by Anna Manning
From JLF’s Jon Sanders:
Now and then you’ll encounter a public servant actually questioning the bad numbers propping up a bad policy proposal, and it’s as refreshing as, well, any scene from a lite beer commercial. Remember when the Maryland county executive held back on imposing a $15 per hour minimum wage until he got an economic study of it, which found it would disemploy tens of thousands in the community and cost hundreds of millions of dollars in total income?
The Carolina Panthers have been pushing the state of South Carolina to build them a new headquarters and practice facility in Rock Hill, SC, just over the border but still considered within Charlotte metro area. Gov. Henry McMaster (R) supports the idea, and the state House already passed a $115 million tax incentives package for it.
South Carolina’s Commerce Department says it’ll have a monster economic impact. All 150 players, coaches, staff members, and owners will move into South Carolina. It’ll create 5,715 new jobs. All told, it’ll have an economic impact over 15 years of $3.8 billion.
Wow. The Panthers just strolled south of the border and offered South Carolina policymakers a way to turn $115 million into a staggering $3.8 billion! How magnanimous!
Here at the John Locke Foundation, we’ve been warning about ridiculous economic-impact numbers for years. It’s precisely about such a thing that I wrote a research brief called “Nonsense with big numbers: How to get legislators to support your industry.”
Fortunately for South Carolina, a state senator wasn’t dazzled by the big numbers. He wondered about the assumptions behind them. As reported by The State, Sen. Dick Harpootlian (D-Richland) put the Panthers’ incentives package on hold to have an economist look at the benefits and costs of the idea. Harpootlian personally “hired Rebecca Gunnlaugsson, the S.C. Department of Commerce’s former chief economist and now an analyst with a conservative think tank [Palmetto Promise Institute].”
As Senior Economist and Resident Scholar at the Locke Foundation Roy Cordato could tell you, once you acknowledge costs, the “impact” game comes to a halt. Economic impact studies are geared specifically to ignoreopportunity costs. See his report on “Economic Impact Studies: The missing ingredient is economics” for the difference between them and sound economic analysis.
Read more here.