What do Tom Brady and Ben Bernanke have in common?

You are more likely to find me reading a book on a Sunday afternoon than watching a football game, but nonetheless I try to stay in touch with at least the major happenings in the sports world. If I had to choose my favorite sport to watch on television, I would have to pick soccer. I look forward to the minor collisions that result in grown men dramatically flinging themselves to the ground, pulling into the fetal position, with the sharp look of pain in their eyes, only to stand up, aloof, brushing off their shirts, as if nothing happened, as soon as the yellow (or red) card is given.

Unfortunately, not every athlete returns unscathed from a strategic hit during a game. I read an article in the Financial Times yesterday about the economics of sports injuries. (Not the typical article that I would usually read, but I have to admit, the picture of Tom Brady caught my eye). The article pointed out, what is to obvious to all sports fans, that certain players, like Tom Brady, are paid significantly more than the rest of the team, sometimes 10-20% of the entire salary budget. While key players can greatly influence the success and failure of a team, by hiring one expensive player, the owners are putting their eggs in one basket and hoping that their investment will pan out. Sometimes the risk is worthwhile, but one critical injury can ruin a season. In analyzing NFL drafts, some economists argue that teams with early picks should choose the #1 prospect and trade him for several other well-respected players. Statistics will tell you that it is a safer investment to choose several good players (hoping that one or more will have latent skills) than investing an enormous amount in just one player.

Deciding who earns the highest salaries in sports is relatively simple by comparison to other industries. A simple supply and demand model dictates that the most popular players, whether they be the most successful or charismatic, are the most entertaining to root for and therefore add the most value to the team.

If only matters of government were as simple. Virtually every government committee is organized as a team, with one strong individual leading the rest of the pack. However, unlike sports, which can display success or failure in the matter of hours, economic success and failures can take months to manifest. And while the public can choose some officials through elections, we really only choose our financial leaders indirectly through the elections of other, higher offices.

So how do we know that every decision that the Fed makes is the right decision? We don’t. Of course, we hope it is. We can only bank on the fact that several economic minds are thoroughly planning out the future of our economy and that we chose the right person to lead the team. However, I feel confident that the Fed will do its utmost job to remedy the state of the economy and allow everyone to return to a high state of prosperity because an improvement in the economy will benefit us all. After all, the Fed is composed of economists, and they are motivated by incentives - what better negative incentive than a job loss, lack of public support, and loss of wealth?