I still cannot understand that seemingly reasonable people in the baseball media continue to parrot the owners bargaining stance regarding implementation of a "slotting" system to determine bonus payments to players drafted.
There has been am "informal" gentlemen's agreement to hold bonus payment down by agreement, but over the last few years, this agreement among thieves has broken down time after time, allowing the better teams to draft quality players later. This circumvents the basic purpose of the player draft, which is to drive better players to less successful teams and allow them to rebuild and become competitive.
So the fix is to formalize the "unwritten" agreement?
This ignores one of the fundamental weaknesses of any price fixing agreement within a cartel--which is what the major league owners are--which is that they tend to break down due to "cheating" by cartel members looking out for their own best interests individually.
It happened when the agreement was informal, it will happen when the agreement is formalized. It's the nature of the beast. People will always look out for their own selfish interests first, even after they have agreed with their partners to act in the interest of the assemled group.
The slot system is a great idea for the owners, if they could ever adhere to it.
It rallies the pitchfork and fire carrying crowd in the media to rail against "greedy, overpaid" players. This appeals to "Joe Six-Pack", who theoretically has to pay higher ticket prices. I say theoretically, because there is no correlation between rising players salaries and rising ticket prices.
It pits veteran players vs. rookie players, who haven't played in professional baseball and are not represented within the players union. Here is where the union generally steps in as the adult in the room to prevent the veterans from hurting themselves by understanding the concept that diminishing on class of players rights diminishes all players rights. And salaries for that matter. I mean, get serious guys, do you honestly believe that the savings the owners will get by suppressing rookie salaries will flow to you? If you do, I still have that bridge in Brooklyn for sale. You might be interested.
The whole concept is good PR for the owners, but bad policy. It won't work. If by working we mean driving down salaries. Don't even get me started on driving better players to lesser teams. That's not even on the owners radar screen.
The reason it won't work jumped out of the page at me when I was reading an investment newsletter "Reflections" by John Gilbert, CIO for General-Re New England Asset Management.
Mr. Gilbert was describing the futility of price fixing in an investment context when he said:
Price fixing is always and everywhere a bad idea because it distorts the allocation of finite resources by deluding the people who make such decisions. It can work for a while, since in the short to intermediate term, politics trumps economics. But economics wins over time. Unfortunately, the longer the distortion continues, the greater the adjustment to a market level when it happens.
To paraphrase:
- He is saying in absolute terms, it is ALWAYS a BAD IDEA.
- It is a distortion designed to delude people into foolishly parting with their "allocation of finite resources" (ie: MONEY).
- It is a short-term fix at best.
- It is a triumph of politics over economics. Remember, this is supposed to be an economic fix.
Sounds great, where do I sign up for this type of fix?
It seems however, as if ultimately politics may trump economics in this case. We will have to see how it plays out and we won't know for sure until five to ten years have passed. It stinks if you are a player coming out in the next five to ten years though, doesn't it?
Basically, I am fundamentally opposed to the idea of price fixing, on the basis that it is illegal in most economic situations. The concept of 1) forming a cartel, 2) which will agree to do something illegal and then 3) cheat on each other internally, sounds like compounding of a bad error in policy. It seems like a policy doomed to fail.
It's strange that many in the baseball media reflexively support the concept and do not do any more than a modicum of thinking or research to find out if it would actually do what the owners say it will do. Isn't it? Your right, it's not strange at all.
That's part of the problem.
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