How Soccer Explains the Dead Hand

This year’s World Cup hasn’t converted me to soccer fandom, but it did motivate me to read a good book. I’m talking about TNR editor Frank Foer’s How Soccer Explains the World: An Unlikely Theory of Globalization.

The book, which came out in 2004, offers a series of fascinating, compulsively readable profiles of soccer’s cultural and political underbelly — its connection to, among other things, war crimes, sectarian conflict, racism and anti-Semitism, political corruption, and culture wars. The beautiful game, perhaps, but what goes on off the pitch is frequently anything but. The picture, though, isn’t all bleak: Foer also tells how soccer has figured into resistance to fascism in Spain and Islamist tyranny in Iran.

The book is heavy on storytelling and light on argument, but through soccer’s prism an interesting picture of globalization emerges. And my apologies to Frank if I’m stretching here, but the picture is quite similar to that offered in my own book about globalization. Soccer, of course, is the global game par excellence — played and loved and marketed around the world. The best teams compete for talent and fans without regard for national boundaries. At the same time, though, this thoroughly cosmopolitan product is consumed in a world where national boundaries — and racial, religious, ideological, and class divisions as well — remain very real and continue to exert an often pernicious influence.

Soccer, then, is the global economy in microcosm. Goods, services, and capital flow across political boundaries as never before, but the global division of labor must contend with local institutions, interests, and mindsets that are frequently profoundly hostile to the market order. At the World Cup as in the larger world economy, the invisible hand of the market and the dead hand of anti-market forces struggle for mastery.

Whether or not you follow soccer, the book offers a wealth of great stories and an overarching perspective that makes our highly interconnected, highly conflicted world a little more comprehensible. And if you are a “football” fanatic, you might also want to check out Frank and friends’ World Cup blog as we head into the final weekend.

Federal Ban on Internet Gambling Marches On

Yesterday, I spoke with an aide to a Republican congressman who, as far as congressmen go, is somewhat libertarian. The aide told me that much to his chagrin, said congressman will be backing the ban on Internet gambling. What’s more, the aide said the congressman actually understands the economics of prohibitions, he just thinks that this will be the one time they don’t apply.

“For some reason, he thinks this is one instance where government can actually pull it off,” the aide said.


Internet gambling is already illegal, of course. That’s why gaming sites set up and operate offshore (several are actually traded on the London Stock Exchange). Yet, it’s still a $12 billion industry in the U.S. That means government already is trying, and failing, to prohibit it.

I guess the thinking is — as it is with the drug war — that if we try just a bit harder, spend just a bit more, harass private citizens just a bit more, and give government a bit more power, we’ll be able to buck history and finally make a vice prohibition stick.

Or perhaps lawmakers know it won’t work, and don’t care. The symbolism of trying to take a moral stand against gambling is more important than the policy actually working.

According to the New York Times, the gambling ban moves to the House floor for a vote next week, where it’s almost certain to pass. Here’s the kicker:

The majority leader, Representative John A. Boehner, Republican of Ohio, announced a few days ago that the measure would be voted on this summer as part of what the Republicans call their American Values Agenda.

So because the Republicans have garnered public scorn for the unethical, corrupt, morally bankrupt way they’ve governed over the last decade, they’ve decided to make a last-ditch attempt to hold on to power by passing judgment on the morals of their constituents (most of whom, polls show, oppose the bill).


The Times piece also looks at the free trade implications of Internet gambling prohibition, often overlooked in the debate. The Goodlatte-Leach bill will certainly exacerbate existing trade tensions between the U.S. and the 80 or so countries that allow online gambling. But many of those tensions have been bubbling over for years.

This bill brings up some new problems.

Because the bill effectively deputizes banks to sniff out and eradicate gambling among their customers (the creepy privacy implications of that alone ought to kill this bill), it amounts to a piece of blatantly protectionist legislation. Its practical effect will be to shield a domestic company (PayPal, which is owned by eBay) from foreign competitors like FirePay and Netteller.

I’ve explained a bit more about how this will work here.

Thus far, when countries like Antigua have challenged the U.S. gambling ban on free trade grounds, the Bush administration has fought tooth and nail to preserve its right to police the private behavior of American citizens. That means the administration has used millions of taxpayer dollars to prevent more liberty-minded countries from making too much freedom available to U.S. taxpayers over the Internet.

Of course, kicking Antigua around is one thing. When Britain mounts a challenge, as it likely will, this will all get much more interesting.

Gotta love the party of limited government.

Mexico’s Thin Margin

NPR keeps reporting that conservative Felipe Calderon seems to have won the Mexican presidential election “by the thinnest of margins.” Thin, yes. But I wouldn’t call it “the thinnest.” At this writing, Calderon leads by 243,000 votes, about 0.5 percent in an electorate of 40 million.

John F. Kennedy defeated Richard Nixon in 1960 by about 118,000 votes out of 69 million cast, or 0.15 percent. (And that’s if you give Kennedy about 320,000 Democratic votes in Alabama, even though only five of Alabama’s 11 Democratic electors intended to vote for Kennedy. If you don’t credit the Alabama votes to Kennedy, then he would win the electoral college vote while losing the popular vote.) Nixon got his revenge eight years later, defeating Hubert Humphrey by about 500,000 votes, or 0.70 percent in an electorate of 73 million. And then of course there was George W. Bush, whose popular vote margin was about minus 500,000 in 2000.

Calderon’s margin is thin, but it is “the thinnest” only by Mexican standards, not when compared to U.S. presidential elections.

A Little Student Loan Perspective

For months, college students and their advocates have decried impending increases in federal student loan rates. This past Saturday, it happened: variable interest rates on existing taxpayer-subsidized Stafford loans rose from 5.3 percent to 7.14 percent, and new loans were pegged at a fixed rate of 6.8 percent. Doomsday had arrived!

Or had it? As a new report from the National Center for Education Statistics makes clear, it wasn’t very long ago that students faced significantly higher interest rates than those that went into effect Saturday, yet for the most part borrowers were able to repay their loans without great difficulty.

According to the report, most borrowers who graduated in the 1992-93 academic year paid interest rates of 8 percent in their first four years after graduation, and between 6 and 9 percent for the remaining years. Despite that, relatively few borrowers had long-term difficulty repaying their loans, and even many who at some point defaulted eventually got back on track.

What this shows, of course, is that taxpayer-backed loans aren’t nearly the burden on students that college activists have made them out to be. But don’t expect student advocates to admit that anytime soon. After all, if they didn’t act incessantly oppressed by having to pay for some of their own education, it would be a lot harder for them to get politicians to fork over ever-more taxpayer dollars.

Jefferson v. Stevens

Justice John Paul Stevens recently dissented from the majority opinion in Randall v. Sorrell, the case involving campaign finance restrictions imposed by Vermont. Stevens has long argued that money is not speech, and thus restrictions on money cannot raise First Amendment issues.

Robert Bauer offers a devastating critique of Stevens’ opinion. Bauer justly says Stevens’ dissent will be “cited, for years to come, as a prime example of carelessness, close in nature to fecklessness, in treating the First Amendment issues raised by campaign finance regulation.” Bauer’s blog, his website, and his book, More Soft Money Hard Law, are essential reading for anyone who care about free speech or the future of American politics.

Thomas Jefferson once wrote, “The natural progress of things is for liberty to yield and government to gain ground.” It’s a pity a long-serving Supreme Court justice thinks government gaining ground in free speech is a good thing and even worse that he projects his own statist sympathies onto the Founders, who were nothing if not defenders of liberty.

Charity Chased Hence by Rancor’s Hand

Both Jonathan Chait’s LA Times op-ed bashing charity and Matthew Yglesias’s post cheering it on demonstrate the confusion of contemporary statist liberalism’s antagonism to civil society. Matt writes:

Donating to charities is a great way to support the arts and pretty much the only way to support religious groups you believe in, but as a method of remedying social problems, it leaves an enormous amount to be desired. Failure to recognize this is a huge problem.

What it leaves to be desired, it seems, is that it does not empower the political class. Chait notes that Warren Buffett’s massive gift to the Gates Foundation comes to 1/10th of 1 percent of the federal budget, and asks:

How much would it cost to influence the political system to move 1/10 of 1% of the budget out of, say, wasteful subsidies and into the sorts of programs the Gates Foundation supports? I’m not sure, but it’s way less than $31 billion.

This is so depressingly wrongheaded it’s hard to know where to start. Let’s start with the obvious thing: math and silly comparisons.

If you have to spend money to spend money, you’re wasting money. Suppose Warren Buffett spent only $20 billion to redirect $31 billion of the federal budget to, say, poverty relief and education programs. Well, then it would be costing $51 billion to secure $31 billion in government spending. Even if government programs were optimally effective, Buffett would basically be burning $20 billion he could have spent directly on poverty relief and education. And if faction A started spending huge amounts of money to “influence the political process,” faction B, with competing priorities, would start spending similarly huge amounts, ratcheting up the number of dollars you would have to spend to influence the direction of each dollar of government spending. And what about the people who receive “wasteful subsidies?” They don’t think the subsidies are wasteful at all, so will they all roll over the moment a billionaire starts flashing cash?

(By the way, here is an article Chait wrote arguing for campaign finance reform in order to stop big money from influencing the political process. So it’s okay as long as the direction of influence is Chait-approved?)

Also, pointing out that Buffett’s gift is a mere 1/10 of 1 percent of the federal budget is simply bizarre—sort of like sniffing at a $100 million yacht because it costs a mere 3 percent of a Nimitz-class aircraft carrier. Would it ever occur to you to argue that the money raised through taxation must be trivial since Warren Buffett alone pays only a small fraction of 1 percent of the entire nation’s taxes? Well, Buffett isn’t the only person who gives money to charity, either. The fact that his gift comes to only a bit more than 10 percent of the $260.3 billion in charitable giving in the US in 2005 makes it no less impressive. Americans gave more money to charity last year than the entire 2005 GDP of Denmark—which is bigger than Greece’s, Ireland’s, Portugal’s, and Argentina’s. Or to put it another way, if American charity was a country, it would have the 27th biggest economy in the world.

Second: effectiveness. One of the leading causes of poverty in America is decades of ineffective government anti-poverty policy. The leading cause of poor education in America is the completely irrational incentives held out to administrators, teachers, and students by union-dominated monopoly public schools. So let’s spend money to lobby the government to do more of that? Thankfully, the Oracle of Omaha knows how to stay away from a bad deal.

Buffett’s donation is about 2/3 of the Department of Education’s budget for one year. Next year’s budget for the schools in Fairfax County, Virginia alone is $2.1 billion, about 7 percent of Buffett’s gift. Is there any reason to believe putting $31 billion or even $100 of taxpayer money on the table for the existing broken system to fight over would improve American schools? Nope. Budgets have already been doubled and tripled to no avail. The government’s problem isn’t usually a lack of money, it’s usually misallocation, due to the lack of feedback from a functioning price system.

The worldview that holds that the same amount of money voluntarily spent on direct charity would have been better spent if only it had been coercively appropriated through a wasteful process of political competition, filtered through a squandering bureaucracy, and then spent ineffeciently (whatever is left of it, that is) makes my brain hurt. Of course, no one actually professes that worldview in those terms, but that’s what the Chait-Yglesias romantic-magical conception of government comes to in practice. “Failure to recognize this is a huge problem,” as some sage once said.

Which brings us to the last thing: fantasy. Chait and Yglesias are in the grip of a beautiful dream in which an elect class of wise persons happen to know exactly how to spend money to make bad things better, and in which there is some way (clap our hands and hope?) the elect can get and stay in control of government spending without (1) wasting huge amounts of money that could actually be spent for humanitarian purposes in the ceaseless fight for the apparatus of state coercion, (2) wasting huge amounts of money paying off the special interest groups that got them elected (i.e., Chait’s “wasteful subsidies”), (3) wasting huge amounts of money in inevitable bureaucratic bloat, (4) wasting huge amounts of money due to the ineffectiveness of government agents who are neither penalized nor rewarded for failing or succeeding. “Success” is just a bigger budget next year, no matter how badly the agency fails.

Chait admits that “Unfortunately, Washington doesn’t always care what works,” but then goes on to imply that this is mainly a problem caused by the present Republican administration’s capitulation to myopically greedy corporations who have come to Washington to seize power. Chait thinks that if only Buffett poured money into a foundation to create big-business lobbyists with Jonathan Chait’s political priorities, then all would turn out well, and Buffett’s money will have been well-spent.

But the problem here is not a lack of far-sighted virtue within corporate boards, or a lack of adequate instruction in the unassailable correctness of Jonathan Chait’s politics, it is simply an inevitable consequence of the incentives created when government puts government power on the table. No doubt government and business aren’t acting as collusively and anti-competitively as they could, and that many businesses might benefit by doing more to lock down their temporary market advantages by creating new costs that upstart competitors will be unable to bear, making sanctimonious noises about the public interest all the while. Remember the tobacco master settlement? Is anyone more concerned with saving us from ecological catastrophe than the civic-minded Archer Daniels Midland Corporation?

Civil society is so profoundly important because voluntary cooperative association is the basis for moral community and because the romantic-magical view of government is false. The Gates Foundation has had incredible success with health initiatives in less developed countries because they are not subject to the truly perverse incentives of the aid bureaucracies. Though I am very skeptical of plans to improve public schools by giving them better computers instead of better incentives, targeted initiatives funded by outside money do allow for a kind of experimentation and feedback that is almost always squelched by the vested interests in control of the public funding process. If public schools are going to get better, it is probably going to be due to the relatively small amount of experimentation made possible by a relatively small amount of private charitable giving.

In general, the difference between civil society and politics is the the difference between cooperation and conflict, between consent and coercion, between correcting feedback and bureaucratic failure. People who wish aloud that wealthy benefactors would throw their money into politics instead of funding the flourishing of voluntary civil society are wishing, whether they mean to or not, for the power of the political class over the productive class—for the reign of conflict over cooperation. Chait says, “don’t get me wrong when I say that instead of lavishing the whole thing on malnourished or otherwise underprivileged children, [Buffett] should be giving some of it to slick political operatives.” Okay. But things don’t look so good for Chait if we get him right.

[Curious about the title quotation?]