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Monday, December 17, 2007

Costs and Benefits Four Years Later

Economists often deplore the fact that most economic impact studies used to justify tax incentives or local public good expenditures usually find their way to the circular file or the back of dusty shelves, never to see the light of day again. This is a shame because the promises of low(ish) costs and high(ish) benefits were likely overstated on one of both sides of the equation. The fact that these "predictions" are rarely re-examined suggests that there are relatively few success stories.

This story from the Seatle Times suggests that the 2003/2004 tax breaks to Boeing to build the 787 Dreamliner haven't cost as much as predicted but haven't yielded the benefits expected either:

In 2003, state officials forecast that the 787 would add 3,600 supplier jobs at existing Boeing subcontractors and at new suppliers drawn to Washington.

But four years later, new suppliers have established just four modest new Dreamliner manufacturing operations employing around 200 people in Washington, half of those jobs in unskilled assembly or distribution work.
The story does admit that the promised tax rebates/incentives won't total the anticipated $3.2 billion, that it might only be half of that. However, for the number of the jobs created it still seems that the net benefits were/are negative.

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