The bait and switch: Is it just business as usual?

In previous posts, I’ve called attention to the bait and switch, whereby developers and public servants persuade our political representatives to go along with development proposals by offering what appears to be a huge public benefit for a small public investment. This is the bait. Once the politicians have been lured into a commitment, the switch takes place: The price to the public purse rises progressively, while the benefit is lowered.

Andrew Zimbalist, professor of economics at Smith College in Massachusetts, who has been researching the economics of sports for many years, has concluded that the bait and switch has become just business as usual in pushing national, regional and local governments into signing on to bids for Olympic Games. In a question-and-answer session with the European Urban Knowledge network, he was asked, “Why is it that the costs of hosting the Olympic Games often turn out to be much higher than initially planned?” He responded as follows:

“I think that what generally happens is that you have this coalition of economic actors that is pushing the city to embrace an application to host the Olympics. They know it is in their private interest for this city to host the Olympics. The best way to get the city on board is to say: ‘we can do all of this, we can host the Olympics, we can build all these facilities and it will only cost us 3 billion dollars.’ In this way it is more likely they will get their support than if they are forthright and say: ‘it is not going to cost 3 billion dollars but 10 billion dollars.’ It is much better for them to do designs of facilities that are minimalist the first time around. Then, after they have gotten public and political approval, they can come back and say: ‘let’s have these bells and whistles and make our designs maximalist.’ They will come back saying ‘we are competing against Rio de Janeiro and Moscow, we need to spend more money’. They could have anticipated that, but it is not in their interest to do so. Cities should know that.”

Indeed they should. For the full interview, click here.

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I first uncovered the bait and switch in a research that was published in:

ResearchBlogging.org

LEO, C. (1995). Global Change And Local Politics: Economic Decline and the Local Regime in Edmonton Journal of Urban Affairs, 17 (3), 277-299 DOI: 10.1111/j.1467-9906.1995.tb00348.x

6 responses to “The bait and switch: Is it just business as usual?

  1. Federico Savini

    Very interesting interpretation. I believe that this happens often when large scale events and urban plans are involved; in cases in which the switch can be also camouflaged into large business plans…I would also add some more ‘deviant’ cases, in which the collusion with banks, politics and developers is crucial. Sometimes it can happen that the bait and switch strategy is also pursued by governments, in cooperation with banks where public money are invested. Those banks issue mortgages to further cover the more expensive plans. Long term mortgages ensure large economic returns for public investors, which de facto invest in their own project. In this way the political risk is limited (they can say to the public opinion, we did an unexpensive project) without sacrificing their economic expectations.

  2. Hello:

    Mid-sized Canadian cities are vulnerable to similar tactics-with overbuilt infrastructure for industry and ‘signature’ buildings be constructed as a result of business lobbying.

  3. Is this what happened to the football stadium?
    So who is at fault – the business people who hatch the deal or the public officials who agree to it?

  4. OH! were you speaking about WINNIPEG… ???
    …The people dreaming about The Jets?
    ,… the ‘Asper’ plans for a football stadium WITHOUT A ROOF ?
    …. The MTS Centre boondoggle?
    … The Waverley West …and remember the Olywest boondoggles ?
    … How about the Rapid HA! Bus transit system? Keep an eye on how badly this fails!
    .. and of course all the suburban sprawl projects with the wonderful names… but which should be named “Promises, Promises, You will need THREE cars when your kids ar 16!”
    AH yes! WINNIPEG !

  5. And don’t forget, Condos in the place of schools.

  6. Thank you for interesting information.

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