Supreme Court Favors Capitalism – 9-0

Something fascinating just happened. In effect, by a unanimous decision – with a concurrence by Brett Kavanaugh – the Supreme Court just favored capitalism. Winner: Student-athletes. Loser: NCAA

If you just read headlines, you would assume nothing special – or limited to sports, what colleges can do to win athletes without violating NCAA rules. But this ruling is bigger because it represents a peek behind the curtain, into the heads of sitting justices.

On the ruling’s merits – the narrowest understanding of what the Supreme Court just did – they effectively said the NCAA is not beyond the reach of antitrust laws, specifically the Sherman Act, which prevents monopoly behavior.

Accordingly, the NCAA cannot stop colleges from competing for athletes with “education-related aid.” In effect, student-athletes deserve consideration for their work, and the NCAA cannot stop colleges from competing with scholarships and expenses for them.

The Court’s rationale is easy to follow. It continues a trend away from the old British separation of amateur athletes (unpaid) from professionals (paid). The High Court saw the obvious that these young athletes put hundreds of millions in college coffers – paid by education.

The Court said colleges need not “cap” education-related benefits for recruited athletes. Wrote Justice Gorsuch: “To the extent [the NCAA] means to propose a sort of judicially ordained immunity from the terms of the Sherman Act for its restraints of trade—that we should overlook its restrictions because they happen to fall at the intersection of higher education, sports, and money—we cannot agree.” See, e.g., Supreme Court sides with student athletes, rules NCAA improperly capped education-related benefits.

In other words, the NCAA is behaving like a monopolist, and that must stop. Capitalism does not stop at the schoolhouse door. Gorsuch added competition can only be via “educated-related aid,” saying: “Under the current decree, the NCAA is free to forbid in-kind benefits unrelated to a student’s actual education; nothing stops it from enforcing a ‘no Lamborghini’ rule.”

As the majority sees it – for now –college athletics is not open to runaway inducements, big money, salaries for athletes, or “a Lamborghini if you play with us.”

Kavanaugh went further: “I add this concurring opinion to underscore that the NCAA’s remaining compensation rules also raise serious questions under the antitrust laws,” noting the decision – while pro-market economics – “does not address the legality” of rules preventing greater competition. So, he thinks gifts like a Lamborghini might be okay, but no ruling yet.

In the most basic way, the decision is interesting – since it opens a can of worms that student-athletes, back to people like Olympic runner Steve Prefontaine, long wanted open. Why should these athletes be corralled? He pointed to limited compensation for amateurs, raising pressure on these athletes, often putting them on a survival bubble – a windfall to amateur associations.

Implications are many.

For starters, this decision thins the wall between amateur and professional sports, putting pressure on both to rethink what makes them unique.

Second, the case puts “amateurism” under bright lights. Why do we perpetuate barring some from the fruits of their labor? Olympic athletes back to 1912 were stripped of medals for compensation (tied to training), a practice by the 1970s called “shamateurism.”

By the 1990s, the Olympics caved, permitting professional athletes to compete.

The whole idea of amateurism comes from a “Corinthian ideal,” that competition in sports is about “honor and fairness, not victory and gain,” but that distinction is questionable.

Are professional sports dishonorable or unfair because paid? If sports mimic war, is victory not a fair motivation? Even if the competitor enjoys a sport, is a return wrong?

One unspoken basis for perpetuating the distinction – especially in 19th and 20th Century Europe – was upper-class interest in preventing working-class entry into sports. If only those who could afford to play without pay played, the circle stayed limited.

While that motivation has dissolved under merit, shadows remain. This decision lights one.

Third, this decision highlights unanswered questions. Why do college and university coaches make millions while the athletes are barred?

Why can they earn at other jobs, but not sport? Why just food, housing, tuition, and education-related expenses?

Why can college athletes not exercise free speech rights, get paid to endorse products? If colleges use sports to underwrite profits, why not athletes? If most college athletes never “go pro” – why not allow hay while the sun shines? While all benefit from structure, why just a degree?

Fourth, in a time of remote learning, political preoccupation, and pressure on colleges, this decision highlights sports as a money maker – and foreshadows heightened competition to recruit top college athletes. Then the question arises, if some are rewarded, must all be? What does this do to Title IX – already battered by the transgender mess?

All this is interesting but not the Big Thing. It is not why this decision is so remarkable, revealing, ultimately reaffirming – and genuinely hopeful – about America’s future.

What is he talking about?

Just this. Think with me about what this decision means. It talks about sports, antitrust principles. But it is about what matters. Nine of nine justices on the US Supreme High Court understand capitalism, its principle, power, place, and importance.

Left to right, nine out of nine subscribe to the principle that competition in the marketplace is good, more the better, supply and demand need room to find each other, less intrusion from external forces – today the NCAA, perhaps tomorrow government – is preferable.

No, this does not make the liberal wing conservative nor speak to any other issue – beyond market behavior. But this is a significant tip of the hand, to the idea that free markets should be allowed to work, and they all think so. Kavanaugh thinks they should be given more room.

Personally, I do not care whether amateur athletes get more play, whether the market for athletic competition widens or remains subject to commonly agreed, education-related limits. What I care about is what the decision means the Supreme Court understands and abides capitalism. They understand upward mobility, big entity intrusion, heavy hands-on freely operating markets.

This holding tells us that all nine believe in basic principles of capitalism, free markets, even if some favor more regulation and others less, some more antitrust and others less. Bottom line:

Future market-focused questions may be more faithful to capitalism than expected. In a world of worry, that is good news – well beyond whether athletes get rich.