Tuesday, 27 September 2011

What are you paying for?

One of the commonest mistakes made by top level sports teams (especially in the USA where salary caps make such things more damaging) is to pay a player on the basis of what he has done rather than what he will do.

So that a player in the latter part of an excellent career as a top player expects to get an eye-watering contract, but simply viewed forwards smart teams will let them walk since their probable future production doesn't warrant it.

The same should really apply to governments. The point is not who caused the financial crisis, but how to move on from it.

So when complaints are made that the government is still helping "bankers who caused the financial crisis" then they are committing the error of looking backwards rather than forwards.

Of course considerations need to be made about this, if bankers always expect rescuing then it removes a brake on how risky they are prepared to be in their actions. But that's how it should (and I hope is) viewed. In terms of future effects.

Reward and punishment makes for good politics but bad government (and sports teams).

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