World Cup Qualifying

Today, England beat Kazakhstan by 4 goals to nil in central Asia, in an attempt to qualify for next summer's world cup in South Africa. On Wednesday they will beat Andorra by a similar margin, unless a flying pig stops the match, or something similarly implausible happens.

Why do I mention this, here on an Economics-based blog? Basically it is because I think the excercise was a waste of money. UEFA (the European football association) has been allocated 13 places, which are awarded to the winners of 9 groups, plus the 4 winners of playoffs between the runners up.

Given that there are 53 clubs in "Europe" (including Kazakhstan, Turkey and Israel, who choose Europe over Asia as their tournament of choice), it seems obvious to me that there should be some 2-stage process to whittle down the candidates and reduce the required number of games.

If the 24 weakest sides (decided by the UEFA coefficient, which is based on performances over the past few years) were to play a tournament during the same summer as the main European Championships and World Cups (that is, every even numbered summer) then the 18 weakest sides could be eliminated, reducing the field to 35 sides.

These could then be allocated into 6 groups of 6 each playing 2 matches, with the top 2 going through, reducing the chance of the "big money" teams failing to qualify (not that it saved England, who finished 3rd behind Croatia and Russia in 2007-8 qualifying for the European Championships of 2008).

The advantages:

1. Fewer matches like England-Andorra or Germany-San Marino, resulting in fewer confidence sapping trouncings for the "minnows".
2. More chances for the minnows to beat each other, allowing them victories in competitive matches, which will teach them much about how to beat the better sides (or at least, the in between teams).
3. A competition that teams don't want to enter, but do want to win. If the prize of getting one of the 6 "bonus" places involves home- and away matches against 2 of Europe's 12 best sides (given UEFA seedings, one of the top 6 and another ranked 7-12 would appear in each group).
4. Fewer journeys to more dangerous places for many of Europe's spoiled élites. Many of the less politically stable members, would be the same teams who struggle to get through this tournament, earning a double bonus.
5. Fewer international matches, reducing the pressure on TV companies to find time in their schedules for ever more football. Already many complain of over-exposure, yet some competitive England matches are only shown on Setanta. This sort of procedure would cut 1-3 matches per year from the schedule, depending on the procedure chosen.

The downsides, as I see them:

1. Fewer matches of the style Andorra-England. The value of this fixture is much greater to the Andorran federation than it is to England, but I still feel that they should have to earn this bonus.
2. A tournament hardly anyone will watch. According to Wikipedia, the 6 teams who would be seeded to survive the tournament would be Latvia, Hungary, Lithuania, Slovenia, Wales and Northern Ireland. Of the other teams, I can only remember Macedonia giving a major country a hard time.

All told, I believe the benefits outweigh the costs, and have the added bonus of reducing the number of meaningless fixtures in far-flung places that fans would be mad to bother with.

To be sure, the number of European sides who qualify for tournaments does vary, and so does the qualifying method. Here is my simple guide to the more recent numbers:

12: 6 groups of 6, 2 from each qualifying. Teams come from 6 pots, with pot 1 being teams 1-6 by ranking, pot 5 being teams 25-30 and pot 6 the 6 "winners" of the minnows tournament.

13: as above, but with the 3rd placed teams competing for the final position (perhaps the 2 or 4 teams that come closest should playoff for the place)

14: 7 groups of 5 teams, 2 from each qualifying. Teams come from 5 pots, the first holding teams 1-7 by ranking, the 4th teams 22-28 and the final point consisting of 7 teams that survive a minnows tournament of all teams ranked below 29.

15 (European championships, minus host): as 12, except that the 6 3rd placed teams should playoff for the spare places.

22 (newly expanded Euro 2016 of 24, minus host and holder or 2 hosts): 11 groups of 5, with 2 qualifying from each. This would not require a preliminary minnows tournament, unless the number of UEFA countries expanded beyond 57 (and even then, perhaps only the very weakest would need to compete).

23 (24 team Euro 2016 minus host): 10 groups of 5, with 2 qualifying from each. 10 clubs to earn appearance in qualifying from all countries ranked outside top 40. Remaining 3 qualification spaces to be determined by best 3rd place sides, perhaps with playoffs to distinguish between them. It should be noted that the holder of the European Championship has never previously been granted automatic qualification, so this is the most likely number of qualifications spaces that will be up for grabs in 3 tournaments time.

Understanding progress

Brad DeLong shares, via his blog, this exposition of economic history. The approach is to investigate average earnings per head across the past 800 or so years, and to find tipping points, where a genuine shift in the pre-existing correlation exists.

In a so-called Malthusian economy, named after Thomas Robert Malthus, the income of most individuals is determined by the land at their disposal, so any technology that enables land to be more productive, leads to more people being supported, and thus lower per capita income.

Page 10 of the pdf shows the historic relationship between population and income (working class real wages) and the break that occured in the mid-17th century. Curiously, the same figure doesn't appear on the graph on the next page, which shows income against time. This latter graph shows a peak during the wars of the roses and Henry VII's reign, which wasn't matched again until the age of Karl Marx, 100 years after the Declaration of US Independence or the publication of the Wealth of Nations.

The other key tale told is about the value of these 'real' numbers on income. Page 24 shows a table, demonstrating the number of man-hours (or more precisely, the multiple of an average earner's wage) required to purchase a variety of items. A single-speed bicycle, for instance, costs under 3% of what it did in 1895, by that metric. A silver spoon, however, costs more.

There then follows a vital desciption of the importance of substitute goods. The cost of live music in a middle class household has fallen from 2400 hours for the piano, plus however long is required to train, to a couple of hours, to buy an iPod with speakers. The key paragraph (in my view) is this one (with emphasis added by me):

Thus perhaps the most important component of the past century’s economic growth is the new commodity component—the goods and services of which people alive in the 1890s could dream but not purchase. Whenever we hear a sentence like “average GDP per worker in 1890 was equal to some $15,000 at 2008 prices,” we cannot help but think that the material standard of living then was about what we could obtain now if we had $15,000 to spend. But it was not. The simple valuing of the past’s production at the present's prices leaves out a very important part of the picture: the material standard of living then was about what we could obtain now if we had $15,000 to spend, but were required to spend it all on commodities that have been around for more than a century: no modern entertainment or communications or transportation technologies; no modern appliances; buildings, roads, bridges, and other infrastructure built using century-old technologies. And an income of $15,000 that must be spent exclusively on late nineteenth-century commodities is, for most of us, worth a lot less than $15,000.

Markets 25-29 May 2009

A less dramatic version of last week's news, with small increases in everything (except oil, which continued its rise). Here are the figures, comparing Friday's close with the close a week earlier. I also include the last weekend when each indicator was last higher (this will differ from the data quoted on news channels, as they will use minute-by-minute data for comparison, not weekly).

FTSE: 4417.94 (up 42.65 or 1.21%) - was higher on 10/05/2009 (3 weeks)
DOW: 8500.33 (up 223.01 or 2.69%) - was higher on 10/05/2009 (3 weeks)

£: $1.6188 (up 2.68¢ or 1.68%) - was higher on 02/11/2008 (30 weeks)
£: €1.1436 (up 0.67¢ or 0.59%) - was higher on 08/02/2009 (16 weeks)

Oil: $65.74 (up $5.11 or 8.43%) - was higher on 02/11/2008 (30 weeks)
Oil: £40.61 (up £2.53 or 6.63%) - data not available before 7/12/2008 (25 weeks)
Oil: €46.44 (up €3.14 or 7.26%) - data not available before 7/12/2008 (25 weeks)

Gold: $975.5 (up $15.75 or 1.64%) - was higher on 22/02/2009 (14 weeks)
Gold: £602.61 (down 25p or 0.04%) - was higher last week, lower 3 weeks ago
Gold: €689.14 (up €3.75 or 0.55%) - was higher on 29/03/2009 (9 weeks)

That both the £/$ and Oil/$ exchange rates are at 30-week highs is no coincidence. Next week, I will compare prices with 13 weeks earlier, since that marks 3 months since the "rally" began in the markets.

Christian Lacroix goes bankrupt

The famous fashion house files for bankruptcy.

What will Joanna Lumley make of this?