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To Change the Global Economy, Start by Changing the Olympics

by Rob Dietz

At the 1980 Winter Olympics in Lake Placid, New York, the Soviet hockey team took the ice as overwhelming favorites — they were a juggernaut, having won the gold medal in 1956, 1964, 1968, 1972, and 1976. In fact, the Soviets were on a 21-game Olympic winning streak, posting lopsided victories along the way, including a 16-0 shutout of Japan and a 17-4 drubbing of the Netherlands during the 1980 tournament. Team USA, featuring a collection of unknown college players, couldn’t possibly win. But the unthinkable happened, and the team’s scrappy play carried the day. Announcer Al Michaels’s captured the emotion with his famous play-by-play call:

Eleven seconds, you’ve got ten seconds, the countdown going on right now! Morrow, up to Silk. Five seconds left in the game. DO YOU BELIEVE IN MIRACLES? YES!

It’s hard to find someone who appreciates competition as much as a sports fan (or a frenzied sports announcer), unless you happen to be in a college economics department. Every student who has suffered through Econ 101 knows the theory of perfect competition: perfectly competitive markets produce the most efficient allocation of goods and services. Never mind that you’re more likely to meet the Easter Bunny than a perfectly competitive market. So for years, economists have been pushing for unregulated markets, and business leaders and policy makers have followed suit.

To some degree the economists are on the right track. Competition can drive people (and companies) to the peak of performance. We like it when companies compete with each other to see who can produce the highest-quality products and provide them at the lowest prices. But as much as there is to admire about competition, there are limits to its usefulness. You probably know someone who’s hyper-competitive, one of those people who has to turn everything into a competition. Just like most things in life, we need to find the balance — the amount of competition that achieves positive results without overdoing it. It’s the equilibrium between competition and cooperation.

Teamwork (or cooperation) is how Team USA pulled off the “Miracle on Ice.” Sure, there were commendable individual performances. In goal, Jim Craig kept 36 of 39 Soviet shots out of the net. Mark Johnson, with grit and hustle, scored two goals. Team captain and emotional leader Mike Eruzione, whose name in Italian means “eruption” knocked in the winning goal. And coach Herb Brooks found the right tactics and motivation to put his team in a position to win. But all of these people have acknowledged that it was a true team effort – some participants have even expressed the feeling that all of America was skating together for that game.

The need for a balance between competition and cooperation exists within the economy. You can see it at the microeconomic scale. Within a company, the employees need to cooperate in order to achieve their goals. A company must figure out how to cooperate, not only internally, but also with other companies, with customers, and with government agencies in order to succeed.

You can also see the need for this competition/cooperation balance at the macroeconomic scale. In a world of finite resources, overly competitive nations can be dangerous. Aggressive competition for control of critical resources like land, water, and oil leads to serious conflicts and degraded social conditions. The last thing we need is an amped-up competition to wring the final drops of growth out of an already overgrown global economy. But in order for nations to find peaceful ways of sharing resources, they need to improve their track record for cooperating with one another. We’ve witnessed so many failures of international cooperation (look to the negotiations on climate change for a recent example), that it’s hard not to be cynical about humanity’s ability to collaborate at this scale. We’ve got to do something to change this track record, and the Olympics provide a venue for getting started.

It is difficult to argue with the ideals of the Olympic Movement. According to the Olympic Charter, “Olympism seeks to create a way of life based on the joy of effort, the educational value of good example, social responsibility and respect for universal fundamental ethical principles.” Although the charter expresses many lofty ideals, and the Olympics provide astounding examples of sportsmanship, the Games are, at the simplest level, a global competition among countries seeking glory through athletic achievement. And most of the world is eager to watch and cheer their teams. Sometimes the cheering can have overtones of nationalistic fanaticism, as in Germany during the 1936 Berlin Games. Other times the Olympics showcase political games as prominently as athletic ones, like the 1980 Moscow Games (boycotted by the United States) and the 1984 Los Angeles Games (boycotted by the Soviet Union). And the transition from amateur to professional athletes in the Games has eroded the Olympic spirit a little more. You’d never see something like the Miracle on Ice today.

At the same time, success at the Olympics has become predictable, maybe not for individual athletes, but for nations. As Andrew Bernard and Meghan Busse have described, the nations with the highest medal counts tend to have both a large population and a high per capita GDP. This means that the most economically overgrown countries have an advantage at the Olympics, just like they have an advantage in the scramble for world resources.

But there’s an unconventional (yet practical) way to rekindle Olympic ideals, encourage greater international cooperation, and mitigate the unfair advantage of “economic bigness” in the Games — all without taking away the spirit of competition or squashing the joy of rooting for your home nation.

What if we paired two nations as a unified team for each cycle of the summer and winter Games? Instead of Team USA, we could have Team Zimbabwe and USA (or Team Zimbusa). The teams in all sports, from gymnastics to skiing to water polo would consist of a mix of Zimbabwean and American athletes. Think of how much more knowledge and understanding would be shared between Zimbabweans and Americans. Medal counts would be totaled for both nations as if they were a single country, making the medals race more competitive and interesting. The paired countries could host joint training sessions in their respective homelands. Imagine the good will that could be generated around the globe as fans root for the athletes of their partner countries just as earnestly as their homegrown athletes — it’s enough to reduce Al Michaels to tears of joy!

Of course the International Olympic Committee (IOC) would have many new rules to establish, such as how teams are paired. Pairings could be random. Picture the United States with Iran, or India with Pakistan. Four years of athletic cooperation could lead to cooperation on more important fronts. Willingness to accept politically or culturally incongruous pairings by all countries would be part of the deal. Another possibility for forming pairs is to rank all nations by GDP and match the highest with the lowest, the second highest with the second lowest, and so on. The IOC would have to work out other details as well, such as the minimum percentage of athletes competing in a given sport that must come from one of the two countries.

The idea to pair nations may seem like an idealistic non-starter, but the Olympics are just a bunch of people getting together to play sports. Would the athletes feel like they represented themselves and their countries any less convincingly if they did so in teamwork with athletes from another country? Would fans support their teams less enthusiastically if they were engaged in such a partnership?

The proposed change in Olympic format could serve as a prominent step toward building the global cooperative spirit that is symbolized by the colorful interlocking rings of the Olympic flag. Such a step could help create balance between competition and cooperation not just in sports arenas, but also in policy arenas where decisions profoundly affect humanity’s prospects.

Besides, who could resist cheering for another miracle as Team Zimbusa takes the ice?

If you like this idea, feel free to pass it along to Jacques Rogge, President of the International Olympic Committee, in one of these ways:

Write a letter…
Château de Vidy
Case postale 356
1001 Lausanne
Switzerland

Make a phone call…
+41 21 621 61 11

Post a comment on the Facebook page for the Olympic Games.

The Fallacy of the Tragedy of the Commons

by Marq de Villiers

I grew up in a small South African town 16,000 kilometers and more than a hundred years away from America’s Wild West, but nevertheless watched many a cheap Saturday morning movie set in the mesquite and chaparral of that mythically violent but oddly honorable land. They mostly had similar themes — honest, hard-working homesteading family set upon by a variety of villains, whether cattle barons, railroad tycoons, “eastern” mining companies and more, each capitalist with armies of thugs for hire, ready to drive our hero off his land. One of the most common revolved around the hapless prospector (usually shown with pickax and mule to show his essential poverty) who finds a rich seam of gold, somewhere up in them thar hills, but never gets to stake his claim, either because he is killed by thugs on the way to the claims office, or because said thugs have raced ahead and filed ahead of him. All generally worked out by the end of the final reel; the prospector (or if dead, his deserving family) vindicated, and villainous mining corporation driven off, often with the help of a virtuous senator or otherwise honest politician. An oddly anti-capitalist saga, for the America of the post-Depression and I Like Ike years.

Unasked, in all this, was a simple question: who owns the gold in the first place? The answer would have been, of course, whoever finds it first.

Those days in the Bijou came back to me after an anecdote told me by Maurice Strong, who had recently chaired the Rio conference on the environment that had come to be called the Earth Summit. Maurice, and a company he controlled, had come into possession of one of Colorado’s historic cattle ranches, the 1823 grant to Luis Maria Cabeza de Baca and still known as the Baca Grande Ranch, in Comanche country near Crestone, looking out on the Sangre de Cristo mountains. Among its other assets, the ranch happened to sit on top of one of the west’s great untapped aquifers. Maurice’s company got into dispute with others about this water. First of all, his opponents suspected he wanted to “mine” the water and ship it north to Canada, a nice reversal of the conventional power politics between the two countries. Then, when it became clear that he really didn’t want to do anything with it, claims were filed by other parties demanding access. The legal rationale was simple: in much of the west, water rights operated under the “use it or lose it” principle. If you didn’t use the water, others had to right to appropriate it and use it themselves. There really couldn’t be a clearer anti-conservationist ethic.

Who owned the gold that the prospectors found in all those Westerns? Who owned the water under Maurice Strong’s Baca Grande ranch? The answer is, no one, everyone, anyone.

The question can be extended indefinitely. Who owns, say, the natural gas deposits that have lain, untapped, under the ocean near Sable Island, a hundred kilometers from my house? Who owns the Gorgon gas field under Barrow Island off Australia’s west coast? Who owns the methane hydrate deposits off the shore of New Jersey? Who owns the limestone deposits under California’s central coast (deposits that yield up some of the world’s sublime wines)? Who owns the great boreal forests of Alaska, Siberia, and Canada? Who owns the rocks of the earth? Who, indeed, owns the air? The birds of the air? The water? The oceans? Fish stocks? Who owns the whales?

Who owns nature?

And then another set of questions, about another kind of commonwealth: who owns culture? Who owns languages, science, the accumulated genius of technology? Who owns history? Who owns, in short, the human library? Who owns it, and who has the right to sell it?

In an empty world, these questions, or at least the ones about nature, didn’t much matter. Nature seemed inexhaustible. Still, natural philosophers, as scientists were once called, have wrestled with the issue for millennia, as have political authorities. In Roman times, the Senate put together a series of laws that classified several aspects of what came to be called “the commons” as explicitly owned by the people collectively. These res communes, common things, included water and the air, but also “bodies of water,” that is lakes, and shorelines generally. Wild animals, as opposed to domesticated ones, were included. After the Roman empire collapsed, overrun by what the Romans were pleased to call barbarians, some aspects of the res communes came into dispute — feudal lords, and then kings, claimed to control them.

The implications of a commons is that since no one owns it, anyone can use it, exploit it, and pollute it at no charge.

So where, in a well-ordered world, do private property rights stop? How best to treat the commons so it survives for the benefit of all? How best to allocate the profits that flow from what exploitation is allowed? Private property is the engine of prosperity. Common property is the backdrop before which private actors perform. Both are necessary. So an answer is critical. We have three economic sectors: the private sector, the public (or state) sector and the commons sector. Only the last has no body of law to protect it, and no accounting systems for its profits or losses.

So the question becomes: if the various natural systems of the earth, especially the air, the water, the land and its minerals, and the complex life systems they sustain, are indeed “the commons,” how do we guard against the “tragedy of the commons?” If no one owns the resource and anyone can use it, how do we protect it from depletion?

The tragedy of the commons as a phrase owes its origins to Garrett Hardin’s essay in Science magazine in 1968, though the notion of a social trap involving a conflict between individual interests and the common good goes back, at least, to Aristotle.

Here is Hardin’s description of the tragedy :

Picture a pasture open to all. It is to be expected that each herdsman will try to keep as many cattle as possible on the commons. Such an arrangement may work reasonably satisfactorily for centuries because tribal wars, poaching, and disease keep the numbers of both man and beast well below the carrying capacity of the land. Finally, however, comes the day of reckoning, that is, the day when the long-desired goal of social stability becomes a reality. At this point, the inherent logic of the commons remorselessly generates tragedy. As a rational being, each herdsman seeks to maximize his gain. Explicitly or implicitly, more or less consciously, he asks, “What is the utility to me of adding one more animal to my herd?” This utility has one negative and one positive component. The positive component is a function of the increment of one animal. Since the herdsman receives all the proceeds from the sale of the additional animal, the positive utility is [obvious]. The negative component is a function of the additional overgrazing created by one more animal. Since, however, the effects of overgrazing are shared by all the herdsmen, the negative utility for any particular decision-making herdsman is only a fraction [of the burden] … The rational herdsman concludes [from this] that the only sensible course for him to pursue is to add another animal to his herd. And another, and another … But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit, in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in a commons brings ruin to all.

Hardin’s argument was widely accepted by economists and free-market enthusiasts. The solution to the dilemma, it seemed obvious, was privatization, the enclosure of the commons.

But it is not obvious. Hardin’s theory was the purest poppycock, and widely adopted only because it seemed to convey the essence of free market competition. It was a truly corporatist view.

The main error was to adopt a key proposition of the free market, and of Adam Smith’s, that man is a rational being who always acts in his own best interests, and then to assume that those interests automatically involved multiplication of personal assets. But what Hardin was describing was not rational behavior — it was the purest selfishness. And there is, after all, a crucial difference. A rational being, faced with a dilemma of the commons, would be able to calculate long-term prospects and conclude, quite rationally, that some sort of short-term limit, arrived at through negotiation, would be in his own interests. In other words, in the context of a limited commons, cooperation is a more rational decision than independence. Hardin derived his views from biology — he wasn’t an economist — and preferred a hard-line version of Darwinism called, not surprisingly, survival of the fittest. But “fit” was interpreted narrowly and stripped of its social context. Hardin simply assumed that when men came together without rules, violence or conflict ensued. He had no knowledge of the equally Darwinist view that natural selection could just as easily select for mutual cooperation as for continual family warfare, a view that has been gaining credence among biological evolutionists in the past few decades. He took no account, therefore, of the human ability to develop rules for accessing and using common resources.

Cooperation, when you look for it, is not hard to find. Fishermen in several places have banded together to set sustainable catch quotas. The same thing is true, as Jonathan Rowe pointed out in an essay for WorldWatch, in the rice paddies of the Philippines, in the Swiss Alpine pasturelands, the Maine lobster fishery, the Pacific haddock fishery, and many other places. The case could even be made that as long as settled communities remain intact, the commons flourishes. The community merely needs to be enabled to protect it.

Marq de Villiers is an award-winning writer of books and articles on exploration, history, politics, and travel.  He is also a graduate of the London School of Economics, and his latest book puts his training in economics to good use.  Our Way Out: Principles for a Post-Apocalyptic World offers a refreshing menu of economic options for an overly consumptive population living on an environmentally stressed planet.