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
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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