The economy must learn from archery

The Olympic archery feat should serve as an awakening call.

Ahn Dong-hyunThe author is a professor of economics at Seoul National University. The City of Lights was full of glitz and glamour as the Paris Olympic opening ceremony paraded from the Seine River to the Eiffel Tower adorned by the five Olympic rings and ended with a historic finale of Celine Dion singing Edith Piaf’s legendary song “Hymne a l’amour” under the iconic tower in her first appearance since 2020 due to a battle with stiff-person’s syndrome. The mysteriously alluring potpourri of history, glamour, art and technology captivated the global audience. The modest Team Korea — in the smallest troupe to take part in the Summer Games competitions in 44 years — exceeded expectations thanks to the bold and unfazed youthful members, bringing home the country’s best-ever 13 gold medals.

As one ad flashed, “As many as five gold!”, Korean men and women took all the gold medals up for grabs in archery events at the Paris Olympics. The golden glory should thank avid archery sponsor Hyundai Motor Group for providing a high-tech training site and equipment as well as carefully catered meals for the national players. But the primary winning recipe goes to the fair reward system through the seamless competitive system and fair recruitment rule. Most of the faces of the six archery players at Paris — who survived the rigorous seven-month-long competitions among 100 athletes each from male and female finalists — were unfamiliar.

The keywords are “competition” and “fair rewards.” After neoliberalism was scorned in the wake of the 2008 global financial crisis, anyone emphasizing competition was misunderstood as a cold-blooded champion of brutal and unlimited races. The concept of fairness is rather tricky as it differs from equality.

Unlike the deep philosophical approach taken by Harvard University Professor Michael Sandel, fairness in a simple economics context refers to rewarding according to an individual’s capability and effort whereas equality calls for a universal remuneration for all participants.

Competition results are determined not just by capabilities and endeavors, but also influenced by externalities like luck. To practice fairness, such extraneous variables should be removed, while unobservable endogenous efforts and ability must be identified to compensate for the observable outcome from competition. But the caveat is that personal endeavors also can be affected by the form of rewards. In other words, just as rewards depend on one’s efforts, it also works the other way around — one’s efforts rely on rewards. Finding a fair solution in the interdependent matrix is actually a primary theme in microeconomics.

Like the sport of archery, the economy also can excel on competition and rightful rewards. I’m not saying that equality should be sacrificed. Instead, offering opportunities to those falling behind to jump-start or restart and providing the basic necessities to hold up dignity for those isolated from competition are as important as promoting competition and fairness. But politicians are careful not to say “competition,” as cold-heartedness does not help buy votes. But if competition that drives growth is arbitrarily suppressed, the economy can slacken.

The widening economic gap between the United States and Europe is proof of this. In 2007, prior to the global financial crisis, their per capita GDP were similar, with the United States’ at around $48,000, Germany’s and France’s at $41,000 and the United Kingdom’s at $49,000. But in 2023, the United States’ per capita GDP surged to $82,000 whereas those of European majors stayed mostly stagnant at $53,000 for Germany, $44,000 for France and $49,000 for the UK. Even taking the strong dollar into account, the economies of the U.S. and Europe have decoupled by a wide margin.

There can be several theories behind that phenomenon. But the game-changer was the fourth industrial revolution that set an entire new stage of competition to bare the “real” skills of contestants. In the novel revolution, countries with edges in technology and science cannot but hold the advantage. Technology innovations are also the byproducts of competition. The United States that values competition could come ahead of European countries bound by socialist regulations governing industrial and labor markets. Regulations tend to restrict the room for competition.

The U.S. government spends heavily to fund universities and private think tanks, allocating investments strictly based on competition. From France or Germany, names of reputable universities do not easily come to mind. British academies like Oxford and Cambridge cannot enjoy their past glory.

The U.S. government concentrates its funding on research-focused graduate schools and research centers to draw great minds across the world. Only those who survived competitions are allowed to keep staying in America. But our society has come to reject competition. Korea is only competitive in adopting regulations. The country has become an encyclopedia on regulations, collecting all the regulations in the world to stifle and kill competition. The Olympic archery feat should serve as an awakening call.

Translation by the Korea JoongAng Daily staff.