Discussion in 'Pistons and NBA' started by KGREG, Nov 2, 2013.
The chances of that happening is about as good as Stuckey finally making it to his sophomore year.
Well that is not necessarily true - there could have been other, better deals available which he turned down to play for the Pistons. Secondly, that was only a single instance of 'the market', in another instance/context he could be worth a different amount.
It is absolutely true my friend. That is how markets work.
Then logically, the Pistons offer was the "best" offer.
I have no idea what this part means.
Sorry I have spent way to much time studying and working within economics to let simply incorrect views of á market' stand.
By what measure? People make bad decisions all the time. If there - hypothetically - was a deal for say 4yrs/60m, then there is no quantitative measure which supports the idea that the market determined the outcome. We know for a fact that Andre Iguodola turned down a $8m larger contract offer to play on a frontloaded version which isn't fully guaranteed for GSW. Can we assume that the value of not playing for Denver is higher than the money available, sure. But then it has nothing to do with the market and all to do with individual decision making.
Essentially, markets are fluid. This isn't game theory. They move up and down. What you said was essentially 'things are worth what people pay for them', but I happen to think that is inherently flawed as an argument.
I bought a car for $2000 which would normally have sold for 4000-5000 due to a number of circumstances on the sellers behalf. The market had determined that car would generally sell for 4-5k, there would have been plenty of interested buyers willing to part with that money, yet I bought for 2K, well under my budget of 4 (which I was willing to pay). The market didn't determine anything, circumstance did. Josh Smith falls into this basket.
We may have slightly different definitions, but there was a market (albeit a closed market, limited to the 30 NBA teams, their cap conditions etc) that gave Josh Smith one or more offers, of which he chose one as "best" for him.
By his own subjective valuation.
Economics is value free. "Good" and "bad" are value judgments. The only thing we can say, is that Josh picked the Pistons deal, ostensibly (as a rational actor) because he thought it was the "best" offer for him.
Markets are compromised of individuals making decisions.
You can't sell something for a price no one will pay (unless you're the government).
Prices are set when two parties agree upon a value or rate of exchange. You can't create a non-arbitrary price with only one party.
In today's media environment if Smoove was offered a better contract we would have heard about it. Just as you point out Igoudala's better contract offer. Smith signed with us. We offered him the most $$. The market this offseason might be different, but in the summer of 2013 the market for Smoove was the 56 million or whatever we gave him.
Economics is most certainly not value free. It is perfectly reasonable, and rational, to compare outcome both quantitatively and qualitatively. To ignore either or these is absurd. Economists often make value judgements, backed up by evidence.
Interesting too, that you brought up the idea of a rational actor. Which was exactly what I am talking about. There are few circumstances where you can think of either party in a negotiation as a rational actor. I certainly don't think a NBA player negotiating a contract is one of these.
I'm not arguing that there is some kind of price paradox, I am arguing that value and price don't necessarily line up in this scenario.
Here is a better one - my brother once gave me a $1 coin for my $2 coin. Both parties accepted the terms of the contract, and it was legally enforced and dictated by two separate parties.
This is measurably bad value for me. I was underpaid. The market only determines prices, not values. Value is determined ex parte, so when I say Josh Smith is underpaid and there is reasonable evidence to suggest that he is, statements like
are not necessarily true. The market provided deals, sure. But his decision (assuming there were multiple offers) is what created an outcome, and a value imbalance. Not the market.
Why would we hear about it? Small market teams offer max contracts to players all the time under the radar, only to be rebuffed. They don't necessarily want everyone to know that they are being constantly rejected...
Man I love this place!
Uhm... it is if you want to have a meaningful discussion about economics. If you want to argue about our different values, that takes economics out of the realm of science and into the realm of debating.
No offense, but I don't care what your values are, nor do I expect you to share mine. In fact, if we get reductive enough (and it would require a much longer discussion) no two people have the exact same values. It's not even possible to measure.
Only between the two parties in the exchange.
When they do so, they aren't acting as economists. They are acting as social commentators, or political analysts. Economics doesn't promote any particular values.
According to Mises, who I tend to agree with, all human action is rational from the perspective of the person acting, or they would not act in that manner. The fact that different people have different needs and wants, at different times, and different predilections, biases, tendencies and with different information. The only way (and this is a claim about epistemology) that someone could have an objectively CORRECT value, would be someone on par with God, someone omniscient. No such person exists. Everyone has incomplete knowledge, and so the decisions they make can only be judged as rational within the bounds of their own capacity and knowledge to act.
I don't know any other way to prove value than price. That's why we have markets and not Soviet commissars setting prices for goods and services. In fact, the Soviets used to borrow price information from Hong Kong back in the day in order to create their own internal price structures for the USSR.
There is no objective measure of value, and we know that because of the Marginal Revolution. All value is subjective.
I dislike discussing arbitrary fictional scenarios that don't happen often, if at all. Let's stick to discussing basketball.
The only person who can say Josh Smith is underpaid, is Josh Smith. And if he feels he is worth $20 mill a year, and no one offers him that, then it is just his opinion man. He may as well also think he has super powers and can fly like an eagle.
You're continuing to say "value" imbalance when again, value is subjective. You can't make objective claims like that without rejecting 200 years of economic thought.
Now I'll allow, people by and large can get sloppy with expression, and people like to speak in terms of the objectively true/not true, but that's not correct, and any Classical, Austrian, and maybe even most Neo-Classical economists should instantly spot that stuff as not up to par.
I think the burden of proof is on the person claiming there were other offers to substantiate that claim. If you can substantiate that Josh had other offers, great. If not, then we should probably abandon this line of reasoning because it would only be conjecture.
Also, no hard feelings intended if any are felt. I really enjoy this sort of argument
Because we've both been quote bombing a lot, I will try to summarize my position.
Josh Smith got a contract offer from Detroit. He may have received other offers, he may not have received other offers.
Smith took the contract offer with Detroit.
The "market" for Josh Smith, was Detroit's offer, plus any other offer. By choosing Detroit's offer, regardless of its nominal value, Smith was (implicitly) declaring that the Detroit offer had the best value for him. It could have been Joe's pitch. It could have been playing with Greg Monroe. It could have been more money than other people offered. It could be because he is a Red Wings fan. It could be some combination of all or none of those things.
What we know, is Detroit made an offer, and Josh Smith took it. If there were other offers, Josh Smith did not take them. He chose Detroit's offer over any other. If it was the only offer, he took the best offer available.
By choosing Detroit's offer, Smith has made a value judgement that such an offer was the "best" available to him (via the market of NBA free agency).
I agree with both of you guys.
Josh took what the Market presented to him.
In the NBA, the TAM (Total Available Market) changes on a minute by minute basis.
When Rodney Stuckey slams his thumb in a car door and injures himself, it has a ripple effect to the talent pool of NBA players.
Did Smith turn down a higher offer to come here? Whats the
Anyway, Hard cap will be around 77 mil next year ( projected ) so figure around 80 mil 2-3 years from now. Its supposed to be so punitive by then that no one will go over it.
If we give Moose a Smith like contract at 13mil/yr. After that lets say Drummond commands 17 mil/yr then we will have 42 mil tied up in the front court starters. What will Jennings make 8mil/yr? Lets also assume that a decent SG will get another 8mil/yr
So we would have 42+16 = 58 mil tied up in the starters. That leaves 15 players - 5 = 10 more players to sign with the remaining 22 mil or roughly 2.2mil/player.
How would you know that small market teams make max contracts all the time under the radar only to be rebuffed unless you heard they make max offers all the time only to be rebuffed?
I think you nailed it right there. There is no way we can keep all front court players longterm and field decent guards and bench players. When Joe signed Smith I think it signaled he really had doubts on Monroe's longterm prospects in Detroit. Also hedged his bet. I think it is 50-50 or less we resign him.
I like the kid, but unless Drummond starts shooting his fritos north of 60%, and develops enough of an offensive repertoire to average 20/15 with 2-3 blocks a game, $17M would be a boat anchor of a contract. As is, he's not worth much more than Monroe or Smith.
Jennings' contract is only 3 years, so he needs to be re-upped in th esame year as Drummond, good news is that so far there's no way I can imagine paying him more than what he currently makes, maybe even less if you gurantee him 5 years....would he balk at 5 years/ $35M? I also think you can get Drummond for $15M/yr, but after the first year Smith falls off the books and I think you can get him to take a $2 or $3M/yr paycut. We're actually pretty solid financially. I think we'll have about $25M for the other 10 players and let's say that 3 of those guys are MLE level players, so that'll be what about 3 X $6.5M, leaving about $5M for the remaining 7 players.....I imagine that we may end up about $3-$5M over the hard cap......which isn't too bad if you're competing for a title.
We're in much better financial shape than we were in 2009. Next year this time, we'll actually be paying only for players that can play.
I was not talking about personal values, but ways of valuation beyond price. Which exist.
They are framing information with their background. Any measure without context is meaningless.
Not a fan. I tend to think of rationality as acting in measurable best interest. And that is the generally accepted economic sense of the term.
My point is that what Josh Smith is paid is not necessarily what he is worth. This isn't some anti-economics line of reasoning. It is actually perfectly reasonable. All it says is that the output of labour is greater than the cost. Marx anyone?
Ill admit I have been sloppy - but at the same time you have said that value is not an economics problem, but it clearly is, unless of course you skipped all economics between 1600 and 1960. Subjective statements are not, but measurable value is.
We don't need other offers. We can estimate the perfect market outcome using past performance.
No hard feelings. Me too.
I hope you continue this debate. I find it fascinating.
Many teams could not afford to bid on Josh due to lack of cap space. So, with limited bidders, it is difficult to know what his true market value might be (i.e. if all 30 teams could bid on him free of salary cap limits/ luxury tax penalties). That is how salary caps hurt NBA players.
For instance, imagine that 30 NBA teams were within $2MM of a hard cap and they all wanted to bid on Smith. He would have gone for $2MM and would have picked the destination that was most attractive to him (location, lifestyle, endorsement options, state income tax rates, schools, etc). It would be hard to say that was his market value. It was where supply and demand intersected, but demand was artificially squashed.
However, it only takes 2 to tango, so many times, the market price is achieved even if bidders are limited. Did Smith get his market value in this case? I hope not and that Joe got a discount for having space. Maybe there were no other bidders though and Joe overbid.... possible.
Separate names with a comma.