04/10/2012 05:51 pm ET Updated Jun 10, 2012

In Illinois, Sports Teaches Us an Economic Lesson!

There's been a lot of bad news coming from the University of Illinois athletic programs lately: long losing streaks, coaches fired, top players leaving early to go pro, sought-after coaches not interested, trustees not approving a coach's contract solely on account of his race,... However, one does not need to be a sports fan to recognize the broader message for all of us. This message is that public corruption is extremely detrimental to an economy.

While "general" public corruption is the stuff of legends, the U of I has been far from immune. Scandal after scandal has afflicted it, from influence peddling and credential misstatement [ two scandals!] at the renowned law school, to 'fake' emails being sent to influence faculty votes, to favoritism in the granting of state scholarships. Recently the president resigned amid reports that he was involved in the fake email matter.

What does any of this have to do with the athletic program? Some would say 'nothing,' but I say, 'a great deal.' I strongly believe that the culture of corruption permeates everything connected with our public sector. At best it demoralizes nominally unaffected public servants, and at worst it leads them astray. While all athletic programs have good and bad cycles, I think that the recent bad cycles for the U of I football and basketball programs coinciding with the revelations of corruption at the university is more than a coincidence.

We've heard from economists for years that in developing nations, corruption and an impairment of the rule of law make impossible rational economic decision-making, and cause the most capable people to leave the country or not come in the first place, leading to impaired economic growth. I can't prove it empirically, but believe that recent events at the U of I indicate that this is the current state of the state.

Maybe the general corruption involving Govs. Ryan and Blago is sufficiently far removed from athletics that it has no impact on athletic programs, although our state's precarious fiscal condition indicates that it has a broader impact. When the corruption starts hitting the university, I suggest that it causes confusion on the part of all concerned, including coaches, which at least subconsciously impacts their motivation. I'm not a coach, but as a long time observer of sports, the football and basketball programs have recently seemed to lack direction, with players seemingly disoriented at key times in close games.

When coaches hear trustees openly refusing to support another coach strictly because of his race, which I consider a form of corruption, it has got to make them wonder where they stand and whether they should be putting their home on the market. Throw in what I consider to be a form of 'quasi-public' corruption in the 'compromises' which must be made in connection with player recruiting, which has supposedly been a factor in some coaches' disinterest in the basketball position, and it becomes clear that there is reason for concern about the impact of the corruption.

If all of this were just a sports issue, in the grand scheme of things, we would have little reason to worry about it. However, I suggest that the U of I athletic program is a microcosm for the entire Illinois economy. I think that the direct and indirect effects of the corruption are destroying our business environment and entrepreneurial spirit. Just as top-tier basketball coaches are turned off by the prospect of having to deal with corruption in their dealings with trustees, the administration and recruits, top-tier managers and business developers will take their talents somewhere else. When top-tier recruits see so much turnover among players and coaches, they are inclined to take their talents to another school. The same is true for outstanding young scientists and engineers, who are the lifeblood of any economy.

Even when outstanding people come or remain here, I believe that the constant revelations of corruption has to at some level impact their motivation in the same manner that it does athletes'.

On another level, the U of I is spending over $7 million to pay off the fired coaches in accordance with their contracts apparently including over $3 million to a basketball coach who obtained another position within a month after being fired. At a time of tight budgets for everything and ever-rising tuition, this seems like an indefensible use of funds. However, why should anyone be surprised at such waste when they see the crushing burden of public pensions that have driven Illinois' credit rating to the very bottom of all of the United States?

We're not going to end public corruption overnight. Can we start with the U of I athletic program and demonstrate that something can be fixed in the short-term. Trustees, are you listening?