Olympics – ‘Rousing Financial Success’?
Though not a true believer myself, I can think of a number of positive impacts from the 2010 Olympics. There was, without question, a community spirit seldom if ever seen in Vancouver. There was a renewed commitment to excellence in sport.
However, one thing I couldn’t imagine anyone suggesting is that it was a “rousing financial success”. But that was before I read Jeff Lee’s enthusiastic commentary based on PriceWaterhouse’s most recent report on the economic impacts of the Olympics.
Lee was obviously impressed by PW’s estimate that over the 2003-2010 period, the Games generated $2.5 billion in GDP and 45,000 jobs. The trouble is, those impacts that so impressed Lee are for the most part the result of government spending, and in many respects excessive and wasteful spending at that.
PW points out that the largest source of construction-related economic impact in the 2009-2010 period was due to the City of Vancouver assuming the responsibilities and costs of completing the Olympic Village project. No doubt lots of people worked on that project, and had the cost overrun and City financial loss been greater, so too would have been the economic impact. But one could hardly call that a ‘rousing financial success’.
Another major source of impact was the 2010 security-related spending, in itself almost equal to all of the tourism impacts over the entire 2003-2010 period. Of course spending nearly $1 billion on security will generate jobs. Keynes understood that when he famously commented that digging a hole in the ground, burying a bottle and digging it up again will generate jobs too. It’s just that Keynes would never have called those impacts a success. He recognized that better things could have been done.
The point is, as PW itself states in its report, estimates of economic impact say absolutely nothing about the economic benefits and costs of the Olympics (or anything else). They certainly don’t address whether or not the Olympics could be considered a financial success. That requires careful consideration of how much was spent, what was produced, and what else could have been done.
Generating impacts, especially with multi-million dollar government spending, is easy. Generating value is something else.