Learning to Box

AP Physics is largely the study of boxes: boxes falling, boxes running into each other, boxes spinning about an axis, invisible boxes boxing in an electrical flow, two boxes that box each other each Boxing Day.

At Large State University, economics, with some exceptions senior year, combined the study of boxes in highly specialized box-like situations with the study of large boxes abstracted away from those earlier, smaller, distinctly boxier scenarios.

I had a brown six-sided teacher who would open class with this joke: There is no such thing as a free boxed lunch.

It was hard to enjoy the joke staring at the boxes of homework awaiting us each night.

In microeconomics, problems are highly specialized. “While the empirical literature has cast serious doubts on horizontal labor supply curves and on the exogeneity of the wage rate even in the densely populated agriculture of poor countries, the theoretical puzzle of explaining the coexistence of a significant positive and often (though not always) downwardly rigid wage, even under conditions of severe unemployment and underemployment, which exercised many development economists in the 1950s and 1960s, has not been completely resolved.” What a sentence! Now to work out the details of a theory that reality (also known as “the empirial literature”) has already proven useless.

In macroeconomics, the problems are bigger and, therefore, more important. In my monetary theory class, we were so big picture we never discussed the financial market. We were above the financial market. Really, the financial market wasn’t even on the radar. We were so little troubled by the financial market, even in the middle of the financial market crisis, that we never mentioned the financial market once in my monetary theory class. And certainly nobody mentioned it after class because, I remind you, this was Large State University, where students, teachers, classes, and even Large State University itself is Too Big for Reality.

When did I learn I had received a horrible, pathetic, embarrassing, and likely detrimental education? After it was too late. I had a chance to transfer to Large State University #2, which is far more prestigious, rankily speaking. I stayed at Large State University. Had I transferred to #2, I’m not sure I’d be smarter; you can box yourself in no matter where you go to school. Large State University was never dishonest. They never said you’d come out working at Goldman Sachs, or The Washington Post, or The Bureau of Labor Statistics, or Redbox. I’d kind of assumed that on their part. I was Too Big for Reality. I was too Inside the Box. I was too boxed into thinking of life as a series of box-like scenarios.

Tax Man to Corporate Man: The Way Your Skin Shines In This Light Makes You Look Completely Different From the Last Time I Saw You…

The IRS has four divisions, each dealing with a different set of entities ranging from big businesses to individuals, each with a mission to apply tax law fairly and help citizens comply with it. There has been a dramatic increase in applications for tax-exempt status to the IRS for groups identifying as “social welfare organizations” in recent years. Those groups do not need to identify their owners. The rise coincides with the Citizens United and a few other decisions that allowed enormous amounts of spending by organizations on campaigns. These groups are often secretive about their donors. The IRS was likely worried that many social welfare organization applicants did not have education or social welfare as their primary focus (some political activity is allowed) which is required by law, but were instead funding campaigns. The large amount of applications was likely too much for the IRS to handle, partly because IRS employees are not trained to assess political activity, but to apply tax law fairly. To cope with the large number of applications last year, some IRS employees seem to have devised a clumsy shortcut: audit any organization with terms like “tea party” or “patriot” in the name, or those hostile to paying taxes. It appears most, if not all, of these groups were conservative. The ensuing conflict, which started Friday morning when the IRS apologized for singling out those groups, reminds some Americans of Richard Nixon’s orders for “special service audits” to hamper his political opponents.

“I am not saying the president had any knowledge or was in any way directly involved in the IRS,” Republican senator Lindsey Graham said Monday. “But there’s a culture in the Obama administration that politics means more than government.”

“Somebody there was more worried about the president’s re-election and protecting the president than they were in doing their job. So the culture in the Obama administration of political manipulation has to be dealt with.”

Rather than focusing only on conservative groups, Ezra Klein of The Washington Post and Kevin Drum of Mother Jones have called for all organizations applying for 501(c)4 status to be audited. They argue this would be the best way to assess whether applicants comply with the law.

Professor of tax law Victor Fleischer argued today in Dealbook that the IRS isn’t capable of that: “The reality is that this is a story of institutional incompetence. And Congress should share the blame. … Current law forces the IRS to enforce a vague set of campaign finance laws that have next to nothing to do with raising revenue.” Because the IRS is not designed to measure political activity, that authority, foisted on it by Congress, is too much to handle. “To the extent that Congress wants to regulate political activity, Professor (of tax law Lloyd) Mayer explained, it should also consider whether the I.R.S. is the agency best suited for such activities. ‘Current events,’ he noted, ‘indicate it is not.’”

Was it wrong for the IRS to single out groups with names including “tea party” or “patriot,” or those hostile to paying taxes? While giving at least a nod to the specter of secret political machinations, almost everyone, including the president, says ‘Yes.’ Supposing instead that the IRS really was ill-equipped to deal with the flood of applications and that some method to expedite the process was necessary, would the conflict be different if all the groups had had “change” or “progress” in their names, or had been hostile toward the 1 percent? What if an even number of groups had been drawn from conservatives and liberals? What if a random number had been drawn without regard for ideology? Would it have been mostly conservative groups that came up?

If President Obama, a White House official, or another Democrat ordered the IRS to audit conservative groups with the intention of hurting them in the last election, then a flagrant injustice executed at a grade-school level has occurred. If the IRS attempted to save time by focusing only on conservative groups, then serious trouble is lurking if that decision was politically motivated. If most of the organizations the IRS had denied 501(c)4 status prior fit the profile of a conservative group, then targeting them could have been a rational response. It seems the best choice would have been for the IRS to petition for a change in its responsibilities or for more resources, which, assuming the request didn’t happen and given the voracious appetite for government spending on Capitol Hill, would surely have been successful. That shortcoming aside, I’m annoyed by how assured Republicans are that Democrats manipulated the IRS to influence elections. If so, then the IRS proved it is as adept at handling secret orders from Obama as it is at winning popularity contests (As an aside, would the IRS really have openly admitted wrongdoing if the Obama administration instructed it to carry out secret orders?), not to mention the remarkable hypocrisy from the GOP, which would prefer if all blacks and Latinos never voted again. Then there’s the solid gold diamond platinum and ruby elephant in the room: the corporate spending driving the explosion in groups applying for tax-exemption. Wait, I mean, hoo-ray for free speech and liberty.

Cairo: Libertarian Paradise

“I never feel comfortable writing a paper on a country without visiting it first.” My professor told me that in Cairo, where I was teaching researchers from Sudan and Egypt how to use Stata. The Egyptians—few were men—knew English; the Sudanese—two were men (there were only two)—did not know much. We got through it. Just before they boarded their planes back to the ministry of labor, they took a picture with me; they smiled broadly the couple of times I ran into them in the lobby.

When I got back home, I wanted to write a column headlined “Cairo: Libertarian Paradise” but I couldn’t pick my headlines in the college paper, and I wasn’t sure if Cairo is libertarian. The military ran the show, and they shouted at women and a tourist (me) to demonstrate it. In Cairo, crossing the street is a dangerous social ritual requiring you to walk with determination as cars swerve out of their way to hit you. There are no traffic lights or traffic enforcement, since the police are busy harassing women. If you run, like Eddie Murphy in Bowfinger, hucksters descend on you. “Fine Egyptian cotton,” they say. “I really have to go somewhere.” All of them will tell you they’re getting married the next day, but remember you don’t have to finance it!

“What is the first thing you notice when you walk on the street in Cairo?” Trash. The trash cans can’t fit a cardboard box. Then there are the taxi drivers, who are on tough times and never stop yelling at you. Everyone who sells a postcard is an artist. Getting your bread as an artist is just as hard in Cairo as it is here—especially at the French bakery in Zamalek—so all the artists have a side business: selling postcards. The postcards are made in Bangladesh. “What a long commute….”

Americans happily overpay not to barter. A scam is preferable to a barter, and every salesman in the Egyptian capital knows Americans know that. Here’s how I bartered:

“Twenty pounds.”

“Twenty dollars? I sell to you for twenty dollars—maybe. Is Egyptian cotton, nicest in the world!”

“Twenty pounds.”

“Dollars, friend, dollars. Not pounds. No, no, no, no, no. Tell you what, I’ll cut a deal….”

“Twenty pounds.”

“Friend, friend, friend….”

I either got it for twenty pounds (less than three dollars, which is how much I paid for about eight shirts, one of which I’m wearing right now), or they got so annoyed with me they sent me away. Even Cairo merchants have their limits.

Good and Bad Economics

I graduated from an economics program that was not, shall we say, so hot in the rank department. To give you an idea of how out of touch my professors were: there was not a single presentation on the economic crisis from the time I entered as an undergraduate to the day I departed as a research assistant, a period of six years, during which time the housing bubble peaked, the liquidity was runned on, the financial markets crashed (I interned at a financial firm three summers in college, and the mood there was, uh, not positive), the Recession ended (officially), and unemployment got stuck at 7.5 percent or above for four shameful years and counting. I saw loads and loads of great presentations: on Greece’s budgetary troubles (100+ percent debt-to-GDP is not a recent development!), on the economic origins of the Arab Spring, on famine’s effect on GDP (not great), and on the causal impact of health clinics on fertility in rural Iran (very positive), among many, many others. Around 2008 I bet my roommate one euro that unemployment would be under 5 percent at graduation. I owe him a euro.

Some people think that lower- to unranked econ departments are populated by professors who can’t get the derivative of 2 and students who sequester elasticity as a property of scrunchies. Not so. In great econ departments people break their backs to do great economics. I worked with one of those people for over two years. But hey, he went to Harvard.

Eat the Young

Imbalances of power easily get conflated with imbalances of age, since access to power usually involves long years of vetting. Yet all the winners in the education bubble are old and all the losers are young, and everything else held equal it appears to be a clear case of reverse ageism.

Source: The Atlantic

This graph goes a fraction of the way in explaining why colleges could charge eight-figure tuitions and still have record applications. Do you want to work? Or do you not want to work?

That question may have at one time been put as: “Do you want to work? Or do you want to be poor?” Now, you’re poor either way.

Do you want to be poor and have fun? Or do you want to be poor and miserable?

That is the question most 17 year-olds ask themselves at the beginning of senior year.

Do I want to be miserable? Or do I want to be slightly less miserable?

The cost is secondary. I know this because I’ve talked to people who will do anything to escape the hell they believe awaits them if they don’t go to school longer.

How else to explain the “lawyer bubble?” Georgetown Law, one of the best in the country, costs almost $200,000 and only lands real jobs for 2/3 of its graduates. But if you met someone who got into Georgetown and was deciding not to go, you’d think They’re crazy.

Do I want to unhappy forever? Or do I at least want a chance at the good life?

Laziness may afflict my generation. Self-obsession undoubtedly. But is a protest against a job market that has nothing, or next to nothing, to offer except a chance–a small one–at an enjoyable job laziness or a plea for something better?

The Internet Sales Tax: A Small Concession

The Senate is expected to approve a sales tax on Internet transactions next week. The bill would require customers to pay their state’s sales tax on anything they buy online. Now, customers only pay a sales tax on items when the proprietor is in their state, often failing to pay sales taxes on out-of-state purchases as they are supposed to do according to law. While residents of Washington, headquarters of Amazon, may be indifferent, for the 90 million Americans without Internet access in their homes and the 100 million without broadband, the tax they can’t avoid on online purchases is as regressive as it gets: full freight for the disconnected, zilch for the tech-savvy. If Republicans proposed a tax that hit “lower income families, people with less education, those with disabilities, Blacks, Hispanics, and rural residents”–groups who lag the national average in broadband access according to the Department of Commerce–but exempted the wealthy, the healthy, the college-educated, and whites, the country would be up in arms. It’s good to see, then, that almost everyone in Congress supports an online sales tax.

Everyone, that is, except some Republicans. Not only are these members proud to belong to the Party of the Rich, when it comes to the Internet sales tax, they’re also the Enemy of the Uneducated, Disabled, the Minority, and the Rural Dweller.

I should qualify that last statement; it’s not completely fair. Republicans don’t oppose the Internet sales tax because they disagree with its details: it’s a bad bill because it’s tax, and taxes of any kind are strictly verboten. (Except sometimes, as in Bobby Jindal’s case, the sales tax.)

Here are some conservative opinions on the proposed Internet sales tax:

“I think the legitimate concern is, can it be used to do other forms of taxation or retroactive taxation? You have got to make sure it doesn’t do that.” — Paul Ryan, who, to his credit, said he agreed with the tax’s “concept.”

“I served in the state legislature for 14 years and this was a real burden to business. It’s not a burden to the larger retailers that would like to impose this.” — Rep. Tim Huelskamp, a Republican from Kansas.

“This bill forces small businesses across the country to spend time and resources they should be using to create jobs jumping through new bureaucratic hoops. … Instead of slapping more red tape on our small businesses, we need to be supporting their work to create jobs and get our economy going.” — Sen. Max Baucus, a Democrat from Montana.

I should have said some Democrats oppose the bill. In the Senate, they are Max Baucus and Ron Wyden, both from states without a sales tax. The bill would require businesses in those states to collect sales taxes from their consumers, unlike the current situation in which consumers are required to report their online purchases to tax collectors on their own, which they usually don’t do.

Even though the bill contains an exemption for companies with less than $1 million in annual revenue, some critics claim it would be “a real burden to business … it’s not a burden to the larger retailers” and that an online sales tax “forces small businesses across the country to spend time and resources they should be using to create jobs jumping through bureaucratic hoops.”

Paul Ryan fears “other forms of taxation or retroactive taxation.” After hitting the gym to relieve some of his anxiety, he can read the bill and assure himself sure they aren’t in there.

The worst of the bunch, however, are commentators like Peter Ferrara of Forbes who say they’re on the side of the consumer. As Ferrara should have discovered during his research for a recent column titled ”Overreaching Internet Sales Tax is Obama’s Calculated Deception of Gullible Voters,” consumers are already supposed to pay an online sales tax. Ferrara shows no special sympathy for the 90 million Americans unable to take advantage of duty-free Internet purchases, either.

Ferrara, who is also an analyst for the conservative Heartland Institute, is right, however, that online buyers like myself will be forced to pay taxes they now avoid. Great, I say; government services are usually good–though I could do without those we provide for the drug, defense, health insurance, and oil industries. Paying online sales tax is a form of austerity, and that may be a good reason to pass the bill now and delay its implementation, but that’s not the argument opposition Republicans and Democrats are making. Yet delayed or no, paying sales tax on some items bought online is a pretty small concession for the broadbanded classes.

…

If the Internet sales tax dies, it will die because of ideology. I expect many liberals, myself included, won’t get a thrill out of paying a bit more for used books on Amazon. But liberals should know broadband access at home is a privilege, and act with humility and support an online sales tax.

Most congressional Republicans are not so humble, especially in the House. If they told the truth, opponents of the Internet sales tax would say it’s not this bill in particular that upsets them: it’s the sales tax, or, rather, the tax in general–the whole “concept” should disappear.

But they, being politicians, often mislead. So we hear Sen. Baucus foretell of the slapping sounds red tape will make as it strikes our small business.

Enough already. We know it’s tough to care about “lower income families, people with less education, those with disabilities, Blacks, Hispanics, and rural residents.” Please spare us the lecture.

Buying Happiness

One of the benefits of working at a magazine is access to free, new books that publishers send hoping a writer with serious cachet will grab a copy and pen a review. But most of the time an intern snatches it.

As I read one of these books late at night, Political Arithmetic by Robert William Fogel, I came across this passage:

“Some proponents of egalitarianism insist on characterizing the material level of the poor today as being harsh. They confound current and past conditions of living. Failure to recognize the enormous material gains over the last century, even for the poor, impedes rather than advances the struggle against chronic poverty in rich nations,  whose principal characteristic is the spiritual estrangement from the mainstream society of those so afflicted…

“Realization of the potential of an individual is not something that can be legislated by the state, nor can it be provided to the weak by the strong. The government cannot transfer virtue from those who have it in abundance to those who are bereft of it. Nor can the rich write out checks denominated in virtue. Self-realization has to develop within each individual on the basis of a succession of choices. The emphasis on individual choice does not mean that other individuals and institutions play no role. Quite the contrary, the quality of the choices and the range of opportunities depend critically on how well endowed an individual is with spiritual resources.”

I thought I was having a very boring dream. In the 1800s, it was expected that those woo woo economists would wax on “spiritual resources.” Now that the profession is mathematical and serious, such arguments are somewhat less popular.

Maybe because Fogel has a Nobel prize he gets a pass. Or maybe his ideas are too great for algebra. I don’t know; I’ve only read a half chapter plus the introduction, which is where the quoted passage is from.

On page three Fogel employs another term rarely read in Econometrica: technophysio evolution, “the synergism between rapid technological change and the improvement in human physiology.” It made me think of a friend from college, or his ideas on Foucault and biopower, rather. We were in a baseball reading group; his final paper was on the increase of players’ biceps as teams turned to statistical analysis to evaluate the guys with the big contracts.

Exciting ideas, but not that exciting–I soon forgot them. Then yesterday I saw a post on Wonkblog describing how a higher GDP is associated with more happiness. People who don’t believe more money makes people happy have never been poor.

My memory was jogged:

“The government cannot transfer virtue from those who have it in abundance to those who are bereft of it.”

What, then, are schools and prisons for? That jogged another memory:

“Chronic poverty in rich nations, whose principal characteristic is the spiritual estrangement from the mainstream society of those so afflicted.”

I’ve heard money can’t buy happiness, but only Ayn Rand used it to argue against income redistribution. I was more convinced as a 7th grader. Give a family access to housing, food, and a safe environment–things the government can provide–and there is evidence mom and dad will fight less, the kids will do better in school, and that, after taxes, society will be better off.

Spiritual estrangement is not determined by internal resources. Fashionable clothes help people fit in. So does a mind freed of anxiety over credit card debt.

Thoreau penned some of my favorite essays, but we shouldn’t all live off beans, Homer, and woods walking. Most humans struggle every day to find hope. I’m not so idealistic as to believe money plays no part in that.

A Punishment for Being Poor: The Chained CPI

In the first economics course most students take, intro to microeconomics, they learn about two competing forces economists use to explain why consumers prefer one basket of goods over another: the wealth effect and the price effect. The wealth effect is the influence of income on purchases; the price effect is the influence of cost given income. If you replace the consumer with an apple cart, the wealth effect is the size of the cart and the price effect is the size of the apples. When you’re rich your cart is spacious. When the size of a Granny Smith balloons, you go for the smaller Golden Delicious. Guarding against a smaller cart is the purpose of social insurance.

When the Social Security Act became law in 1935, President Roosevelt said:

“We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.

“This law, too, represents a cornerstone in a structure which is being built but is by no means complete. It is a structure intended to lessen the force of possible future depressions.”

It is not possible that Congress or the president intended Social Security to insure recipients’ standards of living no matter how deep a recession was. FDR’s remarks, however, show that the program was meant to insure, best it could, against “the vicissitudes of life.” In other words, Social Security was to guard against negative wealth effects, smaller wagons; to keep seniors out of poverty regardless of “life’s hazards.”

It is now fashionable for conservatives and some liberals (including The Washington Post‘s editorial board and President Obama) to argue for a chained CPI, a change in the way cost-of-living adjustments in Social Security benefits are calculated; the switch would reduce lifetime payments for seniors by thousands of dollars. The measure used by the Social Security Administration now accounts for some price effects within categories of goods (switching from steak to ground beef) but not across them (switching from ground beef to chicken); the chained CPI would correct for that. Some economists argue the chained CPI is the superior measure of inflation.

We should ask ourselves whether we care more about an accurate measure of inflation or the well-being of the elderly. What would FDR and the Congress who approved Social Security have said?

“A law which will give some measure of protection to the average citizen and to his family … against poverty-ridden old age.”

Do we care more about the types of apples seniors are bringing home or the size of their cart? Shouldn’t we guard against “the vicissitudes of life” as the president and Congress intended?

If proponents of the chained CPI care about accounting for the inflation seniors face, they would advocate for the CPI-E, a measure that includes seniors’ medical costs, which are close to double those of the general population. Switching to the CPI-E, however, would increase the cost of funding Social Security.

It’s best to judge a person on their actions, not what they say. President Obama, The Washington Post, and the Republican Party are unable to match their actions with their rhetoric when discussing Social Security. If they were, they would say they don’t care about maintaining a decent standard of life for seniors–they would say they think it is too high already. Instead they argue cutting Social Security is the only way to save the program, like a doctor advising you to amputate your infected finger when a bottle of penicillin is sitting right at your shoulder.

According to a new Census measure, over 15 percent of seniors live in poverty. For two-thirds of seniors Social Security makes up half their income; for a third of them it’s over 90. When they can’t afford chicken and start buying beans, President Obama and House Republicans will say, ‘It’s time to to cut their benefits!’ Is that what President Roosevelt and Congress expected of Social Security’s stewards?

FDR closed his speech after he signed the Social Security Act by saying:

“If the Senate and the House of Representatives in this long and arduous session had done nothing more than pass this Bill, the session would be regarded as historic for all time.”

Today, all income over $113,700 is exempt from the payroll tax, the source of Social Security revenue. Eliminating that cap would insure Social Security’s existence for nearly 65 years. If President Obama and House Republicans choose to cut Social Security instead, they will be remembered for snatching pennies from the poor to satisfy their wealthy friends.

A Wealth Tax Tied to Unemployment Could Speed the Recovery

New research from Pew shows how tough the recovery has been for the vast majority of Americans. GDP is growing, the stock market is strong, and Wall Street bankers are doing fine. But for the 99 percent life is tough. Unemployment is at 7.6 percent and only 58.5 percent of adults have jobs. Consistent with these trends, Pew reported last week that the top 7 percent wealthiest households saw their assets increase by 28 percent in the first two years of the recovery, while the bottom 93 percent of households saw a 4 percent decline. This is because the wealthy own stocks while most Americans’ one major asset, their home, gained little during the flat housing market of 2009 to 2011.

With such trouble for almost everyone, why are politicians reluctant to embrace stimulus that will help the poor and middle class get back on their feet? A growing area of study in political science explores how much the policy preferences of various income classes influence lawmakers. So far, researchers believe politicians respond to the wealthy, pay attention some of the time to the middle class, and hardly listen when the lower class speaks. The rich possess the resources to buy access to politicians and fund their campaigns, and also tend to navigate the same social circles as lawmakers. As a result, politicians tend to share the preferences of the wealthy, which, because of gaping income inequality, are at odds with the rest of the country. That explains why the rich are doing so well right now, the rest of us are struggling, and the government is indifferent.

Here is a solution: tax wealth with a tie to unemployment. (Angus King, Warren Buffett, and many other have proposed similar ideas.) The higher unemployment climbs, the higher the tax on the wealthy’s assets rises, so that the jet-setters will be doing bad along with the rest of us. That would give the people who shape policy an incentive to prevent recessions and hasten recoveries; and it would be an automatic trigger for stimulus. Although I prefer a more equal society overall (an opinion shared by most Americans), this tax would get us on the same page while permitting current inequality. Since proposals for an unconditional wealth tax have been around for decades with little notice in Congress, I’m not optimistic a wealth tax putting a special squeeze on the well-to-do will become law; you should ask yourself, however, why it shouldn’t.

Major League Baseball: The Ultimate Free Market?

Source: Baseball Analysts

When I was around 12 or 14 year old—trying to understand the immense salaries Major League players made (Alex Rodgriguez was on the verge of receiving his quarter-million dollar deal) and expecting to one day earn a large salary myself (I was a good hitter and hoped to be as good as Ted Williams)—my dad would frequently tell me that baseball was the ultimate free market.

As I look back now, I wonder: What did he mean by that?

Although there are many other reasons, I think saying baseball is “a free market” was the easiest way to justify the obscene salaries MLB players make (an average of $3.4 million in 2012) in view of the many, many homeless we would see in Washington D.C. and Arlington, where I lived growing up (and still do). Players earn, and deserve, what they make, so it is fair they are so wealthy.

Since then the pay of professional baseball players has been an obsession of mine; I am glad a recent Slate article by Edward McClelland gives me a chance to discuss it.

McClelland’s article is more about the author’s disillusionment with professional sports in an era of stratospheric salaries than an investigation into why salaries are high, although he does that too. McClelland writes:

“In 1972, the year I became aware of baseball, its highest-paid player, Hank Aaron, earned $200,000 per season—the equivalent of around $1 million today. Aaron’s salary was 18 times the median household income in the United States. This year’s highest-paid player, Alex Rodriguez, stands to earn $29 million, which is 580 times the median income.”

He then writes:

“I’m singling out professional athletes for my class envy because they’re the highest-profile beneficiaries of changes that have enriched those at the top of the economic order while impoverishing those at the bottom.”

McClelland, too, invokes the “free market,” although he does so to criticize the deregulation that has benefited CEOs and hedge fund analysts they way black spray paint over a security camera assists a thief at the Louvre. While I disagree with his implication that baseball would be better if we went back to the days when owners owned players for life and pocketed even more money than they do now, I agree that the huge inequities between even the, relatively affluent, fans who can still afford to go to games and the players on the field makes it hard to view professional baseball as an innocent past-time, and harder still to think of the players as part of the local community.

Still, though, I don’t think baseball salaries are set in a free market. Here are a few reasons why:

• In a free market every player would make his marginal contribution; there is evidence that even the highest paid players do not make what they are worth (not to mention “the 99 percent”).
• In theory, competitive firms do not make profits; the majority of teams make them in the tens of millions.
• In a cutthroat industry, companies come into business and go bankrupt regularly; in baseball, new teams are extremely rare, and franchises go out of business even less frequently.
• Major League Baseball teams receive large public subsidies for their stadiums, rather than paying for them themselves[1].
• Even though determining a player’s value is now very sophisticated, I’ve heard from insiders that many teams still do not listen to their stats analysts.

But let me not to the marriage of true minds admit impediments: baseball players make obscene salaries. My answer is not to return to the days of “the well-paid slave”; instead, I’d prefer an enormous tax on team profits, a similar levy on player salaries, and an end to public financing, among other changes. If baseball were less corporate, it would also be more fun.

Then again, given the huge amount of money involved in the sports industry, none of my proposed changes—and those are the tame ones—are likely to go into action.

There is an alternative for the jaded fan, however: youth baseball. I coach a team myself (12-14 year olds; we have a game tonight) and encourage everyone with the time to try it out. The satisfaction of helping the community is certainly nice but the even nicer perk is the opportunity to brainwash your players:

“What is the free market?” Tommy asks me Tuesday, sitting a few feet to my right on the bench, moments after catching his breath from a quick sprint around the bases (he scored from first on a double and couldn’t help but picture himself flashing that same speed on a big league diamond, parents, classmates, teachers, and his girlfriend smiling from the stands).

“A giant, toothed wheel invented by the capitalist to crush the worker’s bones and spirit; to grind his soul like pumice; and to gather its grease by way of blood and entrails,” I respond calmly.

“Oh,” he says, worried. “Is there a free market in baseball?”

“Not here, Tommy,” I tell him. “Not here.”

• ---

  [1] Baseball stadiums are almost never worth the public investment; they produce very few jobs, only operate for half the year, and usually only help businesses within a block or two of the stadium.