Monday, August 31, 2015

Why a Level Playing Field?

Why does the government have a responsibility to make the playing field level? 

Let us at least be on the same playing field. Starting with...
"In commerce, a level playing field is a concept about fairness, not that each player has an equal chance to succeed, but that they all play by the same set of rules.
In a game played on a playing field, such as rugby, one team would have an unfair advantage if the field had a slope. Since some real-life playing fields do in fact have slopes, it is customary for teams to swap ends of the playing field at half time.
A metaphorical playing field is said to be level if no external interference affects the ability of the players to compete fairly.
Some government regulations are intended to provide such fairness, since all participants must abide by the same rules. However, they can have the opposite effect, for example if larger firms find it easier to pay for fixed costs of regulation. It may be added that if the rules [affect] different participants differently then they are not actually the same.
Handicapping might be thought of as the opposite concept, of unequal rules designed to make the outcome of play more equal." -- Wikipedia "Level Playing Field."
But let us see how this works in practice. The USA recently sued India at the WTO because India requires a percentage of domestic content in solar panels, disadvantaging imported materials. In another example, the Netherlands does not grant special state subsidies to its ports, though Germany, Belgium, and France do. The Netherlands claims that this is not a level playing field. Dutch ports are disadvantaged by state subsidies given to other ports.

Those are arguments about "free trade versus fair trade." It is alleged that when a national government subsidizes home industries, it disadvantages imports. Other subsidies give advantage to local exports into foreign markets where they disadvantage the unsubsidized local businesses there. 
Sprinter Dutee Chand has been fighting regulations
that define her gender by the levels of androgen
in her blood. She is not accused of doping.
These are her natural levels of a hormone
present in all women and all men.
All bodies are not created equal.
I suggest a micro-economic analysis of households, individuals, employees, and businesses. Ms. Smith is an executive who earns $250,000 per year. Every Saturday, she takes out her riding mower and manicures the large lawns and gardens around her home. Billy Jones has a lawn service. He points out that he can do the work more efficiently for less. He is willing to earn much less than Ms. Smith, say $100 for the two hours to mow, trim, and rake. Moreover, if Ms. Smith went to the office - even just her home office - she would be far more economically productive than she is being her own lawn service.

Ms. Smith listens to him, and agrees that she has better things to do. She goes into the house and comes out with 8-year old Samantha. "Want to learn to drive? Do a good job, all neat and clean, and I will give you $50. It will take you most of the morning. You will clear about $12.50 an hour." Billy Jones files a complaint with the World Trade Organization.

The concept of a "level playing field" applies to sports because competitive sports are zero-sum games. Business is not. Businesses create unlevel playing fields all the time. They change the rules of the game. New products and new services create new markets. 

The speed limits on streets and roads are a perfect example of a legally mandated level playing field for delivery companies. UPS, FedEx, the USPS, and all the many independents, even the bike couriers, all are subject to the same rules of the road. Amazon wants to deliver packages with drones. Where is your level playing field now? It is in the wrong dimension - Flatland, visited by a sphere.

Moreover, in some games - golf comes to mind - knowing the field - slopes, traps, trees, and all - and playing it to your advantage is part of the game.

Now with the Boston Celtics,
Isaiah Jamar Thomas is 5'9"
and plays on the same courts
as everyone else.

As noted in the Wikipedia article, the remedy in some sports is to switch goals after half-time. That way if there is a natural slope, the advantage goes to each side equally. But does it? Is a football field the same after half a game? Heraclitus would have a lot to say about that. The assumption is that either team could take equal advantage of a sloped field. How is that known? And if it were a real consideration, would not the officials actually measure the field for flatness? And would not some of those sports actually be played on fields with officially regulated slopes? 

What about basketball, another sport where the goals are swapped. No one claims that the gym is sloped. 

Note that in American Football, the first kickoff is settled with a coin toss. They do not have two kickoffs and average them to distribute the result. They do not flip the coin ten times and average that. You win or you lose the advantage on the toss of a coin. That's life... And as for chance, as Louis Pasteur famously noted, it favors the prepared mind.

Finally, as Wikipedia pointed out, attempting to level the playing field may actually deliver a disadvantage to a firm that cannot afford the price of lobbying for legislation.  

The concept of a level playing field in economics is a floating abstraction, a logical construct without empirical validity.

Where All the Children are Above Average

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