Learn from the NFL: The Free Market Works, by Hughey Newsome

newsome_smSeptember is usually exciting for the National Football League, its players and its fans. It’s the start of the new season. Old favorites are back on the gridiron and new players will be tested. Everyone wonders if this season will see his team in the Super Bowl.

This year, however, September presented a series of unusual and unexpected problems for the League.

One of its stars, Ray Rice of the Baltimore Ravens, was indicted in March for aggravated assault of his then-fiancée (now his wife). After some press conferences, an investigation by the League’s front office and a two-game suspension, NFL officials probably thought the situation was over. But the release of a video showing the assault just before the season started appalled the public. There was an ensuing backlash and complaints that the League was too lenient with Rice. There were also revelations of other cases of players being allowed to play while facing domestic abuse allegations.

Under this heavy fire, the penalties for Ray Rice and several other players with similar cases were lengthened.

Public outcry also led to responses from corporate sponsors. Most major sponsors didn’t end their relationships with the NFL, but serious concerns were expressed. Anheuser-Busch officials, for instance, announced they were “disappointed and increasingly concerned by the recent incidents that have overshadowed this NFL season.” Pepsi, Marriott and FedEx expressed similar concerns. Proctor and Gamble cancelled a promotion with the League. Nike pulled all merchandise related to Adrian Peterson of the Minnesota Vikings off its shelves.

Peterson was going to be allowed to play, without even a suspension, after he was charged with physically abusing his child. Later, after public pressure, the Vikings suspended him.

The debate over whether or not this backlash against the NFL is merited dominated mainstream and social media for weeks. While reasonable people can stand on either side of the debate, one thing was very clear: the free market can be leveraged to reflect social norms.

The NFL provides a service. It has a relationship with other businesses. Those companies largely depend on consumers for revenue and profit. When the NFL promotes or allows for actions considered to be socially unacceptable, those consumers have a right to show their disapproval.

Pressure can be placed on sponsors, and sponsors can react by terminating or threatening to terminate their business relationships with the League. All of these players are acting voluntarily and in a way that serves their economic interest. At the same time, they promote social norms by establishing — in this instance — that domestic abuse cannot be ignored.

In this case involving the NFL, it was done without the passage of a single law or establishment of any special government committees or other bureaucracy. There was no need to increase the footprint of government at any level (not that a few U.S. senators didn’t try) just like there was no need for politicians to grandstand for the situation to be rectified.

The free market did the work toward cleaning up the NFL’s problems.

Domestic abuse is socially unacceptable. But what about other agendas the political left tries to push as social norms? For example, it claims our minimum wage laws are unacceptably low and inhumane. Strangely enough, employers often associated with low minimum wages do not see any real reduction in sales. McDonalds and Walmart, two companies often criticized for low wages, continue to see healthy revenue. In fact, Walmart booked $479 billion in sales in 2013 — returning it to the top of the last year’s Fortune 500.

Stopping climate change is also considered a social norm. But no sustained, critical-mass boycott of a local utility has been yet executed, much less succeeded. Likewise for energy companies.

How can people say we need minimum wage laws and carbon taxes to promote social change when the masses have not shown any such demand with their hard-earned money? When government imposed a “living wage” in SeaTac, Washington, last year, the initial reaction to save jobs from being cut was for businesses to impose new surcharges to customers. Where energy suppliers offer alternatives to fossil fuels, energy bills rise.

Perhaps talk of such change should be abandoned to let the free market decide.

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Hughey Newsome, a business consultant in the D.C. area, is a member of the national advisory council of the black leadership network Project 21. Comments may be sent to [email protected].

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