‘Make Britain proud. Back the bid’. There is nothing reprehensible about national pride. The role of the economist is not to scorn this desire, but to promote value for money in achieving them. So I propose we begin to measure PPPPP – pride per pound from prestige projects. And in this sense, the $6bn the London Bid is proposing to spend on hosting the Olympics in 2012 is poor value for money in PPPPP terms
“Make Britain proud. Back the bid.” For months, the slogan has been displayed all over London. This week the International Olympic Committee will decide the venue for the 2012 games.
The brazen admission that the purpose of hosting the Olympics is to generate national pride is unfashionable, especially in the Protestant world. Extravagant public display was rejected during the Reformation. In northern Europe and North America, expressions of national pride need to be rationalised.
So the space programme was justified by the discovery of non-stick frying pans. Britain ruled the waves in pursuit of a civilising mission rather than an assertion of economic hegemony. London’s Olympic bid is buttressed by specious assertions of economic spin-offs – university regeneration and tourist advertising – which would be more effectively and cheaply achieved by direct expenditure.
But there is nothing reprehensible about national pride. What American did not thrill to the sight of Neil Armstrong on the moon? The French erupted on to the streets to celebrate their country’s World Cup victory. And Icelanders still treasure having hosted the greatest chess match in history. It is surely better that these sentiments are channelled in non-violent directions. The role of the economist is not to scorn these desires, but to promote value for money in achieving them. So I propose we measure PPPPP – pride per pound from prestige projects.
The benchmark for PPPPP must be the Eiffel Tower, which combines the maximum of visibility with the minimum of function. The project was very cost-effective – 8.7m francs in 1888, equivalent to $27m in 2004 dollars. And it was a model of private sector involvement – most of the cost was contributed by Gustave Eiffel himself, who recovered his investment within a year from admission charges.
The Eiffel Tower is such an enduring success that high objects in the centre of cities have become a worldwide cliché, with Taipei 101 now towering over Kuala Lumpur’s Petronas Towers. But London found a new twist on this idea in the London Eye. It cost only $60m, raises substantial revenues and attracts 5m visitors a year (compared with the 1m or so expected at the Olympics).
Imaginative conversions of historic buildings often yield high PPPPP. Paris again leads the way, with the transformation of the Gare d’Orsay into one of the world’s most stylish art galleries. And London followed, rebuilding the defunct Bankside power station as Tate Modern. But the recent architectural winner in PPPPP terms is Frank Gehry’s Guggenheim Museum, which enabled the Basque government to put Bilbao on the world map at a cost of $100m.
Sydney’s Opera House scandalised Australia with its endless cost overruns. And at $700m it compares poorly with the Harbour Bridge. Completed in 1932 for $200m, it gave Sydney not only the best-known man-made object in the southern hemisphere but also an indispensable transport link. Still, the cost of both these enduring monuments is only a fraction of the $7bn spent bringing the 2000 Olympics to the city.
The organisers of London’s bid have been obliged to undertake the difficult balancing trick of exaggerating the expenditure on the Olympics to the IOC and minimising it to local taxpayers. But a conservative estimate of the cost is $6bn, a very poor return in PPPPP terms.
They manage prestige projects best in France, and that is why Paris is the probable winner of the 2012 competition. But if London and New York are rejected, both cities should seize the opportunity the IOC has given them. They could set aside a quarter of the money saved for prestige projects.
Imagine a dozen schemes, averaging $100m each. You could get a piece of spectacular architecture, a blockbuster movie, an unrivalled theme park, spread green spaces across deprived urban areas. But an original idea – such as the Eiffel Tower or the London Eye – would yield the greater PPPPP return. You could also give more resources to training future sports stars. A Wimbledon tennis champion? Now that would make Britain proud.