Hopes for a World Cup economic boost are fading fast in Brazil

posted at 1:21 pm on May 28, 2014 by Erika Johnsen

I don’t regularly follow soccer/football/fútbol/calcio/etcetera, but I am excited to watch the World Cup beginning this June. This edition’s host country, Brazil, has been pretty jazzed about the World Cup too, and not just because it’s full of insanely enthusiastic soccer fans and one of the world’s top teams; the country has been hoping that the World Cup and the accompanying billions on billions in tourism and advertising dollars would provide the once prosperous and now severely lagging country with a much needed economic boost. Unfortunately, and yet totally predictably, Brazil has systemic fundamental problems that not even a gigantic international rage-a-thon can cure, via the WSJ:

“Look how many billions were spent on the Cup and how much got down to us,” said the 38-year-old hotel worker, who lives in Rio’s Santo Amaro slum, a labyrinth of narrow alleys not far from Maracanã stadium, where the Cup final will be played.

Mr. Monteiro’s shift from World Cup fanatic to protester highlights a wave of disillusionment that has swept Brazil ahead of the event, which begins June 12. Such bitterness was once unimaginable. Passion for World Cup soccer runs so deep in Brazil—the winner of more Cups than any other nation—that people here say they live in a “country of soccer.” Still, just 48% of Brazilians now say hosting it was a good idea, down from 79% in 2008, according to an April 8 poll by Brazil’s Datafolha, the most recent.

The explanation goes beyond sports. For many Brazilians, the Cup has become a symbol of the unfulfilled promise of an economic boom for this South American nation. But the boom has fizzled. And now the World Cup’s $11.5 billion price tag—the most expensive ever—and a list of unfinished construction projects have become reminders of the shortcomings that many believe keep Brazil poor: overwhelming bureaucracy, corruption and shortsighted policy-making that prioritizes grand projects over needs like education and health care. …

Across Brazil, $3.6 billion in taxpayer money has been poured into stadiums, as much as the stadium bill for the past two Cups combined, and builders are still racing to finish. Meantime, work on airports, roads and other long term projects promised to benefit development in Brazil became hampered by bureaucratic squabbles, allegations of corruption and other obstacles. With days to go, the stadiums are mostly built, but the areas around them often resemble construction sites.

This infrastructure fiasco is starting to sound like Sochi all over again. The WSJ goes on to describe beach-scene canvasses as emergency cosmetic fixes for incomplete structures, tents for airport terminals, unfinished roads and building projects, and a planned light-rail system that is little more than an “unfinished stretch of rubble” — and the unifying theme here is that they all got thrown off schedule by squabbles borne of too much bureaucracy and corruption. Now opposition and even protests are breaking out again as Brazilians are getting mighty upset, not about the tournament itself, but rather with their government’s wildly expensive attention to it compared with the country’s prevailing lack of robust prosperity.

It has become a political headache for Brazil’s left-wing President Dilma Rousseff, who is seeking a second term in October elections. Analysts once predicted the monthlong Cup would launch a re-election campaign portraying her as an efficient leader. Instead, Ms. Rousseff will play a low-key role and has decided not to speak at the opener.

What could she possibly have expected, really? Like I said, Brazil has serious problems inherent in their leftist government and semi-planned economy that no amount of temporary tourism and infrastructure surges can fix; I’ll refer you to Heritage’s 2014 Index of Economic Freedom for more background on that front:

Brazil has benefited from surging prices for commodity exports. The middle class is growing, and millions have been lifted out of poverty, but heavy government intervention in the economy continues to cause the misallocation of capital, limit mobility, and fuel a sense of injustice. Ensuring security and adequate infrastructure for the 2014 World Cup and 2016 Rio Olympic games will challenge the government’s administrative capacity. …

Corruption undermines economic freedom and sparked massive nationwide protests in 2013 over poor public services and the low level of political and institutional effectiveness. In the “Mensalão” case in 2012, some members of the Brazilian Congress were found guilty of participating in a pay-for-votes scheme. Contracts are generally considered secure, but the judiciary is inefficient and subject to political and economic influence.

Regulatory efficiency remains poor, and the application of regulations is inconsistent and non-transparent. On average, it requires over 100 days to incorporate a company, and obtaining necessary permits takes 400 days. The labor market lacks flexibility and hinders job growth. Agricultural subsidies doubled from 2011 to 2013 and now total about $10 billion. In 2013, subsidies for electricity were also increased.


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Socialist government fails. Again.

Who could have predicted that?

PS Good luck, Erika!

novaculus on May 28, 2014 at 5:58 AM

We will miss you, Erika!

bluegill on May 28, 2014 at 1:26 PM

Isn’t Brazil the country where there was a stabbing and a beheading at a soccer game?

Soccer of Thrones?

gwelf on May 28, 2014 at 1:29 PM

Now opposition and even protests are breaking out again as Brazilians are getting mighty upset, not about the tournament itself, but rather with their government’s wildly expensive attention to it compared with the country’s prevailing lack of robust prosperity.

But it’s such a great opportunity for graft!

rbj on May 28, 2014 at 1:35 PM

Leftism is holding them back? I’m shocked.

forest on May 28, 2014 at 1:38 PM

It’s a good thing Rio is host of the 2016 Summer Olympic Games, then… *whew*

HornHiAceDeuce on May 28, 2014 at 1:40 PM

mighty fine snark you’ve got, Erika. Don’t lose it. Good luck.

butch on May 28, 2014 at 1:43 PM

I hope Sunil Gulati fires Klinsmann and his kid is kicked off the U18 squad. MVP Mike Magee’s tweet was hilarious.

Christien on May 28, 2014 at 1:45 PM

Better not let GLAAD see that sign…

DethMetalCookieMonst on May 28, 2014 at 1:45 PM

Didn’t they know about this for almost 8 years?
Brazil has problems.
2018 (Russia) and 2022 (Qatar unless they move it) will be even worse.

You are posting comments too quickly. Slow down.

I’ll be darned…my first comment on this thread!

22044 on May 28, 2014 at 1:54 PM

bye Erika!

coolrepublica on May 28, 2014 at 1:55 PM

We will miss you, Erika!

bluegill on May 28, 2014 at 1:26 PM

Agreed. One of the best writers everywhere (except when addressing cycling/doping and monetary policy, but nobody’s perfect).

Good luck Erika.

On-topic, the standard theory is that the economic impact of mega-sporting events is basically a handout of taxpayers money to some rentiers: corporations that build infrastructures and part of the tourism industry. Brazil will end up being another data point. If these events “paid for themselves”, as it’s often claimed, there would be no need for public funding.

joana on May 28, 2014 at 2:08 PM

My hopes for not seeing anything about futbol on HA, just got flushed down the goal post of life that I call my toilet!

GOOOOOOAAAAAAL!!!!!!!!!!!!!/

I’m sad to see you leaving, because I’ve always enjoyed you anit-enviro-nut columns. But, I’m happy to see you striving for something you want.

Best of luck, and kick some enviro-butt when you finish your schooling.

ZeusGoose on May 28, 2014 at 2:13 PM

Shorter version: OG 0′

Christien on May 28, 2014 at 2:17 PM

How can it be a world cup when North America doesn’t care about this soccer thing?

neyney on May 28, 2014 at 2:37 PM

Just glad 2016 Olympics aren’t coming to Shicago. But on the other hand it would be a schadenfreudig end cap to oboobi’s stint as the world’s most powerful manchild to see it fail in his hometown.

AH_C on May 28, 2014 at 2:43 PM

o_O

Newtie and the Beauty on May 28, 2014 at 2:44 PM

neyney on May 28, 2014 at 2:37 PM

Because more than North American teams may compete and qualify. It has nothing to do whatsoever with whether soccer is the most popular professional sport in North America.

Christien on May 28, 2014 at 2:47 PM

Had to re-read the article.

…overwhelming bureaucracy, corruption and shortsighted policy-making…

sounded like the US had the World Cup this year…

Erika: When you start your own .org after you get the Eviro Studies degree let it be known far and wide. I’ll gladly send you $25 to save the world!

old school on May 28, 2014 at 3:11 PM

I was just down there for the last two weeks. I love Brazil, speak the language and lived there for years.

This is the same sentiment I got talking to people there as well. The normal folks are irritated and disillusioned… but they’ve long considered government to be a sophisticated con.

One reason there’s little tourism there from the US? Try $160 visa charge per person, and then you need to pay someone else to go get it for you or travel to the consulate in your region of the US. That’s an additional $80-$200 per person.

So after paying $240 per person just to get the visa (and waiting a while), you pay another $1200 for tickets, minimum. Much more, now.

I imagine that tourism would be a bit easier if Brazil wouldn’t do this tit-for-tat visa game with the US. Their loss, I suppose.

The new international terminal in São Paulo, however, was very nice. I flew out of it on its first day of operation. :)

Prufrock on May 28, 2014 at 3:28 PM

Hopes for a World Cup economic boost are fading fast in Brazil

A country rich in oil yet still has a lousy economy…sounds familiar…oh, that’s right, Venezuela…hmmm, but there’s another one…can’t…quite…think of it right now. Oh well.

Dr. ZhivBlago on May 28, 2014 at 4:04 PM

Come on now, South Africa FLOURISHED after the World Cup…

And the ultimate irony – the most lucrative WC in years for a host nation was…………………. the country who “doesn’t care about soccer” – the US

FIFA makes their Billions regardless of what country hosts, however they do like to limit any host country’s gain or loss.

Odie1941 on May 28, 2014 at 4:54 PM

The hookers will do well. They always do well.

I have no sympathy for populations that choose socialistic practices.

One gets what one voted for.

neyney on May 28, 2014 at 2:37 PM

Because more than North American teams may compete and qualify. It has nothing to do whatsoever with whether soccer is the most popular professional sport in North America.

Christien on May 28, 2014 at 2:47 PM

No . . . because it is soccer; the second most boring pastime invented by Man, Woman or Beast! Do you know why there are so many riots at soccer games? Because it gives the fans something to do. Watching paint dry is more entertaining.

Bubba Redneck on May 28, 2014 at 6:30 PM

I have seen our future, and it’s…

vnvet on May 28, 2014 at 7:27 PM

Brasil is protard future now. Embrace it.

Murphy9 on May 28, 2014 at 9:24 PM