Brazil will beat Germany to win football’s World Cup, according to a survey of economists: Livemint, June 10
Why do they ask economists about who will win the football World Cup? Why not survey dentists or pole dancers instead? True, there could be a problem with accountants — a recent survey revealed they wanted the goals for and goals against to be exactly the same, according to the principles of double entry goalkeeping. But why don’t they ask other professionals? The answer is simple: economists have long had a unique relationship with football. The beautiful game and the dismal science are closely linked by a history of punditry.
Consider Adam Smith, the father of modern economics. He was the first to talk of an Invisible Hand that guided the game, so that while each individual player tried to do the best for himself, the result was goals for the team. That theory died an untimely death in the 1986 World Cup, when the invisible hand became the visible one of Diego Maradona.
James Mill was an ardent proponent of classical football, arguing that teams should be indistinguishable from one another, so that perfect competition prevailed. David Ricardo’s theory demonstrated conclusively that India’s comparative advantage lies in cricket. On the other hand, Karl Marx deplored the tendency of football to distract the masses from the revolution. Calling football the ‘opium of the people’, he was a strong advocate of abolishing the right-wing position in the field.
John Maynard Keynes, the economist who transformed macroeconomics, hated long runs with the ball. One of his most famous quotes was, ‘In the long run, we are all dead.’ That is why modern economists advise footballers to go for random walks during matches instead of long runs. Keynes’ most famous opponent was Milton Friedman, who said, ‘Football is everywhere and always a monetary phenomenon.’ Friedman was proved to be right by the game becoming a multi-billion dollar industry and with Christiano Ronaldo raking in $73 million last year. Keynes said he too had predicted this, in his theory of the money multiplier. Friedman retorted by calling Keynes a second-division player, to which Keynes responded by calling Friedman a substitute. Friedman then called Keynes ‘a lagging indicator’, to which Lord Keynes retorted that Friedman epitomised ‘the tragedy of the common’. The rivalry soon turned violent, with Friedman’s free-kick to Keynes’ shin. Keynes countered with a hard tackle. A football match was then arranged between post-Keynesians and neo-monetarists, which ended in a penalty shootout and sudden death. Since the goals were seasonally adjusted and standardly deviated, the final tally was a draw.
What do economists have to say about India’s lowly 154th FIFA ranking? They point to irrational expectations, low velocity of circulation of the ball, zero-sum games, indifference curves and general disequilibrium. I personally think the Indian game needs structural adjustment.
It should now be amply clear why Goldman Sachs, Danske Bank and Deutsche Bank have all made predictions about the World Cup. But how does Danske Bank predict a Brazil win? Here’s what they say: “Using OLS (ordinary least squares) based on data from the past five World Cup tournaments yields the result with an R squared=0.27.” Ah…..extraordinarily convincing, that.
And lastly, to further understand the complicated connection between economic development, sports and China’s amazing growth record, please read Adam Smith’s famous book, ‘The Wealth of Mah-Jongg Playing Nations’.
Manas Chakravarty is Consulting Editor, Mint
The views expressed by the author are personal