Fuzzy Economics: Creating Bubbles

Lets use the NBA organization and its economics as an illustration for how economic bubbles are created. It has to do with private studies that use phrases like ‘contribute to’.

In the instance of the NBA, there are many layers of wealth disbursements before there are any direct consumer disbursements of wealth. Those studies are mixing the concepts of consumers (eg. spending at Walmart) and public contributions (eg. income and property taxes). When consumers spend their disposable income with the NBA, instead of alternatives like Chucky Cheese or a broadway show, that money has no direct route back to the economy by way of equal consumer spending. Instead of that that money is disbursed as salaries, pensions, rents, expenses and maybe even investor dividends.

Studies that says the NBA contributes to the local economy with some $ billion amount are fuzzy. They can not track consumer spending of players and owners and staff, if they do it is illegal and next to impossible without invading privacy. They also can not track fans spending or if they do they say everything leading up to game time that day is attributable to the game which is an error.

A player’s career span from 3 to 10 years, even though they may make millions in salaries. But we also know, if that is all they make, the average middle class professional in an advance field can earn that much over their own career span which is normally retirement at 65 years old. So everyone is putting it into savings accounts and spending just a bit of their income on monthly expenses, this includes rich investors that are saving it for their own families.

Unfortunately when such a study is released, everyone jumps on the bandwagon. It’s that simple. It leads to hyper inflation and hyper class divide.