Capitalism Needs a Second Apron
My friend Krissy Moehl used to say that running a 100-mile race was a journey from the peak of health to unhealth in the span of 24 hours.
That’s a good analogy for the NBA super max contract. A player’s peak value would seem to come the instant before he signs it. Once signed, that player has about 127 hours to deliver a return. And that return must be championships and proximity to perfection in all ways.
Jaylen Brown found that out. Good enough to earn the contract, not good enough for the Celtics to want it.
The NBA presents a useful form of regulated capitalism that’s delivering competitive parity. It’s difficult to afford superstars and depth is expensive. Winning requires both, but you can’t have both. Unless both happen to be young, which makes for exceedingly narrow windows of opportunity.
If you push for both stars and depth, you pay a price. The second apron rule imposes a tax on teams that spend too much and it’s essentially become a hard salary cap.
Our US-version of capitalism could use something like this.
Amazon convinced the markets that revenue is more valuable than profit, allowing tech firms to make massive investments and hoard talent with stock option handcuffs. You don’t have to win, until you get so big that winning begets winning. What we end up with, for example, are Meta and Google owning about 52 cents of every advertising dollar spent, representing a giant tax on any firm who wants to advertise online.
In basketball terms, it’s like signing a full roster of superstars to super max contracts and losing year after year under the promise of future winning. Sustain this long enough, and everyone else either quits or gets bought (most often by you!). The second apron forces tradeoffs.
Public policy equivalents aren’t obvious—no single thing offers a silver bullet. The second apron we need, unfortunately, involves two mechanisms difficult to envision: a political system that incentivizes compromise and a regulatory state less vulnerable to capture.
Winning has always been difficult. It should be. But what should be more difficult is continuing to win.
I’m all for meritocracy, except for the kind that allows those who climb the ladder to pull it up behind them.