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4 t h Edition Leisure, Sport and Tourism, Politics, Policy and Planning

CABI TOURISM TEXTS. 4 t h Edition Leisure, Sport and Tourism, Politics, Policy and Planning. A. J. Veal. COMPLEMENTARY TEACHING MATERIALS. Leisure, Sport and Tourism, Politics, Policy and Planning, 4 th Edition. CHAPTER 5. The Market versus the State.

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4 t h Edition Leisure, Sport and Tourism, Politics, Policy and Planning

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  1. CABI TOURISM TEXTS 4th EditionLeisure, Sport andTourism, Politics,Policy and Planning A. J. Veal COMPLEMENTARY TEACHING MATERIALS

  2. Leisure, Sport and Tourism, Politics, Policy and Planning, 4th Edition CHAPTER 5 The Market versus the State Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  3. Outline Introduction The triumph of capitalism? Mainstream economics: the market system Mainstream economics: the role of the state Mainstream economics: market failure types Types of socio-political argument The role of the state: summary Market versus state: Issues Out of the mainstream Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  4. The triumph of capitalism? • Collapse of eastern Communist bloc, 1989–90 • Reforms in China: ‘market system’ but under Communist control • Decline in socialist parties in the West = • Triumph of capitalism • N.B. Global Financial Crisis of 2008 indicates instability • What is the role of the state in a market economy? Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  5. Mainstream economics: the market system • Describes/analyses the market system, i.e. firms and consumers; but also • Has a theory about the state – welfare economics Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  6. Mainstream economics: the role of the state Adam Smith (1723–1790): • Role of the state: • national defence • provision of a system of law and order • public works • Interpretation of Smiths ‘public works’: • market failure • social/political arguments Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  7. Role of state 1: national defence and LST Traditionally, sport promoted to ensure fitness for war: • James I Book of Sports (1618): sport for ‘the common and meaner people’… ‘such exercises as may make their bodies more able for war, when His Majesty or his successors shall have occasion to use them.’ • 1930s: promotion of fitness in Britain and Australia due to concerns about the fitness of young men for war service Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  8. Role of state 2: law and order and LST • Legal restrictions on potentially disruptive activities, e.g. gambling, sale of alcohol and use of recreational drugs • Government control of access to: air-space, radio and television channels, coastal waterways and fisheries • Copyright laws • Fire and safety regulations in entertainment/transport • Gun laws • Leisure provision to prevent juvenile delinquency Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  9. Role of state 3:market failure • Market process alone fails to produce optimum outcomes • Situations: • public goods and services • externalities/neighbourhood effects • mixed goods • merit goods • option demand • infant industries • size of project • natural monopoly Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  10. Market failure: (a) Public goods/services • Characteristics: • non-excludable: difficult/impossible to exclude users • non-rival: one person’s enjoyment does not preclude another’s • Consequence: difficult for private sector to operate, so the market ‘under-provides’ • Examples: • free-to-air broadcasting • public pride in success of local/national athletes • open public events: e.g. firework displays, street parades • street signs/lighting (facilitating access to leisure venues) • major scenic amenities, e.g. conserved historic/natural environment Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  11. Market failure: (b) Externalities (or ‘third party’ or ‘neighbourhood’ effects) • Market under-provides or over-provides, due to specific benefits enjoyed or costs imposed, but not paid for, by specific third parties • Negative: costs imposed on third parties • e.g. air pollution, noise pollution, congestion • Positive: benefits to third parties, which they do not pay for • e.g. environmental/amenity benefits of a golf course to surrounding properties; public tourism attractions Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  12. Market failure: (c) Mixed goods Part private and part public goods/services, e.g.: • Theatre visit • private: enjoyment • public: good social/cultural spin-off • Sport participation • private: enjoyment, well-being • public good: improved health = cost savings to health service/insurance and to employers • Urban park • private: visitor enjoyment, well-being • externalities: environmental benefits to local residents • externality/public good: passers-by enjoyment, well-being • public good: dispersal of pollution Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  13. Market failure: (d) Merit goods • Enjoyment/appreciation is not immediate: high learning threshold, so government should subsidize education/exposure, e.g.: • environmental education • some art/music Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  14. Market failure: (e) Option demand • Goods and services that people want to maintain in case they or their successors want to use them in future, e.g.: • significant environmental, cultural and heritage items Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  15. Market failure: (f) Infant industries • Industries where it is difficult for new entrants to get started because of power of existing companies, so state supports start-up, e.g.: • local film industry • local publishing industry • airlines • Problem of ‘picking winners’ Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  16. Market failure: (g) Size of project • Projects too large for private sector to invest • Few examples today in developed economies • possibly major resort development, Olympic Games Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  17. Market failure: (h) Natural monopoly • Services where only one supplier is technically required, e.g.: – unique heritage attractions or – environmental resources • As with any monopoly, state may take over or highly regulate, to avoid excessive profits. Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  18. Market failure: (i) Competition failure • Consumers not fully informed – information asymmetry • Monopoly/oligopoly Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  19. Role of the state 4: socio-political arguments • Equity or humanitarian measures • Economic management and development Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  20. Socio-political: (a) Equity or humanitarian measures • Leisure may be part of a package of goods and services required for a minimum acceptable quality of life • To be assured for all, notably disadvantaged groups – people with disabilities, elderly, unemployed • In cash (income support) or direct services? Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  21. Socio-political: (b) Economic management/ development • Leisure industries may: • be supported as a significant part of the local economy – e.g. entertainment district, theatres, restaurants • be used to boost the economy – e.g. tourism • Problem of governments ‘picking winners’ Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  22. Socio-political: (c) Incidental enterprise A leisure enterprise may be part of another public service – e.g. shops/restaurants in museums Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  23. Socio-political: (d) Tradition It may be politically difficult to close down a long-standing service, even when it is no longer effective. Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  24. Market versus the state: issues • Profit-making or loss-making? • If a facility/service can be run profitably, why should government bother? • N.B. ‘profitable’ includes a return on capital, including land/buildings, as well as meeting operational costs. • Government failure/size • often argued (e.g. by neo-liberals) that government is innately inefficient • therefore a large government sector is a drag on the economy. Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  25. Issues (cont’d) • Provider or facilitator? • one response to the government failure/size argument is for government to facilitate others to provide services (commercial or non-profit) • Globalization • problems of national/local cultural identity • film, TV, music, sport • economic disruption/unemployment • leisure providers are job creators • services in high unemployment areas Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

  26. Out of the mainstream • Marxist economics (see Ch. 2) • Institutional economics (see Veblen, Theory of the Leisure Class) • Humanistic economics – based on analysis of human needs (see Ch. 3) • Behavioural/psychological economics • Anti-materialist economics • Inequality-based critiques Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts

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