Brazil’s World Cup Dream Becomes a Nightmare

Brazilians are fed up and the economic evidence shows they’re right.

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A statue is covered by graffiti left by protesters outside City Hall in Sao Paulo, Brazil, Wednesday, June 19, 2013. Beginning as protests against bus fare hikes, the demonstrations have quickly ballooned to include broad middle-class outrage over the failure of governments to provide basic services and ensure public safety, even as the country's economy modernizes and tax rates remain some of the highest in the world.

Brazil's World Cup was supposed to be the country's shining moment, a big party on the international stage, a chance to display "the beautiful game" in world-class stadiums for billions of viewers. But one year away from the tournament, Brazil's dream is looking more like a nightmare.

The country has been wracked by days of protests due, in part, to the fact that it is spending billions of dollars to host the 2014 World Cup and 2016 Summer Olympics while it neglects the infrastructure and health care needs of its population. Instead, Brazilians have been subjected to a hike in public transit fares that, as Roberto Ferdman noted at Quartz, adds up to a substantial chunk of change for the poorest among them.

"People are going hungry and the government builds stadiums," Eleuntina Scuilgaro, an 83-year-old protester, told the New York Times. Protesters are carrying signs that read: "Health And Education, Not The Cup." As journalist Andrew Downie wrote, the protests "are directed at the double standard of beautiful new stadiums being built for FIFA at a rush (and huge cost) while the government neglects much more necessary investment in hospitals, schools and sanitation."

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Brazil's leaders, of course, promised a huge economic boost would come from hosting the World Cup. And Brazil could certainly use such a boost: after years of skyrocketing growth, its economy has recently slowed to a crawl, while inflation is climbing.

But the protesters will almost certainly have the better of the long-term economic argument, as the evidence overwhelmingly shows that hosting huge international sporting events is a fool's errand that does nothing for growth. The economic benefits of such "mega-events" rarely materialize, and costs to the hosts almost always fly past their initial projections.

For instance, South Africa only recouped a fraction of the costs it incurred to host the 2010 World Cup (the first to be hosted on the African continent). The 2006 tournament in Germany provided no boost to the country's economy, according to economist Wolfgang Maennig of Hamburg University. Economists Robert Baade and Victor Matheson found that American cities hosting the 1994 World Cup actually "experienced cumulative losses of $5.5 to $9.3 billion as opposed to ex ante estimates of a $4 billion gain touted by event boosters." They added: "Potential hosts should consider with care whether the award of the World Cup is an honour or a burden."

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And the same pattern holds true for the Olympics. Except in rare circumstances, the money spent hosting a big international sporting event can be better spent on long-term investments that the residents of a country will actually use.

A microcosm of this debate plays out in U.S. cities all the time, as city and state governments decide to spend public money building or improving stadiums for already wealthy sports franchise owners, while other public services go begging. Glendale, Ariz., for instance, is still mulling spending millions of dollars per year to keep the National Hockey League's Phoenix Coyotes around, even though the team has proven to be a financial sinkhole and the city is cutting other services and laying off workers.

Brazil, meanwhile, is bulldozing favelas to put a shiny face on the World Cup. And it seems that plenty of Brazilians are through staying quiet about it.

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