India’s Rio tryst – Episode IV: Revelation

sindhu reception

Pride from sporting success is a public good, but how should we produce more of it

Is sport a public good? This debate has gathered steam, or at least should gather steam in the aftermath of the Olympic Games where India’s performance [or lack thereof] has generated a lot of soul searching. In the first three parts [links to Part I, Part II and Part III] of this series I looked at why success at the Games is a tough proposition and how we tend to overreact to both success and failure because of a complex dynamic between inflated expectations and the fact that the Games are a quadrennial affair.

In this last part, I will put forward some thoughts on what potential approaches can be taken to generate more success at sport, and before that address an even more fundamental question – do we even want sporting success?

In a superb and introspecting piece that doesn’t mince words, Abhinav Bindra, gold medallist at Beijing in 2008 and the flag bearer at the Opening Ceremony at Rio, laid bare the reasons why we are ‘a two medal nation’. But how he began was most interesting. He writes –

[L]et’s address the basic questions: Do we want to be known as one of the leaders of the sporting world that wins 20, 30, 40 medals every Olympics? Or are we happy being a two-, three-, or five-medal nation? The confusion is a very understandable one. There are so many problems in India, and so many priorities to focus on-poverty, healthcare, water, power, unemployment, social inequality-that sport ends up taking a back seat. If we are happy with keeping sport on the backburner, on not treating it as a priority item in our larger national agenda, fair enough, and so be it. If we decide, as a nation, that we cannot invest in sport and we cannot afford to join the race for medals, let us re-engineer our hopes and set realistic targets. Let us be fine with winning a few medals, if at all, at the Olympics, and be content.

His line of thought posits sports as a ‘good’ that a country or an economy needs to invest in to produce. Bear with me on this tiny economics digression. Classical economic theory usually says that nations or economies should focus on producing what they are best at [comparative advantage theory] and trading for the stuff they cant produce or do not have a comparative advantage in. Unfortunately, if by sport as a good we mean our national performance on international stages such as the Olympics, there is no scope for trade. We can’t trade Michael Phelps’ gold medal for two of ours in hockey in 1948 and 1980. That means we have to produce sporting excellence ourselves. An extreme case of import substitution, if you will. Now to produce more or better goods, an economy can try one of two methods. As the outgoing RBI Governor Raghuram Rajan explained so elegantly in a speech at the IIT Delhi Convocation last year

‘Robert Solow, won the Nobel Prize in Economics for work that showed that the bulk of economic growth did not come from putting more factors of production such as labour and capital to work. Instead, it came from putting those factors of production together more cleverly, that is, from what he called total factor productivity growth. Put differently, new ideas, new methods of production, better logistics – these are what lead to sustained economic growth.’

So, in a sporting sense, we have put Solow’s ideas into action. In the history of economics, countries have acquired economic might by broadly employing one of two ways of putting factors of production together – through a free market [capitalist] system or through command and control of central planning [socialism]. There is no definitive evidence even today of a foolproof way to grow an economy and produce better goods and services, though based on popularity, capitalism is in a comfortable lead at the moment; an advantage it has had for some time. To slip in some racing terminology, at this point it may have ‘lapped’ socialism.

Unsurprisingly, countries’ approach to investing money and knowhow in creating sporting success often mirrors how they do the same for the economy at large. China, where the state control of the economy is still strong, has a centralized system where the government funds rigorous training programs that identify and train young talent [resources, in econ speak] and the objective is to produce champions who will bring the country glory in terms of success at an international level. At the other extreme, we have the United States, a traditionally free economy that takes its lassiez faire approach to its Olympic sports as well. The government directly funds none of the sports and the United States Olympic Committee raised funds from the public at large and sponsors and distributes them among various disciplines. Like in a capitalist system, ventures that are likely to be successful attract capital. Thus, the money usually goes to sports where likelihood of success is higher or a sport that has a proven track record of success. South Korea, which was a dictator led economy in the 1970s and 80s had massive government push in certain disciplines back then [facilities, funds for training, pressure on athletes to win] and as it transitioned into a more free market economy, its approach to sport was more of the result oriented mix of public and private expenditure.

And then we have Great Britain, who dominated headlines after Rio because of their stellar performance that pushed China into third place on the medal tally. Britain has more of a mixed approach, where money has been consistently raised through a public lottery and poured into supporting sports that had more likelihood of success. It is similar to the American system with the unique Brit twist that the money is quasi government money. Economic success and might is something countries use to stand out internationally, and sporting success has been a stand in for national pride for a long time too. Sport, whether stated explicitly or not, has been treated as a public good – one that is non-excludable [you can cheer for a Sindhu whether you funded her training or not, or whether you know how to play badminton or not] and nonrivalrous [your cheering for Sindhu does not diminish your ability to cheer for a Sakshi Malik or an MS Dhoni]. In their paper ‘The value of public goods generated by a major league sports team’, published in the Journal of Sports Economics in 2000, Bruce Johnson, Peter Groothuis and John Whitehead argue that sports generates a certain positive externality. A positive externality is a benefit for which you don’t necessarily pay. As the authors write

‘People talk about their team, cheer for its success and celebrate its victories and may do so without buying tickets or making any payment to the team. Perhaps the most spectacular manifestations of such public goods are the raucous street parties…by hundreds of thousands of fans in cities whose teams win league championships.’

Think about how an entire country came together for cheering Dipa Karmakar [a virtual unknown in the public eye till the Games] during her gymnastics final or PV Sindhu during the badminton final or the huge welcomes they received at the airport when they got back.

So, this brings us back to the original question. Do we want more of such moments? Because if we do, then we will need to invest resources – whether public or private in the goods. Since the output is likely to be public goods in nature, the profit motive and the market mechanism might not always solve the problem [the ‘putting together of factors of production more cleverly’ as Dr. Rajan put it].

Naturally, the alternative left is public money and government intervention. But if the sordid history of socialism has taught us anything, it is that intervention seldom leads to sustainable outcomes. Our sporting administration is currently stuck in that mode where the government largely gets to decide resource allocation for athletes and if at all it is thinking of breeding success, it is generally along the lines of ‘a faster horse’ philosophy. What is emerging, as we search for potential solutions, is a mixed form of economy among sports, where public and private funds coexist. Our economy has had a similar ride over the last six decades where we moved from a government controlled system to a more mixed one resulting in economic growth – more and better goods and services that have generally lifted standards of living.

Could our Olympic sports follow a similar trajectory? After decades of apathy and lost potential, could a mixed approach produce more excellence and more of the public goods of sporting success to enjoy? Probably not yet. And that is because we don’t have yet any kind of comparative advantage in these sports, generally speaking. Which means, they might need the support of public money a while longer, like a weak industry being subsidized to survive international competition. Remember, besides everything else, there are opportunity costs for those who get involved in these sports and are training to be the best in the world. The hours of practice come at the cost of education, lost income, and maybe even lost contribution in other areas of the economy [what if that archer who gave up studying medicine were to go on and have contributed to the development for a cure to cancer?]. After their sporting career is over, most of these athletes might find it difficult to land productive work and sources of income. This is not a problem exclusive to an economy like ours but happens in advanced economies too. However, opportunity wise, we still have a long way to go in a country where underemployment of resources is a chronic problem. There is no silver bullet to solve this dilemma.

An AP article explained South Korea’s success at the Rio Games and previous ones thus

[In the 80s] authoritarian government pumped money into programs for athletes who had better chances of winning medals, often in these lesser known sports, rather than building up an overall sports infrastructure for the general public. Those selected athletes trained together at government-run facilities and were awarded benefits such as good pensions and, for the men, exemptions from mandatory military service if they performed well in international competitions like the Olympics.

As athletes in those sports succeeded internationally, the sports got more public attention. More popularity meant more steady civilian and business sponsorships. This meant more money, better training facilities and more young athletes taking up and sticking with the sports.

That system is still largely in place. Hence the success.

That is, there is a virtuous cycle of investment that has been generated because there was government subsidy in the first place. Maybe the Prime Minister’s idea of a task force for the next three Games, and the much criticized but well intentioned TOPS program are what India needs to belt out a better quality of public good in sports.

With a young nation and plentiful ambition, the apocalyptic scenarios are probably a little overplayed. But we better start thinking of the ‘clever’ ways to combine resources fast. And National Sports Day is probably as good a day as any to begin thinking about it.



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