Steven Levitt - economics of crack dealing similar to McDondalds
This is a classic talk by Steven Levitt, the co-author of Freakonomics discussing the financial structure of a crack dealing gang. He shows similarities to the way McDonalds is organized and compensated (except for a few minor details such as life expectancy). Some amazing concepts observable in a drug dealing gang:
Franchising structure
Compensation similar to a corporation:
$3.50/ for foot soldiers
$100K/year manager
$200K/year regional leader
$400K/year board of directors
Cycle similar to the doc-com era. Earlier guys became wealthy - the rest just worked for "stock options" that never materialized.
"Compensating differential" concept works in drug gangs (during wars members get higher pay).
Game theory (Nash Equilibrium)
Gang leader gets paid even during worst times ("weak n' shit" hypothesis). Similar to corporate CEOs.
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