In a famous parable by Chinese philosopher Han Feizi, a farmer saw a rabbit fleeing a predator collide with a stump and knock itself out. The farmer carried it home and prepared a tasty stew. He kept going back to the same stump to wait for another rabbit. The idiom shou zhu dai tu (to guard a stump and wait for a rabbit) came to refer the behavior of people who wait for a random stroke of luck instead of making earnest efforts to pursue opportunities.
With the memory of reviving the success of 1964, Japanese have been rubbing their hands together in eager anticipation of business profits. A wide-ranging article in web magazine Money Voice (June 26) discusses the impact on businesses that had hoped to exploit the Orinpikku tokuju (special demand from the Olympics) and pull off another coup.
Whether or not to press ahead for a postponed Olympics in July 2021 has been a point of contention among candidates for Tokyo’s upcoming gubernatorial election, to be held on July 5.
Money Voice, however, is more concerned over the economic ramifications of clinging to a risky cause. One presumption is that if the games are actually held next year, they would provide at least some degree of economic stimulus, both in 2021 and for some time in the future, in the form of the so-called “legacy effect.”
First of all, let’s consider that the outlays for infrastructure — on new roads, stadiums and other facilities, etc — have already been spent, so no further demand can be anticipated.
Other sectors that would have benefited from the holding of the games would include security, transportation — involving tour buses, etc — and the hospitality industry, all of which will realize zero income thanks to the coronavirus pandemic.
So the question is, are there any economic incentives for Japan to host a summer games next year?
One of the big losers this summer stands to be Japan’s regional cities, which were expected to accommodate the overflow inbound travelers while Tokyo was filled to capacity. With no expectation of an infusion of domestic travelers either, by 2021 many of these are likely to have gone into bankruptcy. Nor can any new investments be expected, whether the games are held next year or not.
Let’s do some bean-counting. Three years ago, the Tokyo metropolitan government estimated that the economic impact over the 18 years from the time the IOC picked Tokyo as host city (2013) until a decade after the games (2030) would amount to 32 trillion yen. Had the games been held as scheduled this year, the amount generated would have come to 21 trillion yen, and on top of that, the momentum from successful holding of the games was expected to generate an additional 11 trillion yen, with roughly 60% of the total revenues spent in Tokyo and the remaining 40% in regional cities and towns.
Several Japan-based think tanks have calculated that a complete cancellation of the games would result in at least 3 trillion yen in losses.
The construction of the new stadium, athlete’s village and others required direct investments of some direct investments of some 500 billion yen, an investment that the Bank of Japan viewed as sensible at the time since the anticipated expenditures would have come to 10 trillion yen.
The sad fact is, however, that the activities leading up to the 2020 games do not appear to have greatly benefitted the economy, government claims to the contrary notwithstanding.
Looking at the most recent games in London and Rio de Janeiro, the “legacy effect” of subsequent gains after the games has been negligible, and considering the speed with which the world’s economy changes from year to year, one can only feel skepticism toward the entire notion of any gains down-the-road at all, let alone 11 trillion yen by 2030.
That said, projections are that a one-year postponement of the games are likely to result in losses of 600 billion yen. But the question remains, will America’s NBC still come up with 11 trillion yen for exclusive rights to broadcast the games, in anticipation of a $1.2 billion advertising windfall? Apparently the contracts were insured, and while NBC might not profit, its losses will be covered.
In any event, whether in 2020 or 2021, the Tokyo Olympics won’t bring a windfall to the Japanese economy. Some companies may entail losses, but the average citizens won’t feel the pain. And athletes will still be able compete in the newly built national stadium and the apartments in the athletes’ village can be sold to real estate investors. So losses will be manageable.
Former Tokyo Gov Shintaro Ishihara justified promoting the city as an Olympic venue by saying that “The Japanese people need to have dreams.” But with scandals over financial mismanagement and its being held during the hottest time of the summer, it has become the target of a host of complaints.
Emerging from the COVID-19 pandemic with the economy intact deserves top priority, and anything that detracts from that goal must be given short shrift.
Japan should devote its full energy to fixing what needs to be fixed for the nation and for the economy.
© Japan Today