Wednesday, July 25, 2012

Well, that's baseball

Someone must have missed the first day of his economics class--where they talk about alternative uses for scarce resources;
MY brother, Brian, has been a Mariners fan since 1983, when he was just 13 years old. Brian called me on Monday night with the news. "Can you believe they traded Ichiro after 11 years with the Mariners?" 
....All I can offer my brother and other die-hard Mariners fans is some insight as an economist.
It's worth asking: How did we get to this point? Our short-term-relationship mentality extends beyond sports to the employer-employee relationship in general.
At least part of the answer lies in the 30-year decline of traditional pensions, also known as defined-benefit plans, toward 401(k) plans, also known as defined-contribution plans.
Yes, the above is written by someone claiming to be an economist;
Kevin E. Cahill is a managing director at ECONorthwest, a Northwest-based economic consulting firm, and a research economist at the Sloan Center on Aging and Work at Boston College. 
Whose knowledge about the compensation in professional sports is decidedly lacking.  Ichiro is still receiving his annual $18 million, just from a different employer.

An employer with a chance to get into the post season, even the World Series.  If they do Ichiro will make even more money. The lesson to be learned here is much more elementary; as Adam Smith taught; no one makes a trade unless they expect to benefit by doing so.

Ichiro (who requested that the Mariners trade him to a contending team) benefitted from a huge paycheck 'to play a kids game', the new employer strengthened their outfield defense (and their chances of progressing in the playoffs), and the Mariner's opened a position for a young player to replace the aging legend.  No one plays baseball forever.

And, we think that if Ichiro hasn't planned for his own retirement with the $100+ million he's been paid so far, then that is his problem.  We all should be so blessed.

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