Undercover Economist

What will the Olympics ever do for us?

At tomorrow’s closing ceremony, the Olympic flag will be handed over to London; the next Olympic Games are to be hosted just down the road from the Undercover Economist. Should we east Londoners expect great things?

A wonderful sporting spectacle is assured, but that will be available to anyone with a television or a tourist visa. Not that the world necessarily queues outside the Olympic stadium: fewer people visited Barcelona in 1992, its Olympic year, than in 1991.

If a sporting spectacle was all that was promised, the games would be an unproblematic affair. The Los Angeles games in 1984 focused on the sport, using existing facilities and renting student dorms instead of building an athletes’ village. It turned a huge profit.

Yet few Olympics since then have followed that model. Most aim to leave a legacy, and it is there that the prospects look a bit shakier.

One possibility – emphasised by Lord Coe, the chairman of London 2012’s organising committee – is that the Olympics inspire the nation to spend less time in its collective armchair. No doubt that will happen, but whether the money might have been better spent on grassroots sports (or, indeed, paying off the national debt) is unclear.

Two economists, Stefan Szymanski of City University and Georgios Kavetsos of Imperial College, London, recently surveyed more than 750 managers of sports facilities across the UK, and found that while they were generally bullish about the power of the 2012 Olympics to inspire people to take up sport, almost half of them expected no effect or a negative effect at their own facilities. It seems that while it is easy to be impressed by an abstract feelgood factor, it is harder to pin down specific benefits. Tomorrow’s Olympians may be inspired by today’s, but casual exercise is inspired by easy access to decent local facilities – the sort of local facilities that may be squeezed out by Olympic spending.

Beyond the sporting legacy, there is the much-vaunted economic regeneration of east London. Such regeneration will, of course, do nothing to help Cornwall or Belfast, but that is a red herring. Most government projects are local, and many are paid for by tax revenue from London. Frankly, it’s our turn.

The more important question is whether the area’s regeneration will prove a wise investment or a waste. Time will tell, since government regeneration projects can work well, or badly.

The regeneration plans are uncontroversial enough. London needs more houses. Better transport links in London are long overdue – although Stratford, the Olympic site, is already very well connected to Europe’s richest job market. What divides Stratford from the City will not be bridged by adding a few trains.

But this is nothing to do with the Olympics. Why are the games supposed to have some magical regenerative effect? More likely, the regeneration will be rushed to meet games-related deadlines, while the games will shift bureaucratic priorities in favour of east London. That is hardly helpful.

The only advantage in bundling the games with a regeneration project is that expectations of regeneration can become self-fulfilling. Any serious urban rebirth is going to be built on private housing and private business. In part that is a confidence trick: if everyone expects regeneration to happen, it will. And perhaps, just perhaps, the lustre of the games can create confidence where government proposals merely to spend a few billion pounds will not.

Regenerating east London is thoroughly worthwhile – if only we could work out how to do it. But as far as the games are concerned, why all the fuss? One wise Olympic official complained of the “exaggerated expenses” incurred in staging them, reminding us that “temporary structures would fully suffice”. That was Pierre de Courbertin, founder of the modern Olympics, writing in 1911.

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