There’s no such thing as a happy ending
December 30th, 2007 by Will
If it was good, then the ending isn’t happy. Even if it was bad, the ending is at most relief.
The market is not efficient. Obviously not. And it couldn’t be anyway, because equilibriums never really exist. So obvious in some contexts, yet completely overlooked in ones that count big.
I have the beginnings of a thesis as to why the uber wealth gains of the top percent, the US CEO salaries, the golden parachutes, are actually the exact opposite of incentive to do a better job. Every unit of money becomes less useful the more of them you have. I don’t think any CEO’s make decisions they know are bad. But when the cost of a bad decision is taking $100 million and slinking off to some other project and having missed your chance for the billionaire’s club, that cannot possibly be as big a motivator as when $10 million is the jackpot and $1 million the consolation.
And this needs to be the argument of smart progressive econo-politics. This is a simple question of video game design or motivational psychology or game theory or marginal economics. And we can be confident that the best and brightest are going to scrap harder for the diminishing returns when the differences still mean something than they will when the differences are just paper.
That said, the motivation on the 90th percentile now must be insane. The smart money is that the current situation can’t possibly go on forever (no equilibriums remember). And so all of us at the bottom of the top must strike now, or always remember that those indistinguishingly similar to us, starting in the same place, got the memo, jumped through the door before it closed, and rode the power of exponents farther while they could than might ever be possible for the rest of us to go later, once times change.