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If my skill is common, it doesn't matter how much physical energy I expend, I probably won't make much because the supply of labor is high. If it was easy to b

If my skill is common, it doesn't matter how much physical energy I expend, I probably won't make much because the supply of labor is high. If it was easy to be a hedge fund manager, more people would do it. It's easy to cherry pick these professions that seem overpaid, but in a free market, people tend to make what the market values them at. You could say that teachers are so important that they should be paid more and in a free market education system they might be paid differently than they are now.

tetron 9y ago
Or maybe certain professions have a limited number of openings, which tend to go to people with connections, and cooincidentally these professions deal with large amounts of money, so taking 1% commission on a hundred million dollar deal for very little work seems reasonable.
- ghufran_syed 9y ago
  So why assume hedge fund managers get their jobs through “connections” but professional basketball players don’t?
  - harry8 9y ago
    Why would you assume the converse? Hedgefund managers and more junior employees deal with ie sell to the rich, be they extremely wealthy or others in the finance industry. Do you think that's going to work better as Dennis Rodman or James Van Der Something with the accent and style to match? Dennis got a game to rack up his astounding numbers because he's very tall. He wouldn't get a game as fund manager as 25 year old no matter how smart he was. I'm a CFA, I have grades, never got a look in for fund manager jobs. Pivoted to computing at the age of 30 where I "look the part" or whatever. Don't kid yourself about this stuff. I'm not from an underprivileged background by any stretch of the imagination and nor do I have any time for socialism and socialist posing. Young Dennis will get a game somewhere and put up compelling numbers and will likely get to the NBA. The equivalent can't be said for young potential fund managers who won't get a chance to impress. Positive discrimination is not the answer to this, but neither is the ostrich strategy.
  - joncrane 9y ago
    Because there are more people who have the technical skills to run hedge funds than there are hedge funds. You fill the manager role with someone you're comfortable with on many levels. OTOH, professional sports leagues are about winning intense competition, and skill is much more important. Even then, coaches and owners play favorites. It's not a binary system, it's a spectrum, and professional sports are towards one end of the spectrum and hedge fund management and VC founding are towards the other end.
    - everdev 9y ago
      Exactly. We're social creatures and relationships matter.
      - AstralStorm 9y ago
        The part people miss is that relationships rarely expand at random. They're local and koinophilia (liking alike) plays a huge role. Even if J. Random put all their training into building and managing relationships it would likely not amount to anything of note. (They will have fewer resources and be excluded from some social circles.) There are many necessary components of huge success.
- candiodari 9y ago
  This. It even applies in MANY more situations than just this one. TLDR: the vast majority of markets are demand-bound. So if you are producing marginal supply, you're are simply hurting everyone and at best will do as well as the others. Unless, of course, you cheat, which is what these connections do. Needless to say, there is a global fiction that everybody seems to believe that this is not true, both on the left and (especially) on the right. It is so ignored on the right that this situation is actually left out of economics education.
RhysU 9y ago
> You could say that teachers are so important that they should be paid more and in a free market education system they might be paid differently than they are now. What is the present value of a teacher's pension? How much would you have to save to produce an investment stream that cannot be exhausted no matter how long you live? What value is attached to having it guaranteed by the government instead of being subject to market returns?

tetron 9y ago

Or maybe certain professions have a limited number of openings, which tend to go to people with connections, and cooincidentally these professions deal with large amounts of money, so taking 1% commission on a hundred million dollar deal for very little work seems reasonable.

ghufran_syed 9y ago
So why assume hedge fund managers get their jobs through “connections” but professional basketball players don’t?
- harry8 9y ago
  Why would you assume the converse? Hedgefund managers and more junior employees deal with ie sell to the rich, be they extremely wealthy or others in the finance industry. Do you think that's going to work better as Dennis Rodman or James Van Der Something with the accent and style to match? Dennis got a game to rack up his astounding numbers because he's very tall. He wouldn't get a game as fund manager as 25 year old no matter how smart he was. I'm a CFA, I have grades, never got a look in for fund manager jobs. Pivoted to computing at the age of 30 where I "look the part" or whatever. Don't kid yourself about this stuff. I'm not from an underprivileged background by any stretch of the imagination and nor do I have any time for socialism and socialist posing. Young Dennis will get a game somewhere and put up compelling numbers and will likely get to the NBA. The equivalent can't be said for young potential fund managers who won't get a chance to impress. Positive discrimination is not the answer to this, but neither is the ostrich strategy.
- joncrane 9y ago
  Because there are more people who have the technical skills to run hedge funds than there are hedge funds. You fill the manager role with someone you're comfortable with on many levels. OTOH, professional sports leagues are about winning intense competition, and skill is much more important. Even then, coaches and owners play favorites. It's not a binary system, it's a spectrum, and professional sports are towards one end of the spectrum and hedge fund management and VC founding are towards the other end.
  - everdev 9y ago
    Exactly. We're social creatures and relationships matter.
    - AstralStorm 9y ago
      The part people miss is that relationships rarely expand at random. They're local and koinophilia (liking alike) plays a huge role. Even if J. Random put all their training into building and managing relationships it would likely not amount to anything of note. (They will have fewer resources and be excluded from some social circles.) There are many necessary components of huge success.
candiodari 9y ago
This. It even applies in MANY more situations than just this one. TLDR: the vast majority of markets are demand-bound. So if you are producing marginal supply, you're are simply hurting everyone and at best will do as well as the others. Unless, of course, you cheat, which is what these connections do. Needless to say, there is a global fiction that everybody seems to believe that this is not true, both on the left and (especially) on the right. It is so ignored on the right that this situation is actually left out of economics education.

RhysU 9y ago

> You could say that teachers are so important that they should be paid more and in a free market education system they might be paid differently than they are now. What is the present value of a teacher's pension? How much would you have to save to produce an investment stream that cannot be exhausted no matter how long you live? What value is attached to having it guaranteed by the government instead of being subject to market returns?