A new social contract: from the organisation that you would least expect. Ambromovich would probably disagree.
Football's leaving home
Money, it’s a gas.
A sign of the very weird times that we live in is that the latest call for a new ‘social contract’ comes from the IMF. Bastion of neo-liberal conservatism, promoter of the ‘Washington Consensus’, guardian of fiscal orthodoxy: whatever the label, nobody has ever thought the IMF to be a source of radical ideas. To be fair, it’s one paper from the IMF, from one author, with uncertain connection to the organisation’s overall stance. But it’s fun to call the IMF ‘radical’.
Many of us think the game is rigged. Even if we don’t, our children certainly do. By ‘game’ I mean the world economy - but a wonderful metaphor has just been supplied via an actual game: the idea of a football European Super League (ESL).
Football has long been an example of the winner-takes-all world that we now live in. We have tended to forgive the oligarchical nature of football club ownership. The links to community. Superbly talented individuals take the lion’s share of the money. The only barrier to entry is talent. Your accent or school doesn’t matter. We all can freely choose whether or not to go to a game or subscribe to a sports channel. For most of us, these kinds of factors mitigate football’s winner-takes-all characteristics.
We were amused, rather than appalled, that obscure billionaire Americans, Russian oligarchs and oil-rich potentates seemed to regard club ownership as a plaything rather than an investment opportunity. Football’s finances have always been obscure but didn’t seem to matter that much when club owners were apparently putting more money in than they were taking out.
Roger Waters (of Pink Floyd fame, presciently wrote, all the way back in 1973:
Money
Get away
You get a good job with good pay and you're okay
Money
It's a gas
Grab that cash with both hands and make a stash
New car, caviar, four star daydream
Think I'll buy me a football team
For as long as ownership was a weird plaything for gazillionaires, we didn’t think of football in the same way we do investment banking, politics, the law or any of those other elite occupations where class, connections, university and a hundred invisible other barriers enabled the elite to pull the ladder up behind them.
Until now
The social contract is a term associated with Jean-Jacques Rousseau. He (and others) thought of the it as one of the important constructs that hold society together. It’s a bargain that means we give up some of our rights and freedoms in exchange for a guarantee that rulers and elites will preserve the remaining rights and entitlements that we hold most dear. The social order is part of that guarantee. While the playing field may not be level, it is not so tilted that anybody with a helping of talent, hard work and luck can’t somehow ‘make it’.
The way in which that contract is now broken is often described in terms of the majority of parents, in many countries, particularly the US, who now expect their children to be worse off than themselves. Even those who get a good education, work hard and all the rest, no longer feel confident that their life chances amount to very much. Particularly in economic terms. Winner takes all.
Sport enabled some to dream that trickle-down economics still works, if only by exception. Even in US elite sports there is a tiny element of socialism: wealth is redistributed via the draft, the system that allocates the best young talent to last season’s worst performing teams. Boris Johnson would recognise it as ‘levelling up’. No chance of that aspect of the US system making it into the new super league, which combines the worst of the US way of doing things with the worst of the European system.
The oligarchs and billionaires clearly now want a decent return on their investment. The idea of football ownership as a rich person’s folly is something they wish to dispel. If it goes ahead, the ESL will take away one of the last remaining vestiges of the old order, one of the few remaining clauses in that frayed contract, the idea that fairness stands a chance of prevailing.
From the IMF today:
Discontent is widespread. Four out of five people in China, Europe, India, and the United States feel that the system isn’t working for them…Most of this disaffection stems from the failure of existing social contracts to deliver on people’s expectations for both security and opportunity. Old arrangements have been broken by varied forces…
Of course, the IMF were not aware of the ESL proposal and are talking in a much broader context. In the grander scheme of things the football thing is just another small indignity in a long list of grievances. It will probably be sorted out, given the visceral reaction from all parts of society. The British government reacted faster to it than they did to the Coronavirus crisis.
The IMF lists the things that people are most concerned about and need sorting if the social contract is to be restored:
The first suggestion is as close to a Universal Basic Income as is possible to imagine without giving it that name. Everyone needs a basic level of economic and health security.
More risk sharing - too much is carried by the individual, not enough by employers and governments. Collectivisation by another name!
It takes a Danish citizen, on average two generations to rise from low to middle income. In the UK and US it takes five. In Brazil, Colombia and South Africa, nine. This is what people mean when they talk about fairness, or lack of it. And then there is racial, gender and other elements of unfairness. But its not just about fairness: the argument is that if things were more fair, the economy benefits: trickle-up economics. Talk about new thinking from the IMF!
Here’s the deal from the IMF:
A new social contract is not about higher taxes, more redistribution, and a bigger welfare state. It is about fundamentally reordering and equalising how opportunity and security are distributed across society. This would increase productivity and more efficiently share risks around childcare, health, work, and old age that cause so much anxiety. We should tax the things we want less of, like carbon and smoking, and subsidise things we want more of, like education and a greener economy. Giving everyone the opportunity to use their talent and contribute reduces the need for redistribution later.
An international system that enables such a transformation is essential. This means ensuring that international financial institutions have the resources to help societies invest and support minimum incomes, education, and health care. It also means better rules around global taxation …Such an international system would shore up the global economy with a social contract that is both efficient and fair and therefore more likely to garner public support.
Calling for international financial institutions to play their part in all of this is but one of several new departures for the IMF. I wonder if J P Morgan, financiers of the ESL, would agree. From J P Morgan’s corporate website:
We will work with fierce resolve to make this a company of which our customers, employees, shareholders and communities can be proud.
Communities in the UK aren’t too proud of J P Morgan right now.
The social contract has fairness at its heart. The IMF is right: a little bit more fairness please.