June 30, 2010
Failure to tackle economic crisis a shocking own goalPosted in International Economy · 120 comments ·
The ‘Financial Times’ might not be the most obvious place to go to for football commentary, but in Simon Kuper, the financial paper of record has one of the most engaging football correspondents in the business.
His article on the demise of England’s soccer team got me thinking about the economy. On Monday morning, Kuper made the following observation about England’s defeat to Germany:
“It emerged at half-time that Lukas Podolski, Germany’s winger, had hit a top speed of 31.5kmh. His teammates Bastian Schweinsteiger, Mesut Ozil and Thomas Muller all exceeded 25kmh. They flitted past Englishmen such as Gareth Barry, John Terry and Matthew Upson who were stuck at 21kmh.”
And anyone who saw Ozil skin Gareth Barry for Germany’s fourth goal could be mistaken for thinking they were watching an over-35s Sunday morning team pitted against the Usain Bolt first 11. The English seemed to be playing a different game to the Germans.
And that is the point, they were.
The Financial Times’ point is that Germany have adapted to the new game which is a game of speed, whereas England still opts for lion-hearted, stout yeomanry in defence and heavy-set, beefy lads up front.
Whether you agree totally with this analysis, the central idea that the English are being left behind by the changes in the international game is hard to disagree with.
Here is where the comparisons with sport and economics overlap. Twelve years ago, Germany was thrashed by Croatia in the World Cup; they were also unimpressive in the subsequent European Championship. They regrouped and apparently instructed their youth coaches to focus on speed and passing accuracy. Two of England’s tormentors on Sunday, Mesut Ozil and Thomas Muller, were 21 and 20 years old and are the product of this new thinking.
Germany had a footballing crisis and reacted to it. The crisis gave the Germans the opportunity they needed to change. Ireland is having its economic crisis, but are we, like the German football authority, going to take this as our opportunity to change?
The rules of football have changed because different teams have emerged with different skills and the game has moved on. The teams that are successful are those who have gone for passing and speed. So England, Italy and France have been sent packing, while Uruguay and Germany prosper.
The Dutch have always passed and put great store in teaching children to pass and pass and pass again, letting in football parlance, “the ball do the work”.
Argentina have always played this way. The thing I love most about Argentina is the diminutive size of their forward line. For years Argentina favoured the small, quick, skillful, little guy over the lumbering, “belt and braces” target man. From Diego Maradona, to Pablo Aimar, to Javi Saviola, to Carlos Tevez and Leo Messi, there has rarely been an Argentinean attacker with flair above 5ft 7! They have set the standard and others have followed.
If world football has moved on, so too has global economics. The model of land, banks and credit as a wealth generator has been exposed lamentably. Any country that tries to resuscitate that will be as guilty as the football manager who sticks to two hulking centre-halves to play against skillful, quick attackers.
Countries, after a crisis, should identify the problems and never again repeat the mistakes of the past and move on. Countries should also be aware of what is happening elsewhere to see what the rest are doing.
Unfortunately, our reaction to the crisis has been a predictable effort to protect the positions of the “insiders” who got us into this mess.
The present government policy, through NAMA and bailing out the banks, is trying to put the “humpty dumpty” of the “feudal” land economy back together again. In this effort, it is being ably abetted by the professional “fee takers’ who dominate the advisory game in Ireland. This week we see just how significant these fees are. NAMA will dole out â‚¬2.8bn in professional fees alone!
But this reversion to the property carry-on will only make us revert to a landlord-based economy, which has more in common with the 17th Century than the 21st Century. The professional class of fee-takers is a dressed-up version of the old-fashioned gombeen. They create nothing but curry favour and are paid a fee to stand between the citizens and the creditors pretending to act in the national interest when actually they are acting in self-interest.
All the while, the rest of the world moves on.
And if we want a real game changer we must move on from the tyranny of these “fee-takers” and an economy that celebrates “wealth-makers”. We can see this in the countries that are doing well, they are countries where nimble brainpower and enterprise rather than brawn and property are rewarded.
One thing we see throughout history is that the government of a country simply has to set the tone right and invariably the entrepreneurs do the rest. The recurring idea appears to be the government should invest in infrastructure at all costs. Infrastructure enables growth. Look at so many of the spurts in economic activity — they were prompted by innovation, which accompanied massive infrastructure investment.
For example, the invention of refrigerated ships led to a boom in agricultural exports from Uruguay to Argentina and prompted the grandfathers of the present wonderful footballers to emigrate from Europe. Or take the more recent invention of the internet, we see that infrastructure does not in itself create growth, but it does enable growth.
So the State must get its infrastructure right. In a recent report on telecoms (www.tif.ie) it was calculated that a full roll-out of broadband in Ireland would cost â‚¬2.5bn — or about a tenth of the cost of the Anglo bailout. So this State is prepared to waste â‚¬22bn on Anglo and not invest productively in telecoms. Extraordinary.
This week, The Economist Intelligence Unit and IBM business have released ‘e-readiness’ global rankings. Ireland has come in 17th (or in World Cup parlance, a second-round knockout).
If the Government’s knowledge economy stuff is to have any basis in reality, we need to be in the top five globally, which is currently: 1. Sweden; 2. Denmark; 3. US; 4. Finland; 5. Netherlands.
In football, how you react to the crisis is as important as the crisis itself. Do you learn any lessons? Do you see what the rest of the world is doing and adapt? Or do you bury yourself in nostalgia and play to stout defenders — all heart no brain — and try to stick to what you have always done? Do you defend the system rather than the result?
The choice is yours? The stakes couldn’t be higher.