Bill Simmons has published a back-and-forth with Malcolm Gladwell over at ESPN.com Gladwell recently published a piece in the New Yorker that devles into the tactical psyche of the underdog. Gladwell suggests that if you’re an underdog, don’t try to battle your stronger opponent by subscribing to the orthodox rules of the game. Instead, subvert those rules, engage in guerrilla warfare, define the game on your terms. We saw Golden State do that in 2007 over Dallas, and Detroit in the 2004 Finals over the Lakers.
In his correspondence with Simmons, though, Gladwell debunks the current NBA draft system as an impediment to improvement for teams like the Clippers. Conventional wisdom has always dictated that the ‘reverse order of finish’ format makes the league healthier by replenishing the lousy teams with the best young talent. Gladwell argues that, in fact, rewarding crappy teams is a moral hazard. It’s not that the draft explicitly encourages bad teams to tank, but it discourages them from employing the sort of innovation that could turn them into real winners:
The consistent failure of underdogs in professional sports to even try something new suggests, to me, that there is something fundamentally wrong with the incentive structure of the leagues. I think, for example, that the idea of ranking draft picks in reverse order of finish — as much as it sounds “fair” — does untold damage to the game. You simply cannot have a system that rewards anyone, ever, for losing. Economists worry about this all the time, when they talk about “moral hazard.” Moral hazard is the idea that if you insure someone against risk, you will make risky behavior more likely. So if you always bail out the banks when they take absurd risks and do stupid things, they are going to keep on taking absurd risks and doing stupid things. Bailouts create moral hazard. Moral hazard is also why your health insurance has a co-pay. If your insurer paid for everything, the theory goes, it would encourage you to go to the doctor when you really don’t need to. No economist in his right mind would ever endorse the football and basketball drafts the way they are structured now. They are a moral hazard in spades. If you give me a lottery pick for being an atrocious GM, where’s my incentive not to be an atrocious GM?
I think the only way around the problem is to put every team in the lottery. Every team’s name gets put in a hat, and you get assigned your draft position by chance. Does that, theoretically, make it harder for weaker teams to improve their chances against stronger teams? I don’t think so. First of all, the principal engine of parity in the modern era is the salary cap, not the draft. And in any case, if the reverse-order draft is such a great leveler, then why are the same teams at the bottom of both the NFL and NBA year after year? The current system perpetuates the myth that access to top picks is the primary determinant of competitiveness in pro sports, and that’s simply not true. Success is a function of the quality of the organization.
Though I agree with his larger point, I take some issue with Gladwell’s notion that the same teams are at the bottom of the NFL and NBA year after year. Yes, you’ll have franchises like the Detroit Lions and the Clippers that are, to use Gladwell’s language, outliers [on the downside], but if you look around the NFL and NBA, you’ll see perennial losers that turned things around and achieved success primarily because they were able to obtain a LeBron James, Carmelo Anthony, Matt Ryan, Larry Fitzgerald, etc.
Gladwell is generally a pragmatist, but I think he might be drawing a parallel that doesn’t translate so well from the financial world to the NBA. For one, a draft pick guarantees nothing. Atrocious GMs will manage to squander top picks as they do year after year [do I need to cite Exhibits A-G?]. Second, while I acknowledge the dangers of moral hazards, I’m also a believer that you can be an incentivist while still acknowledging that sometimes, the overall health of any system — the NBA, the world financial structure, etc — is aided by helping the incompetent, not out of sympathy, but for practical reasons. Do you really want to freeze credit markets for responsible people like you and me, just to drive home a point that banks were foolish to dabble in credit default swaps?
Personally, I like Henry Abbott’s idea a lot:
How about no lottery at all? What if there was no draft, and every rookie was a free agent? That would make things very interesting. Perhaps you’d need to give everybody the same budget — $5 million max for rookies or something. You can spread that around as much or as little as you’d like. But there’s no way that wouldn’t be interesting as hell.
Under Henry’s system, teams would have to pay for their bailout. I’d make that $5 million number a little larger, forcing teams to manage their cap space even more carefully. Want to give Blake Griffin or Ricky Rubio 5 years and $40 million? You better be right, because you just took yourself out of the bidding war for more veteran, proven free agent talent. What prevents the tent pole franchises from hoarding all the talent? They’ve got to work within the cap. If the Lakers want Blake Griffin, they won’t be able to hang onto Lamar Odom. If the Knicks want Rubio, they’re going to forfeit leverage in the next several free agent markets.