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Wednesday, November 24, 2010

Rules, Regulation, and Mixed Martial Arts

The Ultimate Fighting Championship (UFC) illustrates well the benefits of limiting rules and regulations, and provides an example of immense success despite—rather than because of—government intervention.

The UFC, which hosts mixed martial arts (MMA) events, has grown immensely popular in recent years. In the early years, the mid-1990s, the sport had a limited number of rules of combat, and even today has far fewer than most fighting sports. However, its popularity was constrained because the Nevada Athletic Commission refused to sanction it and many states banned it. Eventually the UFC modified its rules so it could get sanctioned. The government’s intervention in the UFC parallels its intervention in the economy and personal freedom, while the success of the UFC demonstrates the benefits of less regulation.

When the organization started, one of the main attractions was to see which types of fighters would reign supreme in a fight with essentially no rules (with a few exceptions, such as no eye gouging or biting). Fighters with different backgrounds—such as wrestling, Muay Thai, boxing, and Brazilian Jiu Jitsu—competed against each other. Although the participants willingly entered the competition knowing the rules (or lack thereof) and the risks, most state governments were reluctant to allow the fights. Essentially, the government was protecting the fighters from themselves, similar to how the government steps in to prevent people from eating, drinking, or smoking certain substances. Of course, this frustrated some fighters who did not understand what business the government had in interfering with their lives. As former UFC fighter Kevin Randleman said, “If the public wants it, how can the politicians deny it? . . . They can be out the next election cycle. They need to listen to the people.”

UFC copycat organizations were also banned in many places. One of the people who led the crusade against the UFC and MMA events was U.S. Senator John McCain. As Amy Silverman of the Phoenix NewTimes wrote in “John McCain Breaks Up a Fight” (Feb. 12, 1998), a sold-out show was canceled hours before the bell, the owner of the theater explaining, “I’m not going to take on the U.S. Senate.” One of the fighters, Lyman Markunas, explained his frustration: “I am kind of disgusted, because of all the training I do.” The people wanted to see the event, the fighters wanted to participate in the event, but powerful government figures pressured the states to ban the sport.

From the government’s perspective, allowing people to fight with few rules may seem likely to lead to multiple deaths and serious injuries. Even if true, one can argue that the government still has no business telling a fighter that he cannot assume the risk, but the evidence does not support claims that MMA matches lead to serious injury or death. Up to now no deaths in the UFC have occurred. A study published in the Journal of Sports Science and Medicine in 2006 observed that in 171 MMA matches from 2001 to 2004, over 61 percent of the injuries were hand injuries or facial lacerations. There was only one reported neck injury, and there were no reported chest or abdomen injuries.

As time passed the UFC added a few more rules, became sanctioned, and was allowed to put on events in many states and countries and on cable television. Overall the fighters are still fairly free to fight in any style they prefer as long as they don’t participate in activities such as eye gouging, head butting, groin attacks, hair pulling, or fish hooking. The main changes in the UFC seemed to have been for entertainment and television purposes. For instance, fights now consist of three or five rounds of five minutes each; there were no time limits before. Fighters are also repositioned if in a stalemate to prevent a long time of dull inactivity.

With the fighters essentially having the freedom to fight in any way they want, those with the best strategies and most ability will succeed and those with poor strategies and ability will fail, as with entrepreneurs in a competitive market. In the early years of the UFC, fighters usually came into the ring with a particular skill, such as wrestling, karate, or Brazilian Jiu Jitsu. However, those fighters who did not have a balance of skills did not last if they did not adjust. For instance, fighters who were not familiar with Brazilian Jiu Jitsu were quickly forced to submit, so fighters soon learned the basics of that discipline. Those fighters who had no wrestling skills were typically put on the ground and pounded out if the other fighters were skilled at wrestling, so fighters had to learn the basics of that discipline as well. As time passed, fighters still entered the “octagon” with a specialty, but usually also had to be adequately skilled in the other disciplines to hold off generic attacks.

The government can take a lesson from the success of the UFC when it comes to business and personal freedom. Letting businesses choose whom they want to hire, how much they should pay their employees, what prices to set, and how much to produce seems like it would lead to chaos. Similarly, letting people eat and drink whatever they want, and participate in any sporting activity they want, would also seem to invite chaos. However, we have seen from the UFC that when the rules of the traditional disciplines were lifted, fighters innovated and became more skilled. The more regulation intrudes on the UFC, the less potential for innovation and improvement exists. For example, if to protect fighters the rules limited the sport to make it a boxing match, the fighters would not need to improve their submission or kicking skills, and they would not have to worry about defending such attacks.

Similarly, when government protects a domestic industry with a tariff or quota, the firm may not be forced to innovate and improve to compete with foreign competition. Also, when government tries to protect drivers and pedestrians with unnecessary traffic lights and stop signs, it may create a false sense of security, stifle ingenuity, slow traffic, and increase accidents. “We will be creating a bit of indecision in all road users’ minds to create a safe environment,” said Martin Low, Westminster City Council’s head of transportation, who is running an experiment with fewer traffic lights in London. “When lights are out we have noticed that drivers are far more considerate and show more care and attention than they are when they have the reassurance of traffic lights.” (“London Seeks to Reduce Congestion by Eliminating Traffic Lights,” New York Times, Sept. 2, 2009.)

In fact, regulation may create chaos, while lack of regulation may create continuous innovation.

When regulation of the UFC has increased, as when the regulation of business or personal freedom increases, a select group of people has benefited, while others were punished. Sometimes regulation hurts those who need help the most. For instance, when time limits were implemented in the UFC, it benefited those without the stamina for a longer match—typically the large and bulky fighters—while it hurt the more patient fighters who need time to set up a submission. A minimum wage benefits union workers, who don’t have to compete with low-skill/low-wage competitors, while it hurts the young and unskilled workers who would be willing to work for a lower wage but are unable to find employment. The prohibition of certain drugs benefits the drug cartels and large corporations while imposing a large cost on society from the imprisonment of offenders, an insecure environment, and the unavailability of life-saving drugs.

Benefits of Uncertainty

Like the free-market economy and free people generally, the UFC has faced uncertainty. When two fighters enter the ring with limited rules and different styles, it may be difficult to predict the outcome of the match. This uncertainty can make it exciting for the fans, but it can make government and society nervous. As the saying goes, a known devil is better than an unknown angel. The same goes for freedom and the free market, where the unknown outcome may lead people to favor more government intervention.

However, uncertainty can lead to favorable economic outcomes. As economist Armen A. Alchian wrote in “Uncertainty, Evolution, and Economic Theory”:

In general, uncertainty provides an excellent reason for imitation of observed success. Likewise, it accounts for observed uniformity among the survivors, derived from an evolutionary, adopting, competitive system employing a criterion of survival, which can operate independently of individual motivations. Adapting behavior via imitation and venturesome innovation enlarges the model. Imperfect imitators provide opportunity for innovation, and the survival criterion of the economy determines the successful, possibly because imperfect, imitators. Innovation is provided also by conscious willful action, whatever the ultimate motivation may be, since drastic action is motivated by the hope of great success as well as by the desire to avoid impending failure.

As with people in society, fighters in the UFC do not want to fail. Surely each fighter would love to have a safety net that protects him but not the other fighters, just as a firm would love to have a subsidy and a protective tariff imposed, and just as an employee would love to have a secure union contract and unlimited unemployment benefits. A large company would also love to know that it would be bailed out if it failed. A casino gambler would love to know he will receive a refund if he loses everything. However, if the UFC or the government tried to do too much to protect the fighters, firms, or employees, then competition, innovation, and individual responsibility would cease to exist, and everyone would fail.

Fortunately for the UFC, it has been able to make government accept it without too much overbearing regulation. MMA has now become one of the most popular sports in the United States, and it is growing fast across the world. The success of the UFC demonstrates that the freedom to choose leads to favorable outcomes, but it must overcome government, fear, and special interests.