Tourism Politics Policy and Planning A J Veal COMPLEMENTARY TEACHING MATERIALS CABI TOURISM TEXTS CHAPTER 5 The Market versus the State Leisure Sport and Tourism Politics Policy and Planning 4 ID: 791910
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Slide1
4
th EditionLeisure, Sport andTourism, Politics,Policy and Planning
A. J. Veal
COMPLEMENTARY TEACHING MATERIALS
CABI TOURISM
TEXTS
Slide2CHAPTER 5
The Market versus the State
Leisure, Sport and Tourism, Politics, Policy and Planning, 4
th Edition
Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts
Slide3Outline
Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism TextsThe triumph of capitalism?
Mainstream economics: the market system
The role of the state: summaryIntroduction
Mainstream economics: the role of the state
Mainstream economics: market failure types
Types of socio-political argument
Market versus state: Issues
Out of the mainstream
Slide4The triumph of capitalism?
Collapse of eastern Communist bloc, 1989–90Reforms in China: ‘market system’ but under Communist controlDecline in socialist parties in the West =Triumph of capitalismN.B. Global Financial Crisis of 2008 indicates instabilityWhat 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
Slide5Mainstream economics: the market system
Describes/analyses the market system, i.e. firms and consumers; but alsoHas a theory about the state – welfare economicsLeisure, Sport and Tourism, Politics, Policy and Planning, 4th
edition, Veal, 2017, CABI Tourism Texts
Slide6Mainstream 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 failuresocial/political arguments
Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts
Slide7Role 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 serviceLeisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts
Slide8Role of state 2: law and order and LST
Legal restrictions on potentially disruptive activities, e.g. gambling, sale of alcohol and use of recreational drugsGovernment control of access to: air-space, radio and television channels, coastal waterways and fisheriesCopyright lawsFire 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
Slide9Role of state 3
: market failureMarket process alone fails to produce optimum outcomesSituations:public goods and servicesexternalities/neighbourhood effects
mixed goodsmerit goods option demandinfant industries
size of project natural monopolyLeisure, Sport and Tourism, Politics, Policy and Planning, 4
th edition, Veal, 2017, CABI Tourism Texts
Slide10Market failure: (a) Public goods/services
Characteristics:non-excludable: difficult/impossible to exclude usersnon-rival: one person’s enjoyment does not preclude another’sConsequence: difficult for private sector to operate, so the market ‘under-provides’Examples:f
ree-to-air broadcastingpublic pride in success of local/national athletes open public events: e.g. firework displays, street paradesstreet signs/lighting
(facilitating access to leisure venues)major scenic amenities, e.g. conserved historic/natural environmentLeisure, Sport and Tourism, Politics, Policy and Planning, 4th
edition, Veal, 2017, CABI Tourism Texts
Slide11Market 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 partiesNegative: costs imposed on third parties e.g. air pollution, noise pollution, congestionPositive: benefits to third parties, which they do not pay for e
.g. environmental/amenity benefits of a golf course to surrounding properties; public tourism attractionsLeisure, Sport and Tourism, Politics, Policy and Planning, 4
th edition, Veal, 2017, CABI Tourism Texts
Slide12Market failure: (c) Mixed goods
Part private and part public goods/services, e.g.:Theatre visit private: enjoymentpublic: good social/cultural spin-offSport participation private: enjoyment, well-being public good: improved health = cost savings to health service/insurance and to employers
Urban park private: visitor enjoyment, well-beingexternalities: environmental benefits to local residents externality/public good: passers-by enjoyment, well-beingpublic good: dispersal of pollution
Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts
Slide13Market failure: (d) Merit goods
Enjoyment/appreciation is not immediate: high learning threshold, so government should subsidize education/exposure, e.g.:environmental educationsome art/music Leisure, Sport and Tourism, Politics, Policy and Planning, 4th
edition, Veal, 2017, CABI Tourism Texts
Slide14Market 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, 4
th edition, Veal, 2017, CABI Tourism Texts
Slide15Market failure: (f)
Infant industriesIndustries 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 industrylocal publishing industryairlinesProblem of ‘picking winners’
Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts
Slide16Market failure: (g) Size of project
Projects too large for private sector to investFew examples today in developed economiespossibly major resort development, Olympic GamesLeisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts
Slide17Market failure: (h) Natural monopoly
Services where only one supplier is technically required, e.g.: – unique heritage attractions or – environmental resourcesAs 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
Slide18Market failure: (
i) Competition failureConsumers not fully informed – information asymmetryMonopoly/oligopolyLeisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts
Slide19Role of the state 4: socio-political arguments
Equity or humanitarian measuresEconomic management and developmentLeisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts
Slide20Socio-political: (a) Equity or humanitarian measures
Leisure may be part of a package of goods and services required for a minimum acceptable quality of lifeTo be assured for all, notably disadvantaged groups – people with disabilities, elderly, unemployedIn cash (income support) or direct services?Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts
Slide21Socio-political: (b) Economic management/ developmentLeisure industries may:be supported as a significant part of the local economy – e.g. entertainment district, theatres, restaurantsbe used to boost the economy – e.g. tourismProblem of governments ‘picking winners’
Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts
Slide22Socio-political: (c) Incidental enterprise
A leisure enterprise may be part of another public service – e.g. shops/restaurants in museumsLeisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts
Slide23Socio-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
Slide24Market 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/sizeoften argued (e.g. by neo-liberals) that government is innately inefficienttherefore
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
Slide25Issues (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)Globalizationproblems of national/local cultural identityfilm, TV, music, sporteconomic disruption/unemployment leisure providers are job creators
services in high unemployment areasLeisure, Sport and Tourism, Politics, Policy and Planning, 4
th edition, Veal, 2017, CABI Tourism Texts
Slide26Out 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 economicsAnti-materialist economicsInequality-based critiques
Leisure, Sport and Tourism, Politics, Policy and Planning, 4th edition, Veal, 2017, CABI Tourism Texts