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 Sunday, September 12, 2004
Stadium Boondoggle

It's not a letter, but this too has been sitting in the file for more than a month. I heard this exchange on ESPN during the broadcast of an A's-Yankees game, and I was so astonished that I replayed the tape and transcribed it. (I always have the VCR on record when watching the A's....)

I didn't note the date, but I believe it was the afternoon game on August 5 (which, coincidentally, is about where I am in the letter column). The speakers are Gary Thorne and Steve Phillips. The syntax looks pretty choppy, but I'm pretty sure it's their exact words.

I was originally planning to wrap a lengthy commentary around this, but now I think I'll just let it speak for itself:

Gary Thorne: 1923, Yankee Stadium opened up. Mayor Bloomberg said last week he will help the franchise that helps itself. Because the New York Mets are also interested, and have been for two decades, in getting a new stadium built somewhere, and they want tax dollars. The Yankees want tax dollars. I am one of those, I am just adamantly opposed to one single dollar of tax revenue or one single dollar of bond money being used by a municipality to build a damn ballpark for millionaires. I hate it. Do you think I have a feeling about that?

Steve Phillips: Tell us how you really feel about it.

GT: Every study I've, and I've ordered every study ever done, has shown that municipal tax dollars put into athletic stadiums for pro teams does not return one cent to the municipality. There is no gain, and in most cases it is a cost-losing venture.

SP: I'm not sure about that. I've heard a lot of studies....

GT: Check the studies.

SP: ...Andrew Zimbalist has a number of studies out there that, that it does benefit the cities.

GT: It's a waste of tax dollars, especially in a city like New York that needs it for schools and highways and infrastructures. It's a private business, and it should be run that way.

SP: But it also brings dollars to the city. I believe that. There also is an issue of quality of life. I think that having a sports franchise in an elite facility benefits everybody for the quality of life as well. And that's worth dollars, however many dollars that is, there is a dollar value to it.

GT: Not as much as teaching kids.

Gary Thorne is absolutely right on every count. I've seen the argument made in more detail in the Economist, and it's not even controversial. I was just amazed to see someone say so on ESPN. It was like hearing Bill Clinton praised on the Fox News Channel.

I follow the Oakland A's pretty closely and for the most part I prefer the parochial coverage of the local radio announcers, the local beat writers, and the core fan base that calls the post-game show most frequently. But I've come to accept that whenever the topic of a new stadium comes up, they're all going to be dead wrong.

Sure, I can understand that they want a new stadium, and they want a government subsidy to help make it possible, but when they let their desire cause them to believe that such a subsidy would actually be a financial net gain for the government, that's just fantasy. The best you can argue is that having a nice stadium in the city has a quality-of-life value which doesn't manifest itself in actual dollars. But then you're talking about spending money to serve the public good, in which case you've got to compare it against other spending programs like schools, police, road maintenance, etc.

In Oakland, there's the additional complication that the fan base of the sports teams doesn't align exactly with the boundaries of the City of Oakland or Alameda County. In the stadium deal made with the Oakland Raiders -- a financial disaster from which the City is still suffering -- the most aggressive public lobbying was from fans from neighboring suburbs. Sure, easy for them. It's not their taxes that are going to pay for it.

11:00:19 PM  [permalink]  comment []  



Letters: Free Trade

Tom Murphy, like me, is a regular reader and commenter at Sciolist. Following the links there he found his way to Benzene, where he read my review of Chalmers Johnson's The Sorrows of Empire, including the part where I quoted a long passage from the book in which Johnson argues that, historically, nations which have prospered economically have not done so by pursuing a policy of free trade.

In a post on his blog Representative Press, Tom quotes the same passage along with my follow-up question:

Mark concludes, "The empirical evidence shows that protectionism works, at least in the early stages of a nation's economic development. I'd be very interested to know how free-trade enthusiasts -- real or fake -- answer this argument."

Tom's conclusion is that "they can't", and he goes on to rehearse the anti-neoliberal argument at greater length.

Long-time Benzene regular Steve Hutton checks in with a more interesting answer:

Steve Hutton (August 6)

Johnson argues that most countries that are now rich (a list that mysteriously but conveniently excludes Hong Kong) were once highly protectionist. Even if that's true, it doesn't really prove anything since pretty much every country, including miserably poor ones, was once highly protectionist. It's also true that all rich countries have names composed of vowels and consonants but I don't think there's a causal link.

To make his case, Johnson would have to compare countries in the past and show that the ones with more protectionism were likelier to become rich than the ones with less protectionism. I think it's extremely unlikely that he can do this.

He'd have a much easier case to make if he conceded that there is such a thing as bad protectionism (as practiced by, say, African kleptocrats) and only tried to make the case that "good protectionism" is helpful. Even here, he would have an uphill battle because he would have to establish (1) that the countries in question had an overall high level of protectionism, as opposed to having a great deal of open trade with protectionism concentrated in a few highly visible areas, and (2) that less successful countries had a lower overall level of protectionism, as opposed to their protectionism just being noticed less because they are less successful. Also, it would be helpful to know when protectionism stops being a good thing. Great Britain and the U.S. didn't stop "getting rich" in 1840 and 1940 respectively, and their subsequent openness to trade seems to have been a big part of their increasing wealth.

Here's a much more modest claim he could make, which I do think is supported by the evidence: A certain amount of protectionism doesn't need to be disastrous. All of the countries that are currently rich were once protectionist, in some cases highly protectionist, and that didn't keep them from becoming rich. When giving advice to protectionist poor countries, we shouldn't automatically assume that reducing tariff and non-tariff barriers is the best first step in economic reform.

Steve Hutton (August 9)

One more thing: what Johnson says about protectionism isn't some bold new theory. It was the conventional wisdom in the early post-WW2 period. When they became independent, most ex-colonies adopted the then-fashionable policies of import substitution and protecting infant industries. The fact that most of these countries went on to do badly led to a new conventional wisdom in favour of open trade.

There are a lot of problems with letting the government decide which industries are strategic. The government can easily be seduced by the desire for success in prestige industries (a nice shiny new steel mill, a domestic car industry) rather than in the more boring industries where the country may have an actual comparative advantage. Even an honest and competent government can have this problem. And governments aren't all honest and competent. If the government is the source of fundamental business decisions, the opportunities for large and petty corruption multiply.

On one hand, the post-colonial experience argues pretty strongly against Johnson's position. On the other hand, it also argues for humility when pushing the conventional wisdom of the day on large, poor, distant countries.

[Thanks, Steve, for recognizing that it wasn't just a rhetorical question.]

10:37:33 PM  [permalink]  comment []