Guest Post on Accepting Drugs in Sport: the Case of Pro-Cycling

October 30th, 2012 at 2:00 pm by David Farrar

A guest post by Mike Wilkinson, a former Ironman tri-athlete and a keen Tour de France follower:

The downfall of Lance Armstrong in the sport of professional cycling now seems complete.  Yet, as the dust settles, many are left wondering what’s next for pro-cycling: can it recover its credibility?  Or will it once more be tarnished by the brush of doping?  There seems little cause for hope, unless the Armstrong scandal helps the public reach a new acceptance of drugs in particular sports like pro-cycling.

Much has been written about Lance Armstrong. including allegations that he’s brought the sport into disrepute.  Although I’ll say that we can hardly expect successful pro-cyclists to behave like Mother Teresa, I have little to add about the man’s career.  I think, however, that there’s one important thing to keep in mind: the significant role of drugs in professional cycling goes well beyond just Lance Armstrong.

Before Armstrong, so many of cycling’s big names have tested positive for drugs.  They include Armstrong’s former rival, Jan Ullrich, five times Tour winner, Miguel Indurain and even the man who’s arguably the greatest road cyclist of all time, Eddy Merckx.  

Drugging does not seem confined to just individual athletes, either.  In 1998, the year before Armstrong won his first Tour de France, pro-cycling went through the Festina Affair.  It started when a team car that was stopped by the authorities at a border crossing and was found to be packed to the gunwales with EPO and other performance-enhancing drugs.  The case sent shockwaves throughout the sport and resulted in the trial of 10 people, including cyclists, team doctors and team managers   There were plenty of calls for pro-cycling to clean up its act following that fiasco, too.

But why is doping so rife in pro-cycling?  For my part, I think people need to appreciate just what the sport involves.  In the Tour de France, for example, competitors ride approximately 3500 kilometres.  Over that distance, the winner sets a phenomenal average speed of around 40kmh. And even with that pace, riders get just two rest days through the 23 days of the race  

I don’t doubt how hard it is to be a professional sports person in any code, but surely there are few sports where competitors operate so near the upper bounds of human endurance.  Cyclists must face a massive temptation to seek performance from wherever they can find it.

Some are calling for some sort of amnesty in which riders can come clean.  Whether or not that happens, you have to wonder just how long it will take for riders will start doping or not.  When someone in a race performs well, everyone else is going to think that person’s doping and they should, too.

Do others share my scepticism that the sport can clean itself up?  Yes, including some pretty important people.  One big name sponsor Dutch bank, Rabobank, has been involved in cycling for 17 years.  Yet, after the Armstrong scandal, it announced it was ending its sponsorship of both men’s and women’s professional cycling, saying that it was “no longer convinced that the international professional world of cycling can make this a clean and fair sport.”

What does it mean for something to be a fair sport?  Surely, it’s that players know the rules and abide by them.  What if the rules were changed so that a level of doping was acceptable?  If everyone was able to take drugs, wouldn’t the sport still be fair?

While cyclists might by themselves reach this point, it’s doubtful that the general public would accept any sort of doping.  This is my reason for writing this post for Kiwiblog and not for some cycling forum.  Isn’t it time that we woke up and ask whether, for some particular sports, a level of doping might be ok?

For my 2c I think it is desirable that top titles are won by those who are the best athletes, not have the best chemists. However it would be great to have a “main” Olympics and a “freak” Olympics where anything goes from drugs to biotechnology – and have the winners from both compete against each other 🙂

Guest Post: Payments and Public Policy – the case of NZ’s EFTPOS

August 23rd, 2011 at 10:00 am by David Farrar

A guest post by Mike Wilkinson, who analysed the economics of retail payment system development in a recently completed MA thesis.

While travelling overseas, it’s easy for New Zealanders to see that we use our payment cards a lot more than people from other countries.  Indeed, the figure below shows this observation is backed up by statistics from official sources: relative to many other developed countries, the nation’s debit card system (known as EFTPOS) is very well-used.

What makes it so?  Many would have you believe it’s because such a system was developed here, first.  Yet, the second figure demonstrates that that’s actually a big urban myth – even in my small sample of developed countries, New Zealand was by no means the first to have such a system.  That title looks like it goes to the United States.

If it isn’t that EFTPOS was developed here first, what is it about our country’s system that makes it so useful?  The two most well-used systems in this sample, New Zealand’s and Norway’s, have one thing in common: merchants or retailers in neither country pay significant fees for transactions completed at the point-of-sale.  In both places, they generally need to buy or rent terminals, but, once they have those, most are quite happy to accept transactions for nothing at all.  In other countries, merchants are charged fees that make them unwilling to accept small transactions; instead many prefer their customers to pay with cash.  Meanwhile New Zealand and Norwegian consumers are required (or at least during the years following the systems’ introduction, were required) to pay transaction fees for debit cards.  That these consumers still used debit cards demonstrates that many people really don’t like using cash.

In the case of Norway, such an approach to pricing was encouraged by the Norwegian Government.  What about New Zealand?  Why did the country’s banks adopt this approach even when their Australian parents elected to charge merchants fees?  The answer to this question is firmly rooted in the history of the country’s banks, particularly their regulation by our Government.

In the period following World War 2, New Zealand’s banking system was characterised by intrusive, prescriptive regulation.  Organisations were separated into three groups: trading banks, thrift institutions (including trustee savings banks) and other financial institutions.  In 1984, members of the first two groups introduced their own EFTPOS trials, which some readers may recall.  The trustee savings bank system was called Cashline.  The trading banks’ system, called Quicksmart, was operated by Databank, their joint-venture originally created in the 1960s for processing cheques.  Evidence demonstrates that an adversarial relationship existed between the groups with little prospect of smooth cooperation over a combined system.

In 1987, legislation passed by the Lange-Douglas government came into effect, substantially changing the way banks were regulated.  Under it, any organisation could become a Registered Bank, if it met permissive criteria administered by the Reserve Bank.  The climate for cooperation changed substantially and a merger of Cashline and Quicksmart was being contemplated.  However, the 1987 sharemarket crash made banks much more conscious of costs.  In 1988, two former trading banks, BNZ and ANZ, decided to withdraw their support for Quicksmart.  The two remaining participants, National Bank and Westpac, purchased the EFTPOS assets from Databank, renaming the system, Handy-point.  In order to attract merchant account business, they decided not to charge merchants transaction fees for this new system.

The Handy-point system proved successful and its approach to pricing was adopted when it was merged with Cashline to form Electronic Transaction Services Ltd (ETSL) in 1989.  BNZ eventually joined ETSL, which was later renamed Paymark.  ANZ invested in its own EFTPOS services that interconnected with ETSL, which were later brought into a company ANZ had purchased, EFTPOS New Zealand Ltd.  National Bank and Westpac and, later on, the owners of ETSL were happy to cooperate with the other banks because they saw EFTPOS as a marketplace rather than as a proprietary asset.

New Zealanders have benefited from their successfully developed EFTPOS system because the country’s comparatively light regulation of banks fostered cooperation, and because at no stage has our Government become involved by choosing among the relevant systems.  In my view, were it not for the Lange-Douglas reforms, New Zealand’s EFTPOS would have developed much less successfully.

The success of EFTPOS makes the Snapper bus ticketing stored-value system more useful for non-bus related payments because it can be used for faster payments than can EFTPOS.  The Snapper system is also lightly regulated (relative to how comparable systems would be regulated, overseas), allowing it to offer payment services cheaply.  These two factors combine to make Snapper one of the few privately-owned stored-value systems based on public transport that can be used for other sorts of transactions in the world.  Snapper’s development shows that New Zealanders continue to benefit from the country’s market-driven approach to banks and to payments.