Sport is the ultimate winner- takes-all economy where the difference between first and second place is huge. No one remembers runners-up. It is all about glory – or glory and riches – and no one wants to be second best. This is why Moyes’ exit was so abrupt; Man Utd have come to expect better and there can be no room for sentiment in the economics of sport.
And in sport there are massive differences between players who are ostensibly as good as each other.
On Monday I saw one of the most opportunistic goals scored for years. It was scored by a St Patrick’s Athletic player called Chris Forrester against Drogheda. The skill that it took to execute was sublime and far better than some of the dross served up in the English Premiership. Yet Forrester is paid much less in a year than Premiership footballers are paid for a week. Are the journeymen who turn out for the mid-table English sides one hundred times more talented than Forrester? No way. Yet they get paid as if they were. This is because they are playing in the Premiership and Forrester is playing in the League of Ireland. The more the Premiership dominates, the more this gap will widen and the more Sky dishes will be sold and the more money will flow into England and out of the Irish league.
This winner-takes-all dynamic exists in all sorts of other areas of economics. Think about Harry Potter and the world of publishing or technology. Is JK Rowling a much better writer than the thousands who are writing books? Probably not! Was Mark Zuckerburg’s idea so different from all the other social media entrepreneurs? Probably not, but he is the billionaire.
Think of the Bar in Ireland. Some barristers get paid a fortune and others barely survive. Why? It is because down in the Four Courts the winner takes all. The difference between being good and being best is enormous. The same goes in the world of fashion and architecture. The best get paid multiples of the rest.
This has always been the case in “rock ‘n’ roll”. Consider all the bands that started out at the same time as U2. Lots of them must’ve been as good initially as U2, but they didn’t make it. As time went by, the gap between U2 and the rest widened and widened and U2 emerged as the winners.
This is the world of David Moyes, Jose Mourinho and all the other football, basketball and, latterly, rugby managers. They play to win. They play with lots of money and if they are successful they are rewarded, if not they are gone. If rich football club owners want to play with their own cash, so be it. But what happens when this winner- takes-all economy reaches into other areas of our society? What happens is the rich get much richer.
Last month, Oxfam reported that the top five families in the UK owned more wealth than the bottom 12.5 million people in Britain. Another report found that the number of people in the world with more than $1 million to invest soared to a record of 12 million in 2012. According to Reuters, “the aggregate wealth of this group hit a new high, too – $46.2 trillion – a 10pc increase over the previous year”.
What is particularly striking is that the very, very rich are doing best of all. The ranks of the ultra-rich – people with investable assets of at least $30 million – surged 11pc. So this tiny subgroup of the world’s mega-millionaires is expanding at a faster rate than mere millionaires.
This means that a tiny group of 111,000 people account for 35.2pc of the entire wealth of all the world’s millionaires taken together.
A recent book by Thomas Picketty shows that in America “the richest 1pc appropriated 60pc of the increase in US national income between 1977 and 2007”. The book argues that there is no reason to believe that economies will have a tendency towards equality; in fact, the opposite is true. But what is driving this winner-takes-all economy?
Over recent decades, technological change, globalisation and active changes in the taxation of capital have led to a dramatic increase in the return to capital and international brands that stand out. Over time, more and more money flows into these arenas and away from others.
As the winner-takes-all economy develops, it is hard to distinguish between the talented and the lucky. Some people are just in the right place at the right time. As the gap between 1st and 2nd widens, swathes of what used to be the middle classes fall behind and get priced out of markets like the housing market. This dislocation is made all the more acute by the fact that we in the media write about rich people and celebrities and this further focuses the attention of the average person on the very things that they by definition can’t have. This process can be incredibly negative in a way that was not the case in our parents’ age and is more severe for our children as they are bombarded with messages about winners.
The treatment of Moyes was abrupt, but he is in a high-stakes game. More worrying is the way the rules of that game are reaching other areas of the economy, raising the stakes for everyone.
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I look forward to reading Picetty’s book – it sounds fascinating. I wonder though if you evaluated the population at 50 year intervals on a number of measures; wealth, health, socio economics, over the past 500 years – what would you find. I suspect that, yes the rich have gotten richer but the poor are nothing like the poor of the past. I may well be wrong, but your average poor family, while struggling, enjoy physiological benefits that previous generations of poor could only dream of, on a relative basis. There is so much work to be done in order… Read more »
Hi,
Effortlessly excellent. Sporting pun intended your run of form is top quality. Your article could be brought down to the following; The world’s top bankers get paid to destroy everything not facilitate wealth creation because the return on a capital and its speed of accumulation are far higher than simply waiting for the wealth creation process to run its course. Time to look at the 1990’s movie pretty woman again David.
Michael.
Hipsters Frenchmen Thomas Piketty and Cyril Roux re both members of the ENA ( Elite Schools in Paris ) or’ Enarchy ‘ so both are joined at the hip thinking ‘Methode ‘ in mindset with collective amnesia and a touch of garlic . The findings of Piketty stress that Politics commands itself over Economics and in this case that the arguments of economics alone is subjective to the opinion of the Minister for Finance and the operations of the Ministers always rules regardless .Thus Noonan can ignore economic data and decide how his political assessment calculates the next step before… Read more »
Excellent article David. Great to use current MU as an example. I’d like to just look at the lower level of our global society . The people who are wealthy but by no means millionaires however quite comfortable financially. Maybe we can call them the higher end of the middle class. This group owns a couple of properties; one or two nice cars and can send their children to the better schools. This is a group who’d like to think they are millionaires and so behave as one. They don’t mingle among the lower paid, like to be seen spending… Read more »
No comment on the form of the money these people are paid in. No thought to the fiat Ponzi scheme money system we have world wide. No thought to its enforcement by the armed mercenaries hired by the “western democracies”.
No thought to the armed conflicts and oppressed peoples of this monetary system.
Just comments on bread and circuses to distract the masses from reality.
Shame on you David.
Well of course the winner takes all when the rules of the fake economy-game stipulate it so. But please don’t confuse winning an artificially skewed competition with genuine success, the latter requires perseverance of an applied sufficient talent, the truth being you don’t need to be brilliant to succeed you just need to be good enough over a prolonged period. Read the works of Malcolm Gladwell for an insight into the myth of success, the myth of natural talent, the myth of education, the myth of competition and by extension the myth of capitalism. You seem to be warning, David,… Read more »
Moyes is a ‘football man’ according to all in the game. Therefore, he should know the rules of the industry and have no complaints. He should have declined the offer to manage United. The squad needs a massive clearout. It was a poisoned chalice. Even Mourinho would have struggled to be successful there this year had he got the job. The United manager, whoever he is, must cultivate up and coming young players, and Moyes has little interest or experience of doing this, as he showed at Everton. Louis Van Gaal is the ideal candidate, what he achieved at Ajax… Read more »
Very interesting stuff David. The destruction of the middle class is in no way an accident. This is all deliberate and is an inevitable part of our boom bust economy and the monetary system that fuels it. All the wealth is being siphoned off and is heading towards the banking elite and the corporations they control. Politicians have very little real say and if they try to upset this little system in any meaningful way they are either removed or done away with. Welcome to our brave new world. There is nothing random about any of this just a carefully… Read more »
This isn’t really new, the romans knew that the public could be easily distracted with Bread and Circuses
http://en.wikipedia.org/wiki/Bread_and_circuses
A while back I remember the front page of the Indo was a bit like this (I am paraphrasing a little):
* Local News
* Six Nations
* GAA (something)
* Sport
* Business (maybe)
* Independent Woman
* World News
Says it all really to me where our priorities stand!
“The winner takes it all”-ABBA sometime in the 70’s perhaps The concept is well entrenched in the popular consensus, in fact it is scientifically supported as an off-shoot of evolutionry theory-survival of the fittest. There are so many adjuncts to this way of thinking and all come with the ‘scientific research’ to support it e.g The Bell Curve and human intelliegnce-or anything related to people.Recall Eugenics? People accecpt this way of viewing the world and infact when you consider the only popularly promoted alternative or contrarian arguments e.g Intelligent design v Evolution – you can begin to understand how far… Read more »
In this country, it would appear that in certain areas of our society, the ordinary rules of capitalism that have been laid out above by David, get set aside, and we have allowed and tolerated the pursuance of insane policies of rewarding failure on a massive scale. Look at those who have been remunerated with pension pots and golden handshakes worth millions, for being asleep at the wheel or for heading up financial institutions. Look at what is going on in Irish Water, headed up by a guy who is responsible for hundreds of millions of Euro being lost by… Read more »
Good stuff guys, you have all upped your game on this article.
Reading and learning here. Thanks.
Hi David,
If you need a guy who knows what he is talking about to explain how the chief executives of a bank like Royal bank of Scotland (psychotic like) are paid enormous sums of monies to systematically destroy British businesses (Fingelton like) watch the video at the following link from 12.50 to 25.45. THE SALARIES AREN’T PAID TO THESE GUYS BECAUSE THEY ARE TALENTED.
Michael.
https://www.youtube.com/watch?v=udBFJQqxNiM
“….many souls are on the line , Oh Lord , don’t let him win !”
Zeus vs fire, Prometheus’ gift
http://www.youtube.com/watch?v=DnaUvPoiTfQ
“be water”,everybody
http://www.youtube.com/watch?v=q6OYQSSKWDI