Freeman

ARTICLE

Superstar Athletes Provide Economics Lessons

Where Taxpayer-Funded Welfare Exists, People Will Exploit It

JANUARY 01, 1997 by K. L. BILLINGSLEY

Mr. Billingsley is a journalism fellow at the Los Angeles-based Center for the Study of Popular Culture.

What do former San Francisco 49ers quarterback Joe Montana, L.A. Raiders running back Bo Jackson, and San Diego Chargers quarterback Dan Fouts have in common?

All three are former National Football League stars and all three are multimillionaires—not the sort of status that would rank them with, say, a plasterer in Pasadena or a sheet-metal worker in Santa Ana. Yet, as the San Diego Union-Tribune recently reported, all three—along with many other athletes—are tapping into workers’ compensation in the state of California.

Since 1990, nearly 200 members of the San Diego Padres and Chargers alone have applied for workers’ compensation, a generous $8 billion system—primarily funded through compulsory contributions of employers—to assist workers who are unable to perform their jobs because of injury. Athletes, on the other hand, often enjoy guaranteed contracts that pay them big money even when they are injured, or when they are healthy and don’t play at all. And their respective teams pick up the cost of treating their injuries.

Other wealthy athletes dipping into the public purse include basketball great Bill Walton, former Cy Young award-winning pitcher Randy Jones, and legendary receiver Lance Alworth, who began collecting workers’ compensation nearly 20 years after he stopped playing football. Walton, Fouts, and Montana declined to discuss their windfalls, which average $50,000 to $70,000 per claim.

Joe Montana was once the highest paid player in the NFL, earning $13 million over four years. Both the stars’ salaries and the current workers’ compensation caper illustrate key economic realities.

Though some fans are outraged at the high salaries of today’s athletes, those salaries are simply a reflection of the willingness of millions of people to pay money to watch them play and perform. They are part of the entertainment business—software if you will—providing vicarious thrills for a mostly sedentary populace. If 80,000 cheering fans were willing to part with $20 apiece to watch accountants add, teachers teach, or window washers wash, then these occupations could command similar salaries, complete with lucrative commercial endorsements.

Besides illustrating market forces, athletics shows how a nearly pure meritocracy works. Nobody starts at quarterback for the Dallas Cowboys or guard for the Los Angeles Lakers because his father once played or happens to own the team. If a misguided urban youth can run, pass, kick, and play defense better than those raised in the wealthy suburbs, he will get the job, whatever his race, nationality, or religion. In sports, nepotism is a guarantee of failure, something that government needs to learn. But the attempt of some stars to gain money by other means is also illuminating.

A key player in the scheme is lawyer Ron Mix, a former NFL lineman. Along with a squad of attorneys working with the NFL Players Association, Mix pushes the envelope. He even urged former Baltimore Colts quarterback Johnny Unitas, now 63, to file a claim in California. It was one of the few turned down. Word quickly spread that California’s system is an easy mark. Even those living in other states, and who played for non-California teams, have cashed in.

The superstars’ compensation game confirms that those willing to exploit such programs need not be low-income people. Indeed, in recent years, the wealthy from Mexico, Central America, and as far as Sri Lanka, have had elaborate surgeries such as quadruple bypasses performed under MediCal, the Golden State’s health-care system for low-income people. Word has spread worldwide that this is the place to go for free care, courtesy of taxpayers ineligible to use the system themselves.

If a welfare, workers’ compensation, or medical-aid system exists, it will be exploited, with the exploitation abetted by professionals who get a piece of the action. Such systems, by their very nature, will always be inefficient and corrupt, however noble the intentions and rhetoric of their political creators.

For policymakers, the rule would seem to be that it is better not to establish such a system in the first place. It is always easier to set up a system than to reform it, much less shut it down. To paraphrase the baseball fantasy Field of Dreams: if you build it, even the millionaires will come.

ASSOCIATED ISSUE

January 1997

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