Stephen Pollard and Dominic Lawson complain about the cost of the Olympics. There's one issue they overlook, that might strengthen their case. Let's assume, contrary to the evidence of Sydney and Athens, that the Olympics does regenerate east London. Would even this benefit poor east Enders?
Economic theory says: not necessarily.You get what you pay for. Better neighbourhoods mean higher rents, so it's a wash for many people. And there'll be some people who suffer from higher rents without getting offsetting amenities - say because they don't go to poncey bars anyway. These will lose.
So, urban renewal can hurt some of the poor.
However, other US evidence suggests this might not be the case. Jacob Vigdor shows (pdf) that rents don't actually rise much in renewing areas, so there is a benefit.
So, are the Olympic boosters right? Not necessarily. One reason why rents don't rise much is that the supply of housing rises. But this means anyone hoping the Olympics will raise house prices might be mistaken. (Alternatively, many of those who see rent increases get housing benefit anyway, but that's another story.)
The only message here, I guess, is that there are a lot of steps between building the Olympics and benefitting poor east Londoners. There are far better ways of helping them.
I recently read a study, which I now cannot find, where it showed that to actually affect london house prices through supply you would need to concrete over the royal parks. Life is trade offs I suppose.
Posted by: Katie | March 22, 2007 at 03:32 PM
"to actually affect london house prices", dear Katie, all you need do is adopt my scheme for moving the British capital to Berwick-upon-Tweed.
Posted by: dearieme | March 22, 2007 at 05:37 PM
"One reason why rents don't rise much is that the supply of housing rises. But this means anyone hoping the Olympics will raise house prices might be mistaken."
It's perfectly possible for housing supply to rise, rents to fall and house prices to rise - indeed that's precisely what happened in London in recent years, because buy-to-let landlords bought up most new market housing.
Posted by: Jim | March 22, 2007 at 06:00 PM
I'm afraid you're right, this whole Olympic thing is rotten to the core. Keep pushing and lets hope it's not too late to make it work for the best. Please view my post Tony Blairs Legacy Volume 1 "The Olympics" on my blog http://andtodaysproblemis.blogspot.com/
I'm new to this and trying to generate some interest.
Thanks
Posted by: Dave Ross | March 23, 2007 at 09:35 PM