Quote of the Day – Money Editions

Just because Usain Bolt sets a world record every time he runs doesn’t make the other runners slow.” – Mark Cuban, explaining why income disparity isn’t a problem.

While it’s a great line, it’s actually a poor illustration.  Races and records are zero sum games.  Bolt’s winning the Olympics and setting a new record deprives other runners of gold medals and records.

Conversely, Cuban’s earning a few billion dollars has essentially no impact on future enterpreneurs getting rich.

FILED UNDER: Economics and Business, Sports, , , , ,
James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Tlaloc says:

    Conversely, Cuban’s earning a few billion dollars has essentially no impact on future enterpreneurs getting rich.

    But it has a direct effect on his contemporaries getting rich. Every dollar paid to Cuban is a dollar not paid to someone else, and vice versa. Overpaying athletes, executives, and entertainers leaves less for everyone else.

  2. James Joyner says:

    Every dollar paid to Cuban is a dollar not paid to someone else, and vice versa. Overpaying athletes, executives, and entertainers leaves less for everyone else.

    Money isn’t a finite resource. How much more money would you or I have if Cuban were poor?

    Arguably, Cuban’s being rich means that others have more. The guy who used to own the Mavericks is richer. Certainly, he can afford to pay all his players.

    Or, if we had a salary cap of, say, $400,000 in the NBA. The TV deals and ticket prices stay the same. Do the peanut vendors get more? Or just the owners?

  3. kth says:

    The interest in track isn’t purely positional, as people tune in somewhat more when records are being set. Usain Bolt’s run has probably attracted people to the sport. But that’s more true of niche sports like track or cycling than with sports like soccer or football where the interest is more constant.

    That quibble with the OP aside: leave it to an overrated dot-com zillionaire glibertarian like Cuban to make a fatuous and self-serving comparison between Bolt’s once-in-a-generation talent, and the shipload of Dutch tulips Cuban palmed off in a hot and wildly irrational market.

  4. mattt says:

    Cuban’s earning a few billion dollars has essentially no impact on future enterpreneurs getting rich.

    This is not true. Cuban’s accumulation of truly awesome resources of capital gives him the ability to dominate a market and compete against startups on a non-level playing field. Among other tactics, he can overbid for resources in order to strangle a smaller competitor, or wield disproportionate political influence to get regulations or etc written to suit his needs.

    Of course Mark Cuban only operates in a few markets. But multiply him by scores or hundreds of other superwealthy business interests, and the sky is noticeably darkened for the next generation of entrepreneurs.

    Which is not to say it becomes impossible for the next generation to succeed – only that the accumulation of massive wealth in the hands of a few will tend to stifle innovation and long term productivity.

  5. Tlaloc says:

    Money isn’t a finite resource.

    There’s an infinite amount of money? I really don’t think that’s so. In 2007 the US GDP was ~14 trillion dollars. For the world it was 54 trillion. That’s a large amount but its very much a finite amount. You can’t increase the amount to one person or economic entity without decreasing the amount to another. That’s how math works.

    People get very confused by the idea that the economy “isn’t zero sum.” What they mean by that is that the economy can grow over time. But regardless of that at any instant there is a certain amount of money (or value if you want to be more technical) in the world and that’s all. No one gets more unless others get less.

  6. Joe R. says:

    There’s an infinite amount of money? I really don’t think that’s so. In 2007 the US GDP was ~14 trillion dollars. For the world it was 54 trillion. That’s a large amount but its very much a finite amount. You can’t increase the amount to one person or economic entity without decreasing the amount to another. That’s how math works.

    People get very confused by the idea that the economy “isn’t zero sum.” What they mean by that is that the economy can grow over time. But regardless of that at any instant there is a certain amount of money (or value if you want to be more technical) in the world and that’s all. No one gets more unless others get less.

    Nonsense, because of the equation of money and value. Knowing the finite amount of $54 trillion is useless without knowing what that money is worth. And are you claiming that there is no chance that the $54 trillion could have been worth anything else in 2007?

  7. rodney dill says:

    “Just because Usain Bolt sets a world record every time he runs doesn’t make the other runners slow.” – Mark Cuban,

    Cuban was equating the salaries to the runners time, not to their placing in the races. Analogies are nearly always imperfect, but if you change the analogy (adding runners place as important) you tend to murk up the analogy further.