London Olympics … Boon or Boondoggle?
By Staff News & Analysis - August 15, 2012

Boris Johnson: We will reap economic rewards for years … The Olympic Games were "money well spent" as tourists delivered a huge boost to restaurants, nightclubs and theatres over the past two weeks, Boris Johnson has said. Mr Johnson said crime dropped by five percent and eight out of every ten hotel rooms were full – far higher than during either the Beijing or Sydney Games. The London mayor suggested most people would think the estimated £9.3 billion cost of Britain's most successful Olympics for a century was good value. − UK Telegraph

Dominant Social Theme: If politicians create really huge boondoggles, they can hide the costs for so long it looks like they're really making money!

Free-Market Analysis: Oh, boy … Boris (the "boy mayor") is excited about the money he has made for Britain, though exactly what constitutes "Britain" we're not quite sure. But Boris is convinced "Britain" will reap economic rewards for years.

Boris is one of Britain's more frenetic pols, and he virtually danced his way through these Olympics, especially during the musical closing ceremonies, where the Spice Girls held a much-anticipated reunion. He talked up "The Games" at every turn.

It looked almost compulsive … but perhaps there were nerves involved. Britain is on the verge of yet another recession (maybe it never left the first one) and London's mayor no doubt did not want to dwell heavily on the billions in taxpayer costs.

Much easier, of course, to talk up the Games' success, especially in generalities. Johnson is convinced beyond doubt here that the Games have been an economic success.

Perhaps he is speaking of the Queen? Or of his friends? Again, it's not quite clear, but we're fairly certain of one thing: The Olympic loot will not be spread out evenly. Some will indeed profit; many others shall not.

This is the way it always is with such manufactured events. The Olympics are mostly a celebration of mass statism. Making money is beside the point. We doubt any of these massive boondoggles make money for the majority of people who support them with their tax dollars.

Of course, politicians always pretend the Games are profitable. They can afford to make such statements because the true damage won't be revealed for years. They'll be long gone then, perhaps onto an even bigger job that doesn't involve the mess they've inevitably left behind.

Here's some more from the article (also excerpted above):

"If you were to say to me that we have just held the greatest games ever in Britain, I would say you are on the right track," he said. Despite fears the Olympics would create a "ghost town" in central London, Mr Johnson boasted that eight out of every 10 hotel rooms were full – far higher than during either the Beijing or Sydney Games.

He also rejected complaints that businesses were suffering lower sales during the Games as spending soared at restaurants, nightclubs and theatres.

Figures from Visa showed that tourists eating out increased takings by 20 per cent, while theatres saw ticket sales more than double in the second week.

More than 300,000 foreign visitors were predicted to be in town for the Games, on top of around 600,000 British holidaymakers. The capital also benefited from 5.5!million day-trippers spread across sites from equestrianism in Greenwich Park to rowing at Eton Dorney, with 2.71million visiting the Olympic Park.

To be fair, Johnson is not the only one talking up Olympic profits. Others in government, we learn from the Telegraph, estimate that Britain will get £13 billion of "economic benefits" over the years.

Chris Daniels of the Lloyds Banking Group believes that current numbers underplay potential profits. "There are a couple of big impacts that weren't predicted, and one of them is the sense of pride and confidence that the UK and UK plc has got. This in itself will have a psychological impact on business."

Ah, the old animal spirits argument! So taxpayers spent billions and now receive in return vague pronouncements having to do with the morale-boosting characteristics of the Games.

Daniels also points out that "Every senior business person and politician has been impressed while attending events. You can't measure the impact of some of these private business conversations behind closed doors, but it will be there."

Again, the psychological impact. While uncodifiable (for good reason), it is seen, nonetheless, as perhaps the most important beneficial effect.

Why "senior business executives" would be so giddy over the Games' atmosphere as to create additional, hitherto unnecessary projects is again unclear to us. But Daniels is confident of his analysis. The 2014 Russian Winter Olympics have already contacted British companies, he claims, to see if their services are available for future games.

Daniels does not see the irony in this statement. Providers of goods and services for the money-losing London Games (yes, by any objective standard they will certainly lose money) are now to supply their wares to a Russian project that will doubtless lose money as well.

The Telegraph's experts obviously don't see it this way, however. The revenue has already been codified, in their view. "Benefits from the Olympics are expected to come through extra construction and tourism, with London benefiting from a third of the economic impact and the rest of the country receiving two-thirds."

It sounds so official, doesn't it? But we bet if we really probed we'd find out these prognostications are just that … theoretical proposals about how greater "Britain" might ultimately benefit.

Guesses, in other words. After all, how does one benefit from a spectacle long shut down? It's a little bit like codifying the economic benefit of seeing a movie after the fact.

Sure, it would be a stretch, but if the youngster is inspired by "Batman Returns Again … and Again" to become a makeup artist, one can claim the movie inspired a lifetime's worth of earnings. But that's, well … a stretch!

A stretch that British pols are more than willing to make. The costs meanwhile, are £9 billion – directly to the taxpayer. Boris Johnson and others are estimating £13 billion-worth of economic benefits.

After Thoughts

Dance faster, Mr. Johnson!

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