Improve your Baseball Swing
Assigning numbers to the areas in Figure 12.7 is usually difficult because B is hard to measure. But when the product is sold under conditions of monopoly, and no reasonable substitutes are available, B can be approximated by making some simplifying assumptions about the nature of the market demand curve. An example of a product sold under these circumstances is beer at a baseball game. Because a purchaser of beer would probably not regard soft drinks as a close substitute and since patrons are not allowed to bring in their own beer, the stadium concessionaire has as tight a monopoly on the market as one could imagine.
A strategy is much more comprehensive than an action. Steal second base now is a simple instruction by a coach in a baseball game, and the attempted theft is the action. But a strategy specifies an act as a function of every act made by every participant up to the present stage of the game. Attempt a theft of second base if we haven't reached the fifth inning, or if it is late in the game and we are behind by two or more runs, provided that the batter has fewer than two strikes and the probability of a pitch-out is less than 0.25 is a strategy. We could specify a single strategy for the manager of a baseball game for the entire game. It would specify a decision for every situation that could arise, as well as the decisions made at the beginning of the game before the opponent has taken any action. Consider a deterministic two-person game that is, a game between two individuals that is not affected by any random variables. Let S1 and S2 denote, respectively, the strategies chosen by...
The Nobel Memorial Prize came to Hayek, not coincidentally, as Keynesian macroeconomics was collapsing. Of course it was not Hayekian theory that brought down the Keynesian edifice, but Monetarist empiricism. There were too few working Austrian macroeconomists in 1974 to field a baseball team. The views that gained market share at Keynesian expense were Monetarism and then New Classical Macroeconomics (also known as Rational Expectations), which morphed into Real Business Cycle Theory. Austrian
Like the live performing arts, live spectator sporting events have to be consumed at the point of production, and trends in the spectator sports industry strongly support the argument that discontinuous changes on the supply side have important effects on spending. Figure 2.1 shows that the ratio of spectator sports admission outlays to DPI fell from a relatively high level in 1947 to a low point in the mid-1950s. The decline coincided with a period in which the number of suppliers, as measured by the number of major league teams in baseball, football, basketball, and hockey, was actually declining. Then from 1957 to 1970 the number of teams increased sharply, almost doubling as the leagues expanded into new metropolitan areas in the South and West that had not previously been served. When the latent demand in these new markets was tapped, the ratio of consumer spending on admissions to their DPI soared, reaching an all-time peak in 1969. After 1970 the number of teams continued to...
What logicians call the fallacy of composition is the belief that what is true of a part is true of the whole. A baseball fan at a ballpark can see the game better by standing up but, if all the fans stand up, they will not all see better. Many economic policies involve the fallacy of composition, as politicians come to the aid of some group, industry, state or other special interest, representing the benefits to them as if they were net benefits to society, rather than essentially robbing Peter to pay Paul.
Yet another method of sharing resources among competing uses and competing individuals is by having them bid for these resources and the products resulting from them. In this system-a price-coordinated economy-those who want to use wood to produce furniture must bid against those who want to use it to produce paper, houses, or baseball bats. Those who want to use milk to produce cheese must bid against those who want to use it to produce yogurt or ice cream. Most people may be unaware that they are competing and simply see themselves as deciding how much of various things to buy at whatever prices they find, but scarcity ensures that they are competing with others, even if they are conscious only of weighing their own purchasing decisions against the amount of money they have available.
The demand curves that we graphed in Chapter 2 showed the relationship between the price of a good and the quantity demanded, with preferences, income, and the prices of all other goods held constant. For many goods, demand is related to the consumption and to the prices of other goods. Baseball bats and baseballs, hot dogs and mustard, and computer hardware and soft
Warren Buffett uses a baseball analogy to articulate the discipline of value investors. A long-term-oriented value investor is a batter in a game where no balls or strikes are called, allowing dozens, even hundreds, of pitches to go by, including many at which other batters would swing. Value investors are students of the game they learn from every pitch, those at which they swing and those they let pass by. They are not influenced by the way others are performing they are motivated only by their own results. They have infinite patience and are willing to wait until they are thrown a pitch they can handle an undervalued investment opportunity.
Often actors must choose between various outcomes that all consist of countable supplies of different goods. Even so, the fundamental act of choice always involves a purely ordinal value judgment, not a quantitative measurement of subjective value. If a person, in one fell swoop, trades away five oranges in exchange for eight apples, all we can conclude is that he derived more satisfaction from eight apples than from five oranges. The units involved allow us to go no further than if he had traded away one baseball card for one lollipop.
Basic properties of production functions can be illustrated by examining a simple two-input, one-output system. Consider a production process in which various quantities of two inputs, X and Y, can be used to produce a product, Q. Inputs X and Y might represent resources such as labor and capital or energy and raw materials. The product Q could be physical goods such as television sets, baseball gloves, or breakfast cereal Q could also represent services such as medical care, education, or banking.
Figure 8-5 shows that the marginal-cost curve MC intersects both the AVC and ATC curves at their minimum points. As noted earlier, this marginal-average relationship is a mathematical necessity, which a simple illustration will reveal. Suppose a baseball pitcher has allowed his opponents an average of three runs per game in the first three games he has pitched. Now, whether his average falls or rises as a result of pitching a fourth (marginal) game will depend on whether the additional runs he allows in that extra game are fewer or more than his current three-run average. If in the fourth game he allows fewer than three runs, for example one, his total runs will rise from 9 to 10 and his average will fall from to 2.5 ( 10 * 4). Conversely, if in the fourth game he allows more than three runs, say, seven, his total will increase from 9 to 16 and his average will rise from to 4 ( 16 * 4).
League baseball, concerts, and so on. For such goods it is hardly useful to talk of individual consumer demand schedules the prospective consumers must somehow band together to buy them whence the market demand schedule. In a market economy entrepreneurial activity frequently serves prospective consumers of such goods by undertaking the task of organizing production and then selling tickets of admission. In any event, the price that the market as a whole is prepared to pay for a given quantity of such goods is made up of the shares of the total cost various individuals are prepared to pay for the privilege of admission.
Iliad Corp. is managed by Homer, the founder of the company, who also owns 60 of the shares. The annual profit is 1000 of which Homer is entitled to 600. Not all of the 400 to which the outside shareholders are entitled reaches them. They get only 100, because Homer diverts 300 of their share to himself. However, the diverted funds are used to buy luxury boxes at a baseball stadium. In term's of Homer's utility, these box seats are equivalent to only 120 in cash. If Virgil purchased the firm for the equivalent of an annual payment of 900, with 760 of that going to Homer and 140 going to the incumbent outside owners then everyone gains. Virgil pays 900 for something worth 1000. The outside owners get 140 instead of 100, and Homer gets 760 instead of 720.
These include low-liquidity items such as used clothing. Today, aided by the Internet, consumers can view pictures of the product, make online bids, and track the bidding process electronically. The amount of information that they have has dramatically increased, improving the transactability for low-liquidity items. In addition, bidders can make multiple bids until the auction expires. Collectibles (for example, baseball cards, porcelain dolls, rare comic books, and so forth) are made more transactable in the same way.
In earlier centuries, it was the employers who were more likely to be organized and setting pay and working conditions as a group. In medieval guilds, the master craftsmen collectively made the rules determining the conditions under which apprentices and journeymen would be hired and how much customers would be charged for the products. Today, major league baseball owners collectively make the rules as to what is the maximum total salaries any given ball club can pay to its players.
Even within a given occupation, technology affects people of different abilities differently. Local entertainers of modest abilities could earn a modest living more easily before motion pictures, television, and compact disks enabled the most talented entertainers in the world to become available to audiences around the world. People thousands of miles away could hear Pavarotti sing or watch Andre Agassi play tennis or Tiger Woods play golf Just as the televising of major league baseball made minor league baseball less attractive, so the availability of superstars in many fields led to what one economist called a 'winner-take-all' effect, where only the best do well, and those lucky few command enormous incomes. Focusing on such growing
The individual incentive for plunder in Hobbesian anarchy stems from the fact that there is no institution to punish people who defect from the social contract. The creation of an institution with the amount of power necessary to punish any defectors creates its own problems, though. Buchanan wrote, 'The design and location of this enforcement institution becomes all important, however neither party will entrust enforcement to the other, and, indeed, the delegation of such authority to one party in contract violates the meaning of enforcement' (ibid. 120-21). The ideal third-party enforcement mechanism would be some sort of machine that is entirely outside of the 'game'. This would be similar to a radar that could determine whether a pitch was a ball or strike in a baseball game. Absent the possibility of an impartial machine, an outside referee is optimal. This is the function of the umpire in a baseball game. If the catcher were calling the balls and strikes, the enforcement of...
The large profits of major league baseball teams are often defended on the grounds that much of the profits, extracted from the players, go to pay for their training in the minor leagues (the major league subsidizes the minor leagues). True or false Even if this is true, it is irrelevant to deciding whether or not to break up the monopsony power of the owners over the players (Compare the training of professional baseball players with that of professional tennis or golf or economics players).
Earlier this year Japan won the first-ever Baseball world cup, called the World Baseball Classic, beating the mighty Americans as well as Asian rivals South Korea and amateur champions Cuba. This world-beating performance in the long-popular sport of baseball has raised expectations that success in football could be next. While Japan is still some way from the summit of world football, as a developing football nation we expect it to produce something special in Germany.
Why do major league baseball players get paid more than minor league players Certainly, the higher wage is not a compensating differential. Playing in the major leagues is not a less pleasant job than playing in the minor leagues in fact, the opposite is true. The major leagues do not require mon years of schooling or more experience. To a large extent, players in the major leagues earn more just because they have greater natural ability.
Major league baseball team owners have an oligopoly in the market for baseball players. What is the owners' goal regarding players' salaries Why is this goal difficult to achieve c. Baseball players went on strike in 1994 because they would not accept the salary cap that the owners wanted to impose. If the owners were already colluding over salaries, why did the owners feel the need for a salary cap
What is the difference between the value of marginal product and the marginal value product Between average and marginal factor costs How does one measure the monopsony power of the owners of baseball teams What is the octopus effect Using the algebra of monopsony one can measure the monopsony power of owners of sports franchises. Before baseball players were liberated they were paid only 20 of their marginal revenue product (and major stars were even more underpaid).3
League rules restrict the ability of professional athletes in baseball, basketball, football, and hockey to move to the team that will pay them the most. The owners defend the restrictions as necessary for equal competition among teams, equal competition being necessary to make the games close and worth paying to see. Without the restrictions, the owners say, the teams with the most money would buy up all the best players. Suppose that the New York Knicks already have five superstars (Sam Williamson, Gary Fethke, Tom Pogue, Bill Albrecht, and Sam Wu) and that the Chicago Bulls have none. The Knicks customarily beat the Bulls 130 to 80. Suppose that the acquisition of Albrecht by the Bulls would make the customary score 110 to 95, with occasional very close games. Who would pay more for Albrecht, the Bulls or the Knicks Is the owners' argument sound
Oil companies appear to have fallen victim to the winner's curse during the auctions for offshore oil-drilling rights. Book publishers often feel that by outbidding rivals for the right to publish a book they have paid more than they will ever recoup in profits from book sales. Baseball teams have often outbid other teams for a free agent only to find that they have paid too much for the player's services. The phenomenon also occurs in corporate takeover battles (Thaler, 1992, pp. 57-8 and Dyer and Kagel, 2002, p. 349).
Money has three functions in the economy It is a medium of exchange, a unit of account, and a store of value. These three functions together distinguish money from other assets, such as stocks, bonds, real estate, art, and even baseball cards. Let's examine each of these functions of money in turn. Economists use the term liquidity to describe the ease with which an asset can be converted into the economy's medium of exchange. Because money is the economy's medium of exchange, it is the most liquid asset available. Other assets vary widely in their liquidity. Most stocks and bonds can be sold easily with small cost, so they are relatively liquid assets. By contrast, selling a house, a Rembrandt painting, or a 1948 Joe DiMaggio baseball card requires more time and effort, so these assets are less liquid.
In the United States, major league baseball is exempt from the antitrust laws, the result of a Supreme Court decision and the policy of Congress not to apply the antitrust laws to labor markets.8 This antitrust exemption allowed baseball team owners (before 1975) to operate a monopsonistic cartel. Like all cartels, this one depended on an agreement among owners. This agreement involved an annual draft of players and a reserve clause that effectively tied each player to one team for life, thereby eliminating most interteam competition for players. Under the reserve clause, once a player was drafted by a team, he could not play for another team unless rights were sold to that team. As a result, baseball owners had monopsony power in negotiating new contracts with their players-the only alternative to signing an agreement was to give up the game or play it outside the United States. During the 1960s and early 1970s, baseball players' salaries were substantially below the market value of...
The World Series of baseball is to be played by team A and team B. The first team to win four games wins the series. Suppose that team A is the better team, in the sense that the probability is .6 that team A will win any specific game. Assume also that the result of any game is independent of that of any other.
Sometime in October the U.S. will join China and India in the very small club of countries with at least 300 million residents. This really is a big deal, like hitting 700 home runs in baseball. No other country is expected to reach the 300 million mark for at least 30 more years. . . .
The geographic distribution of ordinary retail stores and service activities shows how these principles operate. Small towns provide a market large enough to support a drugstore or barber shop, but not a department store or health club. Medium-sized cities can support a department store or health club, but not a stock exchange, investment banking firm, or major league baseball club, for which a very large city is required. For each service there is a minimum market size, or threshold, below which that activity is not generally viable. That the famous Green Bay Packers professional football team make their home in a metropolitan area of only 195,000 is clearly an anomaly, since the other twenty-seven teams in the National Football League are all located in metropolitan areas with a population of at least 1.2 million.2 As cities grow larger they pass successively higher size thresholds and consequently supply not only more of each good but also more kinds of goods. Thus, Chicago not...
One type of firm in which such corrections are easier is the sports team. Professional teams have many objective measures of productivity. In baseball, for instance, we can measure a player's batting average, the frequency of home runs, the number of stolen bases, and so on. A similar situation once existed for baseball players. A study using data from the late 1960s showed that black players earned less than comparable white players. Moreover, fewer fans attended games pitched by blacks than games pitched by whites, even though black pitchers had better records than white pitchers. Studies of more recent salaries in baseball, however, have found no evidence of discriminatory wage differentials. Another study, published in the Quarterly Journal of Economics in 1990, examined the market prices of old baseball cards. This study found similar evidence of discrimination. The cards of black hitters sold for 10 percent less than the cards of comparable white hitters. The cards of black...
EXAMPLE 17.1 LEMONS IN MAJOR LEAGUE BASEBALL seldom put up for resale. In a lemons market, purchasers of second-hand products will have limited information, and resold products should be lower in quality than products that rarely appear on the market One such second hand market has been created in recent years by a change in the rules governing contracts in major league baseball.3 Before 1976, major league baseball teams had the exclusive right to renew their players' contracts. After a 1976 ruling declared this system illegal, a new contracting arrangement was created. After six years of major league service, players can now sign new contracts with their original team or become free agents and sign with new teams. Having many free agents creates a secondhand market in baseball players. The original team can make an offer that will either retain a player or lose him to the free-agent market. Asymmetric information is prominent in the free-agent market. One potential purchaser, the...
FIGURE 8.14 Firms Earn Zero .Profit in Long-Run Equilibrium. In long-run equilibrium, all firms earn zero economic profit. In (a) a baseball team in a city with other competitive sports teams sells enough tickets so that price ( 7) is equal to marginal and average cost. In (b) there are no other competitors, so a 10 price can be charged. The team increases its sales to the point at which the average cost of production plus the average economic rent is equal to the ticket price. When the opportunity cost associated with owning the franchise is taken into account, the team earns zero economic profit.
LP applications on RIOT range from the serious, like a planar robot simulator with obstacle avoidance and open-pit mining problems, to the whimsical, like major league baseball and basketball elimination problems. Over time, continuing improvements promise users the opportunity to find the optimal value (maximum or minimum) for any linear function of a certain number of variables given a set of m linear constraints on these variables (equalities or inequalities).
Bird often seen and heard on Canada's lakes. Canada's dollar therefore is widely known as the loonie. One group of Canadian birds avoiding the loonie in the late 1990s was the Toronto Blue Jays. Because the American League baseball team plays most of its games south of the Canadian border and participates in a United States-based market for players, 80 percent of its expenses (including players' salaries) are set in U.S. dollars. On the other hand, 80 percent of its revenues (including ballpark receipts) are paid in Canadian dollars. A sudden and sharp depreciation of the loonie thus would cause big losses for the team by raising its expenses relative to its receipts. To protect itself from the vagaries of the exchange rate, the team tries to predict its need for U.S. dollars ahead of time so that it can sell loonies and purchase the American currency in advance to lock in the exchange rate. Errors in the currency market can be more costly to the Blue Jays than errors on the field.t
In 1931, as the U.S. economy was suffering through the Great Depression, famed baseball player Babe Ruth earned 80,000. At the time, this salary was extraordinary, even among the stars of baseball. According to one story, a reporter asked Ruth whether he thought it was right that he made more than President Herbert Hoover, who had a salary of only 75,000. Ruth replied, I had a better year. Today the average baseball player earns more than 10 times Ruth's 1931 salary, and the best players can earn 100 times as much. At first, this fact might lead you to think that baseball has become much more lucrative over the past six decades. But, as everyone knows, the prices of goods and services have also risen. In 1931, a nickel would buy an ice-cream cone, and a quarter would buy a ticket at the local movie theater. Because prices were so much lower in Babe Ruth's day than they are in ours, it is not clear whether Ruth enjoyed a higher or lower standard of living than today's players.
Most NTBs are decidedly intentional, but they are sometimes disguised to look like a policy directed at another goal. Product quality standards are a particularly common way to keep foreign products out while appearing to have another purpose. Such standards are often written by domestic producer groups, and they often focus on aspects of product design that only local producers meet, in contrast to standards of performance attained regardless of design. For years foreign producers were frustrated by Japanese product standards that found US baseball bats, European skis and Canadian lumber unacceptable. While the European ban on approving the sale of additional genetically modified foods in the late 1900s raised important scientific issues over what constituted convincing evidence of food safety, the policy had a substantial protective effect as well.
In late 2001, commissioner Bud Selig broke open the books to show that major league baseball (MLB) had lost 1.4 billion during the previous 5 years. Worse yet, operating losses of more than 500 million per year on stagnant revenues of 3.5 billion are threatening to kill the game, according to Selig. Obviously, Congress and the players' union need to rally around Selig's plan to reduce player salaries and allow him to get rid of the Montreal Expos and the Minnesota Twins. Local governments also need to pony up for new and more elaborate stadiums. Selig's ploy may be nothing more than public posturing ahead of what promises to be tough labor negotiations. MLB operates much like a corporation with 30 different regional offices (local franchises). Although individual clubs compete on the playing field, they aren't economic competitors. In a competitive market, one competitor's gain comes at the expense of others. In baseball, the success of one franchise brings increased prosperity for...
To answer this question, we need to know the level of prices in 1931 and the level of prices today. Part of the increase in baseball salaries just compensates players for the higher level of prices today. To compare Ruth's salary to those of today's players, we need to inflate Ruth's salary to turn 1931 dollars into today's dollars. A price index determines the size of this inflation correction.
One type of firm in which such corrections are easier is the sports team. Professional teams have many objective measures of productivity. In baseball, for instance, we can measure a player's batting average, the frequency of home runs, the number of stolen bases, and so on. A similar situation once existed for baseball players. A study using data from the late 1960s showed that black players earned less than comparable white players. Moreover, fewer fans attended games pitched by blacks than games pitched by whites, even though black pitchers had better records than white pitchers. Studies of more recent salaries in baseball, however, have found no evidence of discriminatory wage differentials. Another study, publislied in the Quarterly journal of Economies in 1'IVO. examined the market prkes of old baseball cards. This study found similar evidence of discrimination. The cards of black hitters sold for 10 percent less than the cards of comparable white hitters, and the cards of black...
Suppose, for example, that a baseball team has a franchise that makes it the only team in a particular city. The team will earn a substantial accounting profit. This profit will include some economic rent because the team is more valuable with the franchise than it would be if entry into the local baseball market were unrestricted. The producer surplus earned by the baseball team would include its economic profit and the rent that reflects the difference between the current value of the team and what its value would be if an unlimited number of franchises were available. Figure 8.14 shows that firms that earn economic rent earn the same economic profit as firms that do not earn rent. Part (a) shows the economic profit of a baseball team located in a city with several competing teams. The average price of a ticket is 7, and costs are such that the team earns zero economic profit. Part (b) shows the profit of a team with the same costs, but in a city with no competing teams. Because it...
Investors in financially distressed and bankrupt securities must concentrate on the corporate balance sheet. Like knowing the opposing lineups at a baseball game, understanding the amounts and priorities of a company's liabilities can tell investors a great deal not only about how the various security holders are likely to be treated but also how the financial distress is likely to be resolved.
First, if we use absolute changes, the choice of units will arbitrarily affect our impression of buyer responsiveness. To illustrate, if the price of a bag of popcorn at the local softball game is reduced from to 2, and consumers increase their purchases from 60 to 100 bags, it appears that consumers are quite sensitive to price changes and, therefore, that demand is elastic. After all, a price change of one unit has caused a change of 40 units in the amount demanded. But by changing the monetary unit from dollars to pennies (why not ), we find that a price change of 100 units (pennies) causes a quantity change of 40 units. This result may falsely lead us
While it is possible to observe people playing chess or baseball, or fighting, or buying (at an auction), or selling (second-hand motor cars), in most cases it is not possible to observe competition. Instead, as 'observers', we have an empathetic understanding (Verstehen) that people in different contexts are rivals who are attempting to steal a march on one another. We interpret certain social situations as instances of competition or of competitive conduct. All these arguments apply mutatis mutandis to the types of competition that are found in business life competition for more senior positions in the company, competition among companies for market share, or competition between salesmen to 'reach target' by the end of the month.
Management may buy an expensive fleet of corporate jets and use them primarily to fly executives to a trendy resort, or buy an expensive apartment in Manhattan for the use of the executives when in New York on business. Both purchases can often be justified as sound business practice but sometimes they are made to enhance the executives' leisure consumption. It is not unheard of for corporate jets to be used to fly executives to Superbowl games, baseball spring training sessions, and the like (McMillan, 1992, p. 121). As head of RJR Nabisco in the 1980s F. Ross Johnson bought ten corporate jets and hired thirty-six pilots, and that was just the tip of the Johnson iceberg (Milgrom and Roberts, 1992, p. 493). In some firms the executives reward themselves with exquisite amenities, such as an opulent executive dining room, that cost the company millions of dollars a year. At least one CEO is known to have kept celebrities and athletes on the payroll for retainers of a million dollars a...
Large-scale operation also allows the specialized use of labor and machines. In a giant auto plant, hundreds of different jobs must be done, and many of them require a training period for each worker. In a small plant, the same worker might do ten or twenty of these jobs, so each worker would have a much longer, more costly training period. Even then, the worker doing so many tasks might never fully develop the same level of proficiency of the more specialized worker. Baseball players improve by playing baseball, and pianists by playing the piano. Similarly, the employees of a firm improve their skills as they experience learning by doing in their jobs. Even better, concentration on a narrower range of tasks can help workers discover or develop cost-reducing techniques. The result of greater size and specialization is often more output per unit of labor.
Although success in sports requires that one understands the basic principles of physics and physiology, most athletes develop their feel for their sports on the tennis court, golf course, baseball diamond, or gridiron. Similarly, some very successful businesses are run by people with little or no formal training in accounting, finance, management, or marketing. These executives' successes testify to their ability to develop a feel for business in much the same way that the successful athlete develops a feel for his or her sport. Although the term optimization may be foreign to such individuals, the methodology of opti
Jonathan Piper, 18, applied to nine top-notch colleges and got into them all. The Cleveland native scored in the 95th percentile on his SATs and managed a 3.9 average at prep school while playing baseball, singing lead in musicals, and participating in an engineering society. He's also an African American. But getting accepted was just the first step. Next came the money.
Chenault is the first African American to serve as president of a top-100 company. Some people have compared him to Jackie Robinson, who broke the color barrier in baseball in 1947. Coincidentally-and perhaps fit-tingly-Chenault became COO in 1997, the 50th anniversary year of Robinson's breakthrough.
Nearly 15 million of us go to work each day in Canada. We work at an amazing variety of jobs for thousands of different firms for considerable differences in pay. What determines our hourly wage or annual salary Why is the salary for, say, a top major league baseball player 18 million a year, whereas the pay for a first-rate schoolteacher is 60,000 Why are starting salaries for university graduates who major in engineering and accounting so much higher than for graduates majoring in journalism and sociology
Those whose wages and salaries were specified in contracts-whether unionized workers or professional baseball players-were now legally entitled to more real purchasing power than when these contracts were originally signed. So were government employees, whose salary scales were fixed by law. But, while deflation benefited these particular groups if they kept their jobs, the difficulty of paying them meant that many would lose their jobs.
Although many goods and services are bought for immediate use, many other benefits come in a stream over time, whether as a season's ticket to baseball games or an annuity that will make monthly pension payments to you after you retire. That whole stream of benefits may be purchased at a given moment for what economists call its present value. However, more is involved than simply determining the price to be paid, important as that is. The implications of present value affect economic decisions and their consequences, even in areas that are not normally thought of as economic, such as determining the amount of natural resources available for future generations.
The delegation of such authority to one party in contract violates the meaning of enforcement. Both persons will seek something analogous to Crusoe's alarm clock, some instrument that is external to the participants (potential violators all) and which may be programmed in advance, which may be counted on to detect and to punish violations of the agreement, and to do so impersonally and impartially. Both parties will place a higher value on external institutions of enforcement than on adversely chosen internal ones.5 (It is bad baseball when the catcher is required to umpire.) Both parties will prefer that the rules which they mutually choose be enforced by a third party, a stranger, by forces outside and beyond the participating group. Ideally, some wholly impersonal mechanism, a robot that could do nothing but follow automatized instructions, might be selected. Failing this, resort to third-party adjudication produces government of the ideal type in practicality.
The same principle applies outside what we normally think of as economic activities. In baseball, a slugger gets more chances to hit home runs if he is batting ahead of another slugger. But, if the batter hitting after him is not much of a home run threat, pitchers are more likely to walk the slugger in a tight situation, so that he will get fewer opportunities to hit home runs over the course of a season. During Ted William's career, for example, he had one of the highest percentages of home runs-in proportion to his times at bat-in the history of baseball. Yet he had only one season in which he hit as many as 40 homers, because he was walked as often as 162 times a season-averaging more than one walk per game during the era of the 154-game season. By contrast, when Roger Maris hit 61 home runs in 1961, breaking the record at that time, he was walked less than a hundred times because Mickey Mantle was batting right after him, and Mantle hit 54 home runs that season. There was no...
Baseball For Boys
Since World War II, there has been a tremendous change in the makeup and direction of kid baseball, as it is called. Adults, showing an unprecedented interest in the activity, have initiated and developed programs in thousands of towns across the United States programs that providebr wholesome recreation for millions of youngsters and are often a source of pride and joy to the community in which they exist.