Entertainment
Is the Taylor Swift effect real? Be skeptical of claims of economic benefits
Jarrett Skorup and James M. Hohman
What do Taylor Swift, county fairs and taxpayer handouts have in common in Hollywood?
They all ostensibly stimulate the economy, magically multiplying every dollar spent. This is a common assertion regarding smaller local festivals and larger public events and government spending plans. However, this is rarely true. The public is being deceived by the voodoo science of economic multipliers.
This deception takes several forms. Some are harmless, like the constant claims that Taylor Swift's Current World Tour Brings Economic Boom everywhere she goes, apparently $1,300 or more in local spending for every $100 spent on tickets. This is a simplistic statement that ignores how people would otherwise spend their money on thousands of other wants and needs.
Economic multiplier claims are often wrong
The optimistic figures are essentially a cost-benefit analysis that only considers the benefits, which is a clearly flawed approach. Similar problems usually exist when people tout the benefits of things likeyouth football tournaments, golf invitationals, and state and county fairs. These are all important and beautiful things, no doubt, but they are generally not the economic titans they are made out to be.
Luckily, no one is really hurt when the media touts misleading studies about Taylor Swift concerts and tractor pulls at the state fair. But people are almost certainly hurt when economic multipliers are used to justify wasting public subsidies, a phenomenon that happens almost daily.
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Special interests specialize in producing studies that show they will do great things if only taxpayers fund them. For example, Hollywood executives desperately want taxpayers to pay for movie production, so they pretend they will. bring $8.40 to the economy for every dollar they receive from taxpayers. States spent at least $25 billion in film subsidies, but money only finances different things, not creates new things. And unlike Taylor Swift concerts, it's on taxpayers' dime.
Many selfish interest groups have gotten into the economic multiplier game. The American Public Transportation Association proclaims that every taxpayer dollar at Penton Transit generates $5 for the economy. Cleveland transit advocates tout even more gains, saying a dollar in rapid transit generates $114 in economic activity.
Great Lakes Coalition wants Congress to spend more money on the Great Lakesand proponents say it will provide$3.35 of economic activity for every dollar he gets.
And green energy lobbyists say return of $1.42 in economic activity for their grants.
Yet when taxpayers fund green energy projects, they are simply taking money that would have been spent elsewhere and giving it to a politically powerful lobby that has already received funding.hundreds of billions of taxpayer dollarswithothers are in preparation.
Taxpayers should be skeptical about the value of subsidies
It is obvious why these erroneous claims abound. They make taxpayer funding seem like an easy choice, as if only idiots could object to such obvious economic benefits. But journalists should ask tough questions about what motivates them.
Interest groups want to appear as if they are the best beneficiaries of valuable taxpayer resources. And elected officials are content to have analyzes that ignore the costs but praise the benefits.
Economic multipliers are typically used to multiply donations that should never be approved.
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Americans must see through this charade. They should demand better from economists and researchers, question news reports touting a project's sweeping economic benefits, and look twice at politicians who claim transformative benefits if the taxpayer subsidizes a favored project.
It's one thing to say that Taylor Swift is an economic force of nature. It's another to throw billions of dollars of public money at anyone who claims their idea is the best thing since sliced ​​bread.
Jarrett Skorup is vice president of marketing and communications and James Hohman is director of tax policy AtMackinac Center for Public Policy.
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