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The Mercantile Olympics

Mises Daily: Monday, March 04, 2002 by

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I didn't watch any of the Winter Olympics that recently concluded in Salt Lake City, but it was hard not to hear of the controversies that defined them.  Early in the games, the tempest over the judging of the figure-skating competition dominated the news, after gold medals were awarded, first to the Russian pair, and then to the Canadian pair two days later.  Similar controversies arose in speed skating, skiing, and hockey.

The question is whether judging is actually as impartial as possible or whether pressure is being placed upon judges to effect specific results that are in line with the desires of both image-conscious politicians and revenue-conscious Olympic organizers, be they on Olympic committees or television network boards.

Needless to say, no one is happy with the situation.  The Russian team has threatened to boycott the 2004 Olympic Games to be held in Athens, Greece.  Winners now wonder if the metal in their medals has been debased, given the uncertainty implied in the judging process.  While everyone concedes that there must be some element of subjectivity in refereeing any sport, the very notion that every effort to allow results to be determined in the field of play are not being taken threatens to delegitimize future Olympics competitions for an entire generation.

The hullabaloo created by this turn of events is heartening.  It illustrates the inherent attraction of the human person to competition, and the disgust felt when the results of competition have been determined in an a priori manner, showing that the best efforts of egalitarians over the course of several decades to squash this spirit through reeducation have failed.  

The free-enterprise system is based in part on this characteristic of the human person.  It focuses the drive to compete in a way that maximizes the benefits derived by consumers in the form of better products offered in a wide variety and at ever lower prices.  

This explains why, just as many are outraged at the suggestion that judges may have been taking cues from network executives or bribes from home country bureaucrats, so many were sickened by reports that, in 1996, Enron executives received a $1-billion, taxpayer-subsidized loan to keep the firm in business for an extra year or two.  Absent this intervention in the competitive process, the market very well may have shut down Enron sooner than later, before it could do any more damage.  

In the same way, the average sports fan would rather have the competitive process, as much as possible, determine whether Country A's hockey team proceeds to the next level and whether it is told to unlace its skates and go home.  If Country A benefited from any other factor, then its continued presence in the games calls into question the results of other forms of competition as well.  

Of course, this situation is nothing new to an economist.  Since people are self-interested, it is essential that no one person, firm, or state be allowed to set the terms under which competition takes place, whether the competition is in the marketplace or the sports arena.  To allow otherwise would be to allow the reappearance of mercantilism.

Mercantilism describes state intervention in the competitive process in order to bring about specific results that support its goals.  This system defined global trade patterns at least until the end of the eighteenth century, after which time the classical liberal economists of the 1800s--the champions of individual freedom and private property--did their best to crush mercantilist doctrines.  However, neomercantilist thought had emerged by the end of the late 1800s, and in the twentieth century, the continued acceptance of this doctrine complemented the growth of the nation state.

In other words, some bad ideas just won't go away, especially if belief in them supports the expansion of state power.  

When mercantilism is practiced successfully, it serves to expand the power of the state while smashing the incentives of the human person to express any creativity and ingenuity outside of any non-state-approved venues.  Why would anyone have wanted to compete with Enron in the late 1990s for the loyalty of consumers, knowing that the state was actively pursuing a strategy that forbade the firm from failing?  For that matter, why would anyone from a politically insignificant country want to compete in the Olympics if he thought that the results of competition were biased in favor of rivals from other countries?  

In the sports industry, fixing outcomes is detrimental to the bottom lines of the firms that finance competition, and efforts are made to provide a sufficient amount of private regulation to minimize problems resulting from the desire to predetermine outcomes.  None of us will watch the Super Bowl, or any of the Super Bowl-related commercials, if we think it is likely that the result has been previously decided.  Such beliefs directly effect revenues.

Unfortunately, the same analysis can't be said to apply to the Olympics, which is largely a state-sponsored, mercantile event.  When the state heavily finances any project, including the training of Olympic athletes or the staging of Olympic games, its efforts seem foolish or wasteful when its intended results do not come about.  This applies as much to taxpayer funding of curling events as it does to both the corrupt AmeriCorp and the FreedomCorp programs, none of which would receive much attention from private investors in a truly republican society.

The solution to these problems is to remove state influence from all aspects of Olympic competition.  Let private clubs compete among each other for the right to represent their countries, and let private firms stage the events.  Until the Olympics becomes a completely private enterprise, we can expect many years of such controversies, as well as a waning interest in the results of Olympic competition.


Christopher Westley is an assistant professor of economics at Jacksonville State University.  See his Mises.org Articles Archive and send him MAIL.