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Why Hosting the Olympics Makes No Economic Sense

Before the 1990s hosting was usually a low-key affair. Los Angeles was the only bidder for the 1984 Olympics. It funded its games almost entirely with private money, as largely did Atlanta in 1996. Most football World Cups were played in scarcely renovated older stadiums.

But globalisation and new television channels showing sport changed that. Each new host raised the bar, with spiffy new sporting facilities. Politicians, needing to justify the rising cost, claimed that hosting would boost the economy. They invoked hordes of shopaholic visitors, the free advertising of host cities and the long-term benefits of the roads and stadiums that would be built. When Tokyo was named host of the 2020 Olympics, Shinzo Abe, Japan’s prime minister, said: “I want to make the Olympics a trigger for sweeping away 15 years of deflation and economic decline.”

Yet these claims of economic bonanza are false. Most economists agree that hosting big sporting events is an economic strain, says Stefan Szymanski, economics professor at the University of Michigan, with whom I have co-authored a book.

This is largely because the things a country buys for a sports tournament – stadiums, roads to the stadiums, extensive security – are rarely the things it needs for daily life. Often the venues become white elephants the moment the tournament ends. That happened in South Africa after the World Cup of 2010, and is forecast to happen to many Brazilian stadiums after this year’s tournament. London’s Olympic stadium eventually found a tenant, West Ham United Football Club, but the state is paying most of the costs of revamping the venue.

Simon Kuper, in the Financial Times, on the economics of hosting a major world sporting event. Read more on the Olympics.

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Photo: rapidtravelchai, Flickr

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“My Father, the Good Nazi.” Philippe Sands, Financial Times

“Writers’ Second Thoughts.” Liz Jobey, Financial Times

Top 5 Longreads of the Week: Financial Times, Grantland, Rany Jazayerli, The Baffler Magazine, The New Yorker, fiction from The Guardian, and a guest pick from Mark Berman.

In 2009, Brazil introduced “one of the boldest experiments in policing ever witnessed in the democratic world”—the Unidade de Polícia Pacificadora, or UPP—to rid its poorest neighborhoods from the grip of drug traffickers and violent militias before the 2014 World Cup and 2016 Olympics:

‘Everybody in Rio knew – every taxi driver, every senator, every sociologist and every journalist,’ he says with a hint of controlled anger. ‘They all knew that Rio was a divided city. But for 40 years, nobody did a single thing about it.’

The favelas, Beltrame argues, were islands from which the state had just decided to absent itself. Their residents were forgotten and ignored, stewing in a toxic juice of extreme poverty, domestic violence and, from the late 1980s onwards, the omnipotence of Uzi-wielding drug cartels or their vigilante alter-egos, the militias, who specialise in blackmailing entire communities. Regular police raids peppered by arbitrary killings and extortion ensured that favela residents regarded the state not as an ally, but perhaps as their worst enemy.

Appalled by this collective inaction and the stain on the city’s reputation, Beltrame decided to do something about it. In times past, he would have struggled to receive the backing from the governor of Rio state to divert public funds into the favelas. But with the World Cup and Olympics looming, the moment for the UPP had come.

“Rio: The Fight for the Favelas.” — Misha Glenny, Financial Times

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A look at WBUK, an organization created in the United Kingdom to provide support for whistleblowers who often lose their jobs, families, reputations and mental health witnessing illicit activity and going public:

Beyond them sit about two dozen people whose lives, like those of Foxley and Gardiner, have been transformed because they refused to look the other way. They have come together to create a network to offer advice, legal counsel and psychological care to future whistleblowers, as well as campaign for their shared cause. The anger, hurt and frustration of their debate makes evident that WBUK also serves as a support mechanism for its participants.

Ian Foxley compared the very first meeting of the group, in March 2011, to ‘the site of a plane crash where the survivors were just getting to grips with their own injuries and those of their fellow passengers’. But today, the room is more like the ward of a hospital, full of ‘doctors and patients’, as Foxley puts it. Which side you belong to is determined by how far you have progressed along the arc of the life of a whistleblower.

“The Whistleblowers Club.” — Carola Hoyos, Financial Times

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In 1972, Uganda’s President Idi Amin exiled Ugandan Asians from the country, who left behind most of their belongings and lives for new ones in other countries—particularly Great Britain:

Dr. Mumtaz Kassam was only 16 when, stateless, she arrived at a reception centre in Leamington Spa – one of several across the country. Her parents and siblings were shunted elsewhere before being admitted to Britain. Yugoslavia, Norway, Malta and South Carolina were some of the stopovers for such ‘shuttlecock Asians’. Kassam became a lawyer in the early 1980s and in 1998, with Museveni’s blessing, set up a practice in Uganda to work for repossession of assets and compensation for the departed Asians. As deputy high commissioner for Uganda, she now represents the nation that rejected her.

Broken lives were restored with extraordinary determination, says Kassam: ‘They worked hard, maintained their dignity, educated their children, never gave up.’ The Tory MP Shailesh Vara, whose father migrated from Uganda in the early 1960s, concurs: ‘Rather than looking at their expulsion as life-destroying, they saw it as a setback. They didn’t stay downcast, got up, and started over again.’ I remember Ugandan Asian men laughing because English businesses closed at 5pm, had weekends off even. They opened shops that never shut and transformed consumer expectations across Britain.

“Starting Over.” — Yasmin Alibhai-Brown, Financial Times

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Faith, technology and Christianity in Silicon Valley:

The internet and social media present a conundrum for Chuck DeGroat, the pastor at City Church. With a congregation of hip modern professionals, from architects and financial advisers to programmers and venture capitalists, he can’t afford not to have a Facebook page, Twitter handle, or website. And yet, the social media channels that dominate so many of their lives conflict with various Christian principles he hopes they will live by.

‘We follow people on Twitter,’ he says to a half-full church on a recent Sunday. ‘We follow news stories. We follow celebrities. We check boxes to say ‘I’m a fan of this.’ But what does it really mean to follow?’ He launches into a text from Corinthians 1, telling of a city whose people are obsessed with reputation, who boast of their prominent roles in the community. He draws a parallel to today and people’s obsession with how they present themselves online. ‘God is not impressed with your status update,’ he says. ‘He’s impressed with what’s beneath the pretence.’

“Valley of God.” — April Dembosky, Financial Times

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A man receives a non-negotiable junk mail check for $95,093.35 in the mail, and decides to deposit it in his bank account as a joke. It actually clears his account:

The first friend I phoned informed me that it was no mistake at all. Just standard bank policy, crediting my account with the dollar amount but putting a hold on all the funds until the cheque bounced. I couldn’t touch the money and my bank balance would be embarrassing again in three days.

But seven long days later the lottery-like amount was still there and I visited the bank where an employee told me that the funds were now all available for cash withdrawal. All $95,093.35 was mine for the taking. All I had to do was ask. Windfall money begs us to take it and run. But I restrained myself. And gave the bank another two excruciatingly long weeks to do their job, catch up with their mistake, and bounce the cheque. But at the end of three hellish weeks, during which I hourly resisted the urge to take the money and run to Mexico, where it would be worth twice as much, I was told by my branch manager, ‘You’re safe to start spending the money, Mr Combs. A cheque cannot bounce after 10 days. You’re protected by the law.’

“A Man Walks into a Bank.” — Patrick Combs, Financial Times

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