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Why a Level Playing Field?

Posted by $ MikeMarotta 8 years, 8 months ago to Economics
31 comments | Share | Best of... | Flag

In another topic, it was claimed by a regular here that the government has a responsibility to make the playing field level. Why?

Let us at least be on the same playing field. Starting with...
"In commerce, a level playing field is a concept about fairness, not that each player has an equal chance to succeed, but that they all play by the same set of rules.

In a game played on a playing field, such as rugby, one team would have an unfair advantage if the field had a slope. Since some real-life playing fields do in fact have slopes, it is customary for teams to swap ends of the playing field at half time.

A metaphorical playing field is said to be level if no external interference affects the ability of the players to compete fairly.

Some government regulations are intended to provide such fairness, since all participants must abide by the same rules. However, they can have the opposite effect, for example if larger firms find it easier to pay for fixed costs of regulation. It may be added that if the rules effect different participants differently then they are not actually the same.

Handicapping might be thought of as the opposite concept, of unequal rules designed to make the outcome of play more equal." --
https://en.wikipedia.org/wiki/Level_p...


But let us see how this works in practice. Here, the USA sued India at the WTO because India requires a percentage of domestic content in solar panels, disadvantaging imported materials.
(Economic Times for 27 Aug 2015 here: http://economictimes.indiatimes.com/i...

This comes up often in arguments about "free trade versus fair trade." It is alleged that when a national government subsidizes home industries, it disadvantages imports. Other subsidies give advantage to local exports into foreign markets where they disadvantage the unsubsidized local businesses there.

Again, I ask, so what?

I suggest a micro-economic analysis of households, individuals, employees, and businesses. Ms. Smith is an executive who earns $250,000 per year. Every Saturday, she takes out her riding mower and manicures the large lawns and gardens around her home. Billy Jones has a lawns service. He points out that he can do the work more efficiently for less. He is willing to earn much less than Ms. Smith, say $100 for the two hours to mow, trim, and rake. Moreover, if Ms. Smith went to the office - even just her home office - she would be far more economically productive than she is being her own lawn service.

Ms. Smith listens to him and agrees that she has better things to do. She goes into the house and comes out with 8-year old Samantha. "Want to learn to drive? Do a good job, all neat and clean, and I will give you $50. It will take you most of the morning. You will clear about $12.50 an hour." Billy Jones files a complaint with the World Trade Organization.

The concept of a "level playing field" applies to sports. Competitive sports are zero-sum games. Business is not. Businesses create unlevel playing fields all the time. They change the rules of the game. New products and new services create new markets.

The speed limits on streets and roads are a perfect example of a legally-mandated level playing field for delivery companies. UPS, FedEx, the USPS, and all the many independents, even the bike couriers, all are subject to the same rules of the road. Now, Amazon wants to deliver packages with drones. Where is your level playing field now? It is in the wrong dimension - Flatland, visited by a sphere.

Moreover, in some games - golf comes to mind - knowing the field - slopes, traps, trees, and all - and playing it to your advantage is part of the game. Here is a longer article - an editorial, really - about the illusion of a level playing field in sports. In this case, the sports are track and field. All bodies are not created equal. http://www.livemint.com/Leisure/5J3ui...

Furthermore, the remedy in some sports is to switch goals after half-time. That way if there is a natural slope, the advantage goes to each side equally. But does it? Is a football field the same after half a game? Heraclitus would have a lot to say about that. The assumption is that either team could take equal advantage of a sloped field. How is that known? And if it were a real consideration, would not the officials actually measure the field for flatness? And would not some of those sports actually be played on fields with officially regulated slopes?

What about basketball, another sport where the goals are swapped. No one claims that the gym is sloped.

Note that in American Football, the first kickoff is settled with a coin toss. They do not have two kickoffs and average them to distribute the result. They do not flip the coin ten times and average that. You win or you lose the advantage on the toss of a coin. That's life... And as for chance, as Louis Pasteur famously noted, it favors the prepared mind.

The concept of a level playing field in economics is a floating abstraction, a logical construct without empirical validity.


All Comments

  • Posted by plusaf 8 years, 8 months ago in reply to this comment.
    True, Mike! Over the years, we've seen lots of changes in many of the ML sports... some due to "market demand"... like when fans get bored and suddenly the Strike Zone shrinks...
    :)
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  • Posted by $ blarman 8 years, 8 months ago in reply to this comment.
    Right now, the biggest insider traders are the Legislators themselves.

    Frankly, with as automated as the whole system has gotten, I have little confidence in it. People see the stock price as their investment, when it used to be that the stock price was merely an in to getting that quarterly or annual dividend.
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  • Posted by $ 8 years, 8 months ago in reply to this comment.
    You are right. I was not considering the money, only the outcome of the score. In sports, you get no advantage helping your competitor. In business, you can.

    However, as for the money, it is interesting. The rules have changed, but when I was a lad, all of the teams who played .500 or better got some fraction of the World Series receipts. It is different now: you have to make the post-season playoffs.

    The Baseball Almanac gives a tally from 1903 forward for the shares enjoyed by winning and losing players.
    http://www.baseball-almanac.com/ws/ws...

    This ESPN analysis opens with a story. First base coach Mike Coolbaugh of the Tulsa Drillers AA affiliate of the Colorado Rockies was killed by a line drive. The Rockies voted his widow (pregnant with two boys) a full share of their World Series money.
    http://espn.go.com/mlb/story/_/id/117...

    Later this week, I will get out new topic about Baseball. It is the American Game. Just one note here: back before airliners, teams traveled by train. They often passed the hours by reading. Novels, your typical "great books", and Shakespeare were common.
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  • Posted by plusaf 8 years, 8 months ago in reply to this comment.
    I find the concept of suggesting that the cat be part of the 'bell the cat' process not amusing, but hilarious, as so many people make suggestions like that.

    As for a Constitutional Amendment or Convention, there are SO many impediments to THAT process that the odds are it will never happen, either. About as likely as a civil war where most of the participants are already signed up for existing Major Parties or the Apathy Movement....

    I'm certainly not on the 'bad guys' side'... whatever or whichever that is (please specify)... I can not, in good conscience, vote Democrat OR Republican, for reasons I've tried to make clear here and on my personal plusaf.com site.

    I observe what goes on and notice what's missing from most 'discussions' or 'arguments' on such subjects.

    I turn 70 in just a few months; I've been "observing" for scores of years and I've pretty much given up hope of "things getting better" in my lifetime. I know some great teenagers who really do know how to Think, but I suspect that, even if they 'take over,' I will have shuffled off this mortal coil long before their effects move the needle.

    Is that "Gulchy" enough for you? Maybe I'm an Eddie Willers and just don't have what it takes to change anyone's mind, although I can see what's going on pretty clearly. That may kill me in the end, but everyone has their place on the Distribution Curve of Everything.

    I'd like to publish a book of my ideas and observations and suggestions as my Legacy.
    Time will tell.
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  • Posted by plusaf 8 years, 8 months ago in reply to this comment.
    Gee, I thought that in the Majors, whether football (US Football) or baseball... even the losing team gets paid or rewarded in some way...

    Where's the Zero-Sum in that, other than the binary aspect of 'one wins, one loses'? There are win/loss at the Game level, but even the 'losing team' at the SuperBowl gets a fairly fat paycheck, too...

    Drafts and other gimmicks merely try to push things so that the point spreads decrease as skills and talents get forced into closer balance.

    How would that work in "Business"? And please don't suggest that MLB or MLF aren't "businesses" in that sense... :D
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  • Posted by $ jdg 8 years, 8 months ago in reply to this comment.
    This is why I'm proposing it as a constitutional amendment, and that a constitutional convention be held to enact it. It's a "bell the cat" problem, and the only ways to solve that kind of problem are to use those methods, or to fight a civil war.

    I fail to apprehend why you find those facts amusing, unless you are on the bad guys' side.
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  • Posted by $ 8 years, 8 months ago in reply to this comment.
    Well, yes, for the DoD, I mean, it is hard for a small company to develop and produce new heavy equipment such as aircraft and aircraft carriers. However, the federal and state governments do have favored classes of "historically under-utilized businesses." Even Texas is big on HUBs.
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  • Posted by $ 8 years, 8 months ago in reply to this comment.
    Right, but remember, first that competitive sports are zero-sum games. Also, football and basketball are not like baseball, in that they have no minor leagues. They use the colleges for that. So, they have no traditional mechanism for selecting and nurturing young players. In addition, in sports, there is the assumption that over time, every team plays .500 ball. If you are always on top or always in the basement, something is wrong. In college sports, you are in the wrong conference. In minor league baseball, you are in the wrong league. The new player drafts are, indeed, one way to even things out. Again, though, we are not talking about business.

    Apple paid Microsoft to develop a version of Office for the Macintosh. The Oakland Athletics do not lease an infield from the Seattle Mariners. (And you can buy a Mac in Redland...)
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  • Posted by $ Olduglycarl 8 years, 8 months ago in reply to this comment.
    Wet dream is right! LOL.
    I thought the draft was for team improvement, gaining new players with more potential or for players that want to change teams. I can see it heading that way but like you, I do not pay attention to sports very much. I'd rather play than watch...can't sit that long and get board easily...hahahahahah
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  • Posted by $ MichaelAarethun 8 years, 8 months ago
    One is better off laying down to relieve neck strain in order to view their idea of level playing field. Only in the sense of a vertical cliff face. One party gets two names, and two candidates?

    Seig Me No Heils. Republican and Democrat is just another name for smiley face fascists.

    I do not support the party. My oath was to the Constitution. what does that have to do with this Government and it's good little Comrades?
    and the two faced Government Party?

    Nothing.
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  • Posted by $ MichaelAarethun 8 years, 8 months ago
    There is nothing about the system currently in use that is anywhere near level. Close to vertical is a far more accurate description. One party systems such as that run by the Government or Establishment Party level? Seig Me No Heils. The whole left wing socialist fascist system has nothing to do with level playing fields. I suggest laying down sideways to get a level view. When one party getw to nominate or whatever they call it two candidates for President and two for Vice President and the top vote getter is awarded all the opposition votes it's time to decide do you or do you not support the party Comrade? Don't forget the stiff arm salute and hill clicking. It's a joke of the same caliber that ''elected'Adolf and Uncle Joe. Not for me. I do not serve the party.

    As for Constitutional what does that have to do with this government?
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  • Posted by plusaf 8 years, 8 months ago in reply to this comment.
    .... LOL... ... and those powers would be removed by legislation enacted by.... wait for it... The Politicians... :)

    The irony is wonderful.
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  • Posted by SaltyDog 8 years, 8 months ago in reply to this comment.
    Well Mike, you're just plain wrong.

    Oh, and I wasn't a Chief...you're wrong about that too.
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  • Posted by plusaf 8 years, 8 months ago in reply to this comment.
    I'm no sports fan, but aren't things like 'the player draft' another kind of attempt to legislate equal Results for 'all teams'?

    Maybe the sports leagues should argue for the Levelest Of All Playing Fields by demanding that all teams be forced to hire/employ team members equally balanced for age, skill, stamina, weight, intelligence, experience, and so on?

    It would be a Liberal's (wet) Dream!
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  • Posted by $ 8 years, 8 months ago in reply to this comment.
    There is no such thing as "insider trading." Yes, there are laws against it. Like laws against "monopoly" those regulations are not objective. They are floating abstractions., i.e., logical constructs with no empirical referents. Martha Stewart, Michael Milken, Raj Rajaratnam, and all of the others, were persecuted by the regulatory gang.

    I am sorry, Chief, but you are out of line.
    Respectfully,
    PO3 (TX) Marotta
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  • Posted by SaltyDog 8 years, 8 months ago in reply to this comment.
    What about rules regarding insider trading? It still happens on occasion, but nothing compared with what would happen if the insiders were unfettered.
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  • Posted by $ Olduglycarl 8 years, 8 months ago
    That was a good point about a level playing field in regards to businesses. If all of a particular type of business were required to pay the same, charge the same and create the same products the same way then that would essentially be a monopoly now wouldn't it. No one allowed to come a long to do it better. I think the latter is the point here...no one is allowed to be better than another...all things equal ='s all things the same and therefore no improvements allowed, everything stagnates. Conscious Humans do not like 'same', we like things different, different cultures, different ideas, different tastes, different people, different as men and women..
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  • Posted by $ jdg 8 years, 8 months ago
    The way to create a level playing field is to take away politicians' power to award favors. Period. Those favors (often including overregulation) are the only thing that makes the existing "playing field" unfair.
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  • Posted by DrZarkov99 8 years, 8 months ago
    I had to laugh at the golf example. I've always found the concept of a golf "handicap" that penalizes better players ridiculous. Of course that handicap keeps lousy players motivated to keep buying expensive equipment, thinking somehow it will overcome their miserable lack of natural talent. If all sports used that example, would a good sprinter be required to carry weights so that competition against slower runners would be "fair?"

    The government is very selective about applying rules to supposedly level the field. It's a real struggle for small companies to win Pentagon contracts when competing against established big firms.
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  • Posted by Herb7734 8 years, 8 months ago
    "Fairness" in sports has come to mean handicapping the better athlete. In retailing it means handicapping the most successful marketers. It is couched in altruistic language with feel good overtones. It all boils down to taking down the best and brightest and turning them into the dull and mediocre, and rewarding them for being dull and mediocre.
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  • Posted by term2 8 years, 8 months ago
    the government MAKES the field un-level with its regulations. Typically they favor big wealthy companies who have the money to influence the regulations. The smaller companies have to live with the regulations, often designed to inhibit their activities. Try and make medical devices- you have to pass muster with the FDA for extended periods of time and spend large amounts of money convincing bureaucrats you should be permitted to make your new life saving device.
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  • Posted by wiggys 8 years, 8 months ago
    a level playing field breeds mediocrity and that is what the government wants and likes.
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