“That’s great, but how much?” This is the golden question of capitalism, asked aloud or with silent skepticism by any participant in a modern economy about nearly anything with a price tag. Who wouldn’t mind savoring a meal at a Michelin starred restaurant or soaking up the sun on the sands of Tahiti? Who doesn’t believe that college education or high quality public infrastructure is a good thing? But scarcely do such ideas flicker across our consciousness before the golden question of capitalism garishly illuminates the practical difficulties inherent in any economic consideration. The Olympics are certainly no exception.
The net worth of the Olympics has long been questioned through numerous economic studies attempting to quantify its overall economic impact – or return on investment, as it were. Skeptics have pointed out such infamous failures as the 1976 Montreal Olympics which buried the host city under a mountain of debt that took 30 years to pay off. With the cost of the 2012 London Olympics soaring from an original bid of $6.5 billion to $14.5 billion, this year’s games are on track to become one of the most expensive in modern Olympic history. Optimists such as British Prime Minister David Cameron have countered that the Olympics will provide a much needed 20 billion pound boost to the British economy. But ultimately, such broad-based economic estimates are notoriously difficult to calculate and provide only a crude if not misleading measurement of success.
The question of whether the Olympics are worth it is meaningless on its own until one adds a simple but crucial modifier: to whom? Consider the many types of “stakeholders” affected by the Olympics: the athletes, their coaches, the heads of state, and VIP guests, David Cameron and London Mayor Boris Johnson, the International Olympic Committee, its president Jacques Rogge, the residents of East London, the residents of West London, the construction workers, the shareholders of construction companies, the local shopkeepers, the official corporate sponsors, their competitors, the London bus drivers, the London commuters, the consultants, the ticketholders, and so on.
Each of these groups is affected very differently by the Olympics, both within and without the economic sphere.
Arriving at a better understanding of these more nuanced net impacts is vital not only for evaluating the cost-effectiveness of the Olympics more holistically but also for determining its explicit and implicit funding structure. For example, one may argue that the Olympics are largely economically regressive in that well-off ticketholders from London and abroad reap benefits from attending the games that greatly exceed the prices of their tickets because they are effectively subsidized by poorer London taxpayers who cannot afford to attend.
If this is the case, perhaps public funding for the Olympics should be inverted such that the residents of host cities are monetarily compensated by ticketholders for the non-economic costs they are forced to bear. Or perhaps London residents should receive a heavy discount on Olympic tickets for their troubles. Londoners would probably not have objected to such proposals.
Given a more complete reckoning of costs and their differential impact on residents, municipal and state governments – democratically elected ones, at least – may not be so quick to recklessly ratchet up their bids to host the Olympics and bend to the International Olympic Committee’s every whim. While politicians will likely continue to be enamored with the prospect of a global spotlight and personal prestige, providing voters and taxpayers with a more complete accounting of the Olympics’ impact on residents can at least provide a sober check on overzealous promises.
Few can argue against the positive benefits of the Olympics with its spirit of international competition, celebration of human achievement, and inspiringly inventive mascots. But perhaps we can fulfill the Olympic dream in a more equitable, responsible way.
Read more in this column Kyle Chan: On Tuesday, A Day For Nation Building