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Friday, September 26, 2014

"Regulate It First, Learn About It Never "- Gary Galles

Regulate It First, Learn About It Never - Gary Galles - Mises Daily



"People are generally aware of the positive power of compound interest when deferring consumption in favor of productive investments. But more important when it comes to public policy is the destructive power of compound ignorance."

Critique of "The NCAA Racket" by Andrew Syrios

The NCAA Racket - Andrew Syrios - Mises Daily



While Mr. Syrios provides some valid points, the overall article is filled with mis direction, missed points and mis understanding.



This is an incomplete analysis, as it accepts the false premise pushed forward by the main stream media. While I have no issue with the analysis with the corporate cronyism that takes place with the construction of Sports Arenas, Stadiums, or Convention Centers, it mixes in many notions that are not logical, and do not pass the economic sniff test.



First of all, lets address the notion of Mr. Shabazz(UCONN' Men's Basketball Star) "going to bed hungry",  Mr. Shabazz does starve at times not because the school choose not to feed him, but simply because he makes that choice. Think about it: How does one build a successful athlete, thus a successful athletic program by starving the athletes? Utilization of any logic, this point of "starving the athletes" makes no sense. Moreover, the NCAA allows for the student athletes to receive the same meal plans as the other students.   This comment of "going to bed hungry" does not imply that the NCAA or UCONN seeks to starve him. This is just as risible as saying, "I am a Economics Major at UCONN, and I sometimes go to bed hungry." Does this mean that the Econ dept is starving its students?



Secondly, athletes are paid. Their wages are simply paid with the barter of tuition, room, board(meal plan), books, etc in exchange for their athletic skills.  If the athlete thinks he/she is worth more money, he/she will go pro. Since most draft picks do not make the big money, the market wage of the aforementioned benefits is their true market wage. Let us take the example of UConn. If you take the out of state and the in state totals of $50k and $25k, the average tuition, fees, etc come to $38k per year. This is the trade off, thus the "wage" the student athlete receives.



Thirdly, most Universities are not "making a profit" from college athletics. As per the Knight Commission's study on College Athletic programs, only 7-10 College athletic programs actually break even or make a profit....without subsidies. With subsidies from student fees, and the like, that list grows to a whopping 12-15. Side note: All "profits" are ephemeral, as they are simply the rents on the initial investment into the program, net the natural rate of interest.


Lastly, the writer creates a false equivocation with stating the NCAA has the power to block out competition, as he compares the NCAA to the Government. Yes, it is a cartel, but it is a very specific sort of labor/management relationship...the writer fails to mention the monopsony relationship that exists. These athletes have a special labor skill, as they are speculating that the athletic program will help them improve their skills to "go pro". So, an athlete will choose a program that has the best coaching staff, best facilities, best academics(cough couch), excellent TV exposure, etc etc.  There is limited competition simply because there exists very few individuals who can perform these skills at the highest level.



In closing, When a high school prospect leaves school, there are no armed guards whisking them off to UCONN and starving them simply to play basketball. This entire polemic regarding the NCAA making money off the student athlete is a watered down Marx Labor theory of value, which has been debunked countless times. I do agree with the writer that the NCAA/Athletic programs should stand on their own merit, and not get tax payer subsidies for the construction of stadiums and arenas. I also propose that there should be a separation between academics and athletics, as these two should never be mixed. I am curious on why the Yankees do not perform research on the cure for brain cancer?

Thursday, September 4, 2014

The Unseen Costs of the Minimum Wage

The article titled, "The Unseen Costs of the Minimum Wage " by Josh Grossman  from Mises Daily, explains the "seen" and "unseen" costs of minimum wage laws. It is a form of price control, as it shifts and alters the supply of labor in the marketplace.

A Key excerpt:

"By raising wage rates, the public can see their states’ minimum-wage earners making more money. This is the factor that is seen. What is unseen is the number of jobs destroyed or citizens who would have been able to obtain jobs if the minimum wage were never raised in these states in the first place."



Davis-Beacon Act of 1931 is an example of a special type of minimum wage act, as it make it more difficult for lower skilled laborers. A video explaining this: