John Kay show us
why high pay for "stars" makes sense in Basketball, but not necessarily in Banking.
...imagine a world that we think is perfectly just. But then Chamberlain appears, and we all have the opportunity to watch him play. Chamberlain insists that he will only take to the court if everyone puts 25c in a special box marked “for Wilt Chamberlain”. Over a season, a million fans consider 25 cents a small price to pay for this pleasure, and so his box contains a quarter of a million dollars. The fans who put their money in Chamberlain’s box are happier, Chamberlain is richer, and people who are not interested in basketball are in the same position as before. If the distribution before Chamberlain was just, how can you dispute the justice of the distribution after Chamberlain?
[...] Perhaps there is some resemblance between the fans who willingly gave their quarters to Chamberlain and the crowds that sell out every Coldplay concert or the enthusiasts, waiting outside the Apple store as it opens, and have made that company the most valuable in the world. But if you placed a box outside the headquarters of Goldman Sachs labelled “for Lloyd Blankfein”, you would probably not find much in it at the end of the day.
Theres more - I suggest you
go read it. The main point being made is that fairness in compensation isn't just about making sure everybody makes (or doesn't!) the same amount, but in
how we get to the various compensations. And our current exceedingly non-transparent approach isn't really particularly fair.
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