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An Olympic-Sized Disruption

2012 July 27
by Phil Miller

The Olympics, like so many other sporting events, are often portrayed as a panacea to all that ails us economically.  But the reality is quite a bit different.  Why is it that such a public event that brings hundreds of thousands of visitors to a city does not register much, if any, positive blip on the economic radar?  One reason is because of the disruption of everyday economic activity (emphasis mine).  From Der Spiegel (via Craig Newmark):

Starting this week, the world’s biggest financial center will be gripped by a special condition usually only seen in wartime. Its 7.8 million inhabitants are about to be joined by an average of 1 million additional visitors per day. The already overloaded public-transportation system will be burdened with an additional 3 million fares per day. A total of 175 kilometers (109 miles) of the city’s streets will be closed off to normal traffic. Almost twice as many soldiers as Britain has in Afghanistan, a helicopter carrier and special forces units armed to the teeth will make the city look like it’s under siege.

Transport for London (TfL), the city’s bus and rail authority, is nervous — so nervous, in fact, that it has issued an earnest appeal to Londoners to avoid using the Underground if at all possible during the games.

TfL is urging residents to stay at home, walk, bike, rollerblade or simply go on vacation during the Summer Games. It is also begging banks to set up home workstations for their traders, hoping to dissuade them from using their usual mode of transportation, the Tube. TfL knows that the success of the Olympics will be decided in the Tube’s tunnels and stations, some built in the Victorian era, especially those on the Northern, Central and Jubilee lines.

After conducting traffic simulations for years, TfL officials believe they know what’s in store for them. But they also know that there is little tolerance in their ancient system for everything that can and will go wrong. There isn’t much wiggle room between having things go as planned and total chaos. All it takes to disrupt this delicate balance is a broken-down train, a foolish tourist, a suicide, a panic or a bomber.

Those who have to remain mobile in London during the Olympics are well-advised to rethink their strategy. The German package delivery service DHL, for example, plans to shut down part of its London delivery fleet, knowing that traffic will be moving even slower in the downtown area than at the typical snail’s pace of 11 kilometers per hour (7 miles per hour). Instead, DHL plans to have extremely fit jogging couriers making package deliveries during the games.

The increased tourism is great news for those in the hospitality and restaurant industries in London, but it’s a headache for many others.  Keep this stuff in mind the next time you read about how great having the Olympics in city X will be.

5 Responses
  1. Bryan permalink
    July 27, 2012

    Does the argument that the infrastructure and upgrades built on what was considered waste property provide ROI over the long-term make sense to you or others here?

  2. Moggio permalink
    July 27, 2012

    “or simply go on vacation during the Summer Games” is the most important part, no? If locals go on vacation during the Summer Games, their corresponding spending becomes negative injection of money for the area of interest. Am I right?

  3. Nick Evans permalink
    August 1, 2012

    @Moggio: if the locals would otherwise have spent the whole of the summer at home, yes. If they would have gone on vacation anyway, but are simply shifting that vacation from mid-late August to the Olympic period, not so much.

    As it happens, the world seems to be turning in the normal way, and London seems to be carrying on much as before. Ancectodally, we don’t seem to have had the usual drop-off in passenger numbers that we normally see in the school holidays, and there’s a lot of very garish pink around, but otherwise the games seem to have been absorbed smoothly enough.

  4. Moggio permalink
    August 1, 2012

    @Nick: Thank you.

  5. August 9, 2012

    Somewhat along these lines, there is a post on Distasteful Inelegance examining who profits from the attention and massive amount of public expenditure sunk into the Olympics. Would love to see The Sports Economist’s take on it. http://goo.gl/PiIg2

    (Been reading this blog for years. Keep up the great work.)

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