Is Every Dollar "Invested" Really a Winner?
Economic Impact Analysis and Local Spending
A city the size and location of Chicago will routinely chalk up many events and activities as a matter of course. Home to professional sports teams, pop-concert appearances, our world-class cultural institutions, the occasional political or social protest in the streets. But 2023-24 appears to be a period with an usually large number of dates to mark on our calendars. Taylor Swift and 200,000 “Swifties” that took over Soldier Field in June, NASCAR racing downtown the first weekend in July, the Democratic National Convention in August ’24 (and the Republican counterpart in nearby Milwaukee the month before), the Chicago or Arlington Heights or Naperville Bears building something, plus our standard fare: our annual fall marathon, street fairs, Taste of Chicago, and our wealth of cultural amenities.
BY ALLEN R. SANDERSON
Each of these will be accompanied by media coverage and throw-away lines as to the number of outside visitors it will draw, expenditures on hotels and restaurants, how they will enhance the city’s reputation, and the significant economic impact each will add to Chicago’s coffers.
Largely missing from the treatment, however, is the negative side of ledgers when things “go south” or turn ugly. Think the teen weekend street protests and riots this past April, or, further back, the anti-war protests that accompanied the 2012 NATO Summit we held. Further afield, domestic terrorism and the 2013 Boston Marathon bombings. Or, further back, the protests and police riots that forever etched the 1968 Democratic National Convention in Chicago’s history. No reason to have to even mention the weather! And we, along with most every other metropolitan area, list crime as one of its major concerns.
Given our modern environment and the country’s mood when it comes to race and gender sensitivities, abortion, immigration, gun control and mass shootings, and each party likely nominating a wish-it-weren’thim figure for president, certainly activists are already lining up their protest ducks to be out in full force for demonstrations next summer in Milwaukee and Chicago.
Estimates of economic impacts rarely dwell on the ex-ante risks cities have to take. For example, given 9/11, Olympic host cities now have to include a $5 billion line item to factor in the security costs associated with the risks of terrorism. This is one major consideration down the road as the IOC and major cities around the globe weigh their decision to serve as an Olympic host; it has simply become unaffordable for many (most? all?) cities. These risks and this analysis are not simply a US matter. Good luck, Paris, for the Summer Games in 2024.
And if I come to Chicago and lay down $200/night for a hotel room, how much of that gross tab actually stays in the local economy as opposed to leaving for Sheraton, Hilton, or Marriott headquarters? Net v. gross is the issue. As is: Who benefits and who loses?
It may well be that some curious visitors will descend on Chicago next August to witness history, but others will postpone their annual trip to see the Cubs or Sox, or spend their family day at the Shedd, Adler, and Field some other weekend, to avoid congestion. How did these world-class museums do on July 1-2 with race cars making access impossible? They, and Macy’s, do not draw large crowds on Sundays when the Bears are home. They much prefer road games.
And if the IOC (International Olympic Committee) or NFL, not registered 501 3-c organizations, can play one locale against another in bidding for the right to host an event, should it not be able to exercise some of its market power to extract most of the expected financial gains from its event in the form of the price it charges the host upfront or expenditures it requires the city to commit to?
For these reasons, when asked about the purported economic impact of this or that activity, I often tell reporters to take the estimate given by the sponsor or Chamber of Commerce and move the decimal point one place to the left. That’s a pretty good place to start one’s counting.ir
Stock Photo ID: 40571992 Copyright: andykazie
Back to the Classroom by Allen R. Sanderson
Transitioning from the “I-word” to the “R-word?” by Allen R. Sanderson
We the People
The United States 250 Years Ago or Just 50
In 1776, “we the people” were 2.5 million folks, mostly newcomers. No one imagined that the referent of that simple phrase would remain constant over time, but the changes have been especially dramatic in the last 100 years and keep accelerating. By 1920, we had passed the 100 million mark; by 50 years ago, there were over 200 million of us, and the most recent census—2020—put the figure at 331 million. By midcentury, we are expected to climb above 400 million.
“We the people” have undergone similar demographic volatility in our racial/ethnic mix and percent foreign born. The foreign-born slice of our population in 1970 was under 10 million, or 4.7% of our population, the lowest percentage of all time. Today that figure is nearly 15%, over 45 million, and the representations of Hispanics and Asians are far different than they were 50 years ago.
BY ALLEN R. SANDERSON
“We the people” have also managed to get increasingly older over the years. Back in 1970 the median age was 28. Today it is about 39, and the percentage of our population over 65 continues to grow. As our population ages and shrinks, it has put pressure on the labor force—fewer people will be working—and more will be drawing government transfers—Social Security and Medicare benefits. (And don’t forget about our collective national debt commitments we are bequeathing, now just over $31 trillion.)
“We the people” have not only added far more than 100 million of us in the last 50 years, we have spread ourselves out geographically. Of the 10 largest cities in the US in 1970, only 5 of them remain in the top 10 today (and only three of the largest 10 from 100 years ago still remain), and we have continued to follow Horace Greeley’s alleged exhortation by moving westward: half of our 20 largest cities today are in just three states—AZ, CA, TX.
As “we the people’s” numbers approach 350 million and the world’s population creeps ever closer to 8 billion, twice its 1970s level, it is notable that there are fewer and fewer concerns about the overpopulation of Malthus or the Zero Population Growth movement and book The Population Bomb by Paul Erlich, relics of the early 1970s. The earlier estimates of the earth reaching 10 billion inhabitants by 2050—or ever—seem overly optimistic—or pessimistic —and far off the mark.
“We the people” have not only seen dramatic demographic shifts internally in the last fifty years, but staggering technological advances have changed our lives and the way we live them even more dramatically, lowering the costs of transportation and communications such that the world has become a much smaller place. Think apparel and automobiles. That Oregon start-up of Bowerman and Knight officially became Nike, Inc. in 1971, but the overwhelming share of athletic shoes come from abroad, and over 40 percent of new cars sold in the US are foreign-made.
Or think where “we the people” get our news and opinions. No longer do we turn to and rely primarily on local daily newspapers and street-corner conversations, or even the nightly newscasts from three major networks. Now our major news sources are newsfeeds, blogs, posts, and podcasts from a seemingly infinite number of companies, governments, channels, apps, and other outlets of highly variable quality and reliability, all streamed 24/7 to our iPhones or laptops. The internet, still not even 40 years old, has allowed the creation of social (or antisocial and unrepresentative) media platforms we turn to constantly and seem wedded to: Facebook, Twitter, YouTube, Instagram, Snapchat, Tumblr, Reddit, TikTok, Whatsapp, Linkedin, and Pinterest. And our privacy? “We the people” are an open book to the masters of these technologies.
“We the people” are currently concerned by our nation’s political and social discord and polarization aided and abetted, if not caused, by our ubiquitous social media. But we should not forget that as a country we were born through discord and disagreements and that have never been absent from our history. 50 years ago, Richard Nixon and Spiro Agnew started—but did not finish—2nd terms in 1973; the Vietnam War and civil-rights tensions were still with us, as was the Watergate break-in, that era’s political scandal. In 1972, the Supreme Court rendered its Roe v. Wade decision, and “Title IX” became academic and athletic shorthand in higher education and a constant source of litigation ever since. Today “we the people” seem divided on the very legitimacy of our foundational institutions in all three branches of our government.
Demographic changes represent starting points for understanding the economics and politics “we the people” will face in 2023 and beyond. But equally important may be technological “advances” that threaten the very fabric of our unity and democracy. The future of the United States depends upon our meeting these challenges and opportunities together with some measure of respect and dignity
Stock Photo ID: 40571992 Copyright: andykazie
Back to the Classroom by Allen R. Sanderson
Transitioning from the “I-word” to the “R-word?” by Allen R. Sanderson