The Tank (and everyone else I know) oppose Congress investigating the Steroids and HGH issue in MLB. The Tank even wrote a dramatic piece on it saying he wants a tax refund. Most people say that the government has better things to do.
I am a laissez-faire guy, one who thinks that less government is better and one who thinks that government regulation of business is in general bad. A capitalist at heart. Baseball is a business, a private business. I testified in front of the US Congress telling them to leave Microsoft alone 10 years ago. You would assume that I am opposed to the government holding hearings about MLB, right?
Wrong.
Private business is suppose to regulate itself, make sure that it provides a fair environment for competition, a good marketplace for consumers, and follows the law.
I believe in government intervention in two scenarios: monopoly and market inefficiencies.
Market inefficiencies exist in business all the time and the government has the expectation to come in and defend the consumer or workers. A good example of a market inefficiency is automobiles. Without governmental regulations, we would all be driving cars running at 15 miles per gallon.
A market inefficiency exists in MLB with large markets and small markets and MLB tried to address that on its own. While the solution is not perfect, I am in favor of the luxury tax since it represents the industry self-regulating. That is the free market at work. Yankee fans who complain (and Mets and BoSox fans who will soon be complaining) I tell them, think of the alternative: Government controls over MLB payrolls.
Since the workers are unionized, there are few market inefficiencies-even thought the players tend to be underpaid- from a purely economic point of view, not a "holy crap, he makes that much?" point of view. Remember that these players have a window of 10-15 years to make all the money in their life. Take a time value of money economics class and realize that some of the contracts are not as large as you think they are. There are other inefficiencies, like someone like A-Rod or Santana really only can work for a few employers (Mets, Yankees, Red Sox, Dodgers, maybe Cubs), giving the few employers the power, not the player. Look how A-Rod came crawling back to the Yankees, and despite the large contract, look how few options Santana actually had. This leads to players strikes every so many years, and that is ok too, I'll take a strike every decade or two rather than government price controls.
MLB is a monopoly. There are no other professional baseball leagues in the USA. Combined with a handful of other sports (NFL, NBA, NHL) the MLB is also part of a professional sports oligopoly. This means that we have to hold baseball to a higher standard then say the corner grocery store. Baseball is expected to enforce the law of the United States and Canada and HGH and Steroids are illegal. Baseball is doing a bad job at policing itself, it lacked a drug policy until recently. Without a drug policy, then the government must step in. For example, if you were a drug dealer at a Wall Street firm, and your company had no policy to deal with your drug dealing and your customer's usage, the government would step in and arrest those who are involved. This is not that much different.
Allegations are showing up that the league turned a blind eye on it all that was happening. MLB was not policing itself. Even the Mitchell Report has many questions as to its fairness. This my fellow sports fans is a clear case of an market inefficiency. A market inefficiency by a monopolist no less. Where else does the consumer go for remedy? The government.
I don't like that is has come to this, but it has. If it takes the government to clean up baseball, then so be it. For its credit, the Government does not want to police baseball, but has simply held hearings. That is a warning shot. The next step will be to institute legislation. Baseball better get its act together before it comes down to that.
It has been suggested that the commissioner needs to be investigated. I don't agree. I think he should be fired.
Posted by Steve in Cairo, Egypt.