Why the Rich Are So Much Richer

You're mixing up assets and yearly output. You're also ignoring the fact that real assets that always existed may be shifting from other asset classes to hedge funds.

I think the popularly accepted notion of "market rates" basically leads to a social status ladder with the kind of jobs that "high class people" tend to do at the top and "low class work" at the bottom, and there might be a correlation with how much each person contributes to the bottom line of the company, but it is my belief that the within-groups variation is larger than the between-groups variation, which makes it basically a farce. The best support person is probably bringing in more revenue than the worst engineer while making less money.

This system endures because if you are in a higher class, there is no incentive to upset the popular notion of market rates. The top half of the pyramid tends to control pay, and why wouldn't they want a graduated scale based on status?

As engineers, we protect this status by releasing our tools when they are robust and easy enough for ourselves and other professional engineers but stop short of polishing our tools until an end-user could use them. We also maintain a complex set of cultural practices that need to be navigated in order to get access to additional layers of information and institutional knowledge. It's in our interest to prevent people from getting in, because under the Market Rates system, that's how you make more money.

CEOs are just another tier in that system. Like engineers, they keep their knowledge amongst themselves, and require you to work up the ladder in order to get the information and knowledge you need to access successive tiers.

I wish more people would spend more energy in actually trying to tease apart where profits are coming from and give compensation based on that. Or, even better: expect everyone to make a full-bodied human contribution and recognize that that's what is truly valuable, and no human is more valuable than any other.

I realize that's a little too woo-woo for many people, and I respect that. Maybe do the profit-assignment model then. But I really wish people would stop talking about "market rates" as if it's anything other than rent-seeking on a cultural scale.

I confess I am ignorant, so I don't know what you are talking about.

But, I do not see that many more hard assets (I mean physical... I am sure finance has a technical definition that has nothing to do with what the intuition of lay people like myself would think) created. It does not matter if there are trillions, quadrillions or quintillions of dollars; if they had to spend it all, they would end up owning the whole planet and still not run out of money.

So, it is just a matter of stroking egos and playing con games with using K-9 level math, but with much higher numbers. Ultimately, the only thing that much money is worth is to show that you have much more of it than the next person. It is all about social posturing (or if you are cynical, about manipulating other people by triggering emotional responses to the huge numbers involved).

You believe you found a problem, but your objection was addressed and dismissed in an evidence-based fashion in TFA:

"The idea that high CEO pay is ultimately due to poor corporate governance is a commonplace [...] Yet as an explanation for why CEOs get paid so much more today than they once did, Stiglitz’s argument is unsatisfying. After all, back in the 1960s and 1970s, when CEOs were paid much less, corporate governance was, by any measure, considerably worse than it is today [...]

"Shareholders, meanwhile, had fewer rights and were less active. Since then, we’ve seen a host of reforms that have given shareholders more power and made boards more diverse and independent. If CEO compensation were primarily the result of bad corporate governance, these changes should have had at least some effect. They haven’t. In fact, CEO pay has continued to rise at a brisk rate."

No, money is only numbers.

If you cut down a tree, cut it in boards, cut the boards and nail the pieces into a bunch of chairs, that is value added. It did create wealth.

Same, if you write a bunch of code that did not exist before, and the code is compiled and linked into a program that allows users to do stuff they could not do before (or could, but much more slowly) then there is value added. Wealth was created, even if there is no physical representation of that wealth... but it has real effects on the real world.

But when people just place bets, and double-down bets, and triple-dare-you bets on whether or not some random guy is going to write a program that might or might not go viral and get a billion or eyeballs... that's not wealth creation. That is just toying with numbers. You just produce noise in the economy so that the real prices of real stuff cannot be discovered anymore.