Barclays chief exec John Varley has resorted to a tactic I hate in his defence of high pay in the banking industry - comparing it to pay in football. Aside from the fact that I don't think that "they do it too" is a particularly good response to criticism, I'm not sure the analogy really works anyway for a number of reasons.
For one, I am sceptical of the extent to which we can really indentify individual contributions to success in organisations like banks. I accept the common sense point that people who are obviously rubbish will probably get weeded out, but beyond that I have my doubts. Cognitive biases mean that we are likely to view ideas/decisions etc through the prism of what we already know about the person. Add to that the individual's tendency - particularly no doubt amongst those who are very confident/optimistic - to view success or failure in a self-justifying way and we aren't likely to get accurate reports back either. Of course all this happens in football too but a) there is a whole crowd watching who also see what is going on and b) we have stats on what individuals do in games that enable a slightly more objective take on things.
Secondly, the 'market' in football talent does seem to work pretty well, at least at the top clubs. There genuinely is a global competition for the best players. I am sure this is part true at banks too, but does it go as far as in football? In addition, when players lose their sparkle they drop down the scale from top teams to middling teams, from the top division to lower divisions etc. Whilst people can obviously retain there mental ability longer than their athletic ability you don't seem to see the same process at work in the City. And pay in football mirrors this - you earn a lot when you're younger because that is when you can contribute most, but it tails off quickly.
Thirdly, the rules in football are much more clearly defined than in banking. A win is a win is a win. Wins don't subsequently become losses because of events off the field, goals don't turn into own goals. Risk analysis is a lot simpler!
Finally, big names in football can add a lot of value to the club in terms of merchandising. Is there is a comparable effect in terms of 'star' bankers contributing to the share price of those banks who hire them? I'm not sure I would trust an analyst who based his view on the prospects of a bank based on some investment banking hires. But there is quite a bit of evidence that football teams can buy success.