THE ROLE OF MEGA-EVENTS IN URBAN COMPETITIVENESS AND ITS CONSEQUENCES ON PEOPLE

Carolina del Olmo

Universidad Complutense

Some years before filming Bowling for Columbine, Michael Moore directed and starred in the film Roger and Me. In this film, Moore captures the consequences of the closure of a General Motors plant in his home town, Flint, Michigan. The plant closed down and moved in search of lower labour costs, leaving behind a landscape of unemployment and despair. However, Moore portrays this event in a comedic light. In fact, the most hilarious part of the film is seen when the city council of Flint decides to implement some measures to solve the population’s problems, with hopes that these measures convert Flint into a tourist destination. The urban government built an automotive theme park, a colossal hotel and a gigantic shopping mall, but obviously the plan failed in a few months and the new installations closed down. Strangely, by the implementation of these measures, the city council aimed to boost the spirit of the people, to give them back their self-confidence. Unfortunately, these plans are not as unique as they may seem. If we read about the 1992 Barcelona Olympics, we discover that one of its majorly recognized achievements was the increase of its citizen´s pride in themselves and their city and the improvement of the image that the inhabitants had on their home town. In fact, this idea is a basic ingredient of the dominant ideology around mega-events.

Anyway, if we were to study the strategy that consists in organizing large scale events of any kind in order to revitalize a city that before was destroyed by a mix of deindustrialization, unemployment and social service cuts, Spain would be a great example. In Barcelona, the Forum de las Culturas is about to conclude as I write this essay. Valencia is working to host the 32^nd edition of the America’s Cup yacht race. And Madrid is striving to be the host city for the 2012 Olympic Games (along with Paris). Even if they last only a few weeks, these events require years of preparation, take up a huge amount of public funds and permanently change the physical landscape of the city.

But Spain is not alone in supporting this ideology. If we take a look at the figures, we will notice that the competition for hosting an Olympic event becomes more difficult every year since the economic success of the 1984 Los Angeles games (a success largely due to the growth of worldwide communications). The same rivalry prevails in the fight for hosting a World Fair or any other large scale event.

How can we explain this mega-event obsession? First of all, we must realize that this kind of competition is nothing more than the most conspicuous form of global competitiveness. This competition between cities and regions is a consequence of the political and economical changes that have occurred in approximately the last thirty years. To summarize this changes, we can make use of a common term and discuss a transition from a fordist regime of accumulation to a postfordist regime of increased flexibility. The growing geographical dispersion of production and a financial capital boom have played an essential role in allowing this transition to take place, a transition that, in turn, has had important consequences on capitalistic cities. Towns are experiencing a prolonged crisis related to the loss of traditional industries, the growing importance of tertiary sectors, and the increase of unemployment and poverty. They have begun to compete against each other in a fierce fight for attracting investments from the private sector or from different levels of government. They also strive to obtain money by promoting a culture of consumption, in search of some kind of compensation for the loss of steady jobs. The urban governments have taken the initiative in what has been called the “rise of an entrepreneurial city”, encouraging a good business climate and taking measures to attract economic growth. Measures that, in turn, intensify the flexibility and the insecurity.

As was to be expected, the investments aimed to convert a city into a dynamic and competitive enterprise suppose the utilization of the scarce public resources in favour of firms and high level consumers at the expense of disadvantaged classes, specially in a fiscal austerity frame as the one we have had in the last years. As well as the deregulation of labour market and the gifts (fiscal exemptions and all kind of incentives) that urban governments offer to the firms to lure them to their cities, the other efforts aimed to construct a competitive position for the city have primarily been concentrated in the field of urban environment transformation. The city, with the help of post-modern architecture, on the one hand becomes a spectacle in order to make it an attractive space for tourism and consumer money. On the other hand, the city devotes itself to the construction of infrastructures of whatever kind that are highly valuable for corporations and quality customers, as convention centres, business areas, highways, airports and so on. In this frame of competitiveness and in this process of converting a city into a spectacle is where we must set the recent obsession with mega-events. This obsession is perfectly illustrated with Barcelona since they have hosted the 1992 Olympic Games. Since then, it has hosted the Forum this summer and, in between, has organised a myriad of minor tourism-based events.

Now, let’s focus on the so-called advantages of these kind of events. Besides being able to heal the citizen’s psychological discomfort, as we previously noted, politicians constantly brag about two other virtues of mega-events: 1- they are believed to be the perfect occasion for the city to fulfil its longstanding general need for infrastructure and installations. 2- they can stimulate the economy and generate employment. This last claim reads as follows: the mega-event turns the city into a global focus of attention, providing a top-quality kind of marketing and advertising that contributes to sell the city’s image all over the world; as a result, the city will capture a huge amount of tourists and will also attract a lot of corporate headquarters and new events, with the resulting growth of economic activity in the long run and the creation of new jobs.

At first sight, these kind of aspirations and expectations may seem reasonable if we think about the economic significance of tourism in the last years for advanced capitalist societies. But even before evaluating if it is reasonable to expect the fulfilment of these expectations, a big problem arises, a problem that has to do with the urban pattern that this kind of economic development promotes. Public and private interventions on the touristic city usually focuses on the surface and only renovates the central zones in a city, leaving the rest of the neighbourhoods in a sorry state of neglect. These kind of manoeuvres tend to generate gentrification and speculation, resulting in the rise of real estate prices and the eviction of the neighbours with lower purchasing power. The city becomes uncomfortable for the inhabitant, whose needs are subordinated to the pleasure of the visitor, and also becomes depersonalized with the arrival of big trade chains and the closure of small, traditional trade stores (a process of substitution that usually results in a net loss of jobs).

But there are also more serious disadvantages. The kind of jobs created by the tourist industry tend to be low wage, precarious, unqualified, non unionised and without benefits. Moreover, it seems reasonable to suppose that the growing number of tourist destinations will solidify the competition between cities, resulting in the need to reduce expenses and, of course, labour wages. This growing competitiveness is, in fact, one of the factors that makes the tourism-based economic pattern so risky, as well as the fact that the flow of visitors is very sensitive to trends and taste changes, or to questions of security or currency fluctuations.

Nonetheless, if the huge investment of public funds and the inconveniences caused to the people who inhabit the touristic city result in any kind of profits for the population, then we could find a justification for this pattern of development. But no social welfare exists in this pattern. Let’s think about the installations that a city “gains” when it hosts a mega-event. We are tired of hearing about the “Olympic legacy” and the official discourse is repeated again and again that when the mega-event concludes, the installations will remain in the city. But they never discuss what the use value of these infrastructures is, especially if we compare this “sinks” of public investments with other installations and services that could have been financed with the same amount of funds (or a lot less). Public funds are a scarce resource, especially today, in this zero-deficit scenario. In this restricted frame, to finance these kind of events and infrastructures involve a budget cut in other, more necessary, sectors. Besides, there are cases, as in the Valencia Americas Cup, where it is simply impossible to imagine the usefulness of the installations that the event will leave behind: public funds are going to finance, among other things, an extension of the harbour that includes a big ship proprietor’s yacht club with its own heliport and a dock for ships more than 40 meters long. Moreover, this kind of infrastructures tend to require a lot of re-investments to avoid the threat of devaluation that comes with the interurban competition and the changes in trends. That’s why it is so common to see these installations languishing in a state of neglect years after the event.

The Barcelona case represents these aspects extremely well. The 1992 Olympic Games are recorded as a success, even if they didn’t fulfil the expectations they claimed. The Olympic investments (in the broad sense, including some roads, coastal area renewal, cultural outlets, etc.), reached near 6 million euros and 53% of that budget were public funds. But the economic activity that this money generated didn’t have a positive impact on the economic indicators of the Barcelona area. Between 1987 and 1991 the number of jobs created in the construction sector were only 33.000, a figure much lower than the expected considering that three fourths of the total investment went towards the construction sector. On top of this, all of them were temporary jobs. In the hotel and catering trade sector only 20.000 new jobs appeared and only lasted the duration of the event, again, much less than the expected. In the other sectors, the labour impact was zero (we tend to forget that the Olympic volunteers take on a great amount of tasks that would otherwise generated jobs). During 1992, the number of jobs began to fall. If we take a look at trade, we will see that during 1992 the sales rate decreased and the number of tourists that visited the city (a million and a half) was lower than expected and spent less money than it was estimated (exactly the same has happened in Athens this last summer). Also, the Barcelona event resulted in a dramatic decrease in the number of people that visited other destinations in the Barcelona region. Basically, the only economic indicator that experienced an important impact as a result of the Olympic Games were price levels. Since 1988, city price levels increased more than in the rest of the region and more than 1% over the inflation rate in Spain. In the year before the Games, prices rose more than 3% over the prices of the rest of Spain. And if we think that the city gains profit from television broadcasting rights, we should not forget that it is the Olympic Committee who collects this money. In fact, the progressive growth of this source of money has turned the International Olympic Committee into a big (and suspicious) enterprise.

How can we understand the minute economic impact and the lack of fulfilment of expectations? We could focus on the unbridled optimism that seems to encumber the people who do the impact studies, but, especially, we should focus on the limited frame in which the investments take place. If the demand related with the Olympic Games (or any other mega-event) takes up resources that would otherwise remain unused, it would be reasonable to expect an increase in employment, as well as an improvement of the economic indicators in general. Nonetheless, demand growth related with a mega-event doesn’t produce a net income, because it use to be a consequence of a mere change in the direction of the resource’s flow; that is, the resources go to a specific sector or a particular place but only because they are coming from another sector or place. The same goes for private capital: it tends to reduce its investments in other sectors or in other spatial areas. If we pay attention to the recommendations that the economic impact studies use to achieve a real net increase in profits, for example, to make the labour market more flexible, it is clear that the aim of obtaining net profits lose part of its appeal.

Astonishingly, even if the mega-events don’t fulfil their expectations, this is never seen as a failure. Nobody seems to care for or to be surprised by this failure and the event ends with a sense of success. If we want to understand this incoherence, we should put aside the idea of competition as a heuristic tool and focus on the fabulous opportunity for businesses that entail urban transformations related with mega-events. Indeed, even the need to attract tourism and the desire to improve the competitive position of the city in the urban hierarchy seems a petty and secondary question if we compare this with the local elite’s focus on an easy profit. Of course, I am not saying that urban governments don’t want to promote the image of their cities with the purpose of generating employment, attracting enterprise headquarters and so on. Regrettably, one of our most serious problems is that urban governments seem to be convinced that, in a globalized world, there’s no point in promoting local enterprise development. They believe that the best they can do is to turn the city into an appealing zone for foreign investments. But the weakness of some of their strategies and the blindness with which they insist that these strategies actually work, make us question their genuine interests in the city.

In short, we cannot forget that when a mega-event is organized, the money that really flows into a city is, in the first place, public money that falls into the hands of private businessmen. That’s why it is so difficult to understand where does the city expects to obtain incomes by organizing a mega-event, and how little the urban government cares. When asked about the profits the city of Madrid may gain from hosting the Olympic Games, a representative for the Olympic candidature discussed broadcasting copyrights (that, as I have previously stated, benefit Olympic Committee and not the city) and the tourist appeal that the city will gain. He referred to the Barcelona case as a big success and talked about the millions of tourists that have visited Barcelona in the last years as a result of the Olympic Games. What he forgot to mention is that the flow of tourists into Barcelona has not been an easy or inexpensive achievement. The strategy has only worked with the help of a continuous and huge public investment in private business, for example, in the hotel sector, dangerously close to bankruptcy –all in all, another typical episode of socialization of losses and privatisation of profits.

However, if we consider that the investors that promoted and financed a big part of the Olympic Games budget in Barcelona were real estate and construction companies, property developers, land speculators, finance companies and hotel and catering trade firms, we will understand that, indeed, the 1992 Barcelona Olympics can be considered a success. Of course, as a result of the Olympic candidature, Barcelona witnessed a frantic building activity, an increase in the housing and land prices and a huge urban transformation that entailed the conversion of a big amount of industrial land in service or housing plots.

In fact, urban renewal related to a mega-event is not as much a secondary effect as it is a fundamental raison d’être. The recent Forum Universal de las Culturas that has taken place in Barcelona this summer confirms this idea: instead of organizing a mega-event that could reuse the installations built ten years ago as a result of the Olympic Games, the Barcelona government and elite have decided to invent a new kind of event whose major aim, no one can doubt, is urban transformation. This multicultural event has proven to be an effective excuse to finally implement urban renewal in the last coastal area of Barcelona that still has a low income population. A made-to-measure operation for the private capital that has been a real fiasco for the city.

The Spanish case is especially serious since in Spain the construction sector represents almost an 18% of the GDP, and 60% of the investments in fix capital formation. It also employs two million people. After a huge process to merge enterprises, the building sector is now dominated by six big firms, five of which are numbered among the ten largest construction companies in Europe. The sector has become a safe allocation for investments due to the housing price boom and to the approval of huge public infrastructure plans. Even if the present economic climate differs from that of Barcelona 92, the results that we may expect from Madrid 2012 may be very similar. In Barcelona, between 1986-1992, the construction boom and the rise in prices were partially caused by the recent entry of Spain into the European Union, consequently causing an influx of foreign capital into the country, especially into the real estate sector. Nowadays, the potential rise in prices and the worsening of the speculative bubble will come from the fact that we are passing through a difficult period for stock exchange investments. And these bad times for the investors have turned the real estate sector into a safe haven that takes up more than 40% of foreign investment in Spain. In fact, in the last years, banks, investment funds and thousand of corporations had entry into the sector in search of a higher profitability.

So, we had a scenario of uncontrolled growth of the construction and real estate sectors, that has made Madrid one of the cities with the lowest rate of inhabitants per dwelling in Europe and, at the same time, one of the cities with the highest rates of vacant dwellings (and a significant unsatisfied demand). And in this scenario it is difficult to see what is the public interest of the new dwellings that the Olympic Village will leave to the city, or what profit could entail the new centrality zone that is planned for an old industrial area in the East of Madrid. The nearness of this new centrality to a proletarian neighbourhood as is San Blas raise also the fear of housing evictions, a phenomenon that always accompanies mega-events of this kind, as the inhabitants of the urban core in Barcelona know very well. Even the hotel trade sector, that could expect profits, suspiciously look on to events such as the Madrid Olympics or Valencia’s Americas Cup, as they are afraid of a possible saturation of the sector with a consequent threat of devaluation.

By now it should be evident that the organization of a mega-event does not in fact generate benefits for the general public and, instead, causes several nuisances. But an advantage from this kind of events has not yet been mentioned, an advantage gained not for the people, but for the urban governments. I’m referring to the consensus that these events encourage. A consensus that functions as a distraction in order to carry out all kinds of business and urban operations that would, otherwise, generate opposition. Also, this consensus decreases the legitimacy of the groups that fight against urban renewal, turning the conflicts into a police matter. The significance of this consensus advantage seems very clear in the Forum de las Culturas case. In fact, it is very difficult to create a new event capable of generating a consensus that a traditional event such as the Olympic Games has by nature. That’s why the Forum’s organizers select as their motto “Peace, cultural diversity and environmental sustainability”, in an effort to win the people’s trust and approval. And, of course, the need for a consensus combined with the desire to offer a bright image of the city, always leads to a higher level of repression.

I would like to finish by asking what can be expected or what can be done. One of the possible advantages of such events for the urban social movements is based on the government need to portray a peaceful and pleasant image of the city. These movements can exploit this need in order to catapult their stance up to an empowered position for negotiating with the local government. But if we focus on the Madrid Olympic candidacy, the future doesn’t look that clear: the Olympic candidacy has been approved almost unanimously. Regardless the possible involvement of all political parties in the urban business, I believe that the seamless and enthusiastic support of the Olympic candidacy shown by leftwing politicians, is motivated by their traditional acceptance of the orthodox development policies. The leftwing political parties usually carry the burden of an uncritical believe in the idea that good macroeconomic figures entail benefits for the people. From a leftwing position, it is usual to accept that businessmen create jobs and raise wages when they obtain more profits, so it is worth it to make concessions and to offer incentives to firms in order to generate employment, even if the flexible laws that are required to please the businessmen allow the enterprises to move or to fire workers whenever they want. By now it should be evident that a city that strives to create a good business climate is not beneficial for its citizens or, at least, it is incompatible with the strong and well organized proletarian class, a class able to exert influence on its working conditions. I’m not trying to defend some kind of cancellation or reversal of development towards some sort of lost paradise. I only suggest that leftwing opposition parties should try to elaborate an alternate development strategy of those implemented by the activists of the city as a growth machine, an alternative that should pay attention to the old division between use value and change value, a division that only the local elites can afford to neglect. In fact, local elites must neglect this division, since they are deeply interested in claiming that economic growth and social welfare are one and the same. The mega-events strategy only highlights the trap in which the left always naively fall into (or, at least, that’s what I want to believe). As John Logan and Harvey Molotch said, “a skilled politician delivers growth while giving a good circus”.