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May 22, 2024 10:05 AM EDT
What's the connection between government subsidies to Hollywood, local fairs, and Taylor Swift?
They all stimulate the economy by miraculously doubling every dollar spent. This is a typical assertion about the largest public gatherings, government expenditure plans, and the tiniest local festivals. It is seldom true, though. The pseudoscientific theory of "economic multipliers" is deceiving the general population.
This deceit manifests in several ways. Some are innocuous, such as the recurring claims that Taylor Swift's current global tour generates $1,300 or more in local spending for every $100 spent on tickets wherever she travels. This basic assertion fails to consider the thousands of different necessities and wants that individuals may have purchased with their money instead.
The optimistic figures are basically a cost-benefit analysis that ignores anything but the advantages, which is a clearly incorrect methodology. When individuals extol the virtues of events like state and county fairs, golf invitationals, and youth soccer championships, similar issues usually arise. Yes, all those things are nice and significant, but they're typically not the economic giants that people make them out to be.
Nobody is harmed when the media presents false research on tractor pulls at the state fair and Taylor Swift concerts. However, it is undeniably harmful to individuals when "economic multipliers" are invoked to defend unnecessary public subsidies-a practice that occurs almost daily.
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Special interests are experts at fabricating studies to demonstrate their enormous potential-all for public funding. For example, Hollywood executives claim they will return $8.40 to the economy for every dollar they receive from taxpayers because they badly want taxpayers to pay for film production. States have subsidized movies with at least $25 billion, but the money isn't being used to make new films; it's merely being used to pay for other projects. Additionally, government money is being used, unlike Taylor Swift's performances.
Numerous interest groups with self-serving agendas have joined the economic multiplier game. According to the American Public Transportation Association, every tax dollar spent on transportation adds $5 to the economy. In Cleveland, proponents of fast transit brag even greater successes, stating that every dollar invested in the system creates $114 in economic activity.
The Great Lakes Coalition requests that Congress increase funding for the Great Lakes, claiming that for every dollar allocated, $3.35 will be generated in economic activity.
Moreover, proponents of green energy assert that their subsidies resulted in a $1.42 return on economic activity.
Nevertheless, when taxpayers support green energy projects, they are essentially diverting funds intended for other purposes to a politically influential lobby that has already gotten hundreds of billions of government dollars and will likely receive many more in the future.
It is clear why there are so many of these false claims. They portray taxpayer support as a simple decision as if the only people who couldn't see such obvious economic advantages were fools. However, journalists ought to probe deeply into the reasons behind them.
Interest groups want to present themselves as the greatest stewards of valuable public funds. Furthermore, studies that highlight the advantages rather than the costs are welcomed by political leaders. Economic multipliers are usually applied to handouts that ought never to be authorized.
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