Congress Looks at Stadium Subsidies

This Thursday the Domestic Policy Subcommittee of the House Committee on Oversight and Government Reform will hold a hearing titled, “‘Build It and They Will Come’: Do Taxpayer-financed Sports Stadiums, Convention Centers and Hotels Deliver as Promised for America’s Cities?”

Several Cato studies over the years have looked at the absurd economic claims of stadium advocates. In “Sports Pork: The Costly Relationship between Major League Sports and Government,” Raymond Keating finds:

The lone beneficiaries of sports subsidies are team owners and players. The existence of what economists call the “substitution effect” (in terms of the stadium game, leisure dollars will be spent one way or another whether a stadium exists or not), the dubiousness of the Keynesian multiplier, the offsetting impact of a negative multiplier, the inefficiency of government, and the negatives of higher taxes all argue against government sports subsidies. Indeed, the results of studies on changes in the economy resulting from the presence of stadiums, arenas, and sports teams show no positive economic impact from professional sports – or a possible negative effect.

In Regulation magazine, (.pdf) Dennis Coates and Brad Humphreys found that the economic literature on stadium subsidies comes to consistent conclusions:

The evidence suggests that attracting a professional sports franchise to a city and building that franchise a new stadium or arena will have no effect on the growth rate of real per capita income and may reduce the level of real per capita income in that city.

And in “Caught Stealing: Debunking the Economic Case for D.C. Baseball,” Coates and Humphreys looked specifically at the economics of the new baseball stadium in Washington, D.C., and found similar results:

Our conclusion, and that of nearly all academic economists studying this issue, is that professional sports generally have little, if any, positive effect on a city’s economy. The net economic impact of professional sports in Washington, D.C., and the 36 other cities that hosted professional sports teams over nearly 30 years, was a reduction in real per capita income over the entire metropolitan area.

Humphreys will testify at Thursday’s hearing.

Happy Birthday for EU Bureaucrats

The European Union is celebrating its 50th anniversary, but citizens in most nation are understandably underwhelmed. As an article at Foreignpolicy.com explains, the European Union is a remarkably anti-democratic institution.

Today’s EU resembles a sort of undemocratic Habsburg Empire. Its legislation is proposed by a Commission of unelected bureaucrats who have now apparently lost control of their own staffs and who themselves are usually political outcasts from their national political systems. Decisions on whether to adopt their often bizarre initiatives are then taken in total secrecy by the Council of Ministers or the European Council, before being rubber-stamped by the federalist parliament and imposed on the citizens of member states, whose national legislatures can do absolutely nothing to alter their directives or regulations. Indeed, 84 percent of all legislation before national parliaments, according to the German Ministry of Justice, now simply involves implementing Brussels diktats. All this makes European politics undemocratic at all levels, and opinion polls reflect the public’s growing disillusionment.

Daniel Schwammentahl of the Wall Street Journal, meanwhile, notes that politicians who favor more European centralization treat voters as obstacles to be overcome in their drive for a more powerful bureaucracy in Brussels:

…as Valéry Giscard d’Estaing, the former French President and main drafter of the constitution, said last year, rejecting his chef d’oeuvre “was a mistake which will have to be corrected.” In other words, Europeans are given a free vote as long as they vote for what the Brussels mandarins think is best for them. In a newspaper interview last week, Ms. Merkel diagnosed a certain alienation between the EU and its citizens, the root cause of which she located in the people’s alleged impatience with the slow pace of decision making in Brussels. “To change that we need an EU constitutional treaty,” she said. Come again? The chancellor wants to fight the citizens’ alienation by ignoring democratic votes that expressed that very alienation?

He Must Be Scots-Irish

A longtime friend and executive assistant to Sen. James Webb (D-VA) was charged yesterday with trying to carry a loaded pistol and two fully loaded magazines of ammunition into a Senate office building, the Washington Post reports.

Webb’s most recent book is Born Fighting: How the Scots-Irish Shaped America. The Scots-Irish “are a culture founded on guns, which considers the Second Amendment sacrosanct, while literary and academic America considers such views not only archaic but also threatening,” Webb wrote. “Nobody is going to get their guns.”

Watch out, Capitol Police.

Respecting Property Rights

This dramatic photo appears on the front page of today’s New York Times.

 

Chinese authorities are respecting the legal rights of a landowner who does not wish to sell her parcel.  Maybe this incident will have a Sputnik-like effect on American policymakers:  “Hey, the commies are getting ahead of us on property rights!  Let’s reverse the Kelo ruling and stop eminent domain abuse!”

For Cato work related to property rights, go here.

Hillary and the Real 1984

I have an op-ed today taking off from the Hillary 1984 “mash-up” ad to discuss just how close to reality it might be.

The image of Hillary Clinton on a giant screen reminded me of one of the proposals in her book, It Takes a Village….

And what about that giant screen? Even when the government doesn’t step in to take children from their parents, Clinton sees it constantly advising, nagging, hectoring parents: “Videos with scenes of commonsense baby care – how to burp an infant, what to do when soap gets in his eyes, how to make a baby with an earache comfortable – could be running continuously in doctors’ offices, clinics, hospitals, motor vehicle offices, or any other place where people gather and have to wait,” she writes. The childcare videos could alternate with videos on the Food Pyramid, the evils of smoking and drugs, the need for recycling, the techniques of safe sex, the joys of physical fitness, and all the other things the responsible adult citizens of a complex modern society need to know. Sort of like the telescreen in Orwell’s 1984 – or the YouTube video….

Many conservatives want to be your daddy, telling you what to do and what not to do, and many liberals want to be your mommy, feeding you, tucking you in, and setting your curfew. But the proper role for the government of a free society is to treat adults as adults, responsible for making their own decisions and accepting the consequences.

And that’s why the image of a nagging, hectoring Hillary Clinton on a giant telescreen seems altogether too real.

Tax Reform is the Best Way to Reduce Tax Evasion

A column in the Pittsburgh Post-Gazette reviews new academic research indicating that high tax rates encourage tax evasion. Most politicians think the solution is more power for the IRS, but the columnist points to ideas that are much more likely to work and much more consistent with the protection of a free society. First, shrink the size of government so that taxpayes are less likely to be angry about grotesque examples of waste, fraud, and abuse. Second, adopt a simple and fair system such as the flat tax:

The pressure to cheat, Dr. Antenucci said, comes from the big payoff. “The top tax rate is 35 percent. In this investment investment environment, people scratch to make a 5 percent to 8 percent return, and there is 35 percent sitting right there.” …”When people read about a $500 coffee pot being sold to the government, people don’t want to pay their taxes,” he said. …The professors advocate attacking the problem on several fronts. First, create a tax system where cheating is extremely difficult. One way would be to switch to a flat tax or national sales tax.

Market Education — Understanding the Evidence

I recently wrote that that the private sector can and does expand to meet demand in response to large scale school choice programs. I gave as examples the Netherlands, Chile, Sweden, and Denmark, all of which have national school choice programs that resulted in expanded private education sectors.

Though she acknowledges that she is unfamiliar with the programs in Denmark and Sweden, The Quick and the Ed.’s Sara Mead claims that this evidence does not show “what Coulson believes it does.”

She supports that view by questioning the results in Chile and the relevance of the Netherlands, and by presenting American voucher programs as a putative counter-example.

These objections do not hold water.

First, Chile. As Ms. Mead correctly points out, the expansion of the private sector in that country has occurred more rapidly in middle and upper income areas than in low income areas. As I explained in my chapter in What America Can Learn from School Choice in other Countries, there are two main reasons for this: Chilean government schools serving the poor receive substantially greater per-pupil funding than do private voucher schools, and most of Chile’s poor are concentrated in rural areas.

The poor are poor, not stupid. Research shows that when Chilean government schools get total funding that is between 150 percent and 300 percent of the private school voucher amount, they start to do as well or even somewhat better academically. When they get roughly the same per pupil funding, they do poorly compared to private voucher schools. The poor in Chile are thus often making a wise choice when they decide to frequent the much higher spending government schools.

It is also the case that it is easier to open a viable school in an area of high population density than one of low population density. So, until the high-population density areas are saturated with schools, growth of private schooling in rural areas will be slower than in urban areas. If, as seems to be the case, Chilean private voucher schools continue to enroll a larger and larger share of students, this gap will eventually go away.

In the Netherlands, where government schools do not receive higher per pupil funding than private voucher schools, there is little difference in enrollment rates by income. In fact, the private Catholic school sector in the Netherlands has a slightly lower average socio-economic status than does the government sector, but its students nevertheless outperform their wealthier government school counterparts.

I could go on like this at length, picking apart the rest of Ms. Mead’s argument (e.g., existing U.S. voucher programs haven’t grown more because they are explicitly capped in size or funds!), but this is enough to make my point: if you actually look at all the relevant evidence, and make an effort to understand it, the kind of superficial objections that are offered by the anti-market crowd fall apart.

Ms. Mead adds that “If Mr. Coulson sends me a copy of his book and any other relevant materials, I would be happy to learn more about this.”

That’s a nice, polite thing to say. And I appreciate it. But, as scholars, we are not supposed to wait for the evidence to come to us with a bow on it. We are supposed to go out and find it, and if it is apparently contradictory, to try to make sense of it. And we should wait to offer policy advice until we’ve been able to complete that process with a reasonable degree of comprehensiveness and confidence.

I wish I could come up with a nicer way to say that, but it has to be said.