Sunday, May 27, 2007

Us and Them

I had an interesting experience at a professional conference this weekend. A paper was being presented on a rather arcane but interesting problem -- what to do about the low degree of competitive balance in European soccer leagues. Year after year, the top places in the league are dominated by a very small number of teams. In any given year, most members of most of these leagues have a vanishingly small shot at the league championship.

The professor presenting the paper, who was from a European country, quickly drew the conclusion that what was needed was European Union regulations to enhance this competitive balance. The audience was probably half American and half European, and the presenter knew that this would be a tough sell with the American audience. Thus, he immediately tried to impress upon them the importance of "non-market" factors to many Europeans -- the value of tradition, of the need for social fairness, harmony and solidarity, etc.

What was striking about his proposal and sales pitch was the ease with which he got to justifying that the EU, having evidently solved most of its other difficulties, should take on soccer standings as part of its purview. But all of this assumes so much. First, why assume that competitive imbalance is the worst outcome? One could easily come up with many reasons why such leagues might confine their winners to a small subset of their members. For example, the possibility of relegation to an inferior league for the teams at the bottom already adds extra suspense. When you add to that the idea that transnational European competitions like the Champions League have created many fans in other countries, and not just in Europe, for marquee teams like Manchester United or AC Milan, it might well be that the welfare-maximizing outcome is one in which those teams get a lot of global exposure.

But even if it were true that competitive imbalance was bad for the leagues and their fans, why do the leagues not recognize this problem? Why run to government at all, and if so why to the highest possible level of government? Leagues have every reason to solve this problem if it exists because they internalize all the positive and negative consequences of competitive imbalance, and yet they choose it anyway. Perhaps the economist analyzing such problems should first think long and hard about the consequence of his remedy, the possibilities he has ignored, and the possibility that his services might be limited to pointing out the problem to a private actor rather than running not just to his own national government but to a transnational solution to impose a single, rigid solution on over a dozen leagues (or, more generally, on hundreds of millions of people).

And this is fundamentally the difference between the attitude of many (but not all) Europeans and many of their American sympathizers and many (but not all) Americans. Europeans are sure they see problems everywhere (lack of “social justice,” “monopoly abuses,” whatever), and default to central planning to solve them. The possibility that the remedy for a particular problem (assuming it is a problem to begin with) might create other, worse problems does not enter their mind with as much force. Americans are sure they see opportunity everywhere, believe that things happen because some people had a good reason for making them happen, and default to individual freedom to solve whatever problems do indeed exist. It is a difference that appears to be growing with time, making the transatlantic ties needed to address honest-to-goodness global problems harder to forge than ever.



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