Second, high pay of this level does not represent a reward for effort. It does instead represent the ability to capture a rent. In economic terms this is the equivalent of monopoly profit arising from a market imperfection. So, footballers benefit from the rent arising from there being only a very few TV channels.
Have you noted how, as the number of TV channels has gone up, footballers’ pay has risen?
Yep, that’s right, Spud has it the wrong way around. There aren’t that many people capable of playing football at Premiership level. There are many TV stations who would like to be able to show advertising to the many people who like watching Premiership football.
The more TV stations there are competing for that potential profit stream then the more they will be willing to pay to the footballers (or the teams, but they have the same problem, the revenues will flow to the players) to secure the rights.
He is absolutely, 100%, the wrong way around here.
Third, there is a need to reprice this pay to beat inequality which is now widely considered to be the cause of massive social harm as well as economic stagnation. The social harm aspect is, I hope, obvious. The stagnation comes from those very well off spending on asset price inflation (or saving, in other words) rather than recirculating income into the economy as those in lower pay do.
Sheesh. Someone’s just sold the asset, they’ve now got the cash. Which can be spent or saved/invested and nothing else. And if they invest it in an asset them some other mug now has the cash and can make only the same one of two decision.
And this would, of course, justify higher personal tax rates on investment income which, even after recent dividend and rental income changes, do in most cases have tax rates lower than those on going out to work for a living, which is absurd.
And Snippa shows that not only can he get things wrong from first principles he’s entirely ignorant of basic theory on taxation too. Capital income, on efficiency grounds, *should* be taxed at lower rates than labour income.