News & Analysis
The False Boom of the Olympics
Third of London hotel rooms empty for Olympics as 'normal' tourists stay away ... London's hotels are facing a dramatic loss in profits with a third of rooms unsold over the summer after tourists have been put off by the Olympics, a survey has found. – UK Telegraph
Dominant Social Theme: More Olympics, please.
Free-Market Analysis: The Olympics leave a trail of bankruptcy and destruction wherever they go. From Greece to China to Spain and beyond, the mothballed infrastructure, ruinous costs and misdirected man-hours resonate ruinously for decades.
It is surely an elite dominant social theme that the Olympics represent the best of humanity's physical endeavors. It is part of a larger brainwashing having to do with the idea that if something is sponsored by the state it is inevitably morally "purer" than something that is not.
It is hard to escape the notion, in fact, that the Olympics function as some sort of repetitive psy-op – reminding people of the glory of state-controlled pageantry. Conveniently, the aftermath – the rotting buildings and abandoned infrastructure – are never reported. The glory is televised. The waste is hidden.
Now Britain is struggling with what is sure to be a great drag on its economy. While room rates are not performing as desired (see above), this is only a foretaste of what is to come. None of what is being built to accommodate the Olympics would likely have been otherwise constructed.
The vast outlays supporting the "Games" simply would not take place absent their presence. Not only that, but there is no repurposing of the white elephants evolving from most Olympic infrastructure. Here's something from a USA Today article in March:
Boon or bust? London locals split on Olympic impact ... When Londoners learned they would host the 2012 Summer Olympics, the city erupted. Thousands in Trafalgar Square cheered the news, announced in July 2005, that the city had narrowly bested archrival Paris for hosting honors. Workers celebrated in front of their office TVs, and the queen sent her "warmest congratulations." ...
"Britain is Great," declared The Daily Telegraph. "Who's laughing now, Mr. Chirac?" gloated the Daily Mail, referring to French leader Jacques Chirac. Seven years and a devastating economic crash later, the jubilation has been replaced by trepidation.
Resentment of the Games' $14.8 billion cost has grown, as has British unemployment, now at a 16-year high of 8.4%. No longer are the Games, which kick off July 27, lauded as a status symbol. Instead, government officials are touting the Olympics as something more important: a savior of Britain's battered economy.
The Games will bring in $1.6 billion for British business and are "vital" for the country's "return to sustainable growth," Prime Minister David Cameron said in January. The competition, which ends Sept. 9 with the closing of the Paralympics, is "not about six weeks of sport" but about "six weeks of business benefit," culture and sports minister Jeremy Hunt told The Daily Telegraph in December, adding the Games will be "a huge plus sign" for British economic output.
In fact, the Games will not prove a boon for the British economy. When buildings and other physical improvements are generated by legitimate demand, then the results linger and people are enriched. But nothing about the Olympics is legitimate in terms of economic necessity.
It's like a sugar rush – brief and powerful but leading to an inevitable downturn, even a local depression. The resources expended to support 10,000 athletes cycling, diving and running have little to do with what an ordinary economy demands. It is merely a further misalignment of money and energy, made possible, of course, by the reality of monopoly, fiat money.
So long as government-affiliated central banks print money on demand, these sorts of boondoggles are easily erected. The result, however, is the spreading of a great deal of pain – for even fiat money extracts a price in terms of inflation and the hangover of resources that have been squandered.
The USA Today article warns that London theater owners may experience empty seats as ordinary tourists bypass the city. Already, organizers canceled Britain's biggest outdoor arts festivals; companies will be forced into significant expenditures to cope with the traffic of these unnecessary Olympic events.
It could be that the Olympics have run their course. After a series of municipal failures around the world combined with the endless, wretched economic downturn, people have had enough. The article cites a January 2012 poll for ITV, in which only 30% of Britons surveyed said they thought pluses of the Games outweighed the minuses, especially when it came to the economic benefit.
Of course, the British are very good at this sort of thing. Facing yet another recession – actually an extension of the depression that the British economy is currently struggling with – the elites doubled down with the Queen's Diamond Jubilee.
This celebration of nothingness — the reign actually of an old woman and various hanger-oners – cost something like $2 billion and comes on the heels of the April royal wedding which doubtless cost a good deal as well, none of which was paid for by participants.
Conclusion: It is not possible for state-mandated celebrations to "pay for themselves." Large feats of central planning look impressive but inevitably come with huge sunk costs. The British will find this out after the fact, though it seems many have already figured it out.