discussion (again, my emphasis):
So why does Mr Mankiw pick three figures from the entertainment and
computer industries, where everyone knows the "superstar" phenomenon is
strongest? Because if he used examples from other industries, it would
be even more difficult to convince the reader that the immense rewards
being reaped by those at the top had anything to do with their unique
contributions to the economy. Last year the highest-paid chief executive in the country,
at $131m, was a guy named John Hammergren (above), who runs a medical and
pharmaceuticals business called McKesson. If he hadn't been running
McKesson, some other guy would have been. If Michael Vascitelli ($64m)
hadn't been running Vornado Realty Trust, somebody else would have.
Perhaps those other guys wouldn't have been as good at their jobs; in
that case, these firms would have lost market share to competitors. So
The social purpose of high executive pay is to create
incentives for hard work to maximize profit. But these guys are being
paid double what their predecessors were making in the 1980s, which was
not exactly a period known for its stodgy egalitarianism. Are we seeing
startlingly better corporate performance today than we were back then?
Is there greater productive innovation in, say, medical technology or
commercial real estate? Is our economy growing faster? Are general
standards of living rising faster? No, no, no and no. What public
interest is served by the fact that these CEOs, as a class, are earning a
multiple of what their predecessors did a generation ago?