The Economy and Sports

Bill Maher one time on Real Time gave a talk about the economy and talking about NFL and Baseball. I am an economics teacher and for about 5 years have been working on explaining the economy to my students using sports. I use baseball and football.

Free Market Capitalism does not exist even in Adam Smith's (the founder of capitalism) world. The government would break up monopolies to create competition. From most of my conservative friends, their idea of capitalism is having no rules. Let the markets work and have no labeling, no EPA, no taxes etc.

Have you ever played a game with a child? They change the rules all of the time. They cheat, or switch rules or tatics. Have you ever played any game with out rules? Can you image football without a referee? Rules to agree upon? In the least, there have to be rules in capitalism. There have to be rules for fairness, for small companies to be able to compete and people can be protected. The government is the umpire, the referee. The government can set the rules and the boundaries.

Baseball can be a form of capitalism. There are rules in baseball with umpires, commissioner etc. The money goes to the big market teams like the Yankess, Phillies and Red Sox. Now, money does not buy championships like many fear, these big market teams have the stars, get the best players, get the television contracts and make the most money. There is no revenue sharing, there are no maximum payrolls or even the important minimum payroll. This past year, small market teams did much better, like Arizona, Milwaukee and Pittsburgh. In general, in most years, most small market teams have lost all hope in July. Most teams do not have a chance to win the World Series, like Washington (formerly Montreal), Pittsburgh, and others.

Football is socialism. Parity is the word. Many of the teams end up being 7-9, 8-8 and 9-7. At the end of the year, many, many teams are fighting for a play off spot. Every team, every year can make a turn around and make the playoffs. The worst team gets the first pick in the draft. Every team has a team maximum salary and minimum salary to pay the players. The teams split the revenues earned by the league. While there are teams that are at the top for a long time like the 49ers of the 1980's, they are replaced by other teams. Successful teams are rewarded with championships and winning. Sharing makes the sport better. There is more competition as more teams can improve and have a chance to win. This year, the Detroit Lions are having a great year. A few years ago, the Arizona Cardinals went to the Super Bowl. Managment, coaches, owners do make a difference. There is no guarantee you will win. There are no easy wins. There have been bad teams for years. The league tries to protect the quarterbacks and make rules in the game. Sometimes the rules are too much-over-regulation and sometimes they change the rules to help the offense and sometimes to help the defense. Rules are changing but everyone knows the rules and there are rules.

While baseball is exciting to me and we have exiting pennant races and the playoffs are great. Baseball is losing fans and has lots its national prominence.  I would take baseball over no rules or a child's game. I want rules and fairness. In general most people in the US love football and find that it is their favorite sport.  For our economy the NFL is a great example of success. It makes money for all teams and the sport in general. The players make money, the coaches, the office people make money. Football is a success in all ways.

I would love to see this type of success in our economy. One where the owners(business), the players (us) and all participants are working and making money. With rules, with fairness, with everyone working together, we can achieve this sucess. Regulations are not the enemy. They help everyone know how to play, what to do and how to succeed.