Monthly Archives: January 2011

Capital vs Talent: The Future of Business in the US

Yesterday I attended a talk hosted by the University of Toronto’s Rotman School of Management, Reuters and the Harvard Business Review. The panel included Rotman School’s Dean Roger Martin and cultural theorist and commentator Malcolm Gladwell. The talk was about the battle between capital and talent and the future of business in the US.

The panelists discussed the emergence of Michael Jensen’s agency theory in the 1970s and drew parallels to baseball and how the introduction of free agents changed the whole economic landscape. A transition occurred in which talent was calling all of the shots and incredulous capital – in the form of Regan and Thatcher – was left to wonder how they had taken their eye off the ball. There was speculation about how far talent could push for more compensation when the Gini coefficient in the US seems to be getting closer and closer to 1 – deep inequity. Malcolm Gladwell seemed mystified that there hasn’t been any social uprising or backlash to the huge disparity. And he wondered why the US was so different from Sweden and Canada; two countries which also are experiencing globalization but where the income extremes aren’t so vast.

Towards the end of the panel one audience member’s comment caught the attention of the crowd when he observed that he wasn’t certain about who he should be angry with: capital or talent. He reflected on how he might actually straddle both sides of the argument since he too gets annoyed with extreme forms of talent compensation, but at the end of the day, as the talent, he pushes to get as much as he can from capital. Which begs the question: have we created a social context in the US which makes considering less impossible?

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