Читать книгу Who Needs the Fed? - John Tamny - Страница 12

CHAPTER TWO

Jim Harbaugh, Urban Meyer, and Pete Carroll Would Never Need an Easy Fed

You are what your record says you are.

—Hall of Fame NFL coach Bill Parcells

IF YOU FOLLOW college football and basketball with any kind of intensity, odds are you have the Rivals.com website bookmarked. Absent talent, teams can go only so far, and Rivals chronicles the recruiting of that talent. Just as entrepreneurs and corporations in pursuit of profits aggressively seek the best engineers, salespeople, and administrators, so too do coaches travel far and wide each year in search of the players necessary to field great teams.

Labor itself is a form of credit, and realistically it’s the most important form. When CEOs seek monetary “credit” to start or expand a business, they’re often borrowing access to labor. College coaches do much the same. The individuals on the field whom they recruit are their ultimate resource.

Applied to college sports, coaches are offering prospective student athletes a free college education along with room and board, a university name they can carry around for life, and, depending on the player, use of the school’s resources to boost their chances of playing professionally in the future. College football and basketball recruiting is very much a credit story.

To help rabid fans develop a better sense of which players are the most desirable, Rivals employs a team of analysts that watches hours of player tape. The analysts also visit high schools nationwide, interview coaches, and generally do everything possible to put a grade on the best players available. The most desirable recruits for teams are the few athletes graded as 5-Star by Rivals. These are the players seen as most likely to thrive on the collegiate level. 4-Star recruits are similarly much coveted. 3-Star athletes are slightly less desirable. You get the picture.

In addition to player rankings, Rivals calculates team rankings on a points basis. 5-Star recruits logically generate the most points, and consequently it’s usually the teams who can sign the most 5-Star players that win the annual Rivals recruiting championship. In 2015, the USC Trojans won the national recruiting title after then head coach Steve Sarkisian and his staff scored some late 5-Star commitments.¹

National Signing Day for college football recruits falls on the first Wednesday of February every year. Going back two months before signing day in 2015, the University of Michigan fired head coach Brady Hoke after an ugly 5-7 season.² 5-7 records don’t cut it for Wolverine fans used to spending New Year’s Day in Pasadena, California, at the Rose Bowl. But what made Hoke’s dismissal even more likely was the outlook for Michigan recruiting. According to the Rivals team rankings as of early December 2014, Michigan’s 2015 class ranked 96th. Fresno State was one spot behind the University of Michigan at 97th, while Toledo, Army, and even University of Texas San Antonio had higher-ranked recruiting classes.

Uncertainty about Hoke’s future played into the team’s low ranking, but this is still the University of Michigan we’re talking about. The school is a magnet for top players (think Dan Dierdorf, Charles Woodson, and Tom Brady, to name but three) who grow up dreaming about wearing the “Maize and Blue.” So, even a winless season shouldn’t consign the Wolverines to the recruiting basement.

A month later, Jim Harbaugh was named Michigan’s new head coach. Harbaugh had been a star quarterback for the Wolverines before a long career in the NFL. But what distinguishes him even more today are his achievements as a head coach. In 2007, Harbaugh inherited a 1-11 Stanford Cardinal team. In his first season at the helm, Stanford pulled off one of the biggest upsets in college football history, when the overmatched Cardinal beat the #1 USC Trojans at the Coliseum.³ As the fortunes of the Cardinal improved, so did the talent interested in the school. Harbaugh eventually signed a quarterback out of Texas by the name of Andrew Luck.⁴ By Luck’s fourth season on “the Farm,” the Cardinal brought an 11-1 record into the Orange Bowl, where they blew out traditional power Virginia Tech 40-12.

Having turned Stanford into a national football power, Harbaugh moved on to the NFL. In his first three years as head coach of the San Francisco 49ers, he took the team to the NFC Championship Game three times. (The 49ers hadn’t sniffed anything resembling greatness since the mid-1990s). In his second year, they went all the way to the Super Bowl. Although the 49ers lost to the Baltimore Ravens (coached by Harbaugh’s brother, John) in a game that went down to the final drive, Harbaugh had established himself as one of the better and more innovative coaches in all of football. In short, Michigan’s hire of this most “Michigan” of men was a coup. And recruits noticed.

While Harbaugh arguably didn’t have enough time or staff to build a big recruiting class for 2015, by National Signing Day Michigan’s Rivals’ ranking had risen all the way to #50, including fifteen 4-Star recruits and the consensus #1 recruit, Rashan Gary. 2016’s class looks even better. As of this writing, Harbaugh can claim the #5 recruiting class, including nine 4-stars. Harbaugh’s track record of success screams good credit, and a briefly down-on-its-luck Michigan team has a bright future.

What stands in Harbaugh’s way is Michigan’s traditional rival, Ohio State. Coached by Urban Meyer, the Buckeyes won’t give up their perch at the top of the Big Ten’s recruiting and football heap easily. While there are few college coaches with Harbaugh’s “street cred,” Meyer is one of them.

Meyer took over the head coaching reins at Utah in 2003. Notably, Utah never comes up when fans talk about football powers. But by his second season at Utah, Meyer coached the team to a 12-0 record that ended with a victory in the Fiesta Bowl. After the undefeated season, Meyer was hired as head coach of the Florida Gators. In his second season there, the Gators won the national championship. Meyer added a second national title to his resume in his fourth season.⁵ Poor health ultimately forced Meyer to resign.

After a year off, he was named head coach of Ohio State, and it didn’t take him long to work his magic. After an undefeated first season in Columbus and a 12-2 record his second year, Meyer’s Buckeyes overcame an early 2014 stumble to Virginia Tech to win the national championship in blowout fashion over the Oregon Ducks. Recruiting victories predictably increased with the improved on-the-field fortunes of the Buckeyes. As Meyer told USA Today, “I can’t wait to go out recruiting. You can’t recruit to this [success] now, you’re officially a bad recruiter.”⁶ Rivals ranked last year’s Buckeye class #9 in the country. As of this writing, 2016’s class is ranked #1, including two 5-star recruits.

Two great coaches, with brilliant track records, correlates with abundant “credit” in the market for top football talent. On top of past success, the Horseshoe at Ohio State and the Big House at Michigan represent legendary stadiums that aspiring football stars know well. Harbaugh explained it best to Sports Illustrated in 2015: “There’s no bad time to see Michigan, and no bad way to see Michigan.”⁷ Not only do the coaches of each school personify credit, but their schools do, too.

But wonderful as the Buckeye and Wolverine traditions may be, there’s seemingly always something better out there, something a little bit superior. Odds are even the most ardent Buckeye and Wolverine fans would acknowledge that no school represents on the tradition front as well as the University of Southern California (USC).

The University of Southern California can claim a number of “mosts.” It has produced more NFL draft picks, including first round NFL picks, than any other college football team. In nineteen of the last thirty-nine years, USC has led the NFL with the most alums in the league.⁸ Of course, these stats leave out its six Heisman Trophy winners (seven if you count Reggie Bush), its numerous national titles going back to the 1920s, the Trojan Song Girls, Traveler (the statuesque white horse that gallops around the Los Angeles Memorial Coliseum after each score), the Trojan Marching Band blaring “Conquest” after victories, the movie stars in the stands and at practices, the southern California weather. The list is long. Although the Trojan colors are Cardinal & Gold, USC can arguably lay claim to the bluest of college football blood.

Yet even giants stumble. As the twenty-first century dawned, USC hadn’t won a national football title since 1978. The drought was a long one for its faithful fans, and worse, USC wasn’t that good in the 1980s and 1990s. Not only had crosstown rival UCLA eclipsed the Trojans, but fellow blue-blood Notre Dame had also come to dominate the intersectional rivalry between the two schools.

So while there’s “no bad time to see USC,” when Pete Carroll was hired as head coach in 2000, the team had long since lost its luster. The three coaches before him had been fired for having failed to field a consistent winner, despite legendary former Oklahoma coach Barry Switzer’s description of Southern Cal as “a great program with great tradition and something to sell.”⁹ The University of Southern California’s most valuable source of credit was its tradition, but the credit had seemingly run out.

Worse, Carroll hardly seemed like a great hire. Good looking, charismatic, and full of energy, Carroll had a measly 33-31 record in the NFL before USC athletic director Mike Garrett hired him. Carroll had also been fired from both of his head coaching jobs in the NFL prior to USC.¹⁰ At least early on, his past record, along with USC’s tarnished brand, reflected in the team’s access to the ultimate resource: top high school players.

Carroll’s first Trojan team went 6-6 and lost in the Las Vegas Bowl. This was hardly an auspicious start for a team used to playing fellow giants like Michigan and Ohio State on New Year’s Day in Pasadena. Carroll did sign fifteen 4-Star players after the season, but his 2002 recruiting class was ranked “only” #13.

The next season ended with an 11-2 record, an Orange Bowl victory over Iowa, and a national ranking of #4. Notable here is that USC’s subsequent recruiting class reflected the team’s renewed success on the field. Carroll signed two 5-Stars for 2003, and Rivals ranked his class #3.

The Trojans followed a successful 2003 campaign with a 12-1 record, a win over Michigan in the Rose Bowl, and the AP National Championship. Recruiting? Carroll signed eight 5-Stars in a 2004 class that Rivals ranked #1. The following year the Trojans demolished Oklahoma in the Orange Bowl for their second straight title. Carroll signed four more 5-Stars after the season, and USC won the Rivals recruiting title yet again. After losing to Texas the next year in its bid for a third straight national title, USC once more claimed the Rivals recruiting crown.¹¹

The University of Southern California itself always had credit potential based on its glamorous history. The addition of Carroll’s previously unrevealed genius created an unbeatable combination. In the credit sense, lenders lined up to hand USC the best resources from across the country. The college football aristocrat regained its stature as the bluest of blue chips.

Caroll naysayers will doubtlessly point to the Trojan football team being slapped with probation after he left for the NFL in 2010. His two trips to the Super Bowl, including one victory in 2014, indicate that such skepticism is unwarranted. If paying for players is seen as the source of USC’s modern success, then what goes unexplained is why the Trojans were so lousy in the 1980s and 1990s.

Nevertheless, USC was hit with probation after Carroll left. Despite this, Carroll’s replacement, Lane Kiffin, signed Rivals’ #1 recruiting class in 2010. He followed up with the #4 class in 2011 and the #8 class in 2012. Kiffin did this despite severe scholarship limits imposed on the team. Remember, Rivals ranks the classes based on points. Despite being unable to recruit as many players as before, the Trojans continued to sign 5-Stars that kept them in the recruiting title discussion.

Interestingly, Kiffin was fired during the 2013 season. His replacement, University of Washington head coach Steve Sarkisian, signed the #1 class for USC in 2015. But to show the credit magnet that Carroll rebuilt at USC, Sarkisian had but one Rivals Top 20 recruiting class during his five years as head coach of the Huskies.¹²

What’s unknown is how long USC will remain a lure for players if the coaches who have followed Carroll continue to underperform relative to this future Hall of Fame coach. As previously noted, Harbaugh observed that there’s “no bad way to see Michigan.” That describes USC now, and it’s a reminder that one person (Carroll) can build up credit that others will continue to access, at least for some time. The question once again is how long this will last. As evidenced by USC’s many years in the wilderness while they searched for a head coach to revive their fortunes, USC’s AAA credit rating in the recruiting sense may not last very long.

Bringing it all back to Brady Hoke, market forces are rather wise. Despite being able to recruit for a name brand like Michigan, Hoke’s inability to field a winner ultimately meant that Michigan was starved of “credit” of the recruiting variety. This was a good thing.

The great Austrian School economist Ludwig von Mises explained this phenomenon in his endlessly insightful book Human Action. The entrepreneur who fails to use his capital to the “best possible satisfaction of consumers” is “relegated to a place in which his ineptitude no longer hurts people’s well-being.”¹³ College football coaches are merely pursuing an entrepreneurial venture of another kind, whereby they vie for top athletes in order to field the best team they can. Despite being handed a brilliant resource in the University of Michigan, along with the athletes who line up to play there, Hoke failed. The market responded by starving him of resources and then removing him from a position in which he was failing at his stated goal.

Hoke’s story looms large in a credit sense. Pick up the newspaper on any given day, particularly during an economic slowdown, and you will read economists calling for the Fed to “ease credit” so that struggling businesses can get back on their feet. What a shortsighted point of view.

As opposed to situations to avoid, “recessions” are the market’s way of making sure that the allocation of resources to the Brady Hokes of the world ceases. Just as there’s a limited number of software engineers and microchips, so, too, is there a limited number of quality college football schools, coaches, and players who merit an expensive scholarship.

The closure of the credit door on Hoke was healthy because it ensured a much more credible replacement in the form of Jim Harbaugh. The “real world” of business should be no different. If the Fed were truly led by wise minds, then they would do the opposite of fighting the market’s call for credit rationing that is meant to ensure the bankruptcy of poorly run businesses and the replacement of bad managers with better ones.

With the above scenario in mind, we should be thankful that the Fed is not the sole source of credit in the U.S. economy. If it were, Brady Hoke would still be coaching Michigan to the detriment of the school, the players, and the alums, and a lot of businesses would be operating at a fraction of their potential. Happily, however, and despite the Fed’s naiveté, the allocators of credit similarly continue to relieve bad managers of positions that allow them to waste resources.

The free market is infinitely smarter than the wisest collection of Fed minds on their best day. So, when we hear about central bankers working to blunt healthy market activity through credit “ease,” we should quickly conclude that rather than expanding credit, they’re at best destroying it. As the ensuing chapters will reveal, market forces quite thankfully reject alleged Fed medicine, and to the economy’s certain benefit.