Down but not out

Sporting defeat is painful to watch and worse to experience. But off the pitch, failure is more complex – and may even be useful, argues Hamish McRae
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So we failed. The coming weeks and months will be filled with soul-searching, not so much about the detail of the goal that wasn't, nor indeed the performance of the team as a whole, but rather about the nature of football in England. What are we doing wrong? Why is the sum of the team less than its constituent parts? Do we have unrealistic expectations? What should we do?

If it is any consolation, the soul-searching is going on just as profoundly in France. I happened to be in Paris last week on the night they made their exit from the World Cup and can promise you they can do gloom too. They can also hunt for excuses just as energetically as we can. The one I liked most was the notion that it was all England's fault because we had fostered an atmosphere where the individual player was more important than the team – a sporting version of the Anglo-Saxon market model for the economy – and had managed to pollute French football as we had so many other aspects of Continental life.

But sport, by its very nature, has peculiarly cruel attitude to failure. One side has to win and the other side has to lose. There will be one winner of Wimbledon – or rather two, for tennis is relatively gender-neutral, with the women's champion as important as the men's. (Tennis is fascinating in that, almost alone among sports, the women earn the same sort of money as the men – contrast that with golf.)

Most of life isn't like this. Life is not a zero-sum game. Economics most certainly isn't, for the central tenet of international trade is that both sides gain from the transaction. You don't need someone lose to lose in order to win.

Of course there is failure. All economies disappoint in some regard. But you have to have really catastrophic governance to fail as comprehensively as, say, North Korea or Afghanistan. Adam Smith observed that "there is a great deal of ruin in a nation", and we know enough about ourselves to say aye to that. But one of the huge transforming intellectual advances of the Enlightenment was the recognition that societies could become richer without making other societies poorer.

Any wealth achieved by stealing from your neighbour is transitory. From 1066 until the loss of Calais in 1558 Britain and France fought over territory. But during that near-500 year period there was no significant rise in the living standards of the ordinary populace. The cake did not grow. We went on scrapping but it was international trade

and economic specialisation that led to the Industrial Revolution, a force that is rolling on now across China, India and other emerging economies and continuing to transform people's lives.

But if the world of economics is fundamentally different to the world of sport, there are lessons about failure to be drawn from the latter.

Perhaps the most relevant example in sport of the last half-century of using failure in a positive way was the reorganisation of sport in Australia following the country's abysmal performance at the Montreal Olympics in 1976. The country sent 182 athletes to it and did not win a single gold medal. For a country that thought of itself as the great sporting nation, this was a catastrophe. It decided to do something about it. in 1981 it created the Australian Institute for Sport, which created a model for the selection and training of elite athletes and which has become the template for sports training in the rest of the world. By the Athens Olympics in 2004, Australia had reached number four in the gold medal table, an astounding achievement for a nation of 21 million people. Though it slipped back to fifth, behind the UK, in Beijing two years ago, that in a way is a compliment because we adopted Australian coaching methods (and some of their coaches) to lift our own game.

So Australia used failure to create success. Indeed you might almost say that it needed not just to fail but to accept failure in order to achieve success.

There are, as it happens, many parallels to this experience in economic life: countries using the spur of failure to turn themselves round and create a run of success. The two new giants on the world stage, China and India, both had decades of failure behind them when they began their economic transformation.

When Deng Xiaoping began the series of slow, cautious but steady economic reforms in 1978, China was poorer in terms of GDP per head than it had been at the advent of the Second World War. It was still recovering from the social and economic catastrophe of the Cultural Revolution. Now the country has surpassed Japan to become the world's second-largest economy and will probably surpass the US within 15 years to become the world's largest.

India has been transformed by the present prime minister, Manmohan Singh, who as finance minister brought in a series of market reforms, starting with a now famous austerity budget from 1991 onwards. As with China, it took economic failure to force change – in 1991 there was a currency crisis, with India desperately trying to borrow enough to cover its imports. The humiliation created the backdrop for the reforms, and subsequent triumph.

There are similar examples in the developed world. At the moment there is tremendous interest in how Canada and Sweden managed to correct their budget deficits in the early 1990s recession. Here in Britain they are seen as models for the path we should tread. But both of those countries only brought in the reforms in the face of failure. The symbols of that were the collapse of the Canadian dollar against the US one and the rescue of Swedish banks by the government.

So failure – in sports and in public administration – can be a spur to reform. But you have to accept you have failed.

That is tough. As a society we have, in Britain particularly but also elsewhere, become increasingly averse to acknowledging failure. One obvious example of that has been the grade escalation that has taken place in schools. A certain proportion of students have to pass in order to meet some government target so the standard has to be adjusted to meet the target. Unfair? Well, maybe a bit, but look at the way so many schools are adopting a genuinely independent school leaving certificate, the International Baccalaureate, because of the dumbing-down of A-levels.

Look too at the way we find it hard to accept the results of the OECD international pupil assessment study of 16-year-olds, the PISA report. Our students rank very much in the middle of the developed world range, yet we have sought to explain away our mediocre performance, rather than use it, as Germany has done, as a spur to schools reform. It is blindingly obvious that to learn from failure, in schools as in sport, you have first to accept it.

If this seems harsh, consider a further issue. It is only if you accept that failure is something normal, to be accepted and used positively, do you start to create loops back for those who for whatever reason fall at some fence. People make mistakes. But the worst thing for those people is to organise a society in such a way that people who do for whatever reason make a hash of things, cannot get back onto a path towards success. But one bad mistake early on, a conviction perhaps, or even a duff degree, closes so many options for the future. It is surely more harsh to keep punishing people for early mistakes than to mislead them about the need to strive to do their best by telling them they are doing well when they are not.

That leads to a crucial distinction between professional sport and most other ways of life. The rewards for the best sports people are outstanding but the room for the best is minute. In most aspects of human activity there is room for the competent second-rater. That is true even in areas where people's lives are at stake. An airline pilot needs to reach a competent and safe standard. But he or she does not need to be in the top 100 in the world. To ask for extreme standards would be absurd. By contrast to earn a decent living as a tennis player you do need to be outstanding. You can be a wonderful player by any rational standards but if you don't climb high in the rankings, you had better figure out another way of paying the bills.

There is however one element of the sports world that is creeping into economic life, the star system, with corrosive consequences. Once a business executive achieves such a star ranking he or she not only gets showered with adulation and wealth, but also becomes difficult to control. Sir Fred Goodwin became the star of Scottish banking and was for many years very successful. But when he overreached himself it became hard to rein him back. The result was the catastrophic near-collapse of Royal Bank of Scotland. There was failure, massive failure indeed, and one that could with hindsight have been avoided. But it was a result of business adopting the sporting star system as much as failures of regulation, monetary policy and political leadership.

And political leadership – can politicians learn from failure too? Enoch Powell gloomily observed, "all political lives, unless they are cut off in midstream at a happy juncture, end in failure, because that is the nature of politics and of human affairs".

We have certainly had a remarkable few weeks and the stars of both Tony Blair and Gordon Brown have indeed waned with astonishing speed. But that comment is at best surely only half true. We do expect too much from our politicians and as a result they feel bound to promise things they cannot deliver. When they fail we set up the next lot for failure too. But all human affairs ending in failure? That is absurd.

Look at the world now. It is better fed than ever before in human history. It is better educated. There are fewer really nasty regimes. It is better informed. It has better health and longer life expectancy. It is not to downplay either the miseries that still exist or the dangers to the future to assert that the world as a whole is experiencing a period of solid success.

And we here could, if we chose to learn from our sporting failures, improve our performance there too. It is question of accepting failure and then devoting resources in an orderly, measured way, to fixing it. But in sport there has to be a loser. Whereas in life, fortunately, there does not.