Voodoo Economics

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Cablevision's offer to buy the MTA rail yards for $600 million is more than a little brilliant. Now the mayor must either tell the Jets to match Cablevision's offer, or be in the awkward position of telling the cash-strapped MTA to sell its land to the second-highest bidder. One suspects the "businessman mayor" didn't make his own fortune by following advice like that.

The response from the Jets so far has been to complain that Cablevision's tactics are anti-competitive. That may be true, but the noise you hear in the background is a stone getting lobbed through a glass house. It's hard to call someone anti-competitive when you're counting on taxpayers to foot almost half the bill for your stadium. At least Cablevision has the decency to pursue its monopoly at fair market value, and with its own cash.

The city's response has come from Deputy Mayor Dan Doctoroff, who trotted out his usual refrain: The stadium will generate "billions of dollars and thousands of jobs." It will bring New York the Olympics. It will bring the city a Super Bowl. Cablevision has put these opportunities in jeopardy.

But Cablevision's proposal for the site-a dense mixed-use community-will have a bigger economic impact than any stadium. Dan Doctoroff may think that stadiums are wellsprings of growth, but a number of people disagree with him, including the entire economics profession.

I'm only exaggerating a little. The defining feature of research into stadiums, as two economists put it in 2000, is "virtual unanimity of findings."

"Virtual unanimity" is not a phrase commonly associated with economics. Economists disagree with each other about almost everything. It should tell us something that every economist who has studied stadiums agrees that they don't generate economic growth. It should tell us something when a Stanford economist says, "opening a branch of Macy's" has more economic impact on San Francisco than the San Francisco Giants do. It should tell us something that in study after study, cities with stadiums do no better, in terms of jobs or growth or image, than cities without them.

Economic development is about creating jobs. The Jets say their new stadium will create 7000-a figure that is almost certainly too high. The city and state plan to give the stadium $600 million. Between cost overruns and debt, that estimate could well be too low.

Assume both numbers are correct: That puts the subsidy at around $86,000 per job. Many of the jobs will be in low-wage service positions (vending, security, ticket-taking), many won't be full-time, and many won't have benefits. This isn't adding up to a wise use of taxpayer dollars. It might be more efficient to find 7000 people and give them $86,000 apiece, then use the land for something else.

But without the stadium, they cry, we won't have the Super Bowl! The Jets say New York will host a Super Bowl every five years. That would be unprecedented, but let's give them the benefit of the doubt. And let's be generous and say the activity surrounding the Super Bowl lasts a week. So every five years we'd have a seven-day spike in economic activity. Does that kind of return really merit public investment?

An event as infrequent as the Super Bowl just can't have much economic impact. It will have no effect on its neighborhood, because neighborhoods are made healthy by day-to-day activity, not one-shot bursts of spending. It will have no impact on the city, because the amount of money the Super Bowl generates is trivial compared to the city's economy overall. And no one gets a full-time job from a single game; at best, local workers will get some nice overtime. Some people argue that the Super Bowl helps put a city on the map, but where are the maps that don't include New York?

The Super Bowl was held last Sunday, in Jacksonville, Fl. As of this morning, Jacksonville has not been transformed into a world city. It has not become an economic colossus. It remains a sparsely populated backwater in northern Florida. Does anyone seriously expect it to rise to the ranks of New York or Los Angeles (which doesn't even have a football team) simply because it hosted a game?

Manhattan needs housing more than it needs football. It's hard to stand up and cheer for the monopolists at Cablevision, but they're on the right side in this fight. The choice between a lot of small full buildings and a big empty one is easy.

-Michael Manville

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