Flaws in the criticism of the Brazilian World Cup

NUMEROUS COLUMNISTS, economists, and general soap box preachers, have criticised the Brazilian government for hosting the World Cup. The basic argument is that in a country with so much poverty the government should focus its spending on other priorities rather than hosting the largest sports tournament in the world. While this argument is easy, it is simply wrong. How much is actually being spent? Bloomberg magazine estimates that the World Cup will cost Brazil $14 billion. According to Forbes magazine the price of stadium construction, and upgrades, was over $3.5 billion. This is not a small sum by any measure; not least when one considers that in 2011, the country’s government budget was $978 billion. However, if we were to suggest that they aren’t ‘rich’ enough to host the World Cup, then one should consider that only seven countries have larger government budgets than Brazil. Of the top 10 governments by budget size, Brazil is the only one with a budget surplus in recent history. But that only takes into account costs while ignoring revenue. The real revenue, or rather direct revenue, from the World Cup is estimated to be almost $11 billion. That doesn’t take into account indirect revenue such as future earnings from the tourists coming to Brazil because of the exposure from the World Cup, revenue from the stadiums in the future, or even possible foreign exchange benefits of so much foreign currency changed into Brazilian Reals. Far more important than this is the possible multiplier effect of the money circulating in the economy. While one dollar is in real terms only one dollar, it can be used by numerous individuals far more than once. There is an economic fallacy that one should measure money at a specific time and moment. Money entering the monetary system can be deposited, lent out, spent, redeposited and reloaned out for revenue far beyond its ‘real’ value. Myth of poverty eradication, development The basic argument that most pundits have used is that this money should be used for social development mechanisms to help the poor. This negates the fact that Brazil already has some of the most progressive economic and social development programmes in the world. Since 2003 more than 20 million Brazilians have been lifted out of poverty through programmes such as BolsaFamilia which paid poor families to send their children to school and get them vaccinated. The critics act as if spending funds this year will have an immediate effect on lessening poverty. If history has taught governments anything, it is that poverty eradication is complicated, long, and not only a monetary problem. The largest and most prosperous economies on earth, the United States and China, still have swaths of their populations under the poverty line. Building a school will not educate children; schools need teachers, educational reform, willing parents, roads to get to school, school books, etc. The notion that funds should simply be redirected is akin to saying ‘if one has more money they would be happy’. Implicit double standards of economic expenditure Worse, and much more covert, is the condescension of much of this criticism. When Russia hosted the Winter Olympics, the media was quick to point out how ‘unready’ they were. With Brazil and the World Cup, the media has immediately started posting collages of poor Brazilians. There are over 60,000 homeless people in New York City, 60% of Detroit lives under the poverty line, and with 45 homicides per 100,000 people New Orleans is much more dangerous than Rio de Janeiro. That isn’t to say that developing countries should point the flaws of developed countries to lessen their own but perspective is important. This is the WORLD CUP! My point is - this is the World Cup! Perhaps the most watched and influential sports event on planet! Hosting the World Cup is an honour and brings with it a prestige that isn’t to be snuffed at. The developmental impetus that hosting gives construction workers, the exposure for the local residents, and the atmosphere it creates are immeasurable. Let us not spend so long finding ways to always criticize especially when we have so many flaws at home. Let those without flaw cast the first stone. The writer is a Rwandan economist based in Copenhagen

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Flaws in the criticism of the Brazilian World Cup