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Summary on agency, labour, and economics
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its a precise discussing agency, labour, and economics, the 2/20 principal
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Martin's article on 2/20 was an interesting piece to reflect upon issues in agency under contractrelationships and corporate law. I thought it was very clever in the way that he elucidated
examples in the entertainment industry, namely in baseball & film employee-employer contracts.
As the article mentions, while it's obviously part of a key component in the volatility of western
markets, especially in recent times, it leaves me dissatisfied that these aren't the issues clearly
brought across to people in mainstream media or politics. As obvious as the agency problem is
with 2/20 in that managers, or whoever is shaving off that 20%, whether agent, filmmaker, or
baseball player, how often does the potential issues that arise from the shift in bargaining power
get asked in the attention that it deserves in media or politics.
I thought it had interesting implications where in some segments of the labor market the
employee or worker has so much bargaining power, that they actually affect the very quality of
the product or service, or affect stakeholders and consumers, in these limited cases as described
in this article. The self-adjusting rate solution offered in this article was reasonable, yet the
article in general reminded me of the maximum wage concept as another potential solution, and
the issue of applying different or same maximum and minimum wages in different industries.
I would not want to entirely negate the goals of alignment of shareholder and manager interests
that are found in 2/20 however. As much as I agree with a potentially self-adjusting rate in the
2/20 formula according to performance metrics, this in itself is not enough. In short, I'm more of
a proponent of resolving the agency problem with a self-adjusting rate potentially, with measures
for workers, stakeholders, shareholders, and managers, in each industry to remove the incentive
to cause harm in an economy through risky decisions, motivated by greed. I believe this should
be resolved by the state providing a universal minimal amount of goods and services for all
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