Last Wednesday, FOX 4 News asked us our thoughts about Kansas City refusing to release details on the use of tax dollars to support the city’s bid for the 2016 Republican Convention. It mirrored a similar story that the Kansas City Star published earlier. In both, the Show-Me Institute advocated for transparency. In a city as cash-strapped as Kansas City, voters should be told where their tax dollars are being spent. One would think Republicans would agree.
FOX 4 reporter Macradee Aegerter also asked about the claims of economic development that come from such conventions. I said in the interview that such claims are speculative, the bid committee often employs the economists that make the claims, and that the real impact rarely lives up to the hype. (This segment aired in the 6 p.m. version of the story, which is not yet online.) In the segment, a member of the bid committee claimed that the convention would have an economic impact of $250,000,000. That’s a quarter-billion dollars.
We don’t believe it. (Or, perhaps more delicately, we want to verify those numbers before we believe it.)
Certainly, having such a convention in Kansas City is a good thing, and not just for the money it will bring to the area. As a matter of pride, I would love to see Kansas City host again on the 40th anniversary of our last convention. But the idea that having the convention here amounts to a net gain of $250 million is absurd, and it casts a light on how calculating the economic impact of other items is the economic equivalent of alchemy.
The host committee is likely assuming that without the convention, hotel occupancy would be zero. Spending downtown would be zero. Travel in and out of Kansas City would be zero. Then it still probably over-estimates what will be spent here because of the convention. In reality, a hotel that would have had 70 percent occupancy without the convention may have 95 percent occupancy because of the convention. One can claim the difference as “economic impact” but not all of it. But we won’t know how the committee reached the quarter-billion number until it reveals how it calculated a $250,000,000 impact. (If the committee releases the estimate and it proves to be legitimate economic analysis with a multiplier effect below two, we will gladly admit we are wrong.)
As written in the Daily Beast story about the recent Super Bowl in New Jersey:
So, there’s no economically sound way to predict a Super Bowl’s impact before the event and those that try have been proven wrong again and again. But don’t expect that to stop the cheering from the few with the most to gain. When asked for a more detailed analysis of Super Bowl XLVIII, the host committee demurred, but assured in a statement, “Super Bowl XLVIII is expected to be an economic boom [sic] for the region.”
We’re not asking the committee to reveal anything legitimately embargoed about its bid. We just want to know how the committee arrived at that estimate for the impact should the convention occur in Kansas City. Certainly, Republicans would agree that the sound economic policies they advocate require sound economic assumptions — otherwise, how are they supposed to be any more responsible with taxpayer money?