Some People Argue That Convention Centres
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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 peo- ple 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 pro- jects – 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.