The fallout between the two countries has started. Following the executions of Andrew Chan and Myuran Sukumaran, Indonesia has come under attack from the UN, and especially Australia. Australia has retaliated by recalling their ambassador Paul Grigson, and it seems certain that foreign aid to Indonesia will be slashed considerably. On the internet, thousands of Australian social justice advocates have sworn to never visit Indonesia again, culminating in the boycott Indonesia campaign.
In Part 1, I outlined the theoretical understanding and some of the evidence that underlie the economic decision to subsidise a mega-sports event. I concluded that, on balance, subsidising a mega-sport event such as the World Cup is ultimately a poor use of taxpayer money in terms of purely measurable economic indicators. The conventional wisdom that such a big public investment leads to “spill-over” benefits within the economy was dispelled, or at least put into serious doubt.
The life of the average Brazilian over the past year or so has been an emotional roller coaster to say the least. Against the background that ranges from ardent protests in response to fiscal policy to complete despondency when the Canarinho (Brazil’s beloved national team) unforgettably bowed out in the semi-finals of their own World Cup after a 7–1 massacre at the hands of the eventual champions, Germany, a crucial economic question has been brought into focus: why do governments subsidise mega-sports events and what type of economic impacts should the economy expect from such a decision?