In recent years, as citizens start to realize that governments can’t finance every facet in society and budgets need to be tightened, a growing number of countries have begun to protest governments spending billions of tax dollars on sporting events such as the World Cup, Olympic Games and the Pan American Games.
Whether or not one believes the government should be in the areas of healthcare and education, it can be concurred upon that governments that are broke should be spending their budgets wisely on societal needs rather than wants, including these grand entertainment and sporting affairs.
For a long time, it was believed that if a country or a city hit the jackpot by hosting a World Cup or a Summer Olympic Games then it would create immense sums of prosperity and stimulate the economy. In the short-term, it might generate funds in the economy. However, in the long-term, it brings nothing but scandals, budget strains and waste.
This month, the 2014 FIFA World Cup begins. Of course, millions of people all over the world are excited about this, except for a significant number of Brazilians who had their tax dollars taken in order to subsidize this multi-billion-dollar event. In response to the government’s decision to spend $11 billion on the World Cup, there have been protests by scores of people who are living in poverty and don’t have decent access to clean water.
Indeed, not only does it cost a lot of money to build stadiums and construct venues to host these kinds of games but just to bid for the World Cup comes with a hefty price-tag: an estimated $25 million. Also, lost productivity on a global level amounts to tens of billions of dollars – another unintended consequence.
Bureaucrats and politicians will point to the jobs that are created with these international events. However, this can be easily refuted by citing Frederic Bastiat’s “That Which is Seen, and That Which is Not Seen.” Instead of spending billions of dollars building stadiums and taking from the private sector, individuals could have invested in the economy and businesses could have created jobs. We don’t see this, though, because the private economy was never given a chance to.
Another case is the 2015 Pan Am Games in Toronto, Ontario. The provincial government is nearly $300 billion in debt and maintains a budget deficit of $15 billion, while the city debt is approximately $5 billion. What happens? Both governments are engulfed in scandals.
The Pan Am Games is over budget at $2.5 billion – it could approach $3 billion soon – and Pan Am officials have charged taxpayers for lavish items, which has caused numerous calls for resignations. What’s interesting is that the average Torontonian would likely not know what these games even are.
The exact same thing happened in Vancouver, Beijing, London, Turin and Athens for the Summer and Winter Olympic Games.
City after city, state after state, nation after nation has been subsidizing these multi-billion-dollar entertainment and sporting companies and events when these entities can simply fund themselves, especially when they have multi-national corporations sponsoring the games.
Of course, politicians enjoy taking part in these pet projects because it justifies their positions and it gives them something to do in the meantime. They particularly enjoy it when it’s the taxpayer’s money, but it usually ends up costing the taxpayer even more in the end. The only ones who benefit are the politicians and the cronyists.
This is a great reminder of the Milton Friedman quote: nobody spends somebody else’s money as wisely as they spend their own.