Wednesday, October 20, 2021

A few thoughts on various payout structures

One of the key features of Capitalism and the Late Industrial Revolution was the standard of living it afforded to even those people who exhibited modest amounts of talent.

As long as the employee could perform at the minimum level required to keep up with the assembly line and showed up for work every day then he could acquire the trappings of a lower-middle-class life.

Conspicuous Consumption

There is another way to motivate people and that is via the "Tournament Payout Structure".

This is the payout structure for the 2019 US Open Golf Tournament
This chart shows the premium or increase associated with finishing one step closer to the top

Several factors come into play that make this payoff structure work.

One factor is the credible belief that large jumps in ranking are accessible to the player. He has to believe that but for a stray breeze, a clump of grass and a smudge of grass stain on the face of his driver he could have finished in the top four.

Another venue that has a "Tournament payout structure" is the distribution of illegal drugs on the street.

The king-pin driving around with bling and babes and an Escalade with gold-plated spinners is required. The punk on the street corner NEEDS to see the conspicuous consumption so he can be sustained by the fantasy that someday it will be him driving the Caddy.

Another factor is the interplay of randomness and attrition. The punk on the corner COULD end up in the Caddy given the attrition rate in the profession. The chain-of-command is in-and-out of prison, murdered and over-dose. If the stars aligned, the punk could end up Scarface in a few years.

The life of the street-punk is otherwise a bleak existence. He makes less than minimum wage and is likely to live with his mother or a baby-mama. He gets his medical and dental care when he is in jail. He is also likely to gain body-weight before being decanted.

Regular incarceration of the "customer service" end of the retail network is a part of the "business model" of externalizing costs. 

Totalitarian regimes

Totalitarian regimes, be they Marxist, NAZI, Theocracies or Woke, have more in common with the organizational structure of illegal drug dealers than they do with the structures seen in the Late Industrial Revolution.

The question is: How will they externalize those costs after they burn through the accumulated assets of the Late Industrial Revolution.


  1. I believe that Zidens IRS plan has something to do with how they plan to externalize those costs Our tea party here in the Buckeye was one that was under extreme scrutiny and persecution by the friendly IRS people . I retired with a nice bonus and also sold my Walnut harvest for 40k in 2012 and they raked me over the coals .

  2. I don't think cost concerns factor much in the decision making process of totalitarian regimes.
    The major factors seem to be, will the choice bring more power or more money.

    If yes , proceed.

  3. Ref medical/dental care while incarcerated: I spent a little while (and, at the same time, entirely too long) being a medical provider in a county jail. The inmates in pre trial detention or incarcerated (remember, this was a county jail) did get medical care, although oftentimes when the care became expensive, they would find themselves the beneficiaries of bail, not infrequently a personal recognizance bail. That put the medical care on their dime.

    Similarly, dental care primarily consisted of extractions, at around $300 a tooth, IIRC. (this was on the order of 5 years ago)

  4. I'd agree with Beaner on this one. Money is ancillary to them.

  5. They won't. Socialism always fails when the money runs out.


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