Professor Vic Makes the NYT

Frequent commentor Professor Vic landed himself an editorial in the New York Times this past Sunday. And, contrary to the beliefs of many of our readers (where such beliefs are inferred from one of the most frequenty asked questions: who in the hell is Professor Vic?), at least with respect to economics, Professor Vic is quite the moderate. I'm happy to present the evidence for his moderation here with his article and the suggested edits he got back from the editors of the NYT. I am happy to say that Vic held firm and refused to make any of the changes, and they still published it. Editorial comments are in italics.

Luck of the Draw

By VICTOR A. MATHESON
Published: July 10, 2005
STATE and local officials may be hanging their heads about the announcement that London, and not New York City, will be playing host to the 2012 Summer Olympics, but New Yorkers should be breathing a sigh of relief that the Games are now somebody else's worry.

Even though awarding the Olympics to a city other than NY was clearly a slap in Bush's face by the IOC. Not having the Olympics awarded to NY for 2012 would have been inconceivable on September 12, 2001, when we enjoyed the sympathy of the entire free world. Bush blew it.

Mayor Michael R. Bloomberg said the Olympics would have added more than $12 billion to the economy and generated 135,000 jobs. Experts who study the impact of sporting events on the economy, however, uniformly find that such estimates routinely overstate the effect of mega-events like the Olympics on local economies. A study of the 1996 Summer Olympics in Atlanta, which I conducted with Prof. Robert A. Baade of Lake Forest College in Illinois, found that the Games there generated as few as 3,500 new jobs, a tiny fraction of the 77,000 new jobs predicted by the local organizing committee in the run-up to the Olympics.

Has President Bush tried to politicize yours and Professor Baade's scientific studies in any way? If so, you should be aware that we have a hotline for just such an occasion. I'll send a separate e-mail with the details.

How is it possible that the hordes of visitors produced by an event of this magnitude don't wind up benefiting the local economy?

We're not sure how you are going to answer this question, but we're pretty sure a big part of the answer harkens back to Bush's disastrous policies.

First of all, there is little net gain in tourism. The Olympics crowds out other potential visitors. Although the Games would have attracted hundreds of thousands of visitors to the city, hotels in places like New York enjoy a brisk business during the summer anyway.

Isn't it true that no one outside of the U.S. travels to the U.S. on holiday any longer due to fear of becoming political prisoners under the Patriot Act? We haven't seen a French tourist in days despite the strong Euro, and we tell all our friends that they're better off avoiding travelling to a city that Guliani turned into police state.

Certainly no nonsports tourists in their right mind would venture into the craziness of a host city during the Olympics, and therefore their usual spending is displaced by sports fans. Similarly, the crowds and congestion of big events serve to dissuade locals from venturing into areas near the sports venues.

Some of these same sports fans may someday also attend or have attended the Masters tournament at Augustu, where Hootie Johnson refuses to permit women membership. Hootie Johnson is a Republican. So is George Bush. George Bush is also a religious extremist. So are members of Al Queda. Members of Al Qeuda make women wear burquas, which is the Middle East equivalent of denying women membership at Augusta. Need I connect the dots?

New York City got a taste of the negative effects of crowding out last year during the Republican National Convention. The presence of the convention, along with the security measures that accompanied it, resulted in major disruptions for residents. This translated into decreased economic activity in the city despite the presence of tens of thousands of visiting conventioneers and journalists. Attendance at Broadway shows, for example, fell a little more than 20 percent during the convention compared with the same week a year earlier. Now imagine these disruptions on a scale of 10 times the size and lasting for an entire month.

Although in fairness to the Olympics, maybe you should point out that the Republican National Convention was America's version of Hitler taking over the Reichstag, and that most New Yorkers, including the editorial staff of the NYT and yours truly, found that more offensive than the disruption.

And where does all the spending during the Olympics finally end up? Even though local hotels often charge two or three times their normal rates for rooms during the Games, the hotels don't double or triple the wages of their local workers. The spending at the Olympics would have been a windfall for shareholders back at corporate headquarters, but not for ordinary workers in New York City. Yet it is the local workers whose taxes would have been used to pay for the additional security and public works that holding the Olympics requires.

Right on! Although one could quibble that the unions we at the New York Times support would pocket more than a few fat cat shareholders back at corporate headquarters via fat construction contracts, but most of that money would probably be siphoned off by the New Jersey mob, so we take your point. And what about just jacking up sales and hotel taxes in the city, with a special exemption for us little guys working at the NYT? Still, fat cats winning at the expense of the little guy - we like the theme!

While this tax burden doesn't mean that the Olympics provides no benefits to the host city, it does pose a real question as to how much a community should be willing to pay for the "honor" of having the Games. In the wake of Sept. 11, the costs of holding the Games has risen enormously. In 2004, Athens spent more than $1.2 billion on security alone, and with operating costs like this, running the Games without huge subsidies from taxpayers is nearly impossible.
Furthermore, the International Olympic Committee requires that host cities spend billions of dollars on lavish new sports facilities that have little use after the big event. Not even New York City has much need for a 10,000-seat aquatics center or a world-class archery range once the Games are over.

$1.2 billion of security is an awful lot of library record checks performed under the Patriot Act, which is all that Bush would push for. Meanwhile, bin Laden would probably be walking the streets of NY, training his Al Queda recruits at the archery range while Bush gets distracted by Iraq.

Although local organizers will lament that the city will now miss out on the Olympics' powerful legacy of parks and recreational facilities, nothing bars the city from building training centers for elite athletes and renovating fields for young people if it wishes - and at a small fraction of the cost that would have been imposed on it by the International Olympic Committee.

So new York can still throw a bone to the unions without benefitting any shareholders. Now you're thinking. Whew.

New York City would do well to remember that Montreal's legacy from the 1976 Olympics includes an empty baseball stadium and government bonds that residents are still paying off. Similarly, many of the Olympic venues in Athens are unused just one year after their debut.
While New York City has lost the opportunity to "go for the gold" in 2012, I can't imagine that London, especially in light of the terrible bombings on Thursday, isn't already having second thoughts.

All of London's second thoughts are about Blair's agreeing to be Bush's lap dog since September 11, 2001. London would be better re-reading the speeches of Neville Chamberlin, an unfairly maligned former Prime Minister who did his best to understand why the Germans hated the English (and the Poles, and the Czexhs, and the French, etc.). He was much more nuanced than that war-mongerer Churchill, and we here at the NYT think it is only a matter of days before the opinions of right-minded historians restore the reputation of Chamberlin at the expense of Churchill!

Victor A. Matheson is an economics professor at the College of the Holy Cross in Worcester, Mass.

Wait, you teach at a Catholic college!? It's not one of those colleges that would ever obey the pope, right (did you know he was a Nazi youth?)? Oh yeah, we forgot, it's a Jesuit college - no worries. Thanks for the submission!