Wednesday, February 3, 2010

Super-Bowl! Why not Super-Economy? It's all in The Rules

I can't wait for "The Big Game" this weekend. I'm not a true fan of either team, but I'm hoping for a game that is competitive right to the end, as we have been treated to over the last few years. In fact, if the game goes into overtime, that's just fine with me, as I know eventually one team will score in sudden death overtime and will become the champions. A clear winner is the truly successful outcome of any sporting contest.

Fortunately, the NFL is run by people who realize that the fans deserve a successful outcome. This wasn't always the case, the NFL changed the rules in 1974 to extend the games by one extra 15 minute period (overtime), and the first team to score during this period is instantly declared the winner. This has been, almost, the perfect amount of additional time to result in a true winning team, as there still have been 4 ties since 1989.

The most recent tie came in the 2008 season in a game between the Eagles and the Bengals. I remember that game as there was some controversy at the end of the game as Eagles quarterback Donovan McNabb apparently did not realize that the rules allowed only one overtime period, and a regular season game could indeed end in a tie.

Here's McNabb commenting on this: "I've never been a part of a tie. I never even knew that was in the rule book," McNabb said after the game. "It's part of the rules, and we have to go with it. I was looking forward to getting the opportunity to get out there and try to drive to win the game. But unfortunately, with the rules, we settled with a tie."

The mainstream press of course went myopic and focused on the disclosure that McNabb apparently was ignorant of the rules, but I think they as usual missed the real story. If you read between the lines of McNabb's statement, you can sense his incredulity at "the rules" that for no good reason only allow one overtime period. To him, a competitor, a participant, he cannot understand why such an unacceptable outcome is allowed by the rules.

He goes on further: ""I guess we're aware of it now," McNabb said. "In college, there are multiple overtimes, and in high school and Pop Warner. I never knew in the professional ranks it would end that way. I hate to see what would happen in the Super Bowl and in the playoffs."

Well, Donovan, of course, the NFL just changes the rules in the post-season, to allow as many overtimes as necessary to result in a successful outcome. This is because the NFL is run by rational people who understand that they owe the best outcome possible to those that they are ultimately responsible to: The Fans. The NFL management knows that all they have to do is to direct the timekeeper to just get on his terminal and key in: 1 5 : 0 0 [Enter] and voila, they have created the additional playing time to allow the game participants to play on to a successful outcome. It costs the NFL nothing and they don't have to "borrow" the time from the NBA or NHL.

It is a shame that our Federal Government is not run by people with an analogous understanding of their role in managing the economy and with the common sense to arrange the rules to provide for successful economic outcomes as well.

Just as the NFL establishes the extra time period necessary to break a tie, Federal policymakers can currently use fiscal policy to provide the non-government sector the balances necessary to restore demand within the economy, thus increasing output and employment. It won't cost them anything either, and they don't have to borrow the balances from the Chinese or anyone else.

Message to the rule-makers: Let the U.S. economy play on!


mike norman said...

Nor do we stop the football game just because there are too many points on the scoreboard, yet with respect to our economy we want to let output languish and workers sit idle because the "points" put up by gov't (spending) is considered by many as being arbitrarily too high.

Mike Sandifer said...

Matt, Scott Sumner has a great post suggesting that the Fed offset much of the Obama stimulus.

Matt Franko said...

Mike S.

I looked at the article Sumner is going back and forth between monetary and fiscal policy and trying to determine whichone is working better.

Monetary has been at zero for nearly a year and a half, with no effect. I have given up on monetary policy, I'm calling BS on monetary policy. If anything I now believe it to be pro-cyclical. QE is just transfering more balances from the non-govt sector to the govt sector now that homeowners payments on 1.25T of mortgages (probably 60B this year)are going to the Fed who will promptly turn those funds over to Treasury at year end.

As far as fiscal, if you look at the YoY withdrawals from the Treasury account, net spending is DOWN this year vs last year so the stimulus is not causing an increase in govt spending YoY, the deficit must be high due to collapsing revenues. has a great "stimulus watch" type of read out and you can see that the stimulus doesnt have alot of juice left, its mostly some 8/week tax cuts and federal extended unemployment benefits that are left, perhaps some student aid.

So, YoY Fiscal really looks bad and Monetary is basically a hoax. I think the market is starting to price this in.

Resp, matt

Matt Franko said...

for Mike S,

Here is the link to . Resp,