Tessa Jowell is in trouble for her comments, reported in the Guardian and elsewhere, that seem to imply that the Government would not have supported the London Olympic bid if it had known a recession was coming. She's attempted to backtrack by claiming that what she meant is that the Government wouldn't bid under current circumstances (because it would be a "distraction", as if that would be a bad thing!) but it's pretty clear that she meant it wouldn't have bid in 2005 if it had known there would be a recession in 2008.
She's wrong either way. There was no reason for a bid in 2005, when the boom was in full force. But paradoxically, if the 2012 Olympics were on offer right now, it would make a lot of sense to lob in a bid. Obviously Gordon Brown and Alastair Darling's reconversion to Keynesianism hasn't yet reached the rest of the Cabinet.
I yield to none in my contempt for the way the UK Olympic movement conned the Government into underwriting this extravaganza. The initial estimates were outright lies and there are still not many people who think that the final tab will fall within the current estimate of $9.3 billion, which is almost four times what the UK taxpayer was persuaded to support a mere three years ago.
Long before Keynes was even a gleam in his father's eye, monarchs and despots understood that bad economic times were the best times to knock up a couple of new frigates on the cheap. During the great depression, Keynes famously said that it would be wise to emply people to bury money in holes in the ground and then dig it up again. Even as an Olympics hater, I have to admit that the Games will probably prove more valuable than that. The media are advocating tax cuts primarily on the grounds that it will take too long for public works projects to have any impact on the economy; here's a huge public works project that will play out over the next three years, and a senior Cabinet minister is implying it's not a good idea!
In any event we're stuck with the Olympics. So it will be interesting to see what happens to the costs as the project moves forward. The huge jump between the initial estimate and the current one happened mainly because the Olympics grandees lied to the Government and the public to get what they wanted, but there has also been some genuine cost inflation as a result of the strength in the economy. With construction workers starting to receive their P45s and materials costs in freefall, it ought now to be possible to achieve some significant cost savings. Unless, of course, the dolts who are running this show have given out a bunch of fixed price contracts, which, now that I think about it, wouldn't surprise me in the least.
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