Politicians tell us that, whether you like the Olympic Games or not, hosting a Games is a sure fire way to boost the economy. They tell us an Olympic Games creates thousands of new jobs as well as new housing and retail developments, and helps grow the economy. This is the Olympic myth.
Take a walk down to the Olympic site and, indeed, you’ll see lots of workers building stadiums and arenas. whilst in the surrounding areas you’ll see construction of apartment blocks, parks and a shopping centre. These are the visible and direct consequences of the publicly funded Olympic development. But there are opposing indirect and unseen effects on the economy, which politicians (and most economists) fail to acknowledge. This leads to an incomplete and falsely positive assessment of the effects of publicly funded developments.
The cost to tax payers of building the Olympic parks and venues is projected to be around £9.3bn (but it could end up being more). That’s £9.3bn worth of products, goods and services that would have otherwise been created and offered elsewhere in the economy. For every job that the Olympic development ‘creates’ at least one job is denied existence elsewhere in the economy. For every retail outlet or apartment that is created by the Olympic development, a shop or house is not created elsewhere – perhaps in places where the need may be much greater. These are the ghosts of things unmade and of course never register with people as jobs, service, or products ‘lost’ because they never had them.
Publicly funded development projects do not create additional jobs and business that otherwise would not have existed, they do not grow the economy. Such developments simply divert some jobs, production and business to a specific area of the economy to pay for a development that most of the people whose money has been taken to pay for it don’t need and will not benefit directly from. For every £100 that the Olympic development costs, £100 is taken away from taxpayers, which they would otherwise have had to spend on goods and services of their own choosing, things they specifically want or need.
The Olympic Games development will not enlarge or grow the economy. Publicly funded developments do not create wealth, they merely divert and channel it in different ways to the benefit of some, but most importantly, to the equivalent cost of others. Just the same as if you take a slice out of a cake and place it on top you are not creating a bigger cake; you’re simply ‘redistributing’ a part of the cake.
The Olympic Games costs more than you think. Because of it you have less money to spend on things of your choosing; unemployed people everywhere else in the country apart from where Olympic construction projects are have fewer jobs to apply for and businesses in all other areas of the economy have less business. In fact, the only way an event like the Olympic Games can possibly bring additional wealth into the economy is through increased tourism in related areas for the duration of the event. More tourists mean a temporary increase in sales for bars, restaurants, retail outlets, hotels etc. Butthe expected increased revenues from tourism generated by the Olympic Games – estimated by VisitBritain to be £2bn – are nowhere near enough to even negate the lost £9.3bn worth of potential jobs, goods and services elswhere in the economy. Even if we take into the account the supposed increase in business and marketing appeal of UK businesses as a result of the UK hosting the olympics, you would still need to increase the £2bn five fold in order to even begin adding to the economy.
So, next time you hear about publicly funded development or construction, think of what the indirect and unseen consequences are, think about the products unmade, think about the jobs that are denied existence elsewhere by every job ‘created’ by the Olympic Games. Remember that every £1 of tax payers’ money that is diverted into the Olympic Games, is £1 less that is spent elswhere in the economy. The government cannot create something out of nothing and it doesn’t create any wealth because the only money it has is the money it takes from the truly productive.
I have nothing against the Olympic Games as a sporting event, I think it’s quite fun, but I don’t like it enough to pay for it, and so those true fans who want to have an Olympic Games should raise the funding for it from private investment, sponsorship and/or stick their hands in their own pockets – not mine. Would the Olympic Games ever happen if it wasn’t for the money sucked out of the pockets of tax payers? I’m not so sure, after all it’s a huge amount that has to be raised in order to fund the construction of stadia and then stage the event.
For me, the real rubbing of salt in the wounds of tax payers is that vast swathes of them whose money paid for the event and who were actually excited about the whole thing, won’t even get to see any of it in person because they couldn’t get tickets. Thanks for your money, but, sorry, there’s no tickets for you.