*Physicist's delight: Higgs Boson finally discovered at CERN particle accelerator. Source: The Journal.ie
So what about Europe? Well...things weren't looking peachy at the beginning of the year as the pain from the sovereign debt crisis are still lingering in many of its largest economies. Switching to present day, the UK are doing as badly as ever, Spain's 4th largest investment bank, Bankia, has recently requested a 19 billion euro bail out from the state, Italy are leaning over its book account like their famous tower of Pisa and Greece....I'm not even going near there. Who is doing well? Germany; the only pillar of hope in Europe's miserable single currency system. But that is not saying much, the European Commission Spring forecasts that the Eurozone economy will contract by an average of 0.3% GDP, and the European Union will experience zero growth in 2012.
Even though Europe is doing very badly from an economists' point-of-view, Europe can be happy about one thing, it held the Euro 2012 and London held the summer Olympics. The Euro 2012, jointly hosted by Sweden and Ukraine, was a very big event on the footballing calendar, especially to football fans around the world. What makes this year's tournament especially interesting is that there were so many things to expect: will Spain retain their crown or will Netherlands take revenge from their bitter defeat in the 2010 world cup? Can retirement-bound legendary striker, Andriy Shevchenko, inspire Sweden to Euro glory? The results? Spain thrashed Italy 4-0 in the final, and Netherlands finished bottom place in the 'group of death'. Moreover, the 2012 Olympics held in London is another long-anticipated event. China continue to establish its dominance in the sporting world by currently leading USA and South Korea in number of points and medals. Andy Murray emphatically beat Roger Federer 6-1 6-2 6-4 in straight sets to be the first UK person to claim gold since Josiah Ritchie in 1908.
*The best national team ever? Spain retain Euro crown and marked their 3rd consecutive big tournament championship win. Source: On Secret Hunt
As the date drew nearer to these two long-awaited sproting events, this begs a question. Since Europe's economy is doing so badly, can big sporting events such as these save their economies? What we imply is whether the hype of big sporting events can help to stimulate the economy. Certainly, it does not seem likely after hearing that Europe will experience zero growth rate throughout 2012, but forecasts are forecasts, and they might not necessarily be correct. Why? Because economics is not always correct; most of the time predictions are wrong.
First, lets take a look at the possible advantages from big sporting events. Many preparations are needed prior to the event, hence sporting events will increase employment. In the business cycle, the decrease in unemployment is one of the characteristics of economic growth (rise in GDP), which is obviously good to further prevent the GDP from shrinking to the point of no return. Derived from employment, the government would be able to spend less of its funds on unemployment benefits, ultimately creating available funds and overturn the budget deficit. The other advantage is that large sporting events will attract tourists to the country. With many big things to expect in the Olympics, such as Usain Bolt trying to win the 200m event tonight, many people would attend to experience the live atmosphere, even though its gonna end in just over 19 seconds. Tourism involves the export of services from that economy to the other economy using the service. Exports are an injection into the economy, so the income in the economy increases and may lead to economic growth. It is also a component of aggregate demand, so if the country's exports increase, ceteris parabis (all other things being equal), then aggregate demand would increase.
In theory, big sporting events would be very helpful, but there are many issues with it alone to bring the economy up from its slump. Firstly, the creation of the internet. Whenever you want to find information on anything such as product reviews and what foods are low in calories, a quick search on Google will take you to your answer in no time at all. Our access to information is so much greater nowadays that we can know what happened world wide just by sitting on your desk chair, in front of the computer. If we apply this to results in the Olympics, what need is there for foreigners to travel there by plane, purchase overly-expensive tickets only to watch it live in in such a noisy environment when we could watch it at home? Of course, many people express that watching live is a totally different experience compared to watching from the TV screen, but we can now watch live streams of just about anything! So will it attract many tourists? Probably ones near the host country, but not significantly high from countries far away. Which brings me on to the next problem, the host country will have to build or improve sport infrastructures, which are funded by the state. For the amount of money being invested on organizing the event, the country will really need to expect that the event is going to be a success. Also, only the host country is receiving income from the event, other eurozone countries are not going to benefit even though it is within Europe. Lastly, and most importantly, these events are only very short term. The Fifa World Cup, Euro 2012 and Olympics are held once every 4 years, and the host will change every time. The people working in the Olympics or Euro 2012 would only be employed for only the duration of the event; afterwards they will once again be unemployed unless they find another job. Effects? The state will have to once again resume paying high unemployment benefits, possibly leading to budget deficit and a halt in growth. Likewise, although the event has the capability to generate income into the economy, it being short term creates what's called a growth illusion. Short term growth is not what will be needed to solve the euro crisis, long term growth is what we need. To do this, the respective euro countries will have to find a large and continuous source of revenue through interventionist and market-based policies, and not from the European Central Bank (ECB).
If what we are looking for are long term growth, why not try looking at football leagues rather than short term events? Europe arguably has one of the most impressive set of football leagues in the game; top-flight leagues such as the Premier League in UK, La Liga in Spain, Serie A in Italy, Ligue 1 in France, Bundesliga in Germany and the Primeira Liga in Portugal, attract a host of talents from around the world. Football is not only the world's most popular sport, but its also one off the most expensive too. An average football ticket for a match at the Emirates stadium (Arsenal F.C.) will cost you 100 pounds. Excective seats at the Santiago Bernabéu (Real Madrid C.F.) overlooking the El Classico match, will cost you 1 million euros! Its not just to football tickets, player wages and value have also sky-rocketed in recent years; the world record transfer fee of 80 million pounds for C.Ronaldo from Man United to Real Madrid marks the beginning of the new era of football, when the financial power of big clubs really started to flex their muscles. Who do you suppose caused this? When oil producers started to take ownership of football clubs. They start to pay players unreasonably high wages and clubs transfer fees for their player. For example, Paris-Saint-German spent over 150 million pounds on 4 players this summer. In 2011, Manchester City has reportedly spent 1.2 billion pounds since their takeover of the club, with 360 million pounds spent on players alone! These eye-watering figures are due to the amount of money oil producers make. The world's reliance on fossil fuels have reached a new high this year, and its only going to continue to increase as our demand keeps rising. Hence, the reason why they are making an absolute killing. If we use football in terms of representing wealth, Europe would be doing very well.
So now many of you will be asking, "what has this got to do with economics?" Everything basically. You see, there are certain conditions the state must consider before implementing policies. In the case of generating funds through football, Europe have the best clubs in the world; a perfect starting point. Next, we need to find the money...its also available in the banks of rich club owners. Furthermore, we need to have a football association that deal with matters such these...Uefa, Fifa, FFF etc. Even the Uefa President, Michel Platini, has voiced his concern of wealthy clubs ruining the game by financial incentives, and will implemented the financial fair play rule in 2013. We have met all 3 criterion. So now, what the government can do is to use selective taxation on rich football players and clubs. The advantages associated with this are quite promising. Firstly, the amount of money that can be generated from football leagues are simply astonishing, hopefully raising significant funds for the respective economies to pay debtors, and lift the euro out of recession in the long run. Secondly, the financial incentives associated to football will diminish over time, leading to fall in the player market and wage levels, hence making income distribution more even. Francis Hollande, France's prime minister, has already taken action, by slapping a 75% income tax on Zlatan Ibrahimovic's 13 million euro annual salary. The next step will be to target to wealthy owners for tax revenue. Thirdly, it will also lead to the dilution of monopoly power in the rich clubs, leading to more competitive football not dominated by big clubs winning the league every year. Lastly, it is a long term solution to raise funds, which is perfect in Europe's current economic situation.
There are, however, 2 disadvantages with this plan. It will lead to player unrest; protests to the football association would be inevitable. And, the possible decrease in the quality of football. "People respond to incentives", more specifically, financial incentives. If there is a lack of income in becoming a footballer, less people would want a career as a footballer and will look for other jobs, causing a decrease in the quality of football players, and ultimately the game itself, which may have detrimental effects the European economies in the very long run. Hopefully, Europe would have recovered by the time this happens and have tighter control of its economies to prevent another recession.
As we have stated in the previous post, in theory this would happen, but it is uncertain due to the problem of the human factor in social science. Hopefully, things will turn out like it would without the disadvantages. So our conclusion is that big sporting events are too short term to significantly impact European economies, but maybe the key lies in long term sports to prevent to collapse of the single currency.
Even though Europe is doing very badly from an economists' point-of-view, Europe can be happy about one thing, it held the Euro 2012 and London held the summer Olympics. The Euro 2012, jointly hosted by Sweden and Ukraine, was a very big event on the footballing calendar, especially to football fans around the world. What makes this year's tournament especially interesting is that there were so many things to expect: will Spain retain their crown or will Netherlands take revenge from their bitter defeat in the 2010 world cup? Can retirement-bound legendary striker, Andriy Shevchenko, inspire Sweden to Euro glory? The results? Spain thrashed Italy 4-0 in the final, and Netherlands finished bottom place in the 'group of death'. Moreover, the 2012 Olympics held in London is another long-anticipated event. China continue to establish its dominance in the sporting world by currently leading USA and South Korea in number of points and medals. Andy Murray emphatically beat Roger Federer 6-1 6-2 6-4 in straight sets to be the first UK person to claim gold since Josiah Ritchie in 1908.
*The best national team ever? Spain retain Euro crown and marked their 3rd consecutive big tournament championship win. Source: On Secret Hunt
As the date drew nearer to these two long-awaited sproting events, this begs a question. Since Europe's economy is doing so badly, can big sporting events such as these save their economies? What we imply is whether the hype of big sporting events can help to stimulate the economy. Certainly, it does not seem likely after hearing that Europe will experience zero growth rate throughout 2012, but forecasts are forecasts, and they might not necessarily be correct. Why? Because economics is not always correct; most of the time predictions are wrong.
First, lets take a look at the possible advantages from big sporting events. Many preparations are needed prior to the event, hence sporting events will increase employment. In the business cycle, the decrease in unemployment is one of the characteristics of economic growth (rise in GDP), which is obviously good to further prevent the GDP from shrinking to the point of no return. Derived from employment, the government would be able to spend less of its funds on unemployment benefits, ultimately creating available funds and overturn the budget deficit. The other advantage is that large sporting events will attract tourists to the country. With many big things to expect in the Olympics, such as Usain Bolt trying to win the 200m event tonight, many people would attend to experience the live atmosphere, even though its gonna end in just over 19 seconds. Tourism involves the export of services from that economy to the other economy using the service. Exports are an injection into the economy, so the income in the economy increases and may lead to economic growth. It is also a component of aggregate demand, so if the country's exports increase, ceteris parabis (all other things being equal), then aggregate demand would increase.
In theory, big sporting events would be very helpful, but there are many issues with it alone to bring the economy up from its slump. Firstly, the creation of the internet. Whenever you want to find information on anything such as product reviews and what foods are low in calories, a quick search on Google will take you to your answer in no time at all. Our access to information is so much greater nowadays that we can know what happened world wide just by sitting on your desk chair, in front of the computer. If we apply this to results in the Olympics, what need is there for foreigners to travel there by plane, purchase overly-expensive tickets only to watch it live in in such a noisy environment when we could watch it at home? Of course, many people express that watching live is a totally different experience compared to watching from the TV screen, but we can now watch live streams of just about anything! So will it attract many tourists? Probably ones near the host country, but not significantly high from countries far away. Which brings me on to the next problem, the host country will have to build or improve sport infrastructures, which are funded by the state. For the amount of money being invested on organizing the event, the country will really need to expect that the event is going to be a success. Also, only the host country is receiving income from the event, other eurozone countries are not going to benefit even though it is within Europe. Lastly, and most importantly, these events are only very short term. The Fifa World Cup, Euro 2012 and Olympics are held once every 4 years, and the host will change every time. The people working in the Olympics or Euro 2012 would only be employed for only the duration of the event; afterwards they will once again be unemployed unless they find another job. Effects? The state will have to once again resume paying high unemployment benefits, possibly leading to budget deficit and a halt in growth. Likewise, although the event has the capability to generate income into the economy, it being short term creates what's called a growth illusion. Short term growth is not what will be needed to solve the euro crisis, long term growth is what we need. To do this, the respective euro countries will have to find a large and continuous source of revenue through interventionist and market-based policies, and not from the European Central Bank (ECB).
If what we are looking for are long term growth, why not try looking at football leagues rather than short term events? Europe arguably has one of the most impressive set of football leagues in the game; top-flight leagues such as the Premier League in UK, La Liga in Spain, Serie A in Italy, Ligue 1 in France, Bundesliga in Germany and the Primeira Liga in Portugal, attract a host of talents from around the world. Football is not only the world's most popular sport, but its also one off the most expensive too. An average football ticket for a match at the Emirates stadium (Arsenal F.C.) will cost you 100 pounds. Excective seats at the Santiago Bernabéu (Real Madrid C.F.) overlooking the El Classico match, will cost you 1 million euros! Its not just to football tickets, player wages and value have also sky-rocketed in recent years; the world record transfer fee of 80 million pounds for C.Ronaldo from Man United to Real Madrid marks the beginning of the new era of football, when the financial power of big clubs really started to flex their muscles. Who do you suppose caused this? When oil producers started to take ownership of football clubs. They start to pay players unreasonably high wages and clubs transfer fees for their player. For example, Paris-Saint-German spent over 150 million pounds on 4 players this summer. In 2011, Manchester City has reportedly spent 1.2 billion pounds since their takeover of the club, with 360 million pounds spent on players alone! These eye-watering figures are due to the amount of money oil producers make. The world's reliance on fossil fuels have reached a new high this year, and its only going to continue to increase as our demand keeps rising. Hence, the reason why they are making an absolute killing. If we use football in terms of representing wealth, Europe would be doing very well.
So now many of you will be asking, "what has this got to do with economics?" Everything basically. You see, there are certain conditions the state must consider before implementing policies. In the case of generating funds through football, Europe have the best clubs in the world; a perfect starting point. Next, we need to find the money...its also available in the banks of rich club owners. Furthermore, we need to have a football association that deal with matters such these...Uefa, Fifa, FFF etc. Even the Uefa President, Michel Platini, has voiced his concern of wealthy clubs ruining the game by financial incentives, and will implemented the financial fair play rule in 2013. We have met all 3 criterion. So now, what the government can do is to use selective taxation on rich football players and clubs. The advantages associated with this are quite promising. Firstly, the amount of money that can be generated from football leagues are simply astonishing, hopefully raising significant funds for the respective economies to pay debtors, and lift the euro out of recession in the long run. Secondly, the financial incentives associated to football will diminish over time, leading to fall in the player market and wage levels, hence making income distribution more even. Francis Hollande, France's prime minister, has already taken action, by slapping a 75% income tax on Zlatan Ibrahimovic's 13 million euro annual salary. The next step will be to target to wealthy owners for tax revenue. Thirdly, it will also lead to the dilution of monopoly power in the rich clubs, leading to more competitive football not dominated by big clubs winning the league every year. Lastly, it is a long term solution to raise funds, which is perfect in Europe's current economic situation.
There are, however, 2 disadvantages with this plan. It will lead to player unrest; protests to the football association would be inevitable. And, the possible decrease in the quality of football. "People respond to incentives", more specifically, financial incentives. If there is a lack of income in becoming a footballer, less people would want a career as a footballer and will look for other jobs, causing a decrease in the quality of football players, and ultimately the game itself, which may have detrimental effects the European economies in the very long run. Hopefully, Europe would have recovered by the time this happens and have tighter control of its economies to prevent another recession.
As we have stated in the previous post, in theory this would happen, but it is uncertain due to the problem of the human factor in social science. Hopefully, things will turn out like it would without the disadvantages. So our conclusion is that big sporting events are too short term to significantly impact European economies, but maybe the key lies in long term sports to prevent to collapse of the single currency.
Extra Material: The Curse of Aaron Ramsey
Aaron Ramsey is a player in Arsenal Football club that plays in midfield position. Once tipped as one of the leading talents alongside Jack Wilshere that will lift the club out of its trophy-less half decade, his fate took a rather interesting turn for the worse after suffered a broken leg after a nasty challenge by Stoke City defender, Ryan Shawcross after a heated encounter at the Britannia stadium.
He turned from one of Arsenal's brightest prospects to being booed by his own fans. Things aren't looking particularly well for Mr Ramsey; there are rumors going on that when he scores goals, a person mysteriously dies. Not convinced? Take a look:
Aaron Ramsey is a player in Arsenal Football club that plays in midfield position. Once tipped as one of the leading talents alongside Jack Wilshere that will lift the club out of its trophy-less half decade, his fate took a rather interesting turn for the worse after suffered a broken leg after a nasty challenge by Stoke City defender, Ryan Shawcross after a heated encounter at the Britannia stadium.
He turned from one of Arsenal's brightest prospects to being booed by his own fans. Things aren't looking particularly well for Mr Ramsey; there are rumors going on that when he scores goals, a person mysteriously dies. Not convinced? Take a look:
- May 1st 2011: Ramsey scores winner vs Man United. Next day, Osama Bin Laden dies
- October 2nd 2011: Ramsey scores in London Derby vs Tottenham. Three day later, Steve Jobs dies
- October 19th 2011: Ramsey scores injury-time goal in CL group stages vs Olympique de Marseille. Next day, Muanmmar Gaddafi dies
- February 11th 2012: Ramsey scores in League game vs Sunderland. That night, Whitney Houston dies
- August 4th 2012: Ramsay scores penalty in quarter-final clash vs South Korea. Next day, Columbus Crew footballer Kirk Urso dies of unknown reason in first autopsy scan.
Well, whatever the reason, if we let Mr Ramsey score, another famous person has a high chance of not seeing another day.
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