For better or for worse, we have a predisposition toward action. We perceive doing something as better than doing nothing at all, even if that “something” may be detrimental in the long run. Unfortunately, this bias contributes to a distrust of the free market and allowing things to simply run their course. It is as if we would rather crash the plane into the side of the mountain ourselves than trust the autopilot.
Of course, this distrust of the market is also fueled by some negative misconceptions of capitalism. In the minds of many, the very word raises the specter of greed and oppression. This stems from a fundamental misunderstanding of capitalism’s aims. The profit motive is inherently amoral, which means that it can (though not by design) be a force for good. However, too many are willing to conflate amoral and immoral (that is, inherently wicked), and in an effort to right capitalism’s perceived wrongs, leave us with something far worse: the tyranny of good intentions. Why tyranny, you ask? The market, left to its own devices, generates winners and losers. While it would be naïve to deny the existence of dishonest competitive practices, a free market at least maintains some semblance of a correlation between effort (a quality product, an unbeatable price, an innovation not found among the competition) and outcome. When the state intervenes, winners and losers are declared by fiat, often with disastrous results.
One great illustrator of this concept is the mismanaged sports franchise. There are plenty of failing (or should-be-failing) businesses out there, but due to their high media visibility, when a sports franchise is run into the ground, people tend to actually notice. And while sports franchises can fail for a variety of reasons (wrong market for the sport, for instance), the blame can sometimes be placed squarely at the top with the owner.
Of all the terrible sports owners (I’m looking at you, Ted Stepien), perhaps none combined incompetence and sheer malevolence more potently than the late Harold Ballard, owner of the NHL’s Toronto Maple Leafs for three decades. Though he had charitable moments, Ballard was, by many accounts, a miserable human being. Bigoted and misogynistic even by the standards of his day, Ballard regularly denigrated European players and once told a female journalist, “Women are best in one position – on their backs.” He served a prison sentence (which, fortuitously, allowed the team to sign Swedish star Borje Salming) for siphoning funds from the Leafs’ ownership group for personal use and proved himself to be a notorious skinflint. His other exploits, as per Wikipedia, include:
- Intentionally delaying a Beatles concert, turning up the heat in Maple Leaf Gardens, and selling soft drinks at an outrageous markup.
- Telling longtime Leaf and team captain Dave Keon that he had no place on the team, then demanding high compensation from any team who tried to sign him, effectively blacklisting Keon from the league.
- Continuously undermining Keon’s successor as captain, Darryl Sittler. This culminated in trading Sittler’s close friend Lanny McDonald to last-place Colorado out of spite.
- Hiring back aging Punch Imlach, a man noted for his autocratic style, as general manager in order to soften his own image. When Imlach suffered a heart attack, Ballard forced him from his job.
In short, Ballard embodied the characteristics – greed, ruthlessness, etc. – that capitalism’s critics say are endemic to a market system. If ever there seemed a likely candidate for intervention into how a franchise was run, Ballard’s Leafs were it. And while the league stepping in might have benefited the Leafs in the short-term, the long-term, unintended consequences would have been a net negative for the NHL. Consider the following:
- Though Toronto was talented in the late 70s and early 80s, it is unlikely that the Leafs would have overcome the dominant Montreal Canadiens and New York Islanders even if Ballard and Imlach hadn’t stripped the roster.
- Had the league vetoed Ballard’s trades or even tried to force him to sell, other owners would likely have taken umbrage to the intrusion. The NHL could have risked turning its most loathsome owner into a martyr.
- Had the league attempted to buy the team outright (and later sell to a willing buyer a la the NBA’s New Orleans Hornets), this would have directly lined Ballard’s pockets, literally at the expense of the other teams.
- In many cases, the players that Ballard underpaid or spitefully sent away flourished elsewhere. Both McDonald and Bernie Parent went on to win the Stanley Cup with other franchises and were elected to the Hall of Fame.
- In other cases, when the WHA scooped up Ballard’s former players, small-market franchises were given their first taste of star power.
Had the NHL intervened during Ballard’s reign, the unforeseen benefits of his calamity would have been forsaken and several negative consequences would have come to bear in their stead. Though a “Save the Leafs” campaign would have been well-intentioned, its authors likely would have done more harm than good.
Now, compare Ballard’s Leafs to another failing company, such as an auto manufacturer. Their antipathy for executive compensation aside, critics of capitalism would likely regard a car company as something worth saving due to all the blue-collar jobs on the line if the company goes under. Thus, the intention may be noble, but here again, refusing to let the market run its course has unintended results. Bailouts insulate automotive executives from the consequences of their mismanagement. Competitive pressure, on the other hand, forces them to change their losing ways. Furthermore, the money intended to bolster the workers who are at risk for losing their jobs may be absorbed by the corporate bureaucracy and find its way into the pockets of those very same overpaid, underperforming executives. Lastly, since bailouts are taxpayer funded, a rift is created between those whose jobs are deemed worth bailing out and those who received no such assistance. Thus, while unpleasant to countenance, the outcomes made possible by “heartless” capitalism can easily be far more benign than those created by “compassionate” intervention.
In the end, the rationality of the free market is undermined by our desire to do good and our belief that we know what is best for others. A little humility would allow us to see that we can’t reliably predict what are good intentions will eventually amount to, but this is something we seem loath to accept, especially when the Harold Ballards of the world make for such inviting targets. Still, history has taught us that when a man seems intent on burning down his house, sometimes the best thing to do is not to hand him a house but to embrace what arises from the ashes.
