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player ready...Free markets are best … as long as they work for me.
How’s that for the new motto of American business?
It would look good engraved in Latin around the emblem of, say, the U.S. Chamber of Commerce. Something like: “Liberi mercatus sunt optimi . . . dummodo laborant pro me.”
The unfettered free market-whether in international trade, labor or consumer goods-has become the No. 1 credo of American business. Never more so than now, as corporations battle a federal government bent, we are told, on regulating everything from health insurance to the length of maternity leaves.
Throughout last year’s debate on free trade with Mexico, big business pounded home the advantages of open markets for products and labor, as opposed to the self-defeating folly of tariffs and protectionism.
Sounded good. Even this observer, who wonders whether truly free markets exist anywhere outside of textbooks, picked up the chant for NAFTA.
Only now it turns out that certain markets, particularly labor markets, can be too free. So free that they’re bad for business . . . and therefore must be curtailed for the good of all.
Say what?
I’m referring, of course, to America’s free market in professional baseball talent.
Turns out that highly skilled workers cannot be allowed to auction their services to the highest bidder in certain extremely competitive industries. Because if they do, business owners will be tempted to spend more than they should in order to gain a competitive edge. This curbs profitability for all and makes it impossible for some to keep up.
This would be OK in most industries, in which companies that fail to compete simply go bankrupt. But it cannot be allowed to happen in the world of professional team sports, where it is necessary to maintain a degree of parity among all the teams to sustain the interest of the customers. Fans wouldn’t show up if it were a foregone conclusion that teams from New York and Los Angeles, because of superior resources, always would prevail.
There are two ways out of this trap.
The richer teams could share revenues with the poorer ones so that both could go on bidding for talent. The problem, of course, is that business owners don’t like sharing that which they believe, in their Calvinist souls, they have earned fairly and squarely through diligence and hard work. Besides, this wouldn’t solve the problem of escalating wages and pinched profits.
Or the teams could get together and agree to stop paying more than a certain amount for talent-the so-called salary cap. This is the owners’ preferred option. It’s also very anti-competitive, in the sense that it would end the free market in baseball talent.
But the public must understand that what’s good for the goose isn’t always good for the gander.
Take a company such as Wal-Mart. Under the banner of free markets, the big retailer champions duty-free importation of low-cost Mexican-made goods and its ability to pay non-union clerks as little as is necessary to compete with Kmart and Venture.
But that doesn’t mean that Kansas City Royals Chairman David Glass, who also is CEO of Wal-Mart, needs to pay his ace pitcher, David Cone, however much a 20-game winner can command on the open market.
Like the National Guard, the concept of a free market is something to be summoned up when needed. At other times, it’s best left in the armory.
Fortunately for American business, this kind of confusion doesn’t arise all that often. Except in a very few talent-sensitive industries, such as show business or professional sports, workers are interchangeable and getting more so all the time. If one employee doesn’t like the pay or working conditions, there’s always another willing to take his or her job.
Now that the government has decided that an unemployment rate of about 6 percent is desirable so as to avoid (gasp!) wage inflation, employers can count on a full drawer of job applications.
The difficulty occurs in those few instances-such as baseball-when workers turn the tables on management and use the free market to gain the upper hand.
Fortunately for the owners, there is little sympathy in the working classes for “millionaire” baseball players. Most people know nothing of the unpaid hours the athletes put in once a coach or scout marks them as a prospect. Most don’t know that major-league teams recruit dozens of kids for every one who eventually makes it to the big leagues.
What most people do know is that there are hundreds of seemingly “average” major-leaguers, many of whom chew tobacco and struggle with adverbs, who couldn’t possibly be worth the average salary of $1.2 million a year.
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And one other thing most people know: Free markets are best.
They’re told that all the time.
The rest of the motto they have to learn for themselves.