It's that a lot of what's passed off as free-market capitalism is anything but.
In biot's case, arguing that the value generated by an individual should serve as the basis for that person's pay. It isn't, but is only one input (essentially defining the demand curve, and setting a possible upper limit), but the true market pay scale being one that would also have to take into consideration supply. As I noted (somewhat snarkily), market conditions for establishing executive pay fall somewhat short of the free market definition. For a more popular treatment, Eddie Murphey and Dan Akroyd's "Trading Places" explores a similar idea. Mark Lewis's writings on the stock market provide some insight on trader qualifications and pay.
A friend some years ago provided an intriguing argument for why financial traders' pay was as high as it was. It was less a conventional market pricing argument than one of creating incentives to minimize incentives for fraud. Essentially: we're going to pay you so goddamned much money that you'd be completely mental to try to cheat on us and lose out.
I really cannot speak to the merits of this.
What that, and numerous other arguments for the rich getting ever richer do suggest is that there is a class of people who are very well versed at rationalizing their income and remuneration rates.
There's also a great deal of very, very, very sloppy thinking, rationalization, reportage, etc., in economic matters.
I'm also coming to feel that much of economics as it's been taught for the past 150 years or so simply isn't so. That the conditions described by free markets are far less common and far more fragile than commonly believed. That much of macroeconomics is bunkum used, again, to rationalize why them that has gets more (though, oddly, I'm also coming to understand money, fiscal policy, and Keynesian theory better than ever before), and that much of the economic gain is really a power game played for leverage and advantage, rather than for strict financial gain. A lens which makes the MPAA/RIAA, copyright, patent, trade and immigration law, etc., far more understandable.
Jonathen Nitzan's Capital as Power seems to have stumbled on this same insight: http://www.amazon.com/Capital-Power-Creorder-Political-Econo...
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