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Brazil's Protests and Economic Theory

Wall Street Journal contributor Gabriele Marcotti reports on the ongoing protests in Brazil as the country hosts the FIFA Confederations Cup. He says that hosting major events like next year’s World Cup and the Olympic Games two years later is “an exercise in economic theory” in the sense that some point out that the massive spending on infrastructure coupled with the free marketing that hosting these events provides long-term benefits that “amount to a giant stimulus package,” while others claim the cash could be better spent elsewhere. The latter argument adds that if a new subway or highway is worth building, it’s worth building whether the country is going to host a massive sporting event or not.

When the economy is strong, the first argument tends to prevail, but when it’s weak -- which it is now in Brazil -- the latter argument rules. Marcotti doesn’t really say which theory he subscribes to, but instead pours cold water over the theory that once the World Cup starts, the Brazilians will stop their protesting and just support the national team. FIFA President Sepp Blatter even suggested as much, telling Brazilian TV: "When the ball starts to roll, people will understand!"

So far, during the Confederations Cup, that has not been the case, with whistles and jeers being clearly audible during the playing of the Brazilian national anthem -- not to mention the scores of visible signs detailing their grievances. Meanwhile, as Marcotti points out, the shift in focus from the national team to the government has probably benefitted the Selecao, which sailed through its first three games of the tournament, winning each by a combined margin of 9-2.

Read the whole story at Wall Street Journal »

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