Wednesday, September 16, 2009

Joe Stiglitz on Sport and Bankers

Joseph Stiglitz, writing as guest editor of Libération yesterday, on high-earning sports stars:

The salaries of sports stars, soccer in particular, don't bother me near as much as traders' bonuses do. A soccer player is like a singer. The best singer sells the most records, it's public demand that decides that. And for sport too, the public digs into its pockets to go see the best. It's not the same in the world of finance: traders' salaried are fixed by bankers who, to a certain extent, steal from the shareholders, who are the effective owners of the company. In finance, everyone thinks they're smarter than everyone else - it's completely irrational. And if you know you're not the very best, why measure yourself against the very best? In finance, the deal is: "If you only give a million, you only get one-third of my attention; if you want more than that, you pay me more." In sport, the stars are paid according to their competitiveness. What's more, they pay taxes. A trader, on the other hand, if he thinks himself underpaid, will take risks, and if things go bad, it's the taxpayer that pays.

I have a sneaky feeling Stiglitz isn't too bothered by sport and thus didn't give more than a cursory analysis. But none other than Simon Kuper expressed a similar opinion in his FT column a few months back. The truth about the public wanting to watch better quality is undeniable but I don't think a salary cap would be any harm in that it might take the pressure off small and medium clubs and make the game more competitive and prevent badly-run bigger clubs like Valencia going to the wall.

Michel Platini's laudable plans to give the champions of all European countries a fair chance to reach the Champion's League group stages have produced a number of minnows in this years opening round. Poor starts by FC Zurich, hammered 5-2 at home by Real Madrid, and Maccabi Haifa, beaten by Bayern Munich. But hats off to Cypriots Apoel Nicosia who came away from the Vicente Calderón with a priceless 0-0 draw against Atlético Madrid.