The world has been in awe of the tremendous achievements of the Olympic athletes at the London games. Our admiration should  fall not just on the performances at the games, but also on the realization of the endless hours of physical training, practice and personal sacrifice made by those seeking success. There were numerous individual stories such as that of Gabby Douglas who, at age 14, left her home and family in Virginia Beach to train in Iowa.

 

The team achievements of the U.S., China, Russia and Great Britain with 46,38,24 and 29 gold medals respectively are particularly noteworthy. Of course, the Olympics are as much about the single gold medals won by Grenada and Uganda as the feats of the larger richer countries.

 

Great Britain is another example of the boost in medal count host nations appear to enjoy compared to their “normal” level of success. According to an article in the UK’s Telegraph newspaper:

Spain jumped from 4 medals in 1988 to 22 medals in 1992 when the games were held in Barcelona.

South Korea averaged 7 medals in the games prior to 1988 when Seoul hosted. Since then they have averaged almost 30.

Australia won 58 medals during the Sydney 2000 Olympics. This was a record for Australia. They have won 35 in London.

China won 63 medals in 2004 and then jumped to 109 medals in 2008 when the games were held in Beijing. They have won 87 in London.

 

At the time of writing, Great Britain has won 65 medals, 29 gold, during the 2012 games in London. This is their largest number of gold medals since 1908.

 

A paper called “Modelling home advantage in the Summer Olympic Games” by NJ Balmer, AM Nevill and AM Williams published in the Journal of Sports Sciences tried to identify the causes of home field advantage. Allowing for factors such as size of population, wealth effects and team quality, there still appears to be an advantage to the home team. Importantly higher quality/stronger teams exhibit greater home advantage. Much of the study deals with the bias of judges and the impact of the home crowd on those judges. The research team hypothesized that ”significant home advantage would be observed for team games, in which the crowd may have an influence upon the subjective decisions made by officials.”

Implied in this statement is the reasonable assumption that the home bias would be more prominent in sports where the outcome is based on subjective judging such as gymnastics and diving versus the objective judging of sports such as swimming, running and throwing which involve the relatively simple observation of who crossed the line first or threw the farthest.

 

The really interesting findings involved team games. While soccer and volleyball have objective measures such as goals scored, there are also subjective elements such as  fouls. The research team concluded “the imbalance observed with crowd noise in football (soccer) translates to a sizeable home advantage, significantly larger than that for objectively judged events and comparable to that for subjectively judged events.”

 

As we enter the fall political Olympics, there appear to be some parallels we can draw between these findings and the political and economic situation we face at home:

 

There is significant competitive advantage to size. The U.S. has approximately 315 million people.

There is significant competitive advantage to wealth. The U.S. enjoys gross domestic product (GDP) per capita of approximately $48,000 only trailing small countries such as Luxembourg, Singapore and Qatar.

There is significant competitive advantage to “quality.” According to Wikipedia, the U.S. filed approximately 400,000 patents in 2010, second only to Japan at approximately 502,000.

There is significant competitive advantage to unified support for a unified team.

 

This last point is critical. It is highly unlikely that a crowd will give loud and enthusiastic support to a team that appears to be bickering with itself. How many of you would have cheered for the Olympic basketball or soccer teams if they kept reverting to traditional rivalries? What if LeBron James, playing on the U.S. men’s basketball team, refused to pass the ball to anyone not on the Miami Heat.? What if Kobe Bryant would only pass to Pau Gasol, his L.A. Laker team mate in the gold medal game against Spain?

 

Fiercely competitive professional athletes were able to join together for a common purpose of achieving gold for the U.S. Small teenagers were prepared to sacrifice family life to win gold for the U.S. If only our politicians could find a way to set aside traditional rivalries and find a team plan to reduce our debt and spur higher levels of growth on a equitable basis. Unfortunately, the opposite is occurring. According to the non-partisan Center for the Study of the Presidency & Congress “America finds itself in a partisan quagmire. While parties and ideological divides have existed since America’s conception, such as Alexander Hamilton’s Federalist Party and Thomas Jefferson’s Jeffersonian Republicans, it appears that politics have evolved into an ideological and rhetorical conflict that is detrimental to the most basic purposes of governance: to protect and promote the American people and their property.”

 

Therefore, the crowd (electorate) must get LOUD this election season. The U.S. has significant areas of competitive advantage and we have individually talented leadership. However, we lack cohesive leadership. Perhaps we should elect U.S. men’s basketball coach Mike Krzyzewski as President to bring the egos together and find common purpose. With the resulting loud and enthusiastic support of the electorate, he just might win gold for the U.S. economy.

 

 

Disclosure

 

The views expressed are as of 8/13/12, may change as market or other conditions change, and may differ from views expressed by other Columbia Management Investment Advisers, LLC (CMIA) associates or affiliates. Actual investments or investment decisions made by CMIA and its affiliates, whether for its own account or on behalf of clients, will not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not account for individual investor circumstances. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon, and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results and no forecast should be considered a guarantee either. Since economic and market conditions change frequently, there can be no assurance that the trends described here will continue or that the forecasts are accurate.

 

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