Self-Defeating Greed

Speaker A: 00:00:00

Hello, and welcome to the Cognitive Engineering Podcast produced by me, Fraser McGruer, for Aleph Insights. In this series of podcasts, we take a look at interesting topics and discuss what we think they tell us about analysis and decision making. I'm here with Chris Wragg and Nick Hare of Aleph Insights, and this week we're discussing the European Super League. Chris, I'm really excited about this whole European Super League. Here we go. Exciting times. Chris, go.

Speaker B: 00:00:30

Yeah, well, I'm afraid it's not happening. What? Yeah, you're a bit behind the news, but yeah. So, it was quite a short-lived drama, really, but the international kleptocracy, which is the elite footballing community, cried foul this week when some of the billionaires decided to exclude some other billionaires from making even more money. But yeah, basically, for those who haven't followed the story, it's the aborted attempt by six English clubs from the Premier League, three Spanish clubs and three Italian clubs to form a breakaway European competition in parallel to the European Champions League and other European competitions.

Speaker A: 00:01:23

And I don't think we've explicitly stated, this is associating football we're talking about, because we've got a lot of-

Speaker B: 00:01:28

Yeah, sorry, when I said football, I meant football as opposed to that thing Americans do.

Speaker C: 00:01:33

Exactly. But also rugby football, which is another type of football. Different, yeah, that's a different football. Yeah. Okay, so- Can I, I've got, sorry, I've got mechanical questions. Okay. Do you, if they were in this league, would they be no longer effectively in, like, the leagues they're in at the moment, like the Premier League and stuff like that?

Speaker B: 00:01:52

Well, they would have been expelled. I think the idea was that they would have maintained Premier League membership and they would have played sort of midweek in this European competition, which would have replaced the Champions League competition. Right, okay. But in effect- But what's the Champions League? The Champions League, so, well, the Champions League is a bit of a misnomer, really, because it used to be the European Cup, right, which all the countries from around Europe, the winner of the top league used to go into the Champions League. Is that the same as the UEFA Cup? No, the UEFA Cup's something different. The UEFA Cup's like a second ranking thing. The UEFA Cup was for the next rank down. And then you had the Cup Winners' Cup as well, which was for winners of the Cup.

Speaker C: 00:02:33

And is the Champions League the same as the Championship?

Speaker B: 00:02:36

No.

Speaker C: 00:02:37

The Championship is what, the second or third?

Speaker B: 00:02:39

It's domestic, yeah. Okay, go on. Anyway, right, so the point, it used to be that the league winners would go into a competition and play in a knockout-style cup, and the winner would be the European Cup winner, right, and that was the most significant league European competition. But then it got replaced by the Champions League, which really isn't the Champions League, because in England, for instance, the top four teams who qualify each year in the Premier League go through to this competition and play in it. And it involves a bit of a league, a sort of round-robin, and then you go to a knockout stage.

Speaker C: 00:03:19

Sorry, why isn't it a Champions League then, because it's the top teams? Because it used to be meritocratic, right?

Speaker B: 00:03:25

It is meritocratic, but they're not the champions. Like, the champions is the title that you give to the people who win your domestic league, right? So three of them aren't champions.

Speaker C: 00:03:35

Right, but they're pretty close. They're nearly champions.

Speaker B: 00:03:36

Yeah, yeah, yeah. Qualification was meritocratic, at least. And the idea of the European Super League was that you would basically have a league structure.

Speaker C: 00:03:48

Sorry, who appointed these guys as the Super League? They appointed themselves.

Speaker A: 00:03:53

It was cooked up by the owners.

Speaker C: 00:03:54

How did they decide which teams they were going to invite to their little party?

Speaker B: 00:03:57

Well, it was a big conspiracy. So basically, the Real Madrid, the chairman of Real Madrid, who are obviously the biggest, most significant club in Europe, arguably, kind of put together this cartel. And they knew that they needed a bunch of English clubs, because half the original sort of proposed members were going to be English teams, because the English teams are generally pretty wealthy clubs. So it had to have included them. So it was cooked up by this bunch of billionaire owners and their CEOs and so on.

Speaker C: 00:04:37

Okay, but why did it die?

Speaker B: 00:04:39

Right. Well, so yeah, so there was basically one of the key problems with it perceived by everybody other than the chairman of these clubs was that you had 12 founder members and they were going to get three other clubs who are probably going to be like Bayern Munich and Paris Saint-Germain and others that they were going to try and convince to join. But the 15 founder members would have been permanent members, so they would never have been at threat of relegation from this league. And then there would have been five people, five clubs from around the rest of Europe who on a season by season basis could have qualified for this thing. So, you know, in terms of most, even though the US model of competitive sport doesn't necessarily include the concept of relegation, it's a key part of football that you can get promoted and you can get relegated from Leeds. So there are rewards and punishments for performance.

Speaker C: 00:05:42

And so why would they want to have like, if they'd have done it and then in 10 years time, all of those teams were like rubbish.

Speaker B: 00:05:52

Yeah.

Speaker C: 00:05:53

Wouldn't they? Isn't that a risk for them? Like, why wouldn't they want to make it such that it was always the best teams?

Speaker B: 00:05:59

Well, because they wanted to, I suppose, to enshrine the fact that they were the best teams because they would have had access to this massive pot of money that it would have generated. And so they would always have been able to buy the best players.

Speaker C: 00:06:17

So that's my next question is, how do you get more money? Why is there more money if you're in a Super League than if you're just in the Premier League?

Speaker A: 00:06:25

You've got these massively, I think part of the motivation was, I mean, aside from, you know, obviously the financial side of it is a lot of these clubs have got huge international followings and I think, well global followings really. And I think the idea was that, wouldn't that be massively, even more attractive if you could see these huge...

Speaker B: 00:06:46

You're always seeing the biggest, biggest games each week. Because at the moment, you know, in the Champions League...

Speaker C: 00:06:51

So it's a kind of cartel, sort of cartel thing.

Speaker B: 00:06:53

Yeah, definitely a cartel. In fact, you know, one of the reasons it got scuppered was sort of, you know, political involvement, which was, I mean, basically, you know, fans of the clubs themselves, whose clubs would have, you know, presumably have benefited most from this, kind of, you know, were involved in, you know, protests outside the grounds and so on. And then the politicians picked up on it. Boris Johnson called it a cartel and, you know, threatened or promised a legislative bomb to undermine it. And the whole thing...

Speaker C: 00:07:25

I don't know how you could politically, how you could ban people from voluntarily banding together. But look, I must say, I was really surprised by this, because I am totally cynical about football supporters. And I think they talk a good game when it comes to trying to, you know, stop commercialisation. And then they all go out and buy 25 different tops, because their team tells them to. And, you know, things like when they changed the, you know, when they rebuilt Highbury Stadium and called it the Emirates Stadium, I thought that's disgusting and vulgar. Sticking the name of your company on a stadium. Surely, you know, Arsenal fans are going to call it the Highbury Stadium still, aren't they? No, everyone calls it the Emirates. When they changed it to the Barclays Premier League, I thought, well, everyone's going to not call it, they're not going to refer to it as the Barclays Premier League, are they? And then, of course, everyone on the BBC is calling it the Barclays Premier League. So I just thought that there's just, you know, they're going to get in this Super League, they're going to moan about it, but then they're all going to go out and buy the Super League paraphernalia and spend loads of money on watching the games. And it didn't, it didn't happen. We need to get to the press. We need to get to the press, right? No, I like this rambling on about football.

Speaker A: 00:08:35

No, we've been going for almost 10 minutes now. And because what we really want to ask, I think, is the following. When does greed become self-defeating?

Speaker C: 00:08:45

Is this a case, Chris, make the case that this is greed being self-defeating?

Speaker B: 00:08:48

Well, I think there's two sort of, there's two questions at least to look at, right, in the way that greed can be self-defeating. So the first is, like, structurally, did this league work as a market, right? Was it a greedy thing that wasn't going to function properly, like a cartel, right? And that presumably, you know, is reasonably straightforwardly answered by sort of economic theory debate and so on. But the second thing, really, which I find much more interesting, is when does the personal greed become self-defeating? So, for example, for all these chairmen now of these clubs and these clubs themselves, they've all been kicked off their sort of decision-making positions within the Premier League, right? So they've lost power. But not only that, there's a review of football going on, which was already going on, led by the MP Tracey Crouch, the fan-led review of football. And this makes it much more likely that they're going to impose things like the 50 plus 1 rule, which is used in the German Bundesliga, which enforces basically a majority stakeholding for fan-led bodies, for the club itself, as opposed to individual owners. So what these people have done effectively is, in their sort of grasp for something, they've ended up with the—not the reward, but they've ended up with the downside, which they obviously didn't see. So I think, for me, the biggest bit of evidence for the greed being self-defeating is the fallout afterwards, that these people are probably in much riskier positions and are going to lose assets as a result. I mean, it's not as if football is not—as you pointed out, Nick, it's like the top players in football, I think Lionel Messi gets something like $92 million a year for his earnings and bonus, with $34 million for endorsements. So, you know, there's already loads of money in the game. It's just at what point does the obvious open, undisguised greed get too much for the game? And clearly, that was a sort of watershed moment.

Speaker C: 00:11:23

se they're a company, that in: 2009

Speaker A: 00:15:10

More or less. I think you could pick up something you said on there on the end, but you've got the general principle right, yeah.

Speaker B: 00:15:14

Yeah, and I think to sort of add to that, there's an element which sort of brings that home, which is that, you know, a lot of the resistance came from those outside of that elite that were forming this thing because their share of it was going to be reduced. But there are sort of agreements within the Premier League, for example, to fund like what they call grassroots level, you know, so the non-elite level of the sports to make sure there's like a pipeline of players coming through. And, you know, there's this sense that if that dwindles and you don't have lots of people playing at a level, they're less likely to be interested in the game, you're less likely to get the elite players sort of coming through that system. And so, you know, I suppose it's a little bit like cutting down the last tree on Easter Island or something that you're, you know, by excluding these other clubs, you are drying up the supply line for both fans and players and, you know, the whole kind of interest.

Speaker C: 00:16:26

Yeah, I mean, it's interesting this question about what greed is and why we just, what?

Speaker A: 00:16:31

Before you come in, I think there's something also that we could pick up on here, right? Which is, and this should be right up your street, you guys, because one of the, I think it's about, there's an intersection here between motivations with things like greed and things about, and decision making processes, right? Because one of the things that you mentioned there, Chris, was the German model of 50 plus one, which would prevent this kind of decision or would make this sort of decision harder to make. Whereas the ownership of most clubs is essentially an oligarch and they can do what they want. So it's unfettered in terms of what they can do. So that's kind of what, so institutionally in some way like Bayern Munich, you've got something, a process that will stop or hinder greed from, I don't know, am I on something here?

Speaker C: 00:17:25

Do you want to talk about this? Maybe, but I think we're using the word greed a lot without really thinking about what we mean. Go on. People want stuff, right? You're aware of this. People like to acquire stuff. It's why people go out to work. It's why they, you know, it's why they go on. Strive. Celebrity big brother. It's exactly, people want to acquire resources. I have found it quite hard to come up with a definition of greed, which really captures a meaningfully different form of that. I think it comes down to a lack of concern with other people's utility functions. I think it sort of is basically where you are getting a personal benefit and not caring that you're imposing a cost on society. I think that's what people don't like. It's when it crosses over into imposing a kind of social cost, which is why I was talking about this as a kind of tragedy of the commons. I think obviously one of the ways that we have evolved socially to try and prevent tragedy of the commons type situation is social policing. It's policing against that kind of behavior using praise and blame and shame and tools like that. And so I sort of feel like, yeah, it's like why we don't have, we don't, you know, we disapprove of people who drop litter because if we didn't, everyone would do it. And I guess this is football fans trying to perform that social policing role for their commons, which is the sport of football. But I mean, in terms of the motive, like, let's say that they were right. And in fact, what they were doing was profit making. Well, that isn't any different to what any other company does. And I mean, the kind of the sort of, you know, libertarian view. It's a fairly mainstream kind of view, the Adam Smith kind of view, which is the good thing about a market economy is that we don't need to worry about why someone is doing something. They might be making great hammers because they love making hammers or they might be making great hammers because they want to make money. It doesn't matter. We still get great hammers. And I guess that would be the sort of question here is why we're moaning about them being profit seeking now and we haven't moaned about it for the last 25 years.

Speaker B: 00:19:54

Yeah, well, I was just going to give a quote. I'm sure you'll spot this quote, but it's from a famous speech. So I'm just going to read out. The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit. Greed in all its forms, greed for life, for money, for love, knowledge has marked the upward surge of mankind. Dalai Lama. Yeah, that's right. Yeah. Marks. Yeah. Do you know it?

Speaker A: 00:20:31

I presume. I presume. Gordon Gekko?

Speaker B: 00:20:35

Yes, Gordon Gekko, of course. Gordon Gekko. Right. And the point is, like, despite the salutary tale that is Wall Street, he's clearly on to something there. And so the question is, like, if greed is good, is the mantra of that speech. When is greed not good? That's the question. When does it, like you say, tip over? And part of it's probably about a lack of concern for other people. But actually, that lack of concern for other people might not be important, right? You might be not thinking about other people making lots of money for yourself, but actually creating a greater good. But I think it's also, you know, your point, Nick, about social policing is also valid. If you look at the seven deadly sins, arguably four of them, sort of vainglory, pride, covetousness, lust and gluttony are all kind of linked to greed for something. You know, and clearly there's a heavy moral. There's always been, you know, like Oliver Stone built, you know, designed that film to try and be a, you know, a railing against Reaganism. Right. But actually, everybody ended up loving Gordon Gekko and thinking he was brilliant. But there's always this very moralistic attitude towards greed, even though we know striving for more stuff has, you know, spurred mankind on to great achievements. Why is that? And when is it justified?

Speaker C: 00:22:03

I think this is a really fundamental tension, which relates to the thing that I think we've talked about. We mentioned, I mentioned quite often, which is this sort of hunting norms v farming norms. And I think that this really is, and I feel like as, you know, our culture has both and we have this kind of uneasy peace where, you know, we accept that wealth creation enriches people. Well, get onto rent seeking in a sec. But, you know, wealth creation enriches people, but we still don't, we still think people ought to share a bit, you know, it's the whole sort of crabs dragging down the escaping crab back into the bucket element. And, you know, that we don't want to ban to make it impossible for someone like Jeff Bezos to set up Amazon, you know, we all benefit from Amazon. But at the same time, we'd like him to pay some tax. You know, we both want people to share. And we also, you know, accept that we need the incentive for people to create wealth in the first place. And I don't think we've fixed it. I don't think we've fixed that, you know, as a society, because I suspect it's the two competing, you know, social algorithms that can't really be fully reconciled. But yeah, I mean, the idea would be that, you know, if you're a hunter, then you share because you will take, you know, it could be your deer this week, but it might be somebody else's deer next week. But, you know, for a farmer, well, your output and your wealth is much more linked to your own effort that you put in. Yeah, exactly. And I so yeah, that's, that's it, really. I think there might be something else going on here, though, which we touched on, actually, in a similar kind of vein, but before, which is relational models theory, which I think we talked about, I can't remember what the context was, but the that people there were sort of a set of different relational models you can have with a group of people. And so one of them is equality matching, which is, you know, where you're making sure everyone's got an equal share of stuff. There's kind of hierarchical relations where someone is the boss and they give you stuff. But there's also market pricing, which is a sort of, you know, slightly artificial one that's been plonked in at the end, which is which is a sort of completely value neutral. You give me something, I give you something. And we have a set price. And that's that. So if you're a commercial officer, I guess, in Manchester United's, you know, PLC, that is what you think your football club is, right? You deliver services to people, you deliver services to advertisers and to, you know, and to people paying to watch your TV show and to some extent, people buying tickets to go and see the game. But fans, I think, see themselves in more of a kind of, you know, communal sharing relationship with the club. They see that club as, you know, as something that they're, you know, almost like members of a big family. And I think that's the same tension we get when you think about how people feel about restaurants. It's why we try and really sweep the whole financial transaction side of things to one side and hide that, you know, in a restaurant or to some extent with prostitution. You know, you're kind of the money bit kind of gets in the way of the delivery of the service. And I wonder if that's something as well. I don't know if that's true. Chris, you're the football guy.

Speaker A: 00:26:02

Well, before you answer that, Chris, we need to wrap up pretty shortly. I don't actually have any questions or anything like that. So we need to bring this to a close. Chris, and then I guess Nick, go for it. Is there anything you want to finish up?

Speaker B: 00:26:17

Yeah, well, I think for me, you know, one of the things about greed that intrigues me is when it leads to, you know, bad, bad acts, either bad judgment or sort of, you know, morally heinous acts. So, you know, sort of somebody murdering for profit, for example. But even more interesting than that, I find the sort of examples where, you know, people like these investors or these billionaires clearly made the wrong decision. They, like Nick, miscalculated about what the, you know, the reactions of the fans were going to be. And they ended up in a worse position. And they were sort of blinded by their greed, I suppose, you know, at the point at which the reward outweighs your ability to assess the probability of it coming to happen or the costs associated with it. You know, the kind of Midas, again, you know, looking at sort of fables, you know, this idea that, you know, you don't see the downsides of what you're doing because you only see the upsides. And I find that the most fascinating part of greed. And that's, for me, what greed is. It's the point at which you, you know, it's almost like a cognitive bias, the point at which you only see the upsides and you downplay the downsides.

Speaker A: 00:27:41

Yeah, yeah. Nick, anything you want to finish off on?

Speaker C: 00:28:11

Yeah, anyway, that's just my suspicion. But no, I remember there's this cafe that I went to in Norfolk, which I always remember because I just thought this was the most preposterous thing I'd ever seen. The pricing was insane, right? A coffee was, you know, two pounds 50. But if you wanted froth, like milky froth, that was an extra 50p. And if you wanted a sprinkle of chocolate, that was like an extra 20p. And so it was a way of simplifying, I guess, you know, if you ask for a cappuccino, oh, well, that's fine. That's a coffee with a milky froth and a sprinkle of chocolate. If they'd have just said it's three pounds 20 for a cappuccino, it would have been fine. But it just looked like it was purely a framing thing. Well, they could have said, yeah, well, actually, as a discount, if you don't want the froth, you know, it would have been fine. But the way that it was framed was just made them look like they were trying to get every single penny they could for every single thing they were offering you. And it's just stuck in my mind as an example of actually, you know, that problem, the problem of commerce, still feeling, you know, like it gets in the way of normal human relationships.

Speaker A: 00:29:20

Okay. All right. Right. Well, on that note, we'll stop there. Thank you, as always, for listening. If you have any thoughts or suggestions for topics, you can email us at podcast at alephinsights.com. We'd love to hear from you. And if you've enjoyed the podcast, what should people do, Chris?

Speaker B: 00:29:40

They should smash one into the top corner where the like button resides.

Speaker A: 00:29:45

Well said. All right, we'll stop there. Thanks always for listening. I'm Fraser McGruer, been here with Chris Wragg and Nick Hare of Aleph Insights. Until next time. Goodbye.