The fun thing about being a political junkie is having the special (or not-so special) ability to see the hidden political side of just about everything. Every headline, every news story, every major social gathering, special occasion, box office hit, and tune on the radio – suddenly becomes a discussion, say, on the dangers of the surveillance state, the moral degeneracy of modern culture, whether more or fewer armed citizens would have prevented a senseless massacre, which side of a contentious civil war is on the right side of history, whether or not the worship of this or that historical idol on some commemoration of his accomplishments is actually worth all the hype, and how politicians and bureaucrats might be the source, not the solution, to traffic jams, delays at the airport, international terrorism, economic strife, or the overpopulation of carnivorous canines.
Whenever somebody quips, “There ought to be a law against it!” you can butt in and reply with your own snide remark about how a) there are already a million of them on the books specifically addressing the alleged “evil” the person thinks can be corrected through countercyclical government intervention or b) how any proposed remedy would actually make things worse.
And yes, they’ve even found a way to politicize the Olympics.
Now just because some of us want to have a frank discussion about, say, those kooky, robotic missile launchers that look like some freakish cyborg monstrosity out of a Terminator movie that are sitting atop the roofs of apartment dwellers in London – or, perhaps, why the National Health Service that was glorified with speculator razzle-dazzle in the opening ceremony isn’t all it’s cracked up to be – doesn’t mean we think the Olympics are a laughing stock that no one should be allowed to take any pleasure in whatsoever. We’re not sociopaths who want to take away your game controller, TV remote, Playboy magazine, or fishing rod and force you to read a 120-page study on the perils of rent control. But we do think “politicizing” current events makes for interesting discussion on our dorky little online forums. The Olympics is no exception.
I guess I could focus on some of the repulsive defilements of property rights and civil liberties associated with all the scary, hi-tech, security devices plastered on the lawns and shingles of London residents who didn’t voluntarily agree to make their home a rocket-firing station – in addition to, perhaps, all the Big Brother cameras recording your every pitter-patter and flip, flop, flip.
But instead, I’d like to talk about something hopelessly dull, wonkish, and, well, boring. This is primarily an economics blog, after all. If you wanted something zesty and brimming with life, you should have watched the gymnastics athletes twirl, flip, and bend themselves into all sorts of twisty shapes never before thought possible in all the years of research on human anatomy. (My personal favorite course offering. Scrumptious.)
Sorry to get your hopes up. We’re here to talk about red ink, cost projections, and the ideal way to finance this prestigious sports gala. Yay. So, erm, this thing kinda … costs a ton of money, doesn’t it? (I advise you not to use that Captain Obvious cliché on me. It’s been overdone.) The initial estimates, though, were hilariously off – by a longshot. Originally, they reckoned it would cost somewhere around the ballpark of $4 billion dollars. Maybe they just dipped their hands into a top hat and pulled out a card marked with that figure, who knows? The real price tag so far is more like, um … 15 billion smackers. I’m glad these people aren’t sitting on the board of directors at Exxon Mobile or Wal-Mart. I think we’d pretty much all be screwed.
That’s usually what happens with government-run anything though. The folks who administer these things play finger puppets until they can come up with some random number, because they have zero incentive to be accurate about their cost projections. They have every inducement to squander as many dollars (or euros) as humanely possible, pour resources into useless window dressing and Victorian-style architecture, and pay the yellow-helmeted construction workers the same salaries as Angelina Jolie. In the case of the Olympics, the people running this thing were basically rewarded for building stadiums that weren’t needed, balconies that weren’t seated (women’s indoor volleyball, anyone?), hotels that weren’t slept in, and, well, the NHS glittering-light tribute that even its own supporters almost did a cartoon eye pop take at.
So, why does this happen? It’s all about market mechanisms, baby. Things like prices, profit and loss, supply and demand, competition – you get the drift. The portions that were funded by the taxpaying public really weren’t restrained by any of these factors. Normally, misdirection of resources, mismanagement, overspending, waste, corruption, and the rest are punished by declining sales, lost revenue, and lower profit margins. Making money isn’t a guarantee for private companies or organizations. Customers won’t dig money out of their wallets to buy your product, or in this case, purchase tickets for your dog-and-pony show if they don’t trust who they’re doing business with, don’t think they’re money is being put to good use, or don’t like what you’re trying to sell them. But if the government’s paying for it – even partially – those institutional restraints are pretty much thrown out the window.
Government takes the money it has through violent expropriation – by picking your pocket, raiding your bank account, and seizing the family farm when Papa dies. It doesn’t have a bottom line to meet. It doesn’t have customers to service, or preferences to take into account, or liked and disliked features to consider. It doesn’t have budgetary or financial restraints to worry about, because it can just print money or raise taxes if it comes up short. Government has a guaranteed revenue stream, so the laws of the market don’t apply. Easy peasy lemon-squeezy, as my mother would say.
So if government financing of the Olympics creates so many distortions, financial disasters, and wasteful investments ripe for a late-night comedy routine, what can be done about it? Well it could be – dun, dun, dun! – run more like a business.
This blog is called “Evil American Capitalist” for a reason. Deal.
Now let’s get one thing out of the way before people accuse me of being a miserly curmudgeon who likes to take bowls of porridge from kids at the orphanage: If people value the Olympics as much as they say they do – and this group includes myself – the people who run this thing should have no problem collecting enough money through concession stands, ticket sales, advertising slots, and other sources of revenue that don’t involve, you know … threatening to pump people with lead if they don’t hand over the cash. Hey, they did it with the 1984 Olympics. You had to understand that Los Angeles was, well, broke, and we were just coming out of a horrendous period of economic malaise. So one of those dastardly, puppy-eating, playground-demolishing, richety-rich business owners took it upon himself to operate this thing with as much private funding as possible. And what do you know, it was a smashing success. The economic benefits were, like … shazaam! (Erm, for lack of a better word.)
Some will say this so-called infrastructure “investment” in London was an utter godsend in the face of this economic garbage pit. Roads were patched up, drivers were employed bringing passengers to their destinations in taxi cabs, bus lines, and subways, and, well … look at all the beautiful, palace-like structures gracing the city. Look at all the tourism flowing in. And here again, folks are oblivious to a little thing Frederic Bastiat called “the seen and unseen.” Time for a little refresher, economic illiterates.
That money, which was taken out of private hands, is now unavailable for other purposes. If the United Kingdom was going to use those euros for anything, it probably should have been used to patch up their palpitation-inducing budget deficit. Better yet, though, why not, I don’t know – not steal that money from the residents of London in the first place? Had they not been viciously robbed by the, erm, city’s collection agency to pay for the Olympic games, who knows what that money could have been used for? Catching up on mortgage payments, perhaps? Stocking up on groceries? Use your imagination.
Think of what private businessowners could have done with the stolen loot: give their businesses much-needed renovations and makeovers, offer more job positions at their companies, do more research on how they can improve upon the gizmos, gadgets, automobiles, household appliances, and other things they sell. Like I’ve explained near the end part of this blog post, we see all the jobs, services and goods created by government. But what we don’t see is the jobs, services, and goods that would have been created had the government not diverted those scarce funds from private businessowners and citizens to begin with. The money doesn’t simply come from a magical fountain somewhere in the deep, sing-song forests of fairyland or something. It’s not like someone waves a magic wand, covers the city in rainbow sprinkles and – poof! – the money just appears out of nowhere.
Everything the government has it forcibly takes, through the barrel of a gun, from someone else. And as splendor-iffic and marvelous as the Olympics is, this is not the moral or ethical way to pay for it.