Wednesday, December 15, 2004

"Cost Certainty"? I'll Take It

It's a shame that sports reporters aren't required to learn a little something about economics and politics. Whenever there's a labor dispute in pro sports, I gnash my teeth over the way most commentators naively endorse the ludicrous demands of management while bashing the "greedy" players. It's the players, of course, who represent the free-market principles that most Americans--including, emphatically, the sports reporters--claim to favor.

(An aside: I don't mean to imply that there is some sort of moral justification for paying a power-hitting shortstop 200 times as much as a nurse or schoolteacher. The fact is that, as two minutes of thoughtful reflection makes obvious, morality has very little to do with the workings of the marketplace. And if we want to interfere with the market for moral reasons, I don't think that the best place to start would be to mandate that athletes get a smaller piece of the pro sports pie so that team owners can keep a larger one.)

Current case in point is the labor lockout in the National Hockey League. (Hard for me to develop a rooting interest in any sport where virtually all the players are white, so my interest is purely political.) The owners just rejected an offer from the players that included a 24% salary cut for next year, saying that it doesn't produce the "long-term cost certainty" the owners must have.

(This is the same phrase we've heard from many of the baseball owners over the years. In effect, the owners are asking for a rule that will prevent them from offering the players too much money.)

"Cost certainty"?! Who wouldn't want cost certainty? Any business would like to have a guarantee that its expenses won't rise next year, or the year after that, or the year after that. But what business enjoys that kind of insulation from the marketplace? In what industry are managers so immune from the effects of their own mistakes? And what does this vision of locked-in profitability have to do with a free market?

Actually, there are a few industry segments that enjoy guaranteed profits. For example, some defense contractors operate on a cost-plus basis, which allows them to charge the taxpayers whatever they choose to spend, and then some. But I for one don't consider the Halliburtons of the world a model of economic fairness and rationality.

The team owners and the commentators who back them are in fact advocating a highly controlled marketplace, more akin to socialism than to the free market. They're not necessarily wrong; pro sports might operate better under such a system. So let's have an honest debate about it. If we did, the national conversation about sports might become a source of economic education for millions of fans who otherwise ignore the topic, rather than a morass of cant and sloganeering.

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