Economics

Stimulate the economy: Eliminate salary caps in pro sports

Image Credit: Action Sports Photography / Shutterstock.com

Image Credit: Action Sports Photography / Shutterstock.com

The Keynesian approach to getting out of a recession is to shift money from those who save to those who spend. But it’s harder than you’d think to get people to spend. Many will use extra cash to pay off credit cards, get up to date on their mortgage, and retire other debts. For instance, this paper by Joel Slemrod, Matthew Shapiro, and Claudia Sahm found that only around one-third of the 2008 rebate checks actually were spent. The current payroll tax cuts probably aren’t any better.

But ESPN’s new documentary “Broke” suggests a better idea. “Broke” highlights the financial troubles of current and retired professional athletes, reporting that 60% of NFL players are, well, broke within five years of retiring from the sport. Even athletes still in the sport reportedly take payday loans in anticipation of their first paychecks of the season.

In other words, these guys know how to spend. Buying cars. Buying carwashes. On child support. On whatever. If you made a million dollars last season and are broke when the next season starts, hoarding cash is not your problem.

So let’s get the economy moving by paying pro athletes more. Eliminate salary caps and let free agents get the best deal they can. That money will be coming back to you sooner than you think.

8 thoughts on “Stimulate the economy: Eliminate salary caps in pro sports

  1. How DUMB!
    You don’t think the players “earn” enough? Geez, how many years worth of “regular” salary do they get for a few years of PLAYING?
    They ought to be REQUIRED to take a class in financial survival and maybe even have a guardian put over them (yeah, too many are too dumb to manage their own affairs) to help them not go broke so fast.

    • He’s saying they spend so irresponsibly at such a high quantity that it actually stimulates the economy.

      I could be wrong, but I’m pretty sure this is a joke

      • No one ever said that aggregate spending in the economy was only for necessities or even actual “needs”.

        Witness the make-or break season for many retailers – Christmas and the toys and pure junk that are bought that do wonderful things for the economy.

        that’s the really funny thing about this idea that the free market allocates resources “efficiently” and the govt does not.

  2. ” Many will use extra cash to pay off credit cards, get up to date on their mortgage, and retire other debts. ”

    well.. this money does not go into a black hole never to emerge…does it…???

    this money likely get re-cycled into other goods and services that get purchased – like a homeowner getting a remodel loan and then hiring a contractor and helpers who then buy sheetrock and flooring…

    capital formation, job creation, right?

  3. Yeah, sure, let’s just have unrestrained spending for athletes. Small market team? Fuggedaboudit. Let’s just award the championships to the big market teams before the season starts and do away with the drama while we’re at it. When one big market team can pay more in salary for one player than a small market’s entire team salary, the game is over. That’s why there are so many hopelessly poor baseball teams.

    • With the GOP and like-thinking GOP these days, it’s hard as hell to know whether they are advocating something as serious or not…to tell the truth!

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