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Striking Out Defending Antitrust
[August 26, 2002]

By S. M. Oliva

Later today Major League Baseball players are expected to go on strike. This would mark baseball's ninth work stoppage since the players union was formed in the late 1960s. It will also mark the thousandth or so time that a politician has used baseball's labor woes to call for repeal of the game's antitrust exemption.

Yesterday Sen. Arlen Specter threw out the first pitch in the war to repeal the exemption. The Pennsylvania Republican has called for hearings in the Senate Judiciary Committee on repeal should the players actually strike. The fact that the players union has long opposed the exemption and would celebrate its repeal seems lost on Sen. Specter, who is likely seeking a means of capitalizing on popular resentment of the impending strike.

But the antirust exemption has always been a pariah. Critics of the Major League Baseball owners routinely call for the exemption's repeal without every bothering to assess why or how it would help baseball's perpetual labor mess. Some say repealing the exemption would force baseball "into the free market," as if antitrust laws themselves have anything to do with freedom or capitalism. Many staunch opponents of the exemption simply have their own agenda—they want a baseball team in Washington, D.C., and see repeal as the only means of forcing that outcome.

Yet for all this talk about the owners' exemption, nobody ever speaks of the players' exemption. The Major League Baseball Players Association—like every labor union in America—are exempt from antitrust laws. The reasoning for this, according to the U.S. Code, is that "the labor of a human being is not a commodity or article of commerce." If that's the case, Alex Rodriguez should not be making $25 million per year and player trades should be forbidden. After all, if their work is not a commodity or something of value, why should they be paid at all?

The baseball exemption is, by any account, a historical relic that has largely survived due to congressional charity. But that doesn't diminish its underlying moral value. All businesses should be exempt from antitrust, not just baseball, but the fact other business aren't does not make the case for not protecting the rights of baseball owners. No businessman should be compelled to operate under an antitrust regime where the right to use and profit from private property can be hijacked by jealous competitors and an arbitrary and capricious government that enforces the law for political benefit.

The question is not why does baseball deserve special treatment. The question is why should companies like MSC.Software be subject to antitrust. MSC is a small California company that was recently assaulted by one of its competitors and willing antitrust enforcers at the Federal Trade Commission. The FTC punished MSC for the "crime" of being the best in their industry at making a specific product. Because of their success, the company must not surrender its intellectual property to two of its competitors, thus creating more "competition" than ever existed for this product before. Even some of MSC's competitors have risen up in the company's defense, decrying the government's interference on behalf of one company to screw another.

This could be baseball's future without an antitrust exemption. Remember, repeal won't affect the union's monopoly powers, so the people who oppose the exemption are essentially saying the players' rights are more deserving of protection than the owners. That is not a free market position, no matter how hard you try and spin it.

None of this means the owners are actually right on the merits in their current labor dispute. The central item on the owners agenda—a "luxury tax" on teams with high payrolls—is stupid and counterproductive. Punishing teams with money to benefit the unprofitable teams is not the solution, unless you're Al Gore. The luxury tax is the product of intra-owner warfare, with the smaller clubs ganging up on the New York Yankees and a handful of other high-revenue clubs. The union is right to oppose this idea.

But the union is not blameless. Most of their strategy is aimed at maintaining artificially high labor costs for the vast "middle class" of players. The key to this is salary arbitration, where players not eligible for unrestricted free agency can use to force their current team to pay more money. If the owners were smart, this would have been their primary target, not the luxury tax. But even having an antitrust exemption doesn't make you a smart (or successful) businessman. Having antitrust, on the other hand, makes success a crime.


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