Weekly Comic: The Show Must Go On

Weekly Comic:  The Show Must Go On

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Economy2 hours ago (Jul 27, 2021 12:22PM ET)

Weekly Comic:  The Show Must Go On
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By Geoffrey Smith 

Investing.com — Every Olympic Games throws up its heroic wins and gallant losers. What makes the Tokyo Olympic Games of 2021 unique is that the losers may, overwhelmingly, be the Japanese people.

First, there is the sheer expense of staging the games. Even though the government’s borrowing costs are near zero and the central bank has shown for years that it can quietly monetize the government’s debt without too much trouble, the final estimate of $20 billion is still a massive sum of money, largely underwritten by taxpayers.

Then there is the scale of the cost overrun: The final cost of the games will be about triple what was originally promised ($7.4 billion), although some $2.8 billion of that is attributed to the games being postponed last year – something largely beyond the organizers’ control. Only three Summer Games in the modern era have overshot by more, measured against their original estimates: Barcelona in 1992, Rio de Janeiro in 2016 and – way out in a class of its own – Montreal in 1976, which came in sevenfold over budget.

With spectators all but completely banned, the organizers will miss out on an estimated $800 million of ticket sales, as well as a broader boost to tourism revenue. This admittedly should not be overplayed, since neither of the last two Summer Games appear to have generated sustained increases in tourism revenue for the U.K. or Brazil. But even so, it remains a frustrating missed opportunity to raise the country’s global profile.

All this will pale into insignificance if, as many Japanese have vociferously argued, the Games become a super-spreader event for covid-19, sending Japan into lockdown. Tokyo prefecture – which was put under a state of emergency earlier this month – reported its highest-ever daily number of new cases on Tuesday, at 2,848. Nationwide, the number of new cases has risen from barely 1,000 to 5,000 in the last month. Hospital admissions are rising back toward the peaks seen in the last two waves.

The absolute numbers may still look small relative to Japan’s population, but the combination of the highly-transmissible Delta variant of covid-19 with a low current vaccination rate (only 31% of adults are fully vaccinated, according to Reuters) and the world’s oldest population (median age: 46) has obvious potential for trouble.  

“If the (Olympic Games) trigger the spread of infections and necessitate another emergency declaration, then the economic loss would be much greater,” Nomura analyst Takahide Kiuchi said in a recent note to clients quoted by Reuters last week.

There is, inevitably, much argument over the degree to which the Games are responsible for spreading covid-19 within the local community. Since July 1, only 155 cases have been attributed to athletes, officials and others who are supposed to be within a secure Olympic Village bubble. However, the sense of grievance that locals are feeling about being second-class citizens, confined at home so as to allow the Games to proceed in a lower-risk environment, is deep and real. No wonder that Toyota, a top-level sponsor, pulled millions of dollars’ worth of ads from national television to distance itself from an event that its home market has learned to hate.

But for now, that worst-case scenario is still only hypothetical. And it is clear that not all covid-related risks materialize. Only three weeks ago, the U.K. was experiencing similar levels of alarm as the government prepared to lift the last legal restrictions on social distancing and mask-wearing. Since then, case numbers have fallen sharply, appearing to vindicate the government’s calculated gamble.

The same could yet happen in Japan. A subtle and imaginative opening ceremony, the quality of the venues (both new and refurbished) and some extraordinary victories by Tunisian swimmer Ahmed Hafnaoui and Austrian cyclist Anna Kiesenhofer, have shown that the Tokyo games still have the potential to captivate and inspire. Japan’s taxpayers may never see their money again, but they may still live long enough to stop bothering how much it all cost. With a bit of old-fashioned Olympic magic, they may even secure enough medals and memories to think it was all worthwhile yet.

However, as of today, you would still find plenty of locals to take the other side of that bet. 

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