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Monday, October 06, 2008

Weird cost-benefit analysis

Cost-benefit analysis suggests that one should compare the total costs of a project to the total benefits of the project. If the costs outweigh the benefits, the prescription is generally one of caution.

Bud Selig, commissioner of MLB, offers his own version of cost-benefit analysis:
"Every time I drive by the stadium I’m reminded of much that went on," Selig said. "But as my mother would have said, thank goodness for small favors: All the politicians that fought it are either gone or don’t say anything. That’s a good thing. It’s a wonderful day for Milwaukee."

Selig acknowledged that there are "reasonable" arguments for and against public financing of sports stadiums, but insisted that it would be hard to argue that the new stadium didn’t make Milwaukee a better place.

"You can debate the economics," Selig said. "I think it's a plus, but we can have a reasonable debate. But the question you must always ask yourself is, will this be a better place because we have done this?"
So, if benefits are positive then the project is a no-brainer? This sounds a little self-serving on the part of the commish.

There was a similar approach in Arlington, TX, in the run-up to the 2004 vote for the Cowboys stadium. There was an economic benefit study that did not discuss word one about the costs.

A substantial protion of Arlington's contribution to the stadium project was just reset from 2% to 10% on auction rate bonds. Didn't see that cost coming, I suppose.

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