That's the key behind that reasoning : If your so skillful, go right ahead and create your own business. Otherwise, it's your place in the hierarchy which dictates your salary.
But then again: very few corporate NPCs can think outside their bureaucratic box. If they could, they wouldn't be NPCs.
Which is expensive and doesn’t scale very well, as it requires you also keep a positive company culture, hire+train and keep good managers, etc.
The reason why corp goes that way eventually is because defining specific slots and requiring people to fulfill the requirements of those slots ‘or else’, and paying them as expected for those slots scales better (for certain definitions of better anyway), requires far less skill to identify if someone is or is not fulfilling those requirements, and allows central negotiation and better leverage for compensation which scales better for the company too.
It tends to not work great for creative areas, but it does work pretty well for boots on the ground crank turning. Since it’s relatively easy to quantify how hard and much the crank was turned, and often to what quality measure.
Which sucks for humans, but works.
At some point, that stops working too, and at that point the blatant ‘cog’ thinking has also made everyone jaded and shitty.
Depending on the level of market capture for the company /organization and competitive pressure then defines if it will implode, or be the next ‘DMV’ or worse ‘Comcast’, where it is somehow ‘functioning’ despite itself.
The US has a ton of these industries right now, but due to various still working market capture elements, we’re still putting up with them. Everything from Banks, Telcos, major ISPs, etc.
Frankly it seems to be to the backbone of the US economy right now.
One big disadvantage those orgs tend to have is they often suck at being adaptable. Most of the org is just fighting internal inertia, and the moment the direction needs to change it can fall apart and become actively counter-productive to itself or delivering value.
And considering how many consolidations and buyouts have been going on with cheap money, it’s about time for the stack of cards to implode a bit. Which would result in mass unemployment unfortunately, as 36% of Americans work for megacorps now, and a great many smaller companies depend on their business.
Which is great for startups and companies that keep a useful workable culture with decent management through this mess. I don’t know of any off the top of my head right now though.
What is circular reasoning?
It's a cult-dwelling means of solving cognitive dissonance. If you look, you will see it in more contexts than this. The first statement is just an unshakeable premise, and needs no justification.
Since that is common knowledge shared by all the administrative personal, it's impossible to justify somebody paying 1.5x your salary range. Even if you personally realize some specific person doesn't look replaceable (who am I kidding? You don't. You don't stay in management on places like those and keep that ability, you either move or change), you can't communicate that fact.