As long-time readers know, posters at TSE have often argued that entities seeking the right to host mega-events like the Olympics may be engaged in a fool's errand. Public expenditure rooted in the romantic notion of the Olympics returning to Greece, for example, contributed to the ongoing fiscal disaster there (see here and here, for starters). I'm no stranger to romantic notions myself, having made the pilgrimage to Olympia in 2002. It's all too easy to fall into the trap.
Recently comes news that Italy has decided to withdraw from the competition to host the 2020 Olympic Games in Rome. As John Powers points out, Italy no doubt has the capacity to be a fabulous host for the games, but given their fiscal woes, opting out for this round is prudent. Spain is in bad shape too, yet is forging ahead with its bid to host the games in Madrid. Perhaps the Spanish government believes that spending on Olympic infrastructure will stimulate the Spanish economy? Count me a skeptic.
Interestingly, Italy's announcement was made by its Prime Minister, the economist Mario Monti. Monti is known as "Il Professore" and is attempting to lead the "technocratic" effort to reform the Italian economy. Maybe economists do matter. I wish him well.