How odd this is for a capitalist society

If you add together nonfinance executives, “financial professions”, real estate, and lawyers, you’ve got more than 70 percent of the total; plus some of the other categories are probably essentially business executives too. Basically, the top 0.1 percent is the corporate suits, with a few token sports and film stars thrown in.

14 comments on “How odd this is for a capitalist society

  1. The interesting categories there are lawyers and doctors. Everyone knows the basic rule of getting rich; you need to be transacting on a one-to-many basis. Thus, a “capitalist” is transacting with a large subordinate workforce, so he only needs a small trasanction with each to be very well paid. Likewise, a sportsman or someone in the distributive arts has thousands or even millions of customers.

    Neither is true of lawyers and doctors; each of whom can only service one client at any given time, as a general rule. Both are State cartels (effectively, continuations of mediaeval guilds).

    Can there, I wonder, be some kind of connection that we can fathom?

  2. PaulB,
    Lawyers owe their income to state regulation too, almost by definition. (Yes, I know that you’d still have them in a system of private law, but we are a long way from that.) Ian B definitely has something there.

    I don’t see that sportsmen and entertainers do, though.

  3. And medicine is so regulated that it is hard to tell whether doctors owe their income to state regulation or not, I tend to think. Certainly medicine would still exist as a profession without the state regulation, but as to what the distribution of their remuneration would be, I have no idea.

  4. D’oh, so I did.

    The doctors are effectively state employees in Britain. I don’t know if state regulation of medicine affects their income; I suppose it might.

    That leaves only the sportsmen and entertainers as representatives of the dreaded free market.

  5. Weird! I could have sworn that Michael’s post was not visible a moment ago, even though it was done hours ago.

    It could be gremlins in Tim’s website or my computer. It could just be that I’m going nuts.

    Still, nice to see that great minds think alike.

  6. Certainly state regulation affects doctors’ income: quite possibly the effect is downwards in the UK. But demand for doctors is not created by the state.

  7. Price fixing tends to cause a double peaked graph, of “too low” state regulated prices, and then a luxury market for those who can afford it. As with State schooling, in which there are crappy State schools for the proles (free) and luxurious Private Schools, and nothing in the middle. Also happens with property rent price fixing/ “social housing”.

    So, I have no stats to back this up and I’m too lazy to find any, you’re going to have a small population of wealthy private sector doctors, serving the luxury market, which may explain their appearance in the list.

  8. He’s including all “non-finance executives”.

    So effectively whatever you’re doing (engineer, computer wonk, personal services, whatever), if you end up doing it well and expanding into a big company, you’ll be on his list.

    So there is potentially a lot more diversity than he’s suggesting.

  9. The thing that jumped out at me was the same as for IanB – lawyers and doctors work for individual clients at hourly rates (more or less, bit more complicated for firm partners, clinic owners) and that’s not the usual recipe for megabucks even if the billable rate for skilled, specialised labour is high. There is something of a distinction: the market for doctors is much more global than for lawyers, who face difficulties working in a different jurisdiction even if they’re technically qualified to do so. So may be something of a fool’s game to look around for ‘what’s responsible in the UK for the number of rich doctors’; their high rewards are an international, globally-linked, phenomenon.

  10. The rich lawyers will usually work for big companies, not individuals.

    So it’s a similar problem to directors – a large fee will be chickenfeed to a big multinational. And the lawyer will have a number of large corporate clients, so even easier to get into the top earning group.

  11. Tournament wages.

    Clearly the case with sportsman: the world #1 at a sport gets most of the sponsorship money in a given year. #2 gets some. #1138 has to pay his own bus fares.

    For commercial lawyers, given the money at stake and that the other side will pay your costs if you win, it’s worth hiring the best-ranked lawyer you can find. This results in extreme bidding up at the top end of the scale.

    A similar effect applies to CEOs, with the problem that it’s much harder to assess their performance or ascribe how much of a company’s performance is due to the CEO.

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