Let’s give South Africa a Tiger Woods economy

June 20, 2001

Free Market Foundation

Tiger Woods is the best of the best. His success has encouraged young golfers worldwide to seek to perfect their golfing abilities so they can try and win the tournaments and earn the large prizes he does. At age 24 he was reputed to have assets exceeding $140 million, all earned from his own efforts. He does not only inspire golfers. Anyone who emulates his dedication, hard work, and never-ending quest for perfection in their own chosen careers will be assured of a high level of success.

However, it is not his undoubted suitability as a role model that makes him a phenomenon with an important message for the world. Tiger Woods was not the favourite person of his competitors when he burst onto the golfing scene and started snatching the top prizes. His golfing opponents saw themselves becoming poorer as they competed amongst themselves for the lesser prizes. When they entered a tournament many must have hoped that the name Woods would not be listed amongst the participants.

All that has changed as the golfers received a real-life lesson in economics. Tigers opponents are earning more than they ever earned before, as is everyone that has anything to do with golf. Total prize money tripled in five years to $185 million in 2001. TV rights have increased to $1 billion. Tiger captured the imagination of the paying public and has transformed the economics of the game. He has shown that when consumers confer great riches on someone who provides them with what they want, everyone else does not become poorer.

Woods receives only a fraction of the total earnings from golf, even though he has single-handedly been responsible for the huge surge in spending on the game. And what has happened to the attitude of his competitors? They want Woods to play in as many tournaments as possible to attract the crowds, the TV cameras, and the big prize money. Of course they want to beat him, it will assure them fame and fortune. But they dont want him to start playing badly. They need him to remain a superstar, and they will wish him good health and superlative skill as long as some of the earnings he generates keeps rubbing off on them. Retief Goosen is one of Tigers unintended beneficiaries: he received $900,000 (R7.2 million) for winning the U.S. Open because Tiger made it possible.

If we transfer the notion of the Tiger Woods phenomenon to the supply of all other goods and services, we find some interesting economic propositions:

One person getting richer does not cause others to get poorer even if they are competing in the same field of activity.

The superstars and super-earners tend to receive only a fraction of the wealth they create the rest is dispersed amongst the people who are touched by their activities.

We dont necessarily have to like our beneficiaries but we must resist the temptation to allow our envy to prevent them from doing the things from which we benefit.

The more superstars and super-earners we have in a society, the better it is for everyone.

To bring about conditions that will allow the Tiger Woods phenomenon to work in our economy, South Africa should:

Create an environment that will encourage our potential business and industrial Tigers to remain in this country and make as much money for themselves as they can while they increase the wealth of everyone who is touched by their activities.

Maintain the purchasing power of the rand so that dollars invested in South Africa today will buy at least the same number of dollars in ten years time.

Abandon capital gains tax and reduce our tax rates so that we can attract the worlds superstars to come to South Africa and make us all richer in the same way that Tiger Woods unintentionally enriches his golfing rivals.

Stop preventing firms from trying to dominate in serving the consumers of goods or services in any market but ensure that there are no government-created barriers to entry preventing competitors, including foreign competitors, from competing with them.

Abandon all regulations that prevent foreigners from owning and conducting any form of lawful business in South Africa.

Allow potential competitors to supply better and cheaper goods and services than those currently supplied by South Africas state industries.

Stop preventing people from entering into any contract of employment, on any conditions, at any remuneration rate, with any employer, they choose.

Source: Eustace Davie is a Director of the Free Market Foundation. This article may be reprinted without prior consent but with acknowledgement. The patrons, council and members of the Foundation do not necessarily agree with the views expressed by the author of the article.