An article in the Herald reminded me of how 2011 played out. Martyn Bradbury has alluded to this a few times, but usually as part of scathing attacks on everything to the right of Stalin himself. The article discusses how the British government under Tory (Conservative) leader David Cameron plans to cheer people up in Britain, a country facing severe economic austerity and its usual depressing grey and miserable weather. The 2012 Olympic Games in London, with the influx of tourists and celebrations will provide a suitable distraction from the doom and gloom in the UK at the moment. The parallel here was the 2011 Rugby World Cup that played out just before the election, which many criticized as distracting people from political issues that needed to be addressed.
Doom, Gloom… and Grey
I remember being in the UK in the 2008-2009 winter where an MP was very harshly criticized for saying she saw 'green shoots of recovery' in the British economy. The public seemed to have an attitude that everything with a price tag was inappropriate in a time of recession and financial difficulty, so spending and investment dropped markedly. Amongst the closure of many small businesses upon the loss of their credit lines was the household name and retail giant Woolworths, which saw around 800 stores close in just the time I was there. The receivers tried getting as much money as possible back, shop fittings and fixtures like shelves and lightbulbs were sold. It was a stab at the British psychic, and the big warning of how real the recession was. The huge problem was that people thought the way to get out of recession was to spend and invest less, which is basically the opposite of what needed to happen. Business can't grow with falling demand, declining investment, and scarce credit.
Distraction or Celebration?
Before you decide which, the question to ask first is whether Britain is in need of either. The answer is most likely a yes, the more that people dwell on negativity, the more it grows, especially in the cool cloudy climate of Britain. People need to see signs of positivity, prosperity, growth, and the vision of a future in order to continue. The economy, like people, need a future to aspire to in order to continue putting in any effort. Something surely needs to spark some economic positivity to get the ball rolling, and the Olympic Games look like a good idea. It's when huge swathes of London undergo immense regeneration and gentrification, when the city is totally swamped with tourists who are very ready to part with plenty of money, when people watch feats of athletics and sports and share in the successes and efforts of the competitors. In fact, the simple notion of having so many competitors in the games is reminiscent of a healthy market economy.
While indisputable that the Olympic Games will improve morale and spirits significantly, the real question is what role the government will play in organizing this colossal event. How much will they spend? It comes down to a very stringent cost-benefit analysis. In New Zealand, we apparently spent more on running the RWC than we brought in, a net loss to the country. The British government is taking special interest in the Olympic Games and is pouring millions of pounds into the event, apparently doubling the budget of the opening and closing ceremonies, to £81million or NZD$160million. To ensure the games truly provide as an economic stimulant for growth, the games cannot incur a loss, even in the short term. Even if the investment pays off in the long run, it can all be sabotaged if word gets out that the country spent more than it earned hosting the event, as Britons would be skeptical that the games were of any success. If the Tory government wants to see this through, the project must be economically profitable, as it will stack up as a sign of the growth that Britain achieve. Even a small profit to the economy will show that the investment in Britain can appreciate in value.
I'm quietly confident that with careful planning and considered spending, the Olympic Games will be a celebration of Britain and a stimulus to the economy. The Conservative-led government in Britain has proven itself reasonably successful so far, and is theoretically capable of pulling this off for the benefit of Britain. Failure to do so will be an embarrassment to the country, the government, and leave Britain even further in debt and financial despair. The least it can do is provide a distraction and a boost to national spirit and morale in the same way the RWC was to us, the right investment and it can surely become the catalyst for economic success.