By Steve Rhodes
“The NATO summit coming to Chicago later this month will give a $128 million short-term boost to the city’s economy, according to a projection released by the head of the host committee Monday,” the Sun-Times reports.
“That does not count any long-term benefits of raising Chicago’s profile.”
It also doesn’t count any facts that reside here on Earth.
“Oh what a joke! I wish I was smoking what they’re smoking,” Andy Thayer of the Coalition Against NATO/G8 told the paper. “You look at the history of these summits and cities usually end up paying out millions of dollars because of the excesses of city officials on protestors.”
Even without police brutality settlements, the estimate is wildly inflated. The Tribune figured out just one of the ways Deloitte Consulting, on behalf of World Business Chicago, juked the numbers. They included the cost to stage the event.
What’s wrong with that? Isn’t that money going to vendors and workers? Yes, but it’s money simply being shifted from corporate and government treasuries. The cost equals the output. Does the money contribute to some overall economic gain? Only as much – or less – than that money might otherwise had it been used for something else. As the Tribune notes, trade shows never include their own cost when estimating economic impact. It’s folly.
“University of Chicago economist Allen Sanderson said the study’s conclusion is a gross overestimate,” the Tribune reports. “As an example, it likely underestimates the loss of other tourism and business travel that weekend, he said.
“‘Economic impact studies largely are public relations documents,’ Sanderson said.”
They’re almost never to be taken seriously – and it’s one of the first things new reporters learn if they’re paying attention. It pains me to have to write this same item over and over again. When will they ever learn? Learn, dammit!
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Usually one of the tricks is the way the multiplier effect of how much each visitor will spend and how that money will roll through the local economy is deployed, but in this case WBC has some other tricks up its soiled sleeve.
“Healey said the study did take into account possible damage from demonstrations and potential business disruption, but she did not give a dollar figure and none was included in the study.”
So it was taken into account and yet not.
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If someone tried to turn a study like this in to their boss in Corporate America.
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“Sanderson says the actual economic benefits often turn out to be about 10 percent of what the boosters predict,” CBS2 Chicago reports – after first calling him jaundiced so you don’t take him seriously.
“Look, anytime an organization conducts an economic impact study, there is a weak link quality to it; you’re going to produce a report that’s very favorable to whatever activity you want to do,” Sanderson said.
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Hook, line, sinker.
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The study predicts 21,000 people will come to Chicago for the summit.
“That includes 7,500 delegates; 5,000 foreign ministers, support staff, security details and spouses; 2,300 members of the media and 6,400 other staff and attendees,” the Sun-Times reports.
“That will translate into 49,300 hotel stays and 2,200 temporary jobs, said Lori Healey, executive director of the Chicago NATO Host Committee. Most delegates are expected to stay four nights but some will stay as long as 15 nights, the report said.
“Healey called the estimates by the Deloitte consulting firm ‘so conservative,’ not counting the amount of undisclosed money federal officials are spending in Chicago for safety precautions.”
So the more money the feds have to spend preventing riots the better!
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“Liz Jellema, research director for World Business Chicago, said security costs ‘are confidential,’ but they are part of the overall $128 million estimate.”
It’s the figure in the estimate under “Confidential.”
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Actually there are few figures in the report. Deloitte doesn’t show its math.
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And how many times have we heard this before?
“Taxpayers will not pay anything for the summit – that’s why we raised private money and I secured the federal money,” Emanuel said.
First, federal money is taxpayer money too! Second, taxpayers have already been on the hook unless those private funds are flowing into budget lines at City Hall and the police department for the day-to-day activities consuming staff. There’s also the lost opportunity cost of where the city’s time and energy could have otherwise been spent instead of preparing for and hosting the summit.
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Healey spoke at the City Club of Chicago but didn’t answer every question put to her. My favorite example, from the Sun-Times:
“I want to know why Ms. Healey and the city of Chicago is promoting NATO, the most efficient killing machine the world has ever known,” Purdue University sociology professor Steven “Kim” Scipes shouted from the back of the room at Maggiano’s as a moderator threatened to have him escorted out.
C’mon, Scipes! NATO is coming to affirm its commitment to democracy – like the freedom to ask questions of your leaders!
“Why are you bringing war criminals like Madeline Albright and Condoleezza Rice to Chicago? Why are we losing our human rights?”
The moderator ignored the question, and gave Healey a commemorative City Club mug as Scipes shouted, “Why don’t you let her answer?”
I wonder if Deloitte included the cost of that mug in its estimate.
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“Healey downplayed miscommunication between her office and the federal government after her office was surprised to find them creating a ‘red zone’ around federal buildings in the city. ‘I think it was overblown in the press,’ she said.”
Can someone get her another coffee mug?
Accretive Got TIF Funds
“The hugely profitable Chicago health-care debt collection company under fire for its (allegedly) unsavory practices – led by a devotee of Ayn Rand and Milton Friedman – has also been a recipient of generous taxpayer subsidies including millions of dollars in TIF funds,” the Beachwood Reporter found.
Fire Joe Cowley
Douchebag of the Year?
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The Beachwood Tip Line: Economically impactful.
Posted on May 1, 2012