I can't speak for the English, being Austrian, but the phenomenon that fans rather identify with their club than with their country seems to depend on how well a country fares. You don't want to invest feeling into a sh*t institution, will you? And many countries have gon downhill recently, no matter what the government speakers say.
Back in the sxities and seventies, when I was a kid, listening to the live radio broadcast of every international game was a must. Everybody, old or young, male of female, would sit and listen and get depressed when we lost (usually) and giddy when we won (rarely). Austria's one of the tiny soccer nations of Europe (the only time when we were absolute world class was back in the early 1930s), but that didn't matter. Keeping your fingers crossed for the team, especially when they played our arch-enemy Hungary or the despised Piefkes (=Germans) was sort of moral duty. But those were the days when Austria had overcome her post-war woes and was enjoying a commercial boom, was rapidly modernised, while the Socialists in power saw that all layers of society could partake of the incoming wealth. Briefly, many people had the impression that their lives took a turn for the better. It was easy to love and support your country then.
Switch to the present, and what you see is very much the same as in England. Fans couldn't care less for the national side. I definitely can't any more. Part of the problem is that life in Austria hasn't improved since years, rather the opposite. Infrastructure is deteriorating due to wide-spread privatisation, the government is corrupt and doesn't even bother to hide it and the Socialists have become the stirrup-holders to the shareholding parasites. The other part is that fans have been brainwashed by the all-pervading political correctness that being proud of your country is somethin despicable. Last year's World Cup worked a bit as an an antidote to this ideological crap, but there are still politicos out there (usually women and usually from the left or Catholic) who want to make you believe that doing so much as singing "Immer wieder Ăsterreich!" or yelling "Tempo Magyarok" will put you on a sliding scale back towards the Third Reich.
Identifying with a club on a local base simply seems more rewarding, althought many of the most recent developments in club football - all-seater stadiums and FIFA regulating every aspect of the game (with a tendency towards more restrictions) - are threatening to eliminate the passion from club football, too.
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