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.