THE BLOG
09/26/2012 02:16 pm ET | Updated Nov 26, 2012

NFL Refs Show All of Us How to Avoid Economic Personal Foul

At the risk of being melodramatic, I'm going to state that I think the National Football League is becoming an important exemplar of how our economy is going to and should function in years to come. Specifically, the way in which the current lockout of its officials is resolved will tell us a good deal about whether our economy is going to continue its drift toward the inflexible, unaffordable ways of Europe with its social 'safety net' financed by confiscatory taxes and rigid employment laws, or whether it is going to adapt to the rapidly changing world and allow firms the flexibility to properly respond to market conditions.

The current lockout is based upon disputes over retirement benefits, such as the officials' insistence on the continuation of a defined benefit pension plan, and evaluation and accountability for performance, such as the NFL's desire to maintain backup crews who can step in to replace poorly performing ones during the season. Of course, these issues permeate private and public sector labor situations. As we know, many firms and municipalities have been driven into insolvency by unaffordable labor agreements.

My perspective on all of this is somewhat unique, as I am a long time NFL season ticket-holder in addition to being a corporate attorney and law teacher. In a sense, I am one of the paying customers of the NFL and its officials. I also deal with the efforts of clients to rationalize their cost structures in light of the wrenching economic changes we have seen in recent years, and will continue to see.

The officials, who are part time employees having other careers, are seeking the preservation of retirement benefits and job security which may have been well suited for the world as it was 40 years ago, but make little sense today. As a result of their fixed cost component in such a volatile economy, existing defined benefit plans are rapidly going the way of the dodo, and new ones are virtually unheard of. As such, the NFL's proposal to substitute a 401k plan going forward makes good sense, and is consistent with what readers -- fans of the game -- are experiencing.

The involvement of a union in this situation, and numerous others we see today, is the height of absurdity. Industrial unions were essential 100 years ago to protect genuinely oppressed manual laborers from the depredations of captains of industry in the stockyards, railroads and steel mills. However, there is no comparison between those situations and those faced by six figure part time officials.

Similarly, the idea of having crews 'on the bench' to step in for those not meeting expectations, is also consistent with the demands for accountability which we see in so many private and public fields ranging from public school teachers to corporate governance activists today.

As most of the free world is now aware, the use of replacement officials has definitely had its problems with officials being unfamiliar with rules and indecisive, and one should expect them to continue for the rest of this season. However, the regular officials are far from perfect, and many have questioned the use of part timers for such a substantial enterprise. Furthermore, it appears that the league did not anticipate the lockout being necessary, and waited far too long to begin training replacements, and unrealistically expected retired officials to cooperate with such efforts. This problem should be rectified with a full offseason and are not a reason to capitulate to the officials' demands.

I'm writing this so that we all take a lesson from the situation. The old economic order with its numerous unconditional comforts is gone for good in all fields, not just the NFL, and those who will succeed in the new economic order will acknowledge its existence and plan accordingly. Those such as the regular officials who feel that we are dealing with a mere 'blip' and that if they make themselves sufficiently unpleasant can escape its influence, are doing themselves and those working with them a huge disservice. Those such as the NFL and private employers who anticipate an always seamless transition to the new order are also doing themselves and their clientele a disservice if they do not plan for some resistance.