I'm not a major league baseball fan but that sport gave us all a great lesson in economics this week.
The Boston Red Sox traded Manny Ramirez, their slugging left-fielder, to the Dodgers in a three team deal. That's significant because Ramirez publicly demanded the Red Sox trade him. 
Not coincidentally he missed some games after that demand because of "soreness" in his knee even though medical tests were negative. And some observers thought he was dogging it when he was playing and not giving it his all.
So Ramirez got his wish to be traded. Not only that but the Red Sox pay the rest of this year's contract to him even though he's now playing for the Dodgers. How about them apples?
Try pulling those stunts if you aren't employed by a professional sports team and see what happens. You would be unemployed rather abruptly. The difference between professional athletes and us is due to the simple economic law of supply and demand. Ramirez pulled those antics against his employer because he knew another team would be happy to get him. He had a skill (supply) that was desired (demand) by another employer. And so it happened. And because the supply is relatively small he can get highly compensated for his skill. That's as basic in economics as it gets.
Of course the situation will be the opposite as his skills decline with age. Then the reverse happens and there will be no demand for his services and he'll be out of a job. That's our advantage over professional athletes--we have a much longer career. Of course their big money more than compensates for our longer career.
Most of us, myself included, don't have special skills that are in short supply but strong in demand like Mr. Ramirez so we don't get big time money from our employers. And the sports teams that shell out those big salaries? They do it because they have the financial ability to do so and in the Ramirez case because they wanted him gone. It's obvious they wouldn't have made such a lop-sided deal if they didn't consider him to be a cancer in their clubhouse. The Red Sox obviously don't consider it to be too expensive to have done so.
I love it when sports dramas like this one just prove basic economic laws. I should have been an economist.
Scratch that. They're a dime a dozen.
August 1, 2008 in
Business |
Permalink
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d83451d33c69e200e553e4e35a8834
Listed below are links to weblogs that reference SPORTS AND ECONOMICS 101:
Your Comments
Post a comment
