Olympic Games: Carrying the Torch Deeper Into the Perilous Austerity Forest
By Kelly Watson (8/9/12)
When a country hosts the Olympics, governments and mainstream media promote the notion that the host’s economy will be stimulated. The Olympics, however, create what is really an illusion of economic growth. They do not provide the long-term sustainable growth that will significantly contribute to the population, but rather a boost in temporary jobs, with the promise of increased tourism, at least for a time, along with some infrastructural improvements. Greece, site of the 2004 Summer Games and Britain, site of the current Games, are both governed under neoliberal policies, with their respective specific national idiosyncrasies. Globalization, deregulation, and austerity measures characterize both the problem and the supposed solution for both of these countries. It is not possible, however, to fix the underlying problem, which is long-standing and systemic in nature, with a temporary fix.
The British economy has been in steady decline since Thatcher’s days as Prime Minister in the 1980s, but the British populace is offered the Olympic Games as a viable solution to their problems. While it can be argued that temporary job growth is better than none, it still doesn't solve the problems that Britain will continue to face after the Games are over. The solutions the government is pursuing ultimately undermine the public's welfare in the short term, and present few growth opportunities in the long term. Hypocrisy is evident when the public is expected to shoulder the burdens through austerity while the government devotes immense financial resources to hosting the Games.
Britain has been in a period of economic downturn with increasing unemployment rates. It appears extremely unlikely that the UK's economy will escape from this circle of decline in the next period. The austerity policies pursued by the present UK government have substantially slowed the economic recovery that was taking place in 2009 and the first part of 2010 - between the 3rd quarter of 2010 and the 3rd quarter of 2011 the UK economy grew by only 0.5 per cent. The opposition Labour Party has recently also endorsed essentially the same austerity policies which have failed not only in the UK but in other European economies, such as Greece and Ireland, where they have been pursued.[i]
When London bid for the Games, and was awarded them in 2005, Jerome Frost, head of the Olympic Delivery Authority, was quoted as saying:
"The games present a unique opportunity for London... We would reinvent the event. Make it more sustainable. The bid we made to the Olympic Committee was positioned on what we would leave behind. The games were dubbed the 'legacy Olympics’." Jerome Frost was also quoted as saying "If this doesn't work nothing will."
After the Olympics the buildings would find new life as community sports centers, the athlete's villages would become private housing- half was said, earmarked for low-income buyers. The regeneration bounty would spill over to the surrounding area. Cathy Newman also quoted Stephen Bayley as saying, “You can't create a legacy. Let us not imagine that great buildings can undo a ghetto."[ii]
The British government has been imposing austerity on the middle to lower class as a solution for its poor regulation of the banking and financial industry. Due to lax and improper government regulations, private industry has been allowed to take great risks at the public’s expense, risks that the public will end up paying for in the many years to come, and its most severe impact will be on Generation X’s working class. While the facts about the bailout and its cost to the people are subtly swept under the carpet, the Olympics are being oversold as a solution that should be welcomed with open arms by the British people. The contrast between the bailout and the expenditure on the Olympics is analogous to a pickpocket smiling and making conversation, meanwhile reaching in your back pocket and lifting your wallet.
Public funds are channeled into the private sector by the government to create the illusion of stability when there is none. This acts as a safety measure instead of allowing collapse that ought to occur. The private sector is allowed to continue, despite failure, feeding off resources from other avenues, such as the public sector. The public sector pays for this safety net through the public’s tax dollars and cuts to social programs, as well as a lifeless job market.
In the well-publicized case of Greece, the austerity measures used to fuel the bailout are being reconsidered, as of June 2012, and the severity of the austerity measures is being lessened slightly due to massive popular resistance. The specifics of Greece’s austerity measures have been aimed primarily at reducing the current deficit. Private citizens are hit hard with their personal finances being subject to government intervention to recoup the losses for comingling mistakes of government regulations and private investors. In this way austerity shows itself to be an unfair practice; subjugating the populace, who did not create the problem, to restrictions imposed by the very institutions, the government and private sector, that did create the problem. The Olympics exemplify the same financial reasoning which led to the bailout in the first place: overspending and poorly devised investments which yield little to no long term gains and serve to increase debt.
Greece's new coalition government has proposed an extension to the deadline for it to reduce its budget deficit by at least two years, to 2016.
In a policy document, the government said its aim was for the fiscal target envisaged by the bailout deal to be met without further cuts to salaries and pensions.
The austerity measures currently implemented in Greece have taken a large personal toll on people’s lives. The government has shown no real concern for the immense suffering of the Greek people. Household income has been severely decreased by a multitude of factors: salaries have been severely cut, access to medical supplies restricted, state levels of eligibility for certain social benefits have been raised to the point where they are out of reach for many. The problem has surpassed the unemployment rates because it has now begun to affect the people who still have their jobs. No one is exempt and no one is safe with austerity measures like these.
For Delpina Koutsoumba, however, this is a winter of discontent. She's 37, a trained archaeologist with a master's degree who works for the ministry of culture's department of "aquatic antiquities," issuing licenses and supervising construction of ports, hotels and other investments on Greece's storied coastline. Her take-home pay last month was $860.
"I'm an archaeologist, married with a child. Of course, I cannot live on this," she said.
Nominally, she earns $1,190, but late last year the government announced that it was lowering salaries retroactively — and docking everyone's pay accordingly.
"They told us: 'You owe us money from last year.' And they take whatever money they want," she said. So for three months, it's a starvation salary. Her apartment alone costs $730 monthly.
When she supervises a site, the construction engineer at the site may earn 10 times her salary. But Koutsoumba says she cannot be bought: "In my department, there are archaeologists who love their job. That's why there is no corruption."
Her appallingly low income is barely augmented by the earnings of her husband, a philosophy teacher. "I don't know what we will do this month," she said. "Maybe I will ask for money from my father again or my grandmother, because she happens to live on her pension. Or my mother-in-law.”[iv]
There are many other stories similar to Koutsoumba’s, she is an example of how even the employed are suffering major setbacks from austerity. The typical argument used against the poor is that they are not hardworking and lack initiative but this story shows that even those who are the ‘workers’ are being severely affected. The unfairness of the current systemic structures is evident. Attempting to fix a problem with a solution that has no correlation to the original problem and also creates unmitigated hardships in people’s lives is similar in some respects to war. Those who typically suffer most had the least to do with the causes, conditions and impetus that lead to the warring in the first place.
Closely looking at Greece’s devolution makes it clear that Britain is headed in the same direction. When austerity is used as a solution for economic decline it appears to be a solution, but one in which the underlying, original problems are allowed to continue to exist. We can see here, occurring in a repetitious cycle, is poor financial decisions at a systemic level creating debt and unemployment where austerity is then used to rein in the ‘proverbial belts’ creating at best a temporary and tenuous solution. When all appears to improve government and private spending returns to its original state which inevitably leads itself back into the same economic overspending and debt. This can be seen most evidently in Britain with the recent years of economic downturn and unemployment lending itself to the practice of austerity and then the new cycle begins of overspending as seen with the Olympics. This financial resurgence for Britain where such large amounts of funds are allocated for this event will eventually create the same circumstance that created the need for austerity in the first place. This cyclically patterning of financial boom and bust was the central dynamics for Greece and now Britain.
Little concern is displayed for the quality of living of an entire generation of citizens. The cost of a tomorrow is paid for by the people of today.
The British people will pay the cost of the recent financial crisis for a generation. Our national debt is rising rapidly, not least as the consequence of support to the banking system. We shall all be paying for the impact of this crisis on the public finances for a generation," King told business leaders in Edinburgh. "To paraphrase a great wartime leader, never in the field of financial endeavor has so much money been owed by so few to so many," he added.[v]
The Olympics have created short-term jobs for the unemployed in the build up to the Games, and during the Games, but is the solution really this simple? As can be seen with Greece, there were major systemic problems centering mainly on globalization and neoliberal economic policies. Greece’s demise was not slowed, nor aided by the Olympics, yet conversely, served to send them further into the darkened forest via unnecessary government spending. There is now advanced infrastructure in a country that does not have the political and economic foundation to fully utilize these advancements. The Greeks have invested a substantial amount of resources into the Games which are now unused with maintenance of the structures underfunded. It was a vast expansion of building and infrastructure which was beyond that which the country needed which burrowed them deeper into debt.
To get facilities built on time, they paid three to five times the original estimates, and allowed sloppy building techniques that now leave many of the structures crumbling.
The $18-billion tab, the largest in Olympic history, has caused debt to spiral. This week, Athens announced that Greece now has the highest level of public debt in the 25-member European Union. This has necessitated a national austerity program for at least two years, and possibly much longer — exactly the opposite of the economic effect governments had promised for the post-Olympic years.[vi]
The underlying Greek economic structure had been severely undermined by the sovereign debt crisis so that the expenditure of the Olympics could do nothing more than hurt the economy further. At a time when private industry should have been forced to face the music for its risky credit and investment practices, they were let off the proverbial hook and the bill was passed onto the public. The promise of benefits through infrastructure enhancement and the promise of tourism clearly didn't pan out, as evidenced by the following article from Business Week.
Hosting the event cost almost €9 billion ($11 billion at today’s exchange rate), making the 2004 Games the most expensive ever at that point. Greek taxpayers were on the hook for €7 billion, which did not include the cost of extra projects such as a new airport and metro system.
After a period of austerity to tighten up its finances and qualify for euro entry in 2001, the Greek government loosened the purse strings once it entered the single currency. Although hundreds of thousands of visitors came to Greece in 2004 to be a part of the games’ return to their birthplace, in the following years Greece’s share of the tourism pie grew smaller as visitors opted for other countries, such as Croatia and Turkey, which benefited from lower prices and better marketing.[vii]
There are also very strong similarities between the Olympics and professional sports teams as they relate to individual cities’ economies. The extent to which local cities will go to lure professional sports teams is evidenced in the amount of taxpayer’s money they are willing to spend, but are there any long term benefits for the risk? Evidence shows that it actually harms the existing businesses and their profitability as the sports arenas draw consumers away from what once thrived and diverts them to the larger venue:
“The net economic impact of professional sports in Washington, D.C., and the 36 other cities that hosted professional sports teams over nearly 30 years, was a reduction in real per capita income over the entire metropolitan area,” Humphreys and Coates noted in the report. A statistically significant negative impact on the retail and services sectors of the local economy, including an average net loss of 1,924 jobs; an increase in wages in the hotels and other lodgings sector (about $10 per worker year), but a reduction in wages in bars and restaurants (about $162 per worker per year). Those employed in the amusements and recreation sector appeared, at first glance, to benefit significantly from the presence of a pro team, with an average annual salary increase of $490 per worker, Humphreys said. However, he added, “this sector includes the professional athletes whose annual salaries certainly raise the average salary in this sector by an enormous amount. Our conclusion, and that of nearly all academic economists studying this issue, is that professional sports generally have little, if any, positive effect on a city’s economy.”[viii]
The Olympics are a very exciting time where many countries join together in good will, as well as competition, creating an event the world can enjoy, bringing with it a sense of community and excitement. It should not be used as a media or political tool to convince the public that economic conditions are improving when indeed they are continuing on the same course. It is also not a solution for underlying systemic governmental problems. Herein lies the question, can the hosting of an Olympic Games undo years of economic downturn, as shaped by current political policies? Time always reveals what illusions attempt to hide and so it will be with Great Britain, as it was with Greece. As the years progress it will become more evident whether or not the Games were truly a 'legacy' for the people, or merely a distraction as they continue to grapple with issues of economic downturn, unemployment, and the like.
[i] Ross, John, "The Incredible Shrinking UK Economy," January 15, 2012. http://ablog.typepad.com/keytrendsinglobalisation/2012/01/the-incredible-shrinking-uk-economy.html.
[ii] Newman, Cathy, “East Side Story: The ‘other’ London –gritty, graffitied, but with a rising cool index–gets ready for its close-up as the venue of the Summer Olympics," National Geographic Magazine, August 2012.
[iii] Greek Coalition Proposes Easing Bailout Terms. Mark Lowen. BBC, 23 June 2012, http://www.bbc.co.uk/news/world-europe-18564266.
[iv] Gutman, Roy, "Greek Austerity moves leave nations economic safety net in tatters," McClatchy Newspapers. February 8, 2012, http://www.mcclatchydc.com/2012/02/08/138300/greek-austerity-moves-leave-nations.html.
[v] Seager, Ashley, "Financial Crisis Will Burden a Generation of British People, says Bank Chief," Guardian, October 20, 2009, http://www.guardian.co.uk/business/2009/oct/20/government-borrowing-economics.
[vi] Sanders, Doug, “Greece’s Olympic-Sized Misery,”Tumbler, 26 March 2012, http://dougsaunders.tumblr.com/post/24947842173/greeces-olympic-sized-misery.
[vii] Seager, Ashley, "Financial Crisis Will Burden a Generation of British People, says Bank Chief," Guardian, October 20, 2009, http://www.guardian.co.uk/business/2009/oct/20/government-borrowing-economics.