Why Would Anyone Want To Host The Olympics?

http://www.economist.com/blogs/economist-explains/2013/09/economist-explains-0?fsrc=scn/tw/te/bl/ee/hostOlympics

by Qtz • 13 years ago

45 48 13 years ago

Ueland• 13 years ago

Interesting that it got published just now(8th). Oslo,Norway just voted yes to ask the government for financial guarantee in order to try to get the Vinter Olympics in 2022.

netcan• 13 years ago

Current politics seems to demand that everything be an investment. Education, roads, stadiums. It is supposed to create growth. Stimulate. Save on future healthcare or welfare costs. etc.

Realistically, the way to think about almost all government spending is consumption. By spending on health we (hopefully) get to be healthier. By spending on entertainment we are more entertained. The Olympics or any other public prestige projects are like when billionaires and dictators do stuff, but for cities and nations. They get to feel prestigious. Prestige might have some economic benefits but thinking of it that way misses the point. Prestige is an end in itself.

AndrewDucker• 13 years ago

It's a question of how much happiness you generate for the cash. The UK Arts Council gets about £500million to spend. The Olympics cost the UK 18 times that much.

If the Olympics also produces 18 times as much happiness, then that's a worthwhile investment. If not, then maybe that money could have been better spent elsewhere.

teekert• 13 years ago

Flawed logic, that "18 times" depends on the initial 500 million so the cut-off happiness value is now determined by the initial investment? Nope. The only way to determine if it makes sense is if there is way to specify happiness per pound for the olympics. I for one couldn't care less about the olympics by the way.

ddeck• 13 years ago

And let's not forget that governments don't act in isolation. There are numerous corporate interests (primarily construction) that stand to benefit and many government systems incorporate some form of lobbying.

Japan in particular is notorious for it's collusive relationship between politicians and businessmen, with regular bid rigging or no bidding at all for public works contracts.

guard-of-terra• 13 years ago

Istanbul would be a perfect place for an Olympics, except Erdogan ruined it for them. Did you know that Istanbul is already third most internationally traveled city?

fsniper• 13 years ago

Even though I'm very anti Erdoğan I would not be happy If we got the Olympics with or without Erdoğan. Our Economy is projected as a heaven and Turkey as in growth but on the contrary it's way too bad and currently sky diving. Putting one more economic burden as big as the Olympic games would be catastrophic. We are nearly paying taxes just to breath. (exaggeration yes but not too well off.) Getting the games would mean more "temprorary but never to be lifted" taxes to fund the games but in realty just for making more funding for politicians.

I'm really happy for Istanbul to loose and feeling bad for Tokyo to win.

nemesisj2• 13 years ago

I think there's an important psychological dimension that's often missed from these calculations, particularly for countries that have a chip on their shoulder. It's a way for the entire world to be focused on something that you're doing well (hopefully) for a few weeks. Before the Beijing olympics many Chinese would ask you how you liked China, and when you replied, "yes" they would say China is "luo hou", which means backward. China is still luo hou to most who don't live in the richest eastern seaboard cities, and being able to watch China do something amazing for weeks on end is more than worth the 40 billion that was spent.

Lets not forget that in developing countries, massive investments are often sped up just to get the opportunity to bid - in 1999, the Beijing subway was almost nonexistent. Today it's one of the largest systems in the world, and was largely constructed prior to the Olympics. Other improvements included the Beijing airport. Of course, you could say that I'm cherry picking the Chinese olympics as one of the few examples, and maybe there aren't many advantages for a city like Tokyo or London, but even here in the UK, many people were inspired and proud of how their country handled the events. That may not be worth what it cost, but it is worth something, and I think it's a bit bizarre that the Economist seems to be puzzled as to why these events poll well with voters.

m0a0t0• 13 years ago

You are right about the pscychology. I thought we did a bloody good job of hosting the Olympics. Leading up to it I thought it was going to be a bit rubbish but when they actually started there was a sense of national pride.

The problem is that the pride only lasts for a few months. After that I was (and many other people were) back to thinking it was a massive waste of money and the only place that would benefit was London. Basically what I'm trying to get across is that if you had asked me during the Olympics I'd say let's do it again, but before or after? Not a chance

andyjohnson02• 13 years ago

"You are right about the pscychology. I thought we did a bloody good job of hosting the Olympics."

I've been told by a relative, who works for the government to "sell" UK businesses internationally, that the London olympics are widely regarded as a model of how to "do it right". I don't know (and he didn't say) whether this makes it more possible to achieve long-term economic benefits that offset the cost of the event. I'm probably sceptical about that.

brokenparser• 13 years ago

London 2052 will be awesome!

mafribe• 13 years ago

The transformation of East London which I believe to have been the main reason for choosing to host the Olympics in London, has been fairly spectacular. The Stratford area where the Olympic park was built, used to be a wasteland. Although I don't know this, I conjecture that the Olympics were used as a mechanism to force through a substantial number of planning permissions that would not have been granted otherwise.

buro9• 13 years ago

The question should be: Would that transformation have happened anyway?

London has been re-developing brown fields since the mid-80s and shows no sign of slowing down. The Olympics may have accelerated it, but I'm not sure anyone I know who lives in East London or works in Techcity would buy that this re-development wouldn't have happened anyway. The pressure for space is just too great.

I'm fairly pro-Olympics now, afterall... that velodrome is something beautiful and I'm going to ride it.

christoph• 13 years ago

Visually, it's changed - sure. There's a nice big stadium there that can be used every so often. It doesn't look as bad as it once did. It's changed very little of the outside area as far as I can tell though.

Stratford was recently named as the countries worst crime hotspot[0].

According to the FT, "the bounce" has failed to materialise [1].

I would not recommend a walk around the outskirts of the Olympic stadium for all but the very brave, it's still an area in much poverty with many social issues completely unresolved, notably violent crime (3.5 for every 1,000 people) [2].

[0] http://www.standard.co.uk/news/crime/westfield-stratfords-po...

[1] http://www.ft.com/cms/s/2/543cabaa-8a41-11e2-9da4-00144feabd...

[2] http://crimeinlondon.com/newham/stratford-and-new-town/viole...

andy_ppp• 13 years ago

Problem with Straford is that

a) new builds in the UK are made as cheaply as possible.

b) new builds go down in value as soon as you buy them

c) we in Europe hate soulless man planned cities - a lot of the area around the olympic park feels this way.

I think the government could have just paid for the cleanup of the area and done something like subsidise housing for the poor there with the money, rather than pay the the huge costs of running the games. The opening ceremony was pretty good though :-D

andyjohnson02• 13 years ago

"I conjecture that the Olympics were used as a mechanism to force through a substantial number of planning permissions that would not have been granted otherwise"

There was also fairly widespread use of compulsory purchase orders [1] to obtain land for the olympic park [2]. A significant number of people lost their homes, and businesses were forced to move, so that private-sector developers could take-over the land.

[1] http://en.wikipedia.org/wiki/Compulsory_purchase_order

[2] http://www.gamesmonitor.org.uk/node/1092

PakG1• 13 years ago

maybe there aren't many advantages for a city like Tokyo or London

For a country that has endured the world's only recent nuclear disaster and has experienced massive economic stagnation for quite some time, I imagine that the Olympics could present a similar opportunity for building pride and galvanizing the country. Will the investment pay off? Who knows? China's investment isn't paying off in the financial sense that a lot of the Olympic buildings built have no real post-Olympic use. But if we are considering the pride factor alone here, then I imagine Tokyo will have a similar boost.

tokenadult• 13 years ago

in 1999, the Beijing subway was almost nonexistent

Well, you did say "almost," and I'm aware that the subway system in Beijing has been considerably extended, but parts of the system were old in 1987 when I first rode it. I'm not at all sure that I agree that it "is more than worth the 40 billion that was spent" for peasants in a backward region of a still poor country to have the illusion that they live in a developed country.

nemesisj2• 13 years ago

Yeah, it was installed in the late 60s, but it was really poor during the 80s (and yes, I rode it in the mid 80s as well). There's really no comparison between it then and what it became just prior to the olympics. Same with the highway situation, airport, transport links to Tianjin, and even more minor things like making sure Pinyin was on all street signs. These things matter. The 40 billion didn't just give people an illusion - it transformed Beijing and partner cities and made a lasting contribution to the people who lived there.

mathattack• 13 years ago

I agree with you that it's part psychological. I think another piece is an Agency problem. It may not be in the best interest of the people paying the bill (taxpayers) but it may still be in the interest of the organizer.

When Chicago tried to get the Olympics, it was to be the capstone of the legacy of Richard Daley. That's an agency problem, because ultimately the people of the city would need to foot the bills.

I view this similar to corporate M&A. It rarely ever suits the shareholders of the buyers. So why do companies do it? Either there is a psychological reason (overconfidence?) or their stock is overvalued or it might just be in the best interest of the CEO. CEOs of medium companies like to become CEOs of bigger companies. By extension, city officials like to wine and dine with the global elite.

bsullivan012• 13 years ago

On top of my head: not all is lost. So if it costs $50 Billion, a lot of it is recouped via jobs, taxes, infrastructure that would have been built anyway, tourism etc. Some is lost but that's life. There's the "Made in Japan ...USA, China" brand and other geopolitical benefits as well. So money might be lost or it will be lost but so what? Greece has no business in doing them but Japan, China, USA, Russia and countries alike can afford to lose a (relatively) little bit of money for indirect benefits. Sometimes people buy a Lexus when a Toyota does the job just as well, or eat a $100 per head restaurant instead of a $7 Chinese buffet. Are they dumb?

Politicians also win, there's euphoria in Japan right now and those involved will see some benefits, just as those been seen during the opening ceremony, medals etc.

psutor• 13 years ago

Although economically true these days, I found "Greece has no business in doing [the Olympics]" ironic.

bsullivan012• 13 years ago

I meant to say that bigger countries can absorb a loss, smaller ones like Greece might even go down (at least faster) because of Olympic losses.

visakanv• 13 years ago

Same reason you'd host any sort of expensive party. To look cool and feel cool. A lot of international politics make a lot more sense when you remember we're all in high school.

arethuza2• 13 years ago

Actually, I was very skeptical about the London Olympics before the event. However, I thought the whole thing went splendidly and arguably did give the whole of the UK a bit of a lift in national morale just when we really needed it.

Compared to other megaprojects that we seem to be happy to splurge taxpayers money on (e.g. silly aircraft carriers) it actually seemed pretty good value for money.

dingaling• 13 years ago

Current estimate for the QE Carrier project is £5.5 billion, or about 60% of what the Olympics cost.

In comparison to a few weeks of enabling professional athletes 'perform' , the carriers should give at least 45 years of service life. A tangible contribution to UK security, rather than just a TV event.

I'm not a fan of how the carrier project has been managed but to say it's worse value than the Olympics surprises me.

tofof• 13 years ago

Only an economist could ask a question of the form "why would anyone want to do <activity without clear economic benefit>?"

I wonder how they manage to reproduce.

randallsquared• 13 years ago

Are you suggesting that hosting the Olympics is a terminal goal, like having children is?

netrus• 13 years ago

Being entertained is, as feeling a global spirit of humanity, as being proud to be a good host to the world. That are a lot of positive emotions I connect with the Olympic Games. It's quite expensive, but you only do it all 20-odd years (considering also Winter Olympics and Soccer Worldcup). Some modesty is in place, but it would be such a shame if we did not have these events anymore.

acheron• 13 years ago

They've figured that out too. Behold, economist Bryan Caplan's book "Selfish Reasons to Have More Kids": http://www.amazon.com/Selfish-Reasons-Have-More-Kids/dp/0465...

JanezStupar• 13 years ago

First prestige and second corruption opportunities.

Basically its like a high school party for cool kids, with an added bonus that some of the cool kids get a lot of money at the expense of others.

rayiner3• 13 years ago

If I were a mayor, hosting the olympics would seem like a good way to shove infrastructure improvements past all the NIMBY assholes that always block them.

Lucadg• 13 years ago

politicians love big money moving around so they can grab a bit for themselves. Many big projects in Italy shows this seems to be the main, if not unique, drive for events like the Olympics.

codeulike2• 13 years ago

Its a bit like saying why would anyone want to host a huge dinner party.

RougeFemme• 13 years ago

Except that etiquette would dictate that the individual host foot the bill for a huge dinner party, whereas the taxpayers foot the bill for the Olympics.

PeterisP• 13 years ago

Anyway, UK taxpayers don't foot the bill for Beijing Olympics - so it's their (UK as a whole) choice to offer to throw the huge dinner party, or just visit someone else's party.

codeulike2• 13 years ago

Yes, but in the metaphor, individual = country ... so that is taken for granted.

fatihpense• 13 years ago

Also for Turkey, It means government gets an excuse for building landmarks to north Istanbul. Expanding city and continue benefiting from a never-ending real estate gold rush in Istanbul. Both bidding of big projects and real estate benefits will go to "friends" of government.

Also they will use this excuse for removing poor people, and destroying houses that have much higher real estate value than their residents.

decasteve• 13 years ago

If you have most of the infrastructure already, like Sydney, it makes sense.

Whereas Montreal is still paying debts from hosting the Olympics in 1976.

Why Would Anyone Want To Host The Olympics?

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