would not have to comply with Reeves’ order. 

Reeves also reiterated that he will continue to lean on the Department of Health for guidance on further ordinances. He left the door open for either a statewide lockdown, or even a city or regional lockdown if conditions are worse in certain areas. 

In many countries, commercial drones play a key role in the delivery of medical supplies, along with other critical needs. Five years ago, the first drone in the United States delivered medications to the mountains of Southwestern Virginia. It was part of a FAA pilot program for unmanned aircraft.

As we deal with the outbreak of the coronavirus, and the subsequent quarantine along with the need for medical supplies, the technology and capability of drones looks even more promising. 

Is Mississippi prepared for the drone industry? Not according to a new report from the nonprofit Mercatus Center at George Mason University. The Mercatus Center looked at various laws among the 50 states and placed Mississippi 47th, along with Iowa. 

Here is what the report considered:

• Airspace lease law. Drone highways must be demarcated by regulators and safely separated from airports, homes, schools, and other sensitive locations. 
• Law vesting air rights with landowners. These laws clarify that the state is exercising its police powers and defining property rights. They also inform drone operators and residents about the extent of homeown­ers’ property rights, which reduces litigation risk for operators and homeowners alike. 
• Avigation easement law. These laws allow drone operators to fly so long as they are high enough not to bother landowners and passersby. Even if the state or municipality doesn’t own the aerial corridors above public roads, drones will generally be allowed to access the aerial easements that state officials demarcate above public roads. 
• Aviation advisory committee. For state and local authorities, widespread commercial drone services will raise issues such as zoning rules, noise limits, time-of-day restrictions, job training and education, and insurance. Most of these issues will require extensive exploration—by regulators, residents, researchers, and operators. States that have a statewide committee, task force, or department of transportation team dedicated to drones merit a higher score in the report. 
• Drone jobs estimate. The report card ranks states based on the number of drone jobs per 100,000 people. Drone jobs serve as a proxy for soft factors such as whether a state has a community college system with drone programs or has workers in the aerospace industry. These factors can position states for future jobs growth in the industry, much as the auto industry has centered around Detroit and the IT industry around Silicon Valley.

Essentially, Mississippi has no infrastructure in place at this time to support drones.

Mississippi law doesn’t allow public authorities to lease low-altitude airspace above public roads and public property. Such a law would allow state or local authorities to create drone highways above roadways. It also doesn’t expressly provide air rights to landowners, which raises litigation risk for drone operators because landowners don’t know the extent of their property rights and may sue to protect their interests. Nor does it create an avigation easement, which means drone operators may be subject to nuisance and trespass laws, even if their drones don’t disturb people on the ground.

Neighboring Arkansas was the highest rated Southern state, receiving positive marks for airspace lease laws, vesting rights with landowners, and avigation easement law. 

A $2 trillion stimulus bill to deal with the coronavirus pandemic passed by the U.S. Senate Wednesday has some components that might help some Mississippians.

The CARE (Coronavirus Aid, Relief and Economic Security) Act authorizes direct payments to taxpayers, a 13-week extension of unemployment benefits, emergency loans to small businesses, $100 billion in aid for hospitals and health systems nationwide and $425 billion in loans for larger, distressed businesses.

The Democrat-controlled House will take it up Friday after it passed the Senate by a 96-0 vote. President Donald Trump has said he intends to sign the legislation into law. 

The CARE Act also limits liability for volunteer health care professionals and prioritizes U.S. Food and Drug Administration review of drugs that might help with the virus.

The direct payments to individuals would be $1,200 per adult to those earning less than $99,000 per year ($150,000 combined income for married filers) and $500 per child. Those who didn’t pay income tax would receive $600.

Airlines would receive $50 billion, while air cargo firms such as FedEx and UPS would receive $8 billion. Firms considered critical to national security would receive $17 billion.

Small businesses would be eligible for forgivable loans if they keep paying their employees. Firms that rehire employees by April 1 would also be eligible for the program.

Here are some other components of the stimulus:

• Payment and interest suspension on federal student loans – The Senate bill also provides borrowers a payment deferment for three months. During that same time, interest will also not be accrued on the debt. 
• Medicare payment increases – The amount of Medicare payments to hospitals and providers would be increased from present rates.
• Excise tax holiday on jet fuel – The bill would remove federal taxes on jet fuel (kerosene) until January 1, 2021. This is designed to also help the airlines and other commercial aviation entities. 
• Historically black universities – HBCUs would receive a deferment from repaying federal loans intended to pay for capital improvements. Mississippi has three HBCUs — Alcorn State, Jackson State and Mississippi Valley State — that could benefit from this provision. 
• Medicare telemedicine – Telehealth services for federally qualified health centers or rural health clinic would be payable under Medicare. 

The bill also has some important other tax provisions, including ones governing net operating losses and employer-side Social Security payments (can be delayed until January 1, 2021, with 50 percent payable on December 31, 2021 and the remainder on December 31, 2022), for businesses. The bill would also suspend the tax on the alcohol (ethyl and isopropyl) used on hand sanitizer for this tax year.

According to the U.S. Debt Clock, the country’s debt is now up to $23.6 trillion, not counting the new stimulus.

U.S. Senator Mitch McConnell (R-Kentucky) sponsored the 247-page legislation.

“Combating this disease has forced our country to put huge parts of national life on pause and triggered layoffs at a breathtaking pace,” said McConnell on the floor of the Senate. “This strange new reality has forced our nation onto something like a wartime footing. 

“A fight has arrived on our shores. We did not seek it. We did not want it. But now, we are going to win it.”

Whether you are a leader in politics, a business, nonprofit, church, school, or community, you are probably asking yourself how you are going lead your team into the new unknown of the coronavirus pandemic.

It is true that this crisis is unprecedented in many ways, but that is no reason to lose heart. Leaders throughout history have often met and overcome unprecedented challenges in their own times. What can we learn from their examples? 

Steady nerves

The Roman emperor Marcus Aurelius certainly knew a thing or two about leadership through crisis. During his reign, Rome suffered from severe flooding, famine, invasion, and its own viral pandemic that killed up to 2,000 Romans per day and eventually resulted in the deaths of 5 million people. In his influential writings now known as The Meditations, Marcus recorded many of the leadership lessons he learned from these tumultuous times.

Marcus wrote that a leader must remain calm and display confidence to those around them. Leaders cannot appear uncertain of their decisions or panicked. Fear is contagious, but so is calmness. Leaders also don’t complain, blame others, or become rattled. Instead, leaders exhibit strength and courage in the face of daunting challenges. 

Meticulous planning – and adaptability 

As the military maxim reminds us, no plan lasts beyond initial contact with the enemy. While this may be true, there is a paradoxical need to plan carefully anyway, especially for emergencies.

As President Dwight Eisenhower put it: “Plans are worthless, but planning is everything. There is a very great distinction because when you are planning for an emergency you must start with this one thing: the very definition of ‘emergency’ is that it is unexpected, therefore it is not going to happen the way you are planning.”  

If the plans will change, why does planning matter? Because the planning process itself requires thorough exploration of all the relevant variables, contingencies, and opportunities. The knowledge gained during that process can be quickly applied as the facts on the ground unfold. 

Relentlessness 

George Washington’s will for the continental army – and the revolutionary cause – to survive a disastrous supply crisis during the freezing winter at Valley Forge embodies the inspiring relentlessness that leaders must have during times of crisis.

By definition, a crisis is challenging, unpredictable, and often dangerous. In order to succeed, leaders need others to devote themselves fully to overcoming those challenges. A leader who is not personally committed to the cause will never inspire others to meet the challenge.

Humility

President Abraham Lincoln’s leadership qualities were also forged in turbulent times. When he entered office, the country was on the brink of a civil war that would soon leave over 600,000 Americans dead at the hands of their fellow countrymen. 

Lincoln knew that leaders in crisis must be secure enough to realize that they don’t have all the answers, willing to rely on their team for potential insights, and able to learn from their mistakes. He provided the most famous example of this type of humility, recruiting a “team of rivals” who often challenged his views. Spirited debates were a hallmark of Lincoln’s cabinet, and he made better decisions because of these rigorous exchanges. 

Selflessness

The entire point of leadership – especially in times of crisis – is to serve those in the leader’s charge. 

The importance of selfless leadership has been displayed for generations by Marine Corps drill instructors - the leaders of new recruits who enter boot camp. Recruits never see their drill instructors eat, drink, sleep, sit down, or visit the restroom. This strategy reinforces to the recruits that, despite all the demands the drill instructors place on them, they have their recruits’ best interest at heart. The drill instructors make sure the recruits’ physical needs are met, while never seeming to have the same concern for themselves.

By the end of boot camp, young men and women have been transformed into United States Marines, capable of working together to accomplish dangerous missions under extraordinarily difficult circumstances, while following leaders who they know are looking out for the team.

That’s what selfless leadership can accomplish.  

This is the third of a three-part series, Perspectives of a Pandemic.

The Mississippi Board of Medical Licensure has amended a telemedicine proclamation and is limiting access to out-of-state physicians for the service.

The Board issued an amended proclamation Tuesday that limited telemedicine for out-of-state physicians not licensed to practice in Mississippi to only those who have an existing doctor-patient relationship rather than any licensed physician. 

On March 15, the board issued a proclamation that said it would not enforce regulations governing out-of-state physicians using telemedicine to treat patients in the state in response to an emergency declaration by Gov. Tate Reeves that urged a reduction of regulations due to the spread of the coronavirus.  

The proclamation would also have the board not enforcing its rules requiring physicians to examine patients prior to prescribing medication, including controlled substances, to encourage the use of telemedicine. That part of the proclamation is still in effect.

Under existing regulations, a physician using telemedicine to treat patients must be licensed to practice in Mississippi.

Getting certified to practice in Mississippi is easier thanks to action by the Mississippi legislature, but the number of physicians going through the process to get certified to practice in Mississippi is likely nil with the COVID-19 pandemic.

Mississippi is part of the Interstate Medical Licensure Compact, which has 26 states that have signed up to streamline their normal licensing process for licensed physicians. This provides physicians moving from one compact-participating state to another the ability to get a license in their new state within days rather than weeks or even months.

Those states include: Alabama, Arizona, Colorado, Guam, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, North Dakota, South Dakota, Oklahoma, Tennessee, Utah, Vermont, West Virginia, Wisconsin, Wyoming, and Washington.

Georgia, Kentucky, Pennsylvania, and the District of Columbia have passed legislature to participate in the compact but has yet to be implemented. Florida, Missouri and South Carolina have introduced legislation to become part of the compact.

As confinement becomes commonplace and more and more cities and states declare “shelter-in-place” orders and curfews, Americans and sports fans around the world find themselves faced with the new stark reality; no sports to be watched, anywhere!

When sports are cancelled or postponed for reasons beyond our control, just who pays? As regards the mega media deals between networks and leagues that aren’t being fulfilled, who is responsible? The answer might surprise you.

The NBA halted all games on March 12 and all sports followed the lead of Adam Silver shortly thereafter. For college fans, not only did the NCAA cancel all remaining spring sports, they quickly cancelled that rite of spring we affectionately call March Madness. Gone are the usual 3.7 million brackets submitted by basketball fans everywhere. More significantly, gone is the $800 million the NCAA receives from the networks, like CBS and ESPN, by far its largest revenue source for funding year-round endeavors. The Tokyo Olympics have been postponed for a year. NBC Universal paid $1 billion for broadcast rights - the cornerstone of their summer schedule and the gem in their advertising revenue stream – and they must be feeling flu-like symptoms right now.

We are hearing the term “force majeure” quite frequently, a term usually ascribed to commodity outcomes (of which we have been on the wrong side of a few too many times). In short, force majeure declarations are part of any contractual obligations where one side, for an exceptional and unforeseen reason, declares that they cannot or will not fulfill their contract with the other party. Think of a war, strike, riot, crime, plague, or an event described by the legal term “act of God.”  In recent times, think of Hurricane Katrina or the Libyan Civil War.

The NBA’s collective bargaining agreement includes a force majeure clause that allows the league to garnish player wages or even to cancel the labor deal entirely if an event, such as an epidemic or act of war, forces a long-term suspension of play.

Since force majeure is standard in almost all contracts, with all the cancellations and delays of future sporting events, one begs the question: just how does a canceled television/media contract work anyway? Are the networks on the hook for the entire amount? Is the league or association obligated to repay any funds they have received to date and compensate their broadcast partner for damages?

The Sports Professor recently interviewed Doug Perlman, a sports media rights expert, Founder/CEO of Sports Media Advisors,former NHL executive and past president at IMG Media, to get the answer to just who is responsible when God cancels sports. His message was clear and to the point as to who is responsible for media contracts that aren’t fulfilled: “It depends.”

Doug has been on both sides of media deals, representing the content provider and the content distributor, and what he stated was that all contracts are unique in some sense and much depends on the relationship between the leagues and the networks. Assuming a good working relationship, there are plenty of options on contract fulfillment when there is a stoppage. The most common remedies are: 1) Payments might be stretched over the entire life of the contract instead of during the current time frame 2) Pro rata rebates based on not just how much time has elapsed but also a weighting of the importance of games. For example, the NBA is about 80% done with the regular season but the playoffs carry much more weight from a ratings perspective. 3) Arbitration if the two sides cannot reach a deal (this is the case with any force majeure claim).

According to Perlman, it really becomes a question of collaborative vs contractual relationship and he indicated that most networks and league partners have a very good working, collaborative relationship. One thing he made very clear was that while the various network partners are consulted, the decision to cancel or postpone clearly belongs to the leagues.

COVID-19 has had a devastating impact globally. From the loss of life to the way we interact with each other, the virus has proven to truly be life-altering. From an economic perspective, the results are equally as sobering as every industry is impacted. Airlines, auto manufacturers, hotels, and energy companies hang on by a thread. With over 150 million Americans being told to stay at home and countries like India, England, and others enduring national stay-at-home orders, what a great time to be a network with a robust portfolio of live non-scripted content, like sports. Yet, the best networks can do now is strategically promote the re-broadcast of some of the greatest sporting events of all time and wait just like the rest of us. When the curve flattens, the world starts up again, and sports resume, it will be interesting to see the financial damage done to networks and leagues from lost revenue and unfulfilled contracts.  When God cancels sports, who pays? Clearly, that depends.

This appeared in Forbes on March 25, 2020.

A number of distilleries in Mississippi are producing a new item for sale as the coronavirus spreads and one very essential product is available in limited quantities: hand sanitizer. 

This didn’t come from a government mandate on the private sector. It was actually the opposite. The federal government stood in the way, until they reversed a couple regulations. The Alcohol and Tobacco Tax and Trade Bureau waived requirements to obtain permits to legally manufacture hand sanitizer and removed the excise tax for alcohol-based hand sanitizer products. That wasn’t all.

The Food and Drug Administration then had to issue guidance saying they do not “intend to take action against manufacturing firms that prepare alcohol‐​based hand sanitizers for consumer use and for use as health care personnel hand rubs during this ongoing public health emergency.”

It makes sense that distilleries would be a natural fit for a product that contains a high amount of alcohol. And numerous Mississippi distilleries, which have had to close their bars and stop providing tours, are taking advantage of the relaxed rules. And if anyone understands overzealous government regulations, it is alcohol producers. 

“I'm covered up in it — trying to make as much of the stuff as we can,” said David Rich, owner of Rich Grain Distilling Co. in Canton. Lazy Magnolia Brewery in Kiln is also making hand sanitizer.

In times of crisis, we often look to the government for an initial response. That is understandable. Yet it is the private sector who has always, and will always, respond as they can in times of need. As a new column in the Wall Street Journal outlines, Honeywell and 3M are hiring workers and increasing output for N95 masks. Ford and General Motors are using their global supply chain to make face shields, ventilators, and respirators. It is the private sector that created the technology that streamlined curbside pickup and delivery for grocery stores and restaurants.

And, of course, distilleries are now making hand sanitizer. Since government is no longer in the way.