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1 September 2016

Why football, not the Olympics, can help us understand economics

For lessons on how to run the economy, we should look to the Premier League, not Team GB.

By Ed Smith

With the quest for gold medals over, the search turns towards finding hidden meanings in the Olympics. How could the lessons of Rio be “applied”? What did we learn? Not much, in truth. Certainly nothing about how to organise a national economy.

While the UK basked in the golden light of sporting glory, Andrew Marr and the Guardian’s Martin Kettle proposed a seductive theory: that modern Britain should be more like Team GB. Investment should flow towards only those industries that are likely to become world class. The state should pick winning industries as carefully – and enthusiastically – as it selects winning athletes.

The analogy falls flat while still on the playing field. Before we come to whether Olympic strategy could be adapted into an economic blueprint, there is a problem: Olympic medals aren’t even representative of the health of a nation’s sporting aptitude, at elite or recreational level.

Consider the sporting cultures of China (which won 70 medals) and Argentina (which won four). As the essayist Lincoln Allison has pointed out, Argentina is one of the world’s leading sporting nations, whereas China has little cultural tradition of grass-roots games. There is no equivalence between China’s medal haul and Argentina’s broad sporting achievements: two football World Cups, alongside excellence in rugby union, hockey, motor racing, polo, tennis and golf. Medals and national sportiness are scarcely correlated at all.

Much has been made of Team GB’s use of “marginal gains”, the idea that coaches and trainers can achieve overall dominance by accumulating tiny strategic and physical ­advantages. Dave Brailsford, the mastermind of British cycling, is a devotee of the theory. But is it relevant to other sports, let alone to economies?

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When someone uses marginal gains to dominate a game that is played and loved everywhere in the world, we should pay serious attention. But no football World Cup has been won so simply. The jumble of influences that determine the outcome – talent, management, luck and the ever-shifting focus of progressive tactics (Holland in the 1970s, then Spain in the 2010s) – precludes anyone from arranging in advance who will win the cup. Football is too sprawling and cosmopolitan to micromanage. That is why it is a better analogy than the Olympics for how economies work. Managers can make a difference, but they can’t shape
the whole thing.

Now we come to the nub of the issue: what, exactly, was the nature of Britain’s success at the Rio Olympics? The athletes deserve our admiration and respect. They have elevated our summer. Yet a distinction must be made. From the competitor’s perspective, winning a medal is very difficult. But determining where medals can be won, which contests may be swayed by careful and considerable financial investment: how hard is that? As “strategies” go, a state-funded medal hunt is not particularly complex. First, identify where investment can make a difference. Second, invest. Third, win. Huge personal commitment is required at every stage, but that is a separate issue.

It is estimated that each of Britain’s 67 Olympic medals cost, on average, just over £4m in Lottery and Exchequer funding. Good value? A case can be made either way. What cannot be denied is that the process was focused mainly on the super-elites. If it could be demonstrated that elite success led to increased sports participation and ­improved public health, the elitism would be democratic over the long term. However, no definitive link exists.

There is more to industrial policy, surely, than channelling funds into businesses that exist outside the mainstream economy, with little prospect of stimulating any organic growth? The point of an industrial policy is to create jobs across the spectrum. If Team GB were to become the blueprint, Britain would end up pouring state money into creating a handful of super-rich entrepreneurs without generating any new jobs lower down the food chain.

What about the sports that are left behind – apparently analogous with those antiquated industries that Britain should abandon? A potential Olympian whose funding is cut is a disappointed figure with a chance to do something else. An abandoned industry is a rather more serious proposition.

The Olympics were a party, staged to lift the mood, not the testing ground of policies. And I believe in parties. There’s much to be said for bread and circuses: a state shouldn’t spend all of its money on health care, education and pensions, any more than a household should spend all of its money on essential provisions and repairs. But let’s not dress up a virtue (pleasure) as a pretend one (enlightened strategy).

We should view British Olympic success with admiration, but also scepticism. Just as a state can spend too little on sport, it can also spend too much. It is a question of appropriateness and proportion. A hundred medals, 120 medals, “beating” Team USA – at what point would it become silly? Besides, both propositions – that Olympic success is justified, and that Britain could have a shrewder industrial policy, as Theresa May argued in a speech she made in 2013 – can be correct, yet still have nothing in common.

For all its excesses and flaws, the Premier League – which doesn’t draw on state coffers, projects soft power and attracts talent from around the world to Britain – arguably offers a rival economic model. Is the state reduced to orchestrating totemic sporting triumphs, counter-rhythms to the far greater influence of hyper-globalisation? Put differently, sport hasn’t solved the difficulties of managing and creating fairness in a globalised world, any more than governments have done.

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This article appears in the 31 Aug 2016 issue of the New Statesman, Syria's world war