Willy Hutton turns to the subject of football clubs. And manages to fall over his own ignorance of economics while doing so. I’m increasingly coming to the opinion that having him as a bigwig at the London School of Economics is actually damaging to all of us who have a degree from the place. Surely some knowledge would manage to creep in, if only by osmosis, after years of hanging around the place?
Economists call this “rent-seeking” and those who don’t know what the term means need only spend a few seconds surveying the history of the club since Mr Yeung, his son and third director Peter Pannu took it over in 2009. The club is owned by a holding company based in the Cayman Islands, but burdened by vast debts used by Yeung to buy it, now facing financial problems following the problems with Yeung’s business affairs.
Their sole interest is selling off assets, chiefly good footballers in the transfer market, and now the club, to get their money back into the Cayman Islands – while paying large director fees for unnamed services. What they want is economic rent: a surplus created for doing nothing of value.
Britain is a rent-seeker’s paradise, as many more football clubs other than Birmingham City can testify. We have created a looters’ charter, with football as a playpen, within which the super-rich can do what they want.
Hmm. A slightly dodgy definition of rent seeking there but we’ll let it pass. OK, so these people are indeed rent seeking.
So, what is the effect of this rent seeking?
The club is owned by a holding company based in the Cayman Islands, but burdened by vast debts used by Yeung to buy it, now facing financial problems following the problems with Yeung’s business affairs.
It would appear that they are going bust. Why is that then?
Rather, in keeping with the wider culture, football is “open for business”. Market forces are deified as the only value worth celebrating and a business – even a football club – is no more than its owner’s private plaything……Everybody now knows that market forces are both best and irresistible, a perfect justification for putting up ticket prices to whatever the market will bear. ……Flexible and free markets, we have had drummed into us for 30 years, are the reason why Britain is now the world-beating economy that it has become and Germany and the European Union are in the doldrums……What is so depressing about today’s economy is not just that we stand on the verge of a triple dip recession, but that, like our football clubs, so much of our economic base is organised around rent-seeking……Yet the heart of the Eurosceptic, anti-EU case is that, instead, we need to leave to reinforce the market “flexibilities” and “freedoms” that have created such fantastic British success…….
So, let us just run through the facts which Willy offers us.
Rent seeking abounds. In a market, competitive, economy, those rent seeking are going bust.
Now let us see what Willy’s solution is. In order to stop rent seeking we must abandon the market, competitive, economy which is making rent seekers go bust.
Could someone please tell me why this fuckwit gains an audience?