The Economic Puzzles of Dwayne Wade

Conversations about professional athletes’ salaries hold a strange fascination for me. Probably because they are, fundamentally, strange; where else in our society do we have anything like this? When else do Americans discuss money and merit, ownership and labor, “fairness,” and the limitations of income-maximization as motive, in contexts that are frank, detailed, personal and public? Wrangling to assemble an elite team in leagues with both free agency and a salary cap has become a completely ordinary part of sports comment, no different from starting lineups or officiating. Then there’s the odd fact that one of the most vibrant and assertive examples of organized labor pressure left in America involves wealthy athletes, many of them multimillionaires, as its worker side of class struggle.

Of course this is interesting. Sometimes disgusting, and still interesting anyway.

Recently, one particular salary storyline has been nagging at me; I believe I have finally teased out an insight or two worth recording. In recent weeks Miami Heat guard Dwayne Wade has been signaling dissatisfaction with Heat owner Pat Riley’s salary offering. One can read further detail elsewhere, but basically I feel like a reader comment on one story summed things up best. After Dave Hyde referred to Wade’s “sacrifices” over his Heat career, erikszpyra asked “What past sacrifices really? The man has made over $100 million in contracts and endorsements from basketball, along with 5 trips to the Finals with 3 rings. What did Wade give up that warrants crippling the Heats [sic] chance to rebuild?”

Now, this situation by itself is just par for the course with pro sports coverage. Few phenomena have ever provided more perfect or obvious demonstrations of the obnoxious remark that, once one is securely rich, “money is just how you keep score.” Still, I can’t help marveling at what seems like a massive instance of missing the whole point. Dwayne Wade certainly has “fuck-you money” many times over, and from a working class perspective it seems like he should be long past the point of spending even a second caring about more money, and simply doing whatever he wants with his life. I’m familiar with the “hierarchy of needs,” yet I still can’t help asking, why is he expending effort on this? Why not just forget it, and live life on his terms? He’s competitive and likes to win, fine, great; consider what really constitutes winning in life. If he wants to play basketball, just play basketball.

It’s possible to think of reasons why Wade might want something that even his current wealth can’t purchase. That’s always possible. Absent any information to this effect, though, I will presume that he is not driven by aspirations to build the world’s largest pyramid or start his own space program. Likewise, it’s possible that Wade is fanatically dedicated to some charitable or activist cause, and eager to wrench as much money as possible away from less selfless rich people so that he can direct it to a disadvantaged population instead. If so, I submit that we definitely ought to read more about this, as such an example is at the very least worthy of popular discussion. Nonetheless, absent evidence, I presume that this does not explain Wade’s anxiety about getting more money while financially able to satisfy most personal needs for many lifetimes.

My impression is that, basically, getting more money is a significant part of what Dwayne Wade wants to do with his life right now.

Again, while I still find it an inherently weird and possibly just misguided idea, this is not really a new concept. Here’s where it really begins to get interesting, though: arguably Wade is less interested in more money for the sake of more money, but in his relative share. He’s the Heat’s marquee star, yet someone else has always had a bigger salary, and Wade has decided it’s time to redress this, so the thinking goes. This is plausible, and sort of interesting for how it does and does not resemble discussions of broader economic inequality. Something else, though, kept bugging me, particularly related to the sense that there’s just too much money in play; Miami can pay Wade a fortune and still have massive amounts of money left, and so regardless of whether Wade needs it there is a viewpoint that “someone’s going to get that money, better Wade than the suits in the office.” This is something I’ve encountered before.

Over the past decade or so, Hollywood has turned various comic book superheroes from financial footnotes into cash geysers. This seems to have lent a new energy to arguments about the pittance paid to those superheroes’ original creators, who introduced them in the course of work-for-hire projects. These arguments go back some ways further, and have indeed lasted so long that in many cases, lawsuits for a share of movie money are made on behalf of creators’ heirs, as the creator himself (they’re usually male) is deceased. Some including myself have argued that this is absurd, and that aside from legal details there is simply no ethical obligation to award capable adults a share of revenue from an idea that their father or grandfather had. The usual rejoinder to this is, “well, someone’s going to get that money, better the creator’s family than the suits in the office.”

For some while, I couldn’t quite see any conclusion to draw here beyond the appearance of this same argument in two different contexts. That’s kind of interesting, but I felt that there had to be some deeper significance. As noted, it nagged at me. This odd problem of such a superabundance of money that people possibly fight over it more, rather than less. It wouldn’t go away.

When it comes to comics and “too much money” problems, I already had a suggested answer to this problem: ideally the money should not go to anyone, either suits or heirs. At any rate, neither should be able to collect monopoly rents from controlling access to characters created 50, 60, 80 years ago, often by someone no longer living. Restore truly limited copyright terms, and let money for derivative works go to whoever creates them. Yes, this would probably still mean corporate “authors” such as Disney-Marvel or Warner-DC in many cases, but they couldn’t prevent creators’ heirs, or anyone else, from grabbing a cut of the merchandising income by selling their own Hulk Hands, or X-Men shirts, or toy Batmobiles.*

Even setting aside the pie-in-the-sky prospects, I thought that this proposal had no application to the NBA, though. Like most educated people, I long ago learned that ridiculous revenue for professional sports and other popular entertainments is the result of “the superstar effect.” I have since taken this for granted; it bugs me that people seem to treat an explanation as a justification, rather than saying okay, we know how this result occurs, can we think of some way to improve it… but I have taken for granted the basic framework that mega-million athletes and other celebrities benefit from the natural economic phenomenon of the superstar effect.

After about a week of nibbling at these issues, though, I had something of a novel realization. The Miami Heat’s problem of too much money is arguably just as much the result of artificial monopoly as superhero fictions’, and arguably just as susceptible to the same solution.

Think about it. According to the superstar effect model, most people want to watch the very best athletes in a given sport, and in an age of television nearly all of those people can, so the greatest part of revenue from basketball fans’ ad-views, ESPN subscriptions, merchandise purchases, etc., all flows to one elite league rather than spreading out more, as in the days when even the best could only perform for thousands at one time. But most of this depends on government enforced intellectual property monopolies.

The big money for professional sports leagues is television rights. The fact that they can collect that big money for those rights is, however, due to copyright laws denying rights to everyone else by default. In 2015, technology exists for anyone with a ticket to the game to transmit video of it, potentially to the world; a handful of people covering multiple angles could probably make a very respectable alternate game broadcast. For that matter, one could easily retransmit the official broadcast with only a split second’s delay. In both cases, it is not technology but legality that prevents competitors from diverting part of the torrent of money from the NBA.

Likewise, all that merchandise revenue goes to the NBA because everyone else is legally prohibited from making and selling their own Heat jerseys, Warriors caps or Cavs coolers. Even the endorsement revenue—which some have argued makes Wade’s salary irrelevant—depends in some part upon intellectual property restrictions. Wade can set his own price for participating in a television commercial, regardless of IP law, but the amount that sponsors will pay might be reduced if they can use generic video or still images of Wade for free.

Behold “the invisible hand” of “the free market!”

I think this is a fascinating demonstration of how libertarianism could work… but doesn’t. Intellectual property monopolies in their many incarnations are, this issue included, probably the best arguments for e.g. Conor Friedersdorf’s proposal** that before giving up on the free market producing equitable distribution of wealth, we should actually try it, i.e. start removing the many artificial market distortions that the affluent have written into our laws for their benefit.

That’s exactly why this doesn’t happen, however; I believe it’s also another answer to Matthew Yglesias’s recent question of why libertarianism is not more popular. The economically marginal are probably reluctant to trust markets over some kind of formal societal commitment (e.g. social security). The more economically affluent are mostly more eager to discontinue progressive redistribution… But the second that libertarianism starts talking about reintroducing competitive market forces to those government policies (e.g. intellectual property monopolies) that benefit the affluent, the affluent flee back to the GOP for some soothing words about the sanctity of private property and a stiff whiskey.

Personally, I believe that many true market failures do exist, anyway, and that therefore libertarianism is insipid; freedom from government interference is great but so are lots of things, yet trying to establish a general ethos around them is not necessarily very useful. By the same token, I don’t think eradicating intellectual property monopolies entirely is a good idea in the real contemporary world, as attractive as its hypothetical possibilities may be.

I realize that I’m skirting close to dismissing a proposal because “it’s politically impossible,” here, which is a terrible argument. I think it’s rather more valid to observe that, as one or another of The Economist bloggers once wrote, if your idea only works in the purest uncompromised form, then it is worth effectively zero. Sorry, but we live in a kludge world.

To pass the “say what you believe should happen” test, in general I advocate going back to America’s original copyright rules. Fourteen year monopolies, renewable once for a fee; after 28 years (or sooner if the fee isn’t paid) work enters the public domain. I’m willing to let trademark protections alone so long as they don’t act as a de facto copyright restriction. Obviously this would involve a lot of fussy details, to say nothing of the disaster of patent law, but in any event this is my suggested general principle.

Meanwhile, as “the superstar effect” would probably continue operating in a mildly liberalized intellectual property regime much as it does under current law, I would recommend addressing that through much higher top tax rates. If everything that the Heat pay Dwayne Wade—or all profit the team owners make—beyond say one million dollars per year is taxed at something like 90%, then it seems very possible that a working class perspective on wealth will be restored and independently wealthy persons such as Wade will just proceed with doing what interests them, without getting in fights over whether someone else’s share is bigger than theirs. Or, at least, with fewer fights.

Acknowledged, I wouldn’t just assume that high top tax rates would change people’s behavior in this way… but I’ve read that historically it has been so.

Realism aside, as “big ideas” go this is also old-school, stuffy and decidedly un-sexy. But maybe someone can work on a whizzy rebranding like “the life-satisfaction incentivization curve.” Someone work on that.

* Yes, I do know the difference between trademark and copyright; ideally trademark policy would be liberalized as well, but even if it weren’t this would still leave significant room for legal “unlicensed” products. In the scenario of a fair implementation of my proposal, at least. Obviously the details would need to be carefully framed so that Disney couldn’t just pummel competitors into oblivion with legal challenges.

** I spent several minutes searching but I can’t find the column. It was a fair effort, too. Oh well.

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