The Talent Economy

An article on HBR.org: The Rise (and Likely Fall) of the Talent Economy by Roger L. Martin found by clicking here.

And my nice response:

This article is full of implicit political assumptions and strange economics, such as the statement: “One trader’s gain is simply another trader’s loss,” which is explicitly untrue. A buyer/seller on the other end of the hedge fund’s trade engaged the opportunity because it was a gain or a realized opportunity cost. Or asserting that “just” trading existing stocks creates no benefit for society is to argue that market transactions for already created (used) goods have no value, which is also untrue. Unions can cause second-order negative impacts for labor opportunities in and adjacent to the industries in which they work, which may undo the social benefits of higher unionized-labor wages (it’s still open to debate). Capital is taxed lower than earned income because of a risk differential (a difference open to debate, but extant non-the-less). Government interventions are almost always subject to capture in financial industries, and creating market friction through taxes or regulations risks significant unintended consequences. If markets find that CEO’s create volatility in share prices due to their financial incentives, then it should be able to take advantage of them if the compensation packages are transparent (hence the quarterly outlook of equity markets). If Cisco systems price fell by over 50% from its highs, the market clearly judged the competence of the CEO and found it wanting. What premium would be assigned to his departure? The “fixed pie” and redistributive concept is very vogue right now, but capital will find away around coercion, even if it means leaving the country. The article was supposed to be about talent, not financial engineering. Corporate short-termism is a problem for labor development, but government regulation can’t magically fix that. It can do a lot to further damage it though.