The Invisible Hand's Inclination for Baseball by Matias Bulnes, NYC

Baseball season is starting and this introduces changes in the day-to-day pace of life of many of us. When thinking about it, it strikes me as remarkable how important a role Baseball plays in the lives of many. Millions follow their team’s performance on TV, the newspaper, or in casual conversation. Moreover, Baseball oftentimes serves as an opener for social interaction or as a standard of personal identification. According to the magnitude of this role, people are willing to spend an important portion of their income and time on Baseball, and hence it has become a highly compensated human activity. Baseball players make millions and there can hardly be any doubt that they are located on the high part of the wealth pyramid. And as with Baseball, so it happens with Basketball, Football, Tennis, Soccer, Car Races, Boxing, etc. In contemporary societies there are enormous incentives for hitting balls, driving cars or kicking each other to the highest possible degree of perfection.

By contrast, let’s consider the case of natural scientists. Undoubtedly the natural sciences have been the hotbed for much of the technological development of the last few hundred years. This technological development, in turn, is to an important degree responsible for the kind of life our societies enjoy. Telephones for being in touch with our loved ones, electric light for extending our hours of activity, refrigerators for conserving our food, TV’s for watching Baseball and other forms of entertainment, medicine for ensuring the birth of our children, to mention only a few, have given us the choice of living more comfortably. Barring reactionary arguments, it is hard not to see the natural sciences as an indispensable factor in raising the quality of life of mankind over the last centuries (to various degrees depending on the time and location). Nevertheless, society compensates such a crucial occupation as that of the natural scientist with meager salaries compared to other occupations. In particular, top sportsmen make more than ten or twenty times what top natural scientists make. There is no need to have a sharp eye to notice a discrepancy between the importance of these two occupations for the development of our societies and the compensations attached to them. Could it be the case that the invisible hand has a capricious inclination for Baseball players over natural scientists? Could it be the case that Free-market Economy is after all irrational in distributing the incentives in society?


Let’s begin by being fair to the invisible hand. Perhaps, despite initial appearance Baseball is an indispensable human activity, or at least important enough so as to be better compensated than natural sciences. Where could this importance be? One could say that Baseball is an efficient form of entertainment and that people need entertainment during their leisure time in order to be more productive during working time. However, this does not explain why we need to spend such an obscene amount of money in entertainment. Presumably, we would get an equally entertaining Baseball season by paying the players one tenth of what they get paid now. In fact, we see very competent doctors, lawyers, journalists and scientists working for much less than Baseball players. Wouldn’t a $200,000 salary make for quite an incentive to play Baseball? If it works for anybody else, why wouldn’t it work for Baseball players?

A more plausible argument would be admitting that Baseball is not intrinsically important but insisting that it nonetheless produces very important psychological effects. For instance, one could try to make the case that watching Baseball we are first-hand witnesses of success and failure, glory and demise, all of which reinforce competitive attitudes in the audience crucial for the bloom of society. Moreover, the argument would go on, these obscene salaries exacerbate the contrast between success and failure intensifying thereby these attitudes. Now setting aside the extravagancy of this argument, it relies on an empirical claim that seems by all lights doubtful. Surely everybody knows many people who are competitive and, more importantly, competent in their activities and have no interest in sports whatsoever. It is even unclear that statistically speaking sports fans are thirstier of success than others. Simple observation defies this argument.

Another argument I have heard in conversation is that Baseball is important because people are willing to spend a significant portion of their income on it. Baseball fans spend hundreds and even thousands of dollars a year on Baseball tickets or cable TV and this shows that it is important—for them. After all, the argument goes, what other measure of importance can there be if not the preferences of the economic agents? In response, let’s point out that not only are there many other measures of importance but there must be if the hypothesis of the invisible hand is to have any traction. For defining importance as whatever accords to the preferences of the economic agents is just begging the question whether the invisible hand can rationally regulate the incentives in society. The metaphor of the invisible hand as used by libertarians refers precisely to the preferences of the economic agents. As a consequence, the argument amounts to the claim that Baseball is important just because the invisible hand allocates certain resources to it, begging thus the question whether the invisible hand does a good job allocating resources.

But perhaps the best response one can give to these arguments is that there are fairly credible explanations for why our societies fail to compensate certain activities in accordance with their importance. Consider natural sciences and its perceived benefits for society. Usually scientific advancements take a long time to turn into technology. Furthermore, once technology has been derived from science it usually takes decades or centuries to reach the masses. For example, even though scientists had been working on a theory of electricity since at least the XVII century, electric light was not massified until the XX century. Meanwhile the very idea of using electricity to massively distribute light was no more than uncertain speculation. Be as it may, because of this separation in time between the scientific work and its tangible benefits for regular people, scientists, unlike Baseball players, have no negotiation power in the societies they live in. Hanged up on a wall of my workplace, there is a caricature of philosophers going on a strike. Their slogan is “no more search for the truth unless our demands are met.” The joke also represents how much regular people would care if scientists went on a strike. And in a free-market economy, economic incentives are fastened to how much people care. This is why Baseball players make so much money and natural scientists so little.

Now, in all fairness, it should be said that this explanation works only under the assumption that people don’t care about science. But this seems to be fairly obvious from plain observation. Although institutionally science plays a significant role in our societies, when it comes to people’s preferences there can hardly be any doubt that they care much more about Baseball than about natural sciences. And in a free-market economy people’s preferences, not institutional significance, determines economic incentives. Not only is the folk generally ignorant of science and its connection with technology, also it is widely accepted even within Economics that the folk is most strongly driven by short-term considerations. As a result, even if people were completely aware that a strike of natural scientists may jeopardize their chances of improving their quality of life in the far future it is unclear that this would produce the slightest distress in them.

In sum, aside from the comparison between Baseball and natural sciences, the short-term orientation of economic agents gives us independent reasons to expect that their preferences may not distribute the incentives in society rationally. The contrast between Baseball and natural science only goes to confirm what should have been expected. Moreover, this is just one instance of a distortion that should be much more widespread among other human activities. Intervention in the market is therefore necessary to correct for this distortion. I propose to intervene by allowing Baseball players to receive whatever salaries the market pays them but severely increase their tax burden so we can use that money to compensate natural scientists or other crucial human activities in accordance with their importance.