Ukrainian society is actively discussing the approaching European Football Championship, one of the host countries of which, as we know, is Ukraine. They discuss our poor roads, the absence of cheap hotels (it would be more accurate to say the absence of hotels as such), and in general, the conditions under which any tourist should receive prizes for survival. At the same time, the public particularly notes the so-called prices of “services,” which, let’s say, are quite close to international standards—something that cannot be said about their quality.
For their part, potential guests aren’t sleeping either—it’s not the Stone Age after all—most are already aware of what they will have to face. There’s a photo circulating on the internet of Vinnie Jones, a former footballer, now an actor, remembered by everyone from the movie “Lock, Stock and Two Smoking Barrels.” Jones is holding a T-shirt with the inscription “Welcome to Hell,” where Hell is corrected to read Kiev. The man knows what he’s talking about.
In general, everyone is busy, everyone has something to do. As for me, I want to note a popular online lament about how much the championship cost Ukraine and what the state could have bought with that money instead. Everyone agrees with this information and dutifully laments about it (which is, essentially, what is required). If anyone does argue with this, it’s mainly from the position that, one way or another, after the championship there will be stadiums left, and that’s good, no matter how you look at it.
I am not going to argue about whether building stadiums is “good” or “bad.” I want to say a couple of words about the method itself, because in the comments, both sides are wrong, and the authors, first and foremost.
Look. Let’s say I’m planning to build a stadium. I would never do it before understanding—who needs it? Is there anyone who will play on it? Are there people who will attend various sporting events? And how much are these people prepared to pay? All of this is directly reflected in my calculation of costs and planned profits. And if I understand that the calculation is not in my favor, I build nothing. And I will note, not because “there’s no money,” but because such a stadium in such a place will not generate profit. That is, in this form and at this price, it’s not needed there by anyone. Perhaps it would be better for me to build a small gym, for example. Or a swimming pool. Who knows—sport in these places will become more popular, and then in a couple of years a stadium will be needed there too.
Further. Construction is an expensive undertaking. To start it, I need money. I can save up myself or borrow from a bank. In either case, I will have to save—either my own money, or buy other people’s saved money at the bank. However, in any case, the savings process is inevitable. We all do this when we set aside money for vacation, some kind of i-gadget, and so on. What does saving mean? It means giving up consumption of something that this money would have gone toward, had we chosen to save. That something remains unbought and unsold. This is the key, basic economic process called “supply and demand,” a process that is set in motion by our preferences and our choices among them.
Now let’s look at what happens when the state engages in investing, and it will become clear to us that there is no difference whatsoever in whether it spends money on “Euro-2012,” uses it for something else, or simply throws it away.
First, the goals of “state investment” are determined politically. These are, so to speak, wishful desires. Reality, however, is determined not by talk, but by people’s willingness to choose your product in favor of their money. But we have none of that. There is simply “the good of the people,” moreover, as understood by people who are quite far from it.
Second, the state does not save anything, it does not give up anything, it simply drives its bulldozer into the supply and demand process. The money that the state “spends” is not its money—it’s ours.
That is, as a result of state investment, we have arbitrarily created benefits, the “goodness” of which is determined politically, the destruction of the supply and demand process (so to speak, an imbalance of the economy), the withdrawal of significant sums from productive exchange, and the prospect of new taxation to maintain the “created” state facilities in good order.
All of this applies not only to stadiums and roads, but to any other supposedly “alternative” state expenditures.
The money collected for “Euro-2012” would have been useful only if it had not been collected at all and had remained with its original owners. All other ways of “using” these funds are considerably worse.
It’s high time we understood that in the “economy” or “society,” everyone is connected to everyone else and depends on each other. It’s like a complex ecosystem, for example, a forest. State investment and, more broadly, state spending consists of the state cutting down the forest, sticking the cut logs in another, politically correct place, and duct-taping branches to these logs. From a distance, it looks like trees. It might even be useful to someone. Someone will drag a log home for firewood, for example.