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For the Separation of Stadium and State – Article by David R. Henderson

For the Separation of Stadium and State – Article by David R. Henderson

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The New Renaissance HatDavid R. Henderson
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The title of this post is the same as the title of an article by Jonah Goldberg about the Colin Kaepernick incident. (If you haven’t been paying attention to the NFL lately, here’s the summary: Kaepernick is a San Francisco 49er who refused, and still refuses, to stand for the U.S. national anthem.)

I had been pondering writing a similar piece myself. And then I saw his title. Darn, I thought, Goldberg has beat me to it.

Except that he didn’t.

Goldberg’s article is all about his narrow way of keeping politics out of sports: players should stand for the national anthem. Some people would see this as a way of inserting politics into sports.

That means that people who don’t like what Kaepernick did are being forced to pay for the very property on which he did it.

But how would you keep politics out of sports in a fundamental way? It would be by not forcing people to pay for sports.

You don’t have to know a lot about the 49ers or the NFL to know that local governments tax their residents and others heavily to pay for luxurious stadiums.

That means that people who don’t like what Kaepernick did are being forced to pay for the very property on which he did it. On the other hand, it also means that people who don’t like the flag-waving that goes on at NFL games are also forced to pay for the property on which that occurs.

There’s a simple solution here: actually separate sports and state. That is, quit forcing taxpayers to pay for sports.

Now that’s a solution that I will salute.

 

david-r-henderson
David R. Henderson

David Henderson is a research fellow with the Hoover Institution and an economics professor at the Graduate School of Business and Public Policy, Naval Postgraduate School, Monterey, California. He is editor of The Concise Encyclopedia of Economics (Liberty Fund) and blogs at econlib.org.

This article was originally published on FEE.org. Read the original article.

How Not to Fall for the Sunk-Cost Fallacy – Article by T. Norman Van Cott

How Not to Fall for the Sunk-Cost Fallacy – Article by T. Norman Van Cott

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The New Renaissance HatT. Norman Van Cott
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My wife and I frequently vacation near Asheville, North Carolina. Perhaps it’s the economist in me, but an interesting spot that I visit is the Western North Carolina Farmers’ Market. The WNC market is large (36 acres) with vendors selling every seasonal fruit and vegetable item you can imagine. Georgia and South Carolina peaches are always a highlight. Therein lies the basis for a teachable moment in economics.

Chasing Peaches

While returning to Indiana one year, we decided to stop at the market to buy peaches for ourselves and friends. Going west on I-40, we exited for the market. Turning left, we took the bridge over I-40 toward our intended exit. Since the on-ramp for I-40 east and the entrance to the market are not that far apart, we accidentally missed our exit. That was about a 6 mile mistake for me. Unavoidable costs should not figure in the decision about whether to pursue peaches.

By the time we had gotten back to the exit for the WNC market, the question arose whether we should (try again to) buy peaches. I pointed out to my wife that had we known the first time that getting to the peaches was going to entail an additional 6 or so miles of driving, we might not have ever tried to stop.

However, the gasoline, traffic delay and self-incriminating frustration associated with the 6 mile mistake were what economists call “sunk costs.” That is, there was no way to avoid them at that point. Being unavoidable means they should not figure in the decision about whether to pursue peaches. The only costs that matter at that point are the costs of exiting a second time, not both times. So we exited, bought peaches, and continued on our way.   

In retrospect, the net benefits of the peaches were less than what initially motivated us to try to buy them. The net benefits could actually have been negative, but had we not exited the second time, the loss would have been greater!

Sunken Soybeans

Let’s consider another example. Living in rural Indiana, I’ve heard farmers complain at harvest time about how the price of corn and soybeans has fallen so much during the summer. Seeing as they’re going to lose money for the year, “why even harvest” is the lament of some. This is bad thinking. At harvest time many of the costs associated with their crops are “sunk.” That is, the cost of the seed, pesticides, herbicides, fuel, etc. associated with getting to harvest time has already been incurred. Nothing can be done to get that investment back so it should be ignored. The only costs that matter at harvest time are the costs of harvesting itself. The only issue is whether lower prices will cover these costs.

When it comes to tax time those costs, previously labeled sunk at harvest time, suddenly become important in figuring farmers’ taxable income. The accountant is going to want to know them. Moreover, the IRS is going to be interested in their accuracy.

The following spring yields yet another issue. Those seeds, pesticides, herbicides, and fuel costs that didn’t matter last fall now matter, and not just for tax reasons. With planting not yet started, these costs are no longer sunk because they have yet to be incurred. If expectations are that the coming fall is to be a repeat of the previous fall, the farmers will be planting something different than corn and soybeans in the coming spring.

Sunk Costs Might Cost You a Championship

One final example. As a sports fan I have long noted the gargantuan salaries with multi-year, guaranteed contracts for professional baseball and basketball players. What’s interesting is the responses of team owners and general managers when “their” players perform below expectations. More often than not the owner or general managers will say something like “this guy’s contract means we’re paying him umpteen thousands of dollars for this season, so we have to play him to get our investment back.” Another case of bad thinking. Don’t put a bad player in the game just because you paid for them.

The player’s salary for the duration of his contract is a sunk cost. It has to be paid regardless of whether the player plays; it therefore shouldn’t figure in the decision about how much play time needs to be utilized from the player. What matters at this point is whether you can find somebody who can play better. If your favorite team(s) have owners and general managers who think sunk costs matter, I recommend you switch your allegiances.

I’ll admit that ignoring sunk costs is difficult to do. It seems like people have an innate desire to include them in their business and household decisions. But doing so can result in less than optimal decisions, which can include not being able to enjoy those large, juicy Georgia and South Carolina peaches.

T. Norman Van Cott; Economics
T. Norman Van Cott; Economics
T. Norman Van Cott

T. Norman Van Cott, professor of economics, received his Ph.D. from the University of Washington in 1969. Before joining Ball State in 1977, he taught at University of New Mexico (1968-1972) and West Georgia College (1972-1977). He was the department chairperson from 1985 to 1999. His fields of interest include microeconomic theory, public finance, and international economics. Van Cott’s current research is the economics of constitutions.

This article was originally published on FEE.org. Read the original article.

I’ve Got Olympic Fever – and the Only Cure is More Nationalism! – Article by Bradley Doucet

I’ve Got Olympic Fever – and the Only Cure is More Nationalism! – Article by Bradley Doucet

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The New Renaissance Hat
Bradley Doucet
August 17, 2012
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Once again, the Olympics have come and gone. Some of the best athletes from around the world competed to see who could run, swim, row, dive, jump, kick, shoot, spike, spin, flip, and twist faster or higher or more artfully than their opponents. And that part of it was great. Well, some of it was dull as dirt, but some of it was genuinely thrilling and even beautiful.The part of it that I don’t get is where I’m supposed to cheer for the guys and gals who are “representing” Canada. I’m supposed to feel disappointed when these fine young men and women fail to live up to expectations, and I’m supposed to be happy, even proud, when they make it to the podium. And people from other nations are supposed to feel these emotions for the athletes “representing” them. Well, not only do I not feel anything special for Canadian athletes, but I would go so far as to say that such seemingly innocuous nationalistic sentiments are a big part of what’s wrong with the world.Nationalism by Any Other Name

For my money, foul-mouthed stand-up comedian Doug Stanhope put it best: “Nationalism does nothing but teach you how to hate people that you never met, and all of a sudden you take pride in accomplishments you had no part in whatsoever…” Now granted, the Olympics are not so big on the hate. But why should I, simply because I’m Canadian, take pride in the fact that Canada hauled in 18 medals? And should I feel a little less proud because only one of them was a gold? Of course, strictly speaking, “Canada” did not win 18 medals. Rather, Canadian athletes won 18 medals. But why should “we” care one way or the other, much less feel vicarious pride? We didn’t build that.

To be clear, I’m not against sporting events per se. I actually like sports, both playing them and watching them. I like watching basketball and American football, and I even root for certain teams (the Celtics and the Patriots). I enjoy watching my fellow human beings perform incredible feats of strength and agility, and struggle to summon extra energy or settle frazzled nerves. Watching tennis star Na Li rally from a 1-5 deficit in the deciding third set of her semi-finals match at the Rogers Cup in Montreal this weekend to win six straight games and take it 7-5 was both exciting and inspiring. I like the way Na Li plays—I refuse on principle to place her family name first, regardless of what is done in her nation—and she’s got a pretty quick wit, too, judging from the times I’ve heard her speak. Why should I give a damn what her nationality is?

I did watch some Olympic tennis, including the record-breaking third set of the match between Milos Raonic and Jo-Wilfried Tsonga that took 48 service games to decide. I was impressed that Raonic could give Tsonga such a run for his money, but the fact that we are countrymen was the furthest thing from my mind. In fact, I was happy that Tsonga finally won the match. I enjoy his style of play, and he’s actually my favourite player on the men’s tour at the moment. Different nationality, different mother tongue, different skin colour? I literally could not care less.

The Hosts with the Most

What about the host country? In an article in the Globe and Mail, Doug Saunders wrote of the “mood of national euphoria” in England following the closing ceremonies, and of the “ineffable value of having organized a very large, very happy event with virtually no flaws, and having looked very good before the world—something that Britain once took for granted, and is likely to enjoy remembering for some time.” The implication is that Britain should feel proud of the great job it did hosting the Games.

But again, did “Britain” host the Games? Did “the British people” host the Games? No. Some small subset of specific individuals organized the event, for better or for worse. Why would every Brit deserve credit for that? Now, British taxpayers did foot the bill, whether they wanted to or not. And what a bill it was, totalling some $14.5 billion. (You can forget about any economic stimulus from hosting the Games, by the way. As Saunders tells it, the prospect of daily Olympic crowds of 100,000 kept at least 300,000 non-Olympic tourists away.)

Similarly, as a Canadian taxpayer, I financed some tiny fraction of the training of the Canadian athletes participating at these Games, who were subsidized to the tune of $96 million over the last four years. (For those of you keeping track at home, that’s five million and change per Canadian medal.) The thing is, paying taxes is not really something a person does; it’s something that is done to a person. I cannot therefore reasonably feel proud of what is done with those dollars once they are taken out of my account against my will, and neither should the British taxpayer.

For Love of Country

On a trip to Ottawa a few years ago, I saw a bumper sticker that captured my feelings about Canada: “I love my country, but I’m afraid of my government.” Canada is a fine place with many fine people who continue to enjoy the echoes of a strong classical liberal tradition. But those “representing” us (there’s that word again) in the halls of power are not generally speaking the finest of those fine people.

For one thing, they all seem to be nationalists of one stripe or another. I suppose it wasn’t surprising to see Pauline Marois, leader of the separatist Parti Québécois, celebrate the fact that Canada’s first four medals were won by Quebecers. Rather more disappointing was how all three major provincial party leaders were competing to oppose the purchase of homegrown Rona by US rival Lowe’s. The race for gold in the “economic nationalism” event was too close to call.

Someone is surely going to argue that the Olympics are all about the nations of the world coming together in friendship. Well first of all, at the risk of beating a dead dressage horse, “nations” cannot be friends. Only people can be friends, and some of the Olympians probably made some new connections. But do the Olympics help people from different parts of the world adopt friendlier attitudes toward one another? An American basketball team packed with NBA superstars rolling roughshod over every other team tells a different tale, as does the rash of below-the-belt punching in the quest for basketball gold. And how about those bad calls against the Canadian women’s soccer team, denying them a chance to play for gold? That really promotes friendly international relations.

One parting shot: I’ll take the human achievement of the Mars landing over the nationalistic achievements of the Olympics any day. And although again, the taxpayer funds used to pay for it rub me the wrong way, at $2.5 billion, the price tag was roughly 1/6 as large as the Olympic tab.

Some kind of reverence for imaginary lines on a map seems to be deeply ingrained in most people, but to me, honestly, winning a medal “for your country” is only slightly less creepy than winning one for your Dear Leader. I prefer the humanist sentiment of elation of one Western writer (I’ve tried in vain to relocate his name) who, upon seeing the Great Wall of China for the first time, exclaimed, “My people built that.” Human beings can do great things, which should be a source of encouragement and inspiration for us all, regardless of the colours of our passports.

Bradley Doucet is Le Quebecois Libré‘s English Editor. A writer living in Montreal, he has studied philosophy and economics, and is currently completing a novel on the pursuit of happiness. He also writes for The New Individualist, an Objectivist magazine published by The Atlas Society, and sings.