Monthly Archives: February 2011
As economics continues on its inexorable trajectory en route to becoming the new football, this seems an appropriate juncture at which to introduce a new measurement that it is hoped will take its place alongside other indices of repute, such as Gross Domestic Product or the Economist’s Big Mac Index: the European Transfer Ratio (‘ETR’). The theoretical underpinnings of this ratio will be explained in a future blog post, but suffice to say that the amount of money flying between football clubs within UEFA at a time when most sane Europeans are concentrating on the more mundane goal of keeping warm says much about the state of the economy in this continent, as does the manner in which the cash is splashed.
Arguably the most emblematic move of the 2011 January window – a transfer period which is lucidly recollected in the March 2011 issue of World Soccer, pictured above – is that of Senijad Ibricic from Hajduk Split of Croatia to Lokomotiv Moscow; indeed, in years to come, this ETR may become informally known as the Ibricic Index. In years gone by, Ibricic, a chunky midfield genius who is also a key squad player for the Bosnia and Herzegovina national team, would in all likelihood have been snapped up by a club in Western Europe. But after years of plying his trade in the unglamorous HNL, the only really serious suitors were from Turkey and Russia – and after Hajduk turned down an offer of €6.5m from Istanbul aristocrats Galatasaray in the summer of 2010, Lokomotiv stepped in this winter with an offer of €5m + 20% of Ibricic’s next transfer fee; with the poor economic outlook in Europe continuing, the Adriatic port city club were in no position to refuse these overtures.
Several conclusions can be reached from the Ibricic case:
1. The primacy of state or oligarchic support. Lokomotiv Moscow, like many clubs in Russia and Ukraine, get huge backing from a state or oligarchic entity, in this case Rossiyskie zheleznye dorogi or Russian Railways (‘RZD’). Chelsea, who purchased Fernando Torres from Liverpool for £50m, are famously funded by oil magnate Roman Abramovich, while a company owned by a member of the royal family of Abu Dhabi accounted for Manchester City’s £27m acquisition from Wolfsburg and a compatriot of Ibricic, Edin Dzeko;
2. The maxing out of Spanish credit. Real Madrid and Barcelona – as was reported in this blog on 21st January 2011 – are drowning in debt and made just one transaction for which money changed hands between them, namely Barcelona’s signature of sumptuous Dutch midfielder Ibrahim Afellay from PSV Eindhoven for £2.5m. Conversely, Malaga – now in Qatari ownership – splurged over £7m on Diego Buonanotte, Julio Baptista and Ignacio Camacho from River Plate, Roma and Atletico Madrid respectively;
3. A shift in power to the east. Clubs in large countries located in Europe’s East – such as Russia, Ukraine and Turkey – are now serious players in Europe’s transfer market. Two Ukrainian clubs – Dnipro Dnipropetrovsk and Metalist Kharkiv – lavished a total of £27m on just four players, while Turkish outfit Besiktas signed no less than three current or former Portuguese internationals: Manuel Fernandes (Valencia, loan), Simao Sabrosa (Atletico Madrid) and Hugo Almeida (Werder Bremen).
Some say that stress only became a ‘decent’ disease when it began to afflict the middle-class; existential angst over the meaning of Proust spoke to clinicians in exactly the way in which the perils of keeping canaries company down a coal mine failed to.
What, then, are we to make of this poster, snapped earlier this week in the bowels of Fulham Broadway tube station? Marco Pierre White, the triple-starred chef-turned-restauranteur, is now offering 50% off the bill at his eponymous Anglo-French eaterie located in London’s trendy SW6 postcode. Does this represent the bargain of this young century thus far? And when a collaborative venture between one of the great names of the contemporary culinary universe and the fourth richest man in Russia is discounting with remarkable sensitivity, could anyone accuse this recession of being ‘indecent’?
If Karl Marx was right – and so is Martin Luther – what lessons can we learn from this, and what will the next phase of capitalism resemble?—
Asad Yawar (@Mediolana) February 25, 2011
Is India a capitalist country? This may appear to be a bizarre question to be asking in 2011, two decades after the beginning of the economic liberalisation process that has seen the country’s international standing transformed. When even some of the worst slums in India – such as Dharavi, a teeming mass of humanity where it is not unknown for a four-figure number of residents to have to share one toilet between them – are turning into export powerhouses with turnovers in the hundreds of millions of dollars, probing India’s capitalist credentials may appear to be the ultimate exercise in futility.
Yet a recent article in London’s Financial Times prompts a sober reconsideration: a profile of Vijay Mallya, the scion of pioneering industrialist Vittal Mallya, who has built up the family business – the United Breweries Group (‘UBG’) – into a global liquor industry behemoth. Under Mallya Jr.’s stewardship, UBG paid $857m for the marquee Scottish spirits label Whyte & Mackay in 2007, doing much to secure the group’s future supply chains; the Chairman is every inch the flamboyant and fabulously wealthy businessman, famous for his lavish parties, diamond ear studs and private aeroplane with his initials – VJM – painted in gold lettering on the engine and wingtips.
And herein lies the problem: economically, India is perhaps now more than ever a country of dualities. Those with more wealth than anyone sane can possibly quantify sit atop a pyramid where the vast bulk of the population – while not living at the level of those in Dharavi – do not possess anything like middle-class purchasing power. A 2009 report entitled India 2039: An Affluent Society in One Generation published by the Asian Development Bank illustrates how the South Asian superpower-in-waiting is evolving in a manner that suggests oligarchy:
1. About 10 families in India hold more than 80% of the shares in the largest Indian corporations, and these families wield massively disproportionate political influence;
2. Most of India’s lucrative government contracts are divided up between a handful of large corporations;
3. The bulk of India’s natural resources are also controlled by a small number of giant companies, which also vaunt ‘privileged access to land’.
Moreover, the report warns: ‘the continuation of a combination of a weak and ineffective state and more powerful and creative big business houses will inevitably lead to large-scale misuse of market power and invite a massive backlash against a market-based system…[the] concentration of wealth and influence could be a hidden time bomb under India’s social fabric’.
Therefore, while it is not necessarily incorrect to label India a capitalist country, Indian capitalism evinces a pronounced oligarchic flavour which, if unchecked, may end up throttling the undeniable dynamism that permeates the nation – Vijay Mallya included.
At the end of 2011, could the Union for the Mediterranean be seen as a serious regional forum?—
Asad Yawar (@Mediolana) February 23, 2011
The recent unrest in the Middle East – which has thus far resulted in regime changes in Tunisia and Egypt – has prompted a catalogue of commentary on the role of social media in enabling mass uprisings in the region. Some eminent commentators have tended to minimise the part played by the ilk of Twitter and Facebook in these revolts: writing in the New Yorker, Malcolm Gladwell reminds us that despite the scarcity of landline connections in 1980s East Germany, demonstrations involving hundreds of thousands of people were not rendered an impossibility. Others, such as the increasingly omniscient tech deity Dennis Anderson, have emphasised how new information technologies and Web 2.0 tools are having a profound impact on political change.
While the jury is still out on the precise extent to which social media is facilitating dramatic expressions of popular dissent, there does seem to be an interesting pattern emerging with regard to the shutting down of communications services such as the Internet and mobile telephony by authoritarian states in the midst of serious social disruption: in both Tunisia and Egypt, severe restrictions on and/or total shutdowns of the Web and cellular phone networks marked the final days of the ancien régime. The Tunisian government doubled the number of blocked sites as cyberwarfare between the Tunisian Internet Agency (known by its French acronym, ATI) and dissident hackers ensued, while Egypt turned off the Internet and mobile telephone networks entirely for an extended period.
This appears to be especially significant for the following reasons:
1. The economic cost of such steps is high. A recent article by the Organisation for Economic Cooperation and Development (‘OECD’) estimates that the direct revenue losses from Egypt’s communications blackout were $18m per day, or 3-4% of GDP; the secondary effects, such as the impact on industries such as tourism and information technology are much harder to quantify – and in all likelihood, much deeper;
2. The social consequences, even in developing countries such as Tunisia and Egypt, are immense: nothing less than a grinding to a halt of normality. As of 2009, Egypt had over 55 million mobile telephone subscribers, or 66.7 subscribers per 100 inhabitants. Curbing a population’s freedom to communicate via mobile devices – many of which have Internet browsing facilities – in some senses means curtailing communication, period.
With the economic and social price of shuttering the Internet and mobile telephony clearly completely unsustainable, it is no exaggeration to state that if any government begins to implement measures of this kind, its shelf life is probably rather limited; in time, political scientists may come to recognise this as a new, extraordinary tipping point.