Billers, Players, and Income Inequality
Another Nassim Nicholas Taleb quote:
A scalable profession is good only if you are successful; they are more competitive, produce monstrous inequalities, and are far more random, with huge disparities between efforts and rewards–a few can take a large share of the pie, leaving others out entirely at no fault of their own.
Yes, this is just the economics of superstars. But it suggests a simple dichotomy. As Taleb points out, there are safe professions where you charge by the hour, so I might call them Billers. As a Biller, your earnings tend to have a high floor but a low ceiling. Think of an accountant.
What Taleb calls scalable professions are ones where you are not limited by what you can charge for an hour. Recording artists, professional baseball players, entrepreneurs, corporate CEO’s, and financial speculators enjoy scalability. But, as Taleb points out, they have to compete in tournaments where there are a few winners and many losers. So we can call these sorts of people Players.
When I was 40 years old, I changed from being a Biller to being a Player. I quit a well-paid job to start one of the first Internet businesses.
Rising affluence makes it easier to be a Player. I had a tolerable financial cushion when I became a Player, and I had a fallback position of re-enlisting as a Biller. Young entrepreneurs who don’t have children don’t need as much cushion. In addition, they often have fallback positions if they lose in tournaments. In the short run, they have their parents, and in the long run they can switch to Biller occupations.
In marriages with two well-paid professionals, one of the spouses can be a Biller while the other takes a flyer as a Player.
As general affluence increases, I can imagine more people having the freedom to be Players. If they were competing for a fixed set of prizes, this would simply increase the number of losers. But I think that on the other side of the market, greater affluence creates more tournaments and makes each tournament more lucrative.
So one story for rising income inequality is that a larger share of income is going to occupations that involve tournaments, and more people are becoming Players. More Players and fewer Billers means greater inequality.
I’m leaning toward buying Taleb’s book, which would make him an even bigger winner in that tournament.