Tokyo's Winning 2020 Olympics Bid Will Only Worsen Japan's Debt Headache
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Get ready for Tokyo 2020. The International Olympic Committee evidently thought it better to go with safe instead of exotic but risky (Istanbul) or bargain-basement (Madrid, which pitched a "low financial investment" Olympics). It announced Tokyo’s selection Saturday.
Tokyo may be a safe option—putting aside the risk of natural disaster and further issues with the Fukushima nuclear power plant, whose operators fear may be leaking contaminated water into the Pacific Ocean.
But there’s a real safety concern for Japan’s fiscal stability. And though the economic stimulus that comes with hosting an Olympic Games could be positive, game preparations are also highly likely to exacerbate Japan’s already massive debt problems.
The Tokyo government projects that the Games will generate $30 billion in economic benefits for Japan—and that, it said, is a conservative estimate since it calculates only direct spending on the Olympics. One of the notions is that it will boost domestic consumption, helping wrest the country from a couple decades of debilitating deflation.
Japan’s bid of $5 billion to $6 billion does seem modest in comparison to, say, the $12 billion Russia estimated to ready Sochi for the 2014 Olympics. But “o” is for “over budget” as much it’s for “Olympics.” Russia’s Sochi project is now on track to cost $50 billion. And that’s not a fluke. The sensible $3.9 billion price tag London forecast for its 2012 Games ballooned to at least $14.5 billion. The IOC doesn’t do much to help—it kicked in only around $5.6 billion for the combined costs of the London and Vancouver (Winter 2010) Olympic Games. And there’s little evidence that the Games generate any net or lasting economic benefits.
Top image: The thrill of a new excuse to ignore that 230% public debt thing. (Reuters/Ian Walton)
This post originally appeared on Quartz, an Atlantic partner site.