Focusing on the amazing rise of basketball superstar Jeremy Lin from obscurity in a Harvard college team to featuring on the cover of Sports Illustrated two weeks in a row, Rogoff writes in "Jeremy Lin and the Political Economy of Superstars" that he finds it strange that the general public is happy for those involved in basketball and other sports to earn huge sums but not so pleased when corporate folk take home shedloads.
He asks why it is fans tolerate these huge sums – £100,000 a week is not uncommon for Premier League footballers while top golfers or basketball players can earn tens of millions of dollars a year – while they decry top corporate players similar earnings?
Sports stars are not role models
He argues that it can't be because sports stars are role models – he lists a number of scandals – and that many sports venues in the United States receive some public subsidy.
But the comments on his views are almost entirely negative. And it is not hard to see why.
His comparison of sports and corporate stars ignores key points.
- The sports player is visible to the whole world. If Lin – or in the soccer world Wayne Rooney or Carlos Tevez – have a great game or play a turkey, then hundreds of millions will see it or read about it. No matter how much Chelsea paid sacked manager Andre Villas Boas, fans could even work out how many points his team earned for each million of his cost. By contrast, the corporate star's work is hidden from view, often deliberately or camouflaged by impenetrable language.
- There is only a handful of irreplaceable stars in sport at any time and their period at the top is usually limited. There are absolute standards – running 100 metres in under ten seconds or a round of golf in under 70 strokes, for example. There are no external absolutes for company players.
- When sports stars cheat, it is usually visible, either to spectators, the drug testers or – in the case of the Pakistani cricket spot betting corruption case, to the police and the courts. The cheating corporates that have been caught such as Enron and so-called "rogue traders" may only be the tip of the iceberg. You can hide corporate malfeasance behind a regiment of public relations, accountants and lawyers for years, perhaps for ever (the ones we never hear about).
- Non-performing sports stars head back to oblivion with speed. Non-performing corporates can hold on much longer – and collect parachute payments if or when they are thrown out.
- Sports players negotiate payments with team or tournament owners. Corporate stars often negotiate either with themselves or with their peer group – remuneration committees often consist of non-executive directors who have every interest in pushing up pay for those at the top and little incentive in holding it back.
- The public is not called upon to bail out failing footballers – unlike the billions taxpayers have had to find to keep failed banks in business.
- Rogoff says if it is logical that someone who can run the fastest should be remunerated better than the next fastest, then the same should apply to traders who can make decisions faster than the next person. This sidesteps the question of social utility. The super athlete entertains, the super trader merely pushes money around in a zero sum game of – to the average person at least – amazing pointlessness.
- Footballers or basketball players don't lobby governments for special deals or help. Business leaders do.
What motivates the Rogoff?
Now given Rogoff's status as a Harvard professor and former chief economist at the IMF, investors who regard his words as sacrosanct may ask why he is making an argument with so many obvious holes in it even if his sole purpose was to stick up for the leaders of corporate America. It is child's play to demolish his line of reasoning.
There are two possibilities:
Rogoff is not very bright and does not deserve the academic and other accolades he has received. If this is typical of what he writes and advises, then it is very badly argued and not deserving of attention which has any degree of rigour. In other words, if he was a sports player, he would be sitting on the subs' bench (or kicking a ball around the local park).
Alternatively, Rogoff is really bright, deserves his professorship at one of the world's top universities. He has only published this argument in order to give his fans – those who read his blogs – the chance to demolish it. His weakness is deliberate, to underline the power of the big corporations and their lobbyists who often do complain that the supposed special skills of their clients are unrecognised and unloved.
One of those options is certainly more flattering – and most hope, given his job title, it is that one which is his real intention.
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