Capitalism on Steroids
November 5th, 2010
November 5th, 2010
At the age of 15 I moved away from home to live at the Olympic Training Center in Lake Placid, New York, where I lived and trained year-round for the sport of sprint kayaking. Surrounded by some of the country’s finest athletes through most of my formidable years taught me a lot about who athletes are and how they think. Honor was paramount to (almost) everyone of them—whether they were bobsledders or speed skaters, ski jumpers or rhythmic gymnasts. Everyone wanted to achieve their best performance, everyone wanted to make the team or win the race, but no one wanted to cheat to do it.
It therefore troubles me to try to reconcile my memories and images with the reality I see on the news. Reading about steroid-injecting baseball players, blood-doping cyclists and plotting figure-skaters challenges my memories of the decent, strong, driven people who cared about the sweat and honor on the road to victory more than the glory of a gold medal.
But as the headlines we have become all-too-familiar-with will tell you: the doping and the cheating and the plotting are very real. And as decent and courageous as our athletes are, they do cheat.
The most unintentionally sobering quote I came across while researching this post was in an article written in 2008 on the “death of honor in sports.” The author grieved the loss of athletes like Babe Ruth and Hank Aaron, noting that sports are now riddled with “greed, dishonor, and arrogance.” He lamented that even athletes, like Michael Vick, who aren’t cheating at their games are still morally reprehensible. He concluded with a hopeful note, though. He told his audience he remains thankful that there are “still athletes like Tiger Woods …who young people can look up to.” Less than two years after these words were written, Woods publicly admitted to having been unfaithful to his wife, telling reporters he had believed his athlete status meant that “normal rules didn’t apply.”
It’s not just athletes. Recently two of the 24 men who are set to vote on where the 2018 Soccer World Cup will be held told undercover reporters that their votes could be bought. And just this week the International Cricket Council warned the Pakistan Cricket Board to implement a series of measures to solve alleged corruption, including spot-fixing in the team’s recent tour of England, or face serious sanctions. The former PCB chairman Khalid Mahmood responded that the warning was an “insult to the whole nation.”
It seems that honor and moral responsibility are not always strong enough incentives—even when those individuals are given the public’s trust and therefore garner our utmost respect. And that–as a matter of fact–is a lesson economists can learn from sports.
Everyone wants to win. They will do what it takes to get there.
Whether it’s in an arena, a stadium, or a board room, when an individual operates at the highest-levels, bigger and better than the rest, the pressure to win is intense, and it is constant. This pressure, whether inner or outer, flows naturally from the forces of competition. On one hand it is a wonderful thing. Competition is what has driven Usain Bolt to achieve a ground speed of 23 miles per hour, and it is what drives economic markets to produce goods, employ workers, and lift people out of poverty. On the other hand, competition can be hugely destructive, causing otherwise decent people with admirable intentions to take disgraceful actions.
Unfortunately, the solution to this paradox—whether we are talking about markets or athletes—is not to allow the competitors to regulate themselves. But when we allow our international financial system to shroud some jurisdictions in secrecy, we have stripped regulators of their ability to drug test the markets. When we allow banks to write their own lending rules and don’t expect hedgefunds to disclose their investments and funding, we are allowing the markets to self-regulate. And then we are hoping for the best.
It might seem elementary, but we haven’t seemed to realize that markets are not self-regulating. We haven’t come to terms with the fact that when you allow competition to run rampant, without checks or brakes, you get Capitalism on steroids. And with steroids always comes withdrawal, whether that’s an athlete with liver failure or a recession with sky-high unemployment.
Though there are many athletes and companies who might abstain from cheating given the option, and I certainly know plenty of them personally, there are also many who will take the option. Whether it is Barry Bonds using steroids or Google shifting profits overseas to lessen its tax burden—it is clear that our world is full of otherwise admirable individuals and corporations who will exploit the system when they can.
The solution is not more honor or even more rules. The solution is more information, whether that’s better accounting by corporations, improved disclosure for borrowers, or more drug tests for cyclists. More information and more transparency will always be the common-sense solution.
And it’s the only way to keep Capitalism off steroids.