Just realized the huge management fees charged by VC firms are an instance of the Baumol Effect. Good VCs could start their own startups if they wanted to, thus have to be paid enough not to.
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Not sure I agree. Most compensation for a founder is deferred. The equivalent for a VC is carry, not management fee.
Strictly speaking this is true, but I think for someone poised between the two choices, the immediateness of a big VC salary would result in something more like a multiplication than a type error
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OK, then it would be the combination of Baumol effect and time preference.
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Careful, or you'll draw the attention of economists.
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