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Japan is to economics what Axl Rose is to music business.
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They both rocked in the late 80s and beginning of the 90s, then they started losing ground
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and nowadays, anytime they try to make a comeback, the results are⦠pretty disappointing.
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I know what you are thinking⦠from the first glance, Japan doesnāt seem to be that bad,
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right?
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They have the videogames, the anime movies and world class tech behemoths.
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And their capital, Tokyo, looks like a Scy-Fy city.
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It is the Worldās biggest metropolis, with over 30 M people, and they have the fastest
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trains, the most modern TVs and even human-like robots.
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Nonetheless, this country has been 2 decades without no economic growth.
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And this is not the worst!
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Japan is the most indebted country in the whole planet.
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They owe more than twice their entire GDP.
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And their population is decreasing faster than anywhere else, which poses a big problem
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in order to pay retirement pensions.
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This is one of the reasons why Japanese workers make crazy hours and have almost no vacations.
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And those good old technological juggernauts like HITACHI or PANASONIC are falling behind
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the more modern companies from China or America.
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But hold on just a second because things might change!
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Yes, Iām talking about the TOKYO OLIMPICS, 2020.
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A peerless opportunity to make to showcase the whole country and get the worldās attention.
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Yes, my dear viewers⦠since Japan won the Olimpic bid, in the year 2013, tourism has
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skyrocketed from one day to the other.
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And the same goes with private investment.
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By that year 2020, Tokyo will have 45 brand new skyscrapers.
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Nothing more and nothing less.
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And companies like PANASONIC will set state of the art solar cells all over the place
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so people can charge their electric cars.
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If this was not enough, SONY will launch their brand new 8K TV screens.
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Yep, you heard that right.
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If 4K was not enough, now we will have 8K so you will be able to see even the microfiber
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of the athletes Tshirts.
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But hold on just a second because⦠not everything is as beautiful!
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You see, when Tokyo won the Olympic bid, they budgeted them in 6.5 billion dollars.
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But once they started with the building, the costs have doubled.
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And they havenāt even finished!
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In fact, Tokyoās city hall has predicted the total cost might end up near the 20 billion
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USD.
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So the question is⦠would this Summer Olympic Games be an opportunity for Japan⦠or the
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opposite?
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Are Olympic Games as good for a countryās economy as some people say?
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Today we are gonna answer all of this questions but, before, letās take a look back at history.
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AN OLYMPIC FALACY?
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Few things spark nacional pride as much as Olympic games.
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Of course, we all like to brag about the gold medals our country has.
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But what really inflames patriotism the most is to become an Olympic host.
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The excitement it generates is so big that everyone, regardless of their ideology, seems
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to think that organizing an event like this is a good thing for the country.
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Nonetheless, inside the economists field, things are not that clear.
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In fact⦠the arguments in favour of hosting Olympics are a little bit like⦠hmm⦠how
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should I say?
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They are so inconsistent they could be a tweet written by Donald Trump
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According to a paper from the Bank of Japan, the effects of the Olympics are so good that
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you can tell even before they have been celebrated.
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More specifically, the same year the International Olympic Committee named Tokyo as the host
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city, everyone started to see Japan as a perfect place for investment.
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Remember that we are talking about a paper from an institution as prestigious as the
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Bank of Japan.
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This would be the Japanese equivalent to the American Federal Reserve.
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This said, one of their main arguments is that, if your city gets to be an Olympic host,
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the whole country can join all those big organizations every country would like to be a member of.
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Want examples?
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Here you have examples!
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Barcelona got the nomination in 1986 andā¦
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BOOM!
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That very same year, they joined the European Union.
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Beijing was nominated in 2001 andā¦
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BOOM!
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That year they joined the World Trade Organization.
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What do you say?
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It seems like nobody could argue this train of thoughs, right?
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Well⦠wait a second because this is a textbook example of a correlation fallacy.
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In other words, the fact that Spain joined the EU the same year Barcelona got chosen
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as the Olympic host does not mean one thing caused the other.
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In fact, Portugal also joined the EU on the same year without hosting anything.
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And the same happened with China.
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On the same times, other Asian countries joined the WTO without organizing no sport events.
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But I know what you are gonna tell me now!
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Hey Simon, what about the international attention?
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During two weeks, the whole world is going to put their eyes in Japan.
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We are talking about the biggest sport event in the world.
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Or maybe not?
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You see, the London Olympics 2012 got an average audience of, around 31 million people in America.
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To make a comparison, this is twice as much as a Game of Thrones episode.
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Yes, itās not bad.
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But⦠what happened with the rest of the games?
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For example, Sochi Winter Olympics, 2014, didnāt even get to have 22 million viewers
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in the States.
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And Rio 2016 was around 26 million.
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This might look big to you, guys, but is nothing if we compare it with a much cheaper event
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like the SUPERBOWL.
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The 2016 Superbowl surpassed 110 million viewers.
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In other words, even though Olympics are watched all around the world, when you look at the
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audiences country by country, the figures are not so impressive.
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And this means that the perception that people have about a country does not change.
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At least, it doesnāt change⦠for goodā¦
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In a study of the impact of the 2000 Olympics in Sydney, Australian researchers interviewed
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people one year before and after the Games.
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They found little change in perceptions, with one surprising wrinkle: South Africans had
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soured on Australia ābecause of the way in which the Aboriginal issue was highlighted
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and portrayed by the South African media,ā
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Nonetheless, there is one thing where it seems fair to agree: Olympic games kickstart your
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tourism industry.
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Actually, since Tokyo was chosen as the Olympic host, tourism in Japan has skyrocketed.
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They almost didnāt have tourists in 2013 and now they surpassed 24 million people last
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year.
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You can say a brand new industry has been born in Japan.
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And this is an industry that attracts lots of foreign moneyā¦
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Who wouldnāt be happy with this?
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Well⦠hold on a minute because even this figures can be argued.
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Of course, tourism in Japan has increased a lot.
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But⦠do you know of other countries with a booming tourism sector? Chile and Thailand.
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They have grown at a similar rate as Japan.
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And⦠donāt even google it because I will tell you here: none of this two countries
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is planning to host any Olympics.
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The Thailand example is pretty paradigmatic.
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They get 6 million more tourists than Japan with half of its population.
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And their tourism growth is directly correlated to that of the Chinese middle class.
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In other words, as Chinese people have more money, they want to do sight seeing⦠and
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where do they go?
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Of course!
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They go to countries that are nearby and have beautiful things to see!
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But I know what you are thinking!
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Despite the Olympics not being that profitable as they seem⦠whatās the problem if Tokyo
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wants to have Olympics?
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Who doesnāt like to have a giant stadium on his city, huh?
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Well⦠letās have a look at this right now.
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GOLD MEDALLISTā¦
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IN SPENDING!
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We all know itā¦
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Olympics are costly.
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From one day to the other, Tokyo will have to build an Olympic Stadium to host more than
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80,000 people.
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And also, they have to impress them with lights and colors.
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But it doesnāt stop here!
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They need other special venues for the many competitions that are held at the same time.
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Each of the sports have its own specifications.
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Athletism requires different things than swimming or canoeing.
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In summary, 31 venues will be built or remodelated for this Tokyo 2020 Summer Olympic Games.
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Add to this the media centre, which is another big White Elephant and, on the top of it,
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the Olympic Villa.
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This is short of a small town where more than 10,000 athelets will live during the time
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the Olympics are held.
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And, as you can imagine, this will not be cheap, either.
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The total cost for this was meant to be 6.5 billion USD.
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At least, this is the figure given by the local authorities to the International Olympic
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Committee in 2013.
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But, you know, one thing is the theory and another thing is the realityā¦
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Tokyo 2020 Olympic Games costs just keep rising
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By December 2017, Tokyo City Hall had already spent over 12 billions.
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And just a couple of months later, the local authorities said that, at least, they will
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end up spending 20 billiones!
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And maybe, this figure will keep rising before they burn the Olympic flameā¦
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In fact, nothing of this is a surprise.
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Since we have memory, every Olympic Games have cost overrun.
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And we are not talking about little pennies here!
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Rio de Janeiro 2016 ended up being 51% more expensive than expected.
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But the record, so far, is Montreal 1976, that costed 700% more than the initial budget.
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Yes, you heard this right.
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This is 8 times more that what it was planned at the beginning.
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And now you might wonderā¦
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All this billion dollars are little or big money for a government?
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I mean⦠compared with the normal spending in a big city hall⦠is this a big number?
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Well, the answer is a big YES.
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For a better understanding, with 20 billion USD you could build, for instance, a highway
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that connected the extreme north of Japan to their extreme South.
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But wait a minute because this is not the worst of all!
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You see⦠an airport or a highway can and up being a waste of money.
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But, still, you can always reutilize it.
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A country with better infrastructures and communication can have better companies in
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the future, brand new industries or better public services.
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But what do you do with an Olympic stadium that can host 80,000 people?
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Well⦠if we look at past examples, the answer is pretty much bitterā¦
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Rio Olympic venues already falling into a state of disrepair
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Rio de Janeiro example is pretty harsh.
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Despite having Olympics, they still have entire neighbourhoods that are not even connected
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to the city centre by a bus line.
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And the place where the Olympic Villa has is becoming a slum.
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But wait a minute because this is not the only example.
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Athens Olympic site in ruins 10 years on from 2004 Games
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Add to this the fact that Japan is the most indebted country in the planet.
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They owe a sum equivalent to 230% of their GDP.
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The government is already struggling to pay the retirement pensions and they have been
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2 years without any economic growth whatsoever.
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So now this is your turnā¦
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Do you think the Tokyo Olympics 2020 will mean the ruin of Japan?
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Or maybe, against the odds, Japan will take some advantage of hosting this event?
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Please, leave your answer in the comment section below.
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And if you wanna know more about this Japanese failed economy, click on this video.
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Also, visit our friends from RECONSIDER MEDIA at RECONSIDERA MEDIA.COM, this is the podcast
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that provided the voices on this audio that are not mine.
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If you liked this video, please, give us a thumbs up and, as alwaysā¦
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I see you next time.