Brazil’s World Cup: The Joy and the Burden

by Magno Karl The World Cup dominates the Brazilian imagination […]

Image by © Dreamstime

Image by © Dreamstime

by Magno Karl

The World Cup dominates the Brazilian imagination like no other event. Every four years the country becomes a sect living in adoration of Lord Football. Indeed, no other country has won the World Cup as many times as Brazil. So when it was announced in 2010 that Brazil would host the 2014 World Cup, thousands celebrated at a beach party in Rio. We Brazilians felt that football was coming home, and that made us happy.

We were also happy when former President Luiz Inácio Lula said that private investors would seize the opportunity to invest in the country. “This will be the World Cup of the private sector,” he stated in 2008. Sports Minister Orlando Silva assured us that no taxpayer money would be spent on stadiums. Tax revenues, he said, would only be invested in infrastructure – the legacy left to Brazilians when the World Cup was over. Government political strategists built a narrative with a happy ending: a prosperous modern Brazil that would host high-profile world events.

Then we began to suspect that the taxpayers would be on the hook after all. Brazil’s infrastructure was in no condition to accommodate the World Cup. No stadium was up to FIFA standards.

The World Cup quickly became one of the most visible parts of the government’s operations, especially the federal government. Things seemed not to go according to plan. When the financial crisis and the uncertain profit potential inhibited private investors, the government stepped in with billions in subsidized credit. It even took direct ownership of stadiums. With state and federal elections scheduled for three months after the World Cup, the government was eager to spend whatever it took to ensure that the World Cup looked good on TV. The appearance of failure was not an option.

It is now clear that the “World Cup of the private sector” was nothing but a soundbite. Private investment has covered only 15.5 percent of the total spent on the “World Cup Matrix” – a unified plan that included stadiums, urban transportation, airports, ports, telecommunication, and security in the 12 host cities. Despite the sports minister’s promise, 97 percent of the total cost of stadiums was covered by government, either directly or in subsidized loans. Total spending on the plan is almost $12 billion, more than 85% of it covered by the Brazilian taxpayer. And as spending rose, expectations about the infrastructure improvements dropped. Investments in public transportation were replaced by public holidays, closing government offices and schools to keep some cities less congested during the tournament. Some parts of the transportation system that were being developed to get people to and from the matches will not be operational after the event. Brasilia built the fourth most-expensive football stadium in the world, although the city’s best ranked team plays in the Brazilian fourth division.

Dissatisfaction was evident during the June 2013 demonstrations, which began as a mobilization against a price increase in São Paulo’s bus tickets. Demands quickly spread to other areas. As people insisted on more government spending on education, transportation, and health care, they questioned the channeling of tax revenues to stadiums.

Besides the exorbitant cost of the tournament, police violence against demonstrators and journalists also contributed to the massive drop in World Cup approval among Brazilians. A recent poll conducted by Pew Research’s Global Attitudes Project found that more than 60 percent of Brazilians believe that hosting the World Cup is bad for the country, noting that the taxpayer money spent on stadiums could have been used elsewhere. In the same poll 39 percent said the World Cup would actually hurt Brazil’s image, while only 35 percent said it would help to improve that image.

Politicization of the World Cup and the conflicting narratives fed by government and the opposition has polarized the country. Suddenly it was not a football tournament anymore. Our much-loved football became a tool in the political battle. One should never expect anything promoted by politicians to be free of politics.

Nevertheless, public approval of the World Cup is likely to go up. After dropping from 79 percent in 2008 to 51 percent last February, the level of support for the event among Brazilians has reached 60% in recent days, according to Folha de São Paulo, the country’s leading newspaper. Apart from the frequent police violence against demonstrators – a mix of anti-World Cup protesters and striking workers – the atmosphere now seems celebratory. Hundreds of thousands of tourists are enjoying the country’s mood, while also experiencing our relatively high prices, one of the many downsides of our “mostly unfree” economy (114th place on Heritage’s Index of Economic Freedom).

Brazilians rush home from school and work to sit in front of their televisions, singing (the national anthem) and booing (President Dilma, Argentina’s team and Spain’s Diego Costa) together. But hosting the World Cup has taught Brazilians some useful lessons. The most important is that one can never be too skeptical about politicians’ promises, for – as long as they are allowed to spend as they please – they will do it in a way that favors their retention of power. In the World Cup preparations, politicians have once again put the taxpayers’ money to work for their reelection.

The cruel irony is that the politicians used football — the source of priceless joy for Brazilians — to force an impoverished population to foot a $10.2 billion bill.

This article is re-published in course of the syndication- project of AtlasOne


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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