I've Solved the Deficit

[Kuciwalker]

What would justify a steep tax on athletes' incomes in this setup is the low elasticity of supply. The fact that the athletes are positional goods might lead to this low elasticity of supply, but they are not the same thing....

The low elasticity is a direct and necessary consequence of positionality (is that a word?).

[SlowwHand]

Yes.

[KrazyHorse]

Are you sure you aren't attempting to bring in questions of desert here?

What happens if an additional star athlete provides his services? In a purely positional game, the total athlete salary value stays the same, as do everybody else's expenditures and enjoyment. The set of (N-1) old players plus the 1 new player is a perfect substitute for the N old players. Only the individual salaries change. The elasticity of supply is nil. Therefore, optimal taxation says we should tax the employment of professional athletes.

No different than any other situation where supply elasticities are low.

[KrazyHorse]

What would justify a steep tax on athletes' incomes in this setup is the low elasticity of supply. The fact that the athletes are positional goods might lead to this low elasticity of supply, but they are not the same thing....

The low elasticity is a direct and necessary consequence of positionality (is that a word?).

And is not sufficient to prove positionality. The "justification" for taxation is not the positionality but the low supply elasticity (and high salary, obviously; the taxation is thus efficiency neutral and equality enhancing).

There is no market deficiency here, as far as I can see.

[Kuciwalker]

Are you sure you aren't attempting to bring in questions of desert here?

Yes, because I challenged myself with exactly that question when I was thinking about this.

(Especially because part of my motivation was finding a way to ***** about athlete salaries that wasn't "well I don't find most sports to be very interesting" )

No different than any other situation where supply elasticities are low.

Of course. The point is that positionality necessarily reduces supply elasticity and therefore we can look at a market, notice that it's positional, and therefore conclude that it would ideally be subject to some additional tax.

[KrazyHorse]

It's not necessarily obvious that sports are purely positional, Kuci...

Hypothesis is no substitute for evidence

[Kuciwalker]

Obviously, I'm not working off of hard data, but the circumstantial evidence is pretty strong from my POV. After all, professional sports are specifically constructed as ranked competitions.

[KrazyHorse]

that's sporting results

the value comes mostly from the process

[Jon Miller]

Charisma is more important in professional athletes than just skill, and changes it from the behavior that Kuci hypothesizes (Jordan and Tiger both have it in spades).

JM

[Lorizael]

If the transactions didn't have value then parties to them wouldn't engage in them. In order to tell a different type of story you really have to stretch.

There are cases where this principle doesn't apply, but they are generally pretty easy to spot.

It's more accurate to say that if the parties involved didn't believe their transactions had value then they wouldn't engage in them.

And again, this misses the point that while a transaction may have value to the parties that participate in the transaction, the transaction doesn't necessarily have value when measured in a different value system. This is a simple, almost tautological statement, but it's still true.

My services create a transaction cost. The immediate observation is that the transaction must provide so much net benefit to both sides that it is worth bearing this cost.

This might make sense as a value judgment if we were talking about provision of consumption goods & services for the rich. The services I provide are, in the end, paid for by a broad range of companies who wish to enter the capital markets in order to more effectively provide their goods and services to their customers (who represent consumers across the world and across income levels)

Again, this betrays a fundamental misunderstanding of the difference between consumption and investment. An individual who builds luxury yachts may be subject to this criticism. Not somebody who provides services in the capital markets to companies building virtually everything anybody in the First World consumes. As far as my, employer, I have no clue why you think it is so generous

I shouldn't be using you as an example specifically. It's not like I have any particular beef with the work that you do, and I don't honestly have a good handle on what that work is anyway. But I don't think the difference comes between investment and consumption, although that could certainly be part of it. I think the difference lies in profit margins. If a company has more money just lying around, it is more capable of compensating its employees, even if those employees aren't necessarily responsible for providing the increase in profit margin. And if that's the case, I'd say that's a pretty clear example of income and value not directly lining up.

No, prices are the ONLY reasonable way of measuring the value of goods and services. You CAN criticize the value of price as a measure of value due to the distribution of consumption. In fact, that is the ONLY compelling criticism I've ever heard of it. However, the price of an object must be a starting point for any value comparison. Prices represent what informed actors are willing to sacrifice, at the margin, to obtain the given object. The musings of uninformed individuals (and more precisely, individuals who could NEVER be informed enough to understand the entire array of relative values placed on EVERY OBJECT in EVERY SINGLE PERSON IN THE WORLD'S HEAD) who furthermore have nothing at stake compare rather poorly to a mechanism which does.

I'll admit that your argument that prices are the only reasonable way of measuring the value of goods is probably true as long as scarcity still exists and the reason people engage in transactions is to acquire that which they lack. My only response to that is the idea that while those two facts are seemingly inescapable, they don't have to be. Universally, of course, scarcity cannot be eliminated, but locally (whether local is a neighborhood or a solar system) it can be, and it's possible that there are other reasons why people would interact with each other (altruism and idealism being the principle reasons I can think of).

The reason people get up in arms about those things is because they believe that the relative value they place on objects is somehow vastly more important than the relative value that everybody else places on them. On the other hand, prices take into account EVERYBODY'S values. Believing that you know better than the price does is usually a sign of a severe psychological disorder, in my opinion.

Already explained. It's very straightforward: the difference between what any given person thinks the relative value of given objects "should" be and what it is is generally due to that person's belief that he knows better than other people what THEY should prefer.

As I said, severe psychological disorder.

I preempted you here by saying that people's intuitive sense of how value should be assessed is likely to be wrong, but that doesn't mean the reasons why they assess something a particular way aren't interesting to think about. More to the point, the reason someone gets up in arms isn't because of "the belief that he knows better." It's because there are other methods of valuing goods that we don't use. As I said above, the methods might not make good sense within the context of our society, but that doesn't mean there aren't other societies we can create in which they might make sense.

I know I'm being very hypothetical here, which makes it difficult for this discussion to really get any where, but my main point is that there are possibilities which you seem to have dismissed rather quickly because they don't apply to our current system. I'm also being hypothetical because I won't claim to have any particular expertise when it comes to economics, but I do have the ability to imagine a different set of circumstances that would change what economics was.

[Al B. Sure!]

It's not necessarily obvious that sports are purely positional, Kuci...

Hypothesis is no substitute for evidence

That's what I ****ing said.

oh look...

Yet you aren't telling me how it's positional. You're assuming it is, saying it is definitely so, and blabbering about taxing it. Why is it positional?

Nice. I'm a moron because I ask him to explain how its positional... Wow. Shocking suggestion! Kuci to explain what is 'so blatantly obvious'! Hang the moron!

**** YOU GENIUS CLIQUE

[KrazyHorse]

Why don't you go somewhere that people give a **** about anything you say?

[Hauldren Collider]

If you taxed a sport near 100% then businesses would invest in other forms of entertainment with less tax overhead.

[Asher]

Like prostitution rings.

[Jon Miller]

If you taxed a sport near 100% then businesses would invest in other forms of entertainment with less tax overhead.

If people wanted sports, businesses would supply sports.

They would just increase ticket prices, decrease salaries/etc until they made a profit (or people didn't want sports anymore).

It is pretty obvious that the players (at least) could stand a lot higher taxation and still play. We had great players 30 years ago too, even though they were paid much less (and 50 years ago the same, and they were paid even less, relatively).

JM