What I like about having a blog is that I can simply capture my thoughts, along with links that form the basis of my thinking at the time. It allows me to think out loud and perhaps get some feedback in case my views are off base.
With that in mind I want to say a few things about free markets and capitalism. Maybe later I'll think I was completely wrong, but I just want to capture my thinking anyway.
I've always fancied myself as a liberterian, but lately I'm having some misgivings about some of it and wondering if government regulation sometimes isn't as awful as is often portrayed. I know I've lambasted government generally, arguing that it's the root cause of major problems in the world, and I still think that's true, but lately I'm wondering if that's more due to the fact that the public is in a major way isolated from government and government itself is more under the control of private interests. What this would imply is that government itself is not inherently as villainous as is sometimes thought and in fact can be a means of correcting gross imbalances and dangerous actions that can come about in free markets.
Here's a good area where the government should get involved. Bum Fights. These kids apparently offer homeless people something like $50 to beat each other senseless. The first to go unconscious loses. A true liberterian would have to say there's nothing wrong with it. These are free people that own their own bodies and if they decide it's worth it to them why shouldn't they be allowed to chose?
Because it's awful and harmful to them even if they're not smart enough to realize it. Like any liberterian I don't want a government nanny state. But I think in this case the liberals have a point. Maybe the government should be used to protect people from themselves.
We do this for children. An adult can choose to go to school or not, but a child can easily be convinced that he doesn't need school if, for instance, his parents decide they don't want to make the effort to see that he goes to school. This is why have have laws that mandate that kids have to go to school. These homeless people are like children in the sense that for whatever reason they don't have the mental faculties needed to make wise choices and I think it is right for the government to step in.
Maybe these are easy cases, but let's get into something a little more blurry. Take the UFC. It's almost like a perfect example of the famous the Pyramid of Capitalism caricature. Fat cats at the top making millions while dedicated fighters slave away beating their bodies for pennies.
Take Karo Parisyan. This guy is an amazing fighter. Not a champ, but championship caliber. He's a huge draw. And yet he's having panic attacks that result from financial problems. He's trying to simply provide for his family. He's a superstar athlete that has put millions in the pockets of the owners, but he's just scraping by. Or take Hermes Franca. He got a title shot against Sean Sherk but suffered an injury in training. He took steroids to help himself recover and avoid canceling the fight because he just couldn't afford it. He needed the fight to put food on the table. See his statement here. He made $14K in that fight, but had to forfeit $2500 in penalties due to his positive test for steroids. His earnings are listed here. His opponent, the champ, Sean Sherk, made a whopping $25K.
Take Anthony Johnson. He basically had his eye gouged out and managed to earn $9K for it. This guy is not a poser. He's a serious, top tier fighter. Anybody in the UFC is tougher than anyone that most of us have met and Johnson is among the best of these. He made $17K in his recent bout, taking multiple gouges to the eye once again and basically lost probably in large part because of these possibly intentional gouges. I'm sorry, but $17K and you're among the best in the world, getting destroyed both in the gym and in the ring. And you can only do this a few times a year. Meanwhile the President and owners are making millions sitting behind their comfortable desks, destroying all competing fight organizations ensuring that there is no competition available to drive up fighter's salaries.
But then these are grown men. These are people that are competent to make their own choices. These are not children.
Well, aren't they? Aren't we all in a sense? Here's what I'm thinking. We protect children because they can be so easily manipulated into making choices that are not in their own best interest? Is that not also true of adults?
The marketing industry is huge multi-billion dollar industry that has one goal. Convince people of their need to purchase things or take actions that are for the benefit of the corporations that finance them. Do you think you can stand up to that? Do you think you are not motivated by that to buy crap that you don't really even want and certainly don't need? Are you smarter than they are?
Marketing techniques are designed not just to persuade you of your need to purchase a product but also to do so in a way that leads you to believe that you came to that conclusion independent of their influence. It's an extremely sophisticated and almost frightening thing. Watch in this video as master illusionist Derren Brown uses subliminal marketing techniques to cause two marketing experts to come up with an advertising campaign for a new product. What's amazing is that the experts imagine themselves to be coming up with ideas independently when in reality they've been manipulated to do what they do.
So how does this play out in the UFC? In Season 1 of the Ultimate Fighter some fighters express concern about the fact that they aren't paid to fight at all. They can go out and suffer serious injury and have absolutely nothing to show for it. This prompts the President of the UFC to come in and give a supposedly rousing and impressive speech, which is now referred to as the "Do You Want to be an Effing Fighter" speech. This speech is kind of embarrassing to watch as White tries to act like a tough guy and the fighters basically get no answers, but it's played up on the show like it's some sort of impressive thing. The UFC would go on to make a show about the 25 Tuffest Moments of The Ultimate Fighter. White is so impressed with himself that he saw to it that his very speech clocked in at #2. See here. The marketing message is this. Sacrifice your bodies for our business. Forget about the fact that you may end up permanently damaged and have nothing to show for it. This creates big pressure to sacrifice, and these fighters do, while the UFC rakes in the cash and the fighters for the most part leave with nothing but broken bodies. Except for the select few champions, who can make decent money at the top.
Some have speculated that former UFC champion Evan Tanner committed suicide. Past his prime and with little to show for his efforts that helped make the UFC as profitable as it is John Koppenhaver wonders if in fact this motivated behavior in Tanner that lead to his own death. That could be completely false. I have no idea. But it is the shabby treatment that fighters receive that prompts this kind of speculation. Koppenhaver says the UFC cut him due to these comments.
Free markets are great if informed people are making decisions that are in their own best interest without subliminal outside influence. Also if their choices are not being reduced through manipulation and regulation (for instance if the UFC is destroying competition through underhanded ways, which reduces a fighters options). But is this the world we live in?
And I have been wondering lately if what is maybe a little more obvious with the UFC isn't also true in other sectors of the economy where perhaps it isn't quite as obvious.
Take me as an example. I'm a mechanical engineer. When I was growing up engineers were rich people. Today it's considered pretty much middle class. But look at the gains in productivity that have been made? Today a mechanical engineer has wonderful tools available that have dramatically increased his productivity. I design with solid modeling tools. I analyze vibration and structural performance with finite element analysis. I perform thermal simulations using computational fluid dynamics. I correct potential problems before the parts are ever built. All with tools unavailable to my predecessors. I do it all and do it quickly. I can do three to four times the amount of work an engineer did in 1980. How is it that mechanical engineers have gone from being upper middle class to merely middle class? If markets are free wouldn't we expect gains in wages along with the gains in productivity? But this is not what we are seeing. We're seeing wages flat while productivity rises, and this trend seems to have begun around 1980.
So I'm having a mild shift in my thinking on wealth redistribution. People are entitled to the fruits of their own labor. But when that labor involves manipulating others to sacrifice for you in moves that are not in their own best interest, or when that labor involves bribing the government into passing laws that funnel money from the poor to the rich (see the health insurance industry and the recent changes to health care laws) then the consequence is redistribution of wealth already. It's wealth from the poor to the rich. So when there is some talk of reversing that to some degree I'm wondering if that's really so bad.
And I could be totally wrong here. This is thinking out loud.