Category: Economics and Inequality

Neoliberal Baseball

Taken in one way, the famous book (and then movie) Moneyball is a paean to the benefits of untrammeled competition. Some of the allure of sports is that it seemingly offers pure, uncorrupted competition, unsullied by issues of inherited advantage, racist prejudice, access to information unavailable to other competitors, or an uneven playing field structured by rules/laws that favor some players more than others.  Walk onto the baseball field, where the rules are openly known to all, and the umpires are impartial—and the results will go to the team that plays better.  (The Astros’ sign-stealing violates the equal information requirement.)

In Moneyball, intelligence and innovation succeed by doing what capitalists are supposed to do: find a more productive, cheaper, and better way to meet a need.  In this case, the need was to win more baseball games over a season than the competition.  And to do so while spending less money on payroll.  The trick was to value things the market didn’t value—and thus get productivity at a lower cost.  The stone the other builders rejected would be the Oakland A’s path to success.

Someone in the music business once said that the person who gets rich is the one who does it second.  The market needs to be softened up by the innovator—and then the copy-cat gets the biggest rewards.  Professional baseball embraced the “analytics” that drove the A’s innovative approach over a ten year span (or so). 

But—and here is where neoliberalism comes in—the terms of the embrace ended up reversing the priorities.  It no longer became a question of winning, except insofar as winning increased the bottom line.  Economics triumphed over the ostensible point of the whole pursuit—which is better called “the whole enterprise” at this juncture.

One key move was the conversion of WAR (Wins above Replacement; the key general numerical summary of a player’s contribution to his team) into money.  One WAR is deemed to be worth $8 million (that’s a 2018 figure; perhaps it has crept up a bit.)  In game terms, one WAR means a player will over a season of 162 games contribute to the team winning one more game than an “average player” would.  Added to the calculation of WAR is the ZIPS forecast system, which uses a player’s own history and a series of historical comparisons to predict the player’s likely future WAR over a given span of time.  In short, analytics produced a “scientific” measurement of any player’s “value.”  So much for market processes setting the price.  Now there was an “objective” measure of price. 

One more fact about baseball as a business needs to be added.  Players in baseball require a longer period of development than in basketball and football, the two other major money making sports in the United States.  Players can come straight from college (or even high school in the case of basketball) into the two other sports; there is usually two or three years (sometimes more, fewer times less) in the “minor” leagues before a baseball player is ready for the big time.  To compensate teams for subsiding these development years, those teams get to employ (the term used is “control”) players for the first six years of their major league careers.  In other words, players cannot participate in an open market competition for their services until they have worked for six years—often at a very significant discount from what they could earn if all teams could bid for their services.  There is no free market for the vast majority of players—since less than 30% of players even last six full years in the majors.

What has been the effect of this collision of analytics with the player control system?

Basically, teams now covet the younger, cheaper players as the way to keep operating costs down, while being willing to pay large contracts to “super-stars” (Mookie Betts, Gerrit Cole, Bryce Harper, Mike Trout).  The ones left holding the bag are the players who have been good enough to last six years in the majors, but who are in the one to two WAR a year range.  Few teams are now willing to pay (for example) $12 million a season for a player who is one to two games above the younger player who can be had for about $1 million for the season.  (Yes, it is possible to have a negative WAR; those are the players who don’t last.  As would be expected, a very large group of players clusters around the mean of 0 WAR; after all the whole system is built around identifying what is “average.”)

Let us now count the ways that this all resembles neoliberalism (admittedly an inexact term; but one taken in this instance not to refer to increasing privatization of once public functions, but to the current brand of capitalism that combines loud praise of free markets with various practices that, in fact, stifle competition; places economic return over all other considerations; and has a set of by now familiar strategies and consequences.)

1.  The evisceration of the middle class.  Baseball teams are trending toward having a top 10% (the superstars) on the big contracts and a set of disposable younger players cycling through during the “control” years.  The same growth of economic inequality we have been experiencing in the general economy.

2.  Taking advantage of the way the market is structured as the key to making money.  It is not through innovation, increased productivity, or a better product (see # 3 below on this point) that making money most depends.  Rather, the real key to financial success is working the system in your favor.  Competition is anathema to the neoliberal capitalist—as is risk.  The goal is to grab market share that is immune to competition and ensures little to no risk.  In baseball’s case, market share is secured by the control system and privileged access to the teams’ regional market.

3.  Branding is more important than the quality of the product.  It turns out that if you can maintain a loyal fan base, placate them with a superstar or two, then it doesn’t matter if you have a faceless supporting cast.  (College basketball has taken this to its ultimate logical absurdity, cycling in a new cast of characters every single year.)  The loyalty is to the team, not to the players.  Surprisingly, even winning and losing don’t matter than much given the bars to actual competition.  Yes, winning puts fans’ butts in the seats.  But it doesn’t much impact TV revenues so long as teams get to carve out their regional market—and keep other teams out of that market (as league wide rules enable.)  In short, a shoddy product is no bar to economic success.  Sound familiar?

4.  That the downsides of selling something mediocre are so low is because the real profits come from financialization, not from sales of a product.  Baseball teams are speculative investments—and like California real estate only seem to go up in value.  When the Kansas City Royals are sold for over $1 billion dollars in 2019 by someone who bought them for $96 million in 2000, even losing money on day-to-day operations over that 19 year period is a winning move.  In neoliberalism, it is the company’s overall valuation that is the source of wealth, not what it actually does or delivers for consumers. 

5.  Finally, it is worth noting that neoliberalism is usually associated with aggressive privatization.  But (as Christopher Newfield has demonstrated beyond doubt in his analyses of the “corporatization” of American public universities), the actual practice of neoliberalism (pharmaceutical companies are a great example) is to push certain costs of doing business (basic research for the pharmaceuticals, health care for its workers for Walmarts and McDonalds, transportation infrastructure for just about everyone) on to the public ledger in order to maximize its profits.  There is no more egregious example than the way professional sports teams get municipalities to build hugely expensive stadiums—ones that have a shorter and shorter life span. 

Moneyball may seem a charming story about how the wits of little Jack triumph over the Giant.  But we need to see how the Giant, although a little slow on the uptake, becomes the one who recovers to restructure the field once again to his advantage.  And how the Giant in the process repeats that classic move of economic activity: substituting the desire to accumulate wealth for the actual activity that was the original pursuit.

More Post-Election Musings

In response to my last post, my colleague Max Owre wonders why Democrats cannot convert the majority of voters who agree with liberal policy proposals (medicare for all, increased minimum wage, higher taxes on the rich are some prime examples) into votes for Democratic candidates.  And another colleague, Sabine Gruffat, tells us that her father voted for Trump on the basis of Trump’s being good for the economy and out of the conviction that the Democrats’ “socialism” would lead to economic disaster. (Their responses are on my Facebook page.) 

It doesn’t matter for many voters that any objective measure shows that Democratic presidents since 1930 (Eisenhower is a notable exception) have been better for the economy than Republican presidents.  (Greater over all growth rates under Democrats, and a more equitable share of that growth across the board. Links below.)  Similarly, surveys that show a majority supporting government financed medical care also show that voters don’t believe that Republicans have tried (and desire) to shrink Medicare and abolish the popular pre-existing conditions rule that is part of ObamaCare. 

But much more important than this ignorance is to realize (despite what political junkies would like to believe) that policy has almost nothing to do with how people vote.  The Republicans have won the rhetorical war over the past sixty years; they have managed, against all evidence, to brand the Democrats as socialist, unpatriotic, bad for the economy, and hostile to the economically bereft unless they are non-white.  The increasing “partisanship” of the U.S. political scene is a product of the deliberate strategy of demonization that was initiated by Newt Gringich in his attempt to delegitimize the Clinton presidency.  That effort was then taken up by the right wing media, has continued unabated to this day, and has been a fabulous success.

Recently, the novelist Joseph O’Neill has recommended a similar strategy for the Democrats.  They should, he argues, brand the Republicans as the party of incompetence and malevolence—a party that is unfit to govern.  Whether he is right or wrong on the specifics, the larger point is that it isn’t policies that win votes, but the “big picture” characterizations.

Driving this point home, of course, is the fact that the Republicans had absolutely no policy proposals for this election.  They dispensed altogether with writing a platform—and the voters barely noticed and certainly didn’t seem to care.  Policies are for nerds.

The reason this election has been so disappointing to Democrats is that, contrary to what we hoped and believed, Donald Trump has not hurt the Republican brand.  While his odious behavior turned off enough voters to give Biden the win, the craven enabling of that behavior by rank and file Republicans had no downside.  The Blue Wave (we had one in the 2008 repudiation of George W. Bush) did not occur.  Down ballot Republicans pulled more votes than Trump, with a gain in House seats (unusual for the party that loses the presidency) and holding their own in the Senate.  The country has not come to see the Republicans as a party unfit to govern.

Here’s where I don’t quite know what to think.  The down-ballot Republicans did better than Trump.  Yet I also believe that the strength of the Trump cult largely accounts for the huge turn-out on the Republican side.  After this election, will those Trump voters go back to not voting? The dilemma for the Republican party going forward is how to keep the Trump enthusiasts engaged even as the party either backs away from Trump-like antics or discovers that even would-be Trumps can’t reproduce his hold on the public imagination.  The Republicans are tied to the mast of Trump because of all the new voters he has brought to them, but will find it difficult to hold on to those voters to the extent that they act even semi-responsibly as public officials.  (“Holding on” here does not mean losing them to the Democrats; it means keeping them fired up enough to come out and vote.)

Doubtless, several Republican presidential candidates in 2024 will attempt to occupy the Trump lane.  But I suspect Trump will prove inimitable.  His ingenuous self-absorption, his lack of any filter between id and mouth, his ADHD coupled with third-grade verbal aggression, and his sheer delight in sowing chaos as a means of keeping all eyes turned his way will prove hard to reproduce via calculation.  The easiest part of his repertoire to imitate with be the endless self-pitying sense of grievance, of being put upon by all.  Expect lots of whining from the Republicans to continue.

Still, the 2016 primaries already showed that Ted Cruz cannot attract the adulation Trump received and it is even more absurd to think Mike Pence could.  Without a cult figurehead on the right, there is a fair chance that voter turnout will return to earlier levels—and that such a drop-off (despite all those Democratic fantasies that large turn-out favors them) will benefit the left more than the right.  More accurately: in our polarized time, when the party’s “brands” and the loyalties of most voters are fixed in concrete, the biggest fight is the turn-out fight, and I think Republicans are going (post 2020) to have as tough, if not tougher, time getting their partisans to the polls as the Democrats.

Meanwhile, the claims in the left-wing precincts I frequent that it was the moderate Democrats who lost and the progressives who won (especially in House races) have begun.  The Democrats just need to move to the left to be more successful.  That analysis is willfully blind to the make-up of the House districts.  Of course, progressives win in overwhelmingly “safe” districts.  And moderates lose sometimes in “swing” districts.  Republican gerrymandering leads to more extreme House candidates on both sides of the aisle because there are so many “safe” districts now.  To ignore the nature of the districts to make the leftist argument is specious.

I get it.  It is frustrating as hell that the Republicans have achieved electoral success by moving further and further to the right.  Extreme conservatism does not (apparently) carry any electoral cost.  (Although Trump did lose.)  So why can’t the Democrats make a similar move to the left and reap the benefits?  Unfortunately it doesn’t work that way, as Kevin Drum is fond of reminding us by reproducing the long-running Gallup survey that shows over 35% of Americans self-identify as “conservative” while only 24% are willing to call themselves “liberal.”

If the Democratic party wants to move left, it has to create a left-leaning electorate first.  That’s the rhetorical task it has flunked since 1966  The reasons for that failure are complex—and intimately tied up with the ongoing narrative of American racism—but a failure it has been.

Of course, it is not just the Democratic party that must do this work.  It will also depend on vibrant, long-lasting, and active social movements.  The gay liberation movement (sorry for the ham-handed label; I grasp its various inaccuracies) has been a notable success over the past thirty years.  If many of my non-politically informed or engaged students are now knee-jerk Democrats, it is mostly because the right’s hostility to non-heterosexuals is baffling to them—and a huge turn-off. 

The spectacular failure of American politics since 1966 has been to develop strong social movements around economic issues.  Martin Luther King tried—and might have succeeded had he lived.  The unions have not gone down without a fight, but they have mostly gone down.  And nothing substantial has arisen in their wake.  The living wage movements have had some successes—and even Florida has just voted (by over 60%!) for the $15 minimum wage.  So it is not an utterly bleak landscape.  But there is much work to be done.  Reverend William Barber’s admirable attempt to revive King’s Poor People’s Campaign has not gotten much traction yet, but it is early days.

For me, that’s where the action is.  Creating that electorate open to the left’s bread-and-butter issues even as it acknowledges the inequities (not just economic) foisted on POC in our country.  And that work is going to have to take place as we leftists also watch how Republicans try to catch the Trump lightning in a bottle in their ongoing effort to direct America’s course in a vastly different direction. 

Links:

On relative economic performance under Democratic and Republican presidents.

On voters’ refusal to credit actual policy preferences of the Republican party:

https://www.vox.com/21502189/preexisting-conditions-trump-republicans

Joseph O’Neill’s advice to the Democratic Party:

Survey of Americans who label themselves conservative, moderate, or liberal:

It’s Not the Money

Contrary to what the commentators on ESPN and Sports Illustrated are saying, the dispute between the players and the owners that is preventing baseball from coming to an agreement on how to have a 2020 season, is not about the money.  Everybody says it’s about money.  It’s about power.  America’s oligarchs hate employees having the slightest modicum of leverage.  The owners want to “break” the players, want to make them eat shit–and they will happily forego the season (and “damage the game” as all the commentators keep piously saying) to prove they hold the whip.

Not only are the sums they are haggling over risible in relation to the owners’ wealth (none of the stories even divides the gross sum by thirty to show what each individual owner’s losses would be), but (as a Five Thirty Eight article has shown in detail) the owners are also with 99% certainty lying about the financial hit they would take. [https://fivethirtyeight.com/features/mlb-owners-say-they-could-lose-4-billion-even-if-games-are-played-does-that-math-add-up/] That, of course, is why the owners refuse to open their books to the players.

Another Five Thirty Eight article shows that the average player has a career of less than four years (thus failing to meet the five year minimum for a pension and other lifetime benefits) and makes less than two million dollars total. [https://fivethirtyeight.com/features/how-much-money-do-mlb-players-really-make/] And that is after losing money during their years of minor league play, where they do not receive a living wage.

This all, of course, is par for the course in the world of “private equity”: no accountability accompanied by every imaginable dodge to evade taxes, strip value, and move money from the bottom up to the top.

Equity is the operative term here. The owners’ complaints about lost revenue are mostly a red herring.  Owning a baseball team is more like owning a house than owning a business.  The big return on investment is not from revenue, but from the growth in the value of the franchise over time.  You cash in big time when you sell the team, not during the years that you own it.  Plus you get the status of belonging to one of the most exclusive clubs in the world. Only thirty members.

The fury against workers on the part of employers (how wonderful that in baseball they are called “owners”) is part of the ugliness of our time, when the worst impulses of the powerful are openly, even proudly, on display–and the relentlessness of their sadism (a greediness that gains its edge, its frisson, by being augmented by cruelty) dismays, appalls, and baffles.  Such an expenditure of energy on nastiness.  Don’t the uber-rich have better ways to spend their time and money?  What happened to pleasure?

The players’ resolute (thus far) stand really is the proletariat striking back.  And similar to the ways that George Floyd’s death and the subsequent protests have changed perceptions of racism and the police, the needle of public opinion has moved somewhat (although not quite enough).  Unlike what happened in previous labor disputes in baseball, this time the players are not getting all the blame from the public.  Opinion is more divided, although nowhere close to all in the players’ favor.  The success of neoliberal ideology is manifest every time the public echoes the hatred of unions–a hatred that goes hand-in-glove with the concerted efforts by business (aided by the courts, Congress, and the regulatory state) over the past eighty years to destroy unions.

Milton Friedman claimed capitalism could not be discriminatory because that interfered with economic efficiency.  Surely, some competitor would arise who didn’t have those sexist, racist, and/or religious biases and would, because more profitable, drive the discriminators from the field.  Laughable in its naiveté and in the ability of theory to blind you to what is right there in front of your eyes.

The overlords hate it when people get “uppity”—whether the offenders are workers or people of color or “the weaker sex.”  Keeping—or putting—people back in their place is priceless, a motive worth every penny lost for it.  The economic history of the American South shows that Friedman, in a certain way, was right.  Discrimination does lead to poorer economic outcomes.  But the profit motive isn’t strong enough to overcome the will to discrimination.  The baseball owners will bite off their nose to spite their face.  They will destroy baseball rather than enter into a partnership with their players, a partnership that would introduce a modicum of equality into the relationship between capital and labor.

Economic Power/Political Power

A quick addition to my last post.

The desire is to somehow hold economic power and political power apart, using each as a counterbalance against the other.  To give the state absolute power over the economy is to insure vast economic inequality.  Such has, generally speaking, been the lesson of history.  Powerful states of the pre-modern era presided over massively unequal societies.

But there is a modern exception.  Communism in Russia and Eastern Europe did produce fairly egalitarian societies; in that case, state power was used against the accumulation of wealth by the few.  There still existed a privileged elite of state officials, but there was also a general distribution of economic goods.  The problem, of course, was a combination of state tyranny with low productivity.  The paranoia that afflicts all tyrannies led to abuses that made life unbearable.

But (actually existing) communism did show that it is possible to use state (political) power to mitigate economic inequality.  Social democracy from 1945 to 1970 was also successful in this direction.  Under social democracy, the economy enjoys a relative autonomy, but is highly regulated by a state that interferes to prevent large inequities.

Where there is some kind of norm that political power (defined as the ability to direct the actions of state institutions) should not either 1) be a route to economic gain or 2) be working hand-in-glove with the economically powerful to secure their positions, the violations of that norm are called “corruption.”  The Marxist, of course, says that the state in all capitalist societies (the “bourgeois state”) is corrupt if that is our definition of corruption.  The state will always have been “captured” by the plutocrats.

What belies that Marxist analysis is that the plutocrats hate the state and do everything in their power (under the slogan of laissez-faire) to render the state a non-player in economic and social matters.  Capitalists do not want an effective state of any sort—either of the left, center, or right.  A strong state of any stripe is not going to let the economy goes its own way, but will (instead) fight to gain control over it.  I think it fair to say that the fight between political and economic power mirrors the fight between civil and religious power in the early days of the nation-state.  The English king versus the clergy and the Pope.

The ordinary citizen, I am arguing, is better off when neither side can win this fight, when the two antagonists have enough standing to prevent one from having it all its way.

Our current mess comes in two forms, the worst of all worlds.  We have a weak state combined with massive corruption.  What powers the state still has are placed at the service of capital while politicians use office to get rich.  We have a regulatory apparatus that is almost completely dormant.  From the SEC to the IRS, from the FDA to the EPA, the agencies are not doing their jobs, but standing idly by while the corporations, financiers, and tax-evading rich do their thing.

The leftist response is to say that the whole set-up in unworkable.  We need a new social organization.  I have just finished reading Fredric Jameson’s An American Utopia (Verso, 2016).  Interestingly enough, Jameson also thinks we need “dual power” in order to move out of our current mess.  The subtitle of his book is “Dual Power and the Universal Army.”  More about Jameson in subsequent posts.

Here I just want to reiterate what I take to be a fundamental liberal tenet: all concentrations of power are to be avoided; monopolies of power in any society are a disaster that mirror the equal but opposite disaster of civil war.  Absolute sovereignty of the Hobbesian sort is not a solution; but the absence of all sovereignty is, as Hobbes saw, a formula for endless violence.  Jameson says the key political problem for any Utopia is “federalism.”  That seems right to me, if we take federalism to mean the distribution of power to various social locations.  Having a market that stands in some autonomy from the state is an example of federalism.  There are, of course, other forms that federalism can take.  All of those forms are ways of working against the concentration of power in one place.