Salary capping

[pilliwinks]

Economics seems to be in vogue at the moment, so I thought I might put in my 5c worth.

It is a common practice in professional sporting competitions for salary caps to be imposed. The rationale as far as I can tell is the following:

The primary objective is for the clubs to make money. To do this they need lots of interest (ie TV watching) of their competition. To do this, they need to have a close contest (if the same guys always win, fans get despondent). To ensure a close contest you need to make sure that the rich clubs can't just hire all the best players and become invincible. To make it possible for small clubs to get decent players they impose several schemes, one of which is salary capping - that way even the best players are within reach for the smaller clubs, who can compete by offering other incentives (lifestyle/location/team spirit etc).

This scheme has the merit not only of making a more exciting competition, and more money for the clubs, it is also widely regarded as 'fair', to the extent that clubs found to be exceeding the caps are roundly denounced by the media.

So much for sports.

Why not apply such a scheme to everyone?

Tight competition is not only a good thing in sport, so why not put the great innovators in business within reach of the smaller companies?

Before you label such a scheme as pinko socialist madness that undermines the values that made this country great, please consider the possible benefits and also that the cap can be very, very high.

[FortunaMaximus]

Parity in a free market is a bad thing! Restrict the acquisition of wealth for those that can jump the train and make a splash? Why would you do that? Remove another motivation factor?

The Yanks have a budget that outspent all their division rivals. They still have to field the nine. They can field the best nine on the planet. But they don't win every Series.

[hmkpoker]

You are comparing zero-sum games to non-zero-sum games.

[Shadowrun]

There is a misconception about the Yanks even though they outspend every other team, they don't get all the best players (that would cost too much).
I am sure if they could they would.

[FortunaMaximus]

Jays hometown team. Well aware of their flaws.

hmk nailed it more succinctly though.

[bobman0330]

As you point out, the goal of baseball is not to score as many runs as possible, but rather to provide fair, close contests between fixed groups of baseball players. The goal of the economy is not to generate many companies of equal productivity, but rather to maximize the overall productivity of the economy as a whole. Hence, salary caps bad.

[HumanACtor]

[ QUOTE ]
Why not apply such a scheme to everyone?


[/ QUOTE ]

The sheer evil, pretty much.

[evank15]

Baseball has a luxury tax. Hockey and fottball have salary caps.

[soon2bepro]

This works like this in sports because sports fans are 99% idiots (compared to just 90-95% of the overall population).

Socialism is better for society composed majorly by idiots (for the idiots that is).

Capitalism punishes idiocy and rewards intelligence/good decisions.

I still nevertheless believe that an advanced, utopian society would be more like socialism than capitalism.

[OneTwoThreeROBOT]

It makes sense to make rules that make sports teams compete on the same level because watching close games is entertaining.

It doesn't make sense in business to hold the strongest back, because doing so hurts efficeincy, consumers, and everyone.