Aug. 14, 2016 - Freedomain Radio - Stefan Molyneux
19:20
3379 What Pisses Me Off About The Olympics
According to a recent study from The University of Oxford and Said Business School examining the games between 1960 and today, the average inflation adjusted “sports-related costs” of the Summer Olympic games is $5.2 billion and the average cost of the Winter Olympics is $3.1 billion....but what is the human opportunity cost of the Olympic Games? Who profits from these athletic displays and what is the root cause of people investing their entire lives in many economically useless activities? Sourceshttps://arxiv.org/ftp/arxiv/papers/1607/1607.04484.pdfhttps://www.washingtonpost.com/sports/olympics/olympic-executives-cash-in-on-a-movement-that-keeps-athletes-poor/2016/07/30/ed18c206-5346-11e6-88eb-7dda4e2f2aec_story.htmlhttp://www.tradingeconomics.com/brazil/wageshttp://news.bbc.co.uk/2/hi/297030.stmhttps://www.theguardian.com/sport/2016/may/11/tokyo-olympics-payment-diack-2020-gamesFreedomain Radio is 100% funded by viewers like you. Please support the show by signing up for a monthly subscription or making a one time donation at: http://www.freedomainradio.com/donate
Hi everybody, Stefan Molyneux from Freedom Aid Radio.
I hope you're doing well.
Hey, are you enjoying the Olympics these days?
Is it fun and exciting to watch these intense athletic competitions sandwiched between what seems to be like endless amounts of ads?
Does it feel great to get all stressed and tense while sitting in a chair without the release of physical activity of the people you're watching on the screen in Rio?
Well, it's quite an exciting backdrop to what goes on economically about the Olympics.
I'm afraid, like most things that we enjoy, philosophy has a cure for that, called facts and regret.
So according to a recent study from the University of Oxford and the said business school...
The Games between 1960 and today, the sports-related costs of the Summer Olympic Games is $5.2 billion.
The average cost of the Winter Olympics is $3.1 billion.
Now, over the last decade, the Olympics have cost an average of $8.9 billion.
Billion dollars.
Now, this doesn't even include the additional costs for like general road and rail, airport, hotel infrastructures and all of that.
This is often way bigger than the sports related costs.
Plus, of course, you've got to incarcerate or get rid of your homeless people.
You've got to turf out a whole bunch of people so you can house the athletes and all kinds of stuff that goes on there.
Now, the most expensive Summer Olympics of all time was London 2012 at $15 billion.
Now, to be fair, of course, London had to not only build a whole bunch of infrastructure, but as I remember from growing up, it actually had to import summer as well, because it seems to come on a Wednesday in London.
So $15 billion, London 2012, that's 76% Over budget.
Seemed like a lot?
Oh, don't worry.
There's a French take on it that's even worse.
The most expensive Winter Olympics of all time was Sochi 2014 at $21.9 billion, which was 289% over budget.
Yes, that's quite a lot.
No Olympic Games since 1960 has come in under budget, an average budget overrun of 156%.
So the next time, of course, that they say, well, here's how much the Olympics are going to cost, double and a half it, and you'll be somewhat in the ballpark.
Unless, of course, you're talking about Montreal, where I went to school, 1976, 720% cost overrun, 100%.
They said, oh no, it's only going to cost $250 million.
And when all was said and done, the bare bones cost for $2.3 billion.
But it's okay, because they paid it off in a mere 30 years, from 1976 to 2006.
And I'm sure the memories lasted that long as well.
Athens, Greece hosted the 2004 Summer Games, which went 60% over budget and are widely considered a major precursor to the Greek financial crisis, which is still consuming Europe as we speak.
And 21 of the 22 venues built for the Olympics...
In Athens for that year are abandoned or in a state of disrepair or underused, and that occurred only four years after the game.
So it's important to understand the opportunity cost is the key to understanding all of this stuff.
So they trash all of this stuff, clear all these neighborhoods, build this stuff, and then it's too expensive to tear it down, plus it's kind of depressing, and so they just leave it there, which inhibits economic activity, and all the money that went into building all that stuff is not available for things like, I don't know, Border control!
Or things like that.
Now, the latest projected cost of Rio 2016 It's $4.6 billion.
Now, that doesn't sound too bad.
It is only 51% over budget, but of course there's room to grow.
You'll find a wide variety of cost estimates.
Some analysts have projected that the Rio Olympics are going to cost up to $20 billion when all is said and done.
Now, that's a lot of money, but of course if you compare it to the average pre-tax annual income in Brazil, which comes out at $7,412, Well, it's quite a big multiple of the average income.
Now, how is Brazil paying for this?
Well, like most government projects and programs, they're not.
They're just running into debt.
Brazil is currently suffering from its worst recession since the 1930s.
It's got pretty sky-high inflation.
Its sovereign rating has been downgraded to junk status.
And suspended President Dilma Rousseff is facing an impeachment trial.
I guess in Brazil they may actually hold...
They're politicians accountable.
Yeah, I'm looking at you, Comey.
And I'm not going to blink till something happens.
Rio itself recently declared a financial state of emergency, led the Brazilian government to step in and authorize an $850 million loan to help pay for the Olympics.
Now, of course, you'll hear, well, it costs a lot, but don't worry, because you get a lot of tertiary benefits that come back.
Well, independent research has shown neither short-term nor long-term economic benefits to hosting the Olympic Games, and they looked at metrics like foreign investment and tourism inflows.
And to get a sense of this, you've probably heard quite a bit about Rio now, since they are hosting the games.
What have you heard about?
Well, my former exposure to Rio, having just visited there once, was that there were a lot of talking birds, but you've probably heard a lot more.
Green swimming pools, political corruption, human waste in the water.
Apparently there are really deadly bacteria.
You can't even get three teaspoons, not tablespoons, you can't even get three spoons of that water in your mouth, or you may get some disease, some infections.
Immune bacteria.
To antibiotics.
So it's risky.
Sports generally less risky than war, but not always.
Gun violence.
Heard a little bit about that all around.
Shooting is an Olympic sport.
I think it's generally supposed to be confined to within the venue, but it seems to be going on quite a bit around it as well.
So what's your impression of Rio now versus before?
You're more likely to visit...
Now, let's look at the International Olympic Committee.
It is a massive non-profit monopoly whose, quote, volunteer president receives $251,000 in annual compensation while, I guess, getting into the low-rent masses' lifestyle by living rent-free in a five-star hotel and spa in Switzerland.
Now, the cheapest suite at the hotel costs $1,068 annually.
Or about $390,000 for an entire year.
I guess he's a volunteer who's well paid.
His pay is most likely drafted by the state.
Now, a lot of people are getting rich around the Olympics.
There are the politicians who, of course, I'm sure are getting some positive consideration from the people they award the construction contracts to.
There are bureaucrats, officials, trainers and coaches and so on.
And, you know, they're pretty honest about where the money goes.
The U.S. Olympic Committee officials have readily admitted that, with the exception of a few superstars like Michael Phelps, they get big endorsement contracts and so on.
Most Olympians cannot even make a living from their sport, which I guess is one of the time-honored facts that About human condition that athleticism, poise and balance that doesn't involve disco lights, a dance pole, and loverboy songs doesn't seem to pay very well at all.
Olympic officials, administrators, coaches, and so on, they make hundreds of thousands of dollars, but many of the athletes live in fairly abject poverty.
One multiple-time U.S. Olympian said the most he's ever made in his career after expenses, about $3,000.
Dollars a year, I guess, just a little bit more than your average Canadian playwright, which scared me into the business world back in the day.
Now, this is similar to America's college sports, right?
These amateur athletes get almost no compensation, but the organizers, coaches, administrators, and so on rake in massive amounts of money.
And often, of course, there's subsidies that come from the U.S. government, as there are for governments around the world, to get people into college with huge and unproductive student loans, which are about $1.1 trillion in the red at the moment in America.
It's great to be out of the housing crisis, isn't it?
But also, they do shift their costs.
Two other students with multi-hundred dollar athletic fees because basically these sports chucks always seem to win.
It just goes on for a while.
So when you look at this disparity between the athletes and the administrators, the coaches and the bureaucrats and so on, it's pretty extreme.
Imagine if there was a company where the management made the multiples of the workers' salaries that the coaches and administrators and bureaucrats make relative to the athletes' income I think you'd get to understand, you know, see, underpaid sweatshop labor, really, really terrible, but underpaid but merely sweaty labor, apparently that's fine because sentimentality.
So, look, I like as much as anyone watching extreme human events.
Sure, I'm into brawn porn as much as anyone else, but...
There is a significant cost.
A lot of the athletes are intelligent.
They're, of course, very dedicated, hardworking, and so on.
It's a huge waste of human capital to have the giant sucking sound of political money and so on, dragging them away from being entrepreneurs, being job creators and so on, to doing people who drag around logs and do lots of sit-ups.
And apparently, since ping-pong is an Olympic sport, work on their hair-trigger cricket-leg reflexes.
There is, of course, not much money to be made, if any, in some of the more obscure events.
And people, for whatever reason, that's the sport you like.
They dedicate a huge amount of your life to it.
They lose out on other opportunities.
Their skills don't really have any economic value.
And, of course, they accumulate.
You know, these people look very healthy.
But, you know, let's check in in 10 or 15 or 20 years.
Even the non-contact sports, you know, a lot of injuries, you know, a lot of soft tissue damage, a lot of joint damage and so on.
I was chatting with a friend of mine who was talking about her friends who were soccer players in their youth.
And they're all getting, you know, robot knees put in and stuff like that.
So if you're going to compete at the highest level in athletics, you're going to get, most likely at least, a lot of high-level damage to your body as a whole.
So it is a big, big cost for society as a whole.
And there are some a little confusing Olympic sports.
Ping pong, of course, as we mentioned.
Shooting, which I guess would have been great if Barack Obama had been able to get the Olympics to go to Chicago.
Seemed to be quite good at that.
I think last weekend there were 100 shootings in Chicago, so they'd have a lot of practice in that.
Archery.
Which, you know, given that the Brazilian government is putting on all this useless stuff while the poor are starving, I guess, makes archery part of the real-life Hunger Games woven fabric of Brazilian society, which we're seeing.
Fencing is an Olympic sport.
Liberals, of course, got really upset about that until they realized the sport had absolutely nothing to do with Donald Trump, and then they gave it a bit more of a pass, as they are wont to do.
And so, even the people who make it to the Olympics, they do pretty poorly as a whole.
They dedicate their lives to these various sports.
And then what?
You know, they don't get the big endorsement deals.
They're like, oh, you were one of the rowing team.
Okay, I guess that helps.
And, you know, for some of the sports, you know, football, soccer, baseball, and so on, there's some demand you can transition.
A few wrestlers, I guess, have made it.
Into professional wrestling, but I don't know, women's field hockey?
It just kind of strikes me as more of a hobby than a career.
Although I guess there are some lone watching sports like women's volleyball, but...
I don't know that it's really economically productive.
Now, if you've been watching the Olympics, it's pretty wild because a lot of these events, I mean, they make Hillary Clinton rallies look like Donald Trump rallies.
They're really sparsely attended.
The camera pans around.
There are these empty seats everywhere.
I mean, it's crazy.
Governments are borrowing from the future to build stadiums, which few people go to, to house athletes who live in poverty for the administrators and politicians and bureaucrats and coaches to get rich.
And, of course, for the politicians to have their 15 minutes of prestige.
So...
Brazil, of course, at the moment being ravaged with the Zika virus.
And massive resources are going to these economically useless and negative activities.
Many citizens, of course, living in poverty.
And that is very much back to the old Roman model bread and circuses.
I just did a video on the fall of Rome, which I highly recommend you watch.
Very, very important.
So this is not how, of course, resources are so supposed to be spent in society.
The way it should work, of course, is that people should say, hey, we want to put on a big athletic event.
Would you like to buy some tickets?
And that's, of course, how it should work, because that's how it generally works in every other sane part of the relatively free market.
But this, of course, is about political prestige and power and social engineering.
Let's give it to a third world country to show they can do it just as badly as everyone else.
Which, of course, is a terrifying thing because third world countries have much less money to burn than first world countries.
So we also see this weird contradiction like nationalism is really bad, except during the Olympics when it's really good because if you're nationalistic, then you'll be fine with your money being wasted for useless human tricks, which is kind of basically what goes on with this stuff.
Of course, as you live long enough, the glass of the shine tends to go off a lot of statues that you formerly looked up to, you know, like just trying to figure out, learning the truth about the Second World War, which I wasn't exactly told about when I was a kid, takes a little bit of the shine off of that.
And of course, for those of us a little older, the Olympics...
Well, I don't know.
What are the circles?
Well, they're basically just overlaying gold coins that go to affect the outcomes.
There's a lot of cheating that has gone on among the athletes.
Iron Curtain teams back in the day, the Soviet teams, and of course they're experiencing the same thing these days.
I remember reading a story about women...
Who were gymnasts who kind of freaked out because they thought they were a bunch of men with deep voices coming into their dressing room.
It turned out, no, no, it's okay.
It's just the Russian female gymnasts sprouting mustaches and Schwarzenegger-style biceps.
And so, yeah, a lot of the rags-to-riches stories, dedicated youth, eschewing money to pursue their dream.
Turns out that they were just juicing and bribing and all this kind of stuff, or people were on their behalf.
Salt Lake City at the Winter Olympics in 2002, there was a big scandal about that.
We'll put some links to all of this below.
So the organizer said, okay, no, no, new policy, openness, accountability, and so on.
There's a scandal that's falled on Nagano.
A popular newspaper in Japan says that more than $6 million was spent entertaining Olympic officials during the bid to host the 98 Winter Games in Nagano.
The president of the International Olympic Committee came in for severe criticism from America and some European ministers overseas.
The bribery allegations surrounding the 2002 Winter Games.
There was an International Olympic Committee report in 1999 admitted that, quote, quote, It's a Russian track and field athlete being caught trying to tamper with a urine sample, attempting to then bribe the doping control officer and so on.
Just horrendous.
Two Kenyan athletes in the past claimed that the chief executive of Athletics Kenya asked them each for a $24,000 bribe to reduce their suspensions.
At the 2002 Salt Lake City Olympics, a French judge said, OK, yes, I was pressured to vote for the Russian skater's In order to secure an advantage for France in the pair's ice dancing competition.
But, you know, I mean, it's what women like to watch, so I don't think that the sort of trail of corruption and bribery matters that much.
In 2004, IOC vice president, who was involved in both the Seoul Olympics and the Salt Lake City scandal, was found guilty of receiving $700,000 in gifts and bribes.
Hey, that's 100,000 times the average income in Brazil.
That seems like a kind of evil synchronicity and so on.
A leading member of the IOC has claimed that bribes of up to a million dollars have been demanded from cities bidding for the games.
And I don't know.
I mean, how do you prove this stuff?
These are just comments.
You can take them for what they're worth.
Again, the sources are all below.
But it's just a little bit harder to see this as a match of strength and wits and dedication and so on.
There have been past allegations of match fixing in several of the dozens of Olympic sports, bribes being paid to participants to throw the game or underperform, manipulate an event because somebody wants to place a bet on the outcome.
The Tokyo Olympics for the 2020 Games, a 1.3 million euro payment to a secret account, has been raising some suspicions and so on.
Look, I love sports.
I exercise.
I play sports.
I think they're great.
You know, when I was a kid, I also like model trains.
I just didn't expect it to be an income.
Sports are wonderful, a great part of life.
You know, when the government gets involved in these things, it gets to be ugly and messy and corrupt and vicious.
And, you know, just another way of appealing to your sentimentality and raising your nationalistic fervor in order for the government to...
More profitably and easily pick your pockets.
What?
You don't like the Olympics?
You're not a patriot?
You don't care about these athletes?
It's like, I actually do care about these athletes, which is why I like all of this stuff turned back over to the free market, so that we can actually find out how important they are to people, because for everyone who's out there exercising, there are a million people sitting on their couches watching them, and that's not really what sports is supposed to be about.
It's supposed to be just a little bit more inclusive, so...
Love sports, love competition.
I think it's all wonderful, but remember the Olympics, just another government program.
Now, Sentimentality does have its costs.
When you feel yourself getting warm and fuzzy over your government because you mistake the government for your society or your tribe as a whole, well, they're going to use that to pick your pocket.
Sentimentality is like the kid in a Dickens novel who elbows you to distract you while someone else picks your pocket.
Sentimentality is what governments appeal to you in order to pick your pocket more efficiently.
So sentimentality does have its costs, but to be fair to what's happening, it's still a lot better than a sport that the government goes to when it can't go to sport, which is war.
So sentimentality does have its costs, but it's still a lot better than the alternative, the true health of the state, which is war itself.
This is Stefan Molyneux for Freedomain Radio.
Thank you so much for watching.
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