Rodent Regatta

Business Week’s December 9, 2002 issue includes an opinion piece by Robert J. Barro titled The Best Little Monopoly in America. He runs a contest judged by Harvard economists to find the best monopoly operating in America. I’ll summarize and paraphrase part of it for you.

The finalists were: The U.S. Postal Service, OPEC, Microsoft, the International Longshore & Warehouse Union(ILWU) and the National Collegiate Athletic Association(NCAA). Narrowly losing out were Major League Baseball, the National Education Association and the Massachusetts Democratic Party. Remember, this is a bunch of Harvard economists doing the judging.

The USPS loses out because FedEx, fax machines & email easily hurdled any barriers to entry. OPEC loses because it now controls less than one third of the world’s oil production and, despite American initiatives, it isn’t American at all. Microsoft lost because the government didn’t see fit to levy any serious penalty, so how can it possibly be the best monopoly?

Two lovely finalists. The IWLU where 10,000 people used their monopoly to raise salaries to in excess of $100,000 per year while limiting the use of technology. Bush’s threat to send in soldiers to unload the ships caused the IWLU to cave, so, again, how can it be the best monopoly?

Your winner?

Finally, we come to the NCAA, which has successfully suppressed financial competition in college sports. The NCAA is impressive partly because its limitations on scholarships and other payments to athletes boost the profitability of college sports programs. But even more impressive is the NCAA’s ability to maintain the moral high ground. For example, many college basketball players come from poor families and are not sufficiently talented to make it to the National Basketball Assn. Absent the NCAA, such a student would be able to amass significant cash during a college career. With the NCAA in charge, this student remains poor. Nevertheless, the athletic association has managed to convince most people that the evildoers are the schools that violate the rules by attempting to pay athletes rather than the cartel enforcers who keep the student-athletes from getting paid. So given this great balancing act, the NCAA is the clear choice for best monopoly in America.

Robert J. Barro