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Source link: http://archive.mises.org/19479/the-bowl-championship-series-and-the-illusion-of-right/

The Bowl Championship Series and the Illusion of Right

November 25, 2011 by

This year, I tried (and failed) to give up on spectator sports. The opportunity cost of watching baseball and football is just too high, I thought. It worked until about September or October. Over the summer, I checked occasionally to see how the St. Louis Cardinals were doing–I grew up rooting for them, and I went to grad school in St. Louis from 2001-2006–and I thought it was fairly clear that I wasn’t missing anything. Then the Cardinals went on a historic tear that culminated in a World Series victory.

As an Alabama graduate, I knew college football season would be the big test. I watched a few minutes of the Alabama-Penn State game, but I finally broke down and submitted when Alabama played Arkansas. I’m at peace with it.

It’s a good time to be both a social scientist and a fan as big-time college football has descended into its annual madness with respect to determining a champion. We’re on the cusp of a handful of strange scenarios. If LSU beats Arkansas in a few hours, LSU will go to the SEC championship game against Georgia while Alabama will only need to beat Auburn tomorrow to be all but assured of a spot in the national championship game. The road to the championship would actually be easier for Alabama as a division runner-up than it would be for Alabama as a division champion. Commentators are saying LSU could probably still make it to the national championship game even if they lose to Georgia in the SEC championship game. An Arkansas victory over LSU creates an interesting (and chaotic) cycle: 11-1 Alabama will have beaten 11-1 Arkansas, who will have beaten 11-1 LSU, who will have beaten 11-1 Alabama… As at least one commentator has pointed out, SEC officials have interesting and perverse incentives over the next few weeks: if LSU beats Arkansas and then loses a close game to Georgia for the SEC Championship, the probability of an Alabama-LSU rematch for the title is still very, very high. This would also get a third SEC team (Georgia) into a big-money BCS bowl.

And just as Thanksgiving meals produce food comas, the chaos surrounding the top of the rankings in college football has produced calls to “fix” the BCS. The interesting problem, though, is that there isn’t a way to “fix” the BCS. One of the central insights in social choice theory is that, to quote Peter Boettke, “there’s no stable social welfare function.” The BCS can be tinkered with until the end of time, but there will always be some flaw in the mechanism. Even tournaments feature a lot of randomness: as much as we all enjoy bracket-busting upsets in the NCAA basketball tournament and great stories about this or that baseball team surging in the postseason, tournaments aren’t foolproof. Are they better? Maybe they are, and I’ve always been sympathetic to calls for a tournament in big-time college football. As much as we might want to think otherwise, the BCS can’t be “fixed” because there’s no One Right Way to do it (though adding Matt Ryan’s Gus Rankings to the mix might be a good idea; here’s an old article in which I discuss similar themes).

Like just about everything, I see the annual controversy about the BCS as an object lesson in the importance of markets as mechanisms for social decision-making. In a world where people have heterogeneous tastes, preferences, goals, ideas, beliefs, and so on, there’s no One Right Way to do things. This is implicit in the institutions of a free market society based on voluntary trade. To borrow from Steven Horwitz and David Friedman, the “anarchy of production” is a feature of the free market, not a bug. Order emerges from the voluntary interactions of the many buyers and sellers who make up the market. The annual BCS controversy is also instructive because it illustrates another important point. We have enormous trouble figuring out who the best teams in college football are. Answering truly important questions through non-market mechanisms is more difficult by orders of magnitude; indeed, as Mises showed in his classic article “Economic Calculation in the Socialist Commonwealth,” it’s impossible in the absence of private ownership of the means of production.

{ 9 comments }

Demarest November 25, 2011 at 2:08 pm

…well then, ALL education should be market-based.

Get the government entirely out of education… from college right down to kindergarten {as Murray Rothbard so strongly advocated}.

Timber simmer November 26, 2011 at 3:40 am

Is a good time to be a social scientist and a big time college football fans have descended into the madness of the year with a win.

VoCo November 28, 2011 at 1:42 am

“…it’s impossible in the absence of private ownership of the means of production.”

Basically this.

College football is a quasi-public system. Perhaps, in a truly free market consumers would demand a playoff system. We won’t know until college football is completely privatised.

Horst Muhlmann November 28, 2011 at 11:17 am

Yep. And college, in general, has been socialized in the US.

Also note that college sports – particularly football and basketball – is where the most egregious case of “worker exploitation,” as the Marxists say, occurs. Players, some of whom can earn millions of dollars, are forced to play for free while their (usually) state university hoards the cash.

iawai November 28, 2011 at 12:34 pm

And don’t forget the current rash of sexual exploitation stories that are undoubtedly just the tip of the disgusting iceberg.

As a young football or basketball player you are told, flat out: “You have no choice, you must go through the NCAA gauntlet, so its in your best interest to go through college-based camps and play your part in the artificial hierarchy without raising too much fuss, lest you lose your contacts and get black-listed. Especially if you aren’t the greatest player ever, because you’re going to need all the help that you can get to get to the pro levels.”

Certainly there are abuses in soccer, hockey, and golf, too – but as a player in these sports, you usually have a great variation in choices in your path – from juniors leagues, semi-pro leagues, college leagues, or foreign professional leagues. And because there is this level of choice, abusers get called out and young athletes can always find a team willing to take their services and reciprocally give them opportunity and refinement coaching.

The same dynamic has stifled scientific growth in the US, and has led to the same sexual deviancy with professors being the “king” in their govt-granted lab, and graduate student apprentices being told to shut up and not to rock the boat – either in personal affronts or in scientific experimentation.

Bill in StL November 28, 2011 at 1:10 pm

Although I’m sympathetic to the complaints of unpaid players, the argument that they’re being forced to do anything by the colleges is weak.

First, they’re not forced to do anything. They don’t have to go to school. The school offers a scholarship and athletic training in return for their athletic prowess.

Second, it is the NFL’s restriction on young players that makes college athletics seem like the only option for so many. If they allowed younger athletes, such as the NBA does, or if they had a decent minor league system like baseball, there would be little reason left for young prodigies to feel pressured into giving up their services for nothing more than a scholarship.

Obviously, college football would be improved by the complete privatization of all involved universities.

Joseph Salerno November 30, 2011 at 11:36 am

While I have great sympathy for the point of the article, I believe Art chose a weak example to illustrate his point. What troubles me most about this article is that it treats the status quo in college sports as if it were the product of a type of “market mechanism for social decision making.” In fact college sports, especially college football, is dominated and rigidly controlled by the National Collegiate Athletice Association (NCAA), which is a textbook case of a buyer’s cartel. Its primary purpose is to suppress the price of inputs, such as college football players, much below their marginal revenue product or the additional revenue that they earn for their schools . For example, there is the well known “Flutie effect” in college football. It is estimated by economists that over his four-year career as a star quarterback for Boston College, which culminated in his receiving the Heisman Trophy in 1984, Doug Flutie generated an additional $12-$15 million in gate receipts, broadcast revenues, bowl game payouts, admission applications of high performing high school seniors, etc. Flutie received a minute fraction of this income in the form of athletic scholarships. On a truly free market he would have been paid nearly the entire amount. The same can be said of the star center Patrick Ewing Georgetown University’s star center who put the school permanently on the map as a major basketball power. In its quest to suppress athlete’s wages and keep them as close to zero as possible, the NCAA minutely regulates every source of income, including payments in kind from the school’s alumni and boosters, recently penalizing Ohio State University because some of its athletes received free tattoos. But the NCAA also controls and restricts outputs, e.g., the televising of football games by acting as the sole agent for negotiating the sale of television for all cartel members. Finally, and most importantly, the NCAA is supported and propped up, albeit indirectly, by governmental bodies. For instance, any school that overtly paid student-players a salary reflecting their marginal revenue products would risk losing their academic accreditation, which is granted by quasi-governmental academic accrediting agencies, and would thereby be denied access to governmental scholarship and research funds. Also, although it is very costly to monitor infractions of the rules by cartel members, some of these costs are defrayed by taxpayer-funded law enforcement agencies that assist in investigating and ferreting out infractions of the cartel rules. Finally the cartel has historically benefitted the large successful programs, which do not have to “cheat” by offering extra pecuniary inducements to attract premier players to enroll in their programs. This is how the leading programs remain on top year after year. The result is that coaches such as Joe Paterno are widely beloved and achieve almost a god-like status because they continually win yet run “clean” programs–that is, they ruthlessly enforce the cartel rules that benefit themselves.

I have two other quibbles with the article. First, Art quotes Pete Boettke to the effect that “there’s no stable social welfare function.” Huh? The social welfare function is a meaningless concept; speculating on its stability or instability is vain and pointless. Even John Hicks admitted that the concept can only be meaningful if it denotes the utility function of a dictator who makes all choices for all his subjects. And who cares about the properties of Hitler’s or Pol Pot’s utility function? It is irrelevant to the analysis of the efficiency properties of a dynamic market economy.

Second, Art notes correctly that “the “anarchy of production” is a feature of the free market, not a bug.” He says he borrows this insight from Steve Horwitz and David Friedman, which implies that it is original with them. But both Mises and Rothbard made this point much earlier. For example in Human Action (p. 257) Mises wrote:

The Marxian slogan “anarchic production” pertinently characterizes this social structure as an economic system which is not directed by a dictator, a production tsar who assigns to each a task and compels him to obey this command. Each man is free; nobody is subject to a despot. Of his own accord the individual integrates himself into the cooperative system. The market directs him and reveals to him in what way he can best promote his own welfare as well as that of other people.

In Man Economy and State (p. 1024) Rothbard similarly argued:

Superficially, it looks to many people as if the free market is a chaotic and anarchic place, while government intervention imposes order and community values upon this anarchy. Actually,
praxeology—economics—shows us that the truth is quite the reverse. [Th]e network of these free exchanges in society—known as the “free market”—creates a delicate and even awe-inspiring mechanism of harmony, adjustment, and precision in allocating productive resources, deciding upon prices, and gently but swiftly guiding the economic system toward the greatest possible satisfaction of the desires of all the consumers. . . . In short, not only does the free market directly benefit all parties and leave them free and uncoerced; it also creates a mighty and efficient instrument of social order. Proudhon, indeed, wrote better than he knew when he called “Liberty, the Mother, not the Daughter, of Order.”

David Gordon November 30, 2011 at 1:37 pm

Whether it makes sense to talk about an objectively “best” team is not settled by arguments about whether people’s preferences can be aggregated in a consistent way. The post confuses these separate questions.

David Gordon December 1, 2011 at 2:14 pm

I don’t think that my last post was sufficiently clear, so I’d like to try again. Whether it is possible through a tournament to determine which football team ranks best among a number of competitors is an interesting question. It may be as, Art Carden suggests, that there will always be some flaw in the BCS mechanism. But this can’t be shown by pointing out that there is no stable social welfare function. The social welfare function is about preferences. Theorems about it do not apply to the presumably factual issue of which football team is best.

It is also wrong to say that Mises’s socialist calculation argument shows that it is impossible to answer truly important questions without a market. Mises’s argument deals with factors of production that have multiple uses: these cannot be allocated efficiently, the argument shows, without monetary calculation. It is not a general thesis about the conditions in which truly important questions can be answered.

Carden suggests that “In a world where people have heterogeneous tastes, preferences, goals, ideas, beliefs, and so on, there’s no One Right Way to do things.” That is a philosophical thesis, not something that follows from welfare economics or from Mises’s calculation argument. To suggest otherwise promotes confusion.

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