#WorldCup2014 – a reckless and unethical spending orgy: @e2mq173 comments

Errol Brandt

Errol Brandt

Citizen journalist at No Fibs
Errol writes No Fibs political column - From Left Field. He works as an Accountant within the manufacturing sector. He has a strong interest in sustainability and is a member of the ALP. His blog posts are an unusual mix of economic reality with social idealism.
Errol Brandt

FIFA promotional video

Those harbouring unrealistic expectations for Australian success at the World Cup have been brought back to earth this week. Australia has played well but until the ‘Beautiful Game’ becomes a national obsession, the Socceroos are unlikely to become a force that strikes fear into the hearts of European or South American teams.

Thankfully, the rest of Australia need no longer feign interest in soccer for another four years. It’s back to our staple diet of cricket, tennis, NRL and AFL – things we are good at.

At the risk of being branded a traitor and expelled to Manus Island, now that our national hopes have been dashed it’s time to challenge the ethical basis for these massive global sporting events.

It’s time to ask some serious questions.

Brazil is a poor country. It is racked with chronic social issues stemming from massive inequity; the poorest 34% of the population receive less than 1.2% of the nation’s income.  Intuitively, we know that Brazil should not be hosting massive international sporting events such as the World Cup in 2014 or the Olympics in 2016 – not until basic standards of human development are accessible to those at the bottom of the social pyramid. Yet somehow it is.

The total bill for hosting the World Cup in Brazil is now estimated at US$14 billion. Add to that another US$14 billion (before overruns) for the Olympics in 2016. Together it makes for a reckless spending orgy that will leave a legacy of debt and lost social opportunity to plague Brazil for decades.

No economist is seriously arguing the Olympics in 2004 caused the financial meltdown in Greece, but most agree that the games certainly contributed to it. Moreover, it exemplifies the irresponsible economic thinking which did lead the country to ruin. Spending vast sums of public money on such events is a massive breach of the social contract between people and the politicians they elect to represent them.

Brazilian President Dilma Rousseff, a former social activist with Marxist views, now describes herself as a pragmatic capitalist. Predictably, she defended the massive investment arguing this would leave long-term benefits to Brazil including sporting stadiums, airport terminals, roads and other infrastructure.

The fact remains that the necessary infrastructure could have been built at a fraction of the cost without the need for Brazil to host the World Cup. The other infrastructure, much of which will become obsolete, need not have been built at all. For example, the US$270 million Arena da Amazônia in Manaus may become a prison after the games.

The argument of ‘enduring benefit’ used to justify this spending rarely stacks up. The Sydney Olympic Games in 2000 cost around A$6.6 billion to hold, but did not generate enduring economic benefits. Rather, it drained the Australian economy of around $2.1 billion according to a study produced by Giesecke & Madden (2007).

By contrast, the London games in 2012 cost around US$14.6 billion to stage and generated a net profit of US$90 million. Unlike Sydney, those games may have produced some lasting economic benefits. However, London is a city that already has world-class infrastructure – the same cannot be said for Rio de Janeiro.

On both social and economic measures, holding these events in Brazil is a deplorable use of public money. It is a lost opportunity to educate and improve the quality of life for Brazil’s estimated 32 million people who live below the poverty line. Even the economic rationalists must agree that there is no financial justification for holding these events in any developing country.

How the world allows politicians to inflict economic pain on its citizens is a question of ethics that demands attention. We must understand why we don’t see the events in Brazil as a gross social injustice and resolve not to allow it to be repeated.

While die-hard Australian soccer fans drown their sorrows at another lost opportunity, I hope they also shed a tear for the millions of Brazilian children, women and men who will be thinking exactly the same thing.

 


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