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Wear Facepaint for Commerce, not Sports Welfare

The sight of people donning replica jerseys to lobby their elected officials to force some taxpayers to pay for their hobby makes me a bit sad: “Don’t you have a life,” I quietly ask. But I think I’ve found the hints of a silver lining in that passion: Perhaps this is a point for us to remember that commerce–freely and successfully conducted–is a beautiful thing that meets human needs in a just and humane way.

I am a staunch opponent of taxpayer funding of stadiums for professional sports teams. (Among the reasons: As an example of the broken window fallacy, it has minimal economic impact. When it comes to NFL teams, there’s no economic reason to subsidize an enterprise that hauls in $9 billion-a-year. Finally, advocates of stadiums seldom acknowledge the opportunity costs).

An honest review of the economic literature reveals that pro sports have no net economic benefit to a state or even metropolitan area. Oh, you’ll find people pointing to examples of specific jobs in construction or in hospitality, but (see the links above) those are merely mental rationalizations for what the heart wants. For at the end of the day, the true argument for subsidizing pro sports is this: “I like it, and I want government to do it. Doesn’t every civic-minded person?”

 

There’s no doubt that sports fans can be passionate about their favorite teams. They give them the chance to marvel at exceptional athletic talent, which can be a thing of beauty. They offer fans the ego boost of some second-hand glory (“did you see how we won that game?”). They also give us the chance to express some solidarity with like-minded people. We watch in the stands and at home. We talk about it around the workplace water cooler. Even people who never attend a game in person are members of “Husker Nation” or bear “Purple Pride.” Face paint, anyone?

But sports teams aren’t the only entities that give us these emotional benefits. Houses of worship, social clubs, and bowling leagues, to think of a few, give us the chance to marvel at excellence, enjoy some second-hand glory, and express solidarity.

Actually, so do businesses that  have nothing to do with sports.  The most obvious example may be Apple, which, when measured by stock value, is the most valuable company in the world. Customers like its products so much that the company enjoys what might in other instances be called “obscene” profit margins. Some customers are so enthusiastic about the company that some people (including a few of its fans) speak of a “Cult of Apple.”

To a lesser degree, any successful business is like Apple. It must provide something that customers value, something that will entice them to voluntarily surrender their hard-earned cash. Businesses succeed when they serve families and individuals, either directly or indirectly, and do a few other things well, such as keeping costs under control.

The classic essay, “I, Pencil,” gives us a bigger picture, explaining how many businesses and individuals work for mutual benefit, even without some godlike figure or benevolent dictator. (Too busy to read more? Watch Milton Friedman give the two-minute version.) The free exchange of goods and services to satisfy human needs and wants is, like a well-executed pass play, a thing of beauty and wonder.

In closing, I must make a partial qualification: Some companies and service providers prosper for the wrong reason. They prosper not because they satisfy customers, but because they satisfy politicians, who enact tariffs, dole out subsidies, restrict market entry, and so forth. Many health insurance companies embraced the Affordable Care Act because they figured that the taxpayer-subsidized health insurance exchanges would bring them enough customers to offset the law’s new restrictions. Hospitals lobby for certificate of need laws to restrict the competition. For other examples big and small, see the Institute for Justice.

For concerned citizens and business leaders, the best path, I say, is not to seek a special political favor for your preferred enterprise, but to, as far as possible, remove the various ways that governments interfere with the judgments of the consumer. Let businesses succeed by honing their skills at satisfying customers, not in lobbying.