Let’s be honest – this summer has been pretty depressing.
Months have gone by without a resolution between the NBA owners and players, and the prospect of losing games seems to be growing more likely by the day.
If you’re interested in the specifics of the NBA Lockout struggle, I recommend this article written by Henry Abbott at TrueHoop. He talks about the specific sticking points in the current negotiations.
Frankly, my reaction to this whole lockout situation has been a bit bizarre, at least to the untrained eye.
Please click “Read More” to see why…
I work as a Republican political consultant. You could call me a “union-busting Republican,” and I probably wouldn’t quarrel too much with you. I generally believe that unions have way too much power, and I believe in right-to-work laws.
And despite all of that, on this particular issue, I find myself siding with the players’ union 100%.
At first, I couldn’t quite figure that out. Am I having an ideological break? Is my affinity for NBA athletes clouding my sound economic judgment?
Nope. I’m just fine. I’m standing up for free markets and capitalism because that’s what Republicans do.
In typical labor negotiations, unions will fight for what they would consider “fair” wages while corporations will try to keep wages as close to the market rate as possible. In simple terms, unions typically fight for higher wages than what they’re worth.
One such example of an artificially set “fair” wage is the minimum wage. Without the minimum wage’s artificial price floor for labor, many low-skill jobs would pay close to nothing because of the lack of specialization – the more people capable of doing a job in the free market, the less that job is going to pay.
Without a minimum wage, our economy would have much lower unemployment, but we’d probably have a larger separation between the rich and poor. And as a society, we’ve determined that we want to have a price floor for labor in order to maintain certain standards for pay.
Okay. Now having said that, the NBA Lockout is completely different.
Wages in the NBA are artificially capped instead of being artificially propped up. LeBron James made a shade over $16 million last year, but according to sports economist David Berri, James’ production may have been worth nearly $46 million!
In fact, the last collective bargaining agreement mandated these types of discounts for owners. The rookie scale ensured that young players like Blake Griffin and Derrick Rose, who would have absolutely commanded all-star money in the free market, were stuck earning tens of millions of dollars less than what they were worth.
The owners have made the argument throughout the lockout that they’re in the midst of an “arms race.” The current system supposedly creates a prisoner’s dilemma that forces them to spend themselves into financial losses, and therefore they need a strict collective bargaining agreement to protect them from themselves.
This is a ridiculous notion. There are plenty of “arms races” in the business world, and that competition drives up the value of labor, especially in specialized markets like technology and science. This phenomenon doesn’t force corporations into losses. A smart business owner always analyzes the marginal return of each worker they hire. You simply don’t add workers that cost more than they produce.
Why are we trying to blame the workers for what amounts to a lack of business acumen from the NBA owners?
And here’s the thing: the players aren’t even asking for free-market wages. They’re actually giving the owners major concessions, despite the reality that the last CBA capped their wages both directly on the individual level and indirectly on the team level (due to the luxury tax). Players are already receiving a raw deal in the free market, and in these negotiations they’re willing to give up even more!
This type of arrangement would never happen in the real world. But in the world of sports leagues, we’re supposed to just accept this blatant disregard for player value. Owners are arguing that they should be guaranteed a profit, regardless of how poorly they run their businesses. This line of thinking makes absolutely no sense in a capitalistic society.
The truth is that this isn’t your run-of-the-mill union/owner negotiation. This is a blatant example of an oligopoly (the 30 owners) colluding to force their workers (the players) into lower wages.
Right now, the story seems to be “Will the players cause a lost season by not making concessions?”
The story should be, “Are the NBA owners violating U.S. antitrust law?”
I would argue yes. And I’m a Republican.