ECONOMICS: Tour de Lance
Wesbury, Brian S.
ECONOMICS BRIAN S. WESBURY Tour de Lance HE NEWEST SINGLE-NAME, MEGA-STAR IS "LANCE." He just wrapped up a record-breaking, sixth consecutive Tour de France victory—an awesome feat. Being a...
...Moreover, anything can happen...
...Research shows that sleeping in these conditions gives athletes just about all the benefits of training at high-altitude without the logistical difficulties of doing so...
...We can trace the turning-point to the early 1980s and the Reagan tax cuts...
...Using these techniques a rider can truly "peak" maybe once a year...
...Nothing else—not deficits, oil prices, consumer confidence, or interest rates—rises above a six...
...Printing money may inject some bounce into the economy's steps, but it cannot create wealth...
...France has been trying to level the competitive playing field for so long that it has become imaginative in its use of rules...
...But Rep...
...On a scale of 1 to 10, the entrepreneur is a 10...
...Anything that makes it harder, or less rewarding, to innovate and take risks will undermine the awesome ability of this economy to produce wealth...
...John Kerry are not happy with voluntary decisions...
...The combination of more regulation and greater spending is not a positive for the economy...
...Almost every heartbeat, breath, pedal stroke, watt of work effort, calorie, and minute of sleep that Lance takes in, or experiences, during his heavy training period is measured, recorded, and analyzed...
...One reason for this comeback is that Lance is also taking advantage of a huge technological leap in physiological research and training techniques...
...This makes the entire race less exciting...
...The result was deflation and recession...
...Entrepreneurs are the muscles of economic growth...
...Despite a booming economy, federal spending has increased from 18.4 percent of GDP in 2000 to 20.1 percent this year, and defense spending accounts for only one-half of that increase...
...In other words, the threat of higher future taxes to pay for this spending binge is growing larger every day...
...The other involves boosting the oxygen-carrying capacity of blood by either withdrawing an athlete's blood in the weeks leading up to a race and then adding that blood back, or by taking EPO —both of which artificially increase the number of red blood cells...
...It's supposed to be a piece on economics...
...As a result, Lance's team, which won by 1 minute and 7 seconds, saw 47 seconds of that effort taken away in an attempt to make the race more "fair...
...THOROUGH STUDY of wealth creation leads to only one conclusion: the entrepreneur is the most 'mportant force behind wealth creation...
...There are two forms of doping for endurance sports...
...38 THE AMERICAN SPECTATOR SEPTEMBER 2004...
...How successful would a bike rider be if he were forced to carry a 45-lb...
...Bill Gates received just a small fraction of that new wealth...
...This was just not feasible in the time before computers...
...L SING all this technology, and a will that can survive in such a disciplined training environment, Lance has dominated the sport of cycling for the past six years...
...became a player on the world stage...
...Nonetheless, the very powerful 2003 supply-side tax cut is helping to offset these negatives...
...In this year's Tour, one of Lance's Trek-built bikes was so light that his team mechanics had to add weight to make it legal...
...One is the direct use of performance-enhancing drugs, like steroids...
...In bike-racing lingo, the Fed thought the economy was "doped...
...It's as if two or three bike riders were caught with excessively light bikes, so theauthorities decided to make everyone ride heavier ones...
...One can only guess at the methods it may devise in trying to keep Lance from winning his seventh Tour...
...In 2004, however, he won by more than six minutes—a dominant athletic performance...
...Brian S. Wesbury is chief economist at Griffin, Kubik, Stephen & Thompson, Inc., a Chicago-based investment bank...
...No matter where you look—golf, photography, healthcare, distribution, or production—it left virtually no sector of life behind...
...All of these techniques are dangerous...
...The technological boom that occurred in the 1980s and 1990s was no fluke...
...About right now, you're thinking: What's this column about...
...If the economy really needs interest rates that are below inflation in order to grow, then other policies need changing...
...Lance Armstrong chooses to do it for the Tour de France—the most prestigious of bike races...
...backpack stuffed with regulatory paperwork up the Alpine slopes...
...So it set about "detoxing" the economy, by raising interest rates...
...Lance and his fellow riders average speeds over a 120-mile route that are roughly 35 percent to 40 percent faster than the top speed of a recreational rider...
...Every second of time that Lance gained on his opponents was earned...
...The New Era changed everything and still holds great promise...
...Being a bicycle rider myself, I know a little bit about this sport...
...Equipment has changed radically: Composite materials, wind-tunnel testing, and computer-aided design have made the bicycle a space-age technology...
...Trek made a commitment to R&D in the mid-1980s, sold its first bonded aluminum bike in 1985, and its first composite bike in 1986...
...The world has created trillions of dollars in new wealth because of Microsoft Windows software...
...In 2003, a young spectator caught Lance's handlebar with his bag and Lance went down...
...The surge in innovation and creativity that changed biking began in the early 1980s, along with a surge in software and computer power...
...While steroids or blood-doping may help an athlete perform over a short period of time, in the long run they do not add at all to the underlying level of fitness...
...Kerry wants to raise taxes on anyone who makes more than $200,000 a year—he wants Lance to share more with the federal government...
...A skilled coach and disciplined athlete can design a training regimen that will create peak performance at a specific time for a specific event...
...Trek, Inc., the company that makes bikes for Lance, was founded in Waterloo, Wisconsin, in 1976...
...Not only would this penalize those who train hard, it would increase the incentive to be lazy in training...
...This is what is so bothersome about current monetary policy...
...Adam Smith first wrote about the specialization of BRIAN WESBURY labor in 1776, but modern athletes are taking it to new heights...
...The French don't enjoy this, and in 2004 made up new rules that penalized Lance and his team...
...Our money is on Lance again in 2005...
...By holding interest rates artificially low, the Fed is risking inflation in order to get the economy to grow faster...
...Athletes that use these methods are at physical risk...
...Entrepreneurs work diligently to innovate and create...
...But Europeans do not have a lock on this type of thinking...
...But every rider has access to this technology and when the race moves into the Alps, up incredibly steep terrain, none of the riders is using a bike that is significantly better than another...
...But they also must be free to succeed...
...In real life, when he is off the bike, Lance is a very generous person and obviously believes he should give something back...
...SarbanesOxley has put burdens on every company because of the sins of a few...
...Dick Gephardt once argued that "winners in life's lottery" owe something to society and should pay more in taxes...
...But to make sure that the U.S...
...In bike racing, this would be the equivalent of taking time from the winners and giving it to the slower athletes...
...Most who make more than $200,000 a year are like Lance...
...On the spending side, things don't look much better...
...The athletes' attitudes would be altered and the sport would no longer be the same...
...In the late 1990s, unfortunately, the Federal Reserve did not understand this...
...Monetary policy is the same...
...To penalize them would hurt the economy...
...He does this voluntarily...
...Our bet, however, is that whatever they try will fail...
...Part of the explanation for this difference is DNA...
...Lance must be a member of the "lucky-gene-pool...
...And while this line of reasoning may help explain a great deal, it does not answer the question of how Lance could be so dominant amongst his peers...
...For example, in an event called the Team Time Trial, no matter how much time separated the first and second place teams, Tour officials limited the time loss to just 20 seconds...
...Just stop and smell the Yellow Jersey for a minute—but only after it's washed...
...Any other system for determining this ratio would destroy the benefits of capitalism...
...In order to stay fit, they work hard...
...Like so many other areas of life, advancements in technology have invaded the sport...
...Athletes sleep in tents that re-create the lower oxygen levels typically found only at higher altitudes...
...Gephardt and Sen...
...As a cancer survivor, he shares tremendous amounts of his time and money with cancer-related causes...
...It assumed that the economy was experiencing a bubble...
...But if the Bush tax cuts are rescinded this balance will change sharply for the negative...
...36 THE AMERICAN SPECTATOR SEPTEMBER 2004 After years of taking a backseat to Europeans in bike design and construction, the U.S...
...They want to force the issue and use the government to redistribute income...
...Those tax cuts unleashed a tsunami of investment and risk-taking...
...In this day of heightened uncertainty over everything from terrorism and war to the election and regulation, lower capital gains and dividend and marginal income tax rates have increased the rewards to risk-taking...
...It's what I call the New Era...
...They are disciplined, they take risks, they work hard, and they often employ many people...
...This is why the capital gains tax cut that President Clinton signed into law in 1997 was so powerful—it turbocharged the economy in a period of technological breakthroughs...
...Yes, there are some lucky people who really do win the lottery and stumble into gazillions of dollars...
...On a net basis, the entire package of fiscal policies is a net positive for entrepreneurs...
...The market determines how much wealth will flow to the entrepreneur and how much flows to the consumer...
...remains a prime-time player in this boom, the entrepreneur must be treated as the most important part of the economic machine...
...And every dollar of Bill Gates's wealth is reflective of an added benefit that he provided society...
...But comparing the ability of the average athlete to a rider in the Tour is like comparing medium-rare filet mignon to three-day-old pizza...
...If it could, then every economy in the world would try to print their way to utopia and counterfeiting would be legal...
...What if the winner of each day's racing were required to continue riding on a stationary bike until the last place finisher crossed the line to make the time of effort equal, not just the distance...
...After 1,800 miles of racing, Lance won by just 61 seconds—a sign that, nearing 32, he might be over the hill...
...Anything that encourages SEPTEMBER 2004 THE AMERICAN SPECTATOR 37 ECONOMICS more work effort and risk-taking is good for growth, while anything that discourages the entrepreneur is bad...
...It is important to remember that innovation and creativity are not always productive...
...What if the winner of each day's racing were required to continue riding on a stationary bike until the last place finisher crossed the line to make the time of effort equal, not just the distance...
...That has to do with Lance Armstrong's obsessive desire to win and his unnatural ability to remain focused and disciplined...
...1 OR EXAMPLE, in recent years, the regulatory situation has worsened considerably...
...But these people are the minority...
...And it is, but first let's think a little bit about endurance sports and bike racing...
Vol. 37 • September 2004 • No. 7
