Kenneth Rogoff: Jeremy Lin and the Political Economy of Superstars
CAMBRIDGE - The biggest news around Cambridge in recent weeks has been Jeremy Lin, the Harvard economics graduate who has shocked the National Basketball Association by rising overnight from 'nowhere' to become a genuine star, leading a losing New York Knicks team to an unlikely string of victories.
Lin's success is delicious, partly because it contradicts so many cultural prejudices about Asian-American athletes. Flabbergasted experts who overlooked Lin have been saying things like 'he just didn't look the part.' Lin's obvious integrity and graciousness has won him fans outside the sport as well. The whole world has taken note, with Lin being featured on the cover of Sports Illustrated for two consecutive issues. The NBA, which has been trying to build brand recognition and interest in China, is thrilled.
I confess to being a huge Lin fan. Indeed, my teenage son has been idolising Lin's skills and work ethic ever since Lin starred on the Harvard team. But, as an economist observing the public's seething anger over the 'one percenters,' or individuals with exceptionally high incomes, I also see a different, overlooked facet of the story.
What amazes me is the public's blase acceptance of the salaries of sports stars, compared to its low regard for superstars in business and finance. Half of all NBA players' annual salaries exceed US$2 million, more than five times the threshold for the top 1 per cent of household incomes in the United States. Because long-time superstars like Kobe Bryant earn upwards of US$25 million a year, the average annual NBA salary is more than US$5 million. Indeed, Lin's salary, at US$800,000, is the NBA's 'minimum wage' for a second-season player. Presumably, Lin will soon be earning much more, and fans will applaud.