Brazil's Olympics: Cronies Feast while the People Starve

Ryan McMaken

For this year's Summer Olympics in Rio, the Brazilian government spent $4.6 billion — that's a conservative estimate that covers facilities used for sports only. When we include all other related expenses, the total comes to $12 billion.

To some people in the wealthy countries, this may seem like a small amount, but the truth is that $4.6 billion (not to mention $12 billion) is an immense amount of money in the context of the Brazilian economy and the Brazilian government's budget.

For example, the entire national budget for Brazil was (according to this source) $631 billion for 2015. That means the government spending for the 2016 Olympics was about equal to 0.72 percent of Brazil's national budget.

What would the totals look like if the US spent a comparable percentage on the Olympics?

If the US government were to spend 0.72 percent of federal spending on a sporting event — the Federal budget totals about $3.25 trillion at the federal level — that would equal 23 billion dollars, which is equal to or larger than the entire budget of numerous US states including New Mexico, Kansas, Connecticut, Georgia, and Nevada. In other words, it's a healthy chunk of change.¹

For comparison's sake, we can note that the Atlanta, Georgia Summer Olympics — the last Summer Games to be held in the US — were paid for using approximately $3.9 billion in 2015 dollars ($2.6 billion in 1996 dollars). Some of that was paid for by the city, and some by the federal government. In any case, not only was the nominal amount lower than that spent in Brazil, but as a percentage of overall government spending, the number was miniscule. The situation in Brazil today is much different.

So, when we run the numbers, we find that Brazil's government has spent a very large amount of money on the Olympics when compared to the Brazilian economy and the average wage of a Brazilian.

And what good has this done for Brazilians?

Well, if the economics of huge sporting events is the same in Brazil is it is everywhere else it has been studied, then the Olympics will do nothing for the economy of Brazil, and nothing for the taxpayers there who were forced to pony up the cash to pay for it all.

Contrary to what Chambers of Commerce and government cronies like to think, sporting events do not produce wealth for local economies:

“If you ever had a consensus in economics, this would be it," said Michael Leeds, a sports economist at Temple University. “There is no impact.”

“If every sports team in Chicago were to suddenly disappear, the impact on the Chicago economy would be a fraction of 1 percent,” said Leeds.

There is a benefit for some people, of course. The politically connected, billionaires, and those who benefit from lucrative government contracts do indeed benefit. For the members of the International Olympic Committee, the Olympics are one non-stop party where IOC members live in opulence at the expense of the taxpayers who have the good fortune of hosting the prestigious event.

This is nothing new. Back in 2014, Norway pulled out of the running for the 2022 Winter Games after the Norwegian taxpayers lacked the stomach to pay for the outlandish demands of the IOC's elite. Such demands included:

• Separate lanes should be created on all roads where IOC members will travel, which are not to be used by regular people or public transportation.
• The IOC members should have separate entrances and exits to and from the airport.
• “All furniture should be OL-shaped and have Olympic Appearance.”

Any many more. The The National Post opined at the time: “the International Olympic Committee is a notoriously ridiculous organization run by grifters and hereditary aristocrats [i.e., the descendants of successful thieves and murderers of old].”

Nothing has changed since 2014, except now the IOC's wannabe royals — instead of fleecing middle-class Europeans — now live off the sweat of taxpayers in a country living through the worst recession in 90 years. While IOC members sip champagne in their luxurious taxpayer-financed facilities with well-stocked bars and opulent meals, it wil be easy for them to ignore the favelas full of poverty-stricken Brazilians who have had the pleasure of paying for it all through either direct taxation, or through the impoverishment and malinvestment that comes from crony projects like the Olympic games.

It would be something else entirely, of course, if the Olympic games were privately financed. If that were the case, the Olympic games would count as an investment in the local economy where tourists spent their dollars and the IOC paid for the facilities it used.

But that is not how the Olympics works, so, Brazil, like most host cities, will pay billions in taxpayers dollars while the wealthy elite (which in many cases, includes the athletes) will party at someone else's expense.

Taxpayers in many cities have begun to catch on to the scam. In 2015, Boston ended its bid for the 2024 summer games after local taxpayers forced an end to the effort. Moreover, residents from Norway to Poland have also refused to finance yet another international party for millionaires.

And, as a practical effort to end some of the corruption and waste of the bidding process, some have made the practical and reasonable suggestion of hosting the Olympics in a single place (i.e., Athens) from now on.

The most necessary reform, of course, is to end all taxpayer spending on the Olympics. Period.

• 1. It's unclear if the government budget total for Brazil ($631 billion) refers to all government spending in Brazil or just spending by the national government (i.e., does it include state and local government spending?). To be on the safe and conservative side, let's compare this to the US using just federal spending in the US. If we included all government spending in the US, including state and local spending, total spending would be around 6 trillion. So, in order to make a more conservative comparison, I will use just the federal spending number for the US and multiply the total by 0.72 percent in order to arrive at a smaller total.

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