History has taught us that hosting the Olympics serves as a redistribution of wealth from the middle class to the rich. New York’s politicians would have benefited had the city been granted the Games because they could curry favor from the hoteliers, contractors, union leaders and restaurant owners that would have profited. But much of those profits would have come from taking money from middle-class taxpayers who would derive no economic benefit.
The centerpiece of Gotham’s plan was based on a now-defunct project to build a stadium on Manhattan’s West Side, which would have become home to the New York Jets football team. Although team owner Robert Johnson would have financed the $600 million stadium, the city would have had an estimated $1.4 billion in land and infrastructure costs.
A group of 106 economists from around the country sent a letter to Mayor Bloomberg noting that the stadium’s astronomical cost–to be footed by taxpayers through higher levies and bonds–was over three times the price of any existing stadium in the National Football League.
The report also made it clear that a combination of tax exemptions and other subsidies to build the stadium were “both unnecessary for economic development and very inappropriate.” That plan collapsed in June but a similar plan to build a stadium for baseball’s New York Mets in Queens is now in the works. Such a plan, like the one that preceded it, will cost taxpayers billions of dollars by handing over extremely valuable real estate to a wealthy team owner for a song.
A look at other publicly financed Olympics shows what a debacle they usually are for taxpayers.
Greece was host to the 2004 Summer Games. Seven years before the Games, the cost to host the Olympics was estimated at $1.3 billion. Actual cost: $14 billion. Thanks to the Olympic profligacy, Greece now has a 6% budget deficit, which puts the country in breach of the European Union’s stability pact, and its economic growth rate is projected to slow from 4.2% in 2004 to 2.8% in 2005. The facilities it built for the Games go largely unused.
The 1992 Summer Games in Barcelona reportedly posted a $3 million surplus on revenues of $1.6 billion. But that’s before you factor in the $8 billion the city and country spent on capital projects like roads and airports. The increase in tourism has helped the wealthier folks who run the travel industry in Barcelona. But the debt used to finance these projects pushed up inflation in the period leading up to the Olympics, which hurt the poor and middle class much more than the rich. In particular, housing prices increased fourfold from 1986 to 1992, and are now about twice median income.
The 1976 Olympics in Montreal was funded almost exclusively with public city funds. Montreal turned a significant profit on operations from hosting the Games. But capital and infrastructure expenditures for venues such as the Olympic Village and the stadium spiraled so out of control that the city was left with a gaping deficit of $1.2 billion ($4 billion in today’s dollars).
Local taxpayers are still paying off the cost of the Games through a supplementary $2 billion tax on cigarettes. Taxes on tobacco are regressive–that is, they take a much bigger percentage of the average Joe’s income than that of the rich.
New York’s politician’s squandered a whole lot of time and effort campaigning for the Games. Now, thankfully, they won’t be able to waste anything more. Citizens should boot the politicians from office and be grateful the Games will be in London.
And as Mark Tapscott writes today, “It speaks volumes about the state of things when it takes a decision by the Olympic Selection Committee to keep Chicago’s taxpayers from getting completely screwed once again.”
To which I say: What do you have against people of color in a developing nation on a continent that has never hosted the Olympics?
Update: Linking to a CNN talking head second-guessing the president’s decision to lay his rep on the line, Allah asks, does anyone think Obama “would have fueled up Air Force One for New York or Miami, say?”
If not, then how was this some big gesture on behalf of an American Olympics bid rather than a Chicago bid, specifically? In fact, I’m not even sure it was a “Chicago bid” given the ambivalence inside the city about bringing the Olympics there and the very real possibility of tax hikes and layoffs to pay for everything. What it was was a Daley bid, which explains why, according to Chuck Todd, Daley worked every crony connection he had in the White House to get the city’s favorite son out there on his behalf. Bear that in mind the next time you see a liberal crying crocodile tears over how “un-American” it is to chuckle at The One’s failure today. He went to Copenhagen to do a favor for his corrupt hometown political machine and he flamed out big time. Boo hoo.
Or as Rick Moran wrote earlier today, “Obama gambled the prestige of his presidency on a trifle.”