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The New York Sun

 

Olympian Triumph

July 13, 2005

By Nicole Gelinas

New Yorkers shouldn't be sad about losing the 2012 Summer Olympics to London last week. America's dynamic private-sector economy - even in an overtaxed place like New York - is at a natural disadvantage to incubate a successful Olympic bid, by comparison with the economies of the four European cities that competed with Gotham for the Games. And that's a good thing.

To bid for the Olympics entails a long orgy of promised government spending. The five bidding cities for the 2012 Games - London, Madrid, Moscow, New York, and Paris - spent the past four years pledging to spend anywhere from $1.6 billion (Madrid) to $16 billion (London) on the Games. New York itself had pledged $8 billion. In addition to subsidies for the stadium, Mayor Bloomberg had promised $2 billion in public and private funds for an "Olympic Village" apartment complex in Queens and another $2 billion to extend the no. 7 subway to the far West Side of Manhattan.

Successful Olympic bidders must also prove that they are adept at top-down economic planning - not only at the city level, but at the national level. Moscow, with its communist roots, obviously had home-court advantage here. But Moscow lost partly because all those decades of central planning made it, and Russia, cash poor.

London, Paris, and Madrid, three of the capital cities of the Western European welfare state, also boast a comparative advantage over New York when it comes to centrally planned economies. The politicians who run Europe at the municipal and central-government levels design top-down economies for their citizens on an everyday basis. So what's a little extra planning for the Olympics? Indeed, those three cities all impressed the International Olympic Committee with their carefully planned and funded designs for stadium, transportation, and housing investments, backed by full or partial guarantees from each national government. (London, of course, isn't quite in the same league as Paris and Madrid when it comes to overt socialist economic tendencies - but London did win its bid partly because it promised new infrastructure that will be funded with a $3 billion grant from the national lottery.)

By contrast, city and state governments in America, New York's included, have the responsibility - and autonomy - to pursue their own growth, independent of the feds. America's free-market ideal means economic development starts at the bottom, with private investment at the local level, not at the top, with federal dollars. So New York couldn't rely on a federal guarantee to compete against Europe.

But the biggest obstacle for New York was local economic and political culture. In London, Madrid, and Paris, citizens meekly submitted to the proposed physical and economic remaking of their communities by their local and national Olympic planners (as happened in the four U.S. cities that have hosted the Olympics in the recent past). But here in New York, voters viewed Mayor Bloomberg's plans and pronouncements about the Olympics with suspicion, and so did many elected officials. Why do we need a West Side stadium? Is this really the best investment for the West Side? Why should we pay for it? Why should we jump through hoops for the Olympics? What will the Olympics do for us? Indeed, the IOC found that New York had the lowest level of local public support of the five competitors.

Even liberal Democrats on the West Side, including City Councilwoman Christine Quinn, could see that the neighborhood is coming along just fine by itself without the new stadium that was proposed in part for Gotham's Olympic bid. The best thing for the West Side, many in the public and private sectors correctly argued, was not a stadium, but a zoning change to speed up that robust private-sector development. In other words, New York, despite the best efforts of its tax-and-spend pols, is still home to a real private-sector economy (at least compared with European cities) - an economy that doesn't need the Olympics to thrive.

But New York lost for one more reason, this one with troubling implications. The three Western European cities offered more fiscal flexibility to fund some Olympics spending at the local level than did New York. They enjoyed this advantage because they have modest budgets and not much municipal debt. Unlike New York, these cities don't spend much local tax money to maintain their welfare states; the central government takes care of that. America doesn't share Europe's tradition of cradle-to-grave welfare spending at the national level. But New York City does share it - in fact, Gotham collects more in local tax revenues than the four competing European cities combined, according to Standard & Poor's. New York also groans under its debt, which eclipses the city's operating revenues at 102% of the city budget.

New York can thus claim Olympic-sized government spending - but without the Olympics. Gotham officials can now learn from their dashed Olympic dream to be more like America, not like Europe.

Original Source: http://www.nysun.com/opinion/olympian-triumph/16913/

 

 
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