Competitiveness. A Story, A Lesson, and A Joke.

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People will knowingly choose to be worse off themselves, as long as others don't get ahead.

This morning I went running in Pasadena, re-doing the very lovely 5-mile route I did on Wednesday, but I set off at my training pace this time. Now I'm a fairly fast middle-distance runner, and I've been running all my life. High school and college cross country teams, too. But on this run, around two miles into it, some kid passed me. Damn. NO ONE passes me on a run. I pass other people on my runs. Other people don't pass me.

Competitiveness. Part of our nature as human beings is that we are always comparing ourselves to others. More important than simply being good, all of us want to be better than others. On one level, this is a very valuable trait for our species, because it drives technological and economic progress. But on another level, it can be destructive, as well. Most major religions counsel against envy and jealousy. But envy still happens. It's hard wired in the human brain. And it's better for us to recognize it and deal with it, than to pretend it has no impact on human behavior.
Want an example you can chew on? Imagine you have the opportunity to choose one of two future economic scenarios: Under Scenario A, the United States' GDP increases by 50% over the next ten years, while China's GDP increases by 100%. Under Scenario B, both GDPs, in China and the US, increase by 30%. Which scenario would you choose? In easily replicated research, a significant majority of Americans will choose Scenario B. But think about what this means. It means people will knowingly choose to be worse off themselves, as long as others don't get ahead. This seemingly irrational behavior is easy to predict, and in fact there's a marvelous book entitled Predictably Irrational, by the Israeli Dan Ariely, that details some of these kinds of irrational behavior, and I reviewed this book, among others, in one of my Peppers Unplugged episodes recently.

Ariely points out that one of the consequences of irrational competitiveness is skyrocketing CEO pay. In 1993, according to Ariely, the average public-company CEO earned 131 times more than their average employee, so a new SEC rule was introduced requiring public companies to disclose the compensation of their top five executives. People reasoned that if compensation were out in the open, then boards of directors would be shamed into holding back these compensation levels. But guess what? In the years following this rule being introduced, CEO pay has skyrocketed, and today the average public-company CEO earns 369 times their average employee! As Ariely tells it,

Once salaries became public information, the media regularly ran special stories ranking CEOs by pay. Rather than suppressing the executive perks, the publicity had CEOs in America comparing their pay with that of everyone else. In response, executives' salaries skyrocketed. The trend was further "helped" by compensation consulting firms (scathingly dubbed "Ratchet, Ratchet, and Bingo" by the investor Warren Buffett) that advised their CEO clients to demand outrageous raises.

The natural competitiveness and envy between human beings reminds me of a funny story I was told by one of our Greek consultants. I've made many visits to both Greece and Turkey. Something quite noticeable is that in Greece, they really hate Turks. I mean really they don't like Turks at all. But in Turkey, there's no such sentiment toward Greeks. There's an understandable historical reason for this, because for about 300 years the Ottoman Empire ruled Greece, and the Greeks have resented them for it ever since.

But when I remarked on this to my Greek colleague, he told me this joke. He said there were two neighbors living difficult lives out in the countryside, and by a stroke of good luck one neighbor acquired a goat. So, my colleague said, the Christian thing for the other neighbor to do would be to pray to God, "Dear God, thank you for delivering a goat to my neighbor. He can really use this goat." Now instead of this prayer, he said the Turk would likely pray "Dear God, please deliver a goat to me just like my neighbor's." But, he said, the Greek would pray, "Dear God, please kill my neighbor's goat."

Human competitiveness. Gotta love it.

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