CONVENTION CENTERS
-Walter Block
Trail (BC) Daily Times
29 May 1985
Some people argue that convention centres,
even if they lose millions of dollars.
will still benefit the cities in which they are
located since even more millions of tourist
dollars will enter the cash registers of the
local busines~men, and will then find their
way into the city's coffers through taxation.
-, But this is a fallacious argument. First
of all, it ignores the experiences of such
places as Montreal with its Olympics, and
New Orleans with its recent World"s Fair,
.Both places lost money hand over fist; yes,
tourist dollars came flocking in, but to a
lesser degree than expected, and at far
below the rate of loss on construction, etc.
Secondly, this argument commits ,the
fallacy of "the seen versus the unseen". To
,'be sure, . there is a multiplier effect
engendered by the construction of the convention
centre and by the jobs created in
order to run it. all these people buy things in
the local economy (food, shelter, entertainment,
etc.) and it is also true that these people go out and spend this money, again
, creating a further ripple of jobs. All of this
-is "seen".
But what about the "unseen"? What
would have happened to all these millions of
dollars had they not been forcibly seized
from the taxpayers, and funnelled into the
,megaproject in question?
Well, it is hard to say. Probably, people
would have spent this money as they always
do: on paper clips and bobby pins;. on
'toasters and frisbees; on ballet lessons and
tennis racquets; on apples and toothpaste.
These expenditures, too, would have
created a "multiplier effect," but one not so
easy to discern. In evaluating the megaproject,
it is not a "seen" multiplier effect
against - nothing. Rather, it is a "seen"
'multiplier effect against an "unseen" one.
In addition to consumption, there is the
money the consumers would not have spent,
but would have saved. This,toor contrary to
Keynes, creates jobS," production . and
, wealth. For more savings mean lower interest
rates, and thus leads to investment
projects unfeasible at the old lower rate of
saving. _
, Does this mean that megaprojects are
never justified? Not a bit of it. On the
marketplace, entrepreneurs are always
casting about for ways to earn a profit.
When in their eyes'a convention centre can
be a going concern, they will invest their
own funds, and invite the public to help out
by floating a stock issue.
There are great advantages to such projects – when engaged in by private interests.
Business makes the investment
with its own money, or money which must
be repaid. Hence, graft, corruption, inefficiency
tend to be reduced.
The market, moreover, has a way of
-rewarding. those who make wise
megainvestments, and punishing those who
engage in foolish ones. It gives profits to the
one and losses to the other.
This means that on any given occasion,
the millions of dollars Which must be spent
will tend to be controlled by people who
have made wise entrepreneurial decisions
in the past - not by photogenic politicians
who talk a good line, nor yet by bureaucrats
who may have no socially redeeming
qualities at all.
,,