The pay of cricketers skyrocketed into the millions when the 20/20 tournaments started in India. Hundreds of millions of middle-class Indians are mad about cricket and now have the money for pay-TV.
Similar ICT advances allowed executives to run much larger organisations. Fonterra is a global company which must pay the going rate in the international market for executives to hire and retain the best.
But how do you tell if a CEO is worth it? Many will remember the multibillion dollar gyrations in the share price of Apple and the latest photo of an increasingly gaunt Steve Jobs in his last years.
When Hewlett Packard's CEO Mark Hurd resigned unexpectedly, the value of HP shares dropped by $10 billion. This makes his $30 million in annual pay a bargain for shareholders.
Bang Dang Nguyen and Kasper Meisner Nielsen studied how share prices reacted to 149 cases of the chief executive or another prominent manager dying suddenly in American companies between 1991 and 2008. If the shares rise on an executive's death, he was overpaid; if they fall, he was not.
They found that 58 per cent of the bosses studied were under-paid. Those with the bigger pay packages gave the best value for money as measured by the share-price slump when they passed away unexpectedly.
As for those not offering value for their pay, one out of six Fortune 500 CEOs loses their job each year, compared to one out of 10 in the 1970s. CEOs must perform or else.
Top executives are not duping shareholders because none have a big enough individual shareholding to mount a worthwhile protest. Not only did CEO pay increase, so has the pay of private company executives.
These private firms are run by a few shareholders who have a strong interest in paying no more than they need for talent.
The burst of takeovers and leveraged buyouts in the 1970s and 1980s were partly driven by the profits from downsizing flabby corporate headquarters.
The response of the populists on the left and right back then was to support regulation to curb these hostile takeovers rather than applauding corporate raiders for showing lazy, overpaid corporate executives the door.
Executives are one of a range of occupations now earning superstar pay. They are paid much more because ICT allows their skills to be scaled-up to perform on a global stage.
They could be running a multinational company, an international investment portfolio or entertaining a global audience.
If it becomes much cheaper for the best of the best in any field to supply a much larger market, these superstars will be paid a lot more than before.
The second-best in their field are paid much less because everyone prefers to buy the best and can now do so at a lower cost than before because of the ICT revolution.
But what's in it for me? Is superstar pay yet again neoliberalism where the rich get richer and the poor get poorer?
Since the low in 1992, Māori are doing best. Their real incomes adjusted for household size changes is up 80 per cent, Pākehā must make do with 60 per cent more, Pasifika 53 per cent.*
That has always been the deal under capitalism. Everybody gets richer but there is plenty of room left for grumbling by the usual suspects about the success of the most talented and hardest working.
• Ministry of Social Development, Household incomes in New Zealand: Trends in indicators of inequality and hardship, 1982 to 2016.
Jim Rose is an economic consultant in Wellington
