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The Great Olympics Reality Index



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Can an Olympic performance tell us something about what is really going on inside a country? Could the London Games have provided us with a perfect chance to see this, free from noise, hype, and the distortions of statistics? Can we even be so bold as to use it to make a few predictions?

Let us look at a few of the clearest trends.

Since 1996, China has more than doubled its gold haul, from 16 to 38. In the past three Olympiads it has been neck and neck with the United States, outperforming it in Beijing in 2008.

America, far from having collapsed, appears if anything to have grown stronger. In 1988 and 1992  it scored 36 and 37 golds. This year, 46.

At the opposite end of the spectrum, the EU seems to be in a deepening depression that began in 1996. France, Benelux, and the PIIGS took 47 golds that year, compared with 30 in 2012.

Germany, which today does well economically, seems to have lost as many medals as has the rest of the EU. Germany’s finest year since its reunification in 1990 was 1992, when it won 33 golds and 84 total medals. This year its numbers are eleven and 44. Since 1992 it has shown only straight declines.

One of the conclusions may be that Europe should perhaps reconsider its euro strategy and ask itself whether its social model is really working. Some skepticism may also be warranted about the durability of Germany’s current economic upturn.

Other trends are even more surprising.

Eastern Europe, Cuba, and Russia all appear to be in as much consternation as is Western Europe.

Exclude Hungary, which has done well. Consider Ukraine, Belarus, the Czech Republic, Slovakia, Poland, Romania, and Bulgaria. Together they won 31 golds and 106 total medals in Sydney in 2000, the second Olympiad since the fall of the USSR. In 2012 , their numbers were only 17 and 68.

Romania, Bulgaria, and Poland are among the biggest decliners since their independence. Even Olympic stalwarts Ukraine and Belarus are showing signs of stress. They won 13 percent and 19 percent fewer medals this year compared with their long-term averages.

Russia has also been affected. It recovered late in London but, taking fourth place, with 24 golds and 82 total medals, is still well below its high, at Sydney in 2000, of 32 and 89.

Cuba’s story is even more dramatic. Winning 14 golds in Barcelona in 1992 and 11 in 2000, they took only five in London.

The conclusion may be that, in spite of what we are told about Russia’s emerging economy, the collapse of the USSR seems to have left many of its former constituents, including Russia itself, in a state of disarray.

As Eastern Europe has been wounded by political upheaval, and Western Europe by its foray into the euro, a different trend can also be observed. Several prosperous countries seem to have been impaired by their own economic success.

Australia is a major beneficiary of the commodities boom that began in 1995. It is one of the world’s most expensive countries, with a strong currency, a big government, and an inseparable ideological commitment to economic redistribution. It has also just turned in its worst Olympic performance in 24 years. It won seven golds in London, compared with 17 in Athens in 2004.

Canada’s economy is similar to Australia’s but a little more dynamic. It too is bringing home its lowest gold and silver haul since Sydney in 2000.

Indonesia, another hotly touted commodities producer, has just had its worst Olympics since 1988.

And Brazil, at the apex of the commodities bonanza, has had a relatively mediocre Olympiad, winning three golds compared with the five it took at Athens. Brazil’s government, by the way, spends $1.6 billion a year specifically on improving people’s access to sport.

Arguably Brazil should be judged only on soccer, its national sport, but here too the signs are not encouraging. The Brazilian soccer team lost 2 to 1 to Mexico last weekend, and before that FIFA had downgraded it to 13th  place worldwide. In the past twelve months it has lost to Germany, Argentina, and even Paraguay.

Against these dark portents, there is one positive fact that is even more surprising.

The standout stars of the 2012 Olympic Games, who with smiles and good humor have just delivered a performance that the whole world has taken note of, are a socioeconomic group that many in financial services had written off as almost dead: the working and middle classes of the United Kingdom.

It is almost as if all the academic analysis and the capital flows had an exactly contradictory effect. Many fund managers in London and abroad have reallocated their portfolios to the BRICS and to commodities exploitation. They invested in offshore petroleum in Brazil, in tar sands in Canada, in luxury retail in Moscow and St. Petersburg, and in iron ore in Australia.

The tacit assumption behind this viewpoint was that the weakening and impoverishment of the British middle and working classes through inflation, foreign competition, and a lack of productive jobs would continue. Incredibly, though, those conditions, which have endured, have had an improving effect on the competitive spirit of the British people.

Since 1996, Britain’s gold total has been rising — which was when the commodities boom began. Britain in 1996 won only one gold. In 2000, it won 11. In 2008, 19. And this year it has 29.

Could it be that the deluge of funding flowing into commodities producers and “nascent democracies” has in fact had a deleterious effect on the underlying reality in the recipient nations? Is it possible that the lack of inward investment and of enthusiasm among financial professionals for their own countries has helped create the right — difficult — conditions for people at home to get mentally and physically fitter?

These Olympic Games have provided an important new data point that few sporting or economic commentators quite expected. Is it a flash in the pan? Or the start of something more important? As all good sports commentators say: Stay tuned!

— Joseph Cherrez is an analyst of global economic and political issues.


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