Why do we pay our stars so much money?
Malcolm Gladwell
11 October 2010
Alan Fiske - UCLA Anthropologist - Four ways we interact with one another.
- Communal Sharing - Group of roommates that share everything
- Equality Matching - If I drive your kid to school, you drive mine to school.
- Market Pricing - terms of exchange are open to negotiations or subject to supply and demand.
- Authority Ranking - Hierarchical system in which superiors appropriate what they wish.
Marvin Miller takes over players union in 1966
Reserve clause - club owned the rights to a player forever and the player has no choice in where they play---Authority ranking. Players didn't see themselves as exploited.
Mid 1970s - Equity managers Teddy Forstmann and Henry Kravis pioneered the charing of "two and twenty" for managing their clients' money. - 2% of asset management and 20% of profits--these two guys placed themselves on the same level as their investors.
George Lucas owns the rights to all Star Wars sequels so he didn't have to work for the studio.
Marvin Miller brought trade unionization to the world of Talent--to a class with great social and economic resources and who couldn't be easily replaced.
Was Talent now just another new authority structure?
Pay is not determined vertically--according to the characteristics of an organization that an executive works for but rather horizontally---through the characteristics of the peers. This is not a market system.
The problem with the authority system is that it is based on arrogance--the assumption that the world is ordered according to Capital, but now Talent tries to get whatever it can extort.
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