Tokyo Olympics: An Economic Disaster?


When you paid ¥110 instead of ¥108 at Daiso last October, you probably wondered why. While the coronavirus has thrown the Olympics off schedule, it’s hard to imagine that the extra ¥2 and the Olympics can be related. But they are. And as a taxpayer whose tax rates keep rising, you should be alarmed. 

Hosting the Olympics sounds like a great idea in terms of economic fiscal stimulation. But it only works in developing economies since the Olympics provides an immense global platform from where a nation can launch itself onto the global market. Take, for example, the 2008 Beijing Olympics. It introduced a surprising 21st century China to the world. 

Japan initially submitted a bid of  ¥700 billion to host the Olympics. It later changed that estimate to ¥1.5 trillion, but it’s since inflated to ¥2.7 trillion. Keeping in mind that the previous six Olympics were barely profitable – some were a financial disaster –  it’s highly unlikely that Japan’s economy will witness any fiscal stimulation. We can argue that Japan possesses one of the best think tanks when it comes to economics. But the truth of the matter is that Japan’s economy has been dormant since the 1990s as the government has battled an internal debt crisis. In recent years, the government used quantitative easing (printing more money) to try and induce a healthy inflation rate of 2.5% as opposed to the long term deflation Japan has witnessed. 

With the marathon’s relocation to Sapporo, more expenditure is expected due to the new logistics.  This decision will only add to already inaccurate cost-benefit analysis leading to embarrassing cost-overruns. 

The decision to relocate events, like the marathon, has raised many questions about the planning of the Olympics. To avoid this, economists have suggested Los Angeles should host the Olympics every four years. This plan would utilize the already built infrastructure and media centers. It may seem like an abstract idea, but it might save billions of dollars in federal spending that yields nothing but deficits. The best example of how the Olympics can run an economy dry of cash is the Olympic Games Rio 2016 where an initial budget of $3 billion skyrocketed to $13 billion. 

What can be inferred from this analysis is that the Tokyo Summer Olympics is a juvenile attempt by the government to launch neo-Japan to the world. It is going to backfire.

The question we need to address at this time is how can we minimize operation costs and keep the facilities functional once the Games are done. Can Japan stay afloat amidst a global recession that is being predicted by economists around the world?

Despite its postponement to next year, will the Tokyo Summer Olympics be an economic wonder or a spiral deeper into recession? Only time will tell. What we know as of now is that expenditure has exceeded by more than double what was anticipated and as a result, you pay an extra ¥2 at Daiso per item.