07 July 2012

Fantasy economics

So our Prime Minister thinks that the Olympics will boost Britain's economy by £13 billion over the next four years.  Utter tosh!  The Independent explains:
We will never be able to look back at our economy and determine its size if beach volleyball had not been held on Horse Guards Parade. But a series of academic studies have found that big sporting events do not boost economic growth, help employment or even increase tourism. They can do precisely the opposite – and not just because so many workers are being told to stay at home, and many of those working are demanding bonuses to do their job.
For a start, the infrastructure is highly specialised, built fast and to the requirements of organisers rather than the needs of the host city. So we have the obscene spectacle of spending £40m on a basketball arena and £19m on a water polo venue, only to be pulling them down once the crowds disappear. Even Sydney, among the best organised recent Games, tore down several venues – hardly surprising, since it must hold one event a week to cover running costs of its surviving Superdome.
As job creation schemes, these mega-events are flawed. Much of the work making expensive venues is highly specialised, so of limited help for unemployed locals. In the longer term, jobs in sporting centres are often part-time, low skilled and low paid. Any help to the job market is highly inefficient: one American study found the cost of each job generated was four times the cost of the next best alternative. Other studies speculate that the Olympics actually cost a country jobs when so much taxpayers' money is frittered away.
But what about all those extra tourists?
Amid all the hype, there is much talk of tourism. So Londoners hoping to rent out homes at inflated prices were surprised when the promised goldrush never materialised. Meanwhile, music festivals have been cancelled and West End theatre bookings are down by 20 per cent.
The truth is that some visitors would have been coming to London anyway, while many more avoid the circus and business travel is deferred. When we last held a global sports event – the Euro 96 football finals – only 100,000 of the expected 250,000 foreign visitors turned up, and they spent peanuts by comparison with overall tourist spending. When Greece held the centenary Olympics in 2004, it took tourism two years to recover to pre-Games levels.

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