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Economic lessons from the Olympics

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By Michael R. Czinkota and Jiashan Cui

As the Olympics deliver another sports highlight to the world, some Americans remain highly irate with the uniforms worn by the U.S. team. The reason: the team uniforms are made in China. One senior U.S. senator suggested piling up the uniforms and burning them. Some are even trying to use this controversy against presidential candidate Mitt Romney, due to his leadership of the 2002 Winter Olympics.

In response to this public relations debacle, Ralph Lauren, a design icon in the U.S., has already firmly committed that uniform production for the 2014 Winter Olympic game will take place on U.S. soil. Before we sweep this controversy under the rug, however, here are a few thoughts on the importance of the Olympics for economic thinking.

First off, there are also others who voice discontent about their national Olympic outfits. The British public, host of the games, complains about its uniforms designed by Stella MaCartney. They believe that there is not enough red in the uniforms, which therefore do not seem to sufficiently reflect the national colors of the UK. Second, it almost seems as if the debate over the labels on the uniforms draws more attention than the actual preparation of team USA or the London games themselves Shouldn’t the essence of the Olympics lie in the performance of the athletes from around the world competing with each other to excel by fulfilling the Olympic motto: "Citius, Altius, Fortius" (Faster, Higher, and Stronger). There is no part of the motto calling for ‘domesticus’ or ‘pulcher’. One could well argue that attention should mainly be focused on the performance of the athletes, rather than how they look during the opening ceremony. Furthermore, the real performance is not delivered in dress uniforms, but rather in the swim suits or leotards made wet and sweaty by competition.

If there were to be a debate, the quality of the uniforms rather than the source of production should receive public attention. The Olympics are all about effectiveness and efficiency. The economic argument should focus on a cost benefit analysis of those uniforms. Does the outsourcing of stitching tasks to China lower the costs, and how does such international procurement affect quality? There is no need for a patriotic argument here, but rather the simple exploration of whether the team gets what has been paid for. If there has to be some flag waiving about Olympic clothes, then it might be during the entrance of the Chinese team, since its national basketball team and six other Chinese sports teams will compete in outfits featuring the swoosh of Nike, a U.S. owned-brand.

The current debate over the Olympic clothes reflects much bigger issues such as the upcoming U.S. presidential campaign and the subsequent formulation of national policy, but also the future direction of all major economies around the world. How should one deal with and respond to international competition both in terms of process and activity? We all like to win, but the Olympics indicate that we should be willing to let everyone put up their best efforts and honor the highest performers. Typically, we prefer that participants on national teams are domestic citizens. But for special athletes (or products), outsourcing seems to be acceptable, yet touches a nerve if domestic conditions are problematic.

Comments made by some politicians about the Olympics and about the economy may sound silly and outrageous; but just like other outsourcing kerfuffles in the past, their true meaning ought to be taken with a grain of salt, and seen as the vote catching lamentations which they are. For both an economy and the Olympics, it seems unlikely that thoughtful leaders would ignore the value of designs and innovations in favor of low-value added sewing and stitching. After all, outsourcing low value manufacturing provides consumers in wealthy nations with low price products, particularly valuable to low income segments. We should also remember that as originators of the Games, (and of the word ‘economy’) the Greeks get to be first in presenting their flag during the opening march, but when it comes to performance, they are on equal footing with all other nations. Economies also need to refresh their innovation every day.

Right after the opening ceremony, the impact of the dress uniform’s origin will begin to fade. It deserves perhaps mention that the Olympic Game athletes of yore were competing in the buff, which reinforces that it is the context and performance that matter, rather than the clothes. With the athletic performances the Olympic athletes do set an economic example for all of us: We need to embrace change, observe the best, and learn from all for future improvements. The clothes may differ, but the competition continues.

Professor Czinkota and research assistant Cui work at Georgetown University, Hariri School of Business.

© Japan Today

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5 Comments
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The Olympics are all about effectiveness and efficiency

Really? I've never read that before. What about sport and friendship?

3 ( +3 / -0 )

I'm not sure what point this meandering article is supposed to be making.

Buying foreign, cheap clothes is good?

The age old argument of protectionism (mercantilism) vs. free trade?

The merits of a centrally planned economy over a free market?

The leveraging of nationalism to gain public favor?

it seems unlikely that thoughtful leaders would ignore the value of designs and innovations in favor of low-value added sewing and stitching.

How about these "thoughtful" leaders stay the hell out of the marketplace altogether, and let the consumers decide? It's their money after all.

Otherwise you've got politicians stealing money from people (through taxes) and them passing laws or making decisions which restrict how they are allowed to spend the rest of their money.

-1 ( +0 / -1 )

America is drowning in cheap Chinese goods, so what's new?

1 ( +1 / -0 )

So, the Olympic suits were made in China!

WHY is that bad?????

0 ( +1 / -1 )

flag waiving about Olympic clothes

The Olympics would be a lot better if flags were "waived" instead of waved.

2 ( +2 / -0 )

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