Tuesday, January 28, 2014

Law of Unintended Consequences

The law of unintended consequences strikes again. This time, it’s happening in football. The issue is the rookie wage scale and it’s shown once again how hard it is to solve problems by executive fiat.

In 2011, the NFL created the Rookie Wage Scale (not to be confused with the Wookie Rage Scale). This scale put a cap on how much each drafted rookie could make on their first NFL contract. There were several reasons for this:
1. NFL owners wanted to cut salary cost. By price fixing the contracts they gave their rookies, they achieved that.

2. NFL veterans wanted a rookie wage scale because any money paid to rookies is less money they can get. This was because all salaries count against the salary cap. So if you pay $100 dollars to a rookie, that’s $100 you can’t pay to a pro. And many of the top rookies each year were getting paid obscene amounts of money without having shown that they were even worth it – many got paid much more than their veteran counterparts.

3. College coaches were complaining that the prospect of BIG MONEY was causing their best players to rush to the NFL and was draining the college talent pool.
So how do you fix this? You impose a wage scale with a maximum amount that each rookie can get paid. That reduces the amount that needs to be spent on rookies, allowing NFL owners to defer the big expenses, saving more money for veterans, and eliminating the incentive for college players to race to the NFL. Perfect.

The wage scale went into effect in 2011. And to give you a sense of the change, the first pick in the draft got contracts worth $72 million in 2009 and $78 million in 2010, but the first pick in 2011 got only $22 million, as did the first pick in 2012. So everything turned out roses, right?

Hardly.

As soon as college players realized that they would no longer get these mega-huge first contracts, but could get real money on their second contracts, they started heading to the NFL as early as possible so they could get through their first contracts and then seek a MEGA-huge second contract. In effect, they realized that staying in college was a bad decision because the only reason they had to stay in college was to improve their draft stock, which no longer mattered because the money no longer came from getting drafted, it came from proving yourself over your first four years in the league. So they fled to the NFL. In fact, the change has been dramatic. In 2014, 102 underclass players have entered the draft. The prior record was last year at 73. 65 came out in 2012 and only 56 in 2011. This makes perfect sense, but no one saw it happening when they passed the Rookie Wage Scale.

And that's not the only unintended consequence. This flood of talent is pushing out more veterans. There are only 1700 positions available and every one of these extra new rookies who catches on is one less veteran with a job. So while there may have been more money left for veterans because of this Rookie Wage Scale, the unintended consequence is fewer jobs for veterans.

All of this, makes this the perfect example of why liberalism never works. Consider this: (1) The NFL labor market is heavily regulated -- every aspect is controlled by the agreement of the owner's cartel and the unions. (2) There are no outside factors, no competitors, no China to outsource, no randomness. This market is 100% self-contained and controlled. (3) The problems they were trying to solve sounded like they had an easy and obvious solution. Rookies earn too much, so cut the pay and solve the problems. (4) They were able to impose the solution with all sides wanting it to work out, i.e. there was no sabotage. And yet, they only made the problems worse and introduced new problems. If you can’t manipulate an issue this simple in a market this straight forward, then how in the world can you believe you can control something as complex as healthcare or energy or the US economy as a whole?

This stuff should be obvious, but I guess hubris doesn’t do obvious.

45 comments:

AndrewPrice said...

By the way, notice this is not an Obamacare update. You may thank me for that. ;-P

Tennessee Jed said...

sounds like the name of the game is stack the game in your financial favor.

AndrewPrice said...

Jed, That it is. What I find interesting though is that this blowing up on them despite the fact it appeared so obvious that this solution would work. When you can't even control a labor market this simple and clearly defined with such limited choices, then what hope can you possibly have of controlling the US labor market?

TJ said...

Totally off topic this morning, but I thought I would share a little snow humor since we are about to get slammed here in NC:

https://www.youtube.com/watch?v=i6zaVYWLTkU

AndrewPrice said...

TJ, That's global warming for you. So hot it snows. LOL!

Here's your link: LINK

tryanmax said...

Thanks for clearing up the difference between the Rookie Wage Scale and the Wookie Rage Scale. I can't tell you how many times that has bitten me in the butt.

AndrewPrice said...

tryanmax, That's just one of the many services we provide here. :D

BevfromNYC said...

It does seem kind of like they did not think passed the salary cap. Logic would suggest that players have severely limited number of years and that they would want to maximize their bank accounts. So the earlier they start playing, the more years they have to play and the more money they can accumulate. Let's face it, many of these kids don't have much else to count on except their brawn and skill as athletes.

Maybe...if we are really lucky...Obama will DO something about that misguided Rookie Wage Scale. Because this is JUST the kind of issue that needs a Presidential Executive Order. And he does them so well too! Well, that and the "Redskins" name issue that the UN Human Rights Commission is taking up. I think if Obama signed an Executive Order unilaterally changing the name of the Redskins to something more politically correct, he could prove to the UN and the rest of the world what a great leader he really is and peace/harmony would break out all over the globe.

AndrewPrice said...

Bev, What I think is interesting is that they didn't grasp that people's incentives would change. It never dawned on them that this might give college kids an incentive to start "work" sooner. It never dawned on them that teams would happily replace veterans with these kids. Etc. That's static thinking -- a very liberal trait.

So what does this say about attempts to tinker with less simple/basic markets. Think about how few variables there were in this decision -- a fixed number of workers, fixed incomes, limited choices, no alternative markets for services, no consumers to worry about, producers acting in unison. And yet, they blew it in a colossal way. Now imagine trying to remake the healthcare system by a similar fiat where there are hundreds of millions of consumers and producers at all levels making billions of decisions each day. Or choosing industrial champions (green loan program) or picking which products consumers can buy (light bulbs). If you can't manage something this simple as 250 college kids, there is NO WAY you can handle something more complex.

That's the lesson here. But it's a lesson liberals will never learn. Like the NFL, they will lament "how could this happen?" and then propose some new solution to the new problems they created... which will cause even more problems.

This is why command economies don't work.

AndrewPrice said...

BTW, I wouldn't be the least bit surprised if our Dipsh*t in Chief decided to focus the Rookie Wage Scale (or the Wookie Rage Scale) or the Redskin name, or A-Rod's suspension, or J-Lo's butt. He lacks focus to say the least.

BevfromNYC said...

You know, I thought all of these high-thinkers in high places were supposed to be the really smart ones who know what to do. Why can't they think things through? Because you KNOW there's an Ivy Leaguer or 10 in the ranks of the NFL executive offices just like in the Congressional and WH Executive Offices

You know, Harvard, Yale, Stanford, pick an Ivy League school grads. Other than they have been told repeatedly that they are Harvard, Yale, Stanford, pick an Ivy League school grads and therefore they are the smart ones, I don't see it. It's kind of like the Scarecrow in "The Wizard of Oz" - he became smart simply because the Wizard gave him a diploma...

AndrewPrice said...

Bev, Nice Wizard of Oz analogy! :D

Clearly those schools are not what they claim to be if they are actually teaching their wards that they will be smart enough to reshape mankind in their own image. Liberals just don't get this -- the human race is too complex with too many varied opinions and desires for central planning ever to work in any form.

BevfromNYC said...

Andrew - And there is an old adage that I just made up -

"Extrapolate BEFORE It's Too Late!".

Or something like that anyway. Or simple "Sleep on it" would do too.

tryanmax said...

Here is an adage nearly as old:

"Let the Wookie win."

I don't know if that has anything to do with anything. But since the subject of Wookies already came up...

AndrewPrice said...

tryanmax, That's always a useful adage. :)

AndrewPrice said...

Bev, LOL! It seems the thinking about how "the other guy" will respond is beyond most people.

tryanmax said...

The other guy should do exactly what I would do, and if he doesn't, he must be evil! Unless he does something to promote diversity. Then I will have to heap guilt upon myself for my lack of understanding and respect for people's differences. A list of approved differences is on file at INGSOC HQ. This permanent register is updated hourly.

BevfromNYC said...

Hey, Tryanmax, I bet you can't say "Rookie Wookie" real fast 10 times!

BevfromNYC said...

Tryanmax - That list of approved differences should also come with a compendium of commonly used descriptive words that have been deemed "code" words for racist, sexist, and other -ist-type incendiary epithets.

it really would help to know when and with whom one can use some common words so as not to unintentionally insult someone. Take the word "Obamacare" it has been deemed racist to use this in any public conversation and will shut down any conversations about same if used.

AndrewPrice said...

Bev, The race hustlers don't want you knowing. They want to be able to attack at any time for anything, and they don't want to need to explain why their own use of said words is not racist.

AndrewPrice said...

tryanmax, It's always the other guy's fault! ;-P

tryanmax said...

Andrew, true, even when I do something wrong, it's really because of the social blinders put upon me by my white privilege. I just don't understand how good I have it. :-/

AndrewPrice said...

Bingo! Someone else is always to blame! :D

BevfromNYC said...

Oh, yes "white privilege". Not only do I have to contend with my "Jewish guilt" and "Protestant work ethic", now I have to wrap it all up in the cloak of my "White Privilege"... Oy, vey...it's like Kosher White Privilege on Rye bread with a side of sour grapes.

tryanmax said...

Can I substitute the sour grapes for sauerkraut? White guilt isn't complete without a nod to my Aryan ancestry.

AndrewPrice said...

Bev and tryanmax, You need to let that stuff go. Form a terrorist group to demand an end to Jewish guilt, white privilege and the Protestant work ethic. Call yourself FREE HONKEY! and blow up a whinery. :D

tryanmax said...

On nearly this same subject, Slate has a rather scathing editorial about Macklemore. (If you don't know who he is, he's a white rapper who wrote/performs the marriage equality anthem "Same Love" and--probably not coincidentally--totally cleaned up at the Grammys.) I won't link, but the title of the piece is "Don’t Hate Macklemore Because He’s White. Hate him because his music is terrible." which pretty much sums up the whole thing.

In it, the author rips into Macklemore for his ham-fisted and contrived approach to tackling social issues through his art. "This is rap for people who don’t like rap that makes them feel proud of themselves for not liking rap, and for buying Macklemore albums," he writes. He even goes so far to accuse Macklemore of "immoral, bleached-out hucksterism."

Where the author doesn't quite reach is the connection between white guilt and soft bigotry, despite this being the probable inspiration for the piece. Apparently after winning the Grammy for Best Rap Album, he texted an apology to fellow nominee Kendrick Lamar, apologizing for "robbing" him.

This sort of soft-bigotry won't allow the prejudicial person to see anything as fair, which then inspires him to contrive handicaps for the ones he sees as disadvantaged. Whether he attributes the disadvantage to something congenital or something social matters little, the end result is the same: he still regards the other as "lesser" and so won't allow him to contribute/compete as an equal.

Thus, a fair win becomes a robbery--though one to be merely apologized for but not amended. Even if the criteria for winning weren't exactly fair--I content Macklemore won due to social savvy and cultural prescience over musical talent--there was nothing standing between Lamar and his authoring a same-sex love song, certainly no white man.

AndrewPrice said...

tryanmax, By way of full disclosure, I do like Macklemore's "Thrift Shop" - very NSFW

On Macklemore, Macklemore is an odd character. He's made a fortune for himself completely outside the system and that makes him dangerous to those in the system. In other words, he got famous without a record contract and without the whole industry of gatekeeper sycophants declaring him relevant. Hence, he needs to be stopped because shows that these self-appointed gatekeepers aren't needed. Hence, they've been smearing him for years and I've seen some nasty, nasty articles about him -- each of which sneers that regular people like him. Blech!!

That said, he does seem to be race obsessed as the few times I've seen interviews with him, he's whining about how unfair it is that "people don't consider him genuine because he's white." Yo, he's ghetto.

On your point specifically, that is the irony with the liberal view. They do view themselves as superior. They think that minorities only succeed with the help of white liberals, and they feel very morally smug for recognizing this fact. And apologizing for winning is just their way of projecting their own racist beliefs on everyone else... everyone else who are usually liberals as well (which only adds to the irony).

Anthony said...

Got nothing to contribute about Macklemore's win. Sounds undeserved based on his two songs I've heard, but I'm kind of an old school rap fan, so I think its a strange that any rapper would care about such a thing. *Shrugs* Rap has changed tremendously since the 90's in no small part due to almost universal acceptance.

Its also worth noting that white rappers have been around for a while (first group that spring to mind is the Beastie Boys, but maybe there was somebody before that). The first white guy I can remember controversy swirling around if Vanilla Ice. However, I think rap is past the stage where they worry about race or authenticity. Nowadays rappers do duets with bubblegum pop acts like Justin Bieber and Katy Perry.

Anyway, I came here to post a link to a fascinating article I found which claims that the left took over pop music only in the middle of the last century. My knowledge of music history isn't comprehensive enough to know if the guy is telling the truth, but it certainly sounds plausible. Its about the influence of the recently deceased folk singer named Peter Seeger. His name didn't ring any bells with me, but I have heard his music in a lot of commercials and movies.

http://www.city-journal.org/html/15_3_urbanities-communist.html

tryanmax said...

Anthony, very intriguing article. I agree completely about the importance and influence of popular culture. My only other comment is to observe that Bob Dylan has long been coy about his political leanings. I don't care to speculate about who he votes for, but I will openly suggest that Dylan doesn't perfectly align with the movement he was such a prominent member of.

BevfromNYC said...

Hey, the SOTU is about to start. I like by T.V. so I won't be watching. My tenuous grasp on sanity wouldn't survive and neither would my T.V. But if anyone is strong enough to watch, let us know...

T-Rav said...

I might have the TV on, but I'll be concentrating on working on my German, i.e. doing something useful.

I think most conservatives are just burned out on the SOTU by now. We already know what he'll say, we're more than familiar with his incredibly annoying manner of speaking, so what's the point? Just another venue for President Perfect to get in front of the cameras. (Heh, I made an unintentional play on words there....for those of you who are familiar with grammatical tenses...)

BevfromNYC said...

T-Rav- Ah youth! Your hearts are so much stronger...

Okay, let me help you with your German studies! Let's see:
Ich bin ein Berliner
Gesutheit
Ein bier, bitte!
I can order alcohol in multiple languages and the bathroom too!

BevfromNYC said...

Andrew - Blow up a winery?? Are you crazy?? NEVER!!! Oh, you wrote "whinery", that's would be okay.

T-Rav said...

Bev, du meinst "Gesundheit," nicht "Gesutheit." Das ist nicht ein Wort in Deutsch. Aber ich danke dich fuer deine Hilfe.

BevfromNYC said...

Uh, yes it is! I learned it on the playground just like...well, I can't divulge anymore about that. Last time I try and help someone with a language of which I have no knowledge...;-) I bet you don't speak ig-pe atin-le, though...uhmmmm! I I Eak-spe that uent-fle! So there!

I was close on the beer ordering stuff though, right?

T-Rav said...

Bev, don't you mean uently-flay, not uent-fle? ;-)

You did get "Ein bier, bitte!" right, though. If you ever are in Germany, though, just remember you put out your thumb to signal that, not your index finger.

BevfromNYC said...

T-Rav - Smarty-pants :-P. And in Brazil, don't use the American hand gesture for "Okay". ;-pbpbpbp

AndrewPrice said...

Anthony, I understand that the first rapper is considered to be Blondie of all people. And you are right, there have been very prominent whites -- Beastie Boys and Eminem among them.

I'm not sure why the Macklemore stuff has turned racist. I do know that the self-described experts (like Rolling Stone) hate that average people (non-rap fans) like his songs.

On leftism, it's clear that the protest movement was leftists. But beyond them, music seems to follow very consumerist ideas and that would put them on the right.

AndrewPrice said...

Bev, I couldn't watch. I can only take so much BS spewed at me with high intensity self-righteousness.

AndrewPrice said...

P.S. I would never suggest blowing up a winery, a brewery or a donutatorium. A whinery, however, have at it. :)

AndrewPrice said...

T-Rav, German? Why?

T-Rav said...

Andrew, because that's what I'm specializing in for my degree--German history--and my ability with the language is substantial but nowhere near where it needs to be. I've wrestled with it for years.

AndrewPrice said...

Ah, well best of luck then. :)

EricP said...

To the Rookie Wookies, scorin' some dough for the millennials -- take that, veterans (and Roger Goodell)!!! Don't hate the game, or its younger players.

To white rappers and firsts, Debbie Harry may have scored the first big hit, but J. Geils Band's Peter Wolf had been skippin', slidin', jimmy-jivin' with the verbalizin' for years before "Rapture."

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