Sunday, June 15, 2014

TV contracts come into evidence in the O'Bannon antitrust trial

To my way of thinking, this trial has implications that run far deeper into the American "free market" system than just college athletics or the NCAA.  To my mind, this trial touches on a fundamental issue: the inequities involved in the distribution of wealth in this country.

The point is not to prevent top performers --- be they football stars in the NFL or CEOs of multi-national corporations or film stars and other top entertainers or creative entrepreneurs --- from being fairly rewarded for their efforts.  The question is: what is fair?

In the 1950s, the top income tax rate was 90%.  This reportedly outraged Ronald Reagan, who set about lowering it as a top priority when he became president.  He once claimed he made fewer movies each year than he might have because he resented paying most of the additional income to Uncle Sam in taxes.

Reagan may have had a point.  But has the pendulum now swung too far the other way, when corporations such as GE can go for multiple years without paying any US income taxes?

Consider, too, Reagan's industry, entertainment.  Certainly top stars and directors are entitled to the lions' shares of the profits.  But why is the industry structured in such a way that those at the bottom get crumbs, if that.  I'm thinking here of the Fox Searchlight Pictures case, pending before the US Court of Appeals for the Second Circuit.  The judges must decide if a class of unpaid interns were at least entitled to minimum wages under the Fair Labor Standards Act. Minimum wages, for heaven's sake!

The O'Bannon case presents yet another stark contrast in our increasingly Dickensian world of work.  Here we have college players, most of whom will never make it into the NFL or NBA, limited to their football/basketball scholarships, while their names and faces can be sold to TV, video games, you name it. 

Higher education is experiencing an uprising of its serfs which, while not unprecedented, seems notable for it geographic reach and the intensity of its activities.  After decades of picking up the slack left lying by well-paid tenured faculty, who teach one to three classes a semester in load, adjuncts are demanding living wages for their teaching efforts. So are grad students who are working as teaching and research assistants.  And, though I don't support the notion of college athletes unionizing --- an issue now under consideration by the NLRB --- I can appreciate the considerations motivating both the Northwestern University football players who petitioned for a union election, as well as the O'Bannon plaintiffs seeking a share of revenues from enterprises that profit handsomely from their performances.

Last but not least is the drive for a living minimum wage, which got a big boost when California recently raised the state's hourly minimum to $10.  

We tend to pretend that the "free market" is controlled by Adam Smith's invisible hand.  But this is just as much a myth as Marx's claim that, after the revolution, the proletariat would share and share alike, allowing the state to wither away.

The truth is that the rich get richer, why, because they are able to manage the system.  Whether it's the NCAA dictating the rules under which talented young athletes get to play college football or the way lobbyists get access to Congressmen or the ways Boards of Directors collude with CEOs to make sure that even the mediocre ones receive breathtaking compensation packages... none of this is Smith's invisible hand at work.  These are all examples of very visible hands manipulating the so called "free market."

Anti-trust law is intended to slap those manipulating hands which interfere with the invisible hand.  But anti-trust law has become a neglected field of enforcement in the 21st century, as has financial regulation.  Thus, while those of us who actually still do pay a fair ---or more than fair--- share of our income as taxes will be paying off the bail out for a couple of generations, not one of the criminals responsible for the financial industry melt down of 2008 has been prosecuted.  Bernie Maddoff died for their sins, the token human sacrifice, while the rest went back to their multi-million-dollar bonus system within a couple of years of being saved by the Obama Administration from disaster.

And then there's the Citizens United decision... but let's save that for another day and another blog post.

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