Plantation Economics
My personal debt to Gary Becker (RIP)

The Market Speaks

By Jonathan B. Wight

The market speaks, or in this case, screams

CarMax swiftly announced it was pulling its sponsorship of the LA Clippers because of the alleged egregious comments by its owner, Donald Sterling.  Players turned their shirts inside to hide the team name. Nba players

The exodus was soon followed by Lumber Liquidators, Kia Motors, Red Bull, and others. The NBA commissioner, seeing the waterfall of bad press and financial mayhem, quickly imposed a lifetime ban on Sterling and began pushing to force the sale of the team.

There was a collective sigh of relief—our moral sentiments assuaged that a big jerk got his due and that no amount of money could buy the respect of players and fans. 

The market worked in one sense to achieve this end but also seemed to run a bit roughshod over Sterling’s property rights.  Can the monopoly NBA force Sterling to sell his franchise?  Certainly one can see why the Clippers would be worth a lot more sold than to remain in Sterling’s hands.  But should that be Sterling’s decision?  I have no idea what the NBA owners' contracts stipulate, but it is fascinating and sad to watch this play unfold, derived from so much unnecessary pain inflicted by Sterling. 

UPDATE:  There have been problems posting comments to this site.  Jonas Feit has this comment:

On, "The Market Speaks," I would add that Mr Sterling's property rights are likely well protected by the courts and his legal team, which, if past incidents are any measure, is large. It's the HOA situation in other clothes; anyone not desirous of being bound by the customs (and the morality clauses) of organizations needn't voluntarily join them. If such behavior is verboten and this is known and understood, allowing Mr Sterling to remain would violate the property rights of his fellow owners at least as much as forcing him out would violate his.

Excellent point. JBW


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