Socialism: Sports vs The Economy

Posted: February 6, 2012 in Economics
Tags: , , , ,

The following video was shared with me, either in the hopes of convincing me Socialism is good or as a joke, by someone who believes in socialist ideas. Although it may have been shared only in jest, it is very misleading and the issues need to be discussed. Please click the link to watch the video

Please click the link below if the video does not play

Bill Maher – Irritable Bowl Syndrome

The video leads people who don’t think past the information presented to believe that because there are positive socialist aspects in sports, it proves that socialism is good. It should be noted immediately however that the economy as a whole does not function in a limited environment like that of a sports system.

The video says that football, which is one of the biggest sports in America, is great because of its structure based on socialism and is bigger than baseball. It points to the fact that money in football gets pooled together so that one team does not have too big a monetary advantage over another. It also points out that baseball, whose structure follows more of a free market principle, does not have a revenue sharing system. The video would have you believe that football is bigger and better because the Super Bowl gets many more viewers than the last game of the World Series.

Football might be bigger than baseball, but to base it on this bit of information is a perfect example of how statistics can be wrong, and how they never give the complete picture. These stats don’t consider that the Super Bowl might be watched by people for reasons other the attractiveness of the sport. I’ve watched many Super Bowls, and yet I don’t really care for the sport. I watched them because friends used it as an excuse to get together and have some fun. It is due partly to the hype that surrounds the game. This stems from the fact that it is a one game winner takes all final and also that there is a lot of supplemental entertainment that people tune in to watch. On the other side, the World Series is just that, a series. There are less people interested in watching a final that might not even be the final. Marketing, a free market tool, is one of the reasons why the Super Bowl is so big. The number of Super Bowl viewers has been rising year after year for quite a while, yet it does not seem that the number of NFL fans have grown year after year by the same factor. This leads me to believe that there must be another reason people watch the Super Bowl other than for the pleasure of viewing the sport itself.

I’m not saying major league baseball is bigger, but we can’t assume the NFL is “better” on this one statistic alone. Assuming the NFL is bigger than Major League Baseball, and I do think it is, we can’t say it’s due to the monetary structure of how the system works. There is so much more to what people value in sports than the amount of revenue the players and teams recieve. If you had two different football leagues marketed in the same way to the same people in an isolated environment, you would be able to test which system attracts more people. In this case, you not only don’t have an isolated environment, but you have two different sports.

If you were to take hockey for example, it is not due to the financial structure that countries close to the equator aren’t as interested in the sport as Canadians are. It is due to the appeal of the game itself.

Everything I just pointed out doesn’t even matter when we get to the real point however. Even if the sport did succeed more due to the socialistic methods pointed out in the video, it is no model for the economy as a whole. A sport will appeal to a particular audience, and there will be a limited number of people in that audience. You can do some things with the sport to attract more people, but the wealth available for that sport will be somewhat limited to the size of its audience. One team in a sport cannot do whatever it likes to attract a bigger audience by playing by its own rules – it has the rules of the game to follow. So a team in a sport cannot operate freely in its market like a company in the real world can. It can’t actually do much to generate wealth, but must operate in the confines of the rules of the league to earn what money it can.

In today’s economy this can be viewed as similar to entrepreneurs today operating in countries with a very complex system, but there are some major differences. In sports, you can’t do too much to generate new wealth, but are limited to the appeal of the sport and fighting for a share of the market. In the general market, you can produce whatever you like, and through this production, wealth is created. There is not a limited amount of wealth in a free market that people need fight over. If there was a limited amount of wealth, then we would be no better off today than 1000 years ago. A poor person today lives better than kings in medieval times. This is due to new wealth created by entrepreneurs who have set out to provide a product or service which people want, and received monetary compensation for it.

You can also argue that the socialism aspect hurts the appeal of the sport in a few ways. With teams not having to exert much effort on their own to market themselves, they will not have as big an incentive to improve their TV ratings. If a team is located in a poor market, it is likely they will stay their much longer than desirable because they don’t have to worry as much about being profitable. It is likely that there is another city that would benefit much more by a team’s presence and in turn reward the team by giving back to the team and the sport. The shared revenue aspect of the NFL leaves teams with less of an incentive to move to the new market. In other sports, like baseball, if the team’s audience is too small to be profitable, it is forced by the free market to move to a more desirable location.

If our countries worked like the NFL does, giving everybody an equal share, it is obvious that the economy would tank. Why would someone have an incentive to work hard and take more risks than someone else if he couldn’t reap the rewards of his labor? Why would someone do more work when he can get his “fair share” by doing nothing?

One other thing I would like to discuss here, although not in the video, is the idea of socialism creating an even playing field. In the discussion of the video, the other party was pointing out that socialism promotes an even playing field and that is one of the appealing aspects about it. It must be pointed out that this is far from the truth about socialism in practice, but is in fact true about a free market economy. A level playing field means everyone has an equal opportunity. Under socialism, people don’t have an equal opportunity because you have the rewards from one individual’s labor given to another. Getting punished for producing more of what people want is not equal to getting something for providing nothing. Under a free market, no one gets any special favors and everyone has an opportunity to surpass anyone else around them based on their willingness to serve.

Don’t use the examples of today’s economy to point out that opportunities in the free market are not equal. We don’t have a free market, and never have in the past. There is a great quote I heard that is applicable here. “It’s not that the free market has been tried and found wanting, it is wanting to be found tried.” – Chris Brady

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