It’s a simple effect of the structure of the business. When you’ve a business which depends upon human talent, slight gradations in said talent, then all the money in the business will end up in the hands of said talent. This is as true of banking as it is football, movies or, dare I say it, the writing of books.Interestingly this may also help explain why the players don't own the football clubs. To take advantage of the money on offer the players have to be able to move from club to club and player ownership of clubs would make this more difficult.
Those who have that extra 10%, 1% even, will see their prices bid up as the moneymen compete with each other to employ that extra 10%, 1% of talent.
It’s analagous as to why the workers’ wages in general rise over time. As productivity rises then the capitalists are competing among themselves for the ability to employ that now newly more valuable labour. Thus wages in general get bid up.
Thursday, 21 October 2010
The economics of talent
Tim Worstall tells us what What Rooney tells us about football. He writes,