International soccer and fiscal policy

Daniel Rothschild
June 17th, 2010
Economics, Politics

The list of countries that qualify for the World Cup is always a motley one. There’s Brazil playing against just-got-in and didn’t-register-properly North Korea, which Radley Balko suggested fielded a side with eight Kim Jong-Ils. Over in Group  E there’s defending world champions Italy, we’d-rather-be-playing-rugby New Zealand, Slovakia (motto: “No, sorry, you’re looking for Slovenia; they’re in Group C; no bother, it’s a common mistake”), and Paraguay (notice that every country ending with “guay” qualified for the World Cup).

Qualifying for the World Cup is a big deal and source of national pride (except in the United States). Could this pride be leveraged for macroeconomic ends? I have a modest proposal.

The Stability and Growth Pact limits the ability of Eurozone countries to run excessive deficits and incur excessive debts. Supposedly. As we’re seeing in Greece, it doesn’t seem to be doing a very good job at this. And Greece is far from the only country to openly flout the Pact.

Would World Cup disqualification work any better? That is, what if FIFA or the regional governing bodies (like UEFA) only certified for World Cup participation countries that adhered to some basic rules of fiscal discipline, keeping their deficits in check and debt below some reasonable percentage of GDP?

It wouldn’t be unprecedented. After all, in club soccer, teams are regularly disciplined for financial irregularities with point deductions and even outright relegation. This seems to be a more-or-less effective way of keeping team management on the up-and-up. The same might well hold for nation-states.

Obviously this isn’t foolproof, and surely there will be countries that game the system. But it would at least allow the exclusion of countries like Greece who threaten the financial stability of an entire continent. To mix my sport metaphors, Greece deserves some time in the penalty box. That need not be executed just by diplomatic means.

Since the endogenous costs of reckless fiscal policy don’t seem to effectively dissuade countries from marching into the abyss, perhaps the damage to national pride accompanying disqualification from international soccer’s biggest quadrennial tournament would prove more effective.

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