Tuesday, June 27, 2006

Editorialists don't understand multipliers 

Pointed out to me by the Elder, this morning's StarTribune argues that the national political conventions coming to the Twin Cities would be an economic win-win.
Hosting a national political convention would cost this region a projected $40 million to $45 million, in both public and private contributions. The return on that investment is estimated at more than twice that amount. Each of the 20,000-plus partisans in attendance is projected to spend $1,500, yielding about $30 million. Add, too, the millions spent on staging the convention and broadcasting it around the globe.

The intangible benefits would also be abundant. A national convention would bring journalists from all over the globe here to file stories with Minnesota datelines. Many of those stories would feature this place and its people. Growth in tourism and economic development are bound to result.
I don't have any problem with the conventions coming to Minneapolis, but arguing for economic benefits shouldn't be part of the story, for the same reasons we gave for the Super Bowl. Our friend Mark Yost is coming out with a book this fall on the business of the NFL, and in it he discusses the costs and benefits as well. The money in the hotels doesn't stay in Minneapolis (though the room tax money does -- leave it to the STrib to like benefits to government.) The Beacon Hill Institute estimates benefits in New York City as being much lower, and even they look at gross benefits rather than netting out the loss from all those who would NOT come to NYC because of the congestion, lack of hotel space, etc., during the convention period? Beacon Hill estimated these costs at $46 million for NYC. Do it during the Minnesota State Fair period, and those costs are higher for Minneapolis and Saint Paul. I do not think the STrib is taking those costs into account.

Also, I wonder what the net economic benefit would be of having protestors at the RNC convention?