DRI-275 for week of 6-1-14: The Triumph of Economics in Sports: Economics Takes the Field to Build Winning Teams

An Access Advertising EconBrief:

The Triumph of Economics in Sports: Economics Takes the Field to Build Winning Teams

In the previous two EconBriefs, we spoke of a popular attitude towards sports. It looks nostalgically to a hazy past, when men played a boys’ game with joyous abandon. Today, alas, sports are “just a business,” which is “all about the money.” As elsewhere, “greed” – a mysterious force no more explicable than a plague of locusts – has overtaken the men and robbed them of their childlike innocence.

This emotional theory of human behavior owes nothing to reason. It is the view now commonly bruited by those who describe the financial crisis of 2008 and the Great Recession as the outcome of free markets run rampant. People are irrational, so the result of “unfettered capitalism” must naturally be chaotic disaster.

Economics is the rational theory of human choice. For a half-century, it has opposed the irrationalists from two directions. Its free-market adherents have been led by the Chicago School of Frank Knight, Milton Friedman and George Stigler. That school embraced a theory of perfect rationality: perfect knowledge held by all market participants (later modified somewhat by a theory of information only slightly less heroic in its assumptions), perfectly competitive markets and (where necessary) perfectly benevolent government regulators and/or economist advisors.

The neo-Keynesian opponents of Chicago accepted individual rationality but asserted that individually rational actions produced perverse results in the aggregate, leading to involuntary unemployment and stagnant economies. Only counteracting measures by far-seeing government policymakers and regulators – following the advice of economist philosopher-kings – could rescue us from the depredations of free markets.

The debate, then, has largely been defined by people who saw market participants moved either by utter irrationality or complete rationality. But our analysis has revealed instead an evolutionary climate in which participants in professional sports pursued their own ends rationally within the limits imposed by their own knowledge and capabilities. The great free-market economist F.A. Hayek observed that capitalism does not demand that its practitioners be rational. Instead, the practice of capitalism itself makes people more rational than otherwise by continually providing the incentive to learn, adapt and adopt the most efficient means toward any end. Professional sports has exemplified Hayek’s dictum.

Early on, in its first century, the pursuit of individual self-interest left baseball owners, players and fans at loggerheads. The first owner to address himself to the task of improving the product provided to sports fans was Bill Veeck, Jr., who introduced a host of business, financial and marketing innovations that not only enhanced his own personal wealth but also treated his fans as customers whose patronage was vital. The attitude of ownership toward fans prior to Veeck can be gleaned from the dismissal by New York Yankees’ general manager George Weiss of a proposed marketing plan to distribute Yankee caps to young fans. “Do you think I want every youngster in New York City walking around wearing a Yankees’ cap?” snorted Weiss. Veeck made owners and administrators realize that this was exactly what they should want.

Although few people seemed to realize it, economics had yet to play its trump card in the game of professional sports. Economics is the study of giving people what they want the most in the most efficient way. What sports fans want the most is a winning team – and that is exactly what economics had failed to give them. It failed because it had never been deployed toward that end. Even Bill Veeck, despite his success in improving the on-field performance of his teams, had not unlocked the secret to using economic principles per se to win pennants and World Series.

As sometimes happens in human endeavor, baseball had to traverse a Dark Age before this secret was finally revealed.

The Dark Age: Municipal Subsidies and the Growth of Revenue Potential

During Bill Veeck’s swan song as baseball owner in 1975-1981, baseball had entered the period of free agency. The reserve clause tying players to a single team had been drastically modified, allowing players to eventually migrate to teams offering them the best financial terms. As we indicated earlier, this development – viewed in isolation – tilted the division of sports revenue from ownership to players.

This created the pretext by which owners were able to extract subsidies from municipalities throughout the nation. Owners could truthfully claim that they were earning less money as a result of free agency. What they left out was that they were earning more money for a host of other reasons. The obscure nature of player depreciation hid the true financial gains of sports-team ownership from the public. Moreover, the early years of free agency coincided with the advent of massive new revenue sources for owners. Television had brought baseball to millions of people who otherwise saw few games or none; broadcast rights were becoming a valuable asset of team ownership. Radio-broadcast rights increased in value as the increased visibility of teams and players enhanced their popularity. These increases were just gaining speed when the vogue of sports-team subsidies became a national pastime of its own.

The movement of baseball teams had long been viewed as analogous to the movement of businesses. Even the loss of popular teams like the Brooklyn Dodgers and New York Giants to westward expansion of baseball in Los Angeles and San Francisco was grudgingly accepted, since baseball still remained in New York City and the Mets were added as an expansion franchise in 1962. But when the Athletics moved from Kansas City to Oakland in 1967, Missouri Senator Stuart Symington decided that the federal government could not countenance “unfettered capitalism” in the baseball business. He demanded that major-league baseball replace Kansas City’s lost franchise. This opened the floodgates to the intrusion of politics in baseball.

If it was fair for politicians to dictate where major-league baseball should operate, then franchises should be able to demand favors from local governments – or so reasoned baseball owners. And demand them they did.

Owners demanded that teams build new, larger, better-appointed stadiums for their sports teams. Cities should fund construction, own the stadiums, operate them, maintain them and lease them to the sports teams for peanuts – otherwise, owners would pack up and move to a city that would meet their demands.

What was in it for the host city? After all, not everybody is a sports fan. Owners sensed that they needed something to offer the city at large. Thus was born one of the great con games of the 20th century: the notion of sports as economic-development engine of growth. Owners seized on the same thinking that animated the dominant neo-Keynesian economic model. They sponsored “economic-impact studies” of the effect sports teams had on the local economy. In these studies, spending on sports took on a magical, mystical quality, as if jet-propelled by a multiplier ordained to send it rocketing through the local economy. And everybody “knew” that the more spending took place, the better off we all were.

It is hard to say what was worse, the economic logic of these studies or their statistical probity. It was not unusual to find that a study would add (say) the money spent on gasoline purchases at stations adjacent to the stadium to the “benefits” of sports team presence. Of course, this implies that locating the team as far as possible from the fans would increase the “benefits” dramatically; it is a case of cost/benefit analysis in which the costs are counted as benefits. This novel technique inevitably produces a finding of vast benefits.

As time went on, sale of team artifacts and memorabilia was added to the list of supplemental revenue. Larger stadiums, lucrative TV, radio and cable rights, team product sales – all these drove revenues to owners through the roof as the 20th century approached its close. With municipalities subsidizing the ownership, maintenance and improvement of stadiums, it is no wonder that the capital gains available to owners of sports teams were phenomenal. Ewing Kauffman bought the Kansas City Royals’ franchise for $1 million in 1968. At his death in 1993, the team’s value was estimated at well over $100 million.

One might have expected the usual left-wing suspects to recoil in horror from the income redistribution from ordinary taxpayers to rich owners and rich ballplayers – but no. Newspaper editorialists threw up their hands. The economists who supported free agency said that the major-market teams would get the best players, didn’t they? And hadn’t things worked out just that way, before free agency as well as after? If small-market taxpayers want to win – or even have a team at all – they’ll just have to ante up and face the fact that “this is how the game is played in today’s world.” Besides, doesn’t economic research show the economic-development benefits of sports teams?

Heretofore, economics had operated beneficially, albeit in a gradual, piecemeal way. Now the distortion of economics by the owners and their political allies meant that it was serving the ends of injustice.

Economics – and baseball fans – needed a hero. They got one – several, actually – from a pretty unlikely place.

Middle American Ingenuity to the Rescue

Bill James was born in tiny Holton, KS, in 1947. From childhood, he was a devoted sports fan. Like countless others before him, he was fascinated by the quantitative features of baseball and studied them obsessively. He was unique, though, in refusing to take on faith the value of conventional measures of baseball worth such as batting average, fielding average and runs batted in. James developed his own theories of baseball productivity and the statistical measures to back them up.

In 1977, he published the first edition of his Baseball Abstract, which subsequently became the Bible for his disciples and imitators. James was suspicious of batting average because it deliberately omitted credit for walks. (Ironically, walks were originally granted equivalent status with hits in computing batting average; “Tip” O’Neill’s famous top-ranking average of .485 in 1887 was accrued on this basis. The change to the modern treatment took place shortly thereafter.) While it may be technically true that a walk does not represent a “batting” accomplishment, it is certainly the functional equivalent of a single from the standpoint of run-producing productivity. (Veterans of youth baseball will recall their teammates urging them to wait out the opposing pitcher by chanting, “A walk’s as good as a hit, baby!”) Moreover, walks have many ancillary advantages. Putting the ball in play risks making an out. A walk forces the opposing pitcher to throw more pitches, thereby decreasing his effectiveness on net balance. Waiting longer in the count increases the chances that a hitter will get a more hittable pitch to hit, one that may be driven with power. For all these reasons, James made a convincing case that on-base percentage (OBP)is superior to batting average as a measure of a hitter’s run-producing productivity.

Rather than the familiar totals of home runs and runs batted in, James argued in favor of a more comprehensive measure of power production in hitting called slugging percentage (SP), defined as total bases divided by at bats. This includes all base hits, not just home runs. Instead of runs batted in, James created the category of runs created (RC), defined as hits plus walks times total bases, divided by plate appearances. James also sought a substitute for the concept of “fielding average,” which stresses the absence of errors committed on fielding chances actually handled but says nothing about the fielder’s ability or willingness to reach balls and execute difficult plays that other players may not even attempt. Moreover, fielding must be evaluated on the same level with offensive production since it must be just as valuable to prevent run production by the opposing team as to create runs for the home team.

These measures and maxims formed the core of Bill James’ theory of baseball productivity. His Baseball Abstract computed his measures for the major-league rosters each year and analyzed the play and management of the teams each year. Gradually, James became a cult hero. Others adopted his methods and measures. The Society for American Baseball Research (SABR) sprang up. The intensive study of quantitative baseball – eventually, sports in general – came to be known as “sabermetrics.” Even with all this attention, it still took decades for Bill James himself to be embraced by organized baseball itself. That, too, happened eventually, but not before sabermetrics left the realm of theory and invaded the pressbox, the front office and the very baseball diamond itself.

Moneyball Takes the Field

Billy Beane was a high-school “phenom” (short for phenomenal), a term denoting a player whose all-round potential is so patent that he “can’t miss” succeeding at the major-league level. Like a disconcerting number of others, though, Beane did miss. He played only minimally at the major-league level for a few years before quitting to become a scout. He rose to the front office and was named general manager of the Oakland Athletics in 1997. Beane’s mentor, general-manager Sandy Alderson, taught him the fundamentals of Bill James’ theories of baseball productivity. To them, Beane added his own observations about player development – notably, that baseball scouts cannot accurately evaluate the future prospects of players at the high-school level because their physical, emotional and mental development is still too limited to permit it. Thus, major-league teams should concentrate on drafting prospects out of college in order to improve their draft-success quotient.

Beane hired a young college graduate from HarvardUniversity – not as a player but as an administrative assistant. Paul DiPodesta was an economics major who was familiar with the logic of marginal productivity theory. The theory of the firm declares that managers should equalize the marginal productivity per dollar (that is, the ratio of output each unit of input produces at the margin to the input’s price) between inputs by continually adding more of any input with a higher ratio until the optimal output is reached. Of course, the problem in applying this or any other economic principle to baseball had always been that the principles were non-operational unless a meaningful measure of “output” could be found and the inputs contributing to that output could be identified. That was where Bill James and sabermetrics came in.

In 2001, the Oakland team had won the Western Division of the American League. But their star player, Jason Giambi, has been wooed away by a seven-year, $120-million dollar contract offered by the New York Yankees. It was the age-old story, the “Curse of the Bambino” all over again in microcosm. Oakland’s success had ramped up the value of its players on the open market; replacing those players with comparable talent at market rates would bust the payroll budget. Various other Oakland players were lost to injury or disaffection or free agency. Throughout baseball, opinion was unanimous that the Athletics were in for hard times until the team’s talent base could be rebuilt through player development.

Beane and DiPodesta used the most basic sabermetric concepts, such as ONB, SP and RC, as their measures of productivity. Using publicly available information about player salaries, they calculated player productivities per dollar and discovered the startling number of players whose true productivity was undervalued by their current salaries. Methodically, they set out to rebuild the Oakland Athletics “on the cheap” by acquiring the best players their budget could afford through trade or purchase of contracts. They substantially remade the team using this approach. Despite a slow start, their rebuilt club eventually tied the all-time major-league baseball record by winning 21 straight games and successfully defended the Western Division championship in 2002 and 2003. Author Michael Lewis outlined their story and the rise of sabermetrics in baseball in his 2003 best-selling book Moneyball, which later became a 2011 movie starring Brad Pitt that received six Academy Award nominations.

For the first time, baseball management had explicitly used an economic production function – marginal productivity theory with an operational definition of product or output – to maximize a meaningful object function – namely, “wins” by the team. And they succeeded brilliantly.

Money See, Money Do

In 2003, new Boston Red Sox owner John Henry hired Bill James as a consultant to management, to put the theories of sabermetrics into practice in Boston. During 2001 and 2002, the team had lugged the second-highest payroll in major-league baseball to disappointing results. But in 2003, with a lower- (6th-) ranked payroll, the Boston Red Sox laid the ghost of Babe Ruth by winning their first World Series since 1918. Over the succeeding decade, the Red Sox became the success story of baseball, winning the World Series three more times.

Was this a case of what Rocky’s manager Mickey would call “freak luck?” Not hardly. Thanks to the success of Oakland and Boston and Michael Lewis’s book, the tale of Bill James and sabermetrics traveled. Throughout baseball, sabermetrics ran wild and economics reigned triumphant. In 2003, the Detroit Tigers lost an American-League-record 119 games. In 2006, with only the 14th-highest payroll out of 30 major-league teams, the Tigers won the American League championship. In 2008 and 2009, the Washington Nationals were the worst team in baseball. In 2012, with baseball’s 20th-highest payroll, they had baseball’s best record. In 2010, the Pittsburgh Pirates lost 105 games. In 2013, with baseball’s 20th-highest payroll, they made the post-season playoffs. The Cleveland Indians rebounded from sub-.500 seasons to playoff finishes twice between 2006 and 2014, despite never ranking higher than 15th in the size of their payroll; usually, they ranked between 20th and 26th.

The crowning achievement was that of the perennial cellar-dwelling Tampa Bay Devil Rays. Cellar-dwelling, that is, in the size of their payroll, but not necessarily in the season standings. After years of dismal finishes, the 2008 TampaBay team became American League champs despite ranking 29th (next to last!) in the size of their payroll. They have made the playoffs in four of the six subsequent years, but their payroll continues to languish at the bottom of the major-league rankings.

The New Frontier

Does this mean that the generalization about large-market teams getting the better players and enjoying the better results was and is a lie? No, it was and still is true. But like all economic propositions it is subject to qualification and careful statement.

First, it is a ceteris paribus proposition. It is true that “you can’t beat the stock market (averages)” but every year some people (particularly professional investors) do it. You can’t do it systematically by trading on the basis of publicly available information. The few people who succeed do it on the basis of (unsystematic) luck or by uncovering new information (legally) before it becomes generally known. The market for professional sports is not nearly this efficient; techniques of sports productivity evaluation are not nearly as refined and efficient as those of stock evaluation and trading, which leaves much more room for systematic exploitation by techniques like those of sabermetrics.

Second, the term “large market” is no longer limited by geography as it has been during the first century and a half of U.S. professional sports. Ted Turner’s promotion of the Atlanta Braves using his cable-TV stations blazed the trail for turning a local team into a national one, thereby increasing the value of the team’s broadcasting and product rights. Today, there is no inherent geographic limitation of the size of the market for any team – no reason, for example, why the Kansas City Royals or Chiefs could not become “the world’s team” and sit atop the largest market of all.

The Evolutionary Approach to Free Markets

The correct approach to economics is not the irrationalist view that has clouded our understanding of professional sports. Neither is it the perfectionist view of the ChicagoSchool, which has oversold the virtues of free markets and damaged their credibility. It is certainly not the remedial view of the neo-Keynesian school, which has failed whenever and wherever tried and is now undergoing its latest serial failure.

The evolutionary approach of the true free-market school, so nobly outlined by Hayek and his disciples, fits the history of baseball like a batting glove. It is now in full flower. Taxpayers need no longer be violated by owners who promote false economic benefits of sports and hide the real ones. Fans no longer need languish in a limbo of psychological unfulfillment. Economics – not politicians, regulators or academic scribblers – has come to the rescue at last.

DRI-265 for week of 2-3-13: Women in Combat: What Are the Issues?

An Access Advertising EconBrief:

Women in Combat: What Are the Issues?

Recently the Pentagon announced the dropping of the other shoe on its policy of women in the military. Women have long (since 1994) been deployed to theaters of combat. Now they will be allowed to serve in combat units.

This has stirred up the predictable hornet’s nest of controversy. Mostly, the battle lines form along the familiar boundary between right and left wing – the left wing hailing the announcement as a long-overdue victory for feminism and the right wing stressing the unsuitability of women for combat roles.

On the face of it, this would seem to be grist for the mill of economics. The logical approach – which is another way of describing the way economists view the world – is apparently to allow people to sort themselves into occupational slots according to their personal preferences and productivities. The price of labor, its wage, serves as the yardstick measuring labor’s value at the margin, enabling businesses to compare it with the monetary value of labor’s technical productivity.

Any woman who can produce more value than she costs is hired – simple as that! And indeed, history tells us that competitive markets are the best known antidote to arbitrary forms of discrimination, whether based on race, gender, age or any other factor extraneous to productivity.

Furthermore, there are reasonable grounds to believe that in a free market for labor, some women could pass the physical tests for qualification as combat soldiers. Does this make the Pentagon’s action are step in the right direction, at the very least?

No. The decision is based solely on political considerations, not economic ones. It will probably work badly and cause death, dissension and abdication in the ranks of the armed forces.

Marginal Productivity Theory and Female Soldiers

A commonly heard rationale in opposition to women in combat is that “men are stronger than women.” This generalization is woefully imprecise and virtually meaningless without further definition. In principle, it might mean that every single man is stronger than every single woman – that no woman is stronger than any man. Of course, we know from personal experience that opponents don’t mean that and that this global statement is not true. In fact, there are some indices of strength by which women tend to be stronger than men – using the word “stronger” in its colloquial sense of “stronger on average,” using both the mean value and the median individual as the basis for comparison.

For military combat, upper-body strength is perhaps the most relevant index. Male upper-body strength is indeed superior on average. But some women have sufficient upper-body strength to meet military-qualification standards. Comparison on other relevant criteria, such as aerobic capacity, produces similar results. We know this even without examining military records, simply by observing world records in athletic events involving upper-body and aerobic performance. Women’s records fall short of men’s records, but rank well above average male performance and implicitly exceed the standards set for combat soldiers. It is therefore possible for women to perform the physical functions demanded by combat.

There was a time when the American woman would have been adjudged too delicate, too sensitive to perform an act as brutal as killing another human being hand-to-hand or even using a weapon. That time is long past. (Indeed, reference to it from personal memory dates the age of the speaker at least to the early baby-boom cohort.) The performance of women in combat in Israel, among other countries, establishes that women can kill. The actions of women in American politics over the last half-century demonstrate the same cold calculation, lack of sensitivity and sheer brutality exhibited by men. Women are just as willing to kill for their beliefs as are men.

Pure economic logic says that optimal selection of men and women for combat duty would require equalization of their marginal productivities. That is, whenever another combat soldier is needed, the highest-productivity applicant is picked (male or female) – the limiting case or long-run tendency is toward a stable equilibrium in which productivities tend toward equality. Because mean male strength is so much high higher, this will result in many male soldiers and few female soldiers.

So much for pure economics. Up to this point, why has the military chosen to forego the productivity gains that would have accrued from accepting women in combat?

The Rationale For An All-Male Fighting Force

In a pure market setting, the productivity gains from accepting women in combat would be small because only a few women would actually apply, qualify and serve. Some women capable of qualifying would instead prefer to pursue careers in fields such as athletics, which are much more lucrative. And there have always been compelling arguments against trying to realize those small gains.

In a recent Wall Street Journal op-ed, a onetime combat soldier in Iraq spelled out the brutal realities of life as a combat soldier. Some “grunts” who spearheaded the blitz against Baghdad in 2008 spent 48 consecutive hours racing in a column toward the city. Unable to dismount their vehicles, they had to urinate and defecate in place, in full view of and proximity to their comrades. Forcing men and women to endure this would be to add social strain and humiliation to the already severe strain of combat.

A letter writer to the Journal, also a soldier, pointed out that the inevitable result of coed combat battalions would be pairing off and formation of sexual liaisons. In turn, this would upset the vital cohesion necessary to effective function of the unit by interposing jealousy and envy between squad members. This was not mere speculation on his part, but rather the evidence gathered from coed combat experiments in other countries.

That same kind of evidence argues strongly against the presence of women on the battlefield. The sight of women wounded, threatened with capture and torture, drives male soldiers to commit imprudent acts, thereby jeopardizing the safety and success of their units.

These kinds of disruptions could potentially ruin the effectiveness of a rifle platoon. What’s more, they are only the tip of the iceberg. Admission of women is an open invitation to future allegations of discrimination, sexual harassment and rape. The discrimination can of worms is a wriggling mess of litigation and adverse publicity. The potency of a volunteer force is dependent on successful recruiting, which would be threatened by allegations, scandals and lawsuits. (Indeed, there are already rumblings that thousands of re-enlistments have been jeopardized by the shift in policy.) The risk of such serious losses is not counterbalanced by the small productivity gains accrued by adding women to combat units. That is why the military high command preferred to exclude women entirely from combat roles rather than court potential disaster from the side effects of their presence.

Did this policy “discriminate” against women? Of course. The purpose of creating and maintaining an army is not to give every race, gender, religious affiliation, political party and community organization equal representation among its ranks. The only purpose of an army is to defend the nation as productively as possible. Any combat deployment that achieves that purpose is fair because it delivers on the constitutional guarantee of life, liberty and the opportunity to pursue happiness – for everybody. A job is not and cannot be a property right. And it is consumption that businesses are supposed to provide, not equality of outcomes for people who supply inputs to the businesses. As far as that goes, it would be just as true to say that the policy discriminated against those male soldiers who would have benefitted from close contact with women – just as true and just as irrelevant, for the same reasons.

Women in the Military

Throughout the 20th century, the left wing has distorted the true meaning of concepts like “freedom” and “rights.” The word “freedom” has been used as a euphemism for the concept of power – the power to dictate the terms of trade in what would otherwise be free, voluntary exchanges in free markets. Lack of bargaining power or real income has been wrongly characterized as absence of freedom, calling for government intervention to redress injustice. Inability to work one’s will on others has been misdescribed as an absence of rights, calling for government rules to establish new rights.

Freedom is the absence of coercion, not the ability to impose one’s will on others. A right only exists when its exercise does not reduce someone else’s rights. The issue of women in combat brings these classic fallacies back into action once more.

In the February 6, 2013, issue of Time Magazine, author Darlene Iskra asks rhetorically: “Women In Combat: Is It Really That Big of a Deal?” She poses the question as a false dichotomy between “naysayers” who maintain that “women can’t do combat infantry” and “…dedicated women who only want a chance to serve their country like their male peers” and who believe that “military jobs should be based on performance.” She closes her case with anecdotal histories of a few women who served in the military – as divers, not combat soldiers. In other words, the only issues are biological and political, and the solution is government-imposed equal opportunity.

 

It is true that arguments opposing women in combat are sometimes carelessly put. But every other point made by Ms. Iskra is either dishonest or disingenuous. From the moment the military began admitting women alongside men, its focus began shifting away from maintaining its productivity as a fighting force and toward fulfilling the goals of women as individuals. When women began enlisting, they soon discovered that many of them could not meet the physical standards of performance previously established for the all-male military. When men could pass the physical tests, they were washed out of combat service. But the failure of women produced a different result – a lowering of the standards of acceptance only when applied to women.

This created a climate of cynicism and disillusion, within both the service and the general public. Soldiers realized that the overriding purpose of the military was no longer to defend the nation. Their loyalty was no longer to the consumers of their product, the nation’s civilians. Now some of them were allowed to put their own wants ahead of the defense of the nation. And this attitude potentially put male soldiers’ own lives in jeopardy.

The general public realized that, while all men were created equal, women were created more equal because their wants were given priority over the life, liberty and happiness of civilians. The stage was set for the coup de grace to be administered to the public’s belief in the Rule of Law and equality under the law. It came with the Pentagon’s latest decision.

The dictates of political correctness demand that we rejoice at this great victory for equal rights for women. And most people will doubtless give lip service to that reaction. But deep down, they know that this cannot be the right decision for the nation.

 

The Purpose of a Fighting Force

Proponents of a government-mandated female presence in combat units claim that it is woman’s right to not merely enlist in the military but fight in combat as well. By phrasing the issue in terms of the rights of the soldier, they are implicitly treating an army as an organization created to further the self-expression of its individual members. This attitude strongly resembles that taken by the left-wing toward business and employment in general; namely, that the purpose of a business is to provide both real income and personal fulfillment for its employees. Any other purposes are secondary to these primary goals.

Economics teaches us otherwise. The purpose of a business – its only purpose – is to produce goods and services for consumers. The fact that the business’s goal may be to maximize the profit it earns for its owners doesn’t alter its purpose. The minute consumers stop wanting what it produces, the business stops – what the owners want no longer matters.

The purpose of the military is to defend the nation. The purpose of combat soldiers is to fulfill their employer’s purpose by fighting the nation’s enemies as productively as possible. For most of its history, the soldiers of the United States have been widely considered inferior to those of other nations. This was true throughout World War II, when German troops were generally viewed as the best, and Korea. It was only when America adopted the all-volunteer armed forces – thereby adopting the principles of the free market in recruiting its labor – that U.S. forces became acknowledged as the world’s finest. This should make it easier to see that the military is serving the nation as a producer serves his customers. Its purpose is not to make its employees (the soldiers) happy, any more than a business’s purpose is to make its employees happy. The military’s consumers are the nation; its purpose is to serve them.

The U.S. Constitution was preceded by the Declaration of Independence, the country’s founding document. In it, Thomas Jefferson proclaims our right to “life, liberty and the pursuit of happiness.” It is in order to protect our right to life that government is granted a monopoly on force and violence. A military combat force exists in order to safeguard our right to life by fighting our enemies.

The left wing is putting its radical agenda ahead of the military’s constitutional duty to defend us. In effect, proponents of government-mandated women in combat are saying, “We are perfectly willing to put our abstract notions of gender equality ahead of the Constitution and the safety of the country. If soldiers have to die, quit the military or suffer anguish because of the presence of women in combat, that is a small price to pay for the satisfaction gained from seeing women serve in combat over the objections of the military and parts of the civilian public.”

What is Behind the Pentagon’s Action?

The left wing’s motives are clear. But why has the Pentagon reversed its previous stance on women in combat?

The military finds itself in a precarious situation. Both Democrats and Republicans are desperately looking for spending to cut. Their gaze has come to rest on the military. Each party has its own reasons for this choice. Democrats look upon the military as ipso facto evil, the only part of government that needs to be downsized. Moreover, women are a gigantic interest group – not that every woman endorses the new policy – and this announcement is a politically easy way to placate them.

Republicans would like to reduce the size of government. They are frantic to cut spending – some spending, any spending. But they have had absolutely no luck cutting wasteful spending. Now they find themselves contemplating the defense budget, like a starving man stranded on a desert island who eventually finds himself surreptitiously measuring the body weight and protein content of the only other person on the island.

The military is in no position to enforce its will on either party. It has caved in to the Democrats because the Democrats are the party in power. The Pentagon is a mammoth bureaucracy held hostage. To a bureaucracy, there is no prospect more terrifying than a budget cut. By changing its policy in acquiescence to the Democrats, it is tacitly begging its captor: “If I let you do this to me, you won’t hurt me, will you?”

Who Speaks for the People?

In everything said so far, both sides to the controversy are behaving according to form. The left wing is ignoring economic logic, the general welfare and the Rule of Law in order to further its aims. The right wing is too confused to formulate a coherent argument, despite the fact that it has had plenty of time to get its intellectual house in order on this issue. Bureaucracies – the federal government in general and the Pentagon in particular -are so far acting exactly as we have come to expect.

And the big loser from this resolution of the longtime debate is the American public, whose military defense will suffer with no counterbalancing gain. Who speaks for them?

A dispassionate appraisal yields a depressing finding: Nobody.