It’s easy to know where I stand on a variety of political and economic issues by looking at the sources I turn to for various topics (more on how terrible for our society this phenomenon is in a future post). When I’m looking for information on economics or business I have my go-to media outlets that pretty accurately and squarely identify me as a capitalist. With friends, I even joke that I’m a ferocious capitalist when they argue that my socially liberal views make me a communist.
Those conversations then frequently turn to a more detailed description of what I mean by saying, “I am a ferocious capitalist, but my social views are liberal.” I think of it as the title suggests, I am, should, and forever will be a capitalist, but when I think about my government, there are very real circumstances in which a capitalist government is antithetical to the exercise of true capitalism. To parse my sentiment apart, I need to share my definition of capitalism as pertains to government.
Capitalism argues that the key to the march of society is each individual’s right to put forth their best and reap the reward. In no other forum is capitalism better expressed than professional team sports. Take basketball for instance, the best teams (in theory) win championships. The best teams typically have the best players – or, at least, the best combination of players – at gametime (execution, of course, counts so sometimes ‘the best’ are bested). The reward to these best players for executing as the best team is victory. Although it’s possible to succeed despite the team’s ownership, management and coaching, generally, these elements of the team also experience the same ability / reward relationship to greater and lesser degrees. To help ensure this relationship is maintained, teams organize themselves into the NBA, it’s own governing body. The NBA’s charge is to preserve the ability / reward relationship through it’s various responsibilities including establishing rules, organizing the draft, managing the team schedules and playoffs and, most publicly, refereeing the games.
To simplify the NBA’s role, it’s job is to make sure that each team has the same organizational opportunity to win the championship and that the championship goes to the teams that best execute across the spectrum of roles played by owners, management, coaching and players. The NBA explicitly does not provide an advantage to particular teams. This impartiality is intended to foster a scenario in which the season and playoffs REVEAL the best team in the league. ‘Reveals’ is the operative word in the NBA’s management of the league, the NBA DOES NOT select, identify or crown the champion, the champion team takes, or earns, it’s crown in a darwinian survival of the fittest. The NBA’s job is to ensure the process of winning is indeed Darwinian.
Imagine if a team, say the Milwaukee Bucks (the team with the worst record as I write), were able to pay a fee to the NBA to create an advantage for itself, say each basket counted for 5 points instead of 2 or 3. Would the NBA not be acting within its own ability (setting the rules) to reap the maximum reward (greater revenue) for it’s effort? Or better yet, what if the Miami Heat (arguably one of the best teams) were to pay the ‘Five Point Upgrade’ fee and continued on to win the championship? If the NBA were to act as a capitalist INSIDE the system it governs – the league itself – arrangements like the ‘Five Point Upgrade’, the ’10 Minute Foul Holiday’, ‘Bonus Timeouts’ and other relationships or transactions with individual teams, players and other participants should be celebrated as ‘Market Innovations’ and be case studied as ‘the market at work’.
When fans, cash strapped teams and others complained that it’s not right, the NBA would respond that we live in a capitalist society and it has every right – responsibility, even – to maximize its share of the rents available. It may even argue that it HAS to act in its fullest most capitalistic capacity because the NBA itself is locked in a capitalist market where it competes for viewers dollars against the NFL and the other professional sports leagues for viewers and the associated rents of the broader sports fan market.
It turns out that we recognize the ‘NBA as a capitalist’ is a ridiculous, self defeating idea, but yet, within our economy, we have evolved to enable and accept this type of activity by our government. Lobbying, plum consulting jobs for former congress-people, the ridiculous state of campaign finance and other efforts to incentivize our lawmakers to codify advantages for particular ‘teams’ is regarded as the norm in our society and many others. My frustration with my fellow Americans is simply that we’ve moved this distinctly un-capitalistic behavior under the halo of Capitalism.
Now, it’s important to highlight where I do and don’t want my government to take on a capitalist perspective (we’ll get into the consequences of where I don’t later). As in the NBA example, there are times where I want my government to be a fierce capitalistic competitor, where the full force of American drive, ingenuity and ambition are appropriately directed, by our democratically elected leaders, to capture the rents available to those best able to take them. These areas are almost exclusively relegated to international affairs, trade policy, and other foreign relations. Like the NBA, the US has competitors, other nations looking to be best rewarded for their efforts are akin to the NBA’s competing sports leagues (NFL, MLS, NHL and others). In this global arena, we, as members / citizens of the US, need our leaders to ferociously (keep in mind, ferocity is not necessarily measured in soldiers or the threat of force) compete for our interests so that we and our progeny, as a nation, reap the rewards of one of the most talented and gifted societies humanity has ever known.
But when constituencies within our Union are able to remove their need to compete with other competitors UNDER THE SAME JURISDICTION, either through lobbying for the creation of regulatory ‘moats’ or other anticompetitive strategies and tactics, how can we as Americans argue that we live in a capitalist society with any credibility? The narratives we celebrate as capitalists are truly admirable, when someone with a novel idea, unique skills and great effort is able to move us forward as a society while reaping the rewards for their ingenuity and efforts. It’s important to note that with increasing frequency we are codifying ‘moats’ that obstruct that narrative. Fred Wilson wrote a post recently on one such ‘moat’, the decision against Net Neutrality. There are dozens of other examples of these ‘moats’ that have been erected around industries that become more antiquated by the day due to incumbents who have no incentive to compete for rents. I believe the next step in our understanding of government must include this idea of Local Governance / Foreign Competition (for lack of better words to describe the governing of citizens and internal constituencies versus foreign affairs) to provide us with the tools to continue to build, manage and grow a more perfect union.
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