NFL Referees

I had a post yesterday on facebook stating that this whole replacement referee thing is a little crazy, and a few people had responses. Steve Young said on MNF afterwards that as long the demand is inelastic it doesn't matter to the owners. I tend to agree if we keep watching, if tickets keep getting sold the owners won't have any reason to do anything at least not in an economic sense. The economics of it bring me to something I have noticed over the last few years.

The NFL owners are the 1% and in the large scale of things it makes little or no difference to them financially if they pacify the referee union. But, everything in our current climate is about the Rate of Return.We constantly hear about corporate greed, the 1% getting richer, the inequities in incomes growing, and the long list of financial scandals that have taken place.

Let me pose a question for you: Would you rather have a portfolio returning 12% annually where you know nothing about the underlying investments, or a portfolio making 8% where you understand the underlying investments? I am not sure what your answer would be but I am sure at least some portion of it has to do with your ability to lose money. Think of it this way if I am a billionaire and I am investing a $100,000 I would lean towards the higher return. If it is the last $100,000 I have, I might be more careful.For the 1% making investments they aren't investing their whole net worth, they won't lose their home, or not pay their bills. The game is just different.Also some of the largest investors are Mutual Funds, Pensions, etc ... who have to answer to secondary investors. For these passive investors the rate of return becomes paramount.

It makes complete sense on another level as well. If you own a company with 500 employees, there can at least be an argument that the employees are in someway your constituency. If you are on the board of a public company, your constituency are the shareholders. One could argue that in the case of a director not maximizing profits is the amoral decision.

Corporations are growing larger and larger, the investors tend to be passive and even in private companies the focus on immediate returns means that the only thing that matters is profit. I am not sure this behavior can be curbed unless there is a fundamental shift in America's love affair with corporations...