The Reserve Clause and Proletarian Revolution
By Edward McClelland has been thinking very hard:
The deregulation of the American economy that began in the 1970s has increased the salaries of professional athletes enormously while reducing those of blue-collar workers. In 1975, pitchers Andy Messersmith of the Los Angeles Dodgers and Dave McNally of the Montreal Expos appealed to arbitrator Peter Seitz to strike down baseball’s reserve clause and allow them to sell their services to the highest bidder. The Seitz decision, which was upheld by the 8th U.S. Circuit Court of Appeals, began the era of free agency in professional sports. After increasing arithmetically for the first three-quarters of the century, salaries rose geometrically during the past 25 years of the 1900s and have continued to balloon in the 2000s.
Because the reserve clause was eliminated at the insistence of the Major League Baseball Players Association, the Seitz decision is considered a victory for organized labor. It wasn’t. It was a victory for the laissez-faire marketplace.
Labor unions are cartels that increase their members’ salaries by bargaining collectively, thus winning a more lucrative contract than workers could negotiate on their own. Baseball players are entertainers with specialized skills. They didn’t start earning their true market value until they were allowed to negotiate individually with owners—the antithesis of collective bargaining.Marvin Miller, the former United Steelworkers of America economist who became executive director of the MLBPA, was a talent agent, not a labor boss.
I would like to suggest that the connection between striking down the reserve clause and the stagnation of American blue collar wages is… murky. What follows is a long discussion of how perturbed McClellan is that Alex Rodriguez is paid a lot of money by the tremendously wealthy, successful businessmen who own the New York Yankees. Thinking about this makes him sad:
As baseball players accumulate plutocratic riches (Rodriguez will have earned a third of $1billion by the time his contract expires), I find myself wondering why I’m supposed to cheer for a guy earning $27.5 million a year—he’s already a winner. When I was 11, I hero-worshipped the Tigers’ shortstop because I could imagine growing up to take his place. Obviously, that’s not going to happen now. Since my past two jobs disappeared in the Great Recession, I can’t watch a professional sporting event without thinking, Most of those guys are set for life, while I’ve been buying my own health insurance for 5 1/2 years…. I know we’re never going back to the days when Willie Mays lived in Harlem and sold cars in the offseason, but the market forces that have overvalued ballplayers’ skills while devaluing mine have made it impossible for me to just enjoy the damn game.
Here’s the thing; while there are obviously problems associated with determining the “value” of the skills of professional athletes, it’s not at all obvious that Alex Rodriguez is overvalued, or that Willie Mays was appropriately valued. Compensation, obviously, depends on how law and organizational rules structure the ability of owner and worker to negotiate; changes in those rules can have dramatic effect on how much players get paid. I don’t know why people still need to point out that investment in Justin Verlander isn’t irrational if the Tigers win, the owners make money, and franchise value increases.
McClelland is unhappy that he has to pay for health insurance, and has determined that the solution is a set of rules that arbitrarily suppress the value of extremely skilled workers. Such rules will be of no direct material benefit to McClelland, although they’ll surely make billionaire team owners happy; perhaps McClelland hopes that elaborate demonstrations of fealty to these billionaires will land him a more lucrative position.
[SL]: This seems to be the “logic” that buttresses a lot of anti-union sentiment, but once again money generated by professional sports that doesn’t go the player does not then go to teachers or cancer researchers or starving orphans — it goes to (generally obscenely wealthy and lavishly taxpayer-subsidized) owners. If you find yourself longing for the good old days where the almost all of the money generated by the labor of players stayed with the owners, you really need to think harder. (I’m guessing that McClelland is one of those guys who thinks it’s a massive scandal when someone buys an SEC QB a pair of shoes.)
[EL]: Whenever you see someone write, “Labor unions are cartels that increase their members’ salaries by bargaining collectively,” you can pretty much assume that they don’t know what labor unions actually do or why they exist.