All Things Bubba

The New York Times published this excerpt from a book called The Price of Everything: Solving the Mystery of Why We Pay What We Do. It's a book about how it's more than supply and demand that set prices, and about how not all costs are measured in money. However, this particular excerpt is about the increasingly unequal distribution of money - how a few superstars make outrageous amounts of money, at the expense of the rest.

IN 1990, the Kansas City Royals had the heftiest payroll in Major League Baseball: almost $24 million. A typical player for the New York Yankees, which had some of the most expensive players in the game at the time, earned less than $450,000.

Last season, the Yankees spent $206 million on players, more than five times the payroll of the Royals 20 years ago, even after accounting for inflation. The Yankees’ median salary was $5.5 million, seven times the 1990 figure, inflation-adjusted.

What is most striking is how the Yankees have outstripped the rest of the league. Two decades ago. the Royals’ payroll was about three times as big as that of the Chicago White Sox, the cheapest major-league team at the time. Last season, the Yankees spent about six times as much as the Pittsburgh Pirates, who had the most inexpensive roster.

Baseball aficionados might conclude that all of this points to some pernicious new trend in the market for top players. But this is not specific to baseball, or even to sport. Consider the market for pop music. In 1982, the top 1 percent of pop stars, in terms of pay, raked in 26 percent of concert ticket revenue. In 2003, that top percentage of stars — names like Justin Timberlake, Christina Aguilera or 50 Cent — was taking 56 percent of the concert pie.

These days, it's hard to imagine the Royals having the richest payroll in baseball, or the Yankees' typical player making less than half a million. But as the article points out, it's not just baseball. This increasing inequality has been a trend for awhile now, in many fields.

We've all heard about the CEOs who make 400 times what their employees make, when in the past, the CEO would make perhaps 20 times what the lowliest clerk in the mailroom made. In the previous century, it was possible for ordinary people to make a decent living in music, without being a superstar. In publishing, people talk about the "disappearance of the midlist." The midlist used to be the bread and butter of publishers - the authors who were not superstars, but not newbies either. They had established track records and regular readers, but didn't top the bestseller lists. Now, the trend is to give ridiculous amounts of money to the superstars - the Stephen Kings and JK Rowlings - and much less to everyone else. New authors are often preferred, because they are cheap, and there's a chance they'll be the next King or Rowling...kind of like baseball teams prefer cheap young players who may turn into superstars, over the higher-paid journeymen.

Of course, inequality is what drives capitalism. But, the book argues, too much inequality can "gum up the works." People are turned off by extreme inequality, and if only a few superstars reap the rewards, people will give up and not even try, figuring they can't beat such unfavorable odds. Ideally, you have some inequality, but not too much. There has to be a balance. (No idea how that might be realistically achieved, however.)

Labels: books