Connecting the Dots
How about this as a TV game show: “Connect the Dots.” For example, how would you connect the fabulous salaries of professional athletics with the deterioration of our public schools?
A future Hall of Fame linebacker for the 49ers just signed a multi-year contract for as much as 50 million dollars. This was announced in the same paper that has continually reported on cutbacks and layoffs in our public schools. So, what’s the connection?
One has to ask the right question. If we ask whether the linebacker deserved the money, we don’t get very far. Who would not ask for whatever he or she could get? A better question is how did the 49ers get that kind of money? Well, there are various sources, of course, but about 2/3rds of the money comes from TV deals. In 2006, contracts with the three networks, CBS, Fox and NBC, awarded the NFL with an average of $2 billion a year until 2011. So, a large chunk of the money comes from selling programming to television, radio, and other outlets.
And where do these outlets get that kind of money? From advertizing. Remember the cost of 30 seconds during the Super Bowl? One million dollars. So, TV producers have the money to pay the football teams—that then have to money to pay those fabulous salaries—from the corporations that buy advertising on television and radio.
Well. “Where did the corporations get that kind of money?” From their profits. But profit is simply what is left over from one’s income after the bills have been paid. So to have enough profit to spend billions on advertising, either the income is really high or the costs are really low.
It turns out that some of the costs have remained low or even decreased, while income, in some cases, has increased. The costs have remained low—in part—because worker’s wages have not really increased since the 1970’s even though worker productivity has increased due of new technology.
Also workers (in the United States) are working longer hours, and corporations are paying fewer taxes than they did before. Fewer taxes, of course, have left states without the finances to maintain quality public schools. (Decades ago, corporations paid about 40% of the federal income tax, today they pay about 6 %.) So, the kids in public schools are getting less so professional football players can have more.
Or to put it another way, instead of increasing worker’s salaries or paying taxes, the corporations are using billions for advertising, which gives lots of money to television, which in turn gives lots of money to football teams, who then have the money to pay 50,000 million to a linebacker.
If we could learn how to connect the dots, we would have a good chance of understanding what is happening in our economy.