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11-09-2012, 09:42 PM
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Originally Posted by Drydenwasthebest View Post
The explanation was weak and unsupported beyond anything other than some minor anecdotal evidence, though.
Not true.

The law firm example was indeed anecdotal, but for the Wall Street example I provided MSM references. Note that they got ~51% of revenue before costs were subtracted, whereas a lot of costs are subtracted before players get their 50%.

Originally Posted by Drydenwasthebest View Post
Yes, SOME talent based businesses pay more than 50%of the revenue to their employees. There are plenty that don't, though. Look at the Film Industry, where talent gets lots of money but nowhere close to 50% of the revenue generated from a film. Just because SOME businesses give their employees a greater share of the pie doesn't mean all should, talent or otherwise.
Not sure if your claim for Hollywood is true. It might be if you include "actors" as part of talent but not directors, writers, producers, graphics effects artists. In the case of Hollywood, I'd say James Cameron is more talented than Tom Cruise; so it's not a great analogy to pro sports where nobody would say Michel Therrien is more talented than Carey Price.

As explained previously, but perhaps not properly explained, it's not about talent, it's about talent differences that are measurable.

e.g. Wall Street, you might be able to hire 20 traders and each of them is "talented", but if one them can make 50 million dollars more per year than the other, because he's differently talented, he's going to command a higher salary. The same is true of Evgeni Malkin versus Tyler Bozak. With the former, your team will have higher regular season attendance, better local TV deals, and get to play in more home playoff games; therefore he'll command a higher salary. This is not to say that Tyler Bozak isn't talented. He is, but there are more or comparably as many people talented like him than there are spots, and thus he is replaceable.

The differences also need to be "measurable". Wall Street traders can come back with numbers, as can pro athletes. In other fields where it's hard to measure the performance difference, salaries tend to be uniform. For example, in teaching, teacher's unions in the USA have resisted most teaching evaluations and competency bonuses, because most of the measurements of teacher competency are meaningless. In the absence of a competent way to measure differences in teacher performance, salaries tend to be more uniform.

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