Watch this entertaining and enlightening exposé of the “staggering corruption” within FIFA, the organisation that runs the World Cup, by HBO’s John Oliver.
Oliver is a funny chap and the exposing of crony capitalism should always be applauded, but it’s curious that he seems so shocked that a national law banning alcohol consumption in soccer stadiums in Brasil was repealed for the benefit of FIFA sponsor Budweiser. Such mutually beneficial deals between corporations and governments are so commonplace in democracies that being shocked by them is like being shocked by seeing cars on a motorway.
The vast majority of laws in a democracy represent the prejudices and preferences of various special interest groups and corporations – backed by government guns. Corporations/special interest groups routinely leverage government powers to create laws and regulations in order to gain unjust (but legal) economic privileges or advantages over competitors (e.g. licensing laws), or to unjustly (but legally) restrict the liberty of peaceful people who engage in certain (almost always non-criminal) behaviors (e.g. drug possession). This happens every day in a democracy. It is the business of democracy.
The Law itself is a weapon for those who seek unjust economic advantage or who seek to impose their will on others. It’s a way to use force against others where the victims are legally prohibited from resisting. For example, if a man who believes others should not be allowed to smoke in his presence because it harms his health imprisons another man in his basement for doing so, then that guy’s going to jail for kidnap and imprisonment. Also, the smoker would be morally justified in resisting the attempt to imprison him. However, if that man (and men who share his view) successfully lobby government for a law banning smoking in pubs, then they simply outsource to government the violence required to enforce their preference upon others, and furthermore their victims would be acting illegally should they refuse to pay the fine or resist arrest. By leveraging the state’s monopoly on the use of coercion the anti-smokers can, at no cost to themselves, not only legally impose their will on others, but can impose it on an entire society – which is an outcome that would otherwise be impossible. There are countless examples of laws and regulations that have little or nothing to do with rational ethics or the protection of rational rights.
Oliver’s surprise and dismay that laws enforced by government, believed by most to be the essential foundation of ordered society and a force for human progress, can so easily be bent to the will of a corporation reveals a certain naivety about the relationship between human beings and power, and an ignorance of the reality of how democracies in particular function. Laws are rules written by men in power whose actions, it is believed by those who vote them into said power, represent the ‘will of the majority’. When a group of very wealthy men representing a corporation offer to help lawmakers achieve their own immediate self-interests (i.e. re-election) or bribes, in return for changing the law or introducing new laws to benefit their organisation at the expense of the rest of society, the ‘exchange’ is usually made. Essentially, crony corporations do business with people (politicians) who are trading in stolen or implicitly goods (tax payers’ money).
This is nothing new or specific to modernity, it is how democracies have always functioned, the only difference now is that the amounts of wealth involved are much, much larger. The point is we should not still be shocked by this. To be so is somewhat ridiculous, especially since we live in the Information Age and can easily avail ourselves of the necessary historical, economic and philosophical knowledge required to understand the true nature of democracies and government per se. That anyone in the western world is still shocked by the interactions of democracies and corporations and special interest groups is surely evidence of the immense power of propaganda, and of the mind to ignore realities we do not wish to accept because they disprove existing beliefs we do not wish to let go of.
Oliver’s reaction suggests that he shares the common belief that corporations like FIFA ‘corrupt’ the law and government, but it’s not possible to corrupt something that was already morally depraved. From ancient to modern times, numerous intellectuals and philosophers have attempted to justify and rationalise the violence used by governments against people by formulating ethical theories that incorporate The State, but all have failed. The various ethical arguments put forward to justify government violence fail to meet the requirement of universality, lack internal logical coherence and have thus far proven to be an inadequate foundation for the creation of truly peaceful and sustainable societies.
Exposing the fatal flaws in the various justifications of government necessarily created the need for a non-arbitrary and universal ethical theory of liberty (the opposite of government) upon which to found societies, which a minority of thinkers over the last 150 years or so have attempted. Since the world wars the rapid growth in the size and power of governments has been fuelled by the intellectual forces of utilitarianism (the doctrine that actions are right if they are useful or for the benefit of a majority) and relativism (the doctrine that there’s no such thing as objective truth or morality), both of which are at odds with the notion of objective ethics – which is why the concept has been highly marginalised. Discussing the development of the ethics of liberty in detail would be beyond the scope of this article, but I strongly recommend doing your own research. To whet your appetite here’s a quote from one of the most powerful expositions of the immorality of The State, by Murray Rothbard, in his seminal work ‘The Ethics of Liberty’:
“Thus, the State is a coercive criminal organization that subsists by a regularized large-scale system of taxation-theft, and which gets away with it by engineering the support of the majority (not, again, of everyone) through securing an alliance with a group of opinion-moulding intellectuals whom it rewards with a share in its power and pelf.”
Crony corporations/organisations like FIFA, then, exacerbate the negative effects to society of the state’s use of coercion. They are like an infection around humanity’s wound. If all we do is treat the infection, then we’re failing to deal with the bigger problem, which is the wound itself.
Brazilians were already having their property rights and liberty systematically violated by the state, a process especially harmful to the poorest. When a crony corporation like FIFA comes along the poor get hammered even harder because the state forces tax payers to pay for the building of the infrastructure necessary to stage FIFA’s tournament. Individuals have no choice in the matter, they must obey the decisions of the majority or their government overlords. Very rarely and only as a result of market forces, deals between crony corporations and governments might actually improve the lot of some local people – at least temporarily – in some small way. Aside from the temporary construction, security and hospitality jobs, it was only due to FIFA’s insistence that its sponsor Budweiser be allowed to sell beer in the World Cup stadiums in Brasil that the locals will be able to drink any beer at all. A minor and probably temporary liberation, but no doubt a pleasing one for locals.
It’s important to note that the injustice of the alcohol ban in soccer stadiums in Brasil is determined by the fact that it was the state who enforced this prohibition and not the individual owners of the stadiums. If the owners of a stadium prohibited alcohol consumption as part of the terms and conditions of entry, then that would be within their right as the property owners and therefore justified. Given that stadium owners had to be forced to implement alcohol prohibition, we may assume that most soccer fans valued being allowed to drink whilst at a game. But, according to government, not only were fans ‘wrong’ to value the option of being able to consume alcohol during matches, but also stadium owners were ‘wrong’ to give their customers what they want.
FIFA President Sepp Blatter claims that FIFA is a non-profit organisation. The term “non-profit” is a misnomer because NPO’s are (according to Wikipedia) “permitted to generate surplus revenues” but “they must be retained by the organization for its self-preservation, expansion, or plans.”
Technically, then, FIFA is a NPO because it doesn’t have owners or shareholders, but some have argued that receiving significant funding from for-profit corporations can “change the NPO’s function”. Nearly 90% of FIFA’s revenue in 2013 was generated by the sale of broadcasting, marketing, branding, hospitality and licensing rights to for-profit corporations. Compare this to another NPO, the British Red Cross, for example, which generates nearly half of its income from donations. FIFA paid out $102 million in wages in 2013 compared to the British Red Cross’s figure of £485,000. Blatter himself, FIFA’s only full-time employee, enjoys an annual wage of around $1.3 million – plus bonus.
Blatter also claimed that the $1.3 billion in FIFA’s piggy bank is a “reserve”, much to the incredulity of John Oliver. According to FIFA’s financial statement, “having sufficient reserves is of great importance to FIFA’s financial independence and to its ability to react to unexpected events.” The British Red Cross has a much smaller reserve of around £30 million. It’s certainly curious that the international governing body of association football sees the need for a reserve fund over 30 times larger than that of one of the world’s largest humanitarian aid organisations. One struggles to imagine what kind of “unexpected event” in the world of association football would require such a large rainy day fund.
I would argue that FIFA is a good example of how government power can corrupt people and the function of organisations. What started out as a simple organisation created to govern international football has degenerated into a get-very-rich-quick-scheme for power-hungry types who enjoy the thrill of being showered with gifts and bribes by the world’s politicians who know a sporting event like the World Cup is a great way to win votes even if they do bulldoze a few thousand people’s homes, and by corporations clamouring to become a FIFA partner because they know it is highly lucrative. In 2013 FIFA generated $1.3 billion in revenue from the sale of broadcasting, marketing and other rights for the 2014 World Cup. That shows us how highly valued those rights are by businesses around the globe.
It’s only because FIFA is very effective at leveraging government powers in order to gain unjust economic and political privileges for itself and its sponsors in each country they bring the World Cup tournament to that corporations are willing to pay as much as they do for those rights. In other words, the market prices for FIFA’s World Cup rights are much higher than they would otherwise be in a world were there was no such thing as an institution called The State which violates people’s property rights and restricts their liberty to peacefully pursue their own ends. The very same actions that the state supposedly exists to prevent and punish with, if necessary, deadly force. As Rothbard observed “…the State, by its very nature, must violate the generally accepted moral laws to which most people adhere.” It is the nature of the State that enables the predations of crony corporations like FIFA.
In a world without governments FIFA wouldn’t be able to force tens of millions of poor people to pay for the building of the soccer stadiums that cost hundreds of millions of dollars. They could ask if they wanted to, but they couldn’t force them to because there would be no group of people called ‘government’ with the ‘right’ to take people’s money and spend it as they or their pals in some corporation wish. FIFA would have to behave like the rest of peaceful society and raise the funds themselves to build the infrastructure required to stage their tournaments. Furthermore, all the land needed for the infrastructure would be acquired peacefully through exchange with the individual landowners, and not through secret deals with politicians involving suitcases of cash and surprise morning visits to favellas from state police or bulldozers. In short, in societies where absolute property rights were respected the only people paying for FIFA’s tournaments would be those who wanted to. How radical. How anarchic.